1-1 By: Marchant (Senate Sponsor - Armbrister) H.B. No. 696
1-2 (In the Senate - Received from the House April 5, 1993;
1-3 April 5, 1993, read first time and referred to Committee on
1-4 Intergovernmental Relations; April 29, 1993, reported favorably by
1-5 the following vote: Yeas 6, Nays 0; April 29, 1993, sent to
1-6 printer.)
1-7 COMMITTEE VOTE
1-8 Yea Nay PNV Absent
1-9 Armbrister x
1-10 Leedom x
1-11 Carriker x
1-12 Henderson x
1-13 Madla x
1-14 Moncrief x
1-15 Patterson x
1-16 Rosson x
1-17 Shapiro x
1-18 Wentworth x
1-19 Whitmire x
1-20 A BILL TO BE ENTITLED
1-21 AN ACT
1-22 relating to depositories for municipal funds.
1-23 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-24 SECTION 1. Chapter 105, Local Government Code, is amended to
1-25 read as follows:
1-26 CHAPTER 105. DEPOSITORIES FOR MUNICIPAL FUNDS
1-27 SUBCHAPTER A. GENERAL PROVISIONS
1-28 Sec. 105.001. Definitions. In this chapter:
1-29 (1) "Bank" means a state bank or a national bank
1-30 domiciled in this state <banking corporation or association or an
1-31 individual banker>.
1-32 (2) "Credit union" means a state credit union or
1-33 federal credit union domiciled in this state.
1-34 (3) <(2)> "Demand deposit" means a deposit of funds
1-35 that may be withdrawn on the demand of the depositor.
1-36 (4) <(3)> "Depository" means the bank, credit union,
1-37 or savings association selected by the municipality to provide
1-38 depository services.
1-39 (5) "Time deposit" means a deposit of funds subject to
1-40 a contract between the depositor and the depository under which the
1-41 depositor may not withdraw any of the funds by check or by another
1-42 manner until the expiration of a certain period following written
1-43 notice of the depositor's intent to withdraw the funds.
1-44 (6) <(4)> "Depository services" means the receipt and
1-45 disbursement of funds by a depository in accordance with the terms
1-46 of a depository services contract <"Secretary of a municipality"
1-47 includes the clerk of a municipality>.
1-48 (7) "Depository services contract" means a contract
1-49 executed by a municipality and a depository containing terms and
1-50 conditions relating to the depository services to be provided by
1-51 the depository.
1-52 (8) "Designated officer" means the treasurer of a
1-53 municipality or other officer of the municipality so designated by
1-54 the governing body of a municipality.
1-55 (9) "Federal credit union" means a credit union
1-56 organized under the Federal Credit Union Act (12 U.S.C. Section
1-57 1751 et seq.).
1-58 (10) "Federal savings association" means a savings and
1-59 loan association or a savings bank organized under federal law.
1-60 (11) "National bank" means a banking corporation
1-61 organized under the provisions of 12 U.S.C. Section 21.
1-62 (12) "Savings association" means a state savings
1-63 association or a federal savings association domiciled in this
1-64 state.
1-65 (13) "State bank" has the meaning assigned by The
1-66 Texas Banking Code (Article 342-101 et seq., Vernon's Texas Civil
1-67 Statutes).
1-68 (14) "State credit union" means a credit union
2-1 organized under the Texas Credit Union Act (Article 2461-1.01 et
2-2 seq., Vernon's Texas Civil Statutes).
2-3 (15) "State savings association" means any savings and
2-4 loan association or savings bank organized under the laws of this
2-5 state.
2-6 Sec. 105.002. Funds Affected. This chapter applies to the
2-7 funds, including school funds, of any municipality or any
2-8 department or agency of the municipality<, including any school
2-9 funds of the municipality>.
2-10 (Sections 105.003-105.010 reserved for expansion)
2-11 SUBCHAPTER B. ESTABLISHMENT OF DEPOSITORY
2-12 Sec. 105.011. Depository Authorized. (a) Before awarding a
2-13 depository services contract to a depository, the governing body of
2-14 a municipality shall receive applications for the performance of
2-15 depository services from one or more banks, credit unions, or
2-16 savings associations <At a meeting held at any time, the governing
2-17 body of a municipality may receive applications from one or more
2-18 banks for the deposit of the municipality's funds>.
