By Ellis                                               S.B. No. 251
         76R3810 GCH-F                           
                                A BILL TO BE ENTITLED
 1-1                                   AN ACT
 1-2     relating to deposit of certain public funds in certain financial
 1-3     institutions.
 1-4           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
 1-5           SECTION 1.  Subtitle F, Title 10, Government Code, is amended
 1-6     by adding Chapter 2259 to read as follows:
 1-7         CHAPTER 2259.  DEPOSITORY INSTITUTIONS ELIGIBLE FOR DEPOSIT
 1-8                               OF PUBLIC FUNDS
 1-9           Sec. 2259.001.  DEFINITIONS.  In this chapter:
1-10                 (1)  "Political subdivision" means any political
1-11     subdivision of this state, including a  county, municipality,
1-12     special purpose district, or authority.
1-13                 (2)  "Public agency" means a state agency, political
1-14     subdivision, or publicly owned utility.
1-15                 (3)  "Regulated financial institution" has the meaning
1-16     assigned by 12 U.S.C. Section 2902.
1-17                 (4)  "State agency" means any institution, agency, or
1-18     organ of state government established by the constitution or laws
1-19     of this state, including any department, bureau, board, commission,
1-20     office, or council of this state.
1-21           Sec. 2259.002.  SCOPE OF CHAPTER.  (a)  Except as provided by
1-22     Subsection (b), this chapter applies to funds deposited in a
1-23     regulated financial institution by a public agency, including funds
1-24     deposited under Chapter 116, Local Government Code, or any other
 2-1     law.
 2-2           (b)  This chapter does not apply to funds deposited by the
 2-3     comptroller under Chapter 404.
 2-4           Sec. 2259.003.  COMPTROLLER DUTIES.  (a)  The comptroller
 2-5     shall publish and make available for public inspection a report
 2-6     that shows the rating assigned under 12 U.S.C. Section 2906 to each
 2-7     regulated financial institution in this state.
 2-8           (b)  The comptroller shall make the report required by this
 2-9     section not later than August 1 of each year.
2-10           (c)  If the comptroller determines that, after the effective
2-11     date of this chapter, the federal law defining "regulated financial
2-12     institution" is amended, the comptroller may by rule extend the
2-13     application of this chapter to institutions covered by the amended
2-14     definition if the comptroller determines that application to those
2-15     institutions is consistent with the purposes of this chapter.
2-16           Sec. 2259.004.  PROHIBITED DEPOSITS.  (a)  A public agency
2-17     may not select as a depository a regulated financial institution
2-18     that has been assigned two consecutive ratings below "outstanding
2-19     record of meeting community credit needs" or "satisfactory record
2-20     of meeting community credit needs" under 12 U.S.C. Section 2906.
2-21           (b)  If the rating of a financial institution is changed to a
2-22     rating below that required by this section, a public agency shall
2-23     take immediate action to transfer all public funds on deposit with
2-24     the institution to a qualified financial institution.
2-25           Sec. 2259.005.  WITHDRAWAL WITHOUT PENALTY.  The depository
2-26     contract between a regulated financial institution and a public
2-27     agency must authorize the withdrawal without penalty of the public
 3-1     funds on deposit in the event that the rating of the institution is
 3-2     changed to a rating below that required by Section 2259.004.
 3-3           SECTION 2.  Section 404.0212, Government Code, is amended by
 3-4     adding Subsection (g) to read as follows:
 3-5           (g)  The comptroller shall publish and make available for
 3-6     public inspection a report that shows the rating assigned under 12
 3-7     U.S.C. Section 2906 to each regulated financial institution in this
 3-8     state.  The comptroller shall make the report required by this
 3-9     section not later than August 1 of each year.
3-10           SECTION 3.  (a)  Except as provided by Subsection (b) of this
3-11     section, the state and each state agency, political subdivision,
3-12     and publicly owned utility to which Chapter 2259, Government Code,
3-13     as added by this Act, applies shall ensure that funds deposited by
3-14     the entity are deposited in compliance with Chapter 2259 not later
3-15     than January 1, 2000.
3-16           (b)  A regulated financial institution that is acting as a
3-17     depository of funds subject to Chapter 2259, Government Code, as
3-18     added by this Act, on the effective date of this Act and that does
3-19     not have an assigned rating under 12 U.S.C. Section 2906 that
3-20     satisfies the requirement of Section 2259.004, Government Code, as
3-21     added by this Act, may continue to hold the funds only for the
3-22     period necessary to avoid the imposition of a penalty on the
3-23     depositing entity.
3-24           (c)  Section 2259.005, Government Code, as added by this Act,
3-25     applies only to depository contracts executed on or after the
3-26     effective date of this Act.
3-27           SECTION 4.  The importance of this legislation and the
 4-1     crowded condition of the calendars in both houses create an
 4-2     emergency and an imperative public necessity that the
 4-3     constitutional rule requiring bills to be read on three several
 4-4     days in each house be suspended, and this rule is hereby suspended,
 4-5     and that this Act take effect and be in force from and after its
 4-6     passage, and it is so enacted.