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As Passed by the House
123rd General Assembly
Regular Session
1999-2000 | Sub. S. B. No. 82 |
SENATORS JOHNSON-WACHTMANN-MUMPER-DRAKE-WHITE-KEARNS-
BLESSING-HERINGTON-SPADA-LATELL-DiDONATO-HOTTINGER-FINAN-
RAY-WATTS-HORN-GARDNER-ARMBRUSTER-NEIN-
REPRESENTATIVES D. MILLER-SCHULER-EVANS-OLMAN-VERICH-MAIER-SULZER-
TIBERI-BUEHRER-MEAD-TERWILLEGER-O'BRIEN-SYKES-PATTON-AUSTRIA-
HARRIS-DISTEL-SCHULER-CALVERT-SALERNO-AMSTUTZ-PETERSON-WIDENER-
YOUNG-GRENDELL-BARRETT-ROBERTS
A BILL
To amend sections 135.14, 135.143, 135.22, 135.35, and 321.46 of the Revised
Code to
permit subdivision or county treasurers to invest in certain no-load money
market mutual funds in the absence of a written investment policy on behalf of
the subdivision or county or in the cases of exemptions from or noncompliance
with specified initial or continuing education requirements by the subdivision
or county treasurer; and to modify the authority of the Treasurer of State to
invest state interim funds in securities lending agreements.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 135.14, 135.143, 135.22, 135.35, and 321.46 of the
Revised
Code be amended to read as follows:
Sec. 135.14. (A) As used in this section, "treasurer" does not
include the treasurer of state, and "governing board" does not
include the state board of deposit.
(B) The treasurer or governing board may invest or deposit any
part or all of the interim moneys. The
following classifications of obligations shall be eligible for
such investment or deposit:
(1) United States treasury bills, notes, bonds, or any other obligation or
security issued by the United States treasury or any other obligation
guaranteed as to principal and interest by the United States.
Nothing in the classification of eligible obligations set forth in division
(B)(1) of this section or in the classifications of eligible obligations set
forth in divisions
(B)(2) to (6) of this section shall be construed to authorize any investment
in stripped principal or interest obligations of such eligible obligations.
(2) Bonds, notes, debentures, or any other obligations or
securities issued by any federal government agency or instrumentality,
including but not limited to, the federal national mortgage association,
federal home loan bank, federal farm credit bank, federal home loan mortgage
corporation, government national mortgage association, and student loan
marketing association. All federal agency securities shall be direct
issuances of federal government agencies or instrumentalities.
(3) Interim deposits in the eligible institutions applying
for interim moneys as provided in section 135.08 of the Revised
Code. The award of interim deposits shall be made in accordance
with section 135.09 of the Revised Code and the treasurer or the
governing board shall determine the periods for which such
interim deposits are to be made and shall award such interim
deposits for such periods, provided that any eligible institution
receiving an interim deposit award may, upon notification that
the award has been made, decline to accept the interim deposit in
which event the award shall be made as though such THE
institution had not applied for such interim deposit.
(4) Bonds and other obligations of this state;
(5) No-load money market mutual funds consisting
exclusively of obligations described in division (B)(1)
or (2) of this section and repurchase agreements secured by such
obligations, provided that investments in securities
described in this division are made only through eligible institutions
mentioned in section 135.03 of the Revised Code;
(6) The Ohio subdivision's fund as provided in section 135.45
of the Revised Code.
(C) Nothing in the classifications of eligible obligations set
forth in divisions (B)(1) to (6) of this section shall be construed
to authorize any investment in a derivative, and no treasurer or
governing board shall invest in a derivative. For purposes of this
division, "derivative" means a financial instrument or contract or obligation
whose value or return is based upon or linked to another asset or index, or
both, separate from the financial instrument, contract, or obligation itself.
Any security, obligation, trust account, or other instrument that is created
from an issue of the United States treasury or is created
from an obligation of a federal agency or instrumentality or is created from
both is considered a derivative instrument. An eligible investment described
in this section with a variable interest rate payment, based upon a single
interest payment or single index comprised of other eligible investments
provided for in division (B)(1) or (2) of this section, is not a
derivative, provided that such variable rate investment has a maximum maturity
of two years.
(D) Any investment made pursuant to this section must mature
within five years from the date of settlement, unless the investment is
matched to a specific obligation or debt of the
subdivision.
(E) The treasurer or governing board may also enter into a
written repurchase agreement with any eligible institution mentioned in
section 135.03 of the Revised Code or any eligible dealer pursuant to
division (M) of this section, under the terms of which
agreement the treasurer or governing board purchases, and such
institution or dealer agrees unconditionally to repurchase any of the
securities listed in division (B)(1) or (2) of
this section. The market value of securities subject to an overnight
repurchase agreement must exceed the principal value of the overnight
repurchase agreement by at least two per cent. A term repurchase agreement
shall not exceed thirty days and the market value of securities subject to a
term repurchase agreement must exceed the principal value of the term
repurchase agreement by at least two per cent and be marked to market daily.