2-19 (b) The governing body may consider the application of a
2-20 bank, credit union, or savings association that is not doing
2-21 business within the municipality if:
2-22 (1) the bank, credit union, or savings association
2-23 maintains a place of business within the state and offers within
2-24 the state the services required by the depository services
2-25 contract; and
2-26 (2) the governing body, prior to giving the notice
2-27 required by Section 105.012, has adopted a written policy expressly
2-28 permitting the consideration of applications received by the
2-29 municipality from a bank, credit union, or savings association that
2-30 is not doing business within the municipality, after taking into
2-31 consideration what is in the best interest of the municipality in
2-32 establishing a depository.
2-33 (c) The designated officer shall request, receive, and
2-34 review applications for the performance of depository services.
2-35 The designated officer shall present the specifications of each
2-36 application to the governing body who will then select a depository
2-37 <If two or more banks are doing business within a municipality, the
2-38 governing body may consider the applications of only those banks.
2-39 However, a general-law municipality with a population of more than
2-40 20,000 may consider applications from any bank located in the
2-41 county in which the municipality is located or in an adjacent
2-42 county>.
2-43 Sec. 105.012. Notice. (a) The designated officer shall
2-44 give notice to banks, credit unions, and savings associations
2-45 requesting the submission of applications for the performance of
2-46 depository services.
2-47 (b) The notice must contain:
2-48 (1) the name and address of the designated officer
2-49 receiving the applications;
2-50 (2) the date and time the applications are to be
2-51 received by the designated officer; and
2-52 (3) the date, time, and place the governing body of
2-53 the municipality will consider the selection of one or more
2-54 depositories.
2-55 (c) Notice of the request shall be published at least once
2-56 no later than 21 days prior to the deadline for receipt of
2-57 applications for depository services contracts (i) in a newspaper
2-58 of general circulation in the municipality and (ii) in a financial
2-59 publication of general circulation published within this state;
2-60 provided, that the notice required by clause (ii) shall not be
2-61 required if the governing body has not adopted the written policy
2-62 described in Section 105.011 <Not earlier than four weeks or later
2-63 than one week before the date of the meeting, the secretary of the
2-64 municipality shall publish at least once in a newspaper published
2-65 in the municipality a notice of the meeting at which applications
2-66 are to be received>.
2-67 Sec. 105.013. Application. The designated officer may not
2-68 consider an application if it is received after the date specified
2-69 in the notice for receiving applications by the designated
2-70 officer <A bank desiring to be selected as a municipal depository
3-1 must deliver its application to the secretary of the municipality
3-2 on or before the date of the meeting at which applications are to
3-3 be received>.
3-4 Sec. 105.014. REVIEW OF APPLICATIONS. In reviewing the
3-5 applications, the designated officer shall consider the terms and
3-6 conditions for the performance of depository services, including
3-7 the type and cost of services to be provided to the municipality,
3-8 consistent with any policy guidelines adopted by the governing body
3-9 regarding the selection of one or more depositories.
3-10 Sec. 105.015. Selection of Depository. (a) The governing
3-11 body of a municipality may authorize the designated officer to
3-12 execute on the municipality's behalf one or more depository
3-13 services contracts <After considering the applications, the
3-14 governing body of the municipality shall select as municipal
3-15 depositories one or more banks that offer the most favorable terms
3-16 and conditions for the handling of the municipal funds>.
3-17 (b) The governing body may reject any of the applications
3-18 and readvertise if all <for> applications are rejected.
3-19 (c) The conflict of interests provisions of <Chapter 179,
3-20 Acts of the 60th Legislature, Regular Session, 1967 (>Article
3-21 2529c, Vernon's Texas Civil Statutes<),> apply to the selection of
3-22 the depositories.
