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Sub. H. B. No. 313 As Passed by the House
As Passed by the House
126th General Assembly | Regular Session | 2005-2006 |
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Representatives Stewart, J., Seitz, Webster, McGregor, J., Patton, T., Schneider, Wagoner, Widener, Hagan, Gibbs, Coley, Boccieri, Koziura, Buehrer, Domenick, Evans, C., Healy, Hughes, Martin, Otterman, Reidelbach, Schaffer, Stewart, D., Uecker
A BILL
To amend sections 135.18, 135.181, and 135.353 and to enact section 135.144 of the Revised Code to reduce pledging requirements by public depositories securing repayment of public moneys; to specify debt and other obligations of certain out-of-state subdivisions as eligible to secure repayment of state or political subdivision public moneys; and to authorize investment of certain political subdivision and county public moneys in certificates of deposit issued by federally insured banks and savings and loan associations, wherever located, provided certain conditions apply.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1.
That sections 135.18, 135.181, and 135.353 be amended and section 135.144 of the Revised Code be enacted to read as follows:
Sec. 135.144. (A) In addition to the authority provided in section 135.14 of the Revised Code, the treasurer or governing board of a political subdivision may invest interim moneys in certificates of deposit in accordance with all of the following: (1) The interim moneys initially are deposited with an eligible public depository described in section 135.03 of the Revised Code and selected, pursuant to section 135.12 of the Revised Code, by the governing board of a political subdivision, for interim moneys of the political subdivision. (2) For the treasurer or governing board of the political subdivision depositing the interim moneys pursuant to division (A)(1) of this section, the eligible public depository selected pursuant to that division invests the interim moneys in certificates of deposit of one or more federally insured banks or savings and loan associations, wherever located. The full amount of principal and any accrued interest of each certificate of deposit invested in pursuant to division (A)(2) of this section shall be insured by federal deposit insurance. (3) For the treasurer or governing board of the political subdivision depositing the interim moneys pursuant to division (A)(1) of this section, the eligible public depository selected pursuant to that division acts as custodian of the certificates of deposit described in division (A)(2) of this section. (4) At the same time that the eligible public depository selected in accordance with division (A)(1) of this section invests the deposit received pursuant to that division in the certificates of deposit described in division (A)(2) of this section, and the certificates of deposit are issued by the bank or savings and loan association, the eligible public depository receives an amount of deposits from customers of other federally insured financial institutions, wherever located, that are equal to or greater than the amount of the interim money initially deposited pursuant to division (A)(1) of this section by the treasurer or governing board of a political subdivision. (B) Interim moneys deposited or invested in accordance with division (A) of this section are not subject to any pledging requirements described in section 135.18 or 135.181 of the Revised Code.
Sec. 135.18. (A) The treasurer, before making the initial
deposit in a public depository pursuant to an award made under
sections 135.01 to 135.21 of the Revised Code, except as provided in section 135.144 of the Revised Code, shall require the
institution designated as a public depository to pledge to and
deposit with the treasurer, as security for the repayment of all
public
moneys to be deposited in the public depository during the
period
of designation pursuant to the award, eligible securities
of
aggregate market value equal to the excess of the amount of
public moneys to be at the time so deposited, over and above such the
portion or amount of such moneys as is at such that time insured by
the
federal deposit insurance corporation or by any other agency
or
instrumentality of the federal government. In the case of any
deposit other
than the initial
deposit made during the period of
designation, the amount of the
aggregate market value of
securities required to be pledged and
deposited shall be equal to
the difference between the amount of
public moneys on deposit in
such public depository plus the
amount to be so deposited, minus
the portion or amount of the
aggregate as is at the time insured
as provided in this section. The
treasurer may require additional
