Bill Text: MI HB4397 | 2009-2010 | 95th Legislature | Chaptered
Bill Title: Education; financing; investment of certain deposit; include credit unions. Amends secs. 622 & 1223 of 1976 PA 451 (MCL 380.622 & 380.1223). TIE BAR WITH: SB 0195'09
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2009-05-05 - Assigned Pa 22'09 With Immediate Effect [HB4397 Detail]
Download: Michigan-2009-HB4397-Chaptered.html
Act No. 22
Public Acts of 2009
Approved by the Governor
May 5, 2009
Filed with the Secretary of State
May 5, 2009
EFFECTIVE DATE: May 5, 2009
STATE OF MICHIGAN
95TH LEGISLATURE
REGULAR SESSION OF 2009
Introduced by Rep. Mayes
ENROLLED HOUSE BILL No. 4397
AN ACT to amend 1976 PA 451, entitled “An act to provide a system of public instruction and elementary and secondary schools; to revise, consolidate, and clarify the laws relating to elementary and secondary education; to provide for the organization, regulation, and maintenance of schools, school districts, public school academies, intermediate school districts, and other public school entities; to prescribe rights, powers, duties, and privileges of schools, school districts, public school academies, intermediate school districts, and other public school entities; to provide for the regulation of school teachers and certain other school employees; to provide for school elections and to prescribe powers and duties with respect thereto; to provide for the levy and collection of taxes; to provide for the borrowing of money and issuance of bonds and other evidences of indebtedness; to establish a fund and provide for expenditures from that fund; to provide for and prescribe the powers and duties of certain state departments, the state board of education, and certain other boards and officials; to provide for licensure of boarding schools; to prescribe penalties; and to repeal acts and parts of acts,” by amending sections 622 and 1223 (MCL 380.622 and 380.1223), as amended by 2008 PA 307.
The People of the State of Michigan enact:
Sec. 622. (1) The intermediate school board shall select financial institutions for the deposit of school funds. The intermediate school board shall keep a set of coded accounts to be approved by the superintendent of public instruction and shall have its books audited at least annually by a certified public accountant. General operating funds, building and site funds, cooperative education funds, special education funds, vocational-technical education funds, and debt retirement funds shall be maintained separately and shall not be commingled, except that the intermediate school board, by resolution, may authorize the treasurer to combine money from more than 1 fund for the purpose of making an investment authorized by subsection (2)(g).
(2) The treasurer of an intermediate school district, if authorized by resolution of the intermediate school board, may invest general operating funds, special education funds, area vocational-technical education funds, building and site funds, cooperative education funds, and debt retirement funds of the district. Investments shall be made subject to subsection (4) and shall be restricted to any of the following:
(a) Bonds, bills, or notes of the United States or obligations of this state.
(b) Certificates of deposit issued by a financial institution.
(c) Commercial paper rated prime at the time of purchase and maturing not more than 270 days after the date of purchase.
(d) Securities issued or guaranteed by agencies or instrumentalities of the United States government.
(e) United States government or federal agency obligation repurchase agreements.
(f) Bankers’ acceptances issued by a bank that is a member of the federal deposit insurance corporation.
(g) Investment pools, as authorized by the surplus funds investment pool act, 1982 PA 367, MCL 129.111 to 129.118, composed entirely of instruments that are legal for direct investment by an intermediate school district.
(h) Mutual funds composed entirely of investment vehicles that are legal for direct investment by an intermediate school district.
(i) Certificates of deposit issued in accordance with the following conditions:
(i) The funds are initially invested through a financial institution that is not ineligible to be a depository of surplus funds belonging to this state under section 6 of 1855 PA 105, MCL 21.146.
(ii) The financial institution arranges for the investment of the funds in certificates of deposit in 1 or more insured depository institutions, as defined in 12 USC 1813, or 1 or more insured credit unions, as defined in 12 USC 1752, for the account of the intermediate school district.
(iii) The full amount of the principal and any accrued interest of each certificate of deposit is insured by an agency of the United States.
(iv) The financial institution acts as custodian for the intermediate school district with respect to each certificate of deposit.
(v) At the same time that the funds of the intermediate school district are deposited and the certificate or certificates of deposit are issued, the financial institution receives an amount of deposits from customers of other insured depository institutions or insured credit unions equal to or greater than the amount of the funds initially invested by the intermediate school district through the financial institution.
(3) The earnings of an investment shall become a part of the fund from which the investment was made. When money of more than 1 fund of a single intermediate school district or money of more than 1 intermediate school district are combined for an investment pool authorized by subsection (2)(g), the money shall be accounted for separately, and the earnings from the investment shall be separately and individually computed, recorded, and credited to the fund or intermediate school district, as the case may be, for which the investment was acquired.
(4) Notwithstanding subsection (2), additional funds of an intermediate school district shall not be deposited or invested in a financial institution that is not eligible to be a depository of surplus funds belonging to this state under section 6 of 1855 PA 105, MCL 21.146.
(5) Assets acceptable for pledging to secure deposits of funds under this act are limited to any of the following:
(a) Assets considered acceptable to the state treasurer under section 3 of 1855 PA 105, MCL 21.143, to secure deposits of state surplus funds.
(b) Any of the following:
(i) Securities issued by the federal home loan mortgage corporation.
