1-1 By: Ellis S.B. No. 1416 1-2 (In the Senate - Filed March 13, 1997; March 19, 1997, read 1-3 first time and referred to Committee on Finance; April 28, 1997, 1-4 reported adversely, with favorable Committee Substitute by the 1-5 following vote: Yeas 11, Nays 1; April 28, 1997, sent to printer.) 1-6 COMMITTEE SUBSTITUTE FOR S.B. No. 1416 By: Zaffirini 1-7 AN ACT 1-8 relating to deposit of certain public funds in certain financial 1-9 institutions. 1-10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-11 SECTION 1. Subtitle F, Title 10, Government Code, is amended 1-12 by adding Chapter 2259 to read as follows: 1-13 CHAPTER 2259. DEPOSITORY INSTITUTIONS ELIGIBLE FOR DEPOSIT 1-14 OF PUBLIC FUNDS 1-15 Sec. 2259.001. DEFINITIONS. In this chapter: 1-16 (1) "Political subdivision" means any political 1-17 subdivision of this state, including a county, municipality, 1-18 special purpose district, or authority. 1-19 (2) "Public agency" means a state agency, political 1-20 subdivision, or publicly owned utility. 1-21 (3) "Regulated financial institution" has the meaning 1-22 assigned by 12 U.S.C. Section 2902. 1-23 (4) "State agency" means any institution, agency, or 1-24 organ of state government established by the constitution or laws 1-25 of this state, including any department, bureau, board, commission, 1-26 office, or council of this state. 1-27 Sec. 2259.002. SCOPE OF CHAPTER. (a) Except as provided by 1-28 Subsection (b), this chapter applies to funds deposited in a 1-29 regulated financial institution by a public agency, including funds 1-30 deposited under Chapter 116, Local Government Code, or any other 1-31 law. 1-32 (b) This chapter does not apply to funds deposited by the 1-33 comptroller under Chapter 404. 1-34 Sec. 2259.003. COMPTROLLER REPORT. (a) The comptroller 1-35 shall publish and make available for public inspection a report 1-36 that shows the rating assigned under 12 U.S.C. Section 2906 to each 1-37 regulated financial institution in this state. 1-38 (b) The comptroller shall make the report required by this 1-39 section not later than August 1 of each year. 1-40 Sec. 2259.004. PROHIBITED DEPOSITS. (a) A public agency 1-41 may not select as a depository a regulated financial institution 1-42 that has been assigned two consecutive ratings below "outstanding 1-43 record of meeting community credit needs" or "satisfactory record 1-44 of meeting community credit needs" under 12 U.S.C. Section 2906. 1-45 (b) If the rating of a financial institution is changed to a 1-46 rating below that required by this section, a public agency shall 1-47 take immediate action to transfer all public funds on deposit with 1-48 the institution to a qualified financial institution. 1-49 Sec. 2259.005. WITHDRAWAL WITHOUT PENALTY. The depository 1-50 contract between a regulated financial institution and a public 1-51 agency must authorize the withdrawal without penalty of the public 1-52 funds on deposit in the event that the rating of the institution is 1-53 changed to a rating below that required by Section 2259.004. 1-54 SECTION 2. Section 404.0212, Government Code, is amended by 1-55 adding Subsection (g) to read as follows: 1-56 (g) The comptroller shall publish and make available for 1-57 public inspection a report that shows the rating assigned under 12 1-58 U.S.C. Section 2906 to each regulated financial institution in this 1-59 state. The comptroller shall make the report required by this 1-60 section not later than August 1 of each year. 1-61 SECTION 3. (a) Except as provided by Subsection (b) of this 1-62 section, the state and each state agency, political subdivision, 1-63 and publicly owned utility to which Chapter 2259, Government Code, 1-64 as added by this Act, applies shall ensure that funds deposited by 2-1 the entity are deposited in compliance with Chapter 2259, 2-2 Government Code, not later than January 1, 1998. 2-3 (b) A regulated financial institution that is acting as a 2-4 depository of funds subject to Chapter 2259, Government Code, as 2-5 added by this Act, on the effective date of this Act and that does 2-6 not have an assigned rating under 12 U.S.C. Section 2906 that 2-7 satisfies the requirement of Section 2259.004, Government Code, as 2-8 added by this Act, may continue to hold the funds only for the 2-9 period necessary to avoid the imposition of a penalty on the 2-10 depositing entity. 2-11 (c) Section 2259.005, Government Code, as added by this Act, 2-12 applies only to depository contracts executed on or after the 2-13 effective date of this Act. 2-14 SECTION 4. The importance of this legislation and the 2-15 crowded condition of the calendars in both houses create an 2-16 emergency and an imperative public necessity that the 2-17 constitutional rule requiring bills to be read on three several 2-18 days in each house be suspended, and this rule is hereby suspended, 2-19 and that this Act take effect and be in force from and after its 2-20 passage, and it is so enacted. 2-21 * * * * *