3-23 Sec. 105.016 <105.015>. Designation of Depository. (a) The
3-24 <When security is provided in accordance with Subchapter C and is
3-25 approved by the governing body of the municipality, the> governing
3-26 body shall designate, by an order recorded in its minutes, the
3-27 bank, credit union, or savings association to serve as a depository
3-28 for the municipality's funds.
3-29 (b) If a bank, credit union, or savings association selected
3-30 as a municipal depository does not provide security by the deadline
3-31 prescribed by Section 105.031, the selection of the bank, credit
3-32 union, or savings association <of the bank> as a depository is
3-33 void, and the governing body may consider the application it deems
3-34 to be the next most advantageous depository services application
3-35 <shall publish notice, receive applications, and select another
3-36 depository in the regular manner>.
3-37 Sec. 105.017. Term of Depository Contract. A municipality
3-38 may approve, execute, and deliver any depository services contract
3-39 whose term does not exceed five years. The depository services
3-40 contract may only contain terms and conditions approved by the
3-41 governing body of the municipality.
3-42 Sec. 105.018. Additional Services. In addition to
3-43 depository services, a municipality may contract with financial
3-44 institutions, including banks, credit unions, and savings
3-45 associations, for additional financial services under a separate
3-46 contract if the governing body of the municipality determines that
3-47 additional financial services are necessary in the administration,
3-48 collection, investment, and transfer of municipal funds.
3-49 (Sections 105.019 <105.016>-105.030 reserved for expansion)
3-50 SUBCHAPTER C. SECURITY FOR FUNDS HELD BY DEPOSITORY
3-51 Sec. 105.031. Qualification as Depository. (a) The bank or
3-52 savings association, to qualify as a municipal depository, must,
3-53 not later than five days before the commencement of the term of the
3-54 depository services contract, provide security for the municipal
3-55 funds to be deposited in accordance with the terms of the
3-56 depository services contract <Within five days after the date a
3-57 bank is selected as a municipal depository, the bank must qualify
3-58 as a depository by providing security for the municipal funds to be
3-59 deposited with the bank>.
3-60 (b) The Public Funds Collateral Act (Article 2529d, Vernon's
3-61 Texas Civil Statutes) governs the type, level, substitution,
3-62 possession, release, and method of valuation of the security
3-63 necessary to secure the deposit of municipal funds.
3-64 (c) The bank, credit union, or savings association may use
3-65 personal bonds, surety bonds, or any combination to secure
3-66 municipal funds only if each personal bond and surety bond is
3-67 specifically approved by the governing body of the municipality or
3-68 its designated officer <The bank may secure the municipal funds, at
3-69 the option of the governing body of the municipality, by:>
3-70 <(1) personal bond; surety bond; bonds, notes, or
4-1 other securities; or a combination of these methods, as provided by
4-2 this subchapter; or>
4-3 <(2) investment securities or interests in them as
4-4 provided by Chapter 726, Acts of the 67th Legislature, Regular
4-5 Session, 1981 (Article 2529b-1, Vernon's Texas Civil Statutes)>.
4-6 Sec. 105.032. Personal Bond. (a) One or more personal
4-7 bonds executed and filed with the governing body of the
4-8 municipality or its designated officer, payable to the
4-9 municipality, qualify as security under this subchapter if:
4-10 (1) the bonds are signed by at least five solvent
4-11 sureties who:
4-12 (A) own unencumbered real property in the state
4-13 that has a value at least equal to the amount of the bonds and that
4-14 is not exempt from execution under the constitution and other laws
4-15 of this state; or
4-16 (B) have an aggregate net worth at least equal
4-17 to the amount of the bonds; and
4-18 (2) the bonds are approved by the governing body or
4-19 its designated officer.
4-20 (b) When a bond is filed for approval under Subsection
4-21 (a)(1)(A), the sureties shall also file with the governing body a
4-22 statement containing:
4-23 (1) a description of the unencumbered and nonexempt
4-24 real property sufficient to identify the secured property <it on
4-25 the ground>; and
4-26 (2) a fair estimate of the value of each tract of real
4-27 property listed, including the value of any improvements on the
4-28 property.
