As Reported by House Financial Institutions Committee 1
123rd General Assembly 4
Regular Session Sub. S. B. No. 82 5
1999-2000 6
SENATORS JOHNSON-WACHTMANN-MUMPER-DRAKE-WHITE-KEARNS- 8
BLESSING-HERINGTON-SPADA-LATELL-DiDONATO-HOTTINGER-FINAN- 9
RAY-WATTS-HORN-GARDNER-ARMBRUSTER-NEIN- 11
REPRESENTATIVES D. MILLER-SCHULER-EVANS-OLMAN-VERICH-MAIER-SULZER
_________________________________________________________________ 12
A B I L L
To amend sections 135.14, 135.143, 135.22, 135.35, 14
and 321.46 of the Revised Code to permit 16
subdivision or county treasurers to invest in
certain no-load money market mutual funds in the 17
absence of a written investment policy on behalf
of the subdivision or county or in the cases of 18
exemptions from or noncompliance with specified 19
initial or continuing education requirements by
the subdivision or county treasurer; and to 20
modify the authority of the Treasurer of State to
invest state interim funds in securities lending 21
agreements.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO: 22
Section 1. That sections 135.14, 135.143, 135.22, 135.35, 24
and 321.46 of the Revised Code be amended to read as follows: 26
Sec. 135.14. (A) As used in this section, "treasurer" 35
does not include the treasurer of state, and "governing board" 36
does not include the state board of deposit. 37
(B) The treasurer or governing board may invest or deposit 39
any part or all of the interim moneys. The following 41
classifications of obligations shall be eligible for such 42
investment or deposit:
(1) United States treasury bills, notes, bonds, or any 44
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other obligation or security issued by the United States treasury 45
or any other obligation guaranteed as to principal and interest 46
by the United States.
Nothing in the classification of eligible obligations set 48
forth in division (B)(1) of this section or in the 49
classifications of eligible obligations set forth in divisions 50
(B)(2) to (6) of this section shall be construed to authorize any 51
investment in stripped principal or interest obligations of such 52
eligible obligations.
(2) Bonds, notes, debentures, or any other obligations or 54
securities issued by any federal government agency or 55
instrumentality, including but not limited to, the federal 56
national mortgage association, federal home loan bank, federal 57
farm credit bank, federal home loan mortgage corporation, 58
government national mortgage association, and student loan
marketing association. All federal agency securities shall be 59
direct issuances of federal government agencies or 60
instrumentalities.
(3) Interim deposits in the eligible institutions applying 62
for interim moneys as provided in section 135.08 of the Revised 63
Code. The award of interim deposits shall be made in accordance 64
with section 135.09 of the Revised Code and the treasurer or the 65
governing board shall determine the periods for which such 66
interim deposits are to be made and shall award such interim 67
deposits for such periods, provided that any eligible institution 68
receiving an interim deposit award may, upon notification that 69
the award has been made, decline to accept the interim deposit in 70
which event the award shall be made as though such THE 71
institution had not applied for such interim deposit. 72
(4) Bonds and other obligations of this state; 74
(5) No-load money market mutual funds consisting 76
exclusively of obligations described in division (B)(1) or (2) of 78
this section and repurchase agreements secured by such
obligations, provided that investments in securities described in 80
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this division are made only through eligible institutions
mentioned in section 135.03 of the Revised Code; 81
(6) The Ohio subdivision's fund as provided in section 83
135.45 of the Revised Code. 84
(C) Nothing in the classifications of eligible obligations 86
set forth in divisions (B)(1) to (6) of this section shall be 87
construed to authorize any investment in a derivative, and no 88
treasurer or governing board shall invest in a derivative. For 89
purposes of this division, "derivative" means a financial 90
instrument or contract or obligation whose value or return is 91
based upon or linked to another asset or index, or both, separate 92
from the financial instrument, contract, or obligation itself.
Any security, obligation, trust account, or other instrument that 93
is created from an issue of the United States treasury or is 94
created from an obligation of a federal agency or instrumentality 95
or is created from both is considered a derivative instrument. 96
An eligible investment described in this section with a variable 97
interest rate payment, based upon a single interest payment or 98
single index comprised of other eligible investments provided for 99
in division (B)(1) or (2) of this section, is not a derivative, 100
provided that such variable rate investment has a maximum
maturity of two years. 101
(D) Any investment made pursuant to this section must 103
mature within five years from the date of settlement, unless the 104
investment is matched to a specific obligation or debt of the 105
subdivision. 106
(E) The treasurer or governing board may also enter into a 108
written repurchase agreement with any eligible institution 109
mentioned in section 135.03 of the Revised Code or any eligible 110
dealer pursuant to division (M) of this section, under the terms 111
of which agreement the treasurer or governing board purchases, 112
and such institution or dealer agrees unconditionally to 113
repurchase any of the securities listed in division (B)(1) or (2) 114
of this section. The market value of securities subject to an 115
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overnight repurchase agreement must exceed the principal value of 116
the overnight repurchase agreement by at least two per cent. A 117
term repurchase agreement shall not exceed thirty days and the 118
market value of securities subject to a term repurchase agreement 119
must exceed the principal value of the term repurchase agreement 120
by at least two per cent and be marked to market daily. All 121
securities purchased pursuant to this division shall be delivered 122
into the custody of the treasurer or governing board or an agent 123
designated by the treasurer or governing board. A repurchase 124
agreement with an eligible securities dealer shall be transacted 125
on a delivery versus payment basis. The agreement shall contain 126
the requirement that for each transaction pursuant to the 127
agreement the participating institution or dealer shall provide 128
all of the following information:
(1) The par value of the securities; 130
(2) The type, rate, and maturity date of the securities; 132
(3) A numerical identifier generally accepted in the 134
securities industry that designates the securities. 135
No treasurer or governing board shall enter into a written 137
repurchase agreement under the terms of which the treasurer or 138
governing board agrees to sell securities owned by the 139
subdivision to a purchaser and agrees with that purchaser to 140
unconditionally repurchase those securities.
