Rep. Norm Thurston — Voting Record

Bill

Number

H.B. 268 Second Substitute (2017GS)

Sponsor

Rep. Knotwell, J.

Final action

Governor Signed 3/24/2017

Outcome

Became law — signed by Gov. Gary R. Herbert

Summary

What it does

• This bill:
• amends definitions;
• specifies the term to final maturity for certain deposits or investments that are invested by a public agency insurance mutual;
• provides that a certified investment adviser may use the adviser's own approved list of brokers or dealers, subject to rules of the State Money Management Council;
• authorizes the state treasurer, county, city, and town treasurers, the clerk or treasurer of each school district, and other public treasurers to procure crime or theft insurance;
• provides that the State Money Management Council may authorize an exception to certain maturity dates in certain circumstances; and
• makes technical and conforming changes.

Every vote on this bill

Bill text

MONEY MANAGEMENT ACT AMENDMENTS
GENERAL SESSION
STATE OF UTAH
Chief Sponsor: John Knotwell
Senate Sponsor: 
Curtis S. Bramble
LONG TITLE
General Description:
This bill modifies the State Money Management Act by amending provisions relating to
money management.
Highlighted Provisions:
This bill:
▸ amends definitions;
▸ specifies the term to final maturity for certain deposits or investments that are
invested by a public agency insurance mutual;
▸ provides that a certified investment adviser may use the adviser's own approved list
of brokers or dealers, subject to rules of the State Money Management Council;
▸ authorizes the state treasurer, county, city, and town treasurers, the clerk or treasurer
of each school district, and other public treasurers to procure crime or theft
insurance;
▸ provides that the State Money Management Council may authorize an exception to
certain maturity dates in certain circumstances; and
▸ makes technical and conforming changes.
Money Appropriated in this Bill:
None
Other Special Clauses:
None
Utah Code Sections Affected:
AMENDS:
51-7-3
, as last amended by Laws of Utah 2013, Chapters 204 and 388
51-7-11
, as last amended by Laws of Utah 2015, Chapter 171
51-7-11.5
, as last amended by Laws of Utah 2007, Chapter 254
51-7-15
, as last amended by Laws of Utah 2013, Chapters 278 and 388
51-7-23
, as last amended by Laws of Utah 2015, Chapter 171
Be it enacted by the Legislature of the state of Utah:
Section 1. Section 
51-7-3
 is amended to read:
51-7-3.
Definitions.
As used in this chapter:
(1) "Agent" means "agent" as defined in Section 
61-1-13
.
(2) "Certified dealer" means:
(a) a primary reporting dealer recognized by the Federal Reserve Bank of New York
who is certified by the director as having met the applicable criteria of council rule; or
(b) a broker dealer who:
(i) has and maintains an office and a resident registered principal in the state;
(ii) meets the capital requirements established by council rules;
(iii) meets the requirements for good standing established by council rule; and
(iv) is certified by the director as meeting quality criteria established by council rule.
(3) "Certified investment adviser" means a federal covered adviser, as defined in
Section 
61-1-13
, or an investment adviser, as defined in Section 
61-1-13
, who is certified by
the director as having met the applicable criteria of council rule.
(4) "Commissioner" means the commissioner of financial institutions.
(5) "Council" means the State Money Management Council created by Section
51-7-16
.
(6) "Covered bond" means a publicly placed debt security issued by a bank, other
regulated financial institution, or a subsidiary of either that is secured by a pool of loans that
remain on the balance sheet of the issuer or its subsidiary.
(7) "Director" means the director of the Utah State Division of Securities of the
Department of Commerce.
(8) (a) "Endowment funds" means gifts, devises, or bequests of property of any kind
donated to a higher education institution from any source.
(b) "Endowment funds" does not mean money used for the general operation of a
higher education institution that is received by the higher education institution from:
(i) state appropriations;
(ii) federal contracts;
(iii) federal grants;
(iv) private research grants; and
(v) tuition and fees collected from students.
(9) "First tier commercial paper" means commercial paper rated by at least two
nationally recognized statistical rating organizations in the highest short-term rating category.
(10) "Funds functioning as endowments" means funds, regardless of source, whose
corpus is intended to be held in perpetuity by formal institutional designation according to the
