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14  AN ACT relating to public moneys; providing for the establishment of
15    market rates for state moneys; concerning bidding for investment ac-
16    counts of state moneys by banks; amending K.S.A. 68-2060 and K.S.A.
17    1996 Supp. 12-1675, [12-1677d,] 75-4201, 75-4208, 75-4209, 75-
18    4210, 75-4212a[, 75-4221a] and 75-4263 and repealing the existing
19    sections.
20
21  Be it enacted by the Legislature of the State of Kansas:
22    New Section 1.  (a) The director of investments shall accept requests
23  from banks interested in obtaining investment accounts of state moneys.
24  Such requests shall may be submitted by 9:00 a.m. any business day and
25  shall specify the dollar amount, maturity or maturity range and interest
26  rate. If the interest rate bid by the bank is at or greater than the market
27  rate determined by the director of investments in accordance with section
28  2 subsection (b), the director of investments is authorized to award the
29  investment account to the bidding bank at the market rate. Awards of
30  investment accounts pursuant to this section shall be subject to invest-
31  ment policies of the pooled money investment board. When multiple bids
32  are received and are in excess of the amount available for investment that
33  day for any maturity, awards shall be made available in ascending order
34  from smallest to largest dollar amount bid, subject to investment policies
35  of the board.
36    New Sec. 2.  As used in this act, ``market rate'' means a rate (b)  The
37  market rate shall be determined each business day by the director of
38  investments, in accordance with any procedures established by the pooled
39  money investment board. Subject to any policies of the board, the market
40  rate shall reflect the highest rate at which state moneys can be invested
41  on the open market in investments authorized by subsection (a) of K.S.A.
42  75-4209 and amendments thereto for equivalent maturities.
43    Sec. 3 2.  K.S.A. 1996 Supp. 12-1675 is hereby amended to read as
SB 238--Am. by H
                                     

 1  follows: 12-1675. (a) The governing body of any county, city, township,
 2  school district, area vocational-technical school, community college, fi-
 3  remen's relief association, community mental health center, community
 4  facility for the mentally retarded or any other governmental entity, unit
 5  or subdivision in the state of Kansas having authority to receive, hold and
 6  expend public moneys or funds may invest any moneys which are not
 7  immediately required for the purposes for which the moneys were col-
 8  lected or received, and the investment of which is not subject to or reg-
 9  ulated by any other statute.
10    (b)  Such moneys shall be invested only:
11    (1)  In temporary notes or no-fund warrants issued by such investing
12  governmental unit;
13    (2)  in time deposit, open accounts or certificates of deposit with ma-
14  turities of not more than two years: (A) In commercial banks which have
15  offices located in such investing governmental unit; or (B) if the office of
16  no commercial bank is located in such investing governmental unit, then
17  in commercial banks which have offices in the county or counties in which
18  all or part of such investing governmental unit is located;
19    (3)  in time certificates of deposit with maturities of not more than
20  two years: (A) With state or federally chartered savings and loan associ-
21  ations or federally chartered savings banks which have offices located in
22  such investing governmental unit; or (B) if the office of no state or fed-
23  erally chartered savings and loan association or federally chartered savings
24  bank is located in such governmental unit, then with state or federally
25  chartered savings and loan associations or federally chartered savings
26  banks which have offices in the county or counties in which all or part of
27  such investing governmental unit is located;
28    (4)  in repurchase agreements with: (A) Commercial banks, state or
29  federally chartered savings and loan associations or federally chartered
30  savings banks which have offices located in such investing governmental
31  unit, for direct obligations of, or obligations that are insured as to principal
32  and interest by, the United States government or any agency thereof; or
33  (B) (i) if the office of no commercial bank, state or federally chartered
34  savings and loan association or federally chartered savings bank is located
35  in such investing governmental unit; or (ii) if no commercial bank, state
