SB-0875, As Passed Senate, March 2, 2006

SUBSTITUTE FOR

SENATE BILL NO. 875

     A bill to amend 1943 PA 20, entitled

"An act relative to the investment of funds of public corporations

of the state; and to validate certain investments,"

by amending section 1 (MCL 129.91), as amended by 1997 PA 196.

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

     Sec. 1. (1) Except as provided in section 5, the governing

body by resolution may authorize its investment officer to invest

the funds of that public corporation in 1 or more of the following:

     (a) Bonds, securities, and other obligations of the United

States or an agency or instrumentality of the United States.

     (b) Certificates of deposit, savings accounts, deposit

accounts, or depository receipts of a financial institution, but

only if the financial institution complies with subsection (2).

     (c) Commercial paper rated at the time of purchase within the

2 highest classifications established by not less than 2 standard

rating services and that matures not more than 270 days after the

date of purchase.

     (d) Repurchase agreements consisting of instruments listed in

subdivision (a).

     (e) Bankers' acceptances of United States banks.

     (f) Obligations of this state or any of its political

subdivisions that at the time of purchase are rated as investment

grade by not less than 1 standard rating service.

     (g) Mutual funds registered under the investment company act

of 1940, title I of chapter 686, 54 Stat. 789, 15  U.S.C.  USC 80a-

1 to 80a-3 and 80a-4 to 80a-64, with authority to purchase only

investment vehicles that are legal for direct investment by a

public corporation. However, a mutual fund is not disqualified as a

permissible investment solely by reason of either of the following:

     (i) The purchase of securities on a when-issued or delayed

delivery basis.

     (ii) The ability to lend portfolio securities as long as the

mutual fund receives collateral at all times equal to at least 100%

of the value of the securities loaned.

     (iii) The limited ability to borrow and pledge a like portion of

the portfolio's assets for temporary or emergency purposes.

     (h) Obligations described in subdivisions (a) through (g) if

purchased through an interlocal agreement under the urban

cooperation act of 1967, 1967 (Ex Sess) PA 7, MCL 124.501 to

124.512.

     (i) Investment pools organized under the surplus funds

investment pool act, 1982 PA 367, MCL 129.111 to 129.118.

     (j) The investment pools organized under the local government

investment pool act, 1985 PA 121, MCL 129.141 to 129.150.

     (2) A public corporation that invests its funds under

subsection (1) shall not deposit or invest the funds in a financial

institution that is not eligible to be a depository of funds

belonging to the state under a law or rule of this state or the

United States.

     (3) Assets acceptable for pledging to secure deposits of

public funds are limited to assets authorized for direct investment

under subsection (1).

     (4) The governing body by resolution may authorize its

investment officer to pool or coordinate the funds to be invested

under this section with the funds of other public corporations

except in counties where a local government investment pool is

operating and accepting deposits.

(5)  (4) As used in this section, "financial institution"

means a state or nationally chartered bank or a state or federally

chartered savings and loan association, savings bank, or credit

union whose deposits are insured by an agency of the United States

government and that maintains a principal office or branch office

located in this state under the laws of this state or the United

States.

(6)  (5) As used in this act:

     (a) "Governing body" means the legislative body, council,

commission, board, or other body having legislative powers of a

public corporation.

     (b) "Funds" means the money of a public corporation, the

investment of which is not otherwise subject to a public act of

this state or bond authorizing ordinance or resolution of a public

corporation that permits investment in fewer than all of the

investment options listed in subsection (1) or imposes 1 or more

conditions upon an investment in an option listed in subsection

(1).

     (c) "Investment officer" means the treasurer or other person

designated by statute or charter of a public corporation to act as

the investment officer. In the absence of a statutory or charter

designation, the governing body of a public corporation shall

designate the investment officer.

     (d) "Public corporation" means a county, city, village,

township, port district, drainage district, special assessment

district, or metropolitan district of this state, or a board,

commission, or another authority or agency created by or under an

act of the legislature of this state.