eligible securities to be
deposited to provide for any
depreciation which may occur in the
market value of any of the
securities so deposited. (B) The following securities shall be eligible for the
purposes of this section: (1) Bonds, notes, or other obligations of the United
States;
or bonds, notes, or other obligations guaranteed as to
principal
and interest by the United States or those for which
the faith of
the United States is pledged for the payment of
principal and
interest thereon, by language appearing in the
instrument
specifically providing such guarantee or pledge and
not merely by
interpretation or otherwise; (2) Bonds, notes, debentures, letters of credit, or other
obligations or
securities issued by any federal government agency
or instrumentality, or the
export-import bank of Washington;
bonds, notes, or other
obligations guaranteed as to principal and
interest by the United
States or those for which the faith of the
United States is
pledged for the payment of principal and interest
thereon, by
interpretation or otherwise and not by language
appearing in the
instrument specifically providing such guarantee
or pledge; (3) Obligations of or fully insured or fully guaranteed by
the United States
or any federal government agency or
instrumentality; (4) Obligations partially insured or partially guaranteed by
any federal
agency or instrumentality; (5) Obligations of or fully guaranteed by the federal
national mortgage
association, federal home loan mortgage
corporation, federal farm credit bank,
or student loan marketing
association; (6) Bonds and other obligations of this state; (7) Bonds and other obligations of any county, township,
school district, municipal corporation, or other legally
constituted taxing subdivision of this state, which is not at the
time of such deposit, in default in the payment of principal or
interest on any of its bonds or other obligations, for which the
full faith and credit of the issuing subdivision is
pledged; (8) Bonds of other states of the United States which have
not during the ten years immediately preceding the time of such
deposit defaulted in payments of either interest or principal on
any of their bonds; (9) Shares of 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; (10) A surety bond issued by a corporate surety licensed by
the
state and authorized to issue surety bonds in this state
pursuant to
Chapter 3929. of the Revised Code, and qualified to
provide
surety bonds to the federal government pursuant to 96
Stat. 1047
(1982), 31 U.S.C.A. 9304; (11) Bonds or other obligations of any county, municipal corporation, or other legally constituted taxing subdivision of another state of the United States, or of any instrumentality of such county, municipal corporation, or other taxing subdivision, for which the full faith and credit of the issuer is pledged and, at the time of purchase of the bonds or other obligations, rated in one of the two highest categories by at least one nationally recognized standard rating service. (C) If the public depository fails to pay over any part of
the public deposit made therein as provided by law, the treasurer
shall sell at public sale any of the bonds or other securities
deposited with the treasurer pursuant to this section or section
131.09 of the Revised Code, or shall draw on any letter of credit
to the
extent of such the failure to pay. Thirty days' notice of such the
sale shall be
given in a newspaper of general circulation at
Columbus, in the
case of the treasurer of state, and at the county
seat of the
county in which the office of the treasurer is
located, in the
case of any other treasurer. When a sale of bonds
or other
securities has been so made and upon payment to the
treasurer of
the purchase money, the treasurer shall transfer such
bonds or
securities whereupon the absolute ownership of such bonds
or
securities shall pass to the purchasers. Any surplus remaining
after deducting the amount due the state or subdivision and
expenses of sale shall be paid to the public depository. (D) An institution designated as a public depository may,
by
written notice to the treasurer, designate a qualified trustee
and
deposit the eligible securities required by this section with
the
trustee for safekeeping for the account of the treasurer and
the
institution as a public depository, as their respective
rights to
and interests in such securities under this section may
appear and
be asserted by written notice to or demand upon the
trustee. In
such which case, the treasurer shall accept the written
receipt of the
trustee describing the securities which that have been
deposited with
the trustee by the public depository, a copy of
which shall also
be delivered to the public depository.