All securities purchased
pursuant to this division shall be delivered into the custody of the treasurer
or governing board or an agent designated by the treasurer or governing
board. A repurchase agreement with an eligible securities dealer shall be
transacted on a delivery versus payment basis. The
agreement shall contain the requirement that for
each transaction pursuant to the agreement the participating
institution or dealer shall provide all of the following information:
(1) The par value of the securities;
(2) The type, rate, and maturity date of the securities;
(3) A numerical identifier generally accepted in the
securities industry that designates the securities.
No treasurer or governing board shall enter into a written repurchase
agreement under the terms of which the treasurer or governing board agrees to
sell securities owned by the subdivision to a purchaser and agrees with that
purchaser to unconditionally repurchase those securities.
(F) No treasurer or governing board shall make an investment
under this section, unless the treasurer or governing board, at the
time of making the investment, reasonably expects that the
investment can be held until its maturity.
(G) No treasurer or governing board shall pay interim moneys into
a fund established by another subdivision, treasurer, governing board, or
investing authority, if that fund was established for the purpose of investing
the public moneys of other subdivisions. This division does
not apply to the payment of public moneys into either of the following:
(1) The Ohio subdivision's
fund pursuant to division (B)(6) of this section;
(2) A fund created solely for the purpose of acquiring, constructing, owning,
leasing, or operating municipal utilities pursuant to the
authority provided under section 715.02 of the Revised Code or Section 4 of
Article XVIII, Ohio Constitution.
For purposes of division (G) of this section, "subdivision"
includes a county.
(H) The use of leverage, in which the treasurer or governing
board uses its current investment assets as collateral for the purpose of
purchasing other assets, is prohibited. The issuance of taxable notes for the
purpose of arbitrage is prohibited. Contracting to sell securities that have
not yet been acquired by the treasurer or governing board, for the purpose of
purchasing such securities on the speculation that bond prices will decline,
is prohibited.
(I) Whenever, during a period of designation, the treasurer
classifies public moneys as interim moneys, the treasurer shall notify the
governing board of such action. Such THE notification shall be
given within thirty days after such classification and in the event the
governing board does not concur in such classification or in the
investments or deposits made under this section, the governing
board may order the treasurer to sell or liquidate any of such
investments or deposits, and any such order shall specifically
describe the investments or deposits and fix the date upon which
they are to be sold or liquidated. Investments or deposits so
ordered to be sold or liquidated shall be sold or liquidated for
cash by the treasurer on the date fixed in such order at the then
current market price. Neither the treasurer nor the members of
the board shall be held accountable for any loss occasioned by
sales or liquidations of investments or deposits at prices lower
than their cost. Any loss or expense incurred in making such
sales or liquidations is payable as other expenses of the
treasurer's office.
(J) If any investments or deposits purchased under the
authority of this section are issuable to a designated payee or
to the order of a designated payee, the name of the treasurer and
the title of the treasurer's office shall be so designated. If any such
securities are registrable either as to principal or interest, or
both, then such securities shall be registered in the name of the
treasurer as such.
(K) The treasurer is responsible for the safekeeping of all
documents evidencing a deposit or investment acquired by the
treasurer under this section. Any securities may be deposited for
safekeeping with a qualified trustee as provided in section
135.18 of the Revised Code, except the delivery of securities
acquired under any repurchase agreement under this section shall
be made to a qualified trustee, provided, however, that the
qualified trustee shall be required to report to the treasurer,
governing board, auditor of state, or an authorized outside
auditor at any time upon request as to the identity, market
value, and location of the document evidencing each security, and
that if the participating institution is a designated depository
of the subdivision for the current period of designation, the
securities that are the subject of the repurchase agreement may
be delivered to the treasurer or held in trust by the
participating institution on behalf of the subdivision. Interest
earned on any investments or deposits authorized by this section
shall be collected by the treasurer and credited by the
treasurer to the proper fund of the subdivision.
Upon the expiration of the term of office of a treasurer or
in the event of a vacancy in the office of treasurer by reason of
death, resignation, removal from office, or otherwise, the
treasurer or the treasurer's legal representative shall transfer and deliver
to the treasurer's successor all documents evidencing a deposit or investment
held by the treasurer. For the investments and deposits so
transferred and delivered, such treasurer shall be credited with and the
treasurer's successor shall be charged with the amount of money held in such
investments and deposits.
(L) Whenever investments or deposits acquired under this
section mature and become due and payable, the treasurer shall
present them for payment according to their tenor, and shall
collect the moneys payable thereon. The moneys so collected
shall be treated as public moneys subject to sections 135.01 to
135.21 of the Revised Code.
(M)(1) All investments, except for investments in securities
described in divisions (B)(5) and (6) of this section and for investments by
a municipal corporation in the issues of such municipal
corporation, shall be made only through a member of the national
association of securities dealers, through a bank, savings bank,
or savings and loan association regulated by the superintendent of financial
institutions, or through an institution regulated by the comptroller of
the currency, federal deposit insurance corporation, or board of
governors of the federal reserve system.
