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AN ACT relating to public moneys; concerning depositories; amending
  K.S.A. 9-1401, 9-1403, 9-1406, 9-1407, 12-1676 and 17-5002 and
  K.S.A. 1996 Supp. 9-1402, 9-1405, 12-1675, 12-1677a and 12-1677b
  and repealing the existing sections.
Be it enacted by the Legislature of the State of Kansas:
  New Section 1.  As used in article 14 of chapter 9 of the Kansas Stat-
utes Annotated:
  (a)  ``Bank'' means any bank incorporated under the laws of this state
or any other state, or organized under the laws of the United States;
  (b)  ``savings and loan association'' means any savings and loan asso-
ciation incorporated under the laws of this state or any other state, or
organized under the laws of the United States;
  (c)  ``savings bank'' means any savings bank organized under the laws
of the United States;
  (d)  ``centralized securities depository'' means a clearing agency reg-
istered with the securities and exchange commission which provides safe-
keeping and book-entry settlement services to its participants;
  (e)  ``municipal corporation'' or ``quasi-municipal corporation'' in-
cludes each investing governmental unit under K.S.A. 12-1675, and
amendments thereto.
  Sec. 2.  K.S.A. 9-1401 is hereby amended to read as follows: 9-1401.
  (a) The governing body of any municipal corporation or quasi-municipal
corporation shall designate by official action recorded upon its minutes
the state and national banks, state and federally chartered savings and
loan associations and federally chartered savings banks with home offices
located in the state of Kansas which shall serve as depositories of its funds
and the officer and official having the custody of such funds shall not
deposit such funds other than at such designated banks, state or federally
chartered savings and loan associations and federally chartered savings
banks. The state and national banks, state and federally chartered savings
and loan associations and federally chartered savings banks which have
offices in the county or counties in which all or part of such municipal
corporation or quasi-municipal corporation is located shall be designated
as such official depositories if the municipal or quasi-municipal corpora-
tion can obtain satisfactory security therefor, and such official depositories
have a home office located in the state of Kansas.
  (b)  Every officer or person depositing public funds shall deposit all
such public funds coming into such officer or person's possession in their
name and official title as such officer. If the governing body of the mu-
nicipal corporation or quasi-municipal corporation fails to designate an
official depository or depositories, the officer thereof having custody of
its funds shall deposit such funds with one or more state or national banks,
state or federally chartered savings and loan associations or federally char-
tered savings banks which have offices in the county or counties in which
all or part of such municipal corporation or quasi-municipal corporation
is located if satisfactory security can be obtained therefor and if not then
elsewhere, but upon so doing shall serve notice in writing on the govern-
ing body showing the names and locations of such banks, state or federally
chartered savings and loan associations and federally chartered savings
banks where such funds are deposited, and upon so doing the officer
having custody of such funds shall not be liable for the loss of any portion
thereof except for official misconduct or for the misappropriation of such
funds by such officer.
  (c)  As used in this section and K.S.A. 9-1402, 9-1403 and 9-1405, and
amendments thereto, ``municipal corporation or quasi-municipal corpo-
ration'' includes each investing governmental unit under K.S.A. 12-1675,
and amendments thereto.
  Sec. 3.  K.S.A. 1996 Supp. 9-1402 is hereby amended to read as fol-
lows: 9-1402. (a) Before any deposit of public moneys or funds shall be
made by any municipal corporation or quasi-municipal corporation of the
state of Kansas with any state or national bank, state or federally chartered
savings and loan association or federally chartered savings bank, such
municipal or quasi-municipal corporation shall obtain security for such
deposit in one of the following manners prescribed by this section.
  (b)  Such bank, state or federally chartered savings and loan associa-
tion or federally chartered savings bank may give to the municipal cor-
poration or quasi-municipal corporation a personal bond in double the
amount which may be on deposit at any given time.