36  or federally chartered savings and loan association or federally chartered
37  savings bank has an office located in such investing governmental unit is
38  willing to enter into such an agreement with the investing governmental
39  unit at an interest rate equal to or greater than the investment rate, as
40  defined in subsection (l) of K.S.A. 75-4201, and amendments thereto (f),
41  then such repurchase agreements may be entered into with commercial
42  banks, state or federally chartered savings and loan associations or fed-
43  erally chartered savings banks which have offices in the county or counties
SB 238--Am. by H
                                     

 1  in which all or part of such investing governmental unit is located; or (C)
 2  if no bank, state or federally chartered savings and loan association or
 3  federally chartered savings bank which has its office in such county or
 4  counties is willing to enter into such an agreement with the investing
 5  governmental unit at an interest rate equal to or greater than the invest-
 6  ment rate, as defined in subsection (l) of K.S.A. 75-4201, and amend-
 7  ments thereto (f), then such repurchase agreements may be entered into
 8  with commercial banks, state or federally chartered savings and loan as-
 9  sociations or federally chartered savings banks which have offices in the
10  state of Kansas;
11    (5)  in United States treasury bills or notes with maturities as the gov-
12  erning body shall determine, but not exceeding two years. Such invest-
13  ment transactions shall only be conducted with the following, which is
14  doing business within the state of Kansas, any state or national bank, state
15  or federally chartered savings and loan association, or federally chartered
16  savings bank; the federal reserve bank of Kansas City, Missouri; or with
17  primary government securities dealers which report to the market report
18  division of the federal reserve bank of New York, or any broker-dealer
19  engaged in the business of selling government securities which is regis-
20  tered in compliance with the requirements of section 15 or 15C of the
21  securities exchange act of 1934 and registered pursuant to K.S.A. 17-1254,
22  and amendments thereto;
23    (6)  in the municipal investment pool fund established in K.S.A. 1996
24  Supp. 12-1677a, and amendments thereto;
25    (7)  in the investments authorized and in accordance with the condi-
26  tions prescribed in K.S.A. 1996 Supp. 12-1677b, and amendments
27  thereto; or
28    (8)  in multiple municipal client investment pools managed by the
29  trust departments of commercial banks which have offices located in the
30  county or counties where such investing governmental unit is located or
31  with trust companies which have contracted to provide trust services un-
32  der the provisions of K.S.A. 9-2107, and amendments thereto, with com-
33  mercial banks which have offices located in the county or counties in
34  which such investing governmental unit is located. Public moneys in-
35  vested under this paragraph shall be secured in the same manner as pro-
36  vided for under K.S.A. 9-1402, and amendments thereto. Pooled invest-
37  ments of public moneys made by trust departments under this paragraph
38  shall be subject to the same terms, conditions and limitations as are ap-
39  plicable to the municipal investment pool established by K.S.A. 1996
40  Supp. 12-1677a, and amendments thereto.
41    (c)  The investments authorized in paragraphs (5), (6), (7) or (8) of
42  subsection (b) shall be utilized only if the appropriate eligible commercial
43  banks, which have offices located in the investing governmental unit or
SB 238--Am. by H
                                     

 1  in the county or counties in which all or a part of such investing govern-
 2  mental unit is located if no such bank has an office which is located within
 3  such governmental unit, or the appropriate eligible state or federally char-
 4  tered savings and loan associations or federally chartered savings banks,
 5  which have offices located in the investing governmental unit or in the
 6  county or counties in which all or a part of such investing governmental
 7  unit is located if no such state or federally chartered savings and loan
 8  association or federally chartered savings bank has an office which is lo-
 9  cated within such governmental unit, cannot or will not make the invest-
10  ments authorized in paragraph (2) or (3) of subsection (b) available to the
11  investing governmental unit at interest rates equal to or greater than the
12  investment rate, as defined in subsection (l) of K.S.A. 75-4201, and
13  amendments thereto (f).
