1-1 By: Ellis S.B. No. 1128
1-2 (In the Senate - Filed March 9, 1995; March 15, 1995, read
1-3 first time and referred to Committee on State Affairs;
1-4 April 25, 1995, reported adversely, with favorable Committee
1-5 Substitute by the following vote: Yeas 13, Nays 0; April 25, 1995,
1-6 sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR S.B. No. 1128 By: Gallegos
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to the deposit, investment, safekeeping, and records and
1-11 reports of, and collateral requirements for the deposit of, funds
1-12 held by the state treasurer.
1-13 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-14 SECTION 1. Subchapter C, Chapter 404, Government Code, is
1-15 amended by adding Section 404.0212 to read as follows:
1-16 Sec. 404.0212. DEPOSITORY RATING UNDER CERTAIN FEDERAL LAW.
1-17 (a) In this section, "regulated financial institution" has the
1-18 meaning assigned by 12 U.S.C. Section 2902.
1-19 (b) A regulated financial institution that accepts a deposit
1-20 from the treasurer shall report to the treasurer the rating
1-21 assigned to the financial institution under 12 U.S.C. Section 2906.
1-22 (c) A regulated financial institution shall make a report
1-23 required by this section:
1-24 (1) annually, not later than August 1 of each year;
1-25 and
1-26 (2) not later than the 30th day after the date the
1-27 financial institution is notified that the assigned rating has been
1-28 changed.
1-29 (d) The treasurer may not select as a depository a regulated
1-30 financial institution that has been assigned a rating below
1-31 "outstanding record of meeting community credit needs" or
1-32 "satisfactory record of meeting community credit needs" under 12
1-33 U.S.C. Section 2906.
1-34 (e) On receipt of notice that the rating of a financial
1-35 institution is changed to a rating below that required by this
1-36 section, the treasurer shall take immediate action to transfer all
1-37 state funds subject to the custody or control of the treasurer that
1-38 are on deposit with the institution to a qualified financial
1-39 institution.
1-40 (f) The depository contract between a regulated financial
1-41 institution and the treasurer must authorize the withdrawal without
1-42 penalty of the state funds subject to the custody or control of the
1-43 treasurer that are on deposit with the institution if the rating of
1-44 the institution is changed to a rating below that required by
1-45 Subsection (d).
1-46 SECTION 2. Section 404.022, Government Code, is amended by
1-47 adding Subsection (j) to read as follows:
1-48 (j) The board may execute a simplified version of a
1-49 depository agreement with an eligible institution desiring to hold
1-50 $98,000 or less in state deposits that are fully insured by the
1-51 Federal Deposit Insurance Corporation. The treasurer may give the
1-52 institution contingent approval as a depository until the board's
1-53 next scheduled meeting.
1-54 SECTION 3. Subchapter C, Chapter 404, Government Code, is
1-55 amended by adding Section 404.0221 to read as follows:
1-56 Sec. 404.0221. ELIGIBLE COLLATERAL. (a) In this section,
1-57 "public agency" means a board, authority, agency, department,
1-58 commission, political subdivision, municipal corporation, district,
1-59 public corporation, body politic, instrumentality of this state, or
1-60 any other type of political or governmental entity of this state.
1-61 (b) For the purposes of Section 404.022, collateral eligible
1-62 to be pledged with the treasurer to secure state deposits includes:
1-63 (1) direct obligations of or obligations the principal
1-64 and interest of which are guaranteed by the United States
1-65 government;
1-66 (2) direct obligations of or obligations guaranteed by
1-67 agencies or instrumentalities of the United States government; and
1-68 (3) a general or special obligation issued by a public
2-1 agency and approved by the attorney general that is payable from
2-2 taxes, revenues, or both.
2-3 (c) If pledged collateral consists of securities with a
2-4 declining principal balance, the market value of the collateral
2-5 pledged may not be less than 125 percent of the amount of the state
2-6 deposits to be secured.
2-7 (d) Eligible collateral includes only a security with fixed,
2-8 stated rates.
2-9 (e) A loss sustained by a depository that has secured its
2-10 deposits by collateral may be enforced against the collateral.
2-11 (f) The treasurer may reject at any time collateral tendered
2-12 by a state depository without assigning a reason for the rejection,
2-13 and the treasurer's action is final and not subject to review.
2-14 (g) Collateral is not required for deposits to the extent
2-15 that the deposits are insured by the Federal Deposit Insurance
2-16 Corporation.
2-17 SECTION 4. Section 404.024, Government Code, is amended to
2-18 read as follows:
2-19 Sec. 404.024. Authorized Investments. (a) The board may
2-20 determine and designate the amount of state funds to be deposited
2-21 in time deposits in state depositories. The treasurer shall
2-22 recommend to the board a maximum limit for state funds deposited by
2-23 the treasurer at approved state depositories. The percentage of
2-24 state funds to be deposited in state depositories shall be based on
2-25 the interest rates available in competing investments, the demand
2-26 for funds from Texas banks, and the state's liquidity requirements.