institution's policy for designating those funds.
(11) "GASB" or "Governmental Accounting Standards Board" means the
Governmental Accounting Standards Board that is responsible for accounting standards used
by public entities.
(12) "Hard put" means an unconditional sell-back provision or a redemption provision
applicable at issue to a note or bond, allowing holders to sell their holdings back to the issuer
or to an equal or higher-rated third party provider at specific intervals and specific prices
determined at the time of issuance.
(13) "Higher education institution" means the institutions specified in Section
53B-1-102
.
(14) "Investment adviser representative" is as defined in Section 
61-1-13
.
(15) (a) "Investment agreement" means any written agreement that has specifically
negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate.
(b) "Investment agreement" includes any agreement to supply investments on one or
more future dates.
(16) "Local government" means a county, municipality, school district, local district
under Title 17B, Limited Purpose Local Government Entities - Local Districts, special service
district under Title 17D, Chapter 1, Special Service District Act, or any other political
subdivision of the state.
(17) "Market value" means market value as defined in the Master Repurchase
Agreement.
(18) "Master Repurchase Agreement" means the current standard Master Repurchase
Agreement approved by the Public Securities Association or by any successor organization.
(19) "Maximum amount" means, with respect to qualified depositories, the total
amount of:
(a) deposits in excess of the federal deposit insurance limit; and
(b) nonqualifying repurchase agreements.
(20) "Money market mutual fund" means an open-end managed investment fund:
(a) that complies with the diversification, quality, and maturity requirements of Rule
2a-7 or any successor rule of the Securities and Exchange Commission applicable to money
market mutual funds; and
(b) that assesses no sales load on the purchase of shares and no contingent deferred
sales charge or other similar charges, however designated.
(21) "Nationally recognized statistical rating organization" means an organization that
has been designated as a nationally recognized statistical rating organization by the Securities
and Exchange Commission's Division of Market Regulation.
(22) "Nonqualifying repurchase agreement" means a repurchase agreement evidencing
indebtedness of a qualified depository arising from the transfer of obligations of the United
States Treasury or other authorized investments to public treasurers that is:
(a) evidenced by a safekeeping receipt issued by the qualified depository;
(b) included in the depository's maximum amount of public funds; and
(c) valued and maintained at market value plus an appropriate margin collateral
requirement based upon the term of the agreement and the type of securities acquired.
(23) "Operating funds" means current balances and other funds that are to be disbursed
for operation of the state government or any of its boards, commissions, institutions,
departments, divisions, agencies, or other similar instrumentalities, or any county, city, school
district, political subdivision, or other public body.
(24) "Permanent funds" means funds whose principal may not be expended, the
earnings from which are to be used for purposes designated by law.
(25) "Permitted depository" means any out-of-state financial institution that meets
quality criteria established by rule of the council.
(26) "Public funds" means money, funds, and accounts, regardless of the source from
which the money, funds, and accounts are derived, that are owned, held, or administered by the
state or any of its boards, commissions, institutions, departments, divisions, agencies, bureaus,
laboratories, or other similar instrumentalities, or any county, city, school district, political
subdivision, or other public body.
(27) (a) "Public money" means "public funds."
(b) "Public money," as used in Article VII, Sec. 15, Utah Constitution, means the same
as "state funds."
(28) "Public treasurer" includes the state treasurer and the official of any state board,
commission, institution, department, division, agency, or other similar instrumentality, or of
any county, city, school district, 
charter school,
 political subdivision, or other public body who
has the responsibility for the safekeeping and investment of any public funds.
(29) "Qualified depository" means a Utah depository institution or an out-of-state
depository institution, as those terms are defined in Section 
7-1-103
