By: Ellis S.B. No. 1416
Line and page numbers may not match official copy.
Bill not drafted by TLC or Senate E&E.
A BILL TO BE ENTITLED
AN ACT
1-1 relating to deposit of public funds in banks or savings
1-2 associations.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Subtitle F, Title 10, Government Code, is amended
1-5 by adding Chapter 2258 to read as follows:
1-6 CHAPTER 2258. DEPOSITORY INSTITUTIONS ELIGIBLE FOR DEPOSIT
1-7 OF PUBLIC FUNDS
1-8 Sec. 2258.001. DEFINITIONS. In this chapter:
1-9 (1) "Political subdivision" means any political
1-10 subdivision of this state, including a county, municipality,
1-11 special purpose district, or authority.
1-12 (2) "Public agency" means a state agency, political
1-13 subdivision, or publicly owned utility.
1-14 (3) "Regulated financial institution" has the meaning
1-15 assigned by 12 U.S.C. Section 2902.
1-16 (4) "State agency" means any institution, agency, or
1-17 organ of state government established by the constitution or laws
1-18 of this state, including any department, bureau, board, commission,
1-19 office, or council of this state.
1-20 Sec. 2258.002. SCOPE OF CHAPTER. This chapter applies to
1-21 funds deposited in a regulated financial institution by a public
2-1 agency, including funds deposited under Chapter 116, Local
2-2 Government Code, Chapter 404, or any other law.
2-3 Sec. 2258.003. DUTY OF FINANCIAL INSTITUTION. (a) A
2-4 regulated financial institution that accepts a deposit of public
2-5 funds shall report to the public agency that made the deposit the
2-6 rating assigned to the financial institution under 12 U.S.C.
2-7 Section 2906.
2-8 (b) A regulated financial institution shall make a report
2-9 required by this section:
2-10 (1) annually, not later than August 1 of each year;
2-11 and
2-12 (2) not later than the 30th day after the date the
2-13 financial institution is notified that the assigned rating has been
2-14 changed.
2-15 Sec. 2258.004. PROHIBITED DEPOSITS. (a) A public agency
2-16 may not select as a depository a regulated financial institution
2-17 that has been assigned a rating below "outstanding record of
2-18 meeting community credit needs" or "satisfactory record of meeting
2-19 community credit needs" under 12 U.S.C. Section 2906.
2-20 (b) On receipt of notice that the rating of a financial
2-21 institution is changed to a rating below that required by this
2-22 section, a public agency shall take immediate action to transfer
2-23 all public funds on deposit with the institution to a qualified
2-24 financial institution.
2-25 Sec. 2258.005. WITHDRAWAL WITHOUT PENALTY. The depository
3-1 contract between a regulated financial institution and a public
3-2 agency must authorize the withdrawal without penalty of the public
3-3 funds on deposit in the event that the rating of the institution is
3-4 changed to a rating below that required by Section 2258.004.
3-5 SECTION 2. (a) Except as provided by Subsection (b) of this
3-6 section, the state and each state agency, political subdivision,
3-7 and publicly owned utility shall ensure that funds deposited by the
3-8 entity are deposited in compliance with Chapter 2258, Government
3-9 Code, as added by this Act, not later than January 1, 1998.
3-10 (b) A regulated financial institution that is acting as a
3-11 depository of funds subject to Chapter 2258, Government Code, as
3-12 added by this Act, on the effective date of this Act and that does
3-13 not have an assigned rating under 12 U.S.C. Section 2906 that
3-14 satisfies the requirement of Section 2258.004, Government Code, as
3-15 added by this Act, may continue to hold the funds only for the
3-16 period necessary to avoid the imposition of a penalty on the
3-17 depositing entity.
3-18 (c) Section 2258.005, Government Code, as added by this Act,
3-19 applies only to depository contracts executed on or after the
3-20 effective date of this Act.
3-21 SECTION 3. The importance of this legislation and the
3-22 crowded condition of the calendars in both houses create an
3-23 emergency and an imperative public necessity that the
3-24 constitutional rule requiring bills to be read on three several
3-25 days in each house be suspended, and this rule is hereby suspended,
4-1 and that this Act take effect and be in force from and after its
4-2 passage, and it is so enacted.