2-27 The treasurer shall provide periodic investment reports to the
2-28 board.
2-29 (b) State funds not deposited in state depositories shall be
2-30 invested by the treasurer in:
2-31 (1) direct security repurchase agreements;
2-32 (2) reverse security repurchase agreements;
2-33 (3) direct obligations of or obligations the principal
2-34 and interest of which are guaranteed by the United States;
2-35 (4) direct obligations of or obligations guaranteed by
2-36 agencies or instrumentalities of the United States government;
2-37 (5) bankers' acceptances that:
2-38 (A) are eligible for purchase by the Federal
2-39 Reserve System;
2-40 (B) do not exceed 270 days to maturity; and
2-41 (C) are issued by a bank that has received the
2-42 highest short-term credit rating by a nationally recognized
2-43 investment rating firm;
2-44 (6) commercial paper that:
2-45 (A) does not exceed 270 days to maturity; and
2-46 (B) except as provided by Subsection (i) <(j)>,
2-47 has received the highest short-term credit rating by a nationally
2-48 recognized investment rating firm;
2-49 (7) contracts written by the treasury in which the
2-50 treasury grants the purchaser the right to purchase securities in
2-51 the treasury's marketable securities portfolio at a specified price
2-52 over a specified period and for which the treasury is paid a fee
2-53 and specifically prohibits naked-option or uncovered option
2-54 trading; <and>
2-55 (8) direct obligations of or obligations guaranteed by
2-56 the Inter-American Development Bank, the International Bank for
2-57 Reconstruction and Development (the World Bank), the African
2-58 Development Bank, the Asian Development Bank, and the International
2-59 Finance Corporation that have received the highest credit rating by
2-60 a nationally recognized investment rating firm; <and>
2-61 (9) bonds issued, assumed, or guaranteed by the State
2-62 of Israel;
2-63 (10) obligations of a state or an agency, county,
2-64 city, or other political subdivision of a state; and
2-65 (11) mutual funds or other investment pools secured by
2-66 obligations that are described by Subdivisions (1) through (6).
2-67 (c) Investments in direct security repurchase agreements and
2-68 reverse security repurchase agreements may be made with state or
2-69 national banks doing business <domiciled> in this state or with
2-70 primary dealers as approved by the Federal Reserve System.
3-1 (d) The board may contract with a depository for the payment
3-2 of interest on time or demand deposits at a rate not to exceed a
3-3 rate that is lawful under an Act of Congress and rules and
3-4 regulations of the board of governors of the Federal Reserve
3-5 System, the board of directors of the Federal Deposit Insurance
3-6 Corporation, <the Federal Savings and Loan Insurance Corporation,>
3-7 and the Federal Home Loan Banking Board.
3-8 (e) The treasury may not purchase any of the following types
3-9 of investments in an amount that at the time of purchase will cause
3-10 the aggregate value of the investments to exceed five percent of
3-11 the treasury's total investments:
3-12 (1) obligations the payment of which represents the
3-13 coupon payments on the outstanding principal balance of the
3-14 underlying mortgage-backed security collateral and pays no
3-15 principal;
3-16 (2) obligations the payment of which represents the
3-17 principal stream of cash flow from the underlying mortgage-backed
3-18 security collateral and bears no interest;
3-19 (3) collateralized mortgage obligations that have a
3-20 stated final maturity date of greater than 10 years; and
3-21 (4) collateralized mortgage obligations the interest
3-22 rate of which is determined by an index that adjusts opposite to
3-23 the changes in a market index. <Not more than 20 percent of the
3-24 aggregate funds on deposit in financial institutions at any time
3-25 may be in depository institutions other than banks.>
3-26 (f) The treasurer may contract with registered investment
3-27 advisors and other consultants to assist in investment management
3-28 and may pay fees directly from investment earnings <invest the
3-29 gross proceeds from obligations of this state or any agency of this
3-30 state in:>
3-31 <(1) obligations of a state or an agency, county,
3-32 city, or other political subdivision of a state; and>
3-33 <(2) mutual funds composed of obligations described by
3-34 Subdivision (1)>.
3-35 (g) To the extent practicable, the treasurer shall give
3-36 first consideration to Texas banks when investing in direct
3-37 security repurchase agreements.
