AB 283, as amended, Dababneh. 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, until January 1, 2017, authorizes, under certain conditions, a local agency to invest up to a certain percentage of its surplus funds in deposits at specified types of financial institutions that use a private sector entity to assist in the placement of deposits, whether those investments are certificates of deposit or in another form. With respect to investments other than a certificate of deposit, existing law limits the percentage of local agency funds that may be invested by any one private sector entity. Existing law, on and after January 1, 2017, limits this authority to invest surplus funds to investments in certificates of deposit.
This bill wouldbegin delete eliminate the
limitation that would become operative on January 1, 2017, and thus would indefinitely continueend deletebegin insert extendend insert the existingbegin insert temporaryend insert authority for a local agency to invest its surplus funds, in certificates of deposit or in another form ofbegin delete investment.end deletebegin insert investment, until January 1, 2021, and for that time period, would remove a limitation on the percentage of local agency funds that may be invested in certificates of deposit. This bill would, on and after January 1, 2021, indefinitely authorize a local agency to invest surplus funds to investments in certificates of deposit, as specified.end insert This bill would also
remove the limit on the percentage of local agency funds that may be invested by any one private sectorbegin delete entity.end deletebegin insert entity, as specified.end insert
Vote: majority. Appropriation: no. Fiscal committee: no. State-mandated local program: no.
The people of the State of California do enact as follows:
Section 53601.8 of the Government Code, as
2amended by Section 1 of Chapter 228 of the Statutes of 2013, is
3amended to read:
Notwithstanding Section 53601 or any other provision
5of this code, a local agency that has the authority under law to
6invest funds, at its discretion, may invest a portion of its surplus
7funds in deposits at a commercial bank, savings bank, savings and
8loan association, or credit union that uses a private sector entity
9that assists in the placement of deposits. The following conditions
10shall apply:
11(a) The local agency shall choose a nationally or state chartered
12commercial bank, savings bank, savings and loan association, or
13credit union in this state to invest the funds, which shall be known
14as the “selected” depository institution.
15(b) The
selected depository institution may use a private sector
16entity to help place local agency deposits with one or more
17commercial banks, savings banks, savings and loan associations,
18or credit unions that are located in the United States and are within
19the network used by the private sector entity for this purpose.
20(c) Any private sector entity used by a selected depository
21institution to help place its local agency deposits shall maintain
22policies and procedures requiring both of the following:
23(1) The full amount of each deposit placed pursuant to
24subdivision (b) and the interest that may accrue on each such
25deposit shall at all times be insured by the Federal Deposit
26Insurance Corporation or the National Credit Union Administration.
27(2) Every depository institution where funds are placed shall
28be capitalized at a level that is sufficient, and be otherwise eligible,
29to receive such deposits pursuant to regulations of the Federal
30Deposit Insurance Corporation or the National Credit Union
31Administration, as applicable.
P3 1(d) The selected depository institution shall serve as a custodian
2for each such deposit.
3(e) On the same date that the local agency’s funds are placed
4pursuant to subdivision (b) by the private sector entity, the selected
5depository institution shall receive an amount of insured deposits
6from other financial institutions that, in total, are equal to, or greater
7than, the full amount of the principal that the local agency initially
8deposited through the selected depository institution
pursuant to
9subdivision (b).
10(f) Notwithstanding subdivisions (a) to (e), inclusive, a credit
11union shall not act as a selected depository institution under this
12section or Section 53635.8 unless both of the following conditions
13are satisfied:
14(1) The credit union offers federal depository insurance through
15the National Credit Union Administration.
16(2) The credit union is in possession of written guidance or other
17written communication from the National Credit Union
18Administration authorizing participation of federally insured credit
19unions in one or more deposit placement services and affirming
20that the moneys held by those credit unions while participating in
21a deposit placement service will at all times be insured by
the
22federal government.
23(g) It is the intent of the Legislature that this section shall not
24restrict competition among private sector entities that provide
25placement services pursuant to this section.
26(h) The deposits placed pursuant to this section and Section
2753635.8 shall not, in total, exceed 30 percent of the agency’s funds
28that may be invested for this purpose.
29(i) This section shall remain in effect only until January 1, 2021,
30and as of that date is repealed.
