H. B. 2570
(By Delegates Ron Thompson, Perry and H. White)
[Introduced February 21, 2005; referred to the
Committee on Banking and Insurance then the Judiciary.]
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 to the
requirement of banking institutions to post bond or other
security for the deposit of county, municipal or county board
of education funds.
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 for 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 a deposit-
matching network that has been approved by the federal deposit
insurance corporation for federal deposit insurance coverage of the
full amount of the deposit. 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 a deposit-matching network that
has been approved by the federal deposit insurance corporation for
federal deposit insurance coverage of the full amount of the
deposit; 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 a deposit-matching network that has
been approved by the federal deposit insurance corporation for
federal deposit insurance coverage of the full amount of the
deposit. 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 allow federally insured
depository institutions to accept county and municipal and county
board of education public moneys for deposit without posting a bond
or other assets if the funds are placed in deposit-matching
network that provides for federal deposit insurance from the FDIC
for the full amount accepted.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.