Thereupon all such
securities so deposited with the trustee are
deemed to be pledged
with the treasurer and to be deposited with
the treasurer, for all
the purposes of this section. (E) The governing board may make provisions for the
exchange
and release of securities and the substitution of other
eligible
securities therefor except where the public depository
has
deposited eligible securities with a trustee for safekeeping
as
provided in this section. (F) When the public depository has deposited eligible
securities described in division (B)(1) of this section with a
trustee for safekeeping, the public depository may at any time
substitute or exchange eligible securities described in division
(B)(1) of this section having a current market value equal to or
greater than the current market value of the securities then on
deposit and for which they are to be substituted or exchanged,
without specific authorization from any governing board, boards,
or treasurer of any such substitution or exchange. (G) When the public depository has deposited eligible
securities described in divisions (B)(2) to (9) of this
section
with a trustee for safekeeping, the public depository may at any
time substitute or exchange eligible securities having a current
market value equal to or greater than the current market value of
the securities then on deposit and for which they are to be
substituted or exchanged without specific authorization of any
governing board, boards, or treasurer of any such substitution or
exchange only if: (1) The treasurer has authorized the public depository to
make such substitution or exchange on a continuing basis during a
specified period without prior approval of each substitution or
exchange. Such The authorization may be effected by the treasurer
sending to the trustee a written notice stating that substitution
may be effected on a continuing basis during a specified period
which shall not extend beyond the end of the period of
designation
during which the notice is given. The trustee may
rely upon such this
notice and upon the period of authorization stated
therein and
upon the period of designation stated therein. (2) No continuing authorization for substitution has been
given by the treasurer, the public depository notifies the
treasurer and the trustee of an intended substitution or
exchange,
and the treasurer fails to object to the trustee as to
the
eligibility or market value of the securities being
substituted
within ten calendar days after the date appearing on
the notice of
proposed substitution. The notice to the treasurer
and to the
trustee shall be given in writing and delivered
personally or by
certified or registered mail with a return
receipt requested. The
trustee may assume in any case that the
notice has been delivered
to the treasurer. In order for
objections of the treasurer to be
effective, receipt of the
objections must be acknowledged in
writing by the trustee. (3) The treasurer gives written authorization for a
substitution or exchange of specific securities. (H) The public depository shall notify any governing
board,
boards, or treasurer of any substitution or exchange
under
division (G)(1) or (2) of this section. Upon request from
the
treasurer, the trustee shall furnish a statement of the
securities
pledged against such public deposits. (I) Any federal reserve bank or branch thereof located in
this state
or federal home loan bank, without compliance with
Chapter 1111. of the Revised Code and
without becoming
subject to
any other law
of this state relative to the exercise by
corporations of trust
powers generally, is qualified to act as
trustee for the
safekeeping of securities, under this section.
Any
institution
mentioned in section 135.03 of the Revised Code
that
holds a
certificate of qualification issued by the
superintendent
of
financial institutions or any institution
complying with
sections 1111.04,
1111.05, and 1111.06 of the
Revised Code, is
qualified
to act as trustee for the safekeeping
of securities,
other than
those belonging to itself, under this
section. Upon
application
to the superintendent in writing by any
such an
institution, the
superintendent
shall investigate the
applicant
and ascertain whether or not it
has been authorized to
execute and
accept trusts in this state
and has safe and adequate
vaults and
efficient supervision
thereof for the storage and
safekeeping
within this state of such
securities. If the
superintendent finds
that the applicant has
been so authorized and
does have has such
vaults and supervision
thereof, the superintendent
shall approve
the application and issue
a certificate to that
effect, the
original or any certified copy of which
shall be
conclusive
evidence that the institution therein named is
qualified to act as
trustee for the purposes of this section with
respect to
securities other than those belonging to itself. Notwithstanding the fact that a public depository is
required
to pledge eligible securities in certain amounts to
secure
deposits of public moneys, a trustee shall have has no duty or
obligation to determine the eligibility, market value, or face
value of any securities deposited with the trustee by a public
depository. This applies in all situations including, without
limitation, a substitution or exchange of securities. Any charges or compensation of a designated trustee for
acting as such under this section shall be paid by the public
depository and in no event shall be chargeable to the state or
the
subdivision or to the treasurer or to any officer of the
state or
subdivision. The charges or compensation shall
not be
a lien or
charge upon the securities deposited for safekeeping
prior or
superior to the rights to and interests in such the
securities of the
state or the subdivision or of the treasurer.
The treasurer and
the treasurer's bonders or surety
shall be relieved from any
liability to the state or the subdivision or to the
public
depository for the loss or destruction of any securities
deposited
with a qualified trustee pursuant to this section.