4-29 (c) When a bond is filed for approval under Subsection
4-30 (a)(1)(B), the sureties shall also file with the governing body or
4-31 designated officer of the municipality an itemized and verified
4-32 financial statement showing that the aggregate net worth of the
4-33 sureties is at least equal to the amount of the bonds.
4-34 (d) After the governing body approves a personal bond, it
4-35 shall be filed with the secretary and the designated officer of the
4-36 municipality. The statement required by Subsection (c) shall be
4-37 attached to the bond.
4-38 Sec. 105.033. Surety Bond. (a) One or more bonds issued
4-39 and executed by one or more solvent surety companies authorized to
4-40 do business in this state, payable to the municipality and filed
4-41 with the secretary and the designated officer <governing body> of
4-42 the municipality, qualify as security under this subchapter if the
4-43 bonds are approved by the governing body.
4-44 (b) After the governing body approves a surety bond, it
4-45 shall be filed with the secretary and the designated officer of the
4-46 municipality.
4-47 Sec. 105.034. Conditions to Acting as Depository <BONDS,
4-48 NOTES, AND OTHER SECURITIES>. (a) The depository shall:
4-49 (1) keep the municipal funds covered by the depository
4-50 services contract;
4-51 (2) perform all duties and obligations imposed on the
4-52 depository by law and under the depository services contract;
4-53 (3) pay on presentation all checks drawn and properly
4-54 payable on a demand deposit account with the depository;
4-55 (4) pay all transfers properly payable as directed by
4-56 a designated officer;
4-57 (5) provide and maintain security at the level
4-58 required by the provisions of the Public Funds Collateral Act
4-59 (Article 2529d, Vernon's Texas Civil Statutes); and
4-60 (6) account for the municipal funds as required by
4-61 law.
4-62 (b) Any suit brought in connection with a depository
4-63 services contract must be tried in the county in which the city
4-64 hall of the municipality is located. <If approved by the governing
4-65 body as to kind and value, a municipal depository may pledge with
4-66 the governing body of the municipality as security under this
4-67 subchapter:>
4-68 <(1) a bond, certificate of indebtedness, or treasury
4-69 note of the United States, or other evidence of indebtedness of the
4-70 United States that is guaranteed as to principal and interest by
5-1 the United States;>
5-2 <(2) a bond of this state or of a county,
5-3 municipality, independent school district, common school district,
5-4 or other school district in this state;>
5-5 <(3) a bond issued under the federal farm loan acts;>
5-6 <(4) a road district bond;>
5-7 <(5) a bond, pledge, or other evidence of indebtedness
5-8 issued by the board of regents of The University of Texas System;>
5-9 <(6) a note or bond secured by mortgages insured and
5-10 debentures issued by the Federal Housing Administration;>
5-11 <(7) shares or share accounts of a savings and loan
5-12 association organized under the laws of this state or of a federal
5-13 savings and loan association domiciled in this state if the payment
5-14 of the share or share accounts is insured by the Federal Savings
5-15 and Loan Insurance Corporation;>
5-16 <(8) bank acceptances of banks that have a capital
5-17 stock of at least $500,000; or>
5-18 <(9) a bond issued by a municipal corporation in this
5-19 state.>
5-20 <Sec. 105.035. ><CONDITION OF PERSONAL BOND OR CONTRACT FOR
5-21 SECURITIES><. (a) A personal bond or surety bond provided, or a
5-22 contract for the pledge of securities under this subchapter, must
5-23 be conditioned that the depository will:>
5-24 <(1) faithfully keep the municipal funds and
5-25 faithfully perform the duties and obligations imposed by law on the
5-26 depository;>
5-27 <(2) pay on presentation all checks drawn on a demand
5-28 deposit account with the depository;>
5-29 <(3) pay all checks drawn on a time deposit account on
5-30 presentation by the treasurer of the municipality after the
5-31 required period of notice; and>
5-32 <(4) account for the municipal funds as required by
5-33 law.>
5-34 <(b) A suit on a personal bond, surety bond, or contract for
5-35 securities provided or pledged under this subchapter must be tried
5-36 in the county in which the municipality is located.>
5-37 <Sec. 105.036. ><Amount of Security Required><. (a) Personal
5-38 or surety bonds that secure municipal funds in a depository must be
5-39 in an amount at least equal to the total amount of the revenue of