(2) Payment for investments shall be made only upon the
delivery of securities representing such investments to the
treasurer, governing board, or qualified trustee. If the
securities transferred are not represented by a certificate,
payment shall be made only upon receipt of confirmation of
transfer from the custodian by the treasurer, governing board, or
qualified trustee.
(N)(1) Except as otherwise provided in divisions (N)(2)
and (3) of this section, no treasurer or governing board shall make an
investment or deposit
under this section, unless there is on file with the auditor of state
a written investment policy approved by the treasurer or governing board.
The policy shall require that
all entities conducting investment business with the treasurer or governing
board shall sign the investment policy of that
subdivision. All brokers, dealers, and financial institutions, described in
division (M)(1) of this section, initiating transactions with the treasurer or
governing board by giving advice or making investment recommendations shall
sign the treasurer's or governing board's investment policy thereby
acknowledging their agreement to abide by the policy's contents. All brokers,
dealers, and financial institutions, described in division (M)(1) of this
section, executing transactions initiated by the treasurer or governing board,
having read the policy's contents, shall sign the investment policy thereby
acknowledging their comprehension and receipt.
(2) If a written investment policy described in division (N)(1)
of this section is not filed on behalf of the subdivision with the auditor of
state, the treasurer or governing board of that subdivision shall invest the
subdivision's interim moneys only in interim deposits pursuant to
division (B)(3) of this section, NO-LOAD MONEY MARKET MUTUAL FUNDS
PURSUANT TO DIVISION (B)(5) OF THIS SECTION, or the Ohio
subdivision's fund pursuant to division (B)(6) of this section.
(3) Divisions (N)(1) and (2) of this section do not apply to a treasurer or
governing board of a subdivision whose average annual portfolio of
investments held pursuant to this section is one hundred
thousand dollars or less, provided that the treasurer or
governing board certifies, on a form prescribed by the auditor
of state, that the treasurer or governing board will comply and
is in compliance with the provisions of sections 135.01 to
135.21 of the Revised Code.
(O) A treasurer or governing board may enter into
a written investment or deposit agreement that includes a
provision under which the parties agree to submit to
nonbinding arbitration to settle any controversy that may arise
out of the agreement, including any controversy pertaining to
losses of public moneys resulting from investment or deposit.
The arbitration provision shall
be set forth entirely in the agreement, and the agreement shall
include a conspicuous notice to the
parties that any party to the arbitration may apply to the court of common
pleas of the county in which the arbitration was held for an order to vacate,
modify, or correct the award. Any such party may also apply to the court for
an order to change venue to a court of common pleas located more than one
hundred miles from the county in which the treasurer or governing board is
located.
For purposes of this division, "investment or deposit agreement" means any
agreement between a treasurer or governing board and a person, under which
agreement the person agrees to invest, deposit, or otherwise manage a
subdivision's interim moneys on behalf of the treasurer or governing board, or
agrees to provide investment advice to the treasurer or governing board.
(P) An investment made by the treasurer or governing board
pursuant to this section prior to the effective date of this amendment
SEPTEMBER 27, 1996, that
was a legal investment under the law as it existed before the effective
date
of this amendment SEPTEMBER 27, 1996, may be held
until maturity, or if the investment does not
have a maturity date, it may be held until five years from the effective
date
of this amendment SEPTEMBER 27, 1996, regardless
of whether the investment would qualify as a
legal investment under the terms of this section as amended.
Sec. 135.143. (A) The treasurer of state may invest or
execute transactions for any part or all of the interim funds of
the state in the following classifications of obligations:
(1) United States treasury bills, notes, bonds, or any
other obligations or securities issued by the United States
treasury or any other obligation guaranteed as to principal and
interest by the United States;
(2) Bonds, notes, debentures, or any other obligations or
securities issued by any federal government agency or
instrumentality;
(3) Bonds and other obligations of the sinking fund of the
state of Ohio and the Ohio public facilities commission;
(4)(a) Written repurchase agreements with any eligible
Ohio financial institution that is a member of the federal
reserve system or federal home loan bank or any recognized United
States government securities dealer, under the terms of which
agreement the treasurer of state purchases and the eligible
financial institution or dealer agrees unconditionally to
repurchase any of the securities that are listed in division
(A)(1) or (2) of this section and that will mature or are
redeemable within ten years from the date of purchase. The
market value of securities subject to these transactions must
exceed the principal value of the repurchase agreement by an
amount specified by the treasurer of state, and the securities
must be delivered into the custody of the treasurer of state or
the qualified trustee or agent designated by the treasurer of
state. The agreement shall contain the requirement that for each
transaction pursuant to the agreement, the participating
institution or dealer shall provide all of the following
information:
(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
securities industry that designates the securities.
(b) The treasurer of state also may sell any securities,
listed in division (A)(1) or (2) of this section, regardless of
maturity or time of redemption of the securities, under the same
terms and conditions for repurchase, provided that the securities
have been fully paid for and are owned by the treasurer of state
at the time of the sale.