14    (d)  In selecting a depository pursuant to paragraph (2) or (3) of sub-
15  section (b), if a commercial bank, state or federally chartered savings and
16  loan association or federally chartered savings bank has an office located
17  in the investing governmental unit and such financial institution will make
18  such deposits available to the investing governmental unit at interest rates
19  equal to or greater than the investment rate, as defined in subsection (l)
20  of K.S.A. 75-4201, and amendments thereto (f), and such financial insti-
21  tution otherwise qualifies for such deposit, the investing governmental
22  unit shall select one or more of such financial institutions for deposit of
23  funds pursuant to this section. If no such financial institution qualifies for
24  such deposits, the investing governmental unit shall select for such de-
25  posits one or more commercial banks, state or federally chartered savings
26  and loan associations or federally chartered savings banks which have
27  offices in the county or counties in which all or a part of such investing
28  governmental unit is located which will make such deposits available to
29  the investing governmental unit at interest rates equal to or greater than
30  the investment rate, as defined in subsection (l) of K.S.A. 75-4201, and
31  amendments thereto (f), and which otherwise qualify for such deposits.
32    (e) (1)  All security purchases and repurchase agreements shall occur
33  on a delivery versus payment basis.
34    (2)  All securities, including those acquired by repurchase agreements,
35  shall be perfected in the name of the investing governmental unit and
36  shall be delivered to the purchaser or a third-party custodian which may
37  be the state treasurer.
38    (f)  As used in this section, ``investment rate'' means a rate which is
39  the equivalent yield for United States government securities having a ma-
40  turity date as published in the Wall Street Journal, nearest the maturity
41  date for equivalent maturities. The 0-90 day rate shall be computed on
42  the average effective federal funds rate as published by the federal reserve
43  system for the previous week.
SB 238--Am. by H
                                     

 1    [Sec. 3.  K.S.A. 1996 Supp. 12-1677d is hereby amended to read
 2  as follows: 12-1677d. (a) As used in this act:
 3    [(1)  ``Municipality'' means any city, county or other political or
 4  taxing subdivision of the state.
 5    [(2)  ``Foundation'' means any not for profit charitable or elee-
 6  mosynary corporation established by a municipality which is ex-
 7  empt from taxation pursuant to section 501(c)(3) of the internal revenue
 8  code and which has been in existence at least 15 years. Any such
 9  foundation is hereby deemed to be a public body.
10    [(b)  The board of directors of any foundation shall invest the
11  funds held by such foundation which are not required immediately
12  for the purposes of the foundation in the manner provided by this
13  section:
14    [(1)  Any funds in an amount equal to 110% of the average an-
15  nual expenses of the foundation for the next preceding five years
16  may be invested in the manner provided by K.S.A. 12-1675, and
17  amendments thereto. If funds in the amount required by this par-
18  agraph are available from the municipality which established the
19  foundation, the foundation may invest all of its funds in the manner
20  provided in paragraph (2).
21    [(2)  Any funds exceeding the amount described in paragraph (1)
22  may be invested in such investments that may be lawful for fidu-
23  ciaries in this state and also may be invested in such investments as
24  would be lawful for a private corporation or other foundation hav-
25  ing purposes similar to the foundation. No moneys derived pursuant
26  to any tax may be invested under this paragraph.
27    [(c)  Nothing in this act shall effect the status of the foundation
28  as a municipal entity.
29    [(d)  The provisions of this section shall apply to foundations whether
30  created before or after the effective date of this act. Any investment of
31  funds by a foundation prior to July 1, 1997, which would have complied
32  with the provisions of this section, as amended by this act, are hereby
33  validated.]
34    Sec. 4 3 [4].  K.S.A. 68-2060 is hereby amended to read as follows:
35  68-2060. All moneys received pursuant to the authority of this act,
36  whether as proceeds from the sale of bonds or as revenues or otherwise,
37  shall be deemed to be trust funds to be held and applied solely as provided
38  in this act. Any officer with whom, or any bank or trust company with
39  which, such moneys shall be deposited shall act as trustee of such moneys
40  and shall hold and apply the same for the purposes hereof, subject to
41  such regulations as this act and the resolution authorizing the bonds or
42  the trust agreement securing such bonds may provide. Trust funds re-
43  ceived pursuant to this act may be invested as determined by the authority
SB 238--Am. by H
                                     

 1  with banks authorized to do business in Kansas at rates of interest not
 2  less than the investment rate, as defined in subsection (1) of K.S.A. 75-
 3  4201 (f) of K.S.A. 12-1675, and amendments thereto or in direct obliga-
 4  tions of the United States or in obligations that are fully guaranteed as to
 5  principal and interest by the United States.
