By:  Armbrister                                        S.B. No. 302
       73R3234 DWS-F
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to depositories for municipal funds.
    1-3        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-4        SECTION 1.  Chapter 105, Local Government Code, is amended to
    1-5  read as follows:
    1-6            CHAPTER 105.  DEPOSITORIES FOR MUNICIPAL FUNDS
    1-7                   SUBCHAPTER A.  GENERAL PROVISIONS
    1-8        Sec. 105.001.  Definitions.  In this chapter:
    1-9              (1)  "Bank" means a state bank or a national bank
   1-10  domiciled in this state <banking corporation or association or an
   1-11  individual banker>.
   1-12              (2)  "Demand deposit" means a deposit of funds that may
   1-13  be withdrawn on the demand of the depositor.
   1-14              (3)  "Depository" means the bank or savings association
   1-15  selected by a municipality to provide depository services.
   1-16              (4)  "Time deposit" means a deposit of funds subject to
   1-17  a contract between the depositor and the depository under which the
   1-18  depositor may not withdraw any of the funds by check or by another
   1-19  manner until the expiration of a certain period following written
   1-20  notice of the depositor's intent to withdraw the funds.
   1-21              (5)  "Depository services" means the receipt and
   1-22  disbursement of funds by a depository in accordance with the terms
   1-23  of a depository services contract <(4)  "Secretary of a
   1-24  municipality" includes the clerk of a municipality>.
    2-1              (6)  "Depository services contract" means a contract
    2-2  executed by a municipality and a depository containing terms and
    2-3  conditions relating to the depository services to be provided by
    2-4  the depository.
    2-5              (7)  "Designated officer" means the treasurer of a
    2-6  municipality or other officer of the municipality so designated by
    2-7  the governing body of a municipality.
    2-8              (8)  "Federal savings association" means a savings and
    2-9  loan association or a savings bank organized under federal law.
   2-10              (9)  "National bank" means a banking corporation
   2-11  organized under the provisions of 12 U.S.C. Section 21.
   2-12              (10)  "Savings association" means a state savings
   2-13  association or a federal savings association domiciled in this
   2-14  state.
   2-15              (11)  "State bank" has the meaning assigned by The
   2-16  Texas Banking Code (Article 342-101 et seq., Vernon's Texas Civil
   2-17  Statutes).
   2-18              (12)  "State savings association" means any savings and
   2-19  loan association or savings bank organized under the laws of this
   2-20  state.
   2-21        Sec. 105.002.  Funds Affected.  This chapter applies to the
   2-22  funds, including school funds, of any municipality or any
   2-23  department or agency of the municipality<, including any school
   2-24  funds of the municipality>.
   2-25           (Sections 105.003-105.010 reserved for expansion)
   2-26              SUBCHAPTER B.  ESTABLISHMENT OF DEPOSITORY
   2-27        Sec. 105.011.  Depository Authorized.  (a)  Before awarding a
    3-1  depository services contract to a depository, the governing body of
    3-2  a municipality shall receive applications for the performance of
    3-3  depository services from one or more banks or savings associations
    3-4  <At a meeting held at any time, the governing body of a
    3-5  municipality may receive applications from one or more banks for
    3-6  the deposit of the municipality's funds>.
    3-7        (b)  The governing body may consider the application of a
    3-8  bank or savings association that is not doing business within the
    3-9  municipality if:
   3-10              (1)  the bank or savings association maintains a place
   3-11  of business within the state and offers within the state the
   3-12  services required by the depository services contract; and
   3-13              (2)  the governing body, before giving the notice
   3-14  required by Section 105.012 and after considering the best
   3-15  interests of the municipality in selecting a depository, has
   3-16  adopted a written policy expressly permitting the consideration of
   3-17  applications received by the municipality from a bank or savings
   3-18  association that is not doing business within the municipality.
   3-19        (c)  The designated officer shall request, receive, and
   3-20  review applications for the performance of depository services.