(5) Securities lending agreements with any eligible
financial institution that is a member of the federal reserve
system or federal home loan bank or any recognized United States
government securities dealer, under the terms of which agreement
the treasurer of state lends securities and the eligible
financial institution or dealer agrees to simultaneously exchange
similar securities or cash, equal value for equal value;.
SECURITIES AND CASH RECEIVED AS COLLATERAL FOR A SECURITIES LENDING
AGREEMENT ARE NOT INTERIM FUNDS OF THE STATE. THE INVESTMENT OF CASH
COLLATERAL RECEIVED PURSUANT TO A SECURITIES LENDING AGREEMENT MAY BE INVESTED
ONLY IN SUCH INSTRUMENTS SPECIFIED BY THE TREASURER OF STATE IN ACCORDANCE
WITH A WRITTEN INVESTMENT POLICY.
(6) Various forms of commercial paper issued by any
corporation that is incorporated under the laws of the United
States or a state, which such notes are rated in the two highest
categories by two nationally recognized rating agencies, provided
that the total amount invested in commercial paper at any time
shall not exceed five per cent of the state's total average
portfolio, as determined and calculated by the treasurer of
state;
(7) Bankers acceptances, maturing in two hundred seventy
days or less, which are eligible for purchase by the federal
reserve system, provided that the total amount invested in
bankers acceptances at any time shall not exceed ten per cent of
the state's total average portfolio, as determined and calculated
by the treasurer of state;
(8) Certificates of deposit in eligible institutions
applying for interim moneys as provided in section 135.08 of the
Revised Code, including linked deposits as provided in sections
135.61 to 135.67 of the Revised Code, agricultural linked
deposits as provided in sections 135.71 to 135.76 of the Revised
Code, and depressed economic area linked deposits as provided in
sections 135.81 to 135.88 of the Revised Code;
(9) The state treasurer's investment pool authorized under
section 135.45 of the Revised Code;
(10) Debt interests rated investment grade by a nationally
recognized rating agency and issued by corporations that are
incorporated under the laws of the United States or a state, or
issued by foreign nations diplomatically recognized by the United
States government, or any instrument based on, derived from, or
related to such interests. All interest and principal shall be
denominated and payable in United States funds. The investments
made under division (A)(10) of this section shall not exceed in
the aggregate five per cent of the state's total average
portfolio, as determined and calculated by the treasurer of
state. The investments made under division (A)(10) of this
section in debt interests issued by foreign nations shall not
exceed in the aggregate one per cent of the state's total average
portfolio. The investments made under division (A)(10) of this
section in the debt interests of a single issuer shall not exceed
in the aggregate one-half of one per cent of the state's total
average portfolio.
The treasurer of state shall invest under division (A)(10)
of this section in a debt interest issued by a foreign nation
only if the debt interest is backed by the full faith and credit
of that foreign nation. For purposes of division (A)(10) of this
section, a debt interest is rated investment grade by a
nationally recognized rating agency if either the debt interest
itself or the issuer of the debt interest is rated, or is
implicitly rated, investment grade by a nationally recognized
rating agency.
(11) No-load money market mutual funds consisting
exclusively of obligations described in division (A)(1) or (2) of
this section and repurchase agreements secured by such
obligations.
(12) Obligations of a board of education issued under authority
of section 133.10 or 133.301 of the Revised Code.
(B) Whenever, during a period of designation, the
treasurer of state classifies public moneys as interim moneys, the treasurer
of state shall notify the state board of deposit of such action. Such
notification shall be given within thirty days after such
classification and in the event the state board of deposit does
not concur in such classification or in the investments or
deposits made under this section, the board may order the
treasurer of state to sell or liquidate any of such investments
or deposits, and any such order shall specifically describe the
investments or deposits and fix the date upon which they are to
be sold or liquidated. Investments or deposits so ordered to be
sold or liquidated shall be sold or liquidated for cash by the
treasurer of state on the date fixed in such order at the then
current market price. Neither the treasurer of state nor the
members of the state board of deposit shall be held accountable
for any loss occasioned by sales or liquidations of investments
or deposits at prices lower than their cost. Any loss or expense
incurred in making such sales or liquidations is payable as other
expenses of the treasurer's office.
(C) If any securities or obligations invested in by the
treasurer of state pursuant to this section are registrable
either as to principal or interest, or both, such securities or
obligations shall be registered in the name of the treasurer of
state.
(D) The treasurer of state is responsible for the
safekeeping of all securities or obligations under this section.
Any such securities or obligations may be deposited for
safekeeping as provided in section 113.05 of the Revised Code.
(E) Interest earned on any investments or deposits
authorized by this section shall be collected by the treasurer of
state and credited by the treasurer of state to the proper fund of
the state.
(F) Whenever investments or deposits acquired under this
section mature and become due and payable, the treasurer of state
shall present them for payment according to their tenor, and
shall collect the moneys payable thereon. The moneys so
collected shall be treated as public moneys subject to sections
135.01 to 135.21 of the Revised Code.
