BILL NUMBER: AB 279	INTRODUCED
	BILL TEXT


INTRODUCED BY   Assembly Member Dickinson

                        FEBRUARY 11, 2013

   An act to amend Sections 53601.8 and 53635.8 of the Government
Code, relating to local government.


	LEGISLATIVE COUNSEL'S DIGEST


   AB 279, as introduced, Dickinson. Financial affairs.
   Existing law prescribes the instruments in, and criteria by, which
a local agency, as defined, may invest and deposit its funds,
including its surplus funds. Existing law authorizes a local agency
to invest in specified certificates of deposit.
   This bill would remove the term "certificates of deposit" and
instead authorize a local agency to invest in deposits. This bill
would also exclude from public funds reporting requirements a private
sector entity that assists a selected depository institution of a
local agency's deposits under certain conditions.
   Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 53601.8 of the Government Code is amended to
read:
   53601.8.  Notwithstanding Section 53601 or any other provision of
this code, a local agency that has the authority under law to invest
funds, at its discretion, may invest a portion of its surplus funds
in  certificates of deposit   deposits  at
a commercial bank, savings bank, savings and loan association, or
credit union that uses a private sector entity that assists in the
placement of  certificates of deposit,  
deposits,  provided that the  purchases of certificates
of deposit   deposits placed  pursuant to this
section, Section 53635.8, and subdivision (i) of Section 53601 do
not, in total, exceed 30 percent of the agency's funds that may be
invested for this purpose. The following conditions shall apply:
   (a) The local agency shall choose a nationally or state chartered
commercial bank, savings bank, savings and loan association, or
credit union in this state to invest the funds, which shall be known
as the "selected" depository institution.
   (b) The selected depository institution may submit the funds to a
private sector entity that assists in the placement of 
certificates of deposit   deposits  with one or
more commercial banks, savings banks, savings and loan associations,
or credit unions that are located in the United States, for the local
agency's account.
   (c) The full amount of the  principal 
deposit placed pursuant to this section  and the interest that
may be accrued  during the maximum term of each certificate
of deposit   for each deposit  shall at all times
be insured by the Federal Deposit Insurance Corporation or the
National Credit Union Administration.
   (d) The selected depository institution shall serve as a custodian
for each  certificate of  deposit  that is
issued with the placement service for the local agency's account
 .
   (e)  At the same time the local agency's funds are
deposited and the certificates of deposit are issued,  
On the same date that the local agency's funds are deposited pursuant
to this section,  the selected depository institution shall
receive an amount of  insured  deposits from other 
commercial banks, savings banks, savings and loan associations, or
credit unions   financial institutions  that, in
total, are equal to, or greater than, the full amount of the
principal that the local agency initially deposited through the
selected depository institution  for investment 
 pursuant to this section  .
   (f)  Notwithstanding subdivisions (a) to (e), inclusive, 
no   a  credit union  may  
shall not  act as a selected depository institution under this
section or Section 53635.8 unless both of the following conditions
are satisfied:
   (1) The credit union offers federal depository insurance through
the National Credit Union Administration.
   (2) The credit union is in possession of written guidance or other
written communication from the National Credit Union Administration
authorizing participation of federally insured credit unions in one
or more  certificate of  deposit placement services
and affirming that the moneys held by those credit unions while
participating in a deposit placement service will at all times be
insured by the federal government.
   (g) It is the intent of the Legislature that  nothing in
 this section shall  not  restrict competition
among private sector entities that provide placement services
pursuant to this section. 
   (h) Deposits received by the selected depository institution from
other financial institutions pursuant to subdivision (e) are not
subject to this article or to public funds reporting requirements
authorized under this article if the deposits are insured by the
Federal Deposit Insurance Corporation. 
  SEC. 2.  Section 53635.8 of the Government Code is amended to read:

   53635.8.  Notwithstanding Section 53601 or any other provision of
this code, a local agency that has the authority under law to invest
funds, at its discretion, may invest a portion of its surplus funds
in  certificates of deposit   deposits  at
a commercial bank, savings bank, savings and loan association, or
credit union that uses a private sector entity that assists in the
placement of  certificates of deposit,  
deposits,  provided that the  purchases of certificates
of deposit   deposits placed  pursuant to this
section, Section 53601.8, and subdivision (i) of Section 53601 do
not, in total, exceed 30 percent of the agency's funds that may be
invested for this purpose. The following conditions shall apply:
   (a) The local agency shall choose a nationally or state-chartered
commercial bank, savings bank, savings and loan association, or
credit union in this state to invest the funds, which shall be known
as the "selected" depository institution.
   (b) The selected depository institution may submit the funds to a
private sector entity that assists in the placement of 
certificates of deposit   deposits  with one or
more commercial banks, savings banks, savings and loan associations,
or credit unions that are located in the United States, for the local
agency's account.
   (c) The full amount of the  principal  
deposit placed pursuant to this section  and the interest that
may be accrued  during the maximum term of each certificate
of deposit   for each deposit  shall at all times
be insured by the Federal Deposit Insurance Corporation or the
National Credit Union Administration.
   (d) The selected depository institution shall serve as a custodian
for each  certificate of  deposit  that is
issued with the placement service for the local agency's account
 .
   (e)  At the same time the local agency's funds are
deposited and the certificates of deposit are issued,  
On the same date that the local agency's funds are deposited pursuant
to this section   ,  the selected depository
institution shall receive an amount of  insured  deposits
from other  commercial banks, savings banks, savings and loan
associations, or credit unions   financial institutions
 that, in total, are equal to, or greater than, the full amount
of the principal that the local agency initially deposited through
the selected depository institution for investment  pursuant to
this section  .
   (f) Notwithstanding subdivisions (a) to (e), inclusive, 
no   a  credit union  may  
shall not  act as a selected depository institution under this
section or Section 53601.8 unless both of the following conditions
are satisfied:
   (1) The credit union offers federal depository insurance through
the National Credit Union Administration.
   (2) The credit union is in possession of written guidance or other
written communication from the National Credit Union Administration
authorizing participation of federally insured credit unions in one
or more  certificate of  deposit placement services
and affirming that the moneys held by those credit unions while
participating in a deposit placement service will at all times be
insured by the federal government.
   (g) It is the intent of the Legislature that  nothing in
 this section shall  not  restrict competition
among private sector entities that provide placement services
pursuant to this section. 
   (h) Deposits received by the selected depository institution from
other financial institutions pursuant to subdivision (e) are not
subject to this article or to public funds reporting requirements
authorized under this article if the deposits are insured by the
Federal Deposit Insurance Corporation.