, that is authorized to
conduct business in this state under Section 
7-1-702
 or Title 7, Chapter 19, Acquisition of
Failing Depository Institutions or Holding Companies, whose deposits are insured by an
agency of the federal government and that has been certified by the commissioner of financial
institutions as having met the requirements established under this chapter and the rules of the
council to be eligible to receive deposits of public funds.
(30) "Qualifying repurchase agreement" means a repurchase agreement evidencing
indebtedness of a financial institution or government securities dealer acting as principal
arising from the transfer of obligations of the United States Treasury or other authorized
investments to public treasurers only if purchased securities are:
(a) delivered to the public treasurer's safekeeping agent or custodian as contemplated
by Section 7 of the Master Repurchase Agreement; and
(b) valued and maintained at market value plus an appropriate margin collateral
requirement based upon the term of the agreement and the type of securities acquired.
(31) "Reciprocal deposits" means deposits that are initially deposited into a qualified
depository and are then redeposited through a deposit account registry service:
(a) in one or more FDIC-insured depository institutions in amounts up to the relevant
FDIC-insured deposit limit for a depositor in each depository institution; and
(b) in exchange for reciprocal FDIC-insured deposits made through the deposit account
registry service to the qualified depository.
(32) "Securities division" means Utah's Division of Securities created within the
Department of Commerce by Section 
13-1-2
.
(33) "State funds" means:
(a) public money raised by operation of law for the support and operation of the state
government; and
(b) all other money, funds, and accounts, regardless of the source from which the
money, funds, or accounts are derived, that are owned, held, or administered by the state or any
of its boards, commissions, institutions, departments, divisions, agencies, bureaus, laboratories,
or other similar instrumentalities.
Section 2. Section 
51-7-11
 is amended to read:
51-7-11.
Authorized deposits or investments of public funds.
(1) (a) Except as provided in Subsections (1)(b) and (1)(c), a public treasurer shall
conduct investment transactions through qualified depositories, certified dealers, or directly
with issuers of the investment securities.
(b) A public treasurer may designate a certified investment adviser to make trades on
behalf of the public treasurer.
(c) A public treasurer may make a deposit in accordance with Section 
53B-7-601
 in a
foreign depository institution as defined in Section 
7-1-103
.
(2) The remaining term to maturity of the investment may not exceed the period of
availability of the funds to be invested.
(3) Except as provided in Subsection (4), all public funds shall be deposited or invested
in the following assets that meet the criteria of Section 
51-7-17
:
(a) negotiable or nonnegotiable deposits of qualified depositories;
(b) qualifying or nonqualifying repurchase agreements and reverse repurchase
agreements with qualified depositories using collateral consisting of:
(i) Government National Mortgage Association mortgage pools;
(ii) Federal Home Loan Mortgage Corporation mortgage pools;
(iii) Federal National Mortgage Corporation mortgage pools;
(iv) Small Business Administration loan pools;
(v) Federal Agriculture Mortgage Corporation pools; or
(vi) other investments authorized by this section;
(c) qualifying repurchase agreements and reverse repurchase agreements with certified
dealers, permitted depositories, or qualified depositories using collateral consisting of:
(i) Government National Mortgage Association mortgage pools;
(ii) Federal Home Loan Mortgage Corporation mortgage pools;
(iii) Federal National Mortgage Corporation mortgage pools;
(iv) Small Business Administration loan pools; or
(v) other investments authorized by this section;
(d) commercial paper that is classified as "first tier" by two nationally recognized
statistical rating organizations, which has a remaining term to maturity of:
(i) 270 days or fewer for paper issued under 15 U.S.C. Sec. 77c(a)(3); or
(ii) 365 days or fewer for paper issued under 15 U.S.C. Sec. 77d(2);
(e) bankers' acceptances that:
(i) are eligible for discount at a Federal Reserve bank; and
(ii) have a remaining term to maturity of 270 days or fewer;
(f) fixed rate negotiable deposits issued by a permitted depository that have a
remaining term to maturity of 365 days or fewer;