  (c)  Such bank, state or federally chartered savings and loan associa-
tion or federally chartered savings bank may give a corporate surety bond
of some surety corporation authorized to do business in this state, which
bond shall be in an amount equal to the public moneys or funds on deposit
at any given time and such bond shall be conditioned that such deposit
shall be paid promptly on the order of the municipal corporation or quasi-
municipal corporation making such deposits.
  (d)  Any state or national Such bank, state or federally chartered sav-
ings and loan association or federally chartered savings bank may deposit,
maintain, pledge and assign, or cause its agent, trustee or an affiliate bank
having identical ownership as the bank receiving the deposit of public
moneys or funds to deposit, maintain, pledge and assign, for the benefit
of the governing body of the municipal corporation or quasi-municipal
corporation in the manner provided in this act, securities owned by it
directly or indirectly through its agent or trustee holding securities on its
behalf, or owned by such affiliate bank, the market value of which is equal
to 100% of the total deposits at any given time, and such securities may
be accepted or rejected by the governing body of the municipal corpo-
ration or quasi-municipal corporation and shall consist of:
  (1)  Direct obligations of, or obligations that are insured as to principal
and interest by, the United States of America or any agency thereof and
obligations, including but not limited to letters of credit, and securities
of United States sponsored corporations which under federal law may be
accepted as security for public funds;
  (2)  bonds of any municipal corporation or quasi-municipal corpora-
tion of the state of Kansas which have been refunded in advance of their
maturity and are fully secured as to payment of principal and interest
thereon by deposit in trust, under escrow agreement with a bank, of direct
obligations of, or obligations the principal of and the interest on which
are unconditionally guaranteed by, the United States of America;
  (3)  bonds of the state of Kansas;
  (4)  general obligation bonds of any municipal corporation or quasi-
municipal corporation of the state of Kansas;
  (5)  revenue bonds of any municipal corporation or quasi-municipal
corporation of the state of Kansas if approved by the state bank commis-
sioner in the case of banks and by the savings and loan commissioner in
the case of savings and loan associations or federally chartered savings
banks;
  (6)  temporary notes of any municipal corporation or quasi-municipal
corporation of the state of Kansas which are general obligations of the
municipal or quasi-municipal corporation issuing the same;
  (7)  warrants of any municipal corporation or quasi-municipal corpo-
ration of the state of Kansas the issuance of which is authorized by the
state board of tax appeals and which are payable from the proceeds of a
mandatory tax levy;
  (8)  bonds of either a Kansas not-for-profit corporation or of a local
housing authority that are rated at least Aa by Moody's Investors Service
or AA by Standard & Poor's Corp.;
  (9)  bonds issued pursuant to K.S.A. 12-1740 et seq., and amendments
thereto, that are rated at least MIG-1 or Aa by Moody's Investors Service
or AA by Standard & Poor's Corp.;
  (10)  notes of a Kansas not-for-profit corporation that are issued to
provide only the interim funds for a mortgage loan that is insured by the
federal housing administration;
  (11)  bonds issued pursuant to K.S.A. 74-8901 through 74-8916, and
amendments thereto;
  (12)  bonds issued pursuant to K.S.A. 68-2319 through 68-2330, and
amendments thereto; or
  (13)  commercial paper that does not exceed 270 days to maturity and
which has received one of the two highest commercial paper credit ratings
by a nationally recognized investment rating firm; or
  (13) (14) (A)  negotiable promissory notes together with first lien
mortgages on one to four family residential real estate located in Kansas
securing payment of such notes when such notes or mortgages:
  (i)  Are underwritten by the federal national mortgage association, the
federal home loan mortgage corporation, the federal housing administra-
tion or the veterans administration standards; or are valued pursuant to
rules and regulations which shall be adopted by both the state bank com-
missioner and the savings and loan commissioner after having first being
submitted to and approved by both the state banking board under K.S.A.