Sec. 135.181. (A) As used in this section: (1) "Public depository" means that term as defined in
section 135.01 of the Revised Code, but also means an institution
which receives or holds any public deposits as defined in section
135.31 of the Revised Code. (2) "Public deposits," "public moneys," and "treasurer"
mean
those terms as defined in section 135.01 of the Revised
Code, but
also have the same meanings as are set forth in section
135.31 of
the Revised Code. (3) "Subdivision" means that term as defined in section
135.01 of the Revised Code, but also includes a county. (B) In lieu of the pledging requirements prescribed in
sections 135.18 and 135.37 of the Revised Code, an institution
designated as a public depository at its option may pledge a
single pool of eligible securities to secure the repayment of all
public moneys deposited in the institution and not otherwise
secured pursuant to law, provided that at all times the total
market
value of the securities so pledged is at least equal to
one
hundred five per cent of the total amount of all public
deposits
to be secured by the pooled securities, including the
portion of
such deposits that are not covered by any federal deposit
insurance. Each such
institution shall carry in its accounting
records at all times a
general ledger or other appropriate
account of the total amount of
all public deposits to be secured
by the pool, as determined at
the opening of business each day,
and the total market value of
securities pledged to secure such
deposits. (C) The securities
described in division (B) of section
135.18 of the Revised Code
shall be eligible as collateral for the
purposes of division (B)
of this section, provided no such
securities pledged as
collateral are at any time in default as to
either principal or
interest. (D) The state and each subdivision shall have an undivided
security interest in the pool of securities pledged by a public
depository pursuant to division (B) of this section in the
proportion that the total amount of the state's or subdivision's
public moneys secured by the pool bears to the total amount of
public deposits so secured. (E) An institution designated as a public depository shall
designate a qualified trustee and deposit with the trustee for
safekeeping the eligible securities pledged pursuant to division
(B) of this section. The institution shall give written notice
of
the qualified trustee to any treasurer or treasurers
depositing
public moneys for which such securities are pledged. The
treasurer
shall accept the written receipt of the trustee
describing the pool of securities so deposited by the depository,
a copy of which also shall be delivered to the depository. (F) Any federal reserve bank or branch thereof located in
this state
or federal home loan bank, without compliance with
Chapter 1111. of the Revised Code and
without becoming
subject to
any other law
of this state relative to the exercise by
corporations of trust
powers generally, is qualified to act as
trustee for the
safekeeping of securities, under this section.
Any
institution
mentioned in section 135.03 or 135.32 of the
Revised
Code which holds a
certificate of qualification issued by
the
superintendent of financial
institutions or any
institution
complying with sections 1111.04, 1111.05, and 1111.06 of the
Revised Code is qualified to act as trustee
for the safekeeping of
securities under this section, other than
those belonging to
itself or to an affiliate as defined in
division (A) of section
1101.01 of the Revised Code. Upon
application to the
superintendent in writing by any such an
institution, the
superintendent shall investigate the applicant and ascertain
whether or not it has been authorized to execute and accept
trusts
in this state and has safe and adequate vaults and
efficient
supervision thereof for the storage and safekeeping of
such
securities. If the superintendent finds that the applicant
has
been so authorized and does have has such vaults and supervision
thereof, the superintendent shall approve the application and
issue
a certificate
to that effect, the original or any certified
copy of which shall
be conclusive evidence that the institution
named therein is
qualified to act as trustee for the purposes of
this section with
respect to securities other than those belonging
to itself or to
an affiliate. (G) The public depository at any time may substitute,
exchange, or release eligible securities deposited with a
qualified trustee pursuant to this section, provided that such
substitution, exchange, or release does not reduce the total
market value of the securities to an amount that is less than one
hundred five per cent of the total amount of public deposits
as
determined pursuant to division (B) of this section. (H) Notwithstanding the fact that a public depository is
required to pledge eligible securities in certain amounts to
secure deposits of public moneys, a trustee shall have has no duty or
obligation to determine the eligibility, market value, or face
value of any securities deposited with the trustee by a public
depository. This applies in all situations including, but not
limited to, a substitution or exchange of securities, but
excluding those situations effectuated by division (I) of this
section in which the trustee is required to determine face and
market value. (I) If the public depository fails to pay over any part of
the public deposits made therein as provided by law and secured
pursuant to division (B) of this section, the treasurer shall
give
written notice of this failure to the qualified trustee
holding
the pool of securities pledged against public moneys
deposited in