(G) The treasurer of state and any board of education issuing
obligations referred to in division (A)(12) of this section may enter
into an agreement providing for:
(1) The purchase of those obligations by the treasurer of state on terms
and subject to conditions set forth in the agreement;
(2) The payment by the board of education to the treasurer of state of
a reasonable fee
as consideration for the agreement of the treasurer of state to purchase those
obligations; provided, however, that the treasurer of state shall not be
authorized to enter into any such agreement with the board of education of a
school district that has an outstanding obligation with respect to a loan
received under authority of section 3313.483 of the Revised Code.
(H) For purposes of division
(G) of this section, a fee shall
not be considered reasonable unless it is set to recover only
the direct costs and a reasonable estimate of the indirect costs
associated with the purchasing of obligations of a school board
under division (G) of this section and any reselling of the
obligations or any interest in the obligations, including
interests in a fund comprised of the obligations. No money from
the general revenue fund shall be used to subsidize the purchase
or resale of these obligations.
(I) All money collected
by the treasurer of state from the fee imposed by division
(G) of this section shall be
deposited to the credit of the state school board obligations
fund, which is hereby created in the state treasury. Money
credited to the fund shall be used solely to pay the treasurer
of state's direct and indirect costs associated with purchasing
and reselling obligations of a board of education under division
(G) of this section.
Sec. 135.22. (A) For purposes of this section:
(1) "Treasurer" has the same meaning as in section 135.01 of the Revised
Code, but does not include the treasurer of state. "Treasurer" includes any
person whose duties include making investment
decisions with respect to the investment or deposit of interim moneys.
(2) "Subdivision" has the same meaning as in section 135.01 of the Revised
Code.
(B) To enhance the background and working knowledge of treasurers
in investments, cash management, and ethics, the
treasurer of state shall provide annual continuing education
programs for treasurers. A treasurer annually shall complete
the continuing education programs described in this section,
unless the treasurer annually provides a notice of exemption
described in division (E) of this section.
(C) The treasurer of state shall determine the manner, content, and length of
the continuing education programs after consultation with
appropriate statewide organizations of local government officials.
(D) Upon successful completion of a continuing education program required by
this section, the treasurer of state shall issue a certificate indicating that
the treasurer has successfully completed the continuing education program
prescribed by the treasurer of state. The treasurer of state shall forward to
the auditor of state any certificates issued pursuant to this division by the
treasurer of state. The auditor of state shall maintain in the auditor's
records any certificates forwarded by the treasurer of state pursuant to this
division. As part of the auditor of state's audit of the subdivision
conducted in accordance with section 117.11 of the Revised Code, the auditor
of state shall report whether the treasurer is in compliance with this section
of the Revised Code.
(E) Division (B) of this section does not
apply to any treasurer who annually provides a notice of
exemption to the auditor of state. The notice shall be certified by the
treasurer of state and shall provide that the treasurer is not subject to the
continuing education requirements set forth in division (B) of this section,
because the treasurer invests or deposits public moneys
in the following investments only:
(1) Interim deposits pursuant to division (B)(3) of section
135.14 of the Revised Code;
(2) NO-LOAD MONEY MARKET MUTUAL FUNDS PURSUANT TO DIVISION (B)(5)
OF SECTION 135.14 of the Revised Code;
(3) The Ohio subdivision's fund pursuant to division (B)(6) of
section 135.14
of the Revised Code.
(F) In carrying out the duties required by this section, the treasurer of
state may charge the subdivision served by the treasurer a registration fee
that will meet actual and necessary expenses in connection with the training
of the treasurer, including instruction fees, site acquisition costs, and the
cost of course materials. Any necessary personal expenses of a treasurer
incurred as a result of attending the continuing education courses shall be
borne by the subdivision represented by the treasurer.
(G) The treasurer of state may allow any other interested person to attend
any of the continuing education programs that are held pursuant to this
section, provided that before attending any such continuing education program,
the interested person has paid to the treasurer of state the full registration
fee set for the continuing education program.
(H) All funds collected pursuant to this section shall be paid into the
county treasurer education fund created pursuant to section 321.46 of the
Revised
Code, and the actual and necessary expenses of the treasurer of state in
conducting the continuing education programs required by this section shall be
paid from this fund.
(I) The treasurer of state may adopt reasonable rules not inconsistent with
this section for the implementation of this section.
Sec. 135.35. (A) The investing authority shall deposit or
invest any part or all of the county's inactive moneys and shall
invest all of the money in the county library and local
government support fund when required by section 135.352 of the
Revised Code. The following classifications of securities and
obligations are eligible for such deposit or investment:
(1) United States treasury bills, notes, bonds, or any other obligation or
security issued by the United States treasury or any other obligation
guaranteed as to principal or interest by the United States.
Nothing in the classification of eligible securities and obligations set forth
in division (A)(1) of this section or in the classifications of eligible
securities and obligations set forth in divisions (A)(2) to (9) of this
section shall be construed to authorize any investment in stripped principal
or interest obligations of such eligible securities and obligations.