9-1713, and amendments thereto, and the savings and loan board. Such
rules and regulations shall be published in only one place in the Kansas
administrative regulations as directed by the state rules and regulations
board;
  (ii)  have been in existence with the same borrower for at least two
years and with no history of any installment being unpaid for 30 days or
more; and
  (iii)  are valued at not to exceed 50% of the lesser of the following
three values: Outstanding mortgage balance; current appraised value of
the real estate; or discounted present value based upon current federal
national mortgage association or government national mortgage associa-
tion interest rates quoted for conventional, federal housing administration
or veterans administration mortgage loans.
  (B)  Securities under (A) shall be taken at their value for not more
than 50% of the security required under the provisions of this section.
  (C)  Securities under (A) shall be withdrawn immediately from the
collateral pool if any installment is unpaid for 30 days or more.
  (D)  A status report on all such loans shall be provided to the investing
governmental entity by the financial institution on a quarterly basis.
  (e)  No state or national such bank, state or federally chartered savings
and loan association or federally chartered savings bank may deposit and
maintain for the benefit of the governing body of a municipal or quasi-
municipal corporation of the state of Kansas, any securities which consist
of:
  (1)  Bonds secured by revenues of a utility which has been in opera-
tion for less than three years; or
  (2)  bonds issued under K.S.A. 12-1740 et seq., and amendments
thereto, unless such bonds have been refunded in advance of their ma-
turity as provided in subsection (d) or such bonds are rated at least Aa by
Moody's Investors Service or AA by Standard & Poor's Corp.
  (f)  Whenever a bond is authorized to be pledged as a security under
this section, such bond shall be accepted as a security if
  (1)  In the case of a certificated bond, it is assigned, delivered or
pledged to the holder of the deposit for security;
  (2)  in the case of an uncertificated bond, registration of a pledge of
the bond is authorized by the system and the pledge of the uncertificated
bond is registered; or
  (3)  in a form approved by the attorney general, which assures the
availability of the bond proceeds pledged as a security for public deposits.
  (g)  Any expense incurred in connection with granting approval of
revenue bonds shall be paid by the applicant for approval.
  Sec. 4.  K.S.A. 9-1403 is hereby amended to read as follows: 9-1403.
  (a) During the periods of peak deposits occurring at tax paying time and
tax distributing time and continuing for a period of not to exceed 60
continuous days at any given time and not to exceed 120 days in any
calendar year the amount of security for the deposit of public moneys as
required under K.S.A. 9-1402, and amendments thereto, may be reduced
by not more than 1/2 in an amount thereof.
  (b)  The provisions of this section shall apply only to the deposits of
all municipal corporations and quasi-municipal corporations, but the cus-
todian of the funds of each of such municipal corporations or quasi-mu-
nicipal corporations together with an officer of the depository state or
national bank, state or federally chartered savings and loan association or
federally chartered savings bank may enter into an agreement which des-
ignates in writing the beginning of each such sixty-day period, and a copy
thereof, fully executed, shall be kept on file in the office of the governing
body of such municipal corporation or quasi-municipal corporation and
in the files of such bank, state or federally chartered savings and loan
association or federally chartered savings bank.
  Sec. 5.  K.S.A. 1996 Supp. 9-1405 is hereby amended to read as fol-
lows: 9-1405. (a) All bonds and securities given by any bank, state or
federally chartered savings and loan association or federally chartered
savings bank to secure public moneys of the United States or any board,
commission or agency thereof, shall be deposited as required by the
United States government or any of its designated agencies.
