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S. B. No. 173 As IntroducedAs Introduced
129th General Assembly | Regular Session | 2011-2012 |
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Cosponsors:
Senators Beagle, Brown, Jones, Jordan, Manning, Obhof, Patton, Seitz, Stewart
A BILL
To amend sections 135.18 and 135.37 and to enact
sections 135.145 and 135.354 of the Revised Code
to permit a political subdivision, upon the
deposit of public moneys with an eligible public
depository, to arrange for the public depository
to redeposit those moneys with other federally
insured banks and savings and loan associations in
accordance with specified conditions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
Section 1. That sections 135.18 and 135.37 be amended and
sections 135.145 and 135.354 of the Revised Code be enacted to
read as follows:
Sec. 135.145. (A) In addition to the authority provided in
section 135.14 of the Revised Code for the investment or deposit
of interim moneys, the treasurer or governing board of a political
subdivision, upon the deposit of interim moneys with, or the award
of active or inactive deposits to, an eligible public depository
described in section 135.03 of the Revised Code and designated
pursuant to section 135.12 of the Revised Code, may authorize the
public depository to arrange for the redeposit of such public
moneys in accordance with the following conditions:
(1) The public depository, on or after the date the public
moneys are received, arranges for the redeposit of the moneys into
deposit accounts in one or more federally insured banks or savings
and loan associations that are located in the United States, and
serves as custodian of the moneys for the treasurer or governing
board of the political subdivision.
(2) If the amount of the public moneys deposited with and
held at the close of business by the public depository exceeds the
amount insured by the federal deposit insurance corporation, the
excess amount is subject to the pledging requirements described in
section 135.18 or 135.181 of the Revised Code.
(3) The full amount of the public moneys redeposited by the
public depository into deposit accounts in banks or savings and
loan associations, plus any accrued interest, is insured by the
federal deposit insurance corporation.
(4) On the same date the public moneys are redeposited by the
public depository, the public depository receives an amount of
deposits from customers of other financial institutions that is
equal to the amount of moneys redeposited by the public
depository.
(B) Except as provided in division (A)(2) of this section,
the public moneys deposited in accordance with this section are
not subject to the 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 or 135.145 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 the
portion or amount of such moneys as is at 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 the failure to pay. Thirty days' notice of 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
which case, the treasurer shall accept the written receipt of the
trustee describing the securities 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 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. 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 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 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 securities. If the superintendent finds that the
applicant has been so authorized and 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 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 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. 135.354. (A) In addition to the authority provided in
section 135.35 of the Revised Code for the investment or deposit
of inactive moneys, the investing authority of a county, upon the
deposit of active or inactive moneys with an eligible public
depository described in section 135.32 of the Revised Code and
selected by the investing authority, may authorize the public
depository to arrange for the redeposit of such public moneys in
accordance with the following conditions:
(1) The public depository, on or after the date the public
moneys are received, arranges for the redeposit of the moneys into
deposit accounts in one or more federally insured banks or savings
and loan associations that are located in the United States, and
serves as custodian of the moneys for the investing authority.
(2) If the amount of the public moneys deposited with and
held at the close of business by the public depository exceeds the
amount insured by the federal deposit insurance corporation, the
excess amount is subject to the pledging requirements described in
section 135.181 or 135.37 of the Revised Code.
(3) The full amount of the public moneys redeposited by the
public depository into deposit accounts in banks or savings and
loan associations, plus any accrued interest, is insured by the
federal deposit insurance corporation.
(4) On the same date the public moneys are redeposited by the
public depository, the public depository receives an amount of
deposits from customers of other financial institutions that is
equal to the amount of moneys redeposited by the public
depository.
(B) Except as provided in division (A)(2) of this section,
public moneys deposited in accordance with this section are not
subject to the pledging requirements described in section 135.181
or 135.37 of the Revised Code.
Sec. 135.37. (A) Any Except as provided in section 135.353
or 135.354 of the Revised Code, any institution described in
section 135.32 of the Revised Code shall, at the time it receives
a deposit of public moneys under section 135.33 or 135.35 of the
Revised Code, pledge to and deposit with the investing authority,
as security for the repayment of all public moneys to be
deposited, eligible securities of aggregate market value equal to
or in excess of the amount of public moneys to be at the time so
deposited. Any securities listed in division (B) of section 135.18
of the Revised Code are eligible for such purpose. The collateral
so pledged or deposited may be in an amount that when added to the
portion of the deposit insured by the federal deposit insurance
corporation or any other agency or instrumentality of the federal
government will, in the aggregate, equal or exceed the amount of
public moneys so deposited; provided that, when an investment of
inactive moneys consists of the purchase of one or more of the
type of securities listed in division (A)(1) or (2) of section
135.35 of the Revised Code, no additional collateral need be
pledged or deposited.
The investing authority also may require that additional
eligible securities be pledged or deposited when depreciation
occurs in the market value of any securities pledged or deposited.
(B) The public depository may, at any time, provide for the
exchange or substitution of securities for other eligible
securities or the release of securities when the amount of public
moneys on deposit does not require that they be pledged or
deposited, by notifying the investing authority of its intent to
take such action.
Upon proper notification of the public depository's desire
for release of securities, the investing authority may sign a
release of such securities provided that the aggregate amount of
collateral remaining pledged or deposited meets the requirements
of divisions (A) to (E) of this section.
When a public depository desires to exchange or substitute
securities for other eligible securities, the investing authority
may release the securities pledged or deposited after the deposit
of other securities having a current market value equal to or
greater than the current market value of securities then on
deposit or after a safekeeping receipt has been received
evidencing the deposit and pledge of such securities.
(C) Upon request from the investing authority, the trustee or
the public depository shall furnish a statement of the securities
pledged against the public moneys deposited in the public
depository.
(D) If a public depository fails to pay over any part of any
public deposit made as provided by law, the investing authority
shall sell any pledged or deposited securities, as prescribed in
division (C) of section 135.18 of the Revised Code.
(E) A public depository may designate, in accordance with the
provisions of division (D) of section 135.18 of the Revised Code,
a trustee for the safekeeping of any pledged securities. Such
trustee shall be any bank or other institution eligible as a
trustee under division (I) of section 135.18 of the Revised Code,
except that, for the purposes of this section, a bank to which a
certificate of qualification is issued shall be an institution
mentioned in division (A) of section 135.32 of the Revised Code.
(F) In lieu of the pledging requirements prescribed in
divisions (A) to (E) of this section, an institution designated as
a public depository may pledge securities pursuant to section
135.181 of the Revised Code.
Section 2. That existing sections 135.18 and 135.37 of the
Revised Code are hereby repealed.
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