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10  AN ACT relating to public moneys; concerning depositories; amending
11    K.S.A. 9-1401, 9-1403, 9-1406, 9-1407, 12-1676 and 17-5002 and
12    K.S.A. 1996 Supp. 9-701, 9-1402, 9-1405, 12-1675, 12-1677a, 12-
13    1677b, 75-4201, 75-4217, 75-4218 and 75-4220 and repealing the ex-
14    isting sections.
15
16  Be it enacted by the Legislature of the State of Kansas:
17    New Section 1.  As used in article 14 of chapter 9 of the Kansas Stat-
18  utes Annotated:
19    (a)  ``Bank'' means any bank incorporated under the laws of this state,
20  or organized under the laws of the United States or another state and
21  which has a main or branch office in this state;
22    (b)  ``savings and loan association'' means any savings and loan asso-
23  ciation incorporated under the laws of this state, or organized under the
24  laws of the United States or another state and which has a main or branch
25  office in this state;
26    (c)  ``savings bank'' means any savings bank organized under the laws
27  of the United States or another state and which has a main or branch
28  office in this state;
29    (d)  ``centralized securities depository'' means a clearing agency reg-
30  istered with the securities and exchange commission which provides safe-
31  keeping and book-entry settlement services to its participants;
32    (e)  ``municipal corporation'' or ``quasi-municipal corporation'' in-
33  cludes each investing governmental unit under K.S.A. 12-1675, and
34  amendments thereto;
35    (f)  ``main office'' means the place of business specified in the articles
36  of association, certificate of authority or similar document, where the
37  business of the institution is carried on and which is not a branch;
38    (g)  ``branch'' means any office, agency or other place of business
39  within this state, other than the main office, at which deposits are re-
40  ceived, checks paid or money lent with approval of the appropriate reg-
41  ulatory authorities. Branch does not include an automated teller machine,
42  remote service unit or similar device;
43    (h)  ``securities,'' ``security entitlements,'' ``financial assets,'' ``securities
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 1  account,'' ``security agreement,'' ``security interest,'' ``perfection'' and
 2  ``control'' shall have the meanings given such terms under the Kansas
 3  uniform commercial code.
 4    Sec. 2.  K.S.A. 1996 Supp. 9-701 is hereby amended to read as fol-
 5  lows: 9-701. Unless otherwise clearly indicated by the context, the follow-
 6  ing words when used in this act, for the purposes of this act, shall have
 7  the meanings respectively ascribed to them in this section:
 8    (a)  ``Bank'' means a state bank incorporated under the laws of Kansas.
 9    (b)  ``Trust company'' means a trust company incorporated under the
10  laws of Kansas and which does not accept deposits.
11    (c)  ``Board'' means the Kansas state banking board.
12    (d)  ``Commissioner'' means the Kansas state bank commissioner.
13    (e)  ``Executive officer'' means the chairperson of the board, the pres-
14  ident, each vice president, the cashier, the secretary and the treasurer of
15  a bank, unless such officer is excluded by resolution of the board of di-
16  rectors or by the bylaws of the bank or bank holding company from par-
17  ticipation, other than in the capacity of a director, in major policymaking
18  functions of the bank or bank holding company, and the officer does not
19  actually participate in major policymaking functions of the bank or bank
20  holding company.
21    (f)  ``Insured bank'' means a state bank whose deposits are insured
22  through the federal deposit insurance corporation or other governmental
23  agency or by an insurer approved by the state commissioner of insurance
24  for such purpose.
25    (g)  ``Item'' means any check, note, order, or other instrument or
26  memorandum providing for the payment of money, or upon which money
27  may be collected.
28    (h)  ``Demand deposits'' includes every deposit which is not a ``time
29  deposit,'' ``savings deposit'' or ``negotiable order of withdrawal deposit''
30  as defined in this section.