(g) obligations of the United States Treasury, including United States Treasury bills,
United States Treasury notes, and United States Treasury bonds that, unless the funds invested
are pledged or otherwise deposited in an irrevocable trust escrow account, have a remaining
term to final maturity of:
(i) five years or less; [
or
]
(ii) if the funds are invested by an institution of higher education as defined in Section
53B-3-102
, a city of the first class, or a county of the first class, 10 years or less; 
or
(iii) if the funds are invested by a public agency insurance mutual, as defined in
Subsection 
31A-1-103
(7)(a), 20 years or less;
(h) obligations other than mortgage pools and other mortgage derivative products that:
(i) are issued by, or fully guaranteed as to principal and interest by, the following
agencies or instrumentalities of the United States in which a market is made by a primary
reporting government securities dealer, unless the agency or instrumentality has become private
and is no longer considered to be a government entity:
(A) Federal Farm Credit banks;
(B) Federal Home Loan banks;
(C) Federal National Mortgage Association;
(D) Federal Home Loan Mortgage Corporation;
(E) Federal Agriculture Mortgage Corporation; and
(F) Tennessee Valley Authority; and
(ii) unless the funds invested are pledged or otherwise deposited in an irrevocable trust
escrow account, have a remaining term to final maturity of:
(A) five years or less; [
or
]
(B) if the funds are invested by an institution of higher education as defined in Section
53B-3-102
, a city of the first class, or a county of the first class, 10 years or less; 
or
(C) if the funds are invested by a public agency insurance mutual, as defined in
Subsection 
31A-1-103
(7)(a), 20 years or less;
(i) fixed rate corporate obligations that:
(i) are rated "A" or higher or the equivalent of "A" or higher by two nationally
recognized statistical rating organizations;
(ii) are senior unsecured or secured obligations of the issuer, excluding covered bonds;
(iii) are publicly traded; and
(iv) have a remaining term to final maturity of 15 months or less or are subject to a
hard put at par value or better, within 365 days;
(j) tax anticipation notes and general obligation bonds of the state or a county,
incorporated city or town, school district, or other political subdivision of the state, including
bonds offered on a when-issued basis without regard to the limitations described in Subsection
(7) that, unless the funds invested are pledged or otherwise deposited in an irrevocable trust
escrow account, have a remaining term to final maturity of:
(i) five years or less; [
or
]
(ii) if the funds are invested by an institution of higher education as defined in Section
53B-3-102
, a city of the first class, or a county of the first class, 10 years or less; 
or
(iii) if the funds are invested by a public agency insurance mutual, as defined in
Subsection 
31A-1-103
(7)(a), 20 years or less;
(k) bonds, notes, or other evidence of indebtedness of a county, incorporated city or
town, school district, or other political subdivision of the state that are payable from
assessments or from revenues or earnings specifically pledged for payment of the principal and
interest on these obligations, including bonds offered on a when-issued basis without regard to
the limitations described in Subsection (7) that, unless the funds invested are pledged or
otherwise deposited in an irrevocable trust escrow account, have a remaining term to final
maturity of:
(i) five years or less; [
or
]
(ii) if the funds are invested by an institution of higher education as defined in Section
53B-3-102
, a city of the first class, or a county of the first class, 10 years or less; 
or
(iii) if the funds are invested by a public agency insurance mutual, as defined in
Subsection 
31A-1-103
(7)(a), 20 years or less;
(l) shares or certificates in a money market mutual fund;
(m) variable rate negotiable deposits that:
(i) are issued by a qualified depository or a permitted depository;
(ii) are repriced at least semiannually; and
(iii) have a remaining term to final maturity not to exceed three years;
(n) variable rate securities that:
(i) (A) are rated "A" or higher or the equivalent of "A" or higher by two nationally
recognized statistical rating organizations;
(B) are senior unsecured or secured obligations of the issuer, excluding covered bonds;
(C) are publicly traded;
(D) are repriced at least semiannually; and
(E) have a remaining term to final maturity not to exceed three years or are subject to a
hard put at par value or better, within 365 days;
