ENROLLED
Senate Bill No. 633
(By Senators Fanning and Chafin)
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[Passed March 13, 2010; in effect ninety days from passage.]
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AN ACT to amend the Code of West Virginia, 1931, as amended, by
adding thereto a new section, designated §7-6-2a; to amend and
reenact §8-13-22a of said code; to amend and reenact §12-1-4
of said code; and to amend and reenact §18-9-6 of said code,
all relating to enabling counties, municipalities, the state
and county boards of education to deposit public funds into
deposit accounts that are swept periodically into multiple
federally fully insured deposit accounts through a deposit
placement program with full federal insurance in lieu of a
bond or other collateral required of the depository
institution.
Be it enacted by the Legislature of West Virginia;
That the Code of West Virginia, 1931, as amended, be amended
by adding thereto a new section, designated §7-6-2a; that §8-13-22a of said code be amended and reenacted; that §12-1-4 of said code be
amended and reenacted; and that §18-9-6 of said code be amended and
reenacted
, all to read as follows:
CHAPTER 7. COUNTY COMMISSIONS AND OFFICERS.
ARTICLE 6. COUNTY DEPOSITORIES.
§7-6-2a. Further exception to bond requirement; fully insured cash
sweep accounts.
A banking institution is not required to provide a bond or
security in lieu of bond pursuant to section two of this article if
the deposit is placed in a designated state depository that is
selected and authorized by the county to arrange for the redeposit
of the funds through a deposit placement program that meets the
following conditions:
(a) On or after the date that the county funds are received
the selected depository: (i) Arranges for the redeposit of the
funds into deposit accounts in one or more federally insured banks
or savings and loan associations that are located in the United
States; and (ii) serves as custodian for the county with respect to
the funds redeposited into such accounts.
(b) County funds deposited in a selected depository in
accordance with this section and held at the close of business in
the selected depository in excess of the amount insured by the
Federal Deposit Insurance Corporation shall be secured in accordance with section two of this article.
(c) The full amount of the funds of the county redeposited by
the selected depository into deposit accounts in banks or savings
and loan associations pursuant to this section (plus accrued
interest, if any) shall be insured by the Federal Deposit Insurance
Corporation.
(d) On the same date that the funds of the county are
redeposited pursuant to this section, the selected depository
receives an amount of deposits from customers of other financial
institutions through the deposit placement program that are equal
to the amount of the county money redeposited by the selected
depository.
CHAPTER 8. MUNICIPAL CORPORATIONS.
ARTICLE 1. PURPOSE AND SHORT TITLE; DEFINITIONS; GENERAL
PROVISIONS; CONSTRUCTION.
§8-13-22a. Investment of municipal funds.
All municipal funds, the investment of which is not governed
by other provisions of this code and not required for the payment
of current obligations and not otherwise prohibited, may be
invested and reinvested in:
(1) Any direct obligation of, or obligation guaranteed as to
the payment of both principal and interest by, the United States of
America;
(2) Any evidence of indebtedness issued by any United States
government agency guaranteed as to the payment of both principal
and interest, directly or indirectly, by the United States of
America including, but not limited to, the following: Government
National Mortgage Association, federal land banks, federal home
loan banks, federal intermediate credit banks, banks for
cooperatives, Tennessee Valley Authority, United States postal
service, farmers home administration, export-import bank, federal
financing bank, federal home loan mortgage corporation, student
loan marketing association and federal farm credit banks;
(3) Any evidence of indebtedness issued by the Federal
National Mortgage Association to the extent such indebtedness is
guaranteed by the government National Mortgage Association;
(4) Any evidence of indebtedness that is secured by a first
lien deed of trust or mortgage upon real property situate within
this state, if the payment thereof is substantially insured or
guaranteed by the United States of America or any agency thereof;
(5) Direct and general obligations of this state;
(6) Any undivided interest in a trust, the corpus of which is
restricted to mortgages on real property and, unless all of such
property is situate within the state and insured, the trust at the
time of the acquisition of the undivided interest, is rated in one
of the three highest rating grades by an agency which is nationally known in the field of rating pooled mortgage trusts;
(7) Any bond, note, debenture, commercial paper or other
evidence of indebtedness of any private corporation or association
:
Provided, That any such security is, at the time of its
acquisition, rated in one of the three highest rating grades by an
agency which is nationally known in the field of rating corporate
securities
: Provided, however, That if any commercial paper or any
such security will mature within one year from the date of its
issuance, it shall, at the time of its acquisition, be rated in one
of the two highest rating grades by any such nationally known
agency and commercial paper or other evidence of indebtedness of
any private corporation or association shall be purchased only upon
the written recommendation from an investment advisor that has over
$300 million in other funds under its management;
(8) Negotiable certificates of deposit issued by any bank,
trust company, national banking association or savings institution