31    (i)  ``Time deposits'' means ``time certificates of deposit'' and ``time
32  deposits, open account'' as defined in this section.
33    (j)  ``Time certificate of deposit'' means a deposit evidenced by a ne-
34  gotiable or nonnegotiable instrument which provides on its face that the
35  amount of such deposit is payable, upon presentation and surrender of
36  the instrument, to bearer or to any specified person or to such person's
37  order:
38    (1)  On a certain date, specified in the instrument, not less than seven
39  days after the date of the deposit; or
40    (2)  at the expiration of a certain specified time not less than seven
41  days after the date of the instrument; or
42    (3)  upon notice in writing which is actually required to be given not
43  less than seven days before the date of repayment.
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 1    (k)  ``Time deposit, open account'' means a deposit, other than a ``time
 2  certificate of deposit,'' with respect to which there is in force a written
 3  contract with the depositor that neither the whole nor any part of such
 4  deposit may be withdrawn, by check or otherwise, prior to the date of
 5  maturity, which shall be not less than seven days after the date of the
 6  deposit, or prior to the expiration of the period of notice which must be
 7  given by the depositor in writing not less than seven days in advance of
 8  withdrawal.
 9    (l)  ``Savings deposit'' means a deposit: (1) Which consists of funds
10  deposited to the credit of or in which the entire beneficial interest is held
11  by one or more individuals, or of a corporation, association or other or-
12  ganization operated primarily for religious, philanthropic, charitable, ed-
13  ucational, fraternal or other similar purposes and not operated for profit;
14  or that consists of funds deposited to the credit of or in which the entire
15  beneficial interest is held by the United States, any state of the United
16  States or any county, municipality or political subdivision thereof, or that
17  consists of funds deposited to the credit of, or in which any beneficial
18  interest is held by a corporation, partnership, association or other organ-
19  ization not qualifying above; and (2) with respect to which the depositor
20  is not required by the deposit contract but may at any time be required
21  by the bank to give notice in writing of an intended withdrawal not less
22  than seven days before such withdrawal is made and which is not payable
23  on a specified date or at the expiration of a specified time after the date
24  of deposit.
25    (m)  ``Public moneys'' means all moneys coming into the custody of
26  the United States government or any board, commission or agency
27  thereof, and also shall mean all moneys coming into the custody of any
28  officer of any municipal or quasi-municipal or public corporation, the any
29  state or any political subdivision thereof, pursuant to any provision of law
30  authorizing any such official to collect or receive the same.
31    (n)  ``Municipal corporation'' means any city incorporated under the
32  laws of Kansas any state.
33    (o)  ``Quasi-municipal corporation'' means any county, township,
34  school district, drainage district, or any other governmental subdivision
35  in the any state of Kansas having authority to receive or hold moneys or
36  funds.
37    (p)  ``Certificate of authority'' means a statement signed and sealed by
38  the commissioner evidencing the authority of a bank or trust company to
39  transact a general business as such.
40    (q)  ``Transaction account'' means a deposit or account on which the
41  depositor or account holder is permitted to make withdrawals by nego-
42  tiable or transferable instrument, payment orders of withdrawal, tele-
43  phone transfers, or other similar device for the purpose of making pay-
Sub. for SB 86--Am. by HCW
                                     

 1  ments or transfers to third persons or others.
 2    (r)  ``Nonpersonal time deposit'' means a time deposit, including a
 3  savings deposit that is not a transaction account, representing funds in
 4  which any beneficial interest is held by a depositor which is not a natural
 5  person.