(F) No treasurer or governing board shall make an 142
investment under this section, unless the treasurer or governing 143
board, at the time of making the investment, reasonably expects 144
that the investment can be held until its maturity. 145
(G) No treasurer or governing board shall pay interim 147
moneys into a fund established by another subdivision, treasurer, 148
governing board, or investing authority, if that fund was 149
established for the purpose of investing the public moneys of 150
other subdivisions. This division does not apply to the payment 151
of public moneys into either of the following:
(1) The Ohio subdivision's fund pursuant to division 154
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(B)(6) of this section;
(2) A fund created solely for the purpose of acquiring, 156
constructing, owning, leasing, or operating municipal utilities 157
pursuant to the authority provided under section 715.02 of the 158
Revised Code or Section 4 of Article XVIII, Ohio Constitution. 159
For purposes of division (G) of this section, "subdivision" 161
includes a county. 162
(H) The use of leverage, in which the treasurer or 164
governing board uses its current investment assets as collateral 165
for the purpose of purchasing other assets, is prohibited. The 166
issuance of taxable notes for the purpose of arbitrage is 167
prohibited. Contracting to sell securities that have not yet 168
been acquired by the treasurer or governing board, for the
purpose of purchasing such securities on the speculation that 169
bond prices will decline, is prohibited. 170
(I) Whenever, during a period of designation, the 172
treasurer classifies public moneys as interim moneys, the 173
treasurer shall notify the governing board of such action. Such 174
THE notification shall be given within thirty days after such 175
classification and in the event the governing board does not 176
concur in such classification or in the investments or deposits 177
made under this section, the governing board may order the 178
treasurer to sell or liquidate any of such investments or 179
deposits, and any such order shall specifically describe the 180
investments or deposits and fix the date upon which they are to 181
be sold or liquidated. Investments or deposits so ordered to be 182
sold or liquidated shall be sold or liquidated for cash by the 183
treasurer on the date fixed in such order at the then current 184
market price. Neither the treasurer nor the members of the board 185
shall be held accountable for any loss occasioned by sales or 186
liquidations of investments or deposits at prices lower than 187
their cost. Any loss or expense incurred in making such sales or 188
liquidations is payable as other expenses of the treasurer's 189
office.
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(J) If any investments or deposits purchased under the 191
authority of this section are issuable to a designated payee or 192
to the order of a designated payee, the name of the treasurer and 193
the title of the treasurer's office shall be so designated. If 194
any such securities are registrable either as to principal or 195
interest, or both, then such securities shall be registered in 196
the name of the treasurer as such. 197
(K) The treasurer is responsible for the safekeeping of 199
all documents evidencing a deposit or investment acquired by the 200
treasurer under this section. Any securities may be deposited 201
for safekeeping with a qualified trustee as provided in section 202
135.18 of the Revised Code, except the delivery of securities 203
acquired under any repurchase agreement under this section shall 204
be made to a qualified trustee, provided, however, that the 205
qualified trustee shall be required to report to the treasurer, 206
governing board, auditor of state, or an authorized outside 207
auditor at any time upon request as to the identity, market 208
value, and location of the document evidencing each security, and 209
that if the participating institution is a designated depository 210
of the subdivision for the current period of designation, the 211
securities that are the subject of the repurchase agreement may 212
be delivered to the treasurer or held in trust by the 213
participating institution on behalf of the subdivision. Interest 214
earned on any investments or deposits authorized by this section 215
shall be collected by the treasurer and credited by the treasurer 217
to the proper fund of the subdivision.
Upon the expiration of the term of office of a treasurer or 219
in the event of a vacancy in the office of treasurer by reason of 220
death, resignation, removal from office, or otherwise, the 221
treasurer or the treasurer's legal representative shall transfer 222
and deliver to the treasurer's successor all documents evidencing 223
a deposit or investment held by the treasurer. For the 224
investments and deposits so transferred and delivered, such 225
treasurer shall be credited with and the treasurer's successor 226
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shall be charged with the amount of money held in such
investments and deposits. 227
(L) Whenever investments or deposits acquired under this 229
section mature and become due and payable, the treasurer shall 230
present them for payment according to their tenor, and shall 231
collect the moneys payable thereon. The moneys so collected 232
shall be treated as public moneys subject to sections 135.01 to 233
135.21 of the Revised Code. 234
(M)(1) All investments, except for investments in 236
securities described in divisions (B)(5) and (6) of this section 237
and for investments by a municipal corporation in the issues of 238
such municipal corporation, shall be made only through a member 239
of the national association of securities dealers, through a 240
bank, savings bank, or savings and loan association regulated by 241
the superintendent of financial institutions, or through an 242
institution regulated by the comptroller of the currency, federal 243
deposit insurance corporation, or board of governors of the 244
federal reserve system.
