Bill Text: CA AB1156 | 2009-2010 | Regular Session | Amended

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: State and local surplus funds: investments.

Spectrum: Partisan Bill (Democrat 2-0)

Status: (Introduced - Dead) 2010-02-02 - From committee: Filed with the Chief Clerk pursuant to Joint Rule 56. [AB1156 Detail]

Download: California-2009-AB1156-Amended.html

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BILL NUMBER: AB 1156	AMENDED
	BILL TEXT

	AMENDED IN ASSEMBLY  MARCH 27, 2009

INTRODUCED BY   Assembly Member Nava
    (   Principal coauthor:   Assembly Member
  Bass   )

                        FEBRUARY 27, 2009

   An act to  add Section 16430.1 to   amend
Section 53601.8 of, and to add Section 16430.1 to,  the
Government Code, relating to state funds.



	LEGISLATIVE COUNSEL'S DIGEST


   AB 1156, as amended, Nava. Surplus funds:  local agencies:
 investments. 
   Existing 
    (1)     Existing  law specifies the
types of securities that are eligible for the investment of surplus
state funds.
   This bill would require that the first priority for the investment
of surplus moneys be given to time deposits in an eligible community
bank, as defined, to the maximum extent consistent with liquidity
requirements and prudent management of surplus moneys. 
   (2) Existing law prescribes the instruments in, and criteria by,
which local agencies, as defined, may invest surplus funds. Existing
law authorizes, until January 1, 2012, the investment of up to 30% of
those funds in certificates of deposit at a commercial bank, savings
bank, savings and loan association, or credit union that uses a
private sector entity that assists in the placement of certificates
of deposit, as specified.  
   This bill would provide that a local agency, when it chooses to
invest surplus funds in certificates of deposit, to give priority to
an eligible community bank. 
   Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 16430.1 is added to the Government Code, to
read:
   16430.1.    (a) Notwithstanding Section 16430 or any other
provision of law, the first priority for the investment of surplus
moneys shall be, to the maximum extent consistent with liquidity
requirements and prudent management of surplus moneys, time deposits
in an eligible community bank, if the time deposits of surplus funds
and all other investments of surplus moneys made pursuant to this
section are in compliance with all other requirements established by
state law.
   (b) For purposes of this section "eligible community bank" means a
state or national bank located in this state that meets all of the
following requirements and conditions: 
   (1) Has five billion dollars ($5,000,000,000) or less in assets.
 
   (1) 
    (2)  The bank is selected by the Treasurer for the
safekeeping of money belonging to or in the custody of the state.

   (2) 
    (3)  The bank has received an overall rating of not less
than "satisfactory" in its most recent evaluation by the appropriate
federal financial supervisory agency of the bank's record of meeting
the credit needs of the state's communities, including low- and
moderate-income neighborhoods, pursuant to Section 2906 of Title 12
of the United States Code. 
   (3) 
    (4)  The bank is eligible to receive deposits only to
the extent that it complies with the requirements of Chapter 4
(commencing with Section 16500).
   SEC. 2.    Section 53601.8 of the  
Government Code   is amended to read: 
   53601.8.  Notwithstanding Section 53601 or any other provision of
this code, a local agency, at its discretion, may invest a portion of
its surplus funds in certificates of deposit at a commercial bank,
savings bank, savings and loan association, or credit union that uses
a private sector entity that assists in the placement of
certificates of deposit,  provided that   if
 the purchases of certificates of deposit pursuant to this
section, Section 53635.8, and subdivision (h) of Section 53601 do
not, in total, exceed 30 percent of the agency's funds that may be
invested for this purpose. The following conditions shall apply:
   (a) The local agency shall choose a nationally or state chartered
commercial bank, savings bank, savings and loan association, or
credit union in this state to invest the funds, which shall be known
as the "selected" depository institution.
   (b) The selected depository institution may submit the funds to a
private sector entity that assists in the placement of certificates
of deposit with one or more commercial banks, savings banks, savings
and loan associations, or credit unions that are located in the
United States, for the local agency's account.
   (c) The full amount of the principal and the interest that may be
accrued during the maximum term of each certificate of deposit shall
at all times be insured by the Federal Deposit Insurance Corporation
or the National Credit Union Administration.
   (d) The selected depository institution shall serve as a custodian
for each certificate of deposit that is issued with the placement
service for the local agency's account.
   (e) At the same time the local agency's funds are deposited and
the certificates of deposit are issued, the selected depository
institution shall receive an amount of deposits from other commercial
banks, savings banks, savings and loan associations, or credit
unions that, in total, are equal to, or greater than, the full amount
of the principal that the local agency initially deposited through
the selected depository institution for investment.
   (f) A local agency may not invest surplus funds with a selected
depository institution for placement as certificates of deposit
pursuant to this section on or after January 1, 2012. A local agency'
s surplus funds, invested pursuant to this section before January 1,
2012, may remain invested in certificates of deposit issued through a
private sector entity for the full term of each certificate of
deposit.
   (g)  Notwithstanding subdivisions (a) to (f), inclusive, no credit
union may act as a selected depository institution under this
section or Section 53635.8 unless both of the following conditions
are satisfied:
   (1) The credit union offers federal depository insurance through
the National Credit Union Administration.
   (2) The credit union is in possession of written guidance or other
written communication from the National Credit Union Administration
authorizing participation of federally-insured credit unions in one
or more certificate of deposit placement services and affirming that
the moneys held by those credit unions while participating in a
deposit placement service will at all times be insured by the federal
government.
    (h)     (1)     The local
agency shall give priority, with regard to making investments in
certificates of deposit pursuant to this section, to eligible
community   banks.  
   (2) For purposes of this section "eligible community bank" means a
state or national bank located in this state that meets both of the
following requirements and conditions:  
   (A) The bank has five billion dollars ($5,000,000,000) in assets.
 
   (B) The bank has received an overall rating of not less than
"satisfactory" in its most recent evaluation by the appropriate
federal financial supervisory agency of the bank's record of meeting
the credit needs of the state's communities, including low- and
moderate-income neighborhoods, pursuant to Section 2906 of Title 12
of the United States Code.  
   (h) 
    (i)  It is the intent of the Legislature that nothing in
this section shall restrict competition among private sector
entities that provide placement services pursuant to this section.