   3-21  The designated officer shall present the specifications of each
   3-22  application to the governing body who will then select a depository
   3-23  <If two or more banks are doing business within a municipality, the
   3-24  governing body may consider the applications of only those banks.
   3-25  However, a general-law municipality with a population of more than
   3-26  20,000 may consider applications from any bank located in the
   3-27  county in which the municipality is located or in an adjacent
    4-1  county>.
    4-2        Sec. 105.012.  Notice.  (a)  The designated officer shall
    4-3  give notice to banks and savings associations requesting the
    4-4  submission of applications for the performance of depository
    4-5  services.
    4-6        (b)  The notice must contain:
    4-7              (1)  the name and address of the designated officer
    4-8  receiving the applications;
    4-9              (2)  the date and time the applications are to be
   4-10  received by the designated officer; and
   4-11              (3)  the date, time, and place the governing body of
   4-12  the municipality will consider the selection of one or more
   4-13  depositories.
   4-14        (c)  Not later than the 21st day before the date that
   4-15  applications for depository services contracts must be received,
   4-16  notice of the request shall be published at least once:
   4-17              (1)  in a newspaper of general circulation in the
   4-18  municipality; and
   4-19              (2)  if the governing body has adopted the written
   4-20  policy described by Section 105.011, in a financial publication of
   4-21  general circulation published within this state <Not earlier than
   4-22  four weeks or later than one week before the date of the meeting,
   4-23  the secretary of the municipality shall publish at least once in a
   4-24  newspaper published in the municipality a notice of the meeting at
   4-25  which applications are to be received>.
   4-26        Sec. 105.013.  Application.  The designated officer may not
   4-27  consider an application if it is received after the date specified
    5-1  in the notice for receiving applications by the designated officer
    5-2  <A bank desiring to be selected as a municipal depository must
    5-3  deliver its application to the secretary of the municipality on or
    5-4  before the date of the meeting at which applications are to be
    5-5  received>.
    5-6        Sec. 105.014.  REVIEW OF APPLICATIONS.  In reviewing the
    5-7  applications, the designated officer shall consider the terms and
    5-8  conditions for the performance of depository services, including
    5-9  the type and cost of services to be provided to the municipality
   5-10  consistent with any policy guidelines adopted by the governing body
   5-11  regarding the selection of one or more depositories.
   5-12        Sec. 105.015.  Selection of Depository.  (a)  The governing
   5-13  body of a municipality may authorize the designated officer to
   5-14  execute on the municipality's behalf one or more depository
   5-15  services contracts <After considering the applications, the
   5-16  governing body of the municipality shall select as municipal
   5-17  depositories one or more banks that offer the most favorable terms
   5-18  and conditions for the handling of the municipal funds>.
   5-19        (b)  The governing body may reject any of the applications
   5-20  and readvertise if all <for> applications are rejected.
   5-21        (c)  The conflict of interest provisions of Chapter 179, Acts
   5-22  of the 60th Legislature, Regular Session, 1967 (Article 2529c,
   5-23  Vernon's Texas Civil Statutes), apply to the selection of the
   5-24  depositories.
   5-25        Sec. 105.016 <105.015>.  Designation of Depository.  (a)  The
   5-26  <When security is provided in accordance with Subchapter C and is
   5-27  approved by the governing body of the municipality, the> governing
    6-1  body shall designate, by an order recorded in its minutes, the bank
    6-2  or savings association to serve as a depository for the
    6-3  municipality's funds.
    6-4        (b)  If a bank or savings association selected as a municipal
    6-5  depository does not provide security by the deadline prescribed by
    6-6  Section 105.031, the selection of the bank or savings association
    6-7  <of the bank> as a depository is void, and the governing body may
    6-8  consider the depository services application it considers the next
    6-9  most advantageous <shall publish notice, receive applications, and
   6-10  select another depository in the regular manner>.