(2) Payment for investments shall be made only upon the 246
delivery of securities representing such investments to the 247
treasurer, governing board, or qualified trustee. If the 248
securities transferred are not represented by a certificate, 249
payment shall be made only upon receipt of confirmation of 250
transfer from the custodian by the treasurer, governing board, or 251
qualified trustee. 252
(N)(1) Except as otherwise provided in divisions (N)(2) 254
and (3) of this section, no treasurer or governing board shall 255
make an investment or deposit under this section, unless there is 257
on file with the auditor of state a written investment policy 258
approved by the treasurer or governing board. The policy shall 259
require that all entities conducting investment business with the 260
treasurer or governing board shall sign the investment policy of 261
that subdivision. All brokers, dealers, and financial 262
institutions, described in division (M)(1) of this section, 263
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initiating transactions with the treasurer or governing board by 264
giving advice or making investment recommendations shall sign the 265
treasurer's or governing board's investment policy thereby
acknowledging their agreement to abide by the policy's contents. 266
All brokers, dealers, and financial institutions, described in 267
division (M)(1) of this section, executing transactions initiated 268
by the treasurer or governing board, having read the policy's 269
contents, shall sign the investment policy thereby acknowledging 270
their comprehension and receipt.
(2) If a written investment policy described in division 272
(N)(1) of this section is not filed on behalf of the subdivision 273
with the auditor of state, the treasurer or governing board of 274
that subdivision shall invest the subdivision's interim moneys 275
only in interim deposits pursuant to division (B)(3) of this 276
section, NO-LOAD MONEY MARKET MUTUAL FUNDS PURSUANT TO DIVISION 277
(B)(5) OF THIS SECTION, or the Ohio subdivision's fund pursuant 278
to division (B)(6) of this section.
(3) Divisions (N)(1) and (2) of this section do not apply 280
to a treasurer or governing board of a subdivision whose average 281
annual portfolio of investments held pursuant to this section is 282
one hundred thousand dollars or less, provided that the treasurer 283
or governing board certifies, on a form prescribed by the auditor 284
of state, that the treasurer or governing board will comply and 285
is in compliance with the provisions of sections 135.01 to 135.21 287
of the Revised Code.
(O) A treasurer or governing board may enter into a 290
written investment or deposit agreement that includes a provision 291
under which the parties agree to submit to nonbinding arbitration 292
to settle any controversy that may arise out of the agreement, 293
including any controversy pertaining to losses of public moneys 294
resulting from investment or deposit. The arbitration provision 295
shall be set forth entirely in the agreement, and the agreement 296
shall include a conspicuous notice to the parties that any party 298
to the arbitration may apply to the court of common pleas of the 299
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county in which the arbitration was held for an order to vacate,
modify, or correct the award. Any such party may also apply to 300
the court for an order to change venue to a court of common pleas 301
located more than one hundred miles from the county in which the 302
treasurer or governing board is located. 303
For purposes of this division, "investment or deposit 305
agreement" means any agreement between a treasurer or governing 306
board and a person, under which agreement the person agrees to 307
invest, deposit, or otherwise manage a subdivision's interim 308
moneys on behalf of the treasurer or governing board, or agrees 309
to provide investment advice to the treasurer or governing board.
(P) An investment made by the treasurer or governing board 311
pursuant to this section prior to the effective date of this 312
amendment SEPTEMBER 27, 1996, that was a legal investment under 314
the law as it existed before the effective date of this amendment 316
SEPTEMBER 27, 1996, may be held until maturity, or if the 317
investment does not have a maturity date, it may be held until 318
five years from the effective date of this amendment SEPTEMBER 320
27, 1996, regardless of whether the investment would qualify as a 321
legal investment under the terms of this section as amended. 322
Sec. 135.143. (A) The treasurer of state may invest or 331
execute transactions for any part or all of the interim funds of 332
the state in the following classifications of obligations: 333
(1) United States treasury bills, notes, bonds, or any 335
other obligations or securities issued by the United States 336
treasury or any other obligation guaranteed as to principal and 337
interest by the United States; 338
(2) Bonds, notes, debentures, or any other obligations or 340
securities issued by any federal government agency or 341
instrumentality; 342
(3) Bonds and other obligations of the sinking fund of the 344
state of Ohio and the Ohio public facilities commission; 345
(4)(a) Written repurchase agreements with any eligible 347
Ohio financial institution that is a member of the federal 348
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reserve system or federal home loan bank or any recognized United 349
States government securities dealer, under the terms of which 350
agreement the treasurer of state purchases and the eligible 351
financial institution or dealer agrees unconditionally to 352
repurchase any of the securities that are listed in division 353
(A)(1) or (2) of this section and that will mature or are 354
redeemable within ten years from the date of purchase. The 355
market value of securities subject to these transactions must 356
exceed the principal value of the repurchase agreement by an 357
amount specified by the treasurer of state, and the securities 358
must be delivered into the custody of the treasurer of state or 359
the qualified trustee or agent designated by the treasurer of 360
state. The agreement shall contain the requirement that for each 361
transaction pursuant to the agreement, the participating 362
institution or dealer shall provide all of the following 363
information: 364
(i) The par value of the securities; 366
(ii) The type, rate, and maturity date of the securities; 368
(iii) A numerical identifier generally accepted in the 370
securities industry that designates the securities. 371
(b) The treasurer of state also may sell any securities, 373
listed in division (A)(1) or (2) of this section, regardless of 374
maturity or time of redemption of the securities, under the same 375
terms and conditions for repurchase, provided that the securities 376
have been fully paid for and are owned by the treasurer of state 377
at the time of the sale. 378
(5) Securities lending agreements with any eligible 380
financial institution that is a member of the federal reserve 381
system or federal home loan bank or any recognized United States 382
government securities dealer, under the terms of which agreement 383
the treasurer of state lends securities and the eligible 384
financial institution or dealer agrees to simultaneously exchange 385
similar securities or cash, equal value for equal value;. 386
SECURITIES AND CASH RECEIVED AS COLLATERAL FOR A SECURITIES 388
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LENDING AGREEMENT ARE NOT INTERIM FUNDS OF THE STATE. THE 389
INVESTMENT OF CASH COLLATERAL RECEIVED PURSUANT TO A SECURITIES 390
LENDING AGREEMENT MAY BE INVESTED ONLY IN SUCH INSTRUMENTS 391
SPECIFIED BY THE TREASURER OF STATE IN ACCORDANCE WITH A WRITTEN 392
INVESTMENT POLICY.