 6    (s)  ``Negotiable order of withdrawal deposit'' means a deposit on
 7  which interest is paid and which is subject to withdrawal by the owner
 8  by negotiable or transferable instruments for the purpose of making trans-
 9  fers to third parties, and which consists solely of funds in which the entire
10  beneficial interest is held by one or more individuals, an organization
11  which is operated primarily for religious, philanthropic, charitable, edu-
12  cational, fraternal or other similar purposes and which is not operated for
13  profit, and with respect to deposits of public funds by an officer, employee
14  or agent of the United States, any state, county, municipality or political
15  subdivision thereof, the District of Columbia, the commonwealth of
16  Puerto Rico, American Samoa, Guam, any territory or possession of the
17  United States or any political subdivision thereof.
18    (t)  ``Trust business'' means engaging in, or holding out to the public
19  as willing to engage in, the business of acting as a fiduciary for hire, except
20  that no accountant, attorney, credit union, insurance broker, insurance
21  company, investment adviser, real estate broker or sales agent, savings
22  and loan association, savings bank, securities broker or dealer, real estate
23  title insurance company or real estate escrow company shall be deemed
24  to be engaged in a trust company business with respect to fiduciary serv-
25  ices customarily performed by them for compensation as a traditional
26  incident to their regular business activities.
27    (u)  ``Community development corporation'' (CDC) means a corpo-
28  rate entity established by one or more financial institutions or by financial
29  institutions and other investors or members, and operating for the pri-
30  mary purpose of housing development, economic growth and revitaliza-
31  tion, small and minority business creation, and other community devel-
32  opment initiatives.
33    (v)  ``Community development project'' (CD project) means a specific
34  project in a particular location, such as a neighborhood, city, county or
35  state, the primary purpose of which is the economic improvement of that
36  area or the provision of housing for low-income and moderate-income
37  persons in that area and any state tax credit equity fund established pur-
38  suant to K.S.A. 74-8904, and amendments thereto.
39    (w)  ``Depository institution'' means any state bank, national banking
40  association, state savings and loan or federal savings association, without
41  regard to the state where the institution is chartered or the state in which
42  the institution's main office is located.
43    (x)  ``Student bank'' means any nonprofit program offered by a high
Sub. for SB 86--Am. by HCW
                                     

 1  school accredited by the state board of education, where deposits are
 2  received, checks are paid or money is lent for limited in-school purposes.
 3    Sec. 3. [2.]  K.S.A. 9-1401 is hereby amended to read as follows: 9-
 4  1401. (a) The governing body of any municipal corporation or quasi-mu-
 5  nicipal corporation shall designate by official action recorded upon its
 6  minutes the state and national banks, state and federally chartered savings
 7  and loan associations and federally chartered savings banks with home
 8  offices located in the state of Kansas which shall serve as depositories of
 9  its funds and the officer and official having the custody of such funds shall
10  not deposit such funds other than at such designated banks, state or fed-
11  erally chartered savings and loan associations and federally chartered sav-
12  ings banks. The state and national banks, state and federally chartered
13  savings and loan associations and federally chartered savings banks which
14  have main or branch offices in the county or counties in which all or part
15  of such municipal corporation or quasi-municipal corporation is located
16  shall be designated as such official depositories if the municipal or quasi-
17  municipal corporation can obtain satisfactory security therefor, and such
18  official depositories have a home office located in the state of Kansas.
19    (b)  Every officer or person depositing public funds shall deposit all
20  such public funds coming into such officer or person's possession in their
21  name and official title as such officer. If the governing body of the mu-
22  nicipal corporation or quasi-municipal corporation fails to designate an
23  official depository or depositories, the officer thereof having custody of
24  its funds shall deposit such funds with one or more state or national banks,
25  state or federally chartered savings and loan associations or federally char-
26  tered savings banks which have main or branch offices in the county or
27  counties in which all or part of such municipal corporation or quasi-mu-
28  nicipal corporation is located if satisfactory security can be obtained there-
29  for and if not then elsewhere, but upon so doing shall serve notice in
30  writing on the governing body showing the names and locations of such
31  banks, state or federally chartered savings and loan associations and fed-
32  erally chartered savings banks where such funds are deposited, and upon
33  so doing the officer having custody of such funds shall not be liable for
34  the loss of any portion thereof except for official misconduct or for the
35  misappropriation of such funds by such officer.