(2) Bonds, notes, debentures, or any other obligations or
securities issued by any federal government agency or
instrumentality, including but not limited to, the federal
national mortgage association, federal home loan bank, federal farm credit
bank, federal home loan mortgage corporation, government national mortgage
association, and student loan marketing association. All federal agency
securities shall be direct issuances of federal government agencies or
instrumentalities.
(3) Time certificates of deposit or savings or deposit
accounts, including, but not limited to, passbook accounts, in
any eligible institution mentioned in section 135.32 of the
Revised Code;
(4) Bonds and other obligations of this state or the political subdivisions
of this state, provided that such political subdivisions are located wholly or
partly within the same county as the investing authority;
(5) No-load money market mutual funds consisting
exclusively of obligations described in division (A)(1) or (2) of
this section and repurchase agreements secured by such
obligations, provided that investments in securities
described in this division are made only through eligible institutions
mentioned in section 135.32 of the Revised Code;
(6) The Ohio subdivision's fund as provided in section 135.45 of the Revised
Code.;
(7) Securities lending agreements with any eligible institution
mentioned in section 135.32 of the Revised Code that is a member of the
federal reserve system or federal home loan bank, under the terms of which
agreements the
investing authority lends securities and the eligible institution
agrees to simultaneously exchange either securities described in division
(A)(1) or (2) of this section or cash or both securities and cash,
equal value for equal value;
(8) Commercial paper issued by any corporation incorporated under the laws
of the United States or a state if both of the following
conditions apply:
(a) Two nationally recognized rating agencies rank the commercial
paper in either of their two highest categories;
(b) The total amount invested in commercial paper at any time
does
not exceed five per cent of the county's total average portfolio, as
determined and calculated by the investing authority.
(9) Bankers acceptances, if the following conditions are met:
(a) The acceptances mature in two hundred seventy days or fewer
from the date of settlement;
(b) The acceptances are eligible for purchase by the federal
reserve system;
(c) The total amount invested in bankers acceptances at any time
does not exceed ten per cent of the county's total average portfolio, as
determined and calculated by the investing authority.
(B) Nothing in the classifications of eligible obligations and securities
set forth in divisions (A)(1) to (9) of this section shall be
construed to authorize investment in a derivative, and no investing
authority shall invest any county inactive moneys or any moneys in
a county library and local government support fund in a derivative. For
purposes of this division, "derivative" means a financial instrument or
contract or obligation whose value or return is based upon or linked to
another asset or index, or both, separate from the financial instrument,
contract, or obligation itself. Any security, obligation, trust account, or
other instrument that is created from an issue of the United
States treasury or is created from an obligation of a federal agency
or instrumentality or is created from both is considered a derivative
instrument. An eligible investment described in this section with a variable
interest rate payment, based upon a single interest payment or single index
comprised of other eligible investments provided for in division
(A)(1) or (2) of this section, is not a derivative, provided that
such variable rate investment has a maximum maturity of two years.
(C) Any investment made pursuant to this section must mature within five
years from the date of settlement, unless the investment is matched to a
specific obligation or debt of the
county, and the investment is specifically approved by the investment advisory
committee.
(D) The investing authority may also enter into a written
repurchase agreement with any eligible institution
mentioned in section 135.32 of the Revised Code or any eligible securities
dealer pursuant to division (J) of this section, under the terms of which
agreement the investing authority purchases and the eligible
institution or dealer agrees
unconditionally to repurchase any of the securities listed in
division (A)(1) or (2) of this section. The market value of
securities subject to an overnight repurchase agreement must exceed the
principal value of the overnight repurchase agreement by at least two per
cent. A term repurchase agreement must exceed the principal value of the
overnight repurchase agreement, by at least two per cent. A term repurchase
agreement shall not exceed thirty days, and the market
value of securities subject to a term repurchase agreement must exceed the
principal value of the term repurchase agreement by at least two per cent and
be marked to market daily. All securities purchased pursuant to this division
shall be delivered into the
custody of the investing authority or the qualified custodian of the investing
authority or an agent designated by the investing authority. A repurchase
agreement with an eligible securities dealer shall be transacted on a delivery
versus payment basis. The agreement
shall contain the requirement that for each transaction pursuant
to the agreement the participating institution shall provide all
of the following information:
(1) The par value of the securities;
(2) The type, rate, and maturity date of the securities;
(3) A numerical identifier generally accepted in the
securities industry that designates the securities.
No investing authority shall enter into a written repurchase
agreement under the terms of which the investing authority agrees to sell
securities owned by
the county to a purchaser and agrees with that purchaser to unconditionally
repurchase those securities.
(E) No investing authority shall make an investment
under this section, unless the investing authority, at the time of making the
investment, reasonably expects that the investment can
be held until its maturity. The investing authority's written investment
policy shall specify the conditions under which an investment may be redeemed
or sold prior to maturity.