Section 53601.8 of the Government Code, as added
32by Section 2 of Chapter 228 of the Statutes of 2013, is repealed.
begin insertSection 53601.8 of the
end insertbegin insertGovernment Codeend insertbegin insert, as added
34by Section 2 of Chapter 228 of the Statutes of 2013, is amended
35to read:end insert
Notwithstanding Section 53601 or any other provision
37of this code, a local agency that has the authority under law to
38invest funds may, at its discretion, invest a portion of its surplus
39funds in certificates of deposit at a commercial bank, savings bank,
40savings and loan association, or credit union that uses a private
P4 1sector entity that assists in the placement of certificates of deposit,
2provided that the purchases of certificates of deposit pursuant to
3this section, Section 53635.8, and subdivision (i) of Section 53601
4do not, in total, exceed 30 percent of the agency’s funds that may
5be invested for this purpose. The following conditions shall apply:
6(a) The local agency shall choose a nationally or state-chartered
7commercial bank, savings bank, savings and loan association,
or
8 credit union in this state to invest the funds, which shall be known
9as the “selected” depository institution.
10(b) The selected depository institution may submit the funds to
11a private sector entity that assists in the placement of certificates
12of deposit with one or more commercial banks, savings banks,
13savings and loan associations, or credit unions that are located in
14the United States for the local agency’s account.
15(c) The full amount of the principal and the interest that may
16be accrued during the maximum term of each certificate of deposit
17shall at all times be insured by the Federal Deposit Insurance
18Corporation or the National Credit Union Administration.
19(d) The selected depository institution shall serve as a custodian
20for each certificate of deposit that is issued with the placement
21service for the
local agency’s account.
22(e) At the same time the local agency’s funds are deposited and
23the certificates of deposit are issued, the selected depository
24institution shall receive an amount of deposits from other
25commercial banks, savings banks, savings and loan associations,
26or credit unions that, in total, are equal to, or greater than, the full
27amount of the principal that the local agency initially deposited
28through the selected depository institution for investment.
29(f) Notwithstanding subdivisions (a) to (e), inclusive, no credit
30union may act as a selected depository institution under this section
31or Section 53635.8 unless both of the following conditions are
32satisfied:
33(1) The credit union offers federal depository insurance through
34the National Credit Union Administration.
35(2) The credit union is in possession of written guidance or other
36written communication from the National Credit Union
37Administration authorizing participation of federally insured credit
38unions in one or more certificate of deposit placement services
39and affirming that the moneys held by those credit unions while
P5 1participating in a deposit placement service will at all times be
2insured by the federal government.
3(g) It is the intent of the Legislature that this section shall not
4restrict competition among private sector entities that provide
5placement services pursuant to this section.
6(h) This section shall become operative on January 1,begin delete 2017.end delete
7begin insert
2021.end insert
Section 53635.8 of the Government Code, as amended
9by Section 3 of Chapter 228 of the Statutes of 2013, is amended
10to read:
Notwithstanding Section 53601 or any other provision
12of this code, a local agency that has the authority under law to
13invest funds, at its discretion, may invest a portion of its surplus
14funds in deposits at a commercial bank, savings bank, savings and
15loan association, or credit union that uses a private sector entity
16that assists in the placement of deposits. The following conditions
17shall apply:
18(a) The local agency shall choose a nationally or state-chartered
19commercial bank, savings bank, savings and loan association, or
20credit union in this state to invest the funds, which shall be known
21as the “selected” depository institution.
22(b) The selected depository institution may use a private sector
23entity to help place local agency deposits with one or more
24commercial banks, savings banks, savings and loan associations,
25or credit unions that are located in the United States and are within
26the network used by the private sector entity for this purpose.
27(c) Any private sector entity used by a selected depository
28institution to help place its local agency deposits shall maintain
29policies and procedures requiring both of the following:
30(1) The full amount of each deposit placed pursuant to
31subdivision (b) and the interest that may accrue on each such
32deposit shall at all times be insured by the Federal Deposit
33Insurance Corporation or the National Credit Union Administration.
34(2) Every depository institution where funds are placed shall
35be capitalized at a level that is sufficient, and be otherwise eligible,
36to receive such deposits pursuant to regulations of the Federal
37Deposit Insurance Corporation or the National Credit Union
38Administration, as applicable.