3-38 (h) <The treasurer may not use state funds to invest in or
3-39 purchase obligations of a private corporation or other private
3-40 business entity doing business in the Republic of South Africa
3-41 unless the corporation or other entity:>
3-42 <(1) has:>
3-43 <(A) adopted the Statement of Principles for
3-44 South Africa as they existed in 1987, as described in the >þLReport on
3-45 the Signatory Companies to the Statement of Principles for South
3-46 Africaää< published by Arthur D. Little, Inc., Cambridge,
3-47 Massachusetts, and has obtained a performance rating in Category 1
3-48 or 2 of the Statement of Principles for South Africa rating system
3-49 as determined by Arthur D. Little, Inc.; or>
3-50 <(B) agreed to the Code of Conduct that is
3-51 enforced by the United States Department of State under Section
3-52 208, Comprehensive Anti-Apartheid Act of 1986 (Pub. L. No. 99-440)
3-53 and has received a rating of "Making Satisfactory Progress"; and>
3-54 <(2) does not supply strategic products or services
3-55 for use by the government, military, or police of the Republic of
3-56 South Africa.>
3-57 <(i) For the purposes of Subsection (h) of this section:>
3-58 <(1) "Doing business in the Republic of South Africa"
3-59 means conducting or performing manufacturing, assembly, or
3-60 warehousing operations within the Republic of South Africa or, if a
3-61 bank or other financial institution, lending money to the
3-62 government of the Republic of South Africa or any of its agencies
3-63 or instrumentalities.>
3-64 <(2) "Strategic products or services" means articles
3-65 designated as arms, ammunition, or implements of war as provided by
3-66 22 Code of Federal Regulations Part 121 or data processing
3-67 equipment or computers sold for military or police use or for use
3-68 in connection with restrictions on travel within the Republic of
3-69 South Africa by residents of that country.>
3-70 <(j)> The treasurer may not use state funds to invest in or
4-1 purchase obligations of a private corporation or other private
4-2 business entity doing business in Northern Ireland unless the
4-3 corporation or other entity:
4-4 (1) adheres to fair employment practices; and
4-5 (2) does not discriminate on the basis of race, color,
4-6 religion, sex, national origin, or disability.
4-7 (i) <(k)> Notwithstanding Subsection (b)(6)(B) <(a)(6)(B)>,
4-8 the treasurer may purchase commercial paper with a rating lower
4-9 than the rating required by that paragraph <subsection> to provide
4-10 liquidity for commercial paper issued by the treasurer or an agency
4-11 of the state.
4-12 SECTION 5. Subsection (c), Section 404.0245, Government
4-13 Code, is amended to read as follows:
4-14 (c) The principal amount of state funds invested and
4-15 outstanding in hedging transactions on any one day may not exceed
4-16 $500,000 with a maximum risk of loss of $5,000,000 in a biennium.
4-17 The total principal amount of state funds that may be invested by
4-18 the <state> treasurer in hedging transactions during any one
4-19 biennium may not exceed the amount of money credited to the
4-20 unclaimed money fund for that biennium and attributable to the
4-21 remittance of mineral proceeds under Chapter 75, Property Code.
4-22 Any premium incurred in connection with hedging transactions may be
4-23 paid only from funds appropriated for that purpose.
4-24 SECTION 6. The heading of Subchapter D, Chapter 404,
4-25 Government Code, is amended to read as follows:
4-26 SUBCHAPTER D. COLLATERAL, DEPOSITS, AND WITHDRAWALS <TREASURER AS
4-27 SECRETARY OF BOARD>
4-28 SECTION 7. The heading of Section 404.031, Government Code,
4-29 is amended to read as follows:
4-30 Sec. 404.031. COLLATERAL REQUIREMENTS.
4-31 SECTION 8. Subsections (b), (e), (g), and (j), Section
4-32 404.031, Government Code, are amended to read as follows:
4-33 (b) If the market value of the securities pledged by a
4-34 depository becomes less than the amount of funds on deposit in the
4-35 depository, the treasurer shall require that additional collateral
4-36 be pledged immediately or deposits reduced <security>. If the
4-37 collateral pledged by a state depository is in excess of the amount
4-38 required by this chapter, the treasurer may permit the release of
4-39 the excess collateral <security>. If the balance of state funds in
4-40 a state depository is increased, the depository shall increase the
4-41 collateral <security> for the deposits to the amount required by
4-42 this chapter.
4-43 (e) Instead of depositing pledged securities with the
4-44 treasurer, a depository may deposit them with a custodian. The
4-45 custodian may be the Texas Treasury Safekeeping Trust Company or a
4-46 state or national bank that has a capital stock and permanent
4-47 surplus of not less than $5 million, is <has been designated> a
4-48 state depository, and has been designated as a custodian by the
4-49 treasurer. The state depository and the custodian of securities
4-50 pledged by that state depository may not be the same bank or be
4-51 owned by the same bank holding company. The securities shall be
4-52 held in trust by the custodian to secure funds deposited by the
4-53 treasurer in the state depository pledging the securities. On
4-54 receipt of the securities, the custodian shall immediately, by book
4-55 entry or otherwise, identify on its books and records the pledge of
4-56 the securities and shall promptly issue and deliver to the
4-57 treasurer controlled trust receipts for the securities pledged.
4-58 The security evidenced by the trust receipts is subject to
4-59 inspection by the treasurer <board or its agents> at any time. The
4-60 depository pledging the securities shall pay the charges, if any,
4-61 of the custodian bank for accepting and holding the securities.
4-62 The <A> custodian <bank>, acting alone or through a permitted
4-63 institution, is for all purposes under state law and
4-64 notwithstanding Chapters 8 and 9, Business & Commerce Code, the
4-65 bailee or agent of the treasurer. The security interest arising
4-66 out of a pledge of securities to secure deposits of the state is
4-67 created, attaches, and is perfected for all purposes under state
4-68 law from the time the custodian identifies the pledge of the
4-69 securities on its books and records and issues the trust receipts.