(F) No investing authority shall pay a county's inactive moneys
or moneys of a county library and local government support fund into a fund
established by another subdivision, treasurer, governing board, or investing
authority, if that fund was established by the subdivision, treasurer,
governing board, or investing authority for the purpose of investing or
depositing the public moneys of other subdivisions. This division does not
apply to the payment of public moneys into either of the following:
(1) The Ohio subdivision's fund pursuant to division (A)(6) of this section;
(2) A fund created solely for the purpose of acquiring, constructing, owning,
leasing, or operating municipal utilities pursuant to the authority provided
under section 715.02 of the Revised Code or Section 4 of Article XVIII, Ohio
Constitution.
For purposes of division (F) of this section, "subdivision" includes
a county.
(G) The use of leverage, in which the county uses its current
investment assets as collateral for the purpose of purchasing other assets, is
prohibited. The issuance of taxable notes for the purpose of arbitrage is
prohibited. Contracting to sell securities not owned by the county, for the
purpose of purchasing such securities on the speculation that bond prices will
decline, is prohibited.
(H) Any securities, certificates of deposit, deposit
accounts, or any other documents evidencing deposits or
investments made under authority of this section shall be issued
in the name of the county with the county treasurer or investing
authority as the designated payee. If any such deposits or
investments are registrable either as to principal or interest,
or both, they shall be registered in the name of the treasurer.
(I) The investing authority shall be responsible for the
safekeeping of all documents evidencing a deposit or investment
acquired under this section including, but not limited to,
safekeeping receipts evidencing securities deposited with a
qualified trustee, as provided in section 135.37 of the Revised
Code, and documents confirming the purchase of securities under
any repurchase agreement under this section shall be deposited
with a qualified trustee, provided, however, that the qualified
trustee shall be required to report to the investing authority,
auditor of state, or an authorized outside auditor at any time
upon request as to the identity, market value, and location of
the document evidencing each security, and that if the
participating institution is a designated depository of the
county for the current period of designation, the securities that
are the subject of the repurchase agreement may be delivered to
the treasurer or held in trust by the participating institution
on behalf of the investing authority.
Upon the expiration of the term of office of an investing
authority or in the event of a vacancy in the office for any
reason, the officer or the officer's legal representative
shall transfer and deliver to the officer's successor all documents
mentioned in this division for which the officer has been
responsible for safekeeping. For
all such documents transferred and delivered, such officer shall
be credited with, and the officer's successor shall be
charged with, the amount of moneys so evidenced by such documents.
(J)(1) All investments, except for investments in securities
described in divisions (A)(5) and (6) of this
section, shall be made only
through a member of the national association of securities
dealers, through a bank, savings bank, or savings and loan
association regulated by the
superintendent of financial institutions, or through an institution regulated
by the comptroller of the currency, federal deposit
insurance corporation, or board of governors of the federal reserve
system.
(2) Payment for investments shall be made only upon the delivery of
securities representing
such investments to the treasurer, investing authority, or
qualified trustee. If the securities transferred are not
represented by a certificate, payment shall be made only upon
receipt of confirmation of transfer from the custodian by the
treasurer, governing board, or qualified trustee.
(K)(1) Except as otherwise provided in division (K)(2) of
this section, no investing authority shall make an investment or deposit under
this section, unless there is on file with the auditor of state a written
investment policy approved by the investing authority. The policy shall
require that all entities conducting investment business with the investment
authority shall sign the investment policy of that investment authority. All
brokers, dealers, and financial institutions, described in division (J)(1) of
this section,
initiating transactions with the investment authority by giving advice or
making investment recommendations shall sign the investment authority's
investment policy thereby acknowledging their agreement to abide by the
policy's contents. All brokers, dealers, and financial institutions,
described in division (J)(1) of this section, executing transactions initiated
by the investment authority, having read the policy's contents, shall sign the
investment policy thereby acknowledging their comprehension and receipt.
(2) If a written investment policy described in division (K)(1)
of this section is not filed on behalf of the county with the auditor of
state, the investing authority of that county shall invest the county's
inactive moneys and moneys of the county library and local government support
fund only in time certificates of deposits or savings or deposit accounts
pursuant to division (A)(3) of this section, NO-LOAD MONEY MARKET
MUTUAL FUNDS PURSUANT TO DIVISION (A)(5) OF THIS SECTION,
or the Ohio subdivision's fund pursuant to division (A)(6) of this section.
(L)(1) The investing authority shall establish and maintain an
inventory of all obligations and securities acquired by the investing
authority pursuant to this section. The inventory shall
include a description of each obligation or security, including type, cost,
par value, maturity date, settlement date, and any coupon rate.
(2) The investing authority shall also keep a complete record of all
purchases and sales of the obligations and securities made pursuant to this
section.
(3) The investing authority shall maintain a monthly portfolio report and
issue a quarterly investment report describing such investments to the county
investment advisory committee, detailing the current inventory of all
obligations and securities, all transactions during the month that affected
the inventory, any income received from the obligations and securities, and
any investment expenses paid, and stating the names of any persons effecting
transactions on behalf of the investing authority.
(4) The monthly portfolio report and the quarterly investment report shall
be public records and available for inspection under section 149.43 of the Revised Code.
(5) The inventory, the monthly portfolio report, and the quarterly
investment report shall be on standard forms approved by the auditor of state
and shall be filed with the board of county commissioners.