  (b)  All bonds and securities pledged to secure the deposits of any
municipal corporation or quasi-municipal corporation shall be deposited
with a bank, or trust company, or national bank authorized to do business
in Kansas incorporated under the laws of this state or any other state
having adequate modern facilities for the safekeeping of securities, the
federal reserve bank of Kansas City, the federal home loan bank of To-
peka or with the state treasurer, and a joint custody receipt taken therefor
with one copy going to the municipal corporation or quasi-municipal cor-
poration making the public deposit and one copy going to the bank, state
or federally chartered savings and loan association or federally chartered
savings bank which has secured such public deposits. This section shall
not prohibit any custodial bank receiving securities for safekeeping from
issuing a joint custody receipt and placing those securities in such bank's
account with any bank chartered in Kansas or any other state, any trust
company chartered in Kansas or any other state, any national bank, or
any centralized securities depository wherever located within the United
States. No bonds or securities pledged to secure public deposits shall be
left for safekeeping in any bank, trust company, or national bank which
is owned directly or indirectly by any parent corporation of the depository
bank, or with any bank, trust company, or national bank, having common
controlling shareholders, having a common majority of the board of di-
rectors or having common directors with the ability to control or influence
directly or indirectly the acts or policies of the bank, state or federally
chartered savings and loan association or federally chartered savings bank
securing such public deposits.  When bonds and securities are deposited
with the state treasurer as authorized by this subsection, the state treas-
urer shall make a charge for such service which is equivalent to the rea-
sonable and customary charge made therefor.
  (c)  All such bonds and securities shall be deposited under a joint
custody receipt issued by a bank or trust company within the state of
Kansas or the federal reserve bank of Kansas City, the federal home loan
bank of Topeka or with the state treasurer. All bonds or securities held
by any depository and for which a joint custody receipt has been issued
shall be retained by such depository and not released except upon consent
of both the municipal corporation or quasi-municipal corporation making
the deposit and the bank, state or federally chartered savings and loan
association or federally chartered savings bank taking or securing such
deposit. In every report required to be published by any bank, state or
federally chartered savings and loan association or federally chartered
savings bank it shall show in full all of the assets pledged or deposited as
security for public moneys.
  (d)  A bank, state or federally chartered savings and loan association
or federally chartered savings bank which fails to pay according to its
terms any deposit of public moneys of any municipal or quasi-municipal
corporation shall immediately take such actions as are required to enable
bonds and securities pledged to secure such deposit to be sold to satisfy
its obligation to the municipal or quasi-municipal corporation.
  (e)  As used in this section: ``Centralized securities depository'' means
a clearing agency registered with the securities and exchange commission
which provides safekeeping and book-entry settlement services to its par-
ticipants.
  Sec. 6.  K.S.A. 9-1406 is hereby amended to read as follows: 9-1406.
No public officer nor the sureties upon such officer's bond shall be liable
for any loss sustained by the failure or default of any designated depository
or depositories after a deposit or deposits have been made in an officially
designated bank, state or federally chartered savings and loan association
or federally chartered savings bank as provided in this act. This exemption
from liability shall apply even though other statutes shall require the fur-
nishing of a bond or other securities by the designated depositories of
public moneys.
  Sec. 7.  K.S.A. 9-1407 is hereby amended to read as follows: 9-1407.
That portion of any deposit of public moneys or funds which is insured
by the federal deposit insurance corporation, or its successor, or the fed-
eral savings and loan insurance corporation, or its successor, need not be
secured as provided in this act.
  Sec. 8.  K.S.A. 1996 Supp. 12-1675 is hereby amended to read as
follows: 12-1675. (a) The governing body of any county, city, township,
school district, area vocational-technical school, community college, fi-
remen's relief association, community mental health center, community
facility for the mentally retarded or any other governmental entity, unit
or subdivision in the state of Kansas having authority to receive, hold and
expend public moneys or funds may invest any moneys which are not
immediately required for the purposes for which the moneys were col-
lected or received, and the investment of which is not subject to or reg-
ulated by any other statute.