4-70 The security interest remains perfected as of that time in the
5-1 hands of all subsequent custodians and permitted institutions.
5-2 (g) In this section, "permitted institution" means a Federal
5-3 Reserve Bank, a Federal Home Loan Bank, a "clearing corporation" as
5-4 defined by Section 8.102(c), Business & Commerce Code, the Texas
5-5 Treasury Safekeeping Trust Company, a state depository, and any
5-6 state or nationally chartered bank or trust company that is
5-7 controlled by a bank holding company that controls a state
5-8 depository. Neither the state depository that pledges the
5-9 securities nor any bank that is controlled by a bank holding
5-10 company that controls that state depository may be the permitted
5-11 institution with respect to the particular securities pledged by
5-12 that state depository. A custodian holding in trust securities of
5-13 a state depository under Subsections <Subsection> (e) and (f) may
5-14 deposit the pledged securities with a permitted institution if the
5-15 permitted institution is the third party to the transaction. The
5-16 securities shall be held by the permitted institution to secure
5-17 funds deposited by the treasurer in the state depository pledging
5-18 the securities. On receipt of the securities, the permitted
5-19 institution shall immediately issue to the custodian an advice of
5-20 transaction or other document evidencing the deposit of the
5-21 securities. When the pledged securities held by a custodian are
5-22 deposited, the permitted institution may apply book entry
5-23 procedures to the securities. The records of the permitted
5-24 institution shall at all times reflect the name of the custodian
5-25 depositing the pledged securities. The custodian shall immediately
5-26 issue and deliver to the treasurer controlled trust receipts for
5-27 the pledged securities. The trust receipts shall indicate that the
5-28 custodian has deposited with the permitted institution the pledged
5-29 securities held in trust for the state depository pledging the
5-30 securities. A legal action or proceeding brought by or against the
5-31 state, arising out of or in connection with the duties of the state
5-32 depository, the custodian, or other permitted institution under
5-33 this subchapter must be brought and maintained in state district
5-34 court in Travis County. In this section, "control" and "bank
5-35 holding company" have the meanings assigned by Article 2, Chapter
5-36 I, The Texas Banking Code (Article 342-102, Vernon's Texas Civil
5-37 Statutes).
5-38 (j) If a state depository fails to credit <pay> a deposit or
5-39 part of a deposit made by <on the check of> the treasurer, the
5-40 treasurer may immediately sell or otherwise convert the securities
5-41 to money <and disburse the money, according to law, on warrants
5-42 drawn by the comptroller on the funds which the securities
5-43 secured>.
5-44 SECTION 9. The heading of Section 404.032, Government Code,
5-45 is amended to read as follows:
5-46 Sec. 404.032. Deposits <and Investments>.
5-47 SECTION 10. Subsections (a) and (d), Section 404.032,
5-48 Government Code, are amended to read as follows:
5-49 (a) The treasurer shall deposit state funds in depositories
5-50 that satisfy the collateral <security> requirements of this chapter
5-51 <or invest the funds in investments authorized by Section 404.024>.
5-52 The treasurer may deposit funds designated as demand deposits only
5-53 in banks designated as <centrally located depositories and in
5-54 other> depositories <authorized> by the board.
5-55 (d) The treasurer shall keep sufficient money on deposit in
5-56 demand deposit accounts in banks <depositories> designated by the
5-57 board as clearing banks <institutions> to meet all current claims
5-58 on the state. Items received by the treasurer for collection shall
5-59 be deposited with a clearing bank <institution> to be credited to
5-60 the demand deposit account in the bank <depository>. Checks,
5-61 drafts, or warrants drawn by the treasurer for the payment of
5-62 obligations due by the state may be drawn on such an account in
5-63 such a depository or on the demand deposit account in another state
5-64 depository so that the checks, drafts, or warrants of the state may
5-65 at all times pass current as cash.
5-66 SECTION 11. Section 404.043, Government Code, is amended to
5-67 read as follows:
5-68 Sec. 404.043. Security Officers. The treasurer may <shall>
5-69 employ security officers to provide needed security services for
5-70 the treasury and may commission the officers as peace officers.
6-1 The security officers shall give bond in the same manner required
6-2 by this chapter for employees who handle money or other valuable
6-3 property as part of their duties.
6-4 SECTION 12. Section 404.047, Government Code, is amended to
6-5 read as follows:
6-6 Sec. 404.047. Accounts. The treasurer shall keep accounts
6-7 of the receipt and expenditure of the money in the treasury and
6-8 close the accounts on August 31 of each year. The treasurer shall
6-9 keep proper records <legal vouchers>, distinguishing between the
6-10 receipts and disbursements of each fiscal year.
