H. B. No. 507 As Introduced

As Introduced

128th General Assembly

Regular Session

2009-2010

H. B. No. 507

Representative Slesnick

Cosponsors: Representatives Domenick, Mandel, Garland, Harris, Gardner, Grossman, Driehaus, Weddington, Yuko, Heard, Sykes

A BILL

To amend section 135.143 of the Revised Code to alter

the authority of the Treasurer of State to invest

in single-issuer debt.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:

Section 1. That section 135.143 of the Revised Code be	4
amended to read as follows:	5

Sec. 135.143. (A) The treasurer of state may invest or	6
execute transactions for any part or all of the interim funds of	7
the state in the following classifications of obligations:	8

(1) United States treasury bills, notes, bonds, or any other	9
obligations or securities issued by the United States treasury or	10
any other obligation guaranteed as to principal and interest by	11
the United States;	12

(2) Bonds, notes, debentures, or any other obligations or	13
securities issued by any federal government agency or	14
instrumentality;	15

(3) Bonds and other direct obligations of the state of Ohio	16
issued by the treasurer of state and of the Ohio public facilities	17
commission, the Ohio building authority, and the Ohio housing	18
finance agency;	19

(4)(a) Written repurchase agreements with any eligible Ohio	20
financial institution that is a member of the federal reserve	21
system or federal home loan bank or any recognized United States	22
government securities dealer, under the terms of which agreement	23
the treasurer of state purchases and the eligible financial	24
institution or dealer agrees unconditionally to repurchase any of	25
the securities that are listed in division (A)(1), (2), or (6) of	26
this section and that will mature or are redeemable within ten	27
years from the date of purchase. The market value of securities	28
subject to these transactions must exceed the principal value of	29
the repurchase agreement by an amount specified by the treasurer	30
of state, and the securities must be delivered into the custody of	31
the treasurer of state or the qualified trustee or agent	32
designated by the treasurer of state. The agreement shall contain	33
the requirement that for each transaction pursuant to the	34
agreement, the participating institution or dealer shall provide	35
all of the following information:	36

(i) The par value of the securities;

(ii) The type, rate, and maturity date of the securities;

(iii) A numerical identifier generally accepted in the	39
securities industry that designates the securities.	40

(b) The treasurer of state also may sell any securities,	41
listed in division (A)(1), (2), or (6) of this section, regardless	42
of maturity or time of redemption of the securities, under the	43
same terms and conditions for repurchase, provided that the	44
securities have been fully paid for and are owned by the treasurer	45
of state at the time of the sale.	46

(5) Securities lending agreements with any eligible financial	47
institution that is a member of the federal reserve system or	48
federal home loan bank or any recognized United States government	49
securities dealer, under the terms of which agreements the	50
treasurer of state lends securities and the eligible financial	51
institution or dealer agrees to simultaneously exchange similar	52
securities or cash, equal value for equal value.	53

Securities and cash received as collateral for a securities	54
lending agreement are not interim funds of the state. The	55
investment of cash collateral received pursuant to a securities	56
lending agreement may be invested only in such instruments	57
specified by the treasurer of state in accordance with a written	58
investment policy.	59

(6) Various forms of commercial paper issued by any	60
corporation that is incorporated under the laws of the United	61
States or a state, which notes are rated at the time of purchase	62
in the two highest categories by two nationally recognized rating	63
agencies, provided that the total amount invested under this	64
section in any commercial paper at any time shall not exceed	65
twenty-five per cent of the state's total average portfolio, as	66
determined and calculated by the treasurer of state;	67

(7) Bankers acceptances, maturing in two hundred seventy days	68
or less, which are eligible for purchase by the federal reserve	69
system, provided that the total amount invested in bankers	70
acceptances at any time shall not exceed ten per cent of the	71
state's total average portfolio, as determined and calculated by	72
the treasurer of state;	73

(8) Certificates of deposit in eligible institutions applying	74
for interim moneys as provided in section 135.08 of the Revised	75
Code, including linked deposits as provided in sections 135.61 to	76
135.67 of the Revised Code, agricultural linked deposits as	77
provided in sections 135.71 to 135.76 of the Revised Code, and	78
housing linked deposits as provided in sections 135.81 to 135.87	79
of the Revised Code;	80

(9) The state treasurer's investment pool authorized under	81
section 135.45 of the Revised Code;	82

(10) Debt interests, other than commercial paper described in	83
division (A)(6) of this section, rated at the time of purchase in	84
the three highest categories by two nationally recognized rating	85
agencies and issued by corporations that are incorporated under	86
the laws of the United States or a state, or issued by foreign	87
nations diplomatically recognized by the United States government,	88
or any instrument based on, derived from, or related to such	89
interests~~. All interest and principal shall be denominated and~~	90
~~payable in United States funds. The~~, provided that:	91

(a) The investments ~~made under division (A)(10) of this~~	92
~~section~~in debt interests shall not exceed in the aggregate	93
twenty-five per cent of the state's ~~total average~~ portfolio~~, as~~	94
~~determined and calculated by the treasurer of state. The~~;	95