   6-11        Sec. 105.017.  Term of Depository Contract.  A municipality
   6-12  may approve, execute, and deliver any depository services contract
   6-13  the term of which does not exceed five years.  The depository
   6-14  services contract may contain only terms and conditions approved by
   6-15  the governing body of the municipality.
   6-16        Sec. 105.018.  Additional Services.  In addition to
   6-17  depository services, a municipality may contract with financial
   6-18  institutions, including banks and savings associations, for
   6-19  additional financial services under a separate contract if the
   6-20  governing body of the municipality determines that additional
   6-21  financial services are necessary in the administration, collection,
   6-22  investment, and transfer of municipal funds.
   6-23    (Sections 105.019 <105.016> to 105.030 reserved for expansion)
   6-24         SUBCHAPTER C.  SECURITY FOR FUNDS HELD BY DEPOSITORY
   6-25        Sec. 105.031.  Qualification as Depository.  (a)  The bank or
   6-26  savings association, to qualify as a municipal depository, must,
   6-27  not later than five days before the date of commencement of the
    7-1  term of the depository services contract, provide security for the
    7-2  municipal funds to be deposited in accordance with the depository
    7-3  services contract <Within five days after the date a bank is
    7-4  selected as a municipal depository, the bank must qualify as a
    7-5  depository by providing security for the municipal funds to be
    7-6  deposited with the bank>.
    7-7        (b)  The Public Funds Collateral Act (Article 2529d, Vernon's
    7-8  Texas Civil Statutes) governs the type, level, substitution,
    7-9  possession, release, and method of valuation of the security
   7-10  necessary to secure the deposit of municipal funds.
   7-11        (c)  The bank or savings association may use personal bonds,
   7-12  surety bonds, or any combination to secure municipal funds only if
   7-13  each personal bond and surety bond is specifically approved by the
   7-14  governing body of the municipality or its designated officer <The
   7-15  bank may secure the municipal funds, at the option of the governing
   7-16  body of the municipality, by:>
   7-17              <(1)  personal bond; surety bond; bonds, notes, or
   7-18  other securities; or a combination of these methods, as provided by
   7-19  this subchapter; or>
   7-20              <(2)  investment securities or interests in them as
   7-21  provided by Chapter 726, Acts of the 67th Legislature, Regular
   7-22  Session, 1981 (Article 2529b-1, Vernon's Texas Civil Statutes)>.
   7-23        Sec. 105.032.  Personal Bond.  (a)  One or more personal
   7-24  bonds executed and filed with the governing body of the
   7-25  municipality or its designated officer, payable to the
   7-26  municipality, qualify as security under this subchapter if:
   7-27              (1)  the bonds are signed by at least five solvent
    8-1  sureties who:
    8-2                    (A)  own unencumbered real property in the state
    8-3  that has a value at least equal to the amount of the bonds and that
    8-4  is not exempt from execution under the constitution and other laws
    8-5  of this state; or
    8-6                    (B)  have an aggregate net worth at least equal
    8-7  to the amount of the bonds; and
    8-8              (2)  the bonds are approved by the governing body or
    8-9  its designated officer.
   8-10        (b)  When a bond is filed for approval under Subsection
   8-11  (a)(1)(A), the sureties shall also file with the governing body a
   8-12  statement containing:
   8-13              (1)  a description of the unencumbered and nonexempt
   8-14  real property sufficient to identify the secured property <it on
   8-15  the ground>; and
   8-16              (2)  a fair estimate of the value of each tract of real
   8-17  property listed, including the value of any improvements on the
   8-18  property.
   8-19        (c)  When a bond is filed for approval under Subsection
   8-20  (a)(1)(B), the sureties shall also file with the governing body or
   8-21  designated officer of the municipality an itemized and verified
   8-22  financial statement showing that the aggregate net worth of the
   8-23  sureties is at least equal to the amount of the bonds.