5-40 the municipality for the year preceding the year for which the
5-41 bonds are made.>
5-42 <(b) Securities pledged to secure municipal funds on deposit
5-43 in a depository must be in an amount equal to the amount of those
5-44 funds. The value of the securities is determined by the governing
5-45 body of the municipality, and that determination is final and is
5-46 binding on the depository.>
5-47 <Sec. 105.037. ><Security Not Required For Federally Insured
5-48 Deposits><. A depository is not required to provide security for the
5-49 deposit of municipal funds to the extent the deposits are insured
5-50 under 12 U.S.C.A. Sections 1811-1832.>
5-51 (Sections 105.035 <105.038>-105.050 reserved for expansion)
5-52 SUBCHAPTER D. MAINTENANCE AND MODIFICATION OF SECURITY
5-53 Sec. 105.051. Maintenance of <New> Security. (a) A
5-54 depository services contract shall contain terms and conditions
5-55 relating to the possession, substitution, or release of security,
5-56 including:
5-57 (1) requiring the depository to execute a new bond or
5-58 pledge additional securities for the deposit of municipal funds;
5-59 (2) substituting one security for another;
5-60 (3) releasing securities pledged by a depository in
5-61 excess of the amount required by this chapter;
5-62 (4) the time period in which such addition,
5-63 substitution, or release of security by a depository may occur; and
5-64 (5) other matters relating to the possession,
5-65 substitution, or release of security the municipality considers
5-66 necessary for its protection <The governing body of the
5-67 municipality may by written order require a depository to execute a
5-68 new bond or pledge additional or other securities at any time the
5-69 governing body considers it advisable or considers it necessary for
5-70 the protection of the municipality>.
6-1 (b) If a depository fails for any reason to comply with the
6-2 requirements governing the possession, substitution, or release of
6-3 security <file the required new bond or pledge the required
6-4 securities within five days after the date the depository is served
6-5 with a copy of the order>, the governing body may select a new
6-6 depository in the <regular> manner provided in this chapter.
6-7 Sec. 105.052. <Substitution of Securities><. (a) A
6-8 depository is entitled to substitute one type of security for
6-9 another if the substituting security meets the requirements of law
6-10 and is approved by the governing body of the municipality.>
6-11 <(b) The governing body may direct the manner in which
6-12 securities pledged in place of personal or surety bonds are to be
6-13 deposited.>
6-14 <Sec. 105.053. ><Release of Excess Security><. If the
6-15 securities pledged by a depository to secure municipal funds exceed
6-16 the amount required by this chapter, the governing body of the
6-17 municipality shall permit the release of the excess.>
6-18 <Sec. 105.054. ><Inadequate Security><. If for any reason the
6-19 municipal funds on deposit with a depository exceed the amount of
6-20 security pledged, the depository shall immediately pledge
6-21 additional securities with the governing body of the municipality.>
6-22 <Sec. 105.055.> Solvency of Personal Surety. (a) At least
6-23 twice each year while a personal bond securing municipal deposits
6-24 is in effect, the designated officer of the municipality <governing
6-25 body of the municipality> shall investigate the solvency of each
6-26 surety on the bond. The governing body of the municipality or its
6-27 designated officer <governing body> may require a surety to make an
6-28 itemized and verified financial statement accurately showing the
6-29 surety's financial position and, if the bond requires the surety to
6-30 own real property, identifying each tract of real property owned by
6-31 the surety and stating its value.
6-32 (b) The governing body of the municipality shall require a
6-33 depository to provide a new bond meeting the requirements of this
6-34 chapter if a financial statement provided under Subsection (a)
6-35 indicates that:
6-36 (1) a surety is insolvent;
6-37 (2) a surety's net worth is less than the amount
6-38 required by this chapter;
6-39 (3) the assets listed are depreciated or their value
6-40 is in any way impaired; or
6-41 (4) real property required by the bond has been
6-42 disposed of or encumbered and the value of the remaining
6-43 unencumbered and nonexempt real property is insufficient to meet
6-44 the requirements of this chapter.