 6    Sec. 5 4 [5].  K.S.A. 1996 Supp. 75-4201 is hereby amended to read
 7  as follows: 75-4201. As used in this act, unless the context otherwise re-
 8  quires:
 9    (a)  ``Treasurer'' means state treasurer.
10    (b)  ``Controller'' means director of accounts and reports.
11    (c)  ``Board'' means the pooled money investment board.
12    (d)  ``Bank'' means a state bank incorporated under the laws of Kansas
13  or a national bank having such bank's home office within the state of
14  Kansas.
15    (e)  ``State moneys'' means all moneys in the treasury of the state or
16  coming lawfully into the possession of the treasurer.
17    (f)  ``State bank account'' means state moneys or fee agency account
18  moneys deposited in accordance with the provisions of this act.
19    (g)  ``Operating account'' means a state bank account which is payable
20  or withdrawable, in whole or in part, on demand.
21    (h)  ``Investment account'' means a state bank account which is not
22  payable on demand.
23    (i)  ``Market rate'' means the average of the average equivalent yields,
24  with equivalent maturities, of: (1) United States government securities;
25  and (2) debt obligations of the following United States government agen-
26  cies, federal home loan banks, federal national mortgage association and
27  federal farm credit bank.
28    (j)  ``Investment rate'' means a rate which is the equivalent yield for
29  United States government securities having a maturity date as published
30  in the Wall Street Journal, nearest the maturity date for equivalent ma-
31  turities.  The 0-90 day rate shall be computed on the average effective
32  federal funds rate as published by the federal reserve system for the
33  previous week.
34    (k) (i)  ``Fee agency account'' means a state bank account of any state
35  agency consisting of fees, tuition or charges authorized by law prior to
36  remittance to the state treasurer.
37    (l) (j)  ``Disbursement'' means a payment of any kind whatsoever made
38  from the state treasury or from any operating account, except transfer of
39  moneys between or among operating accounts and investment accounts
40  or either or both of them.
41    (m) (k)  ``Securities'' means, for the purposes of K.S.A. 75-4218, and
42  amendments thereto, any one or more of the following, which may be
43  accepted or rejected by the pooled money investment board:
SB 238--Am. by H
                                     

 1    (1)  Direct obligations of, or obligations that are insured as to principal
 2  and interest by, the United States government or any agency thereof and
 3  obligations, letters of credit and securities of United States sponsored
 4  enterprises which under federal law may be accepted as security for pub-
 5  lic funds.
 6    (2)  Kansas municipal bonds which are general obligations of the mu-
 7  nicipality issuing the same.
 8    (3)  Revenue bonds of any agency or arm of the state of Kansas.
 9    (4)  Revenue bonds of any municipality, as defined by K.S.A. 10-101,
10  and amendments thereto, within the state of Kansas or bonds issued by
11  a public building commission as authorized by K.S.A. 12-1761, and
12  amendments thereto, if approved by the state bank commissioner, except
13  (A) bonds issued under the provisions of K.S.A. 12-1740 et seq., and
14  amendments thereto, unless such bonds are rated at least MIG-1 or Aa
15  by Moody's Investors Service or AA by Standard & Poor's Corp. and (B)
16  bonds secured by revenues of a utility which has been in operation for
17  less than three years. Any expense incurred in connection with granting
18  approval of revenue bonds shall be paid by the applicant for approval.
19    (5)  Temporary notes of any municipal corporation or quasi-municipal
20  corporation within the state of Kansas which are general obligations of
21  the municipal corporation or quasi-municipal corporation issuing the
22  same.
23    (6)  Warrants of any municipal corporation or quasi-municipal cor-
24  poration within the state of Kansas the issuance of which is authorized
25  by the state board of tax appeals and which are payable from the proceeds
26  of a mandatory tax levy.
27    (7)  Bonds of any municipal or quasi-municipal corporation of the
28  state of Kansas which have been refunded in advance of their maturity
29  and are fully secured as to payment of principal and interest thereon by
30  deposit in trust, under escrow agreement with a bank, of direct obligations
31  of, or obligations the principal of and the interest on which are uncon-
32  ditionally guaranteed by, the United States of America. A copy of such
33  escrow agreement shall be furnished to the treasurer.
