June 23, 2005, Introduced by Senators VAN WOERKOM and BISHOP and referred to the Committee on Finance.
A bill to amend 1943 PA 20, entitled
"An act relative to the investment of funds of public corporations
of the state; and to validate certain investments,"
by amending section 1 (MCL 129.91), as amended by 1997 PA 196.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. (1) Except as provided in section 5, the governing
body by resolution may authorize its investment officer to invest
the funds of that public corporation in 1 or more of the following:
(a)
Bonds, securities, and other obligations of the United
States
or an agency or instrumentality of the United States bills,
or notes issued by the United States department of treasury or
issued directly from, or guaranteed by, a United States sponsored
enterprise.
(b) Certificates of deposit, savings accounts, deposit
accounts, or
depository receipts, or pooled money market funds
of
a financial institution, but only if the financial institution
complies with subsection (2).
(c)
Commercial paper rated at the time of purchase within the
2
highest classifications established by not less than 2 standard
rating
services and that matures issued
by a United States
domiciled entity and rated prime at the time of purchase and
maturing not more than 270 days from the date of purchase and
short-term corporation obligations issued by a United States
domiciled corporation and rated AAA at the time of purchase
maturing not more than 270 days after the date of purchase.
(d) Repurchase agreements or reverse repurchase agreements
consisting
of instruments investments listed in
subdivision (a)
or United States government or agency lending agreements.
Repurchase agreements, reverse repurchase agreements, and United
States government and agency lending agreements shall meet all of
the following requirements:
(i) That the collateral is maintained in the form of cash,
bonds, bills, or notes issued by the United States government or a
United States government sponsored enterprise, and maintained at a
level not less than 102% of the market value of the securities or
cash. The collateral shall be valued at least once each day the New
York federal reserve bank is open for business.
(ii) For reverse repurchase agreements and government lending
agreements, the agreement is required to be transacted through a
qualified lending agent that has at minimum $5,000,000,000.00 in
securities loans and contracts.
(iii) That a qualified Michigan bank serve as custodian for the
agreement.
(iv) That all maturity dates for any investments made from cash
received as collateral does not have a maturity date or mandatory
put date that exceeds the final date agreed upon for the return of
the collateral.
(e)
Bankers' acceptances of United
States Michigan banks.
(f) Obligations of this state or any of its political
subdivisions
that at the time of purchase are rated
as investment
grade
by not less than 1 standard rating service at least AA as
determined by at least 1 recognized standard rating service and
having a maturity date within 48 months of the date of purchase.
(g)
Mutual funds registered under the investment company act
of
1940, title I of chapter 686, 54 Stat. 789, 15 U.S.C. 80a-1 to
80a-3
and 80a-4 to 80a-64, with authority to purchase only
investment
vehicles that are legal for direct investment by a
public
corporation. However, a mutual fund is not disqualified as a
permissible
investment solely by reason of either of the following:
(i) The purchase of securities on a when-issued or
delayed
delivery
basis.
(ii) The ability to lend portfolio securities as long
as the
mutual
fund receives collateral at all times equal to at least 100%
of
the value of the securities loaned.
(iii) The limited ability to borrow and pledge a like
portion of
the
portfolio's assets for temporary or emergency purposes.
(h)
Obligations described in subdivisions (a) through (g) if
purchased
through an interlocal agreement under the urban
cooperation
act of 1967, 1967 (Ex Sess) PA 7, MCL 124.501 to
124.512.
(i)
Investment pools organized under the surplus funds
investment
pool act, 1982 PA 367, MCL 129.111 to 129.118.
(j)
The investment pools organized under the local government
investment
pool act, 1985 PA 121, MCL 129.141 to 129.150.
(g) Obligations of a political subdivision of another state
which at the time of purchase maintain a rating of AA as determined
by at least 1 standard rating service and having a maturity date
within 12 months of the purchase date.
(2)
A public corporation that invests
its funds in
securities
listed under subsection (1) shall not
deposit or invest
the
funds in a financial institution that is not eligible to be a
depository
of funds belonging to the state under a law or rule of
this
state or the United States have
the securities held by a
financial institution as defined under subsection (4).
(3) Assets acceptable for pledging to secure deposits of
public funds are limited to assets authorized for direct investment
under subsection (1).
(4) As used in this section, "financial institution" means a
state or nationally chartered bank or a state or federally
chartered savings and loan association, savings bank, or credit
union whose deposits are insured by an agency of the United States
government
and that maintains meets 1 of the following:
(a) Maintains a principal office or branch office located in
this
state. under the laws of this state or the United States.
(b) Maintains at least 50% of its branches in this state.
(c) Serves 5% or more of the state population.
(5) As used in this act:
(a) "Governing body" means the legislative body, council,
commission, board, or other body having legislative powers of a
public corporation.
(b) "Funds" means the money of a public corporation, the
investment of which is not otherwise subject to a public act of
this state or bond authorizing ordinance or resolution of a public
corporation that permits investment in fewer than all of the
investment options listed in subsection (1) or imposes 1 or more
conditions upon an investment in an option listed in subsection
(1).
(c) "Investment officer" means the treasurer or other person
designated by statute or charter of a public corporation to act as
the investment officer. In the absence of a statutory or charter
designation, the governing body of a public corporation shall
designate the investment officer.
(d) "Public corporation" means a county, city, village,
township, port district, drainage district, special assessment
district, or metropolitan district of this state, or a board,
commission, or another authority or agency created by or under an
act of the legislature of this state.