H.
B.
4387
(By Delegates Burk and Anderson)
[Introduced February 8, 1994; referred to the
Committee on Finance.]
A BILL to amend and reenact section twenty-two-a, article thirteen, chapter eight of the code of West Virginia, one thousand nine hundred thirty-one, as amended; and to further amend said article by adding thereto a new section, designated section twenty-two-c, all relating to the approved means of investing municipal funds; permitting investments in federally-issued, backed or guaranteed instruments, including mortgages on real property situate in the state or in highly rated pooled trusts; opening investment options in certain mutual funds and in the securities and commercial paper of private organizations, banks, trusts and savings organizations; and imposing portfolio limitations on specified investments.
Be it enacted by the Legislature of West Virginia:
That section twenty-two-a, article thirteen, chapter eight of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted; and that said article thirteen be further amended by adding thereto a new section, designated section twenty-two-c, to read as follows:
ARTICLE 13. TAXATION AND FINANCE.
PART VI. ACCOUNTING PRINCIPLES; FUNDS; DISBURSEMENTS.
§
8
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13
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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) Made available by the municipal treasurer to the state board of investments for investment in accordance with the provisions of article six, chapter twelve of this code, if it be determined by such municipal treasurer that the available interest rate offered by an acceptable depository in such treasurer's municipality be less than the interest rate, net of administrative fees referred to in article six, chapter twelve of this code, offered it through the state board of investments; or
(2) Invested by such treasurer in the following classes of securities and accounts which securities and accounts mature on such dates as will make available such amount of cash as is required:
(a) Obligations of the United States or any agency thereof, which are guaranteed by the United States or for which the full faith and credit of the United States is pledged for the payment of principal and interest, or any obligation of an agency of the United States designated in section nine, article six, chapter twelve of this code.
(b) Certificates of deposit secured by (1) obligations as listed in the preceding paragraph of this subdivision, (2) general obligation or revenue bonds of the state of West Virginia, (3) general obligation bonds of any other state, (4) general obligation bonds of any county in this state or of any county board of education in this state, or (5) general obligation bonds of any municipality in this state.
(c) Interest bearing savings accounts in banking institutions, the accounts of which are insured by the federal deposit insurance corporation, or in federal savings and loan associations, the accounts of which are insured by the federal savings and loan insurance corporation, or in building and loan associations, the accounts of which are insured by the federal savings and loan insurance corporation: That an investment in any such savings account in excess of the amount insured by the federal deposit insurance corporation or the federal savings and loan insurance corporation, as the case may be, shall not be made unless such banking institution, federal savings and loan association or building and loan association provides adequate bond or other adequate security for the amount of the proposed municipal investment in excess of such insurance coverage, the adequacy of any such bond or other security to be determined by the treasurer of such municipality.
(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 of 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 trust at the time of the acquisition of such 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; and
(10) Mutual funds which have assets in excess of three hundred million dollars.
§
8-13-22c. Restrictions on investment.
Moneys invested as permitted by section eleven of this article are subject to the restrictions and conditions contained in this section:
(1) At no time may more than seventy-five percent of the portfolio of either fund be invested in securities described in subdivision (7), section eleven of this article;
(2) At no time may more than twenty percent of the portfolio of either fund be invested in securities described in subdivision (7) of section eleven which mature within one year from the date of issuance thereof;
(3) At no time may more than nine percent of the portfolio be invested in securities issued by a single private corporation or association; and
(4) At no time may more than sixty percent of the portfolio be invested in equity mutual funds under subdivision (10) of section eleven but the remaining forty percent may be invested in fixed income securities and money market funds under subdivision (10).
NOTE: The purpose of this bill is to permit municipal funds to be invested in a broader variety of investment instruments. In addition to obligations of the state, municipal funds could be invested in certain mutual funds and in the securities and commercial paper of private corporations, banks, trusts and savings institutions although specific portfolio limitations or other cautionary standards would be required. Federally-issued, guaranteed or backed investments would be permitted as well as first lien mortgages or deeds of trust secured on real property located within the state or a part of a highly rated pooled mortgage trust.
Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.
Section twenty-two-c is new; therefore, strike-throughs and underscoring have been omitted.
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