which mature in less than one year and are fully collateralized;
(9) Interest earning deposits including certificates of
deposit, with any duly designated state depository, which deposits
are fully secured by a collaterally secured bond as provided in
section four, article one, chapter twelve of this code
: Provided,
That a banking institution is not required to provide this
collaterally secured bond, or other security in lieu of bond, if the deposits accepted are placed in certificates of deposit meeting
the following requirements: (A) The funds are invested through a
designated state depository selected by the municipality; (B) the
selected depository arranges for the deposit of the funds in
certificates of deposit in one or more banks or savings and loan
associations wherever located in the United States, for the account
of the municipality; (C) the full amount of principal and accrued
interest of each certificate of deposit is insured by the Federal
Deposit Insurance Corporation; (D) the selected depository acts as
custodian for the municipality with respect to such certificates of
deposit issued for the municipality's account; and (E) at the same
time that the municipality's funds are deposited and the
certificates of deposit are issued, the selected depository
receives an amount of deposits from customers of other financial
institutions wherever located in the United States equal to or
greater than the amount of the funds invested by the municipality
through the selected depository;
(10) Mutual funds registered with the Securities and Exchange
Commission which have assets in excess of $300 million; and
(11) Deposits with any duly designated state depository that
is selected and authorized by the municipality to arrange for the
redeposit of the funds through a deposit placement program that
meets the following conditions:
(a) On or after the date that the municipal funds are received
the selected depository: (i) Arranges for the redeposit of the
funds into deposit accounts in one or more federally insured banks
or savings and loan associations that are located in the United
States; and (ii) serves as custodian for the municipality with
respect to the funds deposited into such accounts.
(b) Municipal funds deposited in a selected depository in
accordance with this section and held at the close of business in
the selected depository in excess of the amount insured by the
Federal Deposit Insurance Corporation shall be secured in
accordance with section four, article one, chapter twelve of this
code.
(c) The full amount of the funds of the municipality
redeposited by the selected depository into deposit accounts in
banks or savings and loan associations pursuant to this subsection
(plus accrued interest, if any) shall be insured by the Federal
Deposit Insurance Corporation.
(d) On the same date that the funds of the municipality are
redeposited pursuant to this subsection, the selected depository
receives an amount of deposits from customers of other financial
institutions through the direct placement program that are equal to
the amount of the municipality's funds redeposited by the selected
depository.
CHAPTER 12. PUBLIC MONEYS AND SECURITIES.
ARTICLE 1. STATE DEPOSITORIES.
§12-1-4. Bonds to be given by depositories.
(a) Before allowing any money to be deposited with any
eligible depository in excess of the amount insured by an agency of
the federal government or insured by a deposit guaranty bond issued
by a valid bankers surety company acceptable to the treasurer, the
State Treasurer shall require the depository to give a collaterally
secured bond, in the amount of not less than $10,000, payable to
the State of West Virginia, conditioned upon the prompt payment,
whenever lawfully required, of any state money, or part thereof,
that may be deposited with that depository, or of any accrued
interest on deposits. The bond shall be a continuous bond but may
be increased or decreased in amount or replaced by a new bond with
the approval of the State Treasurer. The collateral security for
the bond shall consist of bonds of the United States, or bonds or
letters of credit of the federal land banks, of the federal home
loan banks, or bonds of the State of West Virginia or of any
county, district or municipality of this state, or other bonds,
letters of credit, or securities approved by the treasurer. All
bonds so secured are here designated as collaterally secured bonds.
Withdrawal or substitution of any collateral pledged as security
for the performance of the conditions of the bond may be permitted with the approval in writing of the treasurer. All depository
bonds shall be recorded by the treasurer in a book kept in his or
her office for the purpose, and a copy of the record, certified by
the treasurer, shall be prima facie evidence of the execution and
contents of the bond in any suit or legal proceeding. All
collateral securities shall be delivered to or deposited for the
account of the treasurer of the State of West Virginia and in the
event said securities are delivered to the treasurer, he or she
shall furnish a receipt therefor to the owner thereof. The
treasurer and his or her bondsmen shall be liable to any person for
any loss by reason of the embezzlement or misapplication of the
securities by the treasurer or any of his or her employees, and for
the loss thereof due to his or her negligence or the negligence of
his or her employees; and the securities shall be delivered to the
owner thereof when liability under the bond which they are pledged
to secure has terminated. The treasurer may permit the deposit
under proper receipt of the securities with one or more banking
institutions within or outside the State of West Virginia and may
contract with any institution for safekeeping and exchange of any
collateral securities and may prescribe the rules for handling and
protecting the collateral securities.