6-45 Sec. 105.053 <105.056>. Solvency of Surety Company and
6-46 Adequacy of Securities. At any time the governing body of the
6-47 municipality considers it necessary for the protection of the
6-48 municipality, the governing body may direct the designated officer
6-49 to investigate the solvency of a surety company that issues a bond
6-50 on behalf of a municipal depository or investigate the value of
6-51 securities pledged by a depository to secure municipal funds.
6-52 Sec. 105.054 <105.057>. Surrender of Interest on Securities.
6-53 Except as provided for in the collateral policies of the
6-54 municipality adopted in accordance with the Public Funds Collateral
6-55 Act (Article 2529d, Vernon's Texas Civil Statutes), on <On> request
6-56 of a municipal depository, the <governing body of the> municipality
6-57 shall surrender, when due, interest coupons or other evidence of
6-58 interest on securities deposited by the depository with the
6-59 governing body if the securities remaining pledged by the
6-60 depository are adequate to meet the requirements of this chapter
6-61 and of the governing body.
6-62 (Sections 105.055 <105.058>-105.070 reserved for expansion)
6-63 SUBCHAPTER E. DEPOSITORY ACCOUNTS
6-64 Sec. 105.071. Character and Amount of Deposits. (a) The
6-65 governing body of the municipality may determine and designate in
6-66 the depository services contract the character and amount of
6-67 municipal funds that will be demand deposits. However, the
6-68 municipality has the right to maintain other investments of
6-69 municipal funds in accordance with the investment policy adopted by
6-70 the municipality <and that will be time deposits>.
7-1 (b) The designated officer <governing body> may contract
7-2 with a depository for interest on time deposits, including, without
7-3 limitation, certificates of deposit, at any legal rate under
7-4 federal or state law, <or under a> rule, or regulation <adopted by
7-5 the board of governors of the Federal Reserve System or by the
7-6 board of directors of the Federal Deposit Insurance Corporation>.
7-7 Sec. 105.072. Investments <in United States Securities>.
7-8 The provisions of Chapter 810, Acts of the 66th Legislature,
7-9 Regular Session, 1979 (Article 4413(34c), Vernon's Texas Civil
7-10 Statutes), and the Public Funds Investment Act of 1987 (Article
7-11 842a-2, Vernon's Texas Civil Statutes) shall govern the investment
7-12 of municipal funds <The governing body of the municipality may
7-13 direct the treasurer of the municipality to withdraw any municipal
7-14 funds deposited in a depository that are not immediately required
7-15 to pay obligations of the municipality and invest those funds in
7-16 direct debt securities of the United States unless such an
7-17 investment or withdrawal is expressly prohibited by law or the
7-18 withdrawal is contrary to the terms of the depository contract>.
7-19 Sec. 105.073. Deposit of Funds. Not later than 60 days from
7-20 the date <Immediately after> the governing body of the municipality
7-21 designates a <municipal> depository in accordance with the
7-22 provisions of Section 105.016, the designated officer of the
7-23 municipality <treasurer of the municipality> shall transfer to the
7-24 depository all the municipal funds covered by the depository
7-25 services contract under the <treasurer's> control of the designated
7-26 officer. The designated officer of the municipality <treasurer>
7-27 shall as soon as practicable also <immediately> deposit in the
7-28 depository to the credit of the municipality any money covered by
7-29 the depository services contract received after the depository is
7-30 designated.
7-31 Sec. 105.074. Payment of Funds <Drawing of Checks and
7-32 Warrants>. (a) The funds of the municipality may be paid out of a
7-33 depository only at <on> the direction of a designated officer
7-34 <checks of the treasurer of the municipality>.
7-35 (b) Except as provided in Subsection (g) <in a municipality
7-36 that operates under a municipal charter provision that provides for
7-37 the drawing of checks or warrants on the depository or municipal
7-38 funds in a manner different from that prescribed by this section>,
7-39 a designated officer <treasurer> may draw a check on a depository
7-40 only on a warrant signed by the mayor and attested by the secretary
7-41 of the municipality.