34    (8)  Securities listed in paragraph (13) of subsection (d) of K.S.A. 9-
35  1402 and amendments thereto within limitations of K.S.A. 9-1402 and
36  amendments thereto.
37    (9)  A corporate surety bond guaranteeing deposits in a bank, savings
38  or savings and loan association in excess of federal deposit insurance cor-
39  poration insurance, underwritten by an insurance company authorized to
40  do business in the state of Kansas.
41    (10)  Commercial paper that does not exceed 270 days to maturity
42  and which has received one of the two highest commercial paper credit
43  ratings by a nationally recognized investment rating firm.
SB 238--Am. by H
                                     

 1    (11)  All of such securities shall be current as to interest according to
 2  the terms thereof.
 3    (12)  Whenever a bond is authorized to be pledged as a security under
 4  this section, such bond shall be accepted as a security if: (i) In the case
 5  of a certificated bond, it is assigned, delivered or pledged to the holder
 6  of the deposit for security; (ii) in the case of an uncertificated bond,
 7  registration of a pledge of the bond is authorized by the system and the
 8  pledge of the uncertificated bond is registered; or (iii) in a form approved
 9  by the attorney general, which assures the availability of the bond pro-
10  ceeds pledged as a security for public deposits.
11    (n) (l)  ``Savings bank'' means a federally chartered savings bank in-
12  sured by the federal deposit insurance corporation and doing business
13  within the state of Kansas.
14    (o) (m)  ``Savings and loan association'' means a state or federally char-
15  tered savings and loan association insured by the federal deposit insurance
16  corporation and doing business within the state of Kansas.
17    (p) (n)  ``Custodial bank'' means a bank designated to keep safely col-
18  lateral pledged as security for state bank accounts.
19    (q) (o)  ``Centralized securities depository'' means a clearing agency
20  registered with the securities and exchange commission which provides
21  safekeeping and book-entry settlement services to its participants.
22    (r) (p)  ``Depository bank'' means a bank, savings bank or savings and
23  loan association authorized and eligible to receive state moneys.
24    Sec. 6 5 [6].  K.S.A. 1996 Supp. 75-4208 is hereby amended to read
25  as follows: 75-4208. The board shall follow the procedure prescribed in
26  rules and regulations adopted under the provisions of K.S.A. 1996 Supp.
27  75-4232, in designating banks to receive deposit of state moneys in op-
28  erating accounts and investment accounts. The board shall determine
29  which banks shall receive state operating and investment accounts and
30  shall designate the types of accounts to be awarded each such bank and
31  the initial amount of each award. Such initial awards which are operating
32  accounts shall be made as provided in K.S.A. 75-4205, and amendments
33  thereto. Such initial awards which are investment accounts shall be ap-
34  portioned awarded as is provided in K.S.A. 75-4209, and amendments
35  thereto. Upon making the awards provided for above, the board shall
36  notify each bank of its award, and that the same is subject to approval of
37  securities to be pledged as prescribed in this act.
38    Sec. 7 6 [7].  K.S.A. 1996 Supp. 75-4209 is hereby amended to read
39  as follows: 75-4209. (a) After the director of investments determines the
40  liquidity needs for the state, and determines the varying maturities of the
41  investment accounts to be offered and the amount of state moneys to be
42  invested in each of the maturities offered, in accordance with rules and
43  regulations adopted pursuant to K.S.A. 1996 Supp. 75-4232, and amend-
SB 238--Am. by H
                                     

 1  ments thereto, the director of investments shall make available state mon-
 2  eys eligible for investment accounts in the following manner:
 3    (1) (A)  The director of investments shall offer to qualified banks, on
 4  a competitive bid basis, state moneys for deposit in investment accounts
 5  at maturities of not more than four years and such bids shall be at a rate
 6  of at least the market rate, as defined in subsection (k) of K.S.A. 75-4201,
 7  and amendments thereto.
 8    (B)  As part of the offering under subparagraph (A) the director of
 9  investments shall offer to qualified banks, on a twelve-month average,
10  50% of the amount of state moneys available for investment or
11  $350,000,000, whichever amount is greater, at maturities of not more than
12  four years and at the investment rate as defined in subsection (l) of K.S.A.