(b) A banking institution is not required to provide a bond or
security in lieu of bond if the deposits accepted are placed in certificates of deposit meeting the following requirements: (1) The
funds are invested through a designated state depository selected
by the treasurer; (2) the selected depository arranges for the
deposit of the funds in certificates of deposit in one or more
banks or savings and loan associations wherever located in the
United States, for the account of the state; (3) the full amount of
principal and accrued interest of each certificate of deposit is
insured by the Federal Deposit Insurance Corporation; (4) the
selected depository acts as custodian for the state with respect to
such certificates of deposit issued for the state's account; and
(5) at the same time that the state's funds are deposited and the
certificates of deposit are issued, the selected depository
receives an amount of deposits from customers of other financial
institutions wherever located in the United States equal to or
greater than the amount of the funds invested by the state through
the selected depository.
(c) A banking institution is not required to provide a bond or
security in lieu of bond pursuant to this section if the deposits
accepted are placed in a designated state depository that is
selected and authorized by the state to arrange for the redeposit
of the funds through a deposit placement program that meets the
following conditions:
(1) On or after the date that the funds are received the selected depository: (i) Arranges for the redeposit of the funds
into deposit accounts in one or more federally insured banks or
savings and loan associations that are located in the United
States; and (ii) serves as custodian for the state with respect to
the funds redeposited into such accounts.
(2) State funds deposited in a selected depository in
accordance with this section and held at the close of business in
the selected depository in excess of the amount insured by the
Federal Deposit Insurance Corporation shall be secured in
accordance with section two, article six, chapter seven of this
code.
(3) The full amount of the funds of the state redeposited by
the selected depository into deposit accounts in banks or savings
and loan associations pursuant to this section (plus accrued
interest, if any) shall be insured by the Federal Deposit Insurance
Corporation.
(4) On the same date that the funds of the state are
redeposited pursuant to this section, the selected depository
receives an amount of deposits from customers of other financial
institutions through the deposit placement program that are equal
to the amount of the state funds redeposited by the selected
depository.
CHAPTER 18. EDUCATION.
ARTICLE 9. SCHOOL FINANCES.
§18-9-6. Transfer of moneys; appointment of treasurer; bonding of
treasurer; approval of bank accounts; authority to
invest; security for funds invested.
The sheriff of each county shall remit to the board of
education all moneys in his or her possession held on behalf of the
county board of education, whether or not deposited in a bank or
depository, unless the sheriff has been designated treasurer of the
board of education as provided in this section. The transfer of
funds shall be made as of the balances on hand on June 30 of the
year in which the board of education appoints a treasurer other
than the sheriff, and shall be completed no later than August 1 of
that year. The transfer shall be adjudged complete and final upon
the approval of the sheriff's official settlement for the fiscal
year ending on June 30 of the year in which the board of education
appoints a treasurer other than the sheriff, and any minor
adjustment made necessary by the actually known figures shall also
be made at that time. All balances in all county school funds at
the end of each month after June 30 of the year in which the board
of Education appoints a treasurer other than the sheriff shall be
transferred by the sheriff to the county board of education not
later than the tenth day of the following month.
On or before the first Monday in May each county board of education shall upon recommendation of the county superintendent
appoint a treasurer for the board. The treasurer is the fiscal
officer of the board, or an employee commonly designated as the
person in charge of the financial affairs of the county board, or
the county sheriff:
Provided, That once a board of education has
appointed a treasurer other than the sheriff, the sheriff may not
be named treasurer of the board in a subsequent year. Upon
appointment this person shall be titled and referred to as
treasurer of the board of education. For the faithful performance
of this duty, the treasurer shall execute a bond, to be approved by
the board of education, in the penalty to be fixed by the board of
education, not to exceed the amount of school funds which it is
estimated the treasurer will handle within any period of two
months. The premium on the bond shall be paid by the board of
education.