the depository, and at the same time shall send a
copy of this
notice to the depository. Upon receipt of such this
notice, the
trustee shall transfer to the treasurer for public
sale such of,
the pooled securities as may be that are necessary to produce
an amount
equal to the deposits made by the treasurer and not
paid over,
less the portion of such the deposits covered by any
federal deposit
insurance, plus any accrued interest due on such the
deposits;
however, the amount shall not exceed the state's
or
subdivision's
proportional security interest in the market value
of the pool as
of the date of the depository's failure to pay
over the deposits,
as such that interest and value are determined by
the trustee. The
treasurer shall sell at public sale any of the
bonds or other
securities so transferred. Thirty days' notice of
such the sale shall
be given in a newspaper of general circulation at
Columbus, in the
case of the treasurer of state, and at the
county seat of the
county in which the office of the treasurer is
located, in the
case of any other treasurer. When a sale of
bonds or other
securities has been so made and upon payment to
the treasurer of
the purchase money, the treasurer shall transfer
such bonds or
securities whereupon the absolute ownership of such
bonds or
securities shall pass to the purchasers. Any surplus
after
deducting the amount due the state or subdivision and
expenses of
sale shall be paid to the public depository. (J) Any charges or compensation of a designated trustee
for
acting as such under this section shall be paid by the public
depository and in no event shall be chargeable to the state or
subdivision or to the treasurer or to any officer of the state or
subdivision. The charges or compensation shall not be a
lien or
charge upon the securities deposited for safekeeping prior or
superior to the rights to and interests in such the securities of the
state or subdivision or of the treasurer. The treasurer and the
treasurer's
bonders or surety shall be relieved from any liability
to
the state or subdivision or to the public depository for the
loss or
destruction of any securities deposited with a qualified
trustee
pursuant to this section. (K) In lieu of placing its unqualified endorsement on each
security, a public depository pledging securities pursuant to
division (B) of this section that are not negotiable without its
endorsement or assignment may furnish to the qualified trustee
holding the securities an appropriate resolution and irrevocable
power of attorney authorizing the trustee to assign the
securities. The resolution and power of attorney shall conform
to
such terms and conditions as the trustee prescribes. (L) Upon request of a treasurer no more often than four
times per year, a public depository shall report the amount of
public moneys deposited by the treasurer and secured pursuant to
division (B) of this section, and the total market value of the
pool of securities pledged to secure public moneys held by the
depository, including those deposited by the treasurer. Upon
request of a treasurer no more often than four times per year, a
qualified trustee shall report the total market
value of the pool
of
securities deposited with it by the depository and shall
provide
an itemized list of the securities in the pool. These
reports
shall be made as of the date the treasurer specifies.
Sec. 135.353. In addition to the investments specified in section 135.35 of
the Revised Code, the investing authority of a county may invest do both of the following: (A) Invest inactive or
public moneys in linked deposits as authorized by resolution adopted pursuant
to section 135.80 or 135.801 of the Revised Code; (B) Invest inactive moneys in certificates of deposit in accordance with all of the following:
(1) The inactive moneys initially are deposited with an eligible public depository described in section 135.32 of the Revised Code and selected by the investing authority.
(2) For the investing authority depositing the inactive moneys pursuant to division (B)(1) of this section, the eligible public depository selected pursuant to that division invests the inactive moneys in certificates of deposit of one or more federally insured banks or savings and loan associations, wherever located. The full amount of principal and any accrued interest of each certificate of deposit invested in pursuant to division (B)(2) of this section shall be insured by federal deposit insurance.
(3) For the investing authority depositing the inactive moneys pursuant to division (B)(1) of this section, the eligible public depository selected pursuant to that division acts as custodian of the certificates of deposit described in division (B)(2) of this section.
(4) At the same time that the eligible public depository selected in accordance with division (B)(1) of this section invests the deposit received pursuant to that division in the certificates of deposit described in division (B)(2) of this section, and the certificates of deposit are issued by the bank or savings and loan association, the eligible public depository receives an amount of deposits from customers of other federally insured financial institutions, wherever located, that are equal to or greater than the amount initially deposited by the investing authority pursuant to division (B)(1) of this section.
(C) Inactive moneys deposited or invested in accordance with division (B) of this section are not subject to any pledging requirements described in section 135.181 or 135.37 of the Revised Code.
Section 2. That existing sections 135.18, 135.181, and 135.353 of the Revised Code are hereby repealed.
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