7-42 (c) If there is sufficient money in a fund in a depository
7-43 against which the proper authority has drawn a warrant, the
7-44 designated officer <treasurer> on presentation of the warrant shall
7-45 draw a check on the depository in favor of the legal holder of the
7-46 warrant, retain the warrant, and charge the warrant against the
7-47 fund on which it is drawn. The designated officer <treasurer> may
7-48 not draw a warrant on a fund in a depository unless the fund has
7-49 sufficient money to pay the warrant.
7-50 (d) A designated officer <treasurer> may not draw a check on
7-51 any funds designated in the depository services contract as time
7-52 deposits until notice has been given and the notice period has
7-53 expired under the terms of the contract with the depository.
7-54 (e) The mayor and secretary of the municipality may not draw
7-55 a warrant on a special fund in a depository or under the control of
7-56 the designated officer <treasurer> that was created to pay the
7-57 bonded indebtedness of the municipality other than to pay the
7-58 principal of or interest on the indebtedness or to invest the fund
7-59 as provided by law.
7-60 (f) The designated officer <treasurer> may not pay or draw a
7-61 check to pay money out of a special fund that was created to pay
7-62 the bonded indebtedness of the municipality other than to pay the
7-63 principal of or interest on the indebtedness or to invest the fund
7-64 as provided by law.
7-65 (g) Notwithstanding the provisions of Subsections (b)
7-66 through (f), the governing body of a municipality may adopt
7-67 procedures:
7-68 (1) governing the method by which the designated
7-69 officer is authorized to direct payments from the funds of the
7-70 municipality on deposit with a depository;
8-1 (2) governing the method of payment of obligations of
8-2 the municipality, including payment by check, draft, wire transfer,
8-3 or other method of payment mutually acceptable to the municipality
8-4 and the depository; and
8-5 (3) the governing body determines are necessary to
8-6 ensure the safety and integrity of the payment process.
8-7 (h) If a municipality adopts procedures in accordance with
8-8 Subsection (g), a copy of the adopted procedures shall be filed
8-9 with the depository. The designated officer and the depository
8-10 shall agree upon record-keeping safeguards and other measures
8-11 necessary to ensure the safety and integrity of the payment
8-12 process. The safeguards must be approved by the governing body of
8-13 the municipality if the governing body finds that the safeguards
8-14 are consistent with and do not contravene the procedures adopted
8-15 under Subsection (g).
8-16 Sec. 105.075. Checks Payable at Depository. Checks drawn by
8-17 the treasurer of the municipality against municipal funds on
8-18 deposit are payable by the depository at its place of business in
8-19 the municipality.
8-20 Sec. 105.076. DEBTS PAYABLE OTHER THAN AT MUNICIPAL
8-21 TREASURY. The governing body of the municipality may direct the
8-22 designated officer <treasurer of the municipality> to withdraw from
8-23 a depository and deposit money sufficient to pay a bond, coupon, or
8-24 other indebtedness of the municipality at a place other than at the
8-25 municipal treasury if by its terms the indebtedness is payable on
8-26 maturity or upon redemption prior to maturity at the other
8-27 location.
8-28 (Sections 105.077-105.090 reserved for expansion)
8-29 SUBCHAPTER F. LIABILITY AND REPORT OF DESIGNATED OFFICER
8-30 <TREASURER>
8-31 Sec. 105.091. Liability of Designated Officer <Treasurer>.
8-32 The designated officer <treasurer of the municipality> is not
8-33 responsible for any loss of municipal funds through the negligence,
8-34 failure, or wrongful act of a depository. This section does not
8-35 release the designated officer <treasurer> from responsibility for
8-36 a loss resulting from the official misconduct of the designated
8-37 officer <treasurer>, including a misappropriation of the funds, or
8-38 from responsibility for the funds until a depository is selected
8-39 and the funds are deposited.