13  75-4201, and amendments thereto. Such accounts shall be apportioned
14  by the director of investments among the banks which propose to receive
15  such accounts and which qualify therefor on the basis of the ratio of each
16  bank's combined capital, undivided profits and surplus to the total capital,
17  undivided profits and surplus of all such banks.
18    (C)  Qualified banks shall be determined in accordance with require-
19  ments established by rules and regulations adopted pursuant to K.S.A.
20  1996 Supp. 75-4232, and amendments thereto.
21    (2)  The director of investments may invest and reinvest state moneys
22  eligible for investment which are not invested in accordance with para-
23  graph (1) section 1, in the following investments:
24    (A) (1)  Direct obligations of, or obligations that are insured as to
25  principal and interest by, the United States of America or any agency
26  thereof and obligations and securities of the United States sponsored
27  enterprises which under federal law may be accepted as security for pub-
28  lic funds, on and after the effective date of this act moneys available for
29  investment under this subsection shall not be invested in mortgage-
30  backed securities of such enterprises and of the government national
31  mortgage association, except that any such mortgage-backed securities
32  held prior to the effective date of this act may be held to maturity;
33    (B) (2)  repurchase agreements with a Kansas bank or a primary gov-
34  ernment securities dealer which reports to the market reports division of
35  the federal reserve bank of New York for direct obligations of, or obli-
36  gations that are insured as to principal and interest by, the United States
37  government or any agency thereof and obligations and securities of
38  United States government sponsored enterprises which under federal law
39  may be accepted as security for public funds;
40    (C)  investments in SKILL act projects and bonds pursuant to K.S.A.
41  1996 Supp. 74-8920, and amendments thereto, and investments in any
42  state agency bonds or bond project;
43    (D)  until July 1, 1996, in the municipal investment pool fund, created
SB 238--Am. by H
                                     

 1  under K.S.A. 1996 Supp. 12-1677a, and amendments thereto, in accor-
 2  dance with the policies adopted by the board on January 30, 1995. Any
 3  investment of such state moneys in such fund prior to the effective date
 4  of this act are hereby authorized, confirmed and validated. On July 1,
 5  1996, all state moneys invested in the municipal investment pool fund
 6  under this paragraph shall be removed from such fund; or
 7    (E) (3)  commercial paper that does not exceed 270 days to maturity
 8  and which has received one of the two highest commercial paper credit
 9  ratings by a nationally recognized investment rating firm.
10    (b)  At any time moneys are available for deposits or investments for
11  a period of time which is insufficient to permit deposit in investment
12  accounts or to provide for the liquidity needs for the state, the director
13  of investments may invest such moneys in repurchase agreements as au-
14  thorized in subparagraph (B) of paragraph (2) of subsection (a) When
15  moneys are available for deposit or investments, the director of invest-
16  ments may invest in SKILL act projects and bonds pursuant to K.S.A.
17  1996 Supp. 74-8920, and amendments thereto, and in state agency bonds
18  and bond projects.
19    (c)  When moneys are available for deposits or investments, the di-
20  rector of investments may invest in preferred stock of Kansas venture
21  capital, inc., under terms and conditions prescribed by K.S.A. 74-8203,
22  and amendments thereto, but such investments shall not in the aggregate
23  exceed a total amount of $10,000,000.
24    (d)  When moneys are available for deposits or investments, the di-
25  rector of investments may invest in loans pursuant to legislative mandates,
26  except that not more than the lesser of 10% or $80,000,000 of the state
27  moneys shall be invested.
28    (e)  Interest on investment accounts in banks is to be paid at maturity,
29  but not less than annually.
30    (f)  Investments made by the director of investments under the pro-
31  visions of this section shall be made with judgment and care, under cir-
32  cumstances then prevailing, which persons of prudence, discretion and
33  intelligence exercise in the management of their own affairs, not for spec-
34  ulation, but for investment, considering the probable safety of their capital
35  as well as the probable income to be derived.
36    (g)  Investments under subsection (a) or (b) [of this section or under
37  section 1] shall be for a period not to exceed four years.