The board of education may open a bank account, or accounts,
as required to adequately and properly transact the business of the
district in a depository, or banks, within the county. The
depositories, or banks, shall provide bond to cover the maximum
amount to be deposited at any one time. However, the county board
of education may, in lieu of such bond, accept as security for
money deposited letters of credit from a federal home loan bank,
securities of the United States, or of a state, county, district or municipal corporation, or federal agency securities:
Provided, That
a banking institution is not required to provide a bond or security
in lieu of bond if the deposits accepted are placed in certificates
of deposit meeting the following requirements: (1) The funds are
invested through a designated state depository selected by the
county board of education; (2) the selected depository arranges for
the deposit of the funds in certificates of deposit in one or more
banks or savings and loan associations wherever located in the
United States, for the account of the county board of education;
(3) the full amount of principal and accrued interest of each
certificate of deposit is insured by the Federal Deposit Insurance
Corporation; (4) the selected depository acts as custodian for the
county board of education with respect to such certificates of
deposit issued for the county's account; and (5) at the same time
that the county board of education's funds are deposited and the
certificates of deposit are issued, the selected depository
receives an amount of deposits from customers of other financial
institutions wherever located in the United States equal to or
greater than the amount of the funds invested by the county board
of education through the selected depository:
Provided, however,
That a banking institution is not required to provide a bond or
security in lieu of bond if the deposits accepted are placed in a
designated state depository that is selected and authorized by the county board of education to arrange for the redeposit of the funds
through a deposit placement program that meets the following
conditions: (1) On or after the date that the county board of
education funds are received the selected depository: (i) Arranges
for the redeposit of the funds into deposit accounts in one or more
federally insured banks or savings and loan associations that are
located in the United States; and (ii) serves as custodian for the
county with respect to the money redeposited into such accounts.
(2) County board of education funds deposited in a selected
depository in accordance with this section and held at the close of
business in the selected depository in excess of the amount insured
by the Federal Deposit Insurance Corporation shall be secured in
accordance with the second and third sentences of this paragraph.
(3) The full amount of the funds of the county board of education
redeposited by the selected depository into deposit accounts in
banks or savings and loan associations pursuant to this section
(plus accrued interest, if any) shall be insured by the Federal
Deposit Insurance Corporation. (4) On the same date that the funds
of the county board of education are redeposited pursuant to this
section, the selected depository receives an amount of deposits
from customers of other financial institutions through the deposit
placement program that are equal to the amount of the county board
of education funds redeposited by the selected depository.
One hundred ten percent of the face or par value of the
securities may not be less than the sum hereinbefore specified as
the amount to be named in the bond in lieu of which the securities
are accepted, or the county board of education may accept the
securities as partial security to the extent of their face value
for the money so deposited and require bond for the remainder of
the full amount hereinbefore specified, to be named in the bond,
and, in the bond so required, the acceptance of securities as
partial security and the extent thereof shall be set forth. The
hypothecation of the securities shall be by proper legal transfer
as collateral security to protect and indemnify by trust any and
all loss in case of any default on the part of the banking
institution in its capacity as depository as aforesaid. All such
securities shall be delivered to or deposited for the account of
the county board of education, and withdrawal or substitution
thereof may be permitted from time to time upon approval by the
county board of education by order of record, but the collateral
security shall be released only by order of record of the county
board of education when satisfied that full and faithful accounting
and payment of all the moneys has been made under the provisions
hereof. If actual possession of the hypothecated securities is
delivered to the county board of education, it shall make ample
provision for the safekeeping thereof, and the interest thereon when paid shall be turned over to the banking institution, so long
as it is not in default as aforesaid. The county board of
education may permit the deposit under proper receipt of such
securities with one or more banking institutions within the State
of West Virginia and may contract with any such institution for
safekeeping and exchange of any such hypothecated securities, and
may prescribe the rules for handling and protecting the same.
On and after July 1, 1973, all levies and any other school
moneys received by the sheriff and paid to the treasurer of the
county board of education shall be deposited in these accounts, and
all proper payments from such funds shall be made by the designated
depository or bank upon order or draft presented for payment and
signed by the duly authorized signatories of the Board of
Education
: Provided, That in determining the depository for Board
of Education funds a board member who has a pecuniary interest in
a bank within the county shall not participate in the determination
of the depository for such funds.
If it is considered that sufficient funds are on hand in any
account at any one time which may be more than are normally
required for the payment of incurred expenses, the funds in the
amount so considered available may be invested by the treasurer of
the county board with the West Virginia Municipal Bond Commission,
or in guaranteed certificates of deposit issued by the depository or bank, or other guaranteed investments such as treasury bills,
treasury notes or certificates of deposit issued by either the
United States government or a banking institution in which federal
or state guarantees are applicable. Interest earned in such
investments is to be credited to the fund from which the moneys
were originally available.