  (b)  Such moneys shall be invested only:
  (1)  In temporary notes or no-fund warrants issued by such investing
governmental unit;
  (2)  in time deposit, open accounts or, certificates of deposit with ma-
turities of not more than two years: (A) In commercial banks which have
offices located in such investing governmental unit; or (B) if the office of
no commercial bank is located in such investing governmental unit, then
in commercial banks or time certificates of deposit with maturities of not
more than two years: (A) In banks, savings and loan associations and
savings banks, as defined in section 1, which have offices located in such
investing governmental unit; or (B) if no office of a bank, savings and loan
association or savings bank, as defined in section 1, is located in such
investing governmental unit, then in banks, savings and loan associations
and savings banks, as defined in section 1, which have offices in the county
or counties in which all or part of such investing governmental unit is
located;
  (3)  in time certificates of deposit with maturities of not more than
two years: (A) With state or federally chartered savings and loan associ-
ations or federally chartered savings banks which have offices located in
such investing governmental unit; or (B) if the office of no state or fed-
erally chartered savings and loan association or federally chartered savings
bank is located in such governmental unit, then with state or federally
chartered savings and loan associations or federally chartered savings
banks which have offices in the county or counties in which all or part of
such investing governmental unit is located;
  (4) (3)  in repurchase agreements with: (A) Commercial banks, state
or federally chartered savings and loan associations or federally chartered
savings banks Banks, savings and loan associations and savings banks, as
defined in section 1, which have offices located in such investing govern-
mental unit, for direct obligations of, or obligations that are insured as to
principal and interest by, the United States government or any agency
thereof; or (B) (i) if the office of no commercial bank, state or federally
chartered savings and loan association or federally chartered savings bank
no office of a bank, savings and loan association or savings bank, as de-
fined in section 1, is located in such investing governmental unit; or (ii)
if no commercial such bank, state or federally chartered savings and loan
association or federally chartered savings bank has having an office lo-
cated in such investing governmental unit is willing to enter into such an
agreement with the investing governmental unit at an interest rate equal
to or greater than the investment rate, as defined in subsection (l) (j) of
K.S.A. 75-4201, and amendments thereto, then such repurchase agree-
ments may be entered into with commercial banks, state or federally
chartered savings and loan associations or federally chartered savings
banks, as defined in section 1, which have offices in the county or counties
in which all or part of such investing governmental unit is located; or (C)
if no bank, state or federally chartered savings and loan association or
federally chartered savings bank which has its, as defined in section 1,
having an office in such county or counties is willing to enter into such
an agreement with the investing governmental unit at an interest rate
equal to or greater than the investment rate, as defined in subsection (l)
(j) of K.S.A. 75-4201, and amendments thereto, then such repurchase
agreements may be entered into with commercial banks, state or federally
chartered savings and loan associations or federally chartered savings
banks which have offices in the state of Kansas, as defined in section 1;
  (5) (4)  in United States treasury bills or notes with maturities as the
governing body shall determine, but not exceeding two years. Such in-
vestment transactions shall only be conducted with the following, which
is doing business within the state of Kansas, any state or national bank,
state or federally chartered savings and loan association, or federally char-
tered savings bank banks, savings and loan associations and savings
banks, as defined in section 1; the federal reserve bank of Kansas City,
Missouri; or with primary government securities dealers which report to
the market report division of the federal reserve bank of New York, or
any broker-dealer engaged in the business of selling government securi-
ties which is registered in compliance with the requirements of section
15 or 15C of the securities exchange act of 1934 and registered pursuant
to K.S.A. 17-1254, and amendments thereto;
  (6) (5)  in the municipal investment pool fund established in K.S.A.
1996 Supp. 12-1677a, and amendments thereto;
  (7) (6)  in the investments authorized and in accordance with the con-
ditions prescribed in K.S.A. 1996 Supp. 12-1677b, and amendments
thereto; or
  (8) (7)  in multiple municipal client investment pools managed by the
trust departments of commercial banks, as defined in section 1, which
have offices located in the county or counties where such investing gov-
ernmental unit is located or with trust companies incorporated under the
laws of this state which have contracted to provide trust services under
the provisions of K.S.A. 9-2107, and amendments thereto, with commer-
cial banks, as defined in section 1, which have offices located in the county
or counties in which such investing governmental unit is located. Public
moneys invested under this paragraph shall be secured in the same man-
ner as provided for under K.S.A. 9-1402, and amendments thereto.