6-11 SECTION 13. Section 404.048, Government Code, is amended to
6-12 read as follows:
6-13 Sec. 404.048. Report. In addition to the reports required
6-14 by the constitution, the treasurer shall, as required by <submit to
6-15 the governor on the first Monday in November of each year, and at
6-16 other times> the governor <requires>, submit <an exact statement of
6-17 the condition and situation of the treasury,> a statement of the
6-18 balance of money remaining in the treasury <to the credit of the
6-19 state,> and a summary of the receipts and disbursements recorded by
6-20 <of> the treasury <during the preceding year or for another period
6-21 of time that may be specially required>. The treasurer shall
6-22 exhibit all books, papers, and records <vouchers, and other matters
6-23 pertaining to the office for examination> on request by the
6-24 legislature or a branch or committee of the legislature.
6-25 SECTION 14. Subsections (b), (d), and (f), Section 404.052,
6-26 Government Code, are amended to read as follows:
6-27 (b) The <state> treasurer shall deposit money received by
6-28 the treasurer under this section and shall keep a separate account
6-29 for each municipality, district, or political subdivision. The
6-30 payment of interest and principal due on an obligation of the
6-31 municipality, district, or political subdivision must be on deposit
6-32 with the treasurer not later than five business days before the
6-33 date of maturity. Any charges incurred for late receipt of funds
6-34 shall be assessed to the municipality, district, or political
6-35 subdivision. <As payment of interest and principal becomes due on
6-36 an obligation, the treasurer of the municipality, district, or
6-37 political subdivision shall remit to the state treasurer, not later
6-38 than the 15th day before the date of maturity, the amounts due or
6-39 to become due on maturity.> On receipt of those amounts by the
6-40 <state> treasurer, the treasurer <of the municipality, district, or
6-41 political subdivision> shall request the comptroller to issue a
6-42 warrant <to the state treasurer> for the payment of amounts due<,
6-43 and the state treasurer shall pay the same at the office of the
6-44 state treasurer. The warrant shall state on its face:>
6-45 <(1) that the proceeds of the warrant are to be
6-46 applied by the state treasurer to the payment of certain specified
6-47 bonds or interest coupons described in the warrant;>
6-48 <(2) the name of the municipality, district, or
6-49 political subdivision that issued the obligations;>
6-50 <(3) the numbers, amounts, and dates of maturity of
6-51 the obligations and interest to be paid; and>
6-52 <(4) instructions to the state treasurer to return the
6-53 obligation to the treasurer of the municipality, district, or
6-54 political subdivision on receipt>.
6-55 (d) The <state> treasurer shall collect for the use of the
6-56 state from the municipality, district, or political subdivision a
6-57 fee in an amount established by rule of the <state> treasurer that
6-58 is sufficient to pay the <state> treasurer's cost of
6-59 administration. The treasurer of the municipality, district, or
6-60 political subdivision, at the time of the remittance for the
6-61 payment of the maturing obligation or interest, shall remit the fee
6-62 to the <state> treasurer as ex officio treasurer of the
6-63 municipality, district, or political subdivision. On receipt of
6-64 the fee, the <state> treasurer shall deposit <credit> it to the
6-65 appropriate fund <fees earned>. The amount of the fees earned, or
6-66 as much as necessary, is reserved to the <state> treasurer to be
6-67 used in the administration of this chapter. Any balance remaining
6-68 at the end of a fiscal year is available for use in the next fiscal
6-69 year.
6-70 (f) The <state> treasurer shall cancel and return to the
7-1 municipality, district, or political subdivision depositing funds
7-2 for the payment of interest coupons or the retirement of bonds the
7-3 coupons and bonds that have matured or been retired by purchase,
7-4 together with a statement of the account of the municipality,
7-5 district, or subdivision showing the amounts received and placed to
7-6 its credit, service charges, and amount of coupons or bonds
7-7 retired. At the request of the municipality, district, or
7-8 political subdivision, the <state> treasurer shall remit to the
7-9 municipality, district, or subdivision any balance remaining in
7-10 custody of the treasurer for more than two years for which bonds or
7-11 coupons have not been presented for payment. The municipality,
7-12 district, or political subdivision shall pay these coupons or bonds
7-13 when presented. A municipality, district, or political subdivision
7-14 is entitled at any reasonable time to a statement of its account
7-15 with the <state> treasurer.
7-16 SECTION 15. Section 404.055, Government Code, is amended to
7-17 read as follows:
7-18 Sec. 404.055. Time and Demand Deposits<; Records and Annual
7-19 Report>. <(a)> The treasurer shall maintain records of the daily
7-20 balances of and the interest income from funds deposited by the
7-21 treasurer <or the board> in time and demand deposit accounts in
7-22 each bank acting as a state depository. The treasurer shall
7-23 maintain and preserve those records according to the provisions of
7-24 Subchapter D, Chapter 441, <the Preservation of Essential Records
7-25 Act (Article 5441d, Vernon's Texas Civil Statutes)> and of the open
7-26 records law, Chapter 552 <424, Acts of the 63rd Legislature,
7-27 Regular Session, 1973 (Article 6252-17a, Vernon's Texas Civil
7-28 Statutes)>.