(b) The investments ~~made under division (A)(10) of this~~	96
~~section~~ in debt interests issued by foreign nations shall not	97
exceed in the aggregate one per cent of the state's ~~total average~~	98
portfolio~~, as determined and calculated by the treasurer of state.~~	99
~~The~~;	100

(c) The investments ~~made under division (A)(10) of this~~	101
~~section~~ in the debt interests of a single issuer shall not exceed	102
in the aggregate one-half of one per cent of the state's ~~total~~	103
~~average~~ portfolio, ~~as determined and calculated by the treasurer~~	104
~~of state~~except that debt interests of a single issuer that is a	105
foreign nation shall not exceed in the aggregate one per cent of	106
the state's portfolio.	107

The treasurer of state shall invest under division (A)(10) of	108
this section in a debt interest issued by a foreign nation only if	109
the debt interest is backed by the full faith and credit of that	110
foreign nation, and provided that all interest and principal shall	111
be denominated and payable in United States funds. ~~For~~	112

For purposes of division (A)(10) of this section, a debt	113
interest is rated in the three highest categories by two	114
nationally recognized rating agencies if either the debt interest	115
itself or the issuer of the debt interest is rated, or is	116
implicitly rated, at the time of purchase in the three highest	117
categories by two nationally recognized rating agencies.	118

For purposes of division (A)(10) of this section, the	119
"state's portfolio" means the state's total average portfolio, as	120
determined and calculated by the treasurer of state.	121

(11) No-load money market mutual funds consisting exclusively	122
of obligations described in division (A)(1), (2), or (6) of this	123
section and repurchase agreements secured by such obligations.	124

(12) Obligations of a board of education issued under	125
authority of section 133.10 or 133.301 of the Revised Code.	126

(B) Whenever, during a period of designation, the treasurer	127
of state classifies public moneys as interim moneys, the treasurer	128
of state shall notify the state board of deposit of such action.	129
The notification shall be given within thirty days after such	130
classification and, in the event the state board of deposit does	131
not concur in such classification or in the investments or	132
deposits made under this section, the board may order the	133
treasurer of state to sell or liquidate any of the investments or	134
deposits, and any such order shall specifically describe the	135
investments or deposits and fix the date upon which they are to be	136
sold or liquidated. Investments or deposits so ordered to be sold	137
or liquidated shall be sold or liquidated for cash by the	138
treasurer of state on the date fixed in such order at the then	139
current market price. Neither the treasurer of state nor the	140
members of the state board of deposit shall be held accountable	141
for any loss occasioned by sales or liquidations of investments or	142
deposits at prices lower than their cost. Any loss or expense	143
incurred in making these sales or liquidations is payable as other	144
expenses of the treasurer's office.	145

(C) If any securities or obligations invested in by the	146
treasurer of state pursuant to this section are registrable either	147
as to principal or interest, or both, such securities or	148
obligations shall be registered in the name of the treasurer of	149
state.	150

(D) The treasurer of state is responsible for the safekeeping	151
of all securities or obligations under this section. Any such	152
securities or obligations may be deposited for safekeeping as	153
provided in section 113.05 of the Revised Code.	154

(E) Interest earned on any investments or deposits authorized	155
by this section shall be collected by the treasurer of state and	156
credited by the treasurer of state to the proper fund of the	157
state.	158

(F) Whenever investments or deposits acquired under this	159
section mature and become due and payable, the treasurer of state	160
shall present them for payment according to their tenor, and shall	161
collect the moneys payable thereon. The moneys so collected shall	162
be treated as public moneys subject to sections 135.01 to 135.21	163
of the Revised Code.	164

(G) The treasurer of state and any board of education issuing	165
obligations referred to in division (A)(12) of this section may	166
enter into an agreement providing for:	167

(1) The purchase of those obligations by the treasurer of	168
state on terms and subject to conditions set forth in the	169
agreement;	170

(2) The payment by the board of education to the treasurer of	171
state of a reasonable fee as consideration for the agreement of	172
the treasurer of state to purchase those obligations; provided,	173
however, that the treasurer of state shall not be authorized to	174
enter into any such agreement with the board of education of a	175
school district that has an outstanding obligation with respect to	176
a loan received under authority of section 3313.483 of the Revised	177
Code.	178

(H) For purposes of division (G) of this section, a fee shall	179
not be considered reasonable unless it is set to recover only the	180
direct costs and a reasonable estimate of the indirect costs	181
associated with the purchasing of obligations of a school board	182
under division (G) of this section and any reselling of the	183
obligations or any interest in the obligations, including	184
interests in a fund comprised of the obligations. No money from	185
the general revenue fund shall be used to subsidize the purchase	186
or resale of these obligations.	187

(I) All money collected by the treasurer of state from the	188
fee imposed by division (G) of this section shall be deposited to	189
the credit of the state school board obligations fund, which is	190
hereby created in the state treasury. Money credited to the fund	191
shall be used solely to pay the treasurer of state's direct and	192
indirect costs associated with purchasing and reselling	193
obligations of a board of education under division (G) of this	194
section.	195

Section 2. That existing section 135.143 of the Revised Code	196
is hereby repealed.	197