   8-24        (d)  After the governing body approves a personal bond, it
   8-25  shall be filed with the secretary and the designated officer of the
   8-26  municipality.  The statement required by Subsection (c) shall be
   8-27  attached to the bond.
    9-1        Sec. 105.033.  Surety Bond.  (a)  One or more bonds issued
    9-2  and executed by one or more solvent surety companies authorized to
    9-3  do business in this state, payable to the municipality and filed
    9-4  with the secretary and the designated officer <governing body> of
    9-5  the municipality, qualify as security under this subchapter if the
    9-6  bonds are approved by the governing body.
    9-7        (b)  After the governing body approves a surety bond, it
    9-8  shall be filed with the secretary and the designated officer of the
    9-9  municipality.
   9-10        Sec. 105.034.  Conditions to Acting as Depository <Bonds,
   9-11  Notes, and Other Securities>.  (a)  The depository shall:
   9-12              (1)  keep the municipal funds covered by the depository
   9-13  services contract;
   9-14              (2)  perform all duties and obligations imposed on the
   9-15  depository by law and under the depository services contract;
   9-16              (3)  pay on presentation all checks drawn on a demand
   9-17  deposit account with the depository that are properly payable on
   9-18  demand;
   9-19              (4)  pay all transfers properly payable as directed by
   9-20  a designated officer;
   9-21              (5)  provide and maintain security at the level
   9-22  required by the Public Funds Collateral Act (Article 2529d,
   9-23  Vernon's Texas Civil Statutes); and
   9-24              (6)  account for the municipal funds as required by
   9-25  law.
   9-26        (b)  Any suit brought in connection with a depository
   9-27  services contract must be tried in the county in which the city
   10-1  hall of the municipality is located.  <If approved by the governing
   10-2  body as to kind and value, a municipal depository may pledge with
   10-3  the governing body of the municipality as security under this
   10-4  subchapter:>
   10-5              <(1)  a bond, certificate of indebtedness, or treasury
   10-6  note of the United States, or other evidence of indebtedness of the
   10-7  United States that is guaranteed as to principal and interest by
   10-8  the United States;>
   10-9              <(2)  a bond of this state or of a county,
  10-10  municipality, independent school district, common school district,
  10-11  or other school district in this state;>
  10-12              <(3)  a bond issued under the federal farm loan acts;>
  10-13              <(4)  a road district bond;>
  10-14              <(5)  a bond, pledge, or other evidence of indebtedness
  10-15  issued by the board of regents of The University of Texas System;>
  10-16              <(6)  a note or bond secured by mortgages insured and
  10-17  debentures issued by the Federal Housing Administration;>
  10-18              <(7)  shares or share accounts of a savings and loan
  10-19  association organized under the laws of this state or of a federal
  10-20  savings and loan association domiciled in this state if the payment
  10-21  of the share or share accounts is insured by the Federal Savings
  10-22  and Loan Insurance Corporation;>
  10-23              <(8)  bank acceptances of banks that have a capital
  10-24  stock of at least $500,000; or>
  10-25              <(9)  a bond issued by a municipal corporation in this
  10-26  state.>
  10-27        <Sec. 105.035.  ><Condition of Personal Bond or Contract for
   11-1  Securities><.  (a)  A personal bond or surety bond provided, or a
   11-2  contract for the pledge of securities under this subchapter, must
   11-3  be conditioned that the depository will:>
   11-4              <(1)  faithfully keep the municipal funds and
   11-5  faithfully perform the duties and obligations imposed by law on the
   11-6  depository;>
   11-7              <(2)  pay on presentation all checks drawn on a demand
   11-8  deposit account with the depository;>
   11-9              <(3)  pay all checks drawn on a time deposit account on
  11-10  presentation by the treasurer of the municipality after the
  11-11  required period of notice; and>
  11-12              <(4)  account for the municipal funds as required by
  11-13  law.>
  11-14        <(b)  A suit on a personal bond, surety bond, or contract for
  11-15  securities provided or pledged under this subchapter must be tried
