COMMITTEE SUBSTITUTE
FOR
H. B. 2570
(By Delegates Ron Thompson, Perry and H. White)
(Originating in the Committee on the Judiciary)
[March 22, 2005]
A BILL to amend and reenact §7-6-2 of the Code of West Virginia,
1931, as amended; to amend and reenact §8-13-22a of said code;
to amend and reenact §18-9-6 of said code, all relating
generally to depositories for county, municipal or county
board of education funds; excepting banking institutions from
the requirement to post bond or other security for the deposit
of county, municipal or county board of education funds when
the deposits are placed in certificates of deposits through a
designated state depository; and conditions.
Be it enacted by the Legislature of West Virginia:
That §7-6-2 of the Code of West Virginia, 1931, as amended,
be amended and reenacted; that §8-13-22a 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.
§7-6-2. Bond of depositories.
No
such designation
shall be is binding on any county, nor
shall any public money be deposited thereunder, until the banking
institution designated
shall execute executes a bond with good and
sufficient sureties, to be accepted and approved by the county
commission, payable to the State of West Virginia, in a sum as the
county commission shall direct, and which
shall may not be less
than the maximum sum that
shall be is deposited in the depository
at any one time. The bond shall be executed by at least four
resident freeholders as sureties owning in the aggregate
unencumbered real estate having an assessed valuation thereon equal
to the penalty of the bond, or by a fidelity or indemnity company
authorized to do business within the State, satisfactory to, and
acceptable by the county commission, and having not less than six
hundred thousand dollars capital; and the bond shall be conditioned
for the receipt, safekeeping and payment over of all money which
may be deposited in or come under the custody of the banking
institution designated a county depository under the provisions
hereof, together with the interest thereon at the rate specified by
this article; and the bond shall be further conditioned for the
faithful performance, by the banking institution so designated, of
all the duties imposed by this article upon a depository of public
moneys:
Provided, That the clerk of the county commission shall
keep a record of each surety on all personal bonds given as
hereinbefore provided
for and the clerk shall notify the county
commission of every recorded conveyance of real estate made by any surety on said personal bond.
An action shall lie on the bond at the instance of the county
commission, or the sheriff, for the recovery of any money deposited
in the depository, upon failure or default of the depository to
fully and faithfully account for and pay over any and all public
moneys deposited by the sheriff and of all interests earned and
accrued thereon as required by this article. A bond
shall may not
be accepted by the county commission until it
shall have has been
submitted to the prosecuting attorney, and certified by him or her
to be in due and legal form, and conformable to the provisions of
this article, which certificate shall be
indorsed endorsed thereon:
Provided, That the county commission may, in lieu of the bond
provided hereinbefore, accept as security for money deposited as
aforesaid, interest-bearing securities of the United States, or of
a state, county, district or municipal corporation, or of the
federal land banks, or
indorsed endorsed county and district
warrants of the county in which the depository is located, or
letters of credit of the federal land banks, or federal home loan
banks, or
such any other letters of credit approved by the
treasurer; the face value of which securities
shall 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 commission 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:
Provided, however, That a banking
institution may not be 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; (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; (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 with respect to such certificates
of deposit issued for the county's account; and (5) at the same
time that the county'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 through the selected depository
.
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 the
securities shall be delivered to or deposited for the account of
the county commission, and withdrawal or substitution thereof may
be permitted from time to time upon approval by the county commission by order of record, but the collateral security shall be
released only by order of record of the county commission when
satisfied that full and faithful accounting and payment of all the
moneys has been made under the provisions hereof. In the event
actual possession of the hypothecated securities are delivered to
the county commission, 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 commission may permit the deposit
under proper receipt of the securities with one or more banking
institutions within or without the State of West Virginia and may
contract with any institution for safekeeping and exchange of any
hypothecated securities, and may prescribe the rules for handling
and protecting the same.
CHAPTER 8. MUNICIPAL CORPORATIONS.
ARTICLE 13. TAXATION AND FINANCE.
PART VI. ACCOUNTING PRINCIPLES; FUNDS; DISBURSEMENTS.
§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,
such the trust at
the time of the acquisition of
such 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
three hundred million dollars 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 may not be 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
; and
(10) Mutual funds registered with the securities and exchange
commission which have assets in excess of three hundred million
dollars.
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. Such The transfer
of funds shall be made as of the balances on hand on the thirtieth day of June of the year in which the board of education appoints a
treasurer other than the sheriff, and shall be completed no later
than the first day of August of that year. Such The transfer shall
be adjudged complete and final upon the approval of the sheriff's
official settlement for the fiscal year ending on the thirtieth day
of June 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 the thirtieth day of June 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. Such The treasurer shall be 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 shall 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, such 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 such 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. Such 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 securities of the United States, or of a state,
county, district or municipal corporation, or federal agency
securities: Provided, That a banking institution may not be
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
. One hundred ten percent of the face or par
value of such the securities shall may not be less than the sum
hereinbefore specified as the amount to be named in the bond in
lieu of which such the securities are accepted, or the county board
of education may accept such 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,
such the acceptance of securities as partial security and the
extent thereof shall be set forth. The hypothecation of such 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 such 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. In the event actual
possession of such 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 and
regulations for handling and protecting the same.
On and after the first day of July, one thousand nine hundred
seventy-three, 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,
however, 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 be deemed 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, such the
funds in the amount so deemed 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.
NOTE: The purpose of this bill is to except banking
institutions from the requirement to post bonds or provide
additional security for the deposit of county, municipal or county
board of education funds when the funds are placed by the
designated state depository in certificates of deposits by a manner
which provides for the full amount of the principal and accrued
interest for each certificate of deposit to be fully insured
through the Federal Deposit Insurance Corporation, and certain
other additional conditions are met.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.