(6) Various forms of commercial paper issued by any 394
corporation that is incorporated under the laws of the United 395
States or a state, which such notes are rated in the two highest 396
categories by two nationally recognized rating agencies, provided 397
that the total amount invested in commercial paper at any time 398
shall not exceed five per cent of the state's total average 399
portfolio, as determined and calculated by the treasurer of 400
state; 401
(7) Bankers acceptances, maturing in two hundred seventy 403
days or less, which are eligible for purchase by the federal 404
reserve system, provided that the total amount invested in 405
bankers acceptances at any time shall not exceed ten per cent of 406
the state's total average portfolio, as determined and calculated 407
by the treasurer of state; 408
(8) Certificates of deposit in eligible institutions 410
applying for interim moneys as provided in section 135.08 of the 411
Revised Code, including linked deposits as provided in sections 412
135.61 to 135.67 of the Revised Code, agricultural linked 413
deposits as provided in sections 135.71 to 135.76 of the Revised 414
Code, and depressed economic area linked deposits as provided in 415
sections 135.81 to 135.88 of the Revised Code; 416
(9) The state treasurer's investment pool authorized under 418
section 135.45 of the Revised Code; 419
(10) Debt interests rated investment grade by a nationally 421
recognized rating agency and issued by corporations that are 422
incorporated under the laws of the United States or a state, or 423
issued by foreign nations diplomatically recognized by the United 424
States government, or any instrument based on, derived from, or 425
related to such interests. All interest and principal shall be 426
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denominated and payable in United States funds. The investments 427
made under division (A)(10) of this section shall not exceed in 428
the aggregate five per cent of the state's total average 429
portfolio, as determined and calculated by the treasurer of 430
state. The investments made under division (A)(10) of this 431
section in debt interests issued by foreign nations shall not 432
exceed in the aggregate one per cent of the state's total average 433
portfolio. The investments made under division (A)(10) of this 434
section in the debt interests of a single issuer shall not exceed 435
in the aggregate one-half of one per cent of the state's total 436
average portfolio. 437
The treasurer of state shall invest under division (A)(10) 439
of this section in a debt interest issued by a foreign nation 440
only if the debt interest is backed by the full faith and credit 441
of that foreign nation. For purposes of division (A)(10) of this 442
section, a debt interest is rated investment grade by a 443
nationally recognized rating agency if either the debt interest 444
itself or the issuer of the debt interest is rated, or is 445
implicitly rated, investment grade by a nationally recognized 446
rating agency. 447
(11) No-load money market mutual funds consisting 449
exclusively of obligations described in division (A)(1) or (2) of 450
this section and repurchase agreements secured by such 451
obligations. 452
(12) Obligations of a board of education issued under 454
authority of section 133.10 or 133.301 of the Revised Code. 455
(B) Whenever, during a period of designation, the 457
treasurer of state classifies public moneys as interim moneys, 458
the treasurer of state shall notify the state board of deposit of 459
such action. Such notification shall be given within thirty days 460
after such classification and in the event the state board of 461
deposit does not concur in such classification or in the 462
investments or deposits made under this section, the board may 463
order the treasurer of state to sell or liquidate any of such 464
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investments or deposits, and any such order shall specifically 465
describe the investments or deposits and fix the date upon which 466
they are to be sold or liquidated. Investments or deposits so 467
ordered to be sold or liquidated shall be sold or liquidated for 468
cash by the treasurer of state on the date fixed in such order at 469
the then current market price. Neither the treasurer of state 470
nor the members of the state board of deposit shall be held 471
accountable for any loss occasioned by sales or liquidations of 472
investments or deposits at prices lower than their cost. Any 473
loss or expense incurred in making such sales or liquidations is 474
payable as other expenses of the treasurer's office. 475
(C) If any securities or obligations invested in by the 477
treasurer of state pursuant to this section are registrable 478
either as to principal or interest, or both, such securities or 479
obligations shall be registered in the name of the treasurer of 480
state. 481
(D) The treasurer of state is responsible for the 483
safekeeping of all securities or obligations under this section. 484
Any such securities or obligations may be deposited for 485
safekeeping as provided in section 113.05 of the Revised Code. 486
(E) Interest earned on any investments or deposits 488
authorized by this section shall be collected by the treasurer of 489
state and credited by the treasurer of state to the proper fund 490
of the state. 491
(F) Whenever investments or deposits acquired under this 493
section mature and become due and payable, the treasurer of state 494
shall present them for payment according to their tenor, and 495
shall collect the moneys payable thereon. The moneys so 496
collected shall be treated as public moneys subject to sections 497
135.01 to 135.21 of the Revised Code. 498
(G) The treasurer of state and any board of education 500
issuing obligations referred to in division (A)(12) of this 501
section may enter into an agreement providing for: 502
(1) The purchase of those obligations by the treasurer of 504
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state on terms and subject to conditions set forth in the 505
agreement;
(2) The payment by the board of education to the treasurer 507
of state of a reasonable fee as consideration for the agreement 509
of the treasurer of state to purchase those obligations; 510
provided, however, that the treasurer of state shall not be
authorized to enter into any such agreement with the board of 511
education of a school district that has an outstanding obligation 512
with respect to a loan received under authority of section 513
3313.483 of the Revised Code.