7-29 <(b) The treasurer annually shall make a complete report to
7-30 the legislature and to the governor of the amounts of interest
7-31 income earned on funds deposited by the treasurer or the board in
7-32 each state depository. The report must contain the following:>
7-33 <(1) the name of each institution serving as a state
7-34 depository during the fiscal year;>
7-35 <(2) for each institution, the balance at the
7-36 beginning of the fiscal year, the balance at the end of the fiscal
7-37 year, and the average daily balance in demand deposit accounts
7-38 placed by the treasurer or the board;>
7-39 <(3) for each institution, the balance at the
7-40 beginning of the fiscal year, the balance at the end of the fiscal
7-41 year, the average daily balance in time deposit accounts placed by
7-42 the treasurer or the board, and the amount of interest income
7-43 earned on those accounts; and>
7-44 <(4) the totals of those amounts aggregated for all
7-45 state depositories.>
7-46 SECTION 16. Section 404.060, Government Code, is amended to
7-47 read as follows:
7-48 Sec. 404.060. Priority of Warrants. Warrants on the
7-49 treasury shall be on an equal basis with each other, except that if
7-50 a question arises concerning the priority of payment of the
7-51 warrants the treasurer shall determine the priority of payment <and
7-52 necessity requires, they shall be paid in order of their serial
7-53 number within each account.>
7-54 <This section does not apply to:>
7-55 <(1) warrants drawn on the game, fish, and water
7-56 safety account or on funds collected for and appropriated to the
7-57 Texas Department of Transportation;>
7-58 <(2) a special fund created or provided for in the
7-59 constitution; or>
7-60 <(3) a special fund or account consisting of taxes set
7-61 aside and remitted or donated by the legislature to a county or
7-62 municipality>.
7-63 SECTION 17. Section 404.062, Government Code, is amended to
7-64 read as follows:
7-65 Sec. 404.062. UNDETERMINED REMITTANCES <Daily Statement>.
7-66 (a) <The head of each department shall send to the treasurer daily
7-67 a detailed list of persons remitting money the status of which is
7-68 undetermined or that is awaiting the time when it can be taken into
7-69 the treasury and the departments' remittances to the treasury. The
7-70 treasurer shall cash the remittances and place them in the treasury
8-1 vaults or in legally authorized depository banks if the necessity
8-2 arises.>
8-3 <(b) The report from the General Land Office shall include
8-4 all money for interest, principal, and leases of school,
8-5 university, asylum, and other lands.>
8-6 <(c)> This subsection applies to money the status of which
8-7 is undetermined or that is awaiting the time when it can be taken
8-8 into the treasury. The money shall be placed with the treasurer
8-9 and credited to the suspense account. The treasurer shall request
8-10 and maintain information about the deposit of funds into the
8-11 suspense account in accordance with Section 403.052.
8-12 (b) <(d)> When the status of money placed in the suspense
8-13 account is determined, the money shall be transferred from the
8-14 suspense account by placing the portion of it belonging to the
8-15 state in the appropriate fund in the treasury, and the part not
8-16 belonging to the state shall be refunded. The refund shall be made
8-17 either to the payor of the money or to the payor's estate,
8-18 assignee, devisee, or other successor-in-interest.
8-19 (c) <(e)> When a deposit is made, it and any refunds shall
8-20 be entered in the suspense cash book, and the balance shall
8-21 represent the aggregate of the items still in suspense. Warrants
8-22 shall be used for making refunds. The warrants shall be charged
8-23 against the suspense funds to which they apply.
8-24 SECTION 18. Section 404.064, Government Code, is amended to
8-25 read as follows:
8-26 Sec. 404.064. OFFICE FEES <FEE BOOK>. The treasurer shall
8-27 keep records of <an office fee book in which the treasurer shall
8-28 enter in detail> the fees earned by the treasury department. Those
8-29 fees shall be deposited to the appropriate fund in the treasury <at
8-30 the end of each month to the credit of the general revenue fund>.
8-31 SECTION 19. Section 404.065, Government Code, is amended to
8-32 read as follows:
8-33 Sec. 404.065. CASH BALANCING <BOOK>. The treasurer shall
8-34 keep records <a book, to be called the cash balancing book,> for
8-35 the purpose of arriving at the daily cash balance. The daily
8-36 totals of receipts and disbursements and the amount of cash on hand
8-37 and in depository banks shall be recorded <entered in the book. A
8-38 copy of the book entry for each day shall be furnished daily to the
8-39 comptroller>.
8-40 SECTION 20. Section 404.067, Government Code, is amended to
8-41 read as follows:
8-42 Sec. 404.067. SAFEKEEPING; INVESTMENT AGENCIES <BOND BOOK>.
8-43 (a) The treasurer shall keep custodial records that <a bond book
8-44 in which> shall reflect all deposits and releases of securities <be
8-45 entered warrants or authorizations to receive or relinquish bonds>
8-46 held by the treasurer and belonging to a state investment agency
8-47 <fund>.