39(d) The selected depository institution shall serve as a custodian
40for each such deposit.
P6 1(e) On the same date that the local agency’s funds are placed
2pursuant to subdivision (b) by the private sector entity, the selected
3depository institution shall receive an amount of insured deposits
4from other financial institutions that, in total, are equal to, or greater
5than, the full amount of the principal that the local agency initially
6deposited
through the selected depository institution for investment
7pursuant to subdivision (b).
8(f) Notwithstanding subdivisions (a) to (e), inclusive, a credit
9union shall not act as a selected depository institution under this
10section or Section 53601.8 unless both of the following conditions
11are satisfied:
12(1) The credit union offers federal depository insurance through
13the National Credit Union Administration.
14(2) The credit union is in possession of written guidance or other
15written communication from the National Credit Union
16Administration authorizing participation of federally insured credit
17unions in one or more deposit placement services and affirming
18that the moneys held by those credit unions while participating in
19a
deposit placement service will at all times be insured by the
20federal government.
21(g) It is the intent of the Legislature that this section shall not
22restrict competition among private sector entities that provide
23placement services pursuant to this section.
24(h) The deposits placed pursuant to this section and Section
2553601.8 shall not, in total, exceed 30 percent of the agency’s funds
26that may be invested for this purpose.
27(i) This section shall remain in effect only until January 1, 2021,
28and as of that date is repealed.
Section 53635.8 of the Government Code, as added
30by Section 4 of Chapter 228 of the Statutes of 2013, is repealed.
begin insertSection 53635.8 of the
end insertbegin insertGovernment Codeend insertbegin insert, as added
32by Section 4 of Chapter 228 of the Statutes of 2013, is amended
33to read:end insert
Notwithstanding Section 53601 or any other provision
35of this code, a local agency that has the authority under law to
36invest funds, at its discretion, may invest a portion of its surplus
37funds in certificates of deposit at a commercial bank, savings bank,
38savings and loan association, or credit union that uses a private
39sector entity that assists in the placement of certificates of deposit,
40provided that the purchases of certificates of deposit pursuant to
P7 1this section, Section 53601.8, and subdivision (i) of Section 53601
2do not, in total, exceed 30 percent of the agency’s funds that may
3be invested for this purpose. The following conditions shall apply:
4(a) The local agency shall choose a nationally or state-chartered
5commercial bank, savings bank, savings and loan association,
or
6credit union in this state to invest the funds, which shall be known
7as the “selected” depository institution.
8(b) The selected depository institution may submit the funds to
9a private sector entity that assists in the placement of certificates
10of deposit with one or more commercial banks, savings banks,
11savings and loan associations, or credit unions that are located in
12the United States, for the local agency’s account.
13(c) The full amount of the principal and the interest that may
14be accrued during the maximum term of each certificate of deposit
15shall at all times be insured by the Federal Deposit Insurance
16Corporation or the National Credit Union Administration.
17(d) The selected depository institution shall serve as a custodian
18for each certificate of deposit that is issued with the placement
19service for the
local agency’s account.
20(e) At the same time the local agency’s funds are deposited and
21the certificates of deposit are issued, the selected depository
22institution shall receive an amount of deposits from other
23commercial banks, savings banks, savings and loan associations,
24or credit unions that, in total, are equal to, or greater than, the full
25amount of the principal that the local agency initially deposited
26through the selected depository institution for investment.
27(f) Notwithstanding subdivisions (a) to (e), inclusive, a credit
28union shall not act as a selected depository institution under this
29section or Section 53601.8 unless both of the following conditions
30are satisfied:
31(1) The credit union offers federal depository insurance through
32the National Credit Union Administration.
33(2) The credit union is in possession of written guidance or other
34written communication from the National Credit Union
35Administration authorizing participation of federally insured credit
36unions in one or more certificate of deposit placement services
37and affirming that the moneys held by those credit unions while
38participating in a deposit placement service will at all times be
39insured by the federal government.
P8 1(g) It is the intent of the Legislature that this section shall not
2restrict competition among private sector entities that provide
3placement services pursuant to this section.
4(h) This section shall become operative on January 1,begin delete 2017.end delete
5begin insert
2021.end insert
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