(H) For purposes of division (G) of this section, a fee 516
shall not be considered reasonable unless it is set to recover 517
only the direct costs and a reasonable estimate of the indirect 518
costs associated with the purchasing of obligations of a school 519
board under division (G) of this section and any reselling of the 520
obligations or any interest in the obligations, including 521
interests in a fund comprised of the obligations. No money from 522
the general revenue fund shall be used to subsidize the purchase 523
or resale of these obligations. 524
(I) All money collected by the treasurer of state from the 527
fee imposed by division (G) of this section shall be deposited to 529
the credit of the state school board obligations fund, which is 530
hereby created in the state treasury. Money credited to the fund 531
shall be used solely to pay the treasurer of state's direct and 532
indirect costs associated with purchasing and reselling 533
obligations of a board of education under division (G) of this 534
section.
Sec. 135.22. (A) For purposes of this section: 543
(1) "Treasurer" has the same meaning as in section 135.01 545
of the Revised Code, but does not include the treasurer of state. 546
"Treasurer" includes any person whose duties include making 547
investment decisions with respect to the investment or deposit of 548
interim moneys.
(2) "Subdivision" has the same meaning as in section 550
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135.01 of the Revised Code. 551
(B) To enhance the background and working knowledge of 553
treasurers in investments, cash management, and ethics, the 554
treasurer of state shall provide annual continuing education 555
programs for treasurers. A treasurer annually shall complete the 557
continuing education programs described in this section, unless 558
the treasurer annually provides a notice of exemption described 559
in division (E) of this section.
(C) The treasurer of state shall determine the manner, 561
content, and length of the continuing education programs after 562
consultation with appropriate statewide organizations of local 563
government officials.
(D) Upon successful completion of a continuing education 565
program required by this section, the treasurer of state shall 566
issue a certificate indicating that the treasurer has 567
successfully completed the continuing education program
prescribed by the treasurer of state. The treasurer of state 568
shall forward to the auditor of state any certificates issued 569
pursuant to this division by the treasurer of state. The auditor 570
of state shall maintain in the auditor's records any certificates 571
forwarded by the treasurer of state pursuant to this division. 572
As part of the auditor of state's audit of the subdivision
conducted in accordance with section 117.11 of the Revised Code, 573
the auditor of state shall report whether the treasurer is in 574
compliance with this section of the Revised Code. 575
(E) Division (B) of this section does not apply to any 578
treasurer who annually provides a notice of exemption to the 579
auditor of state. The notice shall be certified by the treasurer 580
of state and shall provide that the treasurer is not subject to
the continuing education requirements set forth in division (B) 581
of this section, because the treasurer invests or deposits public 582
moneys in the following investments only: 583
(1) Interim deposits pursuant to division (B)(3) of 585
section 135.14 of the Revised Code; 586
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(2) NO-LOAD MONEY MARKET MUTUAL FUNDS PURSUANT TO DIVISION 588
(B)(5) OF SECTION 135.14 OF THE REVISED CODE; 589
(3) The Ohio subdivision's fund pursuant to division 591
(B)(6) of section 135.14 of the Revised Code. 593
(F) In carrying out the duties required by this section, 595
the treasurer of state may charge the subdivision served by the 596
treasurer a registration fee that will meet actual and necessary 597
expenses in connection with the training of the treasurer, 598
including instruction fees, site acquisition costs, and the cost 599
of course materials. Any necessary personal expenses of a
treasurer incurred as a result of attending the continuing 600
education courses shall be borne by the subdivision represented 601
by the treasurer.
(G) The treasurer of state may allow any other interested 603
person to attend any of the continuing education programs that 604
are held pursuant to this section, provided that before attending 605
any such continuing education program, the interested person has 606
paid to the treasurer of state the full registration fee set for 607
the continuing education program.
(H) All funds collected pursuant to this section shall be 609
paid into the county treasurer education fund created pursuant to 610
section 321.46 of the Revised Code, and the actual and necessary 612
expenses of the treasurer of state in conducting the continuing 613
education programs required by this section shall be paid from 614
this fund.
(I) The treasurer of state may adopt reasonable rules not 616
inconsistent with this section for the implementation of this 617
section.
Sec. 135.35. (A) The investing authority shall deposit or 626
invest any part or all of the county's inactive moneys and shall 627
invest all of the money in the county library and local 628
government support fund when required by section 135.352 of the 629
Revised Code. The following classifications of securities and 630
obligations are eligible for such deposit or investment: 631
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(1) United States treasury bills, notes, bonds, or any 633
other obligation or security issued by the United States treasury 634
or any other obligation guaranteed as to principal or interest by 635
the United States.
Nothing in the classification of eligible securities and 637
obligations set forth in division (A)(1) of this section or in 638
the classifications of eligible securities and obligations set 639
forth in divisions (A)(2) to (9) of this section shall be 640
construed to authorize any investment in stripped principal or 641
interest obligations of such eligible securities and obligations.
