Section 129.91 - Investment of funds of public corporations; eligible depository; secured deposits; funds limitation on acceptable assets; pooling or coordinating funds; written agreements; investment
INVESTMENT OF SURPLUS FUNDS OF POLITICAL SUBDIVISIONS (EXCERPT)
Act 20 of 1943
129.91 Investment of funds of public corporations; eligible depository; secured deposits; funds limitation on acceptable assets; pooling or coordinating funds; written agreements; investment in certificate of deposit; conditions; “financial institution” defined; additional definitions.
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.
(b) Certificates of deposit, savings accounts, deposit accounts, or depository receipts of a financial institution, but only if the financial institution complies with subsection (2), or certificates of deposit obtained through a financial institution as provided in subsection (5).
(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 not more than 270 days after the date of purchase.
(d) Repurchase agreements consisting of instruments listed in subdivision (a).
(e) Bankers' acceptances of United States 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.
(g) Mutual funds registered under the investment company act of 1940, title I of chapter 686, 54 Stat. 789, 15 USC 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.
(2) Except as provided in subsection (5), a public corporation that invests its funds 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 this state under a law or rule of this state or the United States.
(3) Assets acceptable for pledging to secure deposits of public funds are limited to assets authorized for direct investment under subsection (1).
(4) The governing body by resolution may authorize its investment officer to enter into written agreements with other public corporations to pool or coordinate the funds to be invested under this section with the funds of other public corporations. Agreements allowed under this subsection shall include all of the following:
(a) The types of investments permitted to be purchased with pooled funds.
(b) The rights of members of the pool to withdraw funds from the pooled investments without penalty.
(c) The duration of the agreement and the requirement that the agreement shall not commence until at least 60 days after the public corporations entering the agreement give written notice to an existing local government investment pool which is organized pursuant to the local government investment pool act, 1985 PA 121, MCL 129.141 to 129.150, in those counties where such a pool is operating and accepting deposits on or before September 29, 2006.
(d) The method by which the pool will be administered.
(e) The manner by which the public corporations will respond to liabilities incurred in conjunction with the administration of the pool.
(f) The manner in which strict accountability for all funds will be provided for, including an annual statement of all receipts and disbursements.
(g) The manner by which the public corporations will adhere to the requirements of section 5.
(5) In addition to the investments authorized under subsection (1), the governing body by resolution may authorize its investment officer to invest the funds of the public corporation in certificates of deposit in accordance with all of the following conditions:
(a) The funds are initially invested through a financial institution that is not ineligible to be a depository of surplus funds belonging to this state under section 6 of 1855 PA 105, MCL 21.146.
(b) The financial institution arranges for the investment of the funds in certificates of deposit in 1 or more insured depository institutions, as defined in 12 USC 1813, or 1 or more insured credit unions, as defined in 12 USC 1752, for the account of the public corporation.
(c) The full amount of the principal and any accrued interest of each certificate of deposit is insured by an agency of the United States.
(d) The financial institution acts as custodian for the public corporation with respect to each certificate of deposit.
(e) At the same time that the funds of the public corporation are deposited and the certificate or certificates of deposit are issued, the financial institution receives an amount of deposits from customers of other insured depository institutions or insured credit unions equal to or greater than the amount of the funds initially invested by the public corporation through the financial institution.
(6) A public corporation that initially invests its funds through a financial institution that maintains an office located in this state may invest the funds in certificates of deposit as provided under subsection (5).
(7) 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 a principal office or branch office located in this state under the laws of this state or the United States.
(8) 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.
History: 1943, Act 20, Imd. Eff. Mar. 13, 1943 ;-- CL 1948, 129.91 ;-- Am. 1964, Act 126, Eff. Aug. 28, 1964 ;-- Am. 1977, Act 66, Imd. Eff. July 20, 1977 ;-- Am. 1978, Act 500, Imd. Eff. Dec. 11, 1978 ;-- Am. 1979, Act 79, Imd. Eff. Aug. 1, 1979 ;-- Am. 1982, Act 217, Imd. Eff. July 8, 1982 ;-- Am. 1988, Act 239, Imd. Eff. July 11, 1988 ;-- Am. 1997, Act 44, Imd. Eff. June 30, 1997 ;-- Am. 1997, Act 196, Imd. Eff. Dec. 30, 1997 ;-- Am. 2006, Act 400, Imd. Eff. Sept. 29, 2006 ;-- Am. 2008, Act 308, Imd. Eff. Dec. 18, 2008 ;-- Am. 2009, Act 21, Imd. Eff. May 5, 2009