8-48 (b) The treasurer shall keep appropriate ledger accounts
8-49 that include a short description <of the essential features> of
8-50 each security held in safekeeping for certain investment agencies
8-51 of the state<, of each bond or of each purchase of similar bonds or
8-52 other securities purchased by and belonging to the permanent school
8-53 fund and other funds of the state. Those accounts shall be charged
8-54 with the principal of the bond or purchase and with each separate
8-55 item of interest to accrue to the principal and shall be credited
8-56 with payments as made>.
8-57 (c) The treasurer shall keep controlling or total accounts
8-58 of <bonds or other> securities in the general ledger. Those
8-59 accounts shall be kept with respect to the total amount of bonds or
8-60 other securities belonging to each separate fund.
8-61 (d) <The treasurer shall keep controlling accounts for
8-62 interest to accrue on the bonds. The accounts shall be set up at
8-63 the beginning of the fiscal year for bonds or other securities
8-64 owned at that time and for subsequent purchases when the bonds or
8-65 securities are purchased.>
8-66 <(e)> Those controlling accounts shall be balanced monthly
8-67 with the sum of the individual accounts for <bonds or> securities,
8-68 which also shall be balanced monthly, and shall correspond to
8-69 similar accounts kept by the comptroller.
8-70 SECTION 21. Section 404.068, Government Code, is amended to
9-1 read as follows:
9-2 Sec. 404.068. STATE REGULATORY AGENCIES SAFEKEEPING AND
9-3 PLEDGED COLLATERAL <Securities Register>. (a) The treasurer shall
9-4 keep a suitable system <register> in which shall be entered all
9-5 <bonds, cash, and other> securities deposited with the treasurer by
9-6 <bond investment, surety, and insurance companies and> state
9-7 depositories <depository banks> and other state agencies <all other
9-8 bonds or securities deposited with the treasurer under a statute if
9-9 the registration of the bonds or securities is not otherwise
9-10 provided for by law>. The treasurer shall enter in the system
9-11 <register> the authorizations to deposit <receive> or release
9-12 <relinquish> the <bonds or> securities.
9-13 (b) The treasurer shall keep a securities ledger in which
9-14 appropriate accounts for each custodial agency are kept <all
9-15 matters for which those authorizations are issued shall be kept>.
9-16 That ledger shall be balanced monthly against control accounts kept
9-17 in the general ledger and against corresponding accounts kept by
9-18 the comptroller.
9-19 SECTION 22. Section 404.070, Government Code, is amended to
9-20 read as follows:
9-21 Sec. 404.070. Validity of VOIDED Warrants <Payable From a
9-22 Suspense or Trust Fund>. (a) A warrant issued by the comptroller
9-23 in payment of refunds from a <suspense or trust> fund in the
9-24 treasury becomes void unless presented to the treasurer for payment
9-25 before two years after the end of the fiscal year in which the
9-26 warrant was issued. The sum of money represented by a warrant
9-27 voided under this section shall be transferred by the comptroller
9-28 from the <suspense> fund from which the warrant was originally
9-29 issued to the general revenue fund. Claims for the payment of a
9-30 voided warrant may be presented to the legislature for
9-31 appropriation from which the warrant may be paid. This section
9-32 does not affect the laws regulating the payment of other warrants
9-33 issued by the comptroller.
9-34 (b) When a transfer of money under this section is made, the
9-35 treasurer shall prepare a list of the outstanding warrants
9-36 representing the transfer. The list must show <the name of the
9-37 payee,> the date of the original warrant, the departmental suspense
9-38 account against which the warrant was originally drawn, the
9-39 original warrant number, and the amount of the original warrant.
9-40 The list shall be maintained as a permanent record in the office of
9-41 the treasurer <and proper notation shall be made on each entry on
9-42 the list when the legislature makes appropriation for the refund of
9-43 the amount listed>.
9-44 SECTION 23. Subsection (e), Section 404.071, Government
9-45 Code, is amended to read as follows:
9-46 (e) The treasurer shall provide the comptroller information
9-47 necessary for <notify> the comptroller to compute <of> the amount
9-48 of interest to be paid from the general revenue fund as a result of
9-49 the federal Cash Management Improvement Act of 1990 (31 U.S.C.
9-50 Section 6501 et seq.). The treasurer shall provide the information
9-51 <notifications> in accordance with the comptroller's requirements
9-52 for frequency, method, and format.
9-53 SECTION 24. Section 404.095, Government Code, is amended to
9-54 read as follows:
9-55 Sec. 404.095. Electronic Transfer of Certain Payments.
9-56 (a) This section applies only to a state agency that during the
9-57 preceding state fiscal year collected or received more than $50
9-58 million in fees, fines, penalties, taxes, charges, gifts, grants,
9-59 donations, and other funds, excluding federal grants and interest
9-60 and dividend income.
