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H.B. 173 Enrolled

             1     

MONEY MANAGEMENT ACT UPDATES
             2      2008 GENERAL SESSION
             3      STATE OF UTAH
             4      Chief Sponsor: Paul A. Neuenschwander
             5      Senate Sponsor: Kevin T. VanTassell
             6     
             7      LONG TITLE
             8      General Description:
             9          This bill makes a clarifying modification in the list of federal government obligations in
             10      which public treasurers are authorized to invest public funds.
             11      Highlighted Provisions:
             12          This bill:
             13          .    removes obligations issued by the Student Loan Marketing Association from the list
             14      of approved investments; and
             15          .    clarifies that an authorized agency or instrumentality that becomes private and is no
             16      longer considered to be a government agency is no longer authorized as an approved
             17      investment for public funds.
             18      Monies Appropriated in this Bill:
             19          None
             20      Other Special Clauses:
             21          None
             22      Utah Code Sections Affected:
             23      AMENDS:
             24          51-7-11, as last amended by Laws of Utah 2007, Chapter 207
             25     
             26      Be it enacted by the Legislature of the state of Utah:
             27          Section 1. Section 51-7-11 is amended to read:
             28           51-7-11. Authorized deposits or investments of public funds.
             29          (1) (a) Except as provided in Subsection (1)(b), a public treasurer may conduct

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             30      investment transactions only through qualified depositories, certified dealers, or directly with
             31      issuers of the investment securities.
             32          (b) A public treasurer may, in furtherance of his duties, designate a certified investment
             33      adviser to make trades on behalf of the public treasurer.
             34          (2) The remaining term to maturity of the investment may not exceed the period of
             35      availability of the funds to be invested.
             36          (3) Except as provided in Subsection (4), all public funds may be deposited or invested
             37      only in the following assets that meet the criteria of Section 51-7-17 :
             38          (a) negotiable or nonnegotiable deposits of qualified depositories;
             39          (b) qualifying or nonqualifying repurchase agreements and reverse repurchase
             40      agreements with qualified depositories using collateral consisting of:
             41          (i) Government National Mortgage Association mortgage pools;
             42          (ii) Federal Home Loan Mortgage Corporation mortgage pools;
             43          (iii) Federal National Mortgage Corporation mortgage pools;
             44          (iv) Small Business Administration loan pools;
             45          (v) Federal Agriculture Mortgage Corporation pools; or
             46          (vi) other investments authorized by this section;
             47          (c) qualifying repurchase agreements and reverse repurchase agreements with certified
             48      dealers, permitted depositories, or qualified depositories using collateral consisting of:
             49          (i) Government National Mortgage Association mortgage pools;
             50          (ii) Federal Home Loan Mortgage Corporation mortgage pools;
             51          (iii) Federal National Mortgage Corporation mortgage pools;
             52          (iv) Small Business Administration loan pools; or
             53          (v) other investments authorized by this section;
             54          (d) commercial paper that is classified as "first tier" by two nationally recognized
             55      statistical rating organizations, one of which must be Moody's Investors Service or Standard
             56      and Poor's, which has a remaining term to maturity of 270 days or less;
             57          (e) bankers' acceptances that:

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             58          (i) are eligible for discount at a Federal Reserve bank; and
             59          (ii) have a remaining term to maturity of 270 days or less;
             60          (f) fixed rate negotiable deposits issued by a permitted depository that have a remaining
             61      term to maturity of 365 days or less;
             62          (g) obligations of the United States Treasury, including United States Treasury bills,
             63      United States Treasury notes, and United States Treasury bonds;
             64          (h) obligations other than mortgage pools and other mortgage derivative products
             65      issued by, or fully guaranteed as to principal and interest by, the following agencies or
             66      instrumentalities of the United States in which a market is made by a primary reporting
             67      government securities dealer, unless the agency or instrumentality has become private and is no
             68      longer considered to be a government entity:
             69          (i) Federal Farm Credit banks;
             70          (ii) Federal Home Loan banks;
             71          (iii) Federal National Mortgage Association;
             72          [(iv) Student Loan Marketing Association;]
             73          [(v)] (iv) Federal Home Loan Mortgage Corporation;
             74          [(vi)] (v) Federal Agriculture Mortgage Corporation; and
             75          [(vii)] (vi) Tennessee Valley Authority;
             76          (i) fixed rate corporate obligations that:
             77          (i) are rated "A" or higher or the equivalent of "A" or higher by two nationally
             78      recognized statistical rating organizations, one of which must be by Moody's Investors Service
             79      or Standard and Poor's;
             80          (ii) are publicly traded; and
             81          (iii) have a remaining term to final maturity of 365 days or less or is subject to a hard
             82      put at par value or better, within 365 days;
             83          (j) tax anticipation notes and general obligation bonds of the state or of any county,
             84      incorporated city or town, school district, or other political subdivision of this state, including
             85      bonds offered on a when-issued basis without regard to the limitation in Subsection (7);

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             86          (k) bonds, notes, or other evidence of indebtedness of any county, incorporated city or
             87      town, school district, or other political subdivision of the state that are payable from
             88      assessments or from revenues or earnings specifically pledged for payment of the principal and
             89      interest on these obligations, including bonds offered on a when-issued basis without regard to
             90      the limitation in Subsection (7);
             91          (l) shares or certificates in a money market mutual fund as defined in Section 51-7-3 ;
             92          (m) variable rate negotiable deposits that:
             93          (i) are issued by a qualified depository or a permitted depository;
             94          (ii) are repriced at least semiannually; and
             95          (iii) have a remaining term to final maturity not to exceed two years;
             96          (n) variable rate securities that:
             97          (i) (A) are rated "A" or higher or the equivalent of "A" or higher by two nationally
             98      recognized statistical rating organizations, one of which must be by Moody's Investors Service
             99      or Standard and Poor's;
             100          (B) are publicly traded;
             101          (C) are repriced at least semiannually; and
             102          (D) have a remaining term to final maturity not to exceed two years or are subject to a
             103      hard put at par value or better, within 365 days; and
             104          (ii) are not mortgages, mortgage-backed securities, mortgage derivative products, or
             105      any security making unscheduled periodic principal payments other than optional redemptions.
             106          (4) The following public funds are exempt from the requirements of Subsection (3):
             107          (a) the Employers' Reinsurance Fund created in Section 34A-2-702 ;
             108          (b) the Uninsured Employers' Fund created in Section 34A-2-704 ; and
             109          (c) a local government other post-employment benefits trust fund under Section
             110      51-7-12.2 .
             111          (5) If any of the deposits authorized by Subsection (3)(a) are negotiable or
             112      nonnegotiable large time deposits issued in amounts of $100,000 or more, the interest shall be
             113      calculated on the basis of the actual number of days divided by 360 days.

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             114          (6) A public treasurer may maintain fully insured deposits in demand accounts in a
             115      federally insured nonqualified depository only if a qualified depository is not reasonably
             116      convenient to the entity's geographic location.
             117          (7) The public treasurer shall ensure that all purchases and sales of securities are settled
             118      within 15 days of the trade date.

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