Pooled investments of public moneys made by trust departments under
this paragraph shall be subject to the same terms, conditions and limita-
tions as are applicable to the municipal investment pool established by
K.S.A. 1996 Supp. 12-1677a, and amendments thereto.
  (c)  The investments authorized in paragraphs (4), (5), (6), or (7) or
  (8) of subsection (b) shall be utilized only if the appropriate eligible com-
mercial banks, which have offices located in the investing governmental
unit or in the county or counties in which all or a part of such investing
governmental unit is located if no such bank has an office which is located
within such governmental unit, or the appropriate eligible state or fed-
erally chartered savings and loan associations or federally chartered sav-
ings banks, which have offices located in the investing governmental unit
or in the county or counties in which all or a part of such investing gov-
ernmental unit is located if no such state or federally chartered savings
and loan association or federally chartered savings bank has an office
which is located within such governmental unit banks, savings and loan
associations and savings banks eligible for investments authorized in par-
agraph (2) of subsection (b), cannot or will not make the investments
authorized in paragraph (2) or (3) of subsection (b) available to the in-
vesting governmental unit at interest rates equal to or greater than the
investment rate, as defined in subsection (l) (j) of K.S.A. 75-4201, and
amendments thereto.
  (d)  In selecting a depository pursuant to paragraph (2) or (3) of sub-
section (b), if a commercial bank, state or federally chartered savings and
loan association or federally chartered savings bank eligible for an invest-
ment deposit thereunder has an office located in the investing govern-
mental unit and such financial institution will make such deposits available
to the investing governmental unit at interest rates equal to or greater
than the investment rate, as defined in subsection (l) (j) of K.S.A. 75-
4201, and amendments thereto, and such financial institution otherwise
qualifies for such deposit, the investing governmental unit shall select one
or more of such eligible financial institutions for deposit of funds pursuant
to this section. If no such financial institution qualifies for such deposits,
the investing governmental unit shall select for such deposits one or more
commercial eligible banks, state or federally chartered savings and loan
associations or federally chartered savings banks which have offices in the
county or counties in which all or a part of such investing governmental
unit is located which will make such deposits available to the investing
governmental unit at interest rates equal to or greater than the investment
rate, as defined in subsection (l) (j) of K.S.A. 75-4201, and amendments
thereto, and which otherwise qualify for such deposits.
  (e) (1)  All security purchases and repurchase agreements shall occur
on a delivery versus payment basis.
  (2)  All securities, including those acquired by repurchase agreements,
shall be perfected in the name of the investing governmental unit and
shall be delivered to the purchaser or a third-party custodian which may
be the state treasurer.
  Sec. 9.  K.S.A. 12-1676 is hereby amended to read as follows: 12-
1676. Except as otherwise provided in K.S.A. 12-1678a, and amendments
thereto, the provisions of this act authorizing the investment of moneys
shall not apply to moneys collected or received by a county for appor-
tionment, credit or distribution to the state or any political subdivision
thereof. Interest paid by commercial eligible banks, savings and loan as-
sociations and savings banks on time deposit, open accounts, time certif-
icates of deposit and certificates of deposit of investing governmental units
and by state or federally chartered savings and loan associations or fed-
erally chartered savings banks on time certificates of deposit of investing
governmental units shall be at rates agreed upon by the governmental
units and the eligible banks, state or federally chartered savings and loan
associations or federally chartered savings banks.
  Sec. 10.  K.S.A. 1996 Supp. 12-1677a is hereby amended to read as
follows: 12-1677a. (a) Moneys deposited by any municipality with the
state treasurer for investment authorized in paragraph (6) (5) of subsec-
tion (b) of K.S.A. 12-1675, and amendments thereto, shall be deposited
in the municipal investment pool fund which is hereby created in the
state treasury. The state treasurer shall provide the board a monthly rec-
ord of the deposits and withdrawals of municipalities. Such record may
include the amount of the deposit, the date of the deposit and such other
information as the pooled money investment board may require.