(ii) Securities issued by the federal national mortgage association.
(iii) Securities issued by the government national mortgage association.
(c) Securities considered acceptable to the intermediate school board and the financial institution.
(6) As used in this section, “deposit” includes purchases of or investment in shares of a credit union.
(7) As used in this section, “financial institution” means a state or nationally chartered bank or a state or federally chartered savings and loan association, savings bank, or credit union whose deposits are insured by an agency of the United States government and that maintains a principal office or branch office located in this state under the laws of this state or the United States.
Sec. 1223. (1) If authorized by resolution of the board of a school district, the treasurer may invest debt retirement funds, building and site funds, building and site sinking funds, or general funds of the district. The investment shall be made under subsection (7) and shall be restricted to the following:
(a) Bonds, bills, or notes of the United States; obligations, the principal and interest of which are fully guaranteed by the United States; or obligations of the state. In a primary or fourth class school district, the bonds, bills, or notes shall be payable, at the option of the holder, upon not more than 90 days’ notice, or if not so payable, shall have maturity dates not more than 5 years after the purchase dates.
(b) Certificates of deposit issued by a financial institution or share certificates of a state or federal credit union that is a financial institution.
(c) Commercial paper rated prime at the time of purchase and maturing not more than 270 days after the date of purchase.
(d) Securities issued or guaranteed by agencies or instrumentalities of the United States government.
(e) United States government or federal agency obligation repurchase agreements.
(f) Bankers’ acceptances issued by a bank that is a member of the federal deposit insurance corporation.
(g) Mutual funds composed entirely of investment vehicles that are legal for direct investment by a school district.
(h) Investment pools, as authorized by the surplus funds investment pool act, 1982 PA 367, MCL 129.111 to 129.118, composed entirely of instruments that are legal for direct investment by a school district.
(i) Certificates of deposit issued in accordance with the following conditions:
(i) The funds are initially invested through a financial institution that is not ineligible to be a depository of surplus funds belonging to this state under section 6 of 1855 PA 105, MCL 21.146.
(ii) The financial institution arranges for the investment of the funds in certificates of deposit in 1 or more insured depository institutions, as defined in 12 USC 1813, or 1 or more insured credit unions, as defined in 12 USC 1752, for the account of the school district.
(iii) The full amount of the principal and any accrued interest of each certificate of deposit is insured by an agency of the United States.
(iv) The financial institution acts as custodian for the school district with respect to each certificate of deposit.
(v) At the same time that the funds of the school district are deposited and the certificate or certificates of deposit are issued, the financial institution receives an amount of deposits from customers of other insured depository institutions or insured credit unions equal to or greater than the amount of the funds initially invested by the school district through the financial institution.
(2) An obligation purchased under this section, when received by the treasurer, shall be deposited with the financial institution having the deposit of the money of the particular fund from which the obligation was purchased.
(3) Money in the several funds of a school district shall not be commingled for the purpose of making an investment authorized by this section except that:
(a) The board of a school district may establish and maintain 1 common debt retirement fund for issues of bonds of similar character.
(b) The board of a school district, by resolution, may authorize the treasurer to combine money from more than 1 fund for the purpose of making an investment authorized by subsection (1)(h).
(4) Earnings of an investment shall become a part of the fund for which the investment was made. When money of more than 1 fund of a single district or money of more than 1 district are combined for an investment pool authorized by subsection (1)(h), the money shall be accounted for separately, and the earnings from the investment shall be separately and individually computed, recorded, and credited to the fund or district, as the case may be, for which the investment was acquired.
(5) The treasurer of a school district, if authorized by resolution of the board, may deposit upon approval of the employee, funds accumulated under a deferred compensation program in a federally insured financial institution authorized by law to do business in this state. If authorized by a resolution of the board, the treasurer of a school district, with the prior consent of the employee, may use funds accumulated under a deferred compensation plan to purchase from a life insurance company authorized to do business in this state an annuity contract or life insurance policy in the manner and for the purposes described in section 457 of the internal revenue code.
(6) Security in the form of collateral, surety bond, or another form may be taken for the deposits or investments of a school district in a financial institution. However, an investment under section 622(2)(e) or subsection (1)(e) or in an investment pool that includes instruments eligible for investments under section 622(2)(e) or subsection (1)(e) shall be secured by the transfer of title and custody of the obligations to which the repurchase agreements relate and an undivided interest in those obligations must be pledged to the school district for these agreements.
(7) Notwithstanding subsection (1), additional funds of a school district shall not be deposited or invested in a financial institution that is not eligible to be a depository of surplus funds belonging to this state under section 6 of 1855 PA 105, MCL 21.146.
(8) As used in this section, “deposit” includes purchase of or investment in shares of a credit union.
(9) As used in this section, “financial institution” means a state or nationally chartered bank or a state or federally chartered savings and loan association, savings bank, or credit union whose deposits are insured by an agency of the United States government and which maintains a principal office or branch office located in this state under the laws of this state or the United States.
Enacting section 1. This amendatory act does not take effect unless Senate Bill No. 195 of the 95th Legislature is enacted into law.
This act is ordered to take immediate effect.
Clerk of the House of Representatives
Secretary of the Senate
Approved
Governor
