| 1 | A bill to be entitled |
| 2 | An act relating to investment of public funds; amending s. |
| 3 | 17.57, F.S.; expanding authorized deposits of certain |
| 4 | public funds in financial instruments insured by the |
| 5 | Federal Deposit Insurance Corporation; requiring certain |
| 6 | securities to meet certain rating requirements; |
| 7 | authorizing the Chief Financial Officer to hold certain |
| 8 | security types not meeting such requirements under certain |
| 9 | circumstances; amending s. 17.61, F.S.; authorizing the |
| 10 | Chief Financial Officer to establish a reserve account in |
| 11 | the State Treasury for investment losses; providing for |
| 12 | funding the reserve account; providing a limitation; |
| 13 | amending s. 218.415, F.S.; expanding authorized deposits |
| 14 | of certain public funds in financial instruments insured |
| 15 | by the Federal Deposit Insurance Corporation; providing an |
| 16 | effective date. |
| 17 |
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| 18 | Be It Enacted by the Legislature of the State of Florida: |
| 19 |
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| 20 | Section 1. Subsection (7) of section 17.57, Florida |
| 21 | Statutes, is amended, and subsection (8) is added to that |
| 22 | section, to read: |
| 23 | 17.57 Deposits and investments of state money.-- |
| 24 | (7) In addition to the deposits authorized under this |
| 25 | section and notwithstanding any other provisions of law, funds |
| 26 | that are not needed to meet the disbursement needs of the state |
| 27 | may be deposited by the Chief Financial Officer in accordance |
| 28 | with the following conditions: |
| 29 | (a) The funds are initially deposited in a qualified |
| 30 | public depository, as defined in s. 280.02, selected by the |
| 31 | Chief Financial Officer. |
| 32 | (b) The selected depository arranges for the deposit of |
| 33 | the funds in financial instruments insured by the Federal |
| 34 | Deposit Insurance Corporation certificates of deposit in one or |
| 35 | more federally insured banks or savings and loan associations, |
| 36 | wherever located, for the account of the state. |
| 37 | (c) The full amount of principal and accrued interest of |
| 38 | each such financial instrument certificate of deposit is insured |
| 39 | by the Federal Deposit Insurance Corporation. |
| 40 | (d) The selected depository acts as custodian for the |
| 41 | state with respect to such financial instruments certificates of |
| 42 | deposit issued for its account. |
| 43 | (e) At the same time the state's funds are deposited and |
| 44 | the financial instruments certificates of deposit are issued, |
| 45 | the selected depository receives an amount of deposits from |
| 46 | customers of other federally insured financial institutions, |
| 47 | wherever located, equal to or greater than the amount of the |
| 48 | funds initially invested by the Chief Financial Officer through |
| 49 | the selected depository. |
| 50 | (8) Securities listed in paragraphs (2)(g), (h), (i), (l), |
| 51 | (m), (n), (q), (s), (t), and (u) must meet the ratings |
| 52 | requirements for each respective security type at the time of |
| 53 | purchase; however, the Chief Financial Officer may hold such |
| 54 | securities if the ratings are downgraded below the required |
| 55 | rating level and the Chief Financial Officer believes that |
| 56 | holding such securities is in the best interest of the state. |
| 57 | Section 2. Subsection (6) is added to section 17.61, |
| 58 | Florida Statutes, to read: |
| 59 | 17.61 Chief Financial Officer; powers and duties in the |
| 60 | investment of certain funds.-- |
| 61 | (6) The Chief Financial Officer may establish a reserve |
| 62 | account within the State Treasury for investment losses. The |
| 63 | reserve account may be funded by placing up to 10 percent of the |
| 64 | net investment earnings of the State Treasury in reserve each |
| 65 | month up to a maximum reserve balance of $200 million. |
| 66 | Section 3. Subsection (23) of section 218.415, Florida |
| 67 | Statutes, is amended to read: |
| 68 | 218.415 Local government investment policies.--Investment |
| 69 | activity by a unit of local government must be consistent with a |
| 70 | written investment plan adopted by the governing body, or in the |
| 71 | absence of the existence of a governing body, the respective |
| 72 | principal officer of the unit of local government and maintained |
| 73 | by the unit of local government or, in the alternative, such |
| 74 | activity must be conducted in accordance with subsection (17). |
| 75 | Any such unit of local government shall have an investment |
| 76 | policy for any public funds in excess of the amounts needed to |
| 77 | meet current expenses as provided in subsections (1)-(16), or |
| 78 | shall meet the alternative investment guidelines contained in |
| 79 | subsection (17). Such policies shall be structured to place the |
| 80 | highest priority on the safety of principal and liquidity of |
| 81 | funds. The optimization of investment returns shall be secondary |
| 82 | to the requirements for safety and liquidity. Each unit of local |
| 83 | government shall adopt policies that are commensurate with the |
| 84 | nature and size of the public funds within its custody. |
| 85 | (23) AUTHORIZED DEPOSITS.--In addition to the investments |
| 86 | authorized for local governments in subsections (16) and (17) |
| 87 | and notwithstanding any other provisions of law, a unit of local |
| 88 | government may deposit any portion of surplus public funds in |
| 89 | its control or possession in accordance with the following |
| 90 | conditions: |
| 91 | (a) The funds are initially deposited in a qualified |
| 92 | public depository, as defined in s. 280.02, selected by the unit |
| 93 | of local government. |
| 94 | (b) The selected depository arranges for the deposit of |
| 95 | the funds in financial instruments insured by the Federal |
| 96 | Deposit Insurance Corporation certificates of deposit in one or |
| 97 | more federally insured banks or savings and loan associations, |
| 98 | wherever located, for the account of the unit of local |
| 99 | government. |
| 100 | (c) The full amount of principal and accrued interest of |
| 101 | each such financial instrument certificate of deposit is insured |
| 102 | by the Federal Deposit Insurance Corporation. |
| 103 | (d) The selected depository acts as custodian for the unit |
| 104 | of local government with respect to such financial instruments |
| 105 | certificates of deposit issued for its account. |
| 106 | (e) At the same time the unit of local government's funds |
| 107 | are deposited and the financial instruments certificates of |
| 108 | deposit are issued, the selected depository receives an amount |
| 109 | of deposits from customers of other federally insured financial |
| 110 | institutions, wherever located, equal to or greater than the |
| 111 | amount of the funds initially invested by the unit of local |
| 112 | government through the selected depository. |
| 113 | Section 4. This act shall take effect July 1, 2009. |