(2) Bonds, notes, debentures, or any other obligations or 643
securities issued by any federal government agency or 644
instrumentality, including but not limited to, the federal 645
national mortgage association, federal home loan bank, federal 646
farm credit bank, federal home loan mortgage corporation, 647
government national mortgage association, and student loan 648
marketing association. All federal agency securities shall be 649
direct issuances of federal government agencies or
instrumentalities. 650
(3) Time certificates of deposit or savings or deposit 652
accounts, including, but not limited to, passbook accounts, in 653
any eligible institution mentioned in section 135.32 of the 654
Revised Code; 655
(4) Bonds and other obligations of this state or the 657
political subdivisions of this state, provided that such 658
political subdivisions are located wholly or partly within the 659
same county as the investing authority;
(5) No-load money market mutual funds consisting 661
exclusively of obligations described in division (A)(1) or (2) of 662
this section and repurchase agreements secured by such 663
obligations, provided that investments in securities described in 665
this division are made only through eligible institutions
mentioned in section 135.32 of the Revised Code; 666
(6) The Ohio subdivision's fund as provided in section 668
18
135.45 of the Revised Code.; 669
(7) Securities lending agreements with any eligible 671
institution mentioned in section 135.32 of the Revised Code that 672
is a member of the federal reserve system or federal home loan 673
bank, under the terms of which agreements the investing authority 675
lends securities and the eligible institution agrees to 676
simultaneously exchange either securities described in division
(A)(1) or (2) of this section or cash or both securities and 677
cash, equal value for equal value; 678
(8) Commercial paper issued by any corporation 680
incorporated under the laws of the United States or a state if 681
both of the following conditions apply: 682
(a) Two nationally recognized rating agencies rank the 684
commercial paper in either of their two highest categories; 685
(b) The total amount invested in commercial paper at any 687
time does not exceed five per cent of the county's total average 689
portfolio, as determined and calculated by the investing 690
authority.
(9) Bankers acceptances, if the following conditions are 692
met:
(a) The acceptances mature in two hundred seventy days or 694
fewer from the date of settlement; 695
(b) The acceptances are eligible for purchase by the 697
federal reserve system; 698
(c) The total amount invested in bankers acceptances at 700
any time does not exceed ten per cent of the county's total 701
average portfolio, as determined and calculated by the investing 702
authority.
(B) Nothing in the classifications of eligible obligations 704
and securities set forth in divisions (A)(1) to (9) of this 705
section shall be construed to authorize investment in a 706
derivative, and no investing authority shall invest any county 707
inactive moneys or any moneys in a county library and local 708
government support fund in a derivative. For purposes of this 709
19
division, "derivative" means a financial instrument or contract 710
or obligation whose value or return is based upon or linked to
another asset or index, or both, separate from the financial 711
instrument, contract, or obligation itself. Any security, 712
obligation, trust account, or other instrument that is created 713
from an issue of the United States treasury or is created from an 714
obligation of a federal agency or instrumentality or is created 715
from both is considered a derivative instrument. An eligible 716
investment described in this section with a variable interest 717
rate payment, based upon a single interest payment or single
index comprised of other eligible investments provided for in 718
division (A)(1) or (2) of this section, is not a derivative, 719
provided that such variable rate investment has a maximum 720
maturity of two years.
(C) Any investment made pursuant to this section must 722
mature within five years from the date of settlement, unless the 723
investment is matched to a specific obligation or debt of the 724
county, and the investment is specifically approved by the 725
investment advisory committee. 726
(D) The investing authority may also enter into a written 728
repurchase agreement with any eligible institution mentioned in 730
section 135.32 of the Revised Code or any eligible securities
dealer pursuant to division (J) of this section, under the terms 731
of which agreement the investing authority purchases and the 732
eligible institution or dealer agrees unconditionally to 734
repurchase any of the securities listed in division (A)(1) or (2) 735
of this section. The market value of securities subject to an 736
overnight repurchase agreement must exceed the principal value of 737
the overnight repurchase agreement by at least two per cent. A 738
term repurchase agreement must exceed the principal value of the
overnight repurchase agreement, by at least two per cent. A term 739
repurchase agreement shall not exceed thirty days, and the market 740
value of securities subject to a term repurchase agreement must 741
exceed the principal value of the term repurchase agreement by at 742
20
least two per cent and be marked to market daily. All securities 743
purchased pursuant to this division shall be delivered into the 744
custody of the investing authority or the qualified custodian of 745
the investing authority or an agent designated by the investing 746
authority. A repurchase agreement with an eligible securities 747
dealer shall be transacted on a delivery versus payment basis. 748
The agreement shall contain the requirement that for each 749
transaction pursuant to the agreement the participating 750
institution shall provide all of the following information: 751
(1) The par value of the securities; 753
(2) The type, rate, and maturity date of the securities; 755
(3) A numerical identifier generally accepted in the 757
securities industry that designates the securities. 758
No investing authority shall enter into a written 760
repurchase agreement under the terms of which the investing 761
authority agrees to sell securities owned by the county to a 763
purchaser and agrees with that purchaser to unconditionally
repurchase those securities. 764
(E) No investing authority shall make an investment under 767
this section, unless the investing authority, at the time of
making the investment, reasonably expects that the investment can 768
be held until its maturity. The investing authority's written 769
investment policy shall specify the conditions under which an 770
investment may be redeemed or sold prior to maturity. 771
(F) No investing authority shall pay a county's inactive 773
moneys or moneys of a county library and local government support 774
fund into a fund established by another subdivision, treasurer, 775
governing board, or investing authority, if that fund was 776
established by the subdivision, treasurer, governing board, or 777