9-61 (b) If during the preceding state fiscal year a person paid
9-62 a state agency a total of $500,000 or more in a category of
9-63 payments and the agency reasonably anticipates that during the
9-64 current state fiscal year the person will pay the agency $500,000
9-65 or more in a category of payments, the state agency shall require
9-66 the person to transfer payment amounts <of $25,000 or more> due to
9-67 the agency in that category, on or before the date the payment is
9-68 due, by one <or more> of the means of electronic funds transfer
9-69 approved by the treasurer. For the purposes of this section, each
9-70 of the following is a separate category of payments to a state
10-1 agency:
10-2 (1) fees;
10-3 (2) fines;
10-4 (3) civil penalties;
10-5 (4) taxes, with each type of tax specified by the
10-6 treasurer being considered a separate category; and
10-7 (5) other payments to the state agency, excluding
10-8 extraordinary payments such as gifts, grants, donations, interest
10-9 and dividend income, and one time surcharges.
10-10 (c) A state agency by rule may require a person other than a
10-11 person subject to Subsection (b) to transfer all payment amounts
10-12 <of $10,000 or more> due in a category of payments to the agency on
10-13 or before the date the payment is due by electronic funds transfer
10-14 <if the person paid the agency a total of $250,000 or more in that
10-15 category of payments>.
10-16 (d) A person's failure to transfer payment amounts by
10-17 electronic funds transfer may result in the assessment of a penalty
10-18 by the state agency in an amount equal to five percent of the
10-19 payment amount.
10-20 (e) The treasurer shall adopt rules specifying approved
10-21 means of electronic funds transfer and specifying the types of
10-22 taxes constituting separate categories. A person's failure to
10-23 comply with the rules may result in the assessment of a penalty by
10-24 the state agency in an amount equal to five percent of the payment
10-25 amount.
10-26 (f) <(e)> To the extent of any conflict between this section
10-27 and another law specifying the time or manner of making a payment
10-28 to the agency, this section controls. This section does not affect
10-29 a law specifying the time for the filing of a return or other
10-30 report related to the payment.
10-31 (g) <(f)> A state agency may not require payment by
10-32 electronic funds transfer of a protested tax payment.
10-33 SECTION 25. Section 404.105, Government Code, is amended to
10-34 read as follows:
10-35 Sec. 404.105. Capital or Reserve Requirements. The trust
10-36 company shall have capital stock or reserve balances in an amount
10-37 required by applicable regulatory bodies for eligibility for
10-38 federal reserve services, but the amount may not be more than $1
10-39 million. The stock of the trust company is an authorized
10-40 investment for state funds and<,> shall be held by the treasurer<,
10-41 and shall be acquired by the treasurer on an order of the state
10-42 depository board>.
10-43 SECTION 26. Section 404.106, Government Code, is amended by
10-44 adding Subsection (c) to read as follows:
10-45 (c) With respect to specific funds held by the trust company
10-46 for a particular participant, the trust company has the same
10-47 investment authority as that participant for those specific funds.
10-48 SECTION 27. Subsection (d), Section 404.123, Government
10-49 Code, is amended to read as follows:
10-50 (d) All notes must mature and be paid in full during the
10-51 fiscal biennium in which they were issued. The notes must be
10-52 signed by the governor. <The interest rate on the notes must be
10-53 set so that the amount equal to the total amount of interest to be
10-54 paid on the notes plus the costs of issuance of the notes does not
10-55 exceed the amount of interest that would be paid on the notes if
10-56 the interest rate on the notes were one percent less than one of
10-57 the following, as computed by the treasurer:>
10-58 <(1) the average interest yield being earned on funds
10-59 invested by the treasurer as of the date of the notes' issuance; or>
10-60 <(2) the projected average interest yield to be earned
10-61 on funds invested by the treasurer over the life of the note
10-62 issue.>
10-63 SECTION 28. The following provisions are repealed:
10-64 (1) Subsections (e) and (f), Section 404.0245, and
10-65 Sections 404.025 and 404.061, Government Code; and
10-66 (2) Section 2, Chapter 234, Acts of the 73rd
10-67 Legislature, 1993.
10-68 SECTION 29. (a) A regulated financial institution that is
10-69 acting as a depository of funds subject to Section 404.0212,
10-70 Government Code, as added by this Act, on the effective date of
11-1 this Act and that does not have an assigned rating under 12 U.S.C.
11-2 Section 2906 that satisfies the requirement of that section may
11-3 continue to hold the funds only for the period necessary to avoid
11-4 the imposition of a penalty on the state.
11-5 (b) Subsection (f), Section 404.0212, Government Code, as
11-6 added by this Act, applies only to depository contracts executed on
11-7 or after the effective date of this Act.
11-8 SECTION 30. This Act takes effect immediately, except that a
11-9 state depository approved before the effective date of this Act and
11-10 operating as a state depository on the effective date of this Act
11-11 is not required to meet a requirement of Chapter 404, Government
11-12 Code, as amended or added by this Act, until January 1, 1996.
11-13 SECTION 31. The importance of this legislation and the
11-14 crowded condition of the calendars in both houses create an
11-15 emergency and an imperative public necessity that the
11-16 constitutional rule requiring bills to be read on three several
11-17 days in each house be suspended, and this rule is hereby suspended,
11-18 and that this Act take effect and be in force from and after its
11-19 passage, and it is so enacted.
11-20 * * * * *