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.