  (b)  The director of investments may invest and reinvest moneys in
the municipal investment pool fund in accordance with investment poli-
cies established by the pooled money investment board under K.S.A. 75-
4232, and amendments thereto, and in accordance with K.S.A. 1996
Supp. 75-4234 and K.S.A. 75-4209, and amendments thereto.
  (c)  The director of investments shall apportion earnings and losses
among the accounts of the depositors in the various investment options
of the municipal investment pool in accordance with policies approved
and published by the board. A statement for each municipality partici-
pating unit account showing deposits, withdrawals, earnings and losses
distributions shall be provided monthly to the municipality. The director
of investments shall make comprehensive reports monthly to those mu-
nicipalities participating in the municipal investment pool fund and to
other interested parties requesting such reports. Such reports shall in-
clude a summary of transactions for the month, the current market value
of the pooled money investment portfolio investments, the weighted av-
erage maturity of the portfolio, the original costs of the investments in
the portfolio, including any fees associated with such investments and
such other relevant information the director of investments may wish to
include in such report.
  (d)  The municipal investment pool reserve fund is abolished effective
July 1, 1996, and any unencumbered balance remaining therein shall be
applied to net losses in the municipal investment pool fund. The munic-
ipal investment pool fund fee fund is abolished on July 1, 1997, and any
unencumbered balance remaining therein shall be transferred to the
pooled money investment portfolio fee fund and such amounts shall be
applied to net losses, as of July 1, 1996, in the municipal investment pool
fund.
  (e)  The pooled money investment board may adopt rules and regu-
lations necessary for the administration and operation of the municipal
investment pool fund and may enter into agreements with any munici-
pality as to methods of deposits, withdrawals and investments.
  (f)  Deposits in the municipal investment pool fund: (1) May only be
made for the same maturity as the maturity which is offered under par-
agraphs (2) and (3) paragraph (2) of subsection (b) of K.S.A. 12-1675 and
amendments thereto; and (2) upon the maturity of such deposits, such
moneys shall be offered for investment under paragraphs (2) or (3) par-
agraph (2) of subsection (b) of K.S.A. 12-1675, and amendments thereto,
and may be reinvested in such fund only if the conditions contained in
subsection (c) of K.S.A. 12-1675, and amendments thereto, have been
satisfied.
  (g)  Moneys and investments in the municipal investment pool fund
shall be managed by the pooled money investment board in accordance
with investment policies provided for in K.S.A. 75-4209, and amendments
thereto. A copy of such published policies shall be distributed to all mu-
nicipalities participating in the municipal investment pool fund and to
other interested persons requesting a copy of such policies. The pooled
money investment board shall not contract for management of invest-
ments by a money manager.
  (h)  For the purpose of this section, ``municipality'' means those en-
tities specified in subsection (a) of K.S.A. 12-1675, and amendments
thereto, and K.S.A. 1996 Supp. 75-4263, and amendments thereto.
  Sec. 11.  K.S.A. 1996 Supp. 12-1677b is hereby amended to read as
follows: 12-1677b. (a) The governing body of any city or county which
has a written investment policy approved by the governing body of such
city or county and approved by the pooled money investment board may
invest and reinvest pursuant to the approved investment policy in the
following investments, as authorized under paragraph (7) (6) of subsec-
tion (b) of K.S.A. 12-1675, and amendments thereto:
  (1)  Direct obligations of, or obligations that are insured as to principal
and interest by, the United States of America or any agency thereof and
obligations and securities of United States sponsored enterprises which
under federal law may be accepted as security for public funds, except
that such investments shall not be in mortgage-backed securities;
  (2)  interest-bearing time deposits in any of the following, which is
doing business within the state of Kansas, any state or national bank, state
or federally chartered savings and loan association, or federally chartered
savings bank banks, savings and loan associations and savings banks, as
defined in section 1; or
  (3)  repurchase agreements with a Kansas bank, savings and loan as-
sociation, a federally chartered savings bank banks, savings and loan as-
sociations and savings banks, as defined in section 1, or with a primary
government securities dealer which reports to the market reports division
of the federal reserve bank of New York for direct obligations of, or
obligations that are insured as to principal and interest by, the United
States government or any agency thereof and obligations and securities
of United States government sponsored enterprises which under federal
law may be accepted as security for public funds.
