HB-6298, As Passed House, September 18, 2008
June 27, 2008, Introduced by Reps. Coulouris, Clemente, Mayes and Griffin and referred to the Committee on Banking and Financial Services.
A bill to amend 1943 PA 20, entitled
"An act relative to the investment of funds of public corporations
of the state; and to validate certain investments,"
by amending section 1 (MCL 129.91), as amended by 2006 PA 400.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. (1) Except as provided in section 5, the governing
body by resolution may authorize its investment officer to invest
the funds of that public corporation in 1 or more of the following:
(a) Bonds, securities, and other obligations of the United
States or an agency or instrumentality of the United States.
(b) Certificates of deposit, savings accounts, deposit
accounts, or depository receipts of a financial institution, but
only if the financial institution complies with subsection (2), or
certificates of deposit obtained through a financial institution as
provided in subsection (5).
(c) Commercial paper rated at the time of purchase within the
2 highest classifications established by not less than 2 standard
rating services and that matures not more than 270 days after the
date of purchase.
(d) Repurchase agreements consisting of instruments listed in
subdivision (a).
(e) Bankers' acceptances of United States banks.
(f) Obligations of this state or any of its political
subdivisions that at the time of purchase are rated as investment
grade by not less than 1 standard rating service.
(g) Mutual funds registered under the investment company act
of 1940, title I of chapter 686, 54 Stat. 789, 15 USC 80a-1 to 80a-
3 and 80a-4 to 80a-64, with authority to purchase only investment
vehicles that are legal for direct investment by a public
corporation. However, a mutual fund is not disqualified as a
permissible investment solely by reason of either of the following:
(i) The purchase of securities on a when-issued or delayed
delivery basis.
(ii) The ability to lend portfolio securities as long as the
mutual fund receives collateral at all times equal to at least 100%
of the value of the securities loaned.
(iii) The limited ability to borrow and pledge a like portion of
the portfolio's assets for temporary or emergency purposes.
(h) Obligations described in subdivisions (a) through (g) if
purchased through an interlocal agreement under the urban
cooperation act of 1967, 1967 (Ex Sess) PA 7, MCL 124.501 to
124.512.
(i) Investment pools organized under the surplus funds
investment pool act, 1982 PA 367, MCL 129.111 to 129.118.
(j) The investment pools organized under the local government
investment pool act, 1985 PA 121, MCL 129.141 to 129.150.
(2)
A Except as provided in
subsection (5), a public
corporation that invests its funds under subsection (1) shall not
deposit or invest the funds in a financial institution that is not
eligible
to be a depository of funds belonging to the this state
under a law or rule of this state or the United States.
(3) Assets acceptable for pledging to secure deposits of
public funds are limited to assets authorized for direct investment
under subsection (1).
(4) The governing body by resolution may authorize its
investment officer to enter into written agreements with other
public corporations to pool or coordinate the funds to be invested
under this section with the funds of other public corporations.
Agreements allowed under this subsection shall include all of the
following:
(a) The types of investments permitted to be purchased with
pooled funds.
(b) The rights of members of the pool to withdraw funds from
the pooled investments without penalty.
(c) The duration of the agreement and the requirement that the
agreement shall not commence until at least 60 days after the
public corporations entering the agreement give written notice to
an existing local government investment pool which is organized
House Bill No. 6298 as amended September 18, 2008
pursuant to the local government investment pool act, 1985 PA 121,
MCL 129.141 to 129.150, in those counties where such a pool is
operating
and accepting deposits on or before the effective date of
the
amendatory act adding this subsection September 29, 2006.
(d) The method by which the pool will be administered.
(e) The manner by which the public corporations will respond
to liabilities incurred in conjunction with the administration of
the pool.
(f) The manner in which strict accountability for all funds
will be provided for, including an annual statement of all receipts
and disbursements.
(g) The manner by which the public corporations will adhere to
the requirements of section 5.
(5) In addition to the investments authorized under subsection
(1), the governing body by resolution may authorize its investment
officer to invest the funds of the public corporation in
certificates of deposit in accordance with all of the following
conditions:
(a) The funds are initially invested through a financial
institution that is not ineligible to be a depository of surplus
funds belonging to this state under section 6 of 1855 PA 105, MCL
21.146.
(b) The financial institution arranges for the investment of
the funds in certificates of deposit in 1 or more insured
depository institutions[,] as defined in [
] 12 USC 1813, for the account of the public
corporation.
(c) The full amount of the principal and any accrued interest
of each certificate of deposit is insured by an agency of the
United States.
(d) The financial institution acts as custodian for the public
corporation with respect to each certificate of deposit.
(e) At the same time that the funds of the public corporation
are deposited and the certificate or certificates of deposit are
issued, the financial institution receives an amount of deposits
from customers of other insured depository institutions equal to or
greater than the amount of the funds initially invested by the
public corporation through the financial institution.
(6) (5)
As used in this section,
"financial institution" means
a state or nationally chartered bank or a state or federally
chartered savings and loan association, savings bank, or credit
union whose deposits are insured by an agency of the United States
government and that maintains a principal office or branch office
located in this state under the laws of this state or the United
States.
(7) (6)
As used in this act:
(a) "Governing body" means the legislative body, council,
commission, board, or other body having legislative powers of a
public corporation.
(b) "Funds" means the money of a public corporation, the
investment of which is not otherwise subject to a public act of
this state or bond authorizing ordinance or resolution of a public
corporation that permits investment in fewer than all of the
investment options listed in subsection (1) or imposes 1 or more
conditions upon an investment in an option listed in subsection
(1).
(c) "Investment officer" means the treasurer or other person
designated by statute or charter of a public corporation to act as
the investment officer. In the absence of a statutory or charter
designation, the governing body of a public corporation shall
designate the investment officer.
(d) "Public corporation" means a county, city, village,
township, port district, drainage district, special assessment
district, or metropolitan district of this state, or a board,
commission, or another authority or agency created by or under an
act of the legislature of this state.