  11-16  in the county in which the municipality is located.>
  11-17        <Sec. 105.036.  ><Amount of Security Required><.  (a)  Personal
  11-18  or surety bonds that secure municipal funds in a depository must be
  11-19  in an amount at least equal to the total amount of the revenue of
  11-20  the municipality for the year preceding the year for which the
  11-21  bonds are made.>
  11-22        <(b)  Securities pledged to secure municipal funds on deposit
  11-23  in a depository must be in an amount equal to the amount of those
  11-24  funds.  The value of the securities is determined by the governing
  11-25  body of the municipality, and that determination is final and is
  11-26  binding on the depository.>
  11-27        <Sec. 105.037.  ><Security Not Required For Federally Insured
   12-1  Deposits><.  A depository is not required to provide security for the
   12-2  deposit of municipal funds to the extent the deposits are insured
   12-3  under 12 U.S.C.A.  Sections 1811-1832.>
   12-4    (Sections 105.035 <105.038> to 105.050 reserved for expansion)
   12-5        SUBCHAPTER D.  MAINTENANCE AND MODIFICATION OF SECURITY
   12-6        Sec. 105.051.  Maintenance of <New> Security.  (a)  A
   12-7  depository services contract shall contain terms and conditions
   12-8  relating to the possession, substitution, or release of security,
   12-9  including:
  12-10              (1)  requiring the depository to execute a new bond or
  12-11  pledge additional securities for the deposit of municipal funds;
  12-12              (2)  substituting one security for another;
  12-13              (3)  releasing securities pledged by a depository in
  12-14  excess of the amount required by this chapter;
  12-15              (4)  the period in which the addition, substitution, or
  12-16  release of security by a depository may occur; and
  12-17              (5)  other matters relating to the possession,
  12-18  substitution, or release of security the municipality considers
  12-19  necessary for its protection <The governing body of the
  12-20  municipality may by written order require a depository to execute a
  12-21  new bond or pledge additional or other securities at any time the
  12-22  governing body considers it advisable or considers it necessary for
  12-23  the protection of the municipality>.
  12-24        (b)  If a depository fails for any reason to comply with the
  12-25  requirements governing the possession, substitution, or release of
  12-26  security <file the required new bond or pledge the required
  12-27  securities within five days after the date the depository is served
   13-1  with a copy of the order>, the governing body may select a new
   13-2  depository in the <regular> manner provided in this chapter.
   13-3        Sec. 105.052.  <Substitution of Securities><.  (a)  A
   13-4  depository is entitled to substitute one type of security for
   13-5  another if the substituting security meets the requirements of law
   13-6  and is approved by the governing body of the municipality.>
   13-7        <(b)  The governing body may direct the manner in which
   13-8  securities pledged in place of personal or surety bonds are to be
   13-9  deposited.>
  13-10        <Sec. 105.053.  ><Release of Excess Security><.  If the
  13-11  securities pledged by a depository to secure municipal funds exceed
  13-12  the amount required by this chapter, the governing body of the
  13-13  municipality shall permit the release of the excess.>
  13-14        <Sec. 105.054.  ><Inadequate Security><.  If for any reason the
  13-15  municipal funds on deposit with a depository exceed the amount of
  13-16  security pledged, the depository shall immediately pledge
  13-17  additional securities with the governing body of the municipality.>
  13-18        <Sec. 105.055.>  Solvency of Personal Surety.  (a)  At least
  13-19  twice each year while a personal bond securing municipal deposits
  13-20  is in effect, the designated officer <governing body> of the
  13-21  municipality shall investigate the solvency of each surety on the
  13-22  bond.  The governing body of the municipality or its designated
  13-23  officer may require a surety to make an itemized and verified
  13-24  financial statement accurately showing the surety's financial
  13-25  position and, if the bond requires the surety to own real property,
  13-26  identifying each tract of real property owned by the surety and
  13-27  stating its value.