  (b)  The investment policy of any city or county approved by the
pooled money investment board under this section shall be reviewed and
approved at least annually by such board or when such city or county
makes changes in such investment policy.
  (c)  City and county investment policies shall address liquidity, diver-
sification, safety of principal, yield, maturity and quality, and capability of
investment management staff.
  (d) (1)  All security purchases shall occur on a delivery versus pay-
ment basis.
  (2)  All securities shall be perfected in the name of the city or county
and shall be delivered to the purchaser or a third party custodian which
may be the state treasurer.
  (3)  Investment transactions shall only be conducted with the follow-
ing, which is doing business within the state of Kansas, any state or na-
tional bank, state or federally chartered savings and loan association, or
federally chartered savings bank banks, savings and loan associations and
savings banks, as defined in section 1; or with primary government se-
curities dealers which report to the market report division of the federal
reserve bank of New York; or any broker-dealer which is registered in
compliance with the requirements of section 15C of the securities
exchange act of 1934 and registered pursuant to K.S.A. 17-1254, and
amendments thereto.
  (4)  The maximum maturity for investments under subsection (a) shall
be four years.
  (e)  Investments in securities under paragraph (1) of subsection (a)
shall be limited to securities which do not have any more interest rate
risk than do direct United States government obligations of similar ma-
turities. For purposes of this subsection, ``interest rate risk'' means market
value changes due to changes in current interest rates.
  (f)  A city or county which violates subsection (c) or (d) of K.S.A. 12-
1675 and amendments thereto or the rules and regulations of the pooled
money investment board shall forfeit its rights under this section for a
two year period and shall be reinstated only after a complete review of
its investment policy as provided for in subsection (b). Such forfeiture
shall be determined by the pooled money investment board after notice
and opportunity to be heard in accordance with the Kansas administrative
procedure act.
  Sec. 12.  K.S.A. 17-5002 is hereby amended to read as follows: 17-
5002. (a) Administrators, executors, conservators, trustees, insurance
companies and other financial institutions, charitable, educational, elee-
mosynary corporations and organizations are authorized, in addition to
investments now authorized by law, to invest funds which they are au-
thorized by law to invest, in shares or savings deposits of federally insured
savings and loan associations or federally chartered savings banks with
home main offices in the state of Kansas and in credit unions which are,
in whole or in part, insured with an insurer or guarantee corporation as
required under K.S.A. 17-2246, and amendments thereto, and such in-
vestment shall be deemed and held to be legal investments for such funds.
  (b)  The governing body of any municipal corporation or quasi-mu-
nicipal corporation, county, township, school district, area vocational-
technical school, community college, firemen's relief association, com-
munity mental health center, community facility for the mentally retarded
or any other governmental entity, unit or division in the state of Kansas
having authority to receive, hold and expend public moneys or funds may
invest the same in state or federally chartered savings and loan associa-
tions incorporated under the laws of this state or any other state, and
savings and loan associations or federally chartered savings banks organ-
ized under the laws of the United States with home offices in the state of
Kansas subject to and as provided by K.S.A. 9-1401, 9-1402, 9-1405, 9-
1407, 12-1675 and 12-1676 and amendments to such sections thereto.
  Sec. 13.  K.S.A. 9-1401, 9-1403, 9-1406, 9-1407, 12-1676 and 17-5002
and K.S.A. 1996 Supp. 9-1402, 9-1405, 12-1675, 12-1677a and 12-1677b
are hereby repealed.
  Sec. 14.  This act shall take effect and be in force from and after its
publication in the statute book.