38    (h)  Investments in securities under subparagraph (A) of paragraph
39    (2) paragraph (1) of subsection (a) shall be limited to securities which do
40  not have any more interest rate risk than do direct United States govern-
41  ment obligations of similar maturities. For purposes of this subsection,
42  ``interest rate risk'' means market value changes due to changes in current
43  interest rates.
SB 238--Am. by H
                                     

 1    (i)  On and after July 1, 1996, The director of investments shall not
 2  invest state moneys eligible for investment under paragraph (2) of sub-
 3  section (a), in the municipal investment pool fund, created under K.S.A.
 4  1996 Supp. 12-1677a, and amendments thereto.
 5    (j)  The director of investments shall not invest moneys in the pooled
 6  money investment portfolio in derivatives. As used in this subsection,
 7  ``derivatives'' means a financial contract whose value depends on the value
 8  of an underlying asset or index of asset values.
 9    (k)  Moneys and investments in the pooled money investment port-
10  folio shall be invested and reinvested by the director of investments in
11  accordance with investment policies developed, approved, published and
12  updated on an annual basis by the board. Such investment policies shall
13  include at a minimum guidelines which identify credit standards, eligible
14  instruments, allowable maturity ranges, methods for valuing the portfolio,
15  calculating earnings and yields and limits on portfolio concentration for
16  each type of investment. Any changes in such investment policies shall
17  be approved by the pooled money investment board. Such investment
18  policies may specify the contents of reports, methods of crediting funds
19  and accounts and other operating procedures.
20    (l)  The board shall adopt rules and regulations to establish an overall
21  percentage limitation on the investment of moneys in investments au-
22  thorized under subparagraph (E) of paragraph (2) paragraph (3) of sub-
23  section (a), and within such authorized investment, the board shall estab-
24  lish a percentage limitation on the investment in any single business
25  entity.
26    Sec. 8 7 [8].  K.S.A. 1996 Supp. 75-4210 is hereby amended to read
27  as follows: 75-4210. The director of investments shall calculate the in-
28  vestment rate, as defined in subsection (l) of K.S.A. 75-4201 subsection
29    (f) of K.S.A. 12-1675, and amendments thereto, on Monday of each week
30  and publish such rate that week in the Kansas register. The director of
31  investments shall also calculate the market rate as defined in subsection
32    (k) of K.S.A. 75-4201 and amendments thereto on the day before the
33  offering of moneys to Kansas banks.
34    Sec. 9 8 [9].  K.S.A. 1996 Supp. 75-4212a is hereby amended to read
35  as follows: 75-4212a. Whenever the balance in operating accounts is in-
36  sufficient to meet the state's obligations or withdrawals from the munic-
37  ipal investment pool fund, and there are state moneys in authorized in-
38  vestments, the director of investments, with approval of the board, may:
39    (a)  Borrow upon the security of any one or more investment accounts
40  an amount sufficient to meet the state's or the municipal investment pool
41  fund's obligations. Any such loan shall be repaid in full within 60 days or
42  prior to July 1, whichever occurs first. Interest payment by the state for
43  any loan under this section shall be made only by way of setoff from
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 1  interest obligations to the state from the bank making such loan. The
 2  amount borrowed under this section from any bank, shall never exceed
 3  an amount equal to the amount of state moneys on deposit in such bank;
 4  or
 5    (b)  enter into reverse repurchase agreements utilizing securities pur-
 6  chased by the board pursuant to subsection (a)(2)(A) of K.S.A. 75-4209,
 7  and amendments thereto. Such reverse repurchase agreements may be
 8  entered into with Kansas banks or primary government securities dealers
 9  which report to the market reports division of the federal reserve bank
10  of New York. Expenses of reverse repurchase agreements shall be paid
11  by deducting such expenses against other interest income to the state.
12    Sec. 10 9 [10].  K.S.A. 1996 Supp. 75-4263 is hereby amended to
13  read as follows: 75-4263. (a) Except as provided in subsection (b), moneys
14  of a state agency or public instrumentality of this state which may be
15  invested by the director of investments in accordance with investment
16  policies established by the pooled money investment board under K.S.A.
