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H.B. 318

             1     

MONEY MANAGEMENT ACT AMENDMENTS

             2     
2011 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Jim Bird

             5     
Senate Sponsor: Peter C. Knudson

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill modifies the Money Management Act by amending provisions for the
             10      investment of public funds by a public treasurer.
             11      Highlighted Provisions:
             12          This bill:
             13          .    amends the remaining term to maturity required for commercial paper used as an
             14      investment of public funds;
             15          .    requires that fixed rate corporate obligations and variable rate securities be senior
             16      unsecured obligations of the issuer to be an allowable investment for public funds;
             17          .    extends the allowable remaining term to final maturity for certain first tier
             18      commercial paper to 365 days or less;
             19          .    allows 30 days instead of 15 days for settlement of new purchases of sales of
             20      securities; and
             21          .    makes technical changes.
             22      Money Appropriated in this Bill:
             23          None
             24      Other Special Clauses:
             25          None
             26      Utah Code Sections Affected:
             27      AMENDS:


             28          51-7-11, as last amended by Laws of Utah 2008, Chapter 324
             29     
             30      Be it enacted by the Legislature of the state of Utah:
             31          Section 1. Section 51-7-11 is amended to read:
             32           51-7-11. Authorized deposits or investments of public funds.
             33          (1) (a) Except as provided in Subsection (1)(b), a public treasurer may conduct
             34      investment transactions only through qualified depositories, certified dealers, or directly with
             35      issuers of the investment securities.
             36          (b) A public treasurer may[, in furtherance of his duties,] designate a certified
             37      investment adviser to make trades on behalf of the public treasurer.
             38          (2) The remaining term to maturity of the investment may not exceed the period of
             39      availability of the funds to be invested.
             40          (3) Except as provided in Subsection (4), all public funds may be deposited or invested
             41      only in the following assets that meet the criteria of Section 51-7-17 :
             42          (a) negotiable or nonnegotiable deposits of qualified depositories;
             43          (b) qualifying or nonqualifying repurchase agreements and reverse repurchase
             44      agreements with qualified depositories using collateral consisting of:
             45          (i) Government National Mortgage Association mortgage pools;
             46          (ii) Federal Home Loan Mortgage Corporation mortgage pools;
             47          (iii) Federal National Mortgage Corporation mortgage pools;
             48          (iv) Small Business Administration loan pools;
             49          (v) Federal Agriculture Mortgage Corporation pools; or
             50          (vi) other investments authorized by this section;
             51          (c) qualifying repurchase agreements and reverse repurchase agreements with certified
             52      dealers, permitted depositories, or qualified depositories using collateral consisting of:
             53          (i) Government National Mortgage Association mortgage pools;
             54          (ii) Federal Home Loan Mortgage Corporation mortgage pools;
             55          (iii) Federal National Mortgage Corporation mortgage pools;
             56          (iv) Small Business Administration loan pools; or
             57          (v) other investments authorized by this section;
             58          (d) commercial paper that is classified as "first tier" by two nationally recognized


             59      statistical rating organizations, one of which must be Moody's Investors Service or Standard
             60      and Poor's, which has a remaining term to maturity of:
             61          (i) 270 days or less[;] for paper issued under 15 U.S.C. Sec. 77c(a)(3); or
             62          (ii) 365 days or less for paper issued under 15 U.S.C. Sec. 77d(2);
             63          (e) bankers' acceptances that:
             64          (i) are eligible for discount at a Federal Reserve bank; and
             65          (ii) have a remaining term to maturity of 270 days or less;
             66          (f) fixed rate negotiable deposits issued by a permitted depository that have a
             67      remaining term to maturity of 365 days or less;
             68          (g) obligations of the United States Treasury, including United States Treasury bills,
             69      United States Treasury notes, and United States Treasury bonds;
             70          (h) obligations other than mortgage pools and other mortgage derivative products
             71      issued by, or fully guaranteed as to principal and interest by, the following agencies or
             72      instrumentalities of the United States in which a market is made by a primary reporting
             73      government securities dealer, unless the agency or instrumentality has become private and is no
             74      longer considered to be a government entity:
             75          (i) Federal Farm Credit banks;
             76          (ii) Federal Home Loan banks;
             77          (iii) Federal National Mortgage Association;
             78          (iv) Federal Home Loan Mortgage Corporation;
             79          (v) Federal Agriculture Mortgage Corporation; and
             80          (vi) Tennessee Valley Authority;
             81          (i) fixed rate corporate obligations that:
             82          (i) are rated "A" or higher or the equivalent of "A" or higher by two nationally
             83      recognized statistical rating organizations, one of which must be by Moody's Investors Service
             84      or Standard and Poor's;
             85          (ii) are senior unsecured obligations of the issuer;
             86          [(ii)] (iii) are publicly traded; and
             87          [(iii)] (iv) have a remaining term to final maturity of [365 days] 13 months or less or is
             88      subject to a hard put at par value or better, within 365 days;
             89          (j) tax anticipation notes and general obligation bonds of the state or of any county,


             90      incorporated city or town, school district, or other political subdivision of this state, including
             91      bonds offered on a when-issued basis without regard to the limitation in Subsection (7);
             92          (k) bonds, notes, or other evidence of indebtedness of any county, incorporated city or
             93      town, school district, or other political subdivision of the state that are payable from
             94      assessments or from revenues or earnings specifically pledged for payment of the principal and
             95      interest on these obligations, including bonds offered on a when-issued basis without regard to
             96      the limitation in Subsection (7);
             97          (l) shares or certificates in a money market mutual fund as defined in Section 51-7-3 ;
             98          (m) variable rate negotiable deposits that:
             99          (i) are issued by a qualified depository or a permitted depository;
             100          (ii) are repriced at least semiannually; and
             101          (iii) have a remaining term to final maturity not to exceed two years; and
             102          (n) variable rate securities that:
             103          (i) (A) are rated "A" or higher or the equivalent of "A" or higher by two nationally
             104      recognized statistical rating organizations, one of which must be by Moody's Investors Service
             105      or Standard and Poor's;
             106          (B) are senior unsecured obligations of the issuer;
             107          [(B)] (C) are publicly traded;
             108          [(C)] (D) are repriced at least semiannually; and
             109          [(D)] (E) have a remaining term to final maturity not to exceed two years or are subject
             110      to a hard put at par value or better, within 365 days; and
             111          (ii) are not mortgages, mortgage-backed securities, mortgage derivative products, or
             112      any security making unscheduled periodic principal payments other than optional redemptions.
             113          (4) The following public funds are exempt from the requirements of Subsection (3):
             114          (a) the Employers' Reinsurance Fund created in Section 34A-2-702 ;
             115          (b) the Uninsured Employers' Fund created in Section 34A-2-704 ; and
             116          (c) a local government other post-employment benefits trust fund under Section
             117      51-7-12.2 .
             118          (5) If any of the deposits authorized by Subsection (3)(a) are negotiable or
             119      nonnegotiable large time deposits issued in amounts of $100,000 or more, the interest shall be
             120      calculated on the basis of the actual number of days divided by 360 days.


             121          (6) A public treasurer may maintain fully insured deposits in demand accounts in a
             122      federally insured nonqualified depository only if a qualified depository is not reasonably
             123      convenient to the entity's geographic location.
             124          (7) The public treasurer shall ensure that all purchases and sales of securities are settled
             125      within:
             126          (a) 15 days of the trade date[.] for outstanding issues; and
             127          (b) 30 days on new issues.




Legislative Review Note
    as of 2-7-11 2:16 PM


Office of Legislative Research and General Counsel


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