ENROLLED
COMMITTEE SUBSTITUTE
FOR
H. B. 2570
(By Delegates Ron Thompson, Perry and H. White)
[Passed April 7,2005; in effect ninety days from passage.]
AN ACT 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 designation is binding on any county, nor shall any public
money be deposited thereunder, until the banking institution
designated 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 may not be less than the maximum sum that 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 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 may not be
accepted by the county commission until it 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 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
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 any other letters of credit
approved by the treasurer; the face value of which 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 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 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; (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, 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
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 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
; 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. 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. 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. 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 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
. 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. In the event 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 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,
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.