(ii) are not mortgages, mortgage-backed securities, mortgage derivative products, or a
security making unscheduled periodic principal payments other than optional redemptions; and
(o) reciprocal deposits made in accordance with Subsection 
51-7-17
(4).
(4) The following public funds are exempt from the requirements of Subsection (3):
(a) the Employers' Reinsurance Fund created in Section 
34A-2-702
;
(b) the Uninsured Employers' Fund created in Section 
34A-2-704
;
(c) a local government other post-employment benefits trust fund under Section
51-7-12.2
; and
(d) a nonnegotiable deposit made in accordance with Section 
53B-7-601
 in a foreign
depository institution as defined in Section 
7-1-103
.
(5) If any of the deposits authorized by Subsection (3)(a) are negotiable or
nonnegotiable large time deposits issued in amounts of $100,000 or more, the interest shall be
calculated on the basis of the actual number of days divided by 360 days.
(6) A public treasurer may maintain fully insured deposits in demand accounts in a
federally insured nonqualified depository only if a qualified depository is not reasonably
convenient to the entity's geographic location.
(7) Except as provided under Subsections (3)(j) and (k), the public treasurer shall
ensure that all purchases and sales of securities are settled within:
(a) 15 days of the trade date for outstanding issues; and
(b) 30 days for new issues.
Section 3. Section 
51-7-11.5
 is amended to read:
51-7-11.5.
Certified investment advisers -- Scope of and limits to authority.
(1) [
Certified investment advisers
] 
A certified investment advisor
 may not make any
investments that are inconsistent with this chapter or rules of the council.
(2) [
Certified investment advisers
] 
Except as provided in Subsection (3), a certified
investment adviser
 acting on behalf of a public treasurer shall conduct investment transactions
only through qualified depositories, certified dealers, or directly with issuers of the investment
securities.
(3) Subject to rules of the council, a certified investment adviser may use the adviser's
own approved list of brokers and dealers.
Section 4. Section 
51-7-15
 is amended to read:
51-7-15.
Bonds of state treasurer and other public treasurers -- Reports to
council.
(1) (a) The state treasurer, county, city, and town treasurers, the clerk or treasurer of
each school district, and other public treasurers that the council designates by rule shall be
bonded 
or may procure crime or theft insurance as allowed in Section 
17-16-11
 in an amount
of not less than that established by the council.
(b) The council shall base the minimum bond amount 
or crime or theft insurance as
allowed in Section 
17-16-11
 on the amount of public funds normally in the treasurer's
possession or control.
(2) (a) When a public treasurer deposits or invests public funds as authorized by this
chapter, the public treasurer and the public treasurer's bondsmen 
or insurers
 are not liable for
any loss of public funds invested or deposited unless the loss is caused by the malfeasance of
the public treasurer or a member of the public treasurer's staff.
(b) A public treasurer and the public treasurer's bondsmen 
or insurers
 are liable for a
loss for any reason from deposits or investments not made in conformity with this chapter and
the rules of the council.
(3) (a) A public treasurer shall file a written report with the council on or before January
31 and July 31 of each year.
(b) The report shall contain:
(i) the information about the deposits and investments of that public treasurer during
the preceding six months ending December 31 and June 30, respectively, that the council
requires by rule; and
(ii) information detailing the nature and extent of interest rate contracts permitted by
Subsection 
51-7-17
(3).
(c) A public treasurer shall make copies of the report available to the public at the
public treasurer's office during normal business hours.
Section 5. Section 
51-7-23
 is amended to read:
51-7-23.
Transition of investments previously authorized.
(1) Any investment held by a public treasurer that as of June 30, 2015, is not in
compliance with the provisions of this chapter is subject to review by the council.
(2) (a) No later than July 31, 2015, a public treasurer who holds an investment
described in Subsection (1) shall provide the council a written report that outlines a reasonable
plan to bring the investment into compliance.
(b) A plan described in Subsection (2)(a) is subject to annual review by the council.
(c) The council may authorize, with substantial justification, an exception to the
five-year maturity requirements of Section 
51-7-11
.