8-40 Sec. 105.092. REPORT BY DESIGNATED OFFICER <TREASURER>. In
8-41 conjunction with the publication of the annual financial statement
8-42 of the municipality <On or before the first regular meeting of the
8-43 governing body of the municipality in July of each year>, the
8-44 designated officer <treasurer of the municipality> shall prepare a
8-45 report which shall describe in summary form <to the governing
8-46 body>:
8-47 (1) the amount of receipts and expenditures of the
8-48 municipal treasury;
8-49 (2) the amount of money on hand in each fund;
8-50 (3) the amount of bonds becoming due for redemption
8-51 that require action;
8-52 (4) the amount of interest to be paid during the next
8-53 fiscal year; and
8-54 (5) any other information required by law to be
8-55 reported by the designated officer <treasurer>.
8-56 SECTION 2. Section 2(6), Public Funds Collateral Act
8-57 (Article 2529d, Vernon's Texas Civil Statutes), is amended to read
8-58 as follows:
8-59 (6) "Investment security" means:
8-60 (A) a direct obligation of the United States;
8-61 (B) an obligation that in the opinion of the
8-62 Attorney General of the United States is a general obligation of
8-63 the United States and backed by its full faith and credit;
8-64 (C) an obligation, the principal of and interest
8-65 on which are unconditionally guaranteed by the United States;
8-66 (D) an obligation of an agency or
8-67 instrumentality of the United States, including a mortgage-backed
8-68 security of the agency or instrumentality;
8-69 (E) a general or special obligation issued by a
8-70 public agency, payable from taxes, revenues, or a combination of
9-1 taxes and revenues <that has been rated as to investment quality by
9-2 a nationally recognized rating agency and that has a current rating
9-3 of not less than A or its equivalent>; and
9-4 (F) any security in which a public entity may
9-5 invest under the Public Funds Investment Act of 1987 (Article
9-6 842a-2, Vernon's Texas Civil Statutes).
9-7 SECTION 3. Section 131.901(b), Local Government Code, is
9-8 amended to read as follows:
9-9 (b) An institution selected as a paying agent or trustee for
9-10 specific bonds or obligations or an institution selected by the
9-11 governing body to provide safekeeping services is not considered a
9-12 depository for purposes of this section.
9-13 SECTION 4. This Act takes effect September 1, 1993.
9-14 SECTION 5. The importance of this legislation and the
9-15 crowded condition of the calendars in both houses create an
9-16 emergency and an imperative public necessity that the
9-17 constitutional rule requiring bills to be read on three several
9-18 days in each house be suspended, and this rule is hereby suspended.
9-19 * * * * *
9-20 Austin,
9-21 Texas
9-22 April 29, 1993
9-23 Hon. Bob Bullock
9-24 President of the Senate
9-25 Sir:
9-26 We, your Committee on Intergovernmental Relations to which was
9-27 referred H.B. No. 696, have had the same under consideration, and I
9-28 am instructed to report it back to the Senate with the
9-29 recommendation that it do pass and be printed.
9-30 Armbrister,
9-31 Chairman
9-32 * * * * *
9-33 WITNESSES
9-34 FOR AGAINST ON
9-35 ___________________________________________________________________
9-36 Name: Corrine Steeger x
9-37 Representing: GFOAT/TML
9-38 City: Dallas
9-39 -------------------------------------------------------------------
9-40 Name: William L. Whitk x
9-41 Representing: GFOAT
9-42 City: San Marcos
9-43 -------------------------------------------------------------------
9-44 Name: Marion Raley x
9-45 Representing: City of Austin
9-46 City: Austin
9-47 -------------------------------------------------------------------
9-48 Name: Jeff Huffman x
9-49 Representing: Texas Credit Union League
9-50 City: Farmers Branch
9-51 -------------------------------------------------------------------
9-52 Name: Scott K. Joslove x
9-53 Representing: TML
9-54 City: Austin
9-55 -------------------------------------------------------------------
9-56 Name: Joe Paniagua x
9-57 Representing: City of Fort Worth
9-58 City: Fort Worth
9-59 -------------------------------------------------------------------
9-60 Name: James McCarley x
9-61 Representing: City of Plano
9-62 City: Plano
9-63 -------------------------------------------------------------------