   14-1        (b)  The governing body of the municipality shall require a
   14-2  depository to provide a new bond meeting the requirements of this
   14-3  chapter if a financial statement provided under Subsection (a)
   14-4  indicates that:
   14-5              (1)  a surety is insolvent;
   14-6              (2)  a surety's net worth is less than the amount
   14-7  required by this chapter;
   14-8              (3)  the assets listed are depreciated or their value
   14-9  is in any way impaired; or
  14-10              (4)  real property required by the bond has been
  14-11  disposed of or encumbered and the value of the remaining
  14-12  unencumbered and nonexempt real property is insufficient to meet
  14-13  the requirements of this chapter.
  14-14        Sec. 105.053 <105.056>.  Solvency of Surety Company and
  14-15  Adequacy of Securities.  At any time the governing body of the
  14-16  municipality considers it necessary for the protection of the
  14-17  municipality, the governing body may direct the designated officer
  14-18  to investigate the solvency of a surety company that issues a bond
  14-19  on behalf of a municipal depository or investigate the value of
  14-20  securities pledged by a depository to secure municipal funds.
  14-21        Sec. 105.054 <105.057>.  Surrender of Interest on Securities.
  14-22  Except as provided for by the collateral policies of the
  14-23  municipality adopted in accordance with the Public Funds Collateral
  14-24  Act (Article 2529d, Vernon's Texas Civil Statutes), on <On> request
  14-25  of a municipal depository, the <governing body of the> municipality
  14-26  shall surrender, when due, interest coupons or other evidence of
  14-27  interest on securities deposited by the depository with the
   15-1  governing body if the securities remaining pledged by the
   15-2  depository are adequate to meet the requirements of this chapter
   15-3  and of the governing body.
   15-4    (Sections 105.055 <105.058> to 105.070 reserved for expansion)
   15-5                  SUBCHAPTER E.  DEPOSITORY ACCOUNTS
   15-6        Sec. 105.071.  Character and Amount of Deposits.  (a)  The
   15-7  governing body of the municipality may determine and designate in
   15-8  the depository services contract the character and amount of
   15-9  municipal funds that will be demand deposits.  However, the
  15-10  municipality has the right to maintain other investments of
  15-11  municipal funds in accordance with the investment policy adopted by
  15-12  the municipality <and that will be time deposits>.
  15-13        (b)  The designated officer <governing body> may contract
  15-14  with a depository for interest on time deposits, including
  15-15  certificates of deposit, at any legal rate under federal law, <or
  15-16  under a> rule, or regulation <adopted by the board of governors of
  15-17  the Federal Reserve System or by the board of directors of the
  15-18  Federal Deposit Insurance Corporation>.
  15-19        Sec. 105.072.  Investments <in United States Securities>.
  15-20  Chapter 810, Acts of the 66th Legislature, Regular Session, 1979
  15-21  (Article 4413(34c), Vernon's Texas Civil Statutes), and the Public
  15-22  Funds Investment Act of 1987 (Article 842a-2, Vernon's Texas Civil
  15-23  Statutes) govern the investment of municipal funds <The governing
  15-24  body of the municipality may direct the treasurer of the
  15-25  municipality to withdraw any municipal funds deposited in a
  15-26  depository that are not immediately required to pay obligations of
  15-27  the municipality and invest those funds in direct debt securities
   16-1  of the United States unless such an investment or withdrawal is
   16-2  expressly prohibited by law or the withdrawal is contrary to the
   16-3  terms of the depository contract>.
   16-4        Sec. 105.073.  Deposit of Funds.  Not later than the 60th day
   16-5  after the date <Immediately after> the governing body of the
   16-6  municipality designates a <municipal> depository in accordance with
   16-7  Section 105.016, the designated officer <treasurer> of the
   16-8  municipality shall transfer to the depository all the municipal
   16-9  funds covered by the depository services contract under the
  16-10  <treasurer's> control of the designated officer.  The designated
  16-11  officer <treasurer> shall as soon as practicable also <immediately>
  16-12  deposit in the depository to the credit of the municipality any
  16-13  money covered by the depository services contract received after
  16-14  the depository is designated.