(M) An investing authority may enter into a
written investment or deposit agreement that includes a
provision under which the parties agree to submit to
nonbinding arbitration to settle any controversy that may arise
out of the agreement, including any controversy pertaining to
losses of public moneys resulting from investment or deposit.
The arbitration provision shall
be set forth entirely in the agreement, and the agreement shall
include a conspicuous notice to the
parties that any party to the arbitration may apply to the court of common
pleas of the county in which the arbitration was held for an order to vacate,
modify, or correct the award. Any such party may also apply to the court for
an order to change venue to a court of common pleas located more than one
hundred miles from the county in which the investing authority is located.
For purposes of this division, "investment or deposit agreement" means any
agreement between an investing authority and a person, under which agreement
the person agrees to invest, deposit, or otherwise manage, on behalf of the
investing authority, a county's inactive moneys or moneys in a county library
and local government support fund, or agrees to provide investment advice to
the investing authority.
(N) An investment held in the county portfolio on the effective
date of this amendment SEPTEMBER 27, 1996, that
was a legal investment under the law as it existed
before the effective date of this amendment SEPTEMBER
27, 1996, may be held until maturity, or if
the investment does not have a maturity date the investment may be held until
five years from the effective date of this amendment
SEPTEMBER 27, 1996, regardless of whether
the investment would qualify as a legal investment under the terms of this
section as amended.
Sec. 321.46. (A) To enhance the
background and working knowledge of county treasurers in
governmental accounting, portfolio reporting and compliance,
investments, and cash management, the auditor of state and the
treasurer of state shall conduct education programs for persons
elected for the first time to the office of county treasurer and
shall hold annual continuing education programs for persons who
continue to hold the office of county treasurer. Education
programs for newly elected county treasurers shall be held
between the first day of December and the first Monday of
September next following that person's election to the office of
county treasurer. Similar initial training may also be provided
to any county treasurer who is appointed to fill a vacancy or
who is elected at a special election.
(B)(1) The auditor of state shall determine the manner and content of the
education
programs in the subject areas of governmental accounting and
portfolio reporting and compliance. In those areas, newly elected county
treasurers shall be required to take at least
thirteen hours of education before taking office.
(2) The treasurer of state shall determine the manner and
content of the education programs in the subject areas of
investments and cash management. In those areas, newly elected
county treasurers shall be required to take at least thirteen
hours of education before taking office.
(3) After completing one year in office, a county treasurer shall be
required to take not less than twelve hours annually of continuing education.
The treasurer of state shall determine the manner and content of the education
programs in the subject areas of investments, cash management, the
collection of taxes, ethics, and any other subject area that the treasurer of
state determines is reasonably related to the duties of the office of the
county
treasurer. The auditor of state shall determine the manner and content of the
education programs in the subject areas of governmental accounting, portfolio
reporting and compliance, office management, and any other subject area that
the auditor of state determines is reasonably related to the duties of the
office of the county treasurer.
(C) The auditor of state
and the treasurer of state may each charge counties a registration
fee that will meet actual and necessary expenses of the training
of county treasurers, including instructor fees, site
acquisition costs, and the cost of course materials. The
necessary personal expenses of county treasurers as a result of
attending the training programs shall be borne by the counties
the treasurers represent.
(D) The auditor of state
and the treasurer of state may allow any other interested person
to attend any of the education programs that are held pursuant
to this section, provided that before attending any such
education program, the interested person shall pay to either the
auditor of state or the treasurer of state, as appropriate, the full
registration fee set for the education program.
(E) A county treasurer who fails to
complete the initial or continuing education programs required by this section
without a valid health-related excuse or other special hardship shall be
restricted to investing in the Ohio subdivision's fund pursuant to division
(A)(6) of section 135.35 of the Revised
Code, IN NO-LOAD MONEY MARKET MUTUAL FUNDS PURSUANT TO DIVISION
(A)(5) OF SECTION 135.35 of the Revised Code, or in time certificate of
deposits or deposit accounts pursuant to
division (A)(3) of section 135.35 of the Revised Code. A county treasurer who
has failed to complete the initial or continuing education programs and
invests in other than the investments permitted by this division shall be
subject to removal from office upon
complaint and investigation by the county prosecuting attorney, a hearing,
and a resolution adopted by the board of county commissioners
approving the removal from office.
(F)(1) There is hereby
created in the state treasury the county treasurer education
fund, to be used by the treasurer of
state for actual and necessary expenses of education
programs held pursuant to this section. All registration fees
collected by the treasurer of state under this section shall be paid
into that fund.
(2) All registration fees collected by the auditor of state under
this section shall be paid into the auditor of state training program fund
established under section 117.44 of the Revised Code.
(G) The treasurer of state, with the
advice and consent of the auditor of state, may adopt reasonable
rules not inconsistent with this section for the implementation
of this section.
Section 2. That existing sections 135.14, 135.143, 135.22, 135.35, and 321.46
of the
Revised Code are hereby repealed.
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