investing authority for the purpose of investing or depositing 778
the public moneys of other subdivisions. This division does not
apply to the payment of public moneys into either of the 779
following:
(1) The Ohio subdivision's fund pursuant to division 781
21
(A)(6) of this section;
(2) A fund created solely for the purpose of acquiring, 783
constructing, owning, leasing, or operating municipal utilities 784
pursuant to the authority provided under section 715.02 of the 785
Revised Code or Section 4 of Article XVIII, Ohio Constitution. 786
For purposes of division (F) of this section, "subdivision" 788
includes a county. 789
(G) The use of leverage, in which the county uses its 791
current investment assets as collateral for the purpose of 792
purchasing other assets, is prohibited. The issuance of taxable 793
notes for the purpose of arbitrage is prohibited. Contracting to 794
sell securities not owned by the county, for the purpose of 795
purchasing such securities on the speculation that bond prices
will decline, is prohibited. 796
(H) Any securities, certificates of deposit, deposit 798
accounts, or any other documents evidencing deposits or 799
investments made under authority of this section shall be issued 800
in the name of the county with the county treasurer or investing 801
authority as the designated payee. If any such deposits or 802
investments are registrable either as to principal or interest, 803
or both, they shall be registered in the name of the treasurer. 804
(I) The investing authority shall be responsible for the 806
safekeeping of all documents evidencing a deposit or investment 807
acquired under this section including, but not limited to, 808
safekeeping receipts evidencing securities deposited with a 809
qualified trustee, as provided in section 135.37 of the Revised 810
Code, and documents confirming the purchase of securities under 811
any repurchase agreement under this section shall be deposited 812
with a qualified trustee, provided, however, that the qualified 813
trustee shall be required to report to the investing authority, 814
auditor of state, or an authorized outside auditor at any time 815
upon request as to the identity, market value, and location of 816
the document evidencing each security, and that if the 817
participating institution is a designated depository of the 818
22
county for the current period of designation, the securities that 819
are the subject of the repurchase agreement may be delivered to 820
the treasurer or held in trust by the participating institution 821
on behalf of the investing authority. 822
Upon the expiration of the term of office of an investing 824
authority or in the event of a vacancy in the office for any 825
reason, the officer or the officer's legal representative shall 827
transfer and deliver to the officer's successor all documents
mentioned in this division for which the officer has been 828
responsible for safekeeping. For all such documents transferred 830
and delivered, such officer shall be credited with, and the 831
officer's successor shall be charged with, the amount of moneys 832
so evidenced by such documents.
(J)(1) All investments, except for investments in 834
securities described in divisions (A)(5) and (6) of this section, 836
shall be made only through a member of the national association 837
of securities dealers, through a bank, savings bank, or savings 838
and loan association regulated by the superintendent of financial 840
institutions, or through an institution regulated by the 841
comptroller of the currency, federal deposit insurance 842
corporation, or board of governors of the federal reserve system. 843
(2) Payment for investments shall be made only upon the 845
delivery of securities representing such investments to the 847
treasurer, investing authority, or qualified trustee. If the 848
securities transferred are not represented by a certificate, 849
payment shall be made only upon receipt of confirmation of 850
transfer from the custodian by the treasurer, governing board, or 851
qualified trustee.
(K)(1) Except as otherwise provided in division (K)(2) of 853
this section, no investing authority shall make an investment or 854
deposit under this section, unless there is on file with the 855
auditor of state a written investment policy approved by the 856
investing authority. The policy shall require that all entities 857
conducting investment business with the investment authority 858
23
shall sign the investment policy of that investment authority.
All brokers, dealers, and financial institutions, described in 859
division (J)(1) of this section, initiating transactions with the 861
investment authority by giving advice or making investment 862
recommendations shall sign the investment authority's investment 863
policy thereby acknowledging their agreement to abide by the
policy's contents. All brokers, dealers, and financial 864
institutions, described in division (J)(1) of this section, 865
executing transactions initiated by the investment authority, 866
having read the policy's contents, shall sign the investment 867
policy thereby acknowledging their comprehension and receipt.
(2) If a written investment policy described in division 869
(K)(1) of this section is not filed on behalf of the county with 870
the auditor of state, the investing authority of that county 871
shall invest the county's inactive moneys and moneys of the 872
county library and local government support fund only in time 873
certificates of deposits or savings or deposit accounts pursuant 874
to division (A)(3) of this section, NO-LOAD MONEY MARKET MUTUAL 875
FUNDS PURSUANT TO DIVISION (A)(5) OF THIS SECTION, or the Ohio 876
subdivision's fund pursuant to division (A)(6) of this section.
(L)(1) The investing authority shall establish and 878
maintain an inventory of all obligations and securities acquired 879
by the investing authority pursuant to this section. The 880
inventory shall include a description of each obligation or 881
security, including type, cost, par value, maturity date, 882
settlement date, and any coupon rate.
(2) The investing authority shall also keep a complete 884
record of all purchases and sales of the obligations and 885
securities made pursuant to this section. 886
(3) The investing authority shall maintain a monthly 888
portfolio report and issue a quarterly investment report 889
describing such investments to the county investment advisory 890
committee, detailing the current inventory of all obligations and 891
securities, all transactions during the month that affected the 892
24
inventory, any income received from the obligations and
securities, and any investment expenses paid, and stating the 893
names of any persons effecting transactions on behalf of the 894
investing authority.
(4) The monthly portfolio report and the quarterly 896
investment report shall be public records and available for 897
inspection under section 149.43 of the Revised Code.
(5) The inventory, the monthly portfolio report, and the 899
quarterly investment report shall be on standard forms approved 900
by the auditor of state and shall be filed with the board of 901
county commissioners.