  16-15        Sec. 105.074.  Payment of Funds <Drawing of Checks and
  16-16  Warrants>.  (a)  The funds of the municipality may be paid out of a
  16-17  depository only at <on> the direction of a designated officer
  16-18  <checks of the treasurer of the municipality>.
  16-19        (b)  Except as provided by Subsection (g) <in a municipality
  16-20  that operates under a municipal charter provision that provides for
  16-21  the drawing of checks or warrants on the depository or municipal
  16-22  funds in a manner different from that prescribed by this section>,
  16-23  a designated officer <treasurer> may draw a check on a depository
  16-24  only on a warrant signed by the mayor and attested by the secretary
  16-25  of the municipality.
  16-26        (c)  If there is sufficient money in a fund in a depository
  16-27  against which the proper authority has drawn a warrant, the
   17-1  designated officer <treasurer> on presentation of the warrant shall
   17-2  draw a check on the depository in favor of the legal holder of the
   17-3  warrant, retain the warrant, and charge the warrant against the
   17-4  fund on which it is drawn.  The designated officer <treasurer> may
   17-5  not draw a warrant on a fund in a depository unless the fund has
   17-6  sufficient money to pay the warrant.
   17-7        (d)  A designated officer <treasurer> may not draw a check on
   17-8  any funds designated in the depository services contract as time
   17-9  deposits until notice has been given and the notice period has
  17-10  expired under the terms of the contract with the depository.
  17-11        (e)  The mayor and secretary of the municipality may not draw
  17-12  a warrant on a special fund in a depository or under the control of
  17-13  the designated officer <treasurer> that was created to pay the
  17-14  bonded indebtedness of the municipality other than to pay the
  17-15  principal of or interest on the indebtedness or to invest the fund
  17-16  as provided by law.
  17-17        (f)  The designated officer <treasurer> may not pay or draw a
  17-18  check to pay money out of a special fund that was created to pay
  17-19  the bonded indebtedness of the municipality other than to pay the
  17-20  principal of or interest on the indebtedness or to invest the fund
  17-21  as provided by law.
  17-22        (g)  Notwithstanding Subsections (b) through (f), the
  17-23  governing body of a municipality may adopt procedures:
  17-24              (1)  governing the method by which the designated
  17-25  officer is authorized to direct payments from the funds of the
  17-26  municipality on deposit with a depository;
  17-27              (2)  governing the method of payment of obligations of
   18-1  the municipality, including payment by check, draft, wire transfer,
   18-2  or other method of payment mutually acceptable to the municipality
   18-3  and the depository; and
   18-4              (3)  the governing body determines are necessary to
   18-5  ensure the safety and integrity of the payment process.
   18-6        (h)  If a municipality adopts procedures in accordance with
   18-7  Subsection (g), a copy of the adopted procedures shall be filed
   18-8  with the depository.  The designated officer and the depository
   18-9  shall agree upon record-keeping safeguards and other measures
  18-10  necessary to ensure the safety and integrity of the payment
  18-11  process.  The safeguards must be approved by the governing body of
  18-12  the municipality if the governing body finds that the safeguards
  18-13  are consistent with and do not contravene the procedures adopted
  18-14  under Subsection (g).
  18-15        Sec. 105.075.  <CHECKS PAYABLE AT DEPOSITORY.  Checks drawn
  18-16  by the treasurer of the municipality against municipal funds on
  18-17  deposit are payable by the depository at its place of business in
  18-18  the municipality.>
  18-19        <Sec. 105.076.>  Debts Payable Other Than at Municipal
  18-20  Treasury.  The governing body of the municipality may direct the
  18-21  designated officer <treasurer of the municipality> to withdraw from
  18-22  a depository and deposit money sufficient to pay a bond, coupon, or
  18-23  other indebtedness of the municipality at a place other than at the
  18-24  municipal treasury if by its terms the indebtedness is payable on
  18-25  maturity or upon redemption before maturity at the other location.