17  75-4232, and amendments thereto, expressly for such agency or instru-
18  mentality, or invested directly by the agency or instrumentality, may be
19  invested in the municipal investment pool fund established in K.S.A. 1996
20  Supp. 12-1677a and amendments thereto. Such agency or instrumentality
21  shall be treated as a municipality for purposes of participation in such
22  fund.
23    (b)  On and after July 1, 1996, state moneys eligible for investment
24  under paragraph (2) of subsection (a) of K.S.A. 75-4209, and amendments
25  thereto, shall not be invested in the municipal investment pool fund.
26    [Sec. 11.  K.S.A. 1996 Supp. 75-4221a is hereby amended to
27  read as follows: 75-4221a. (a) There is hereby established the
28  pooled money investment board which shall consist of six members,
29  four of whom shall be appointed by the governor, subject to confir-
30  mation by the senate as provided in K.S.A. 75-4315b and amend-
31  ments thereto. Except as provided by K.S.A. 1996 Supp. 46-2601,
32  and amendments thereto, no person appointed to the board, whose
33  appointment is subject to confirmation, shall exercise any power,
34  duty or function as a member of the board until confirmed by the
35  senate. The fifth member shall be the state treasurer. The sixth mem-
36  ber shall be the securities commissioner who shall serve as a non-
37  voting member. Not more than three members of the board shall be
38  of the same political party. All members appointed to the board
39  shall have at least 10 years of direct work experience in the areas
40  of finance, accounting or management of investments or shall have
41  at least a baccalaureate degree from an accredited college or uni-
42  versity and at least five years of direct work experience in the areas
43  of finance, accounting or management of investments. Except as
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 1  provided by subsection (b), members appointed by the governor
 2  shall serve for a term of four years and until successors are ap-
 3  pointed and confirmed. The governor shall select one of the board
 4  members to serve as chairperson.
 5    [(b) (1)  On July 1, 1992, the two appointive board members
 6  serving on the board immediately prior to such date shall cease to
 7  be members of the board and on such date, or as soon thereafter as
 8  possible, the governor shall appoint four members to the board to
 9  serve for terms as specified by this subsection. The two appointive
10  members serving on the board immediately prior to July 1, 1992,
11  may be reappointed to the board on or after such date under this
12  subsection. Of the members first appointed on or after July 1, 1992,
13  two members shall be appointed for a term commencing on July 1,
14  1992, and ending on June 30, 1994, and two members shall be ap-
15  pointed for a term commencing on July 1, 1992, and ending on June
16  30, 1996. The governor shall designate the term for each member
17  so appointed. Except as provided in paragraph 2 of this subsection,
18  members appointed to the board shall serve for four-year terms and
19  until their successors are appointed and confirmed. Whenever a va-
20  cancy occurs in the membership of the board prior to the expiration
21  of a term of office, the governor shall appoint a qualified successor
22  to fill the unexpired term.
23    [(2)  The terms of members who are serving on the board on the
24  effective date of this act shall expire on March 15, of the year in
25  which such member's term would have expired under the provisions
26  of this section prior to amendment by this act and by section 3 of
27  chapter 194 of the session laws of 1995. Thereafter members shall
28  be appointed for terms of four years and until their successors are
29  appointed and confirmed.
30    [(c)  Members of the pooled money investment board attending
31  meetings of such board, or attending a subcommittee meeting
32  thereof authorized by such board, shall be paid compensation, sub-
33  sistence allowances, mileage and other expenses as provided in
34  K.S.A. 75-3223 and amendments thereto.
35    [(d)  No member of the pooled money investment board, within one
36  year after termination of the member's position with the board, shall ac-
37  cept employment with the pooled money investment board.]
38    Sec. 11 10 [12] 11.  K.S.A. 68-2060 and K.S.A. 1996 Supp. 12-1675,
39  [12-1677d,] 75-4201, 75-4208, 75-4209, 75-4210, 75-4212a[, 75-4221a]
40  and 75-4263 are hereby repealed.
41    Sec. 12 11 [13] 12.  This act shall take effect and be in force from
42  and after its publication in the Kansas register.