Bill Text: MI HB4397 | 2009-2010 | 95th Legislature | Engrossed
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-Engrossed.html
HB-4397, As Passed Senate, April 1, 2009
SENATE SUBSTITUTE FOR
HOUSE BILL NO. 4397
A bill to amend 1976 PA 451, entitled
"The revised school code,"
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.