(M) An investing authority may enter into a written 904
investment or deposit agreement that includes a provision under 905
which the parties agree to submit to nonbinding arbitration to 906
settle any controversy that may arise out of the agreement, 907
including any controversy pertaining to losses of public moneys 908
resulting from investment or deposit. The arbitration provision 909
shall be set forth entirely in the agreement, and the agreement 910
shall include a conspicuous notice to the parties that any party 912
to the arbitration may apply to the court of common pleas of the 913
county in which the arbitration was held for an order to vacate,
modify, or correct the award. Any such party may also apply to 914
the court for an order to change venue to a court of common pleas 915
located more than one hundred miles from the county in which the 916
investing authority is located.
For purposes of this division, "investment or deposit 918
agreement" means any agreement between an investing authority and 919
a person, under which agreement the person agrees to invest, 920
deposit, or otherwise manage, on behalf of the investing 921
authority, a county's inactive moneys or moneys in a county
library and local government support fund, or agrees to provide 922
investment advice to the investing authority. 923
(N) An investment held in the county portfolio on the 925
effective date of this amendment SEPTEMBER 27, 1996, that was a 927
25
legal investment under the law as it existed before the effective 928
date of this amendment SEPTEMBER 27, 1996, may be held until 929
maturity, or if the investment does not have a maturity date the 930
investment may be held until five years from the effective date 931
of this amendment SEPTEMBER 27, 1996, regardless of whether the 933
investment would qualify as a legal investment under the terms of
this section as amended. 934
Sec. 321.46. (A) To enhance the background and working 944
knowledge of county treasurers in governmental accounting, 945
portfolio reporting and compliance, investments, and cash 946
management, the auditor of state and the treasurer of state shall 947
conduct education programs for persons elected for the first time 948
to the office of county treasurer and shall hold annual 949
continuing education programs for persons who continue to hold 950
the office of county treasurer. Education programs for newly 951
elected county treasurers shall be held between the first day of 952
December and the first Monday of September next following that 953
person's election to the office of county treasurer. Similar 954
initial training may also be provided to any county treasurer who 955
is appointed to fill a vacancy or who is elected at a special 956
election.
(B)(1) The auditor of state shall determine the manner and 958
content of the education programs in the subject areas of 960
governmental accounting and portfolio reporting and compliance. 961
In those areas, newly elected county treasurers shall be required 962
to take at least thirteen hours of education before taking 963
office.
(2) The treasurer of state shall determine the manner and 965
content of the education programs in the subject areas of 966
investments and cash management. In those areas, newly elected 967
county treasurers shall be required to take at least thirteen 968
hours of education before taking office. 969
(3) After completing one year in office, a county 971
treasurer shall be required to take not less than twelve hours 972
26
annually of continuing education. The treasurer of state shall 973
determine the manner and content of the education programs in the 974
subject areas of investments, cash management, the collection of 975
taxes, ethics, and any other subject area that the treasurer of
state determines is reasonably related to the duties of the 976
office of the county treasurer. The auditor of state shall 978
determine the manner and content of the education programs in the 979
subject areas of governmental accounting, portfolio reporting and 980
compliance, office management, and any other subject area that
the auditor of state determines is reasonably related to the 981
duties of the office of the county treasurer. 982
(C) The auditor of state and the treasurer of state may 985
each charge counties a registration fee that will meet actual and 986
necessary expenses of the training of county treasurers, 987
including instructor fees, site acquisition costs, and the cost 988
of course materials. The necessary personal expenses of county 989
treasurers as a result of attending the training programs shall 990
be borne by the counties the treasurers represent. 991
(D) The auditor of state and the treasurer of state may 994
allow any other interested person to attend any of the education 995
programs that are held pursuant to this section, provided that 996
before attending any such education program, the interested 997
person shall pay to either the auditor of state or the treasurer 998
of state, as appropriate, the full registration fee set for the 999
education program.
(E) A county treasurer who fails to complete the initial 1,002
or continuing education programs required by this section without 1,003
a valid health-related excuse or other special hardship shall be
restricted to investing in the Ohio subdivision's fund pursuant 1,004
to division (A)(6) of section 135.35 of the Revised Code, IN 1,006
NO-LOAD MONEY MARKET MUTUAL FUNDS PURSUANT TO DIVISION (A)(5) OF 1,007
SECTION 135.35 OF THE REVISED CODE, or in time certificate of
deposits or deposit accounts pursuant to division (A)(3) of 1,009
section 135.35 of the Revised Code. A county treasurer who has 1,010
27
failed to complete the initial or continuing education programs
and invests in other than the investments permitted by this 1,011
division shall be subject to removal from office upon complaint 1,013
and investigation by the county prosecuting attorney, a hearing,
and a resolution adopted by the board of county commissioners 1,014
approving the removal from office. 1,015
(F)(1) There is hereby created in the state treasury the 1,018
county treasurer education fund, to be used by the treasurer of 1,019
state for actual and necessary expenses of education programs 1,021
held pursuant to this section. All registration fees collected 1,022
by the treasurer of state under this section shall be paid into 1,023
that fund.
(2) All registration fees collected by the auditor of 1,025
state under this section shall be paid into the auditor of state 1,026
training program fund established under section 117.44 of the 1,027
Revised Code.
(G) The treasurer of state, with the advice and consent of 1,030
the auditor of state, may adopt reasonable rules not inconsistent 1,031
with this section for the implementation of this section. 1,032
Section 2. That existing sections 135.14, 135.143, 135.22, 1,034
135.35, and 321.46 of the Revised Code are hereby repealed. 1,036