  18-26    (Sections 105.076 <105.077> to 105.090 reserved for expansion)
  18-27       SUBCHAPTER F.  LIABILITY AND REPORT OF DESIGNATED OFFICER
   19-1                              <TREASURER>
   19-2        Sec. 105.091.  Liability of Designated Officer <Treasurer>.
   19-3  The designated officer <treasurer of the municipality> is not
   19-4  responsible for any loss of municipal funds through the negligence,
   19-5  failure, or wrongful act of a depository.  This section does not
   19-6  release the designated officer <treasurer> from responsibility for
   19-7  a loss resulting from the official misconduct of the designated
   19-8  officer <treasurer>, including a misappropriation of the funds, or
   19-9  from responsibility for the funds until a depository is selected
  19-10  and the funds are deposited.
  19-11        Sec. 105.092.  REPORT BY DESIGNATED OFFICER <TREASURER>.  In
  19-12  conjunction with the publication of the annual financial statement
  19-13  of the municipality <On or before the first regular meeting of the
  19-14  governing body of the municipality in July of each year>, the
  19-15  designated officer <treasurer of the municipality> shall prepare a
  19-16  report which shall describe in summary form <to the governing
  19-17  body>:
  19-18              (1)  the amount of receipts and expenditures of the
  19-19  municipal treasury;
  19-20              (2)  the amount of money on hand in each fund;
  19-21              (3)  the amount of bonds becoming due for redemption
  19-22  that require action;
  19-23              (4)  the amount of interest to be paid during the next
  19-24  fiscal year; and
  19-25              (5)  any other information required by law to be
  19-26  reported by the designated officer <treasurer>.
  19-27        SECTION 2.  Section 2(6), Public Funds Collateral Act
   20-1  (Article 2529d, Vernon's Texas Civil Statutes), is amended to read
   20-2  as follows:
   20-3              (6)  "Investment security" means:
   20-4                    (A)  a direct obligation of the United States;
   20-5                    (B)  an obligation that in the opinion of the
   20-6  Attorney General of the United States is a general obligation of
   20-7  the United States and backed by its full faith and credit;
   20-8                    (C)  an obligation, the principal of and interest
   20-9  on which are unconditionally guaranteed by the United States;
  20-10                    (D)  an obligation of an agency or
  20-11  instrumentality of the United States, including a mortgage-backed
  20-12  security of the agency or instrumentality;
  20-13                    (E)  a general or special obligation issued by a
  20-14  public agency, payable from taxes, revenues, or a combination of
  20-15  taxes and revenues <that has been rated as to investment quality by
  20-16  a nationally recognized rating agency and that has a current rating
  20-17  of not less than A or its equivalent>; and
  20-18                    (F)  any security in which a public entity may
  20-19  invest under the Public Funds Investment Act of 1987 (Article
  20-20  842a-2, Vernon's Texas Civil Statutes).
  20-21        SECTION 3.  Section 131.901(b), Local Government Code, is
  20-22  amended to read as follows:
  20-23        (b)  An institution selected as a paying agent or trustee for
  20-24  specific bonds or obligations or an institution selected by the
  20-25  governing body to provide safekeeping services is not considered a
  20-26  depository for purposes of this section.
  20-27        SECTION 4.  This Act takes effect September 1, 1993.
   21-1        SECTION 5.  The importance of this legislation and the
   21-2  crowded condition of the calendars in both houses create an
   21-3  emergency and an imperative public necessity that the
   21-4  constitutional rule requiring bills to be read on three several
   21-5  days in each house be suspended, and this rule is hereby suspended.