36    (c)  As used in this section and K.S.A. 9-1402, 9-1403 and 9-1405, and
37  amendments thereto, ``municipal corporation or quasi-municipal corpo-
38  ration'' includes each investing governmental unit under K.S.A. 12-1675,
39  and amendments thereto.
40    Sec. 4. [3.]  K.S.A. 1996 Supp. 9-1402 is hereby amended to read as
41  follows: 9-1402. (a) Before any deposit of public moneys or funds shall
42  be made by any municipal corporation or quasi-municipal corporation of
43  the state of Kansas with any state or national bank, state or federally
Sub. for SB 86--Am. by HCW
                                     

 1  chartered savings and loan association or federally chartered savings bank,
 2  such municipal or quasi-municipal corporation shall obtain security for
 3  such deposit in one of the following manners prescribed by this section.
 4    (b)  Such bank, state or federally chartered savings and loan associa-
 5  tion or federally chartered savings bank may give to the municipal cor-
 6  poration or quasi-municipal corporation a personal bond in double the
 7  amount which may be on deposit at any given time.
 8    (c)  Such bank, state or federally chartered savings and loan associa-
 9  tion or federally chartered savings bank may give a corporate surety bond
10  of some surety corporation authorized to do business in this state, which
11  bond shall be in an amount equal to the public moneys or funds on deposit
12  at any given time less the amount of such public moneys or funds which
13  is insured by the federal deposit insurance corporation or its successor
14  and such bond shall be conditioned that such deposit shall be paid
15  promptly on the order of the municipal corporation or quasi-municipal
16  corporation making such deposits.
17    (d)  Any state or national Such bank, state or federally chartered sav-
18  ings and loan association or federally chartered savings bank may deposit,
19  maintain, pledge and, assign, and grant a security interest in, or cause its
20  agent, trustee, wholly-owned subsidiary or an affiliate bank having iden-
21  tical ownership as the bank receiving the deposit of public moneys or
22  funds to deposit, maintain, pledge and, assign, and grant a security in-
23  terest in, for the benefit of the governing body of the municipal corpo-
24  ration or quasi-municipal corporation in the manner provided in this act,
25  securities, security entitlements, financial assets and securities accounts
26  owned by it the depository institution directly or indirectly through its
27  agent or trustee holding securities on its behalf, or owned by the depos-
28  itory institutions wholly-owned subsidiary or by such affiliate bank, the
29  market value of which is equal to 100% of the total deposits at any given
30  time, and such securities, security entitlements, financial assets and se-
31  curities accounts, may be accepted or rejected by the governing body of
32  the municipal corporation or quasi-municipal corporation and shall con-
33  sist of the following and security entitlements thereto:
34    (1)  Direct obligations of, or obligations that are insured as to principal
35  and interest by, the United States of America or any agency thereof and
36  obligations, including but not limited to letters of credit, and securities
37  of United States sponsored corporations which under federal law may be
38  accepted as security for public funds;
39    (2)  bonds of any municipal corporation or quasi-municipal corpora-
40  tion of the state of Kansas which have been refunded in advance of their
41  maturity and are fully secured as to payment of principal and interest
42  thereon by deposit in trust, under escrow agreement with a bank, of direct
43  obligations of, or obligations the principal of and the interest on which
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 1  are unconditionally guaranteed by, the United States of America;
 2    (3)  bonds of the state of Kansas;
 3    (4)  general obligation bonds of any municipal corporation or quasi-
 4  municipal corporation of the state of Kansas;
 5    (5)  revenue bonds of any municipal corporation or quasi-municipal
 6  corporation of the state of Kansas if approved by the state bank commis-
 7  sioner in the case of banks and by the savings and loan commissioner in
 8  the case of savings and loan associations or federally chartered savings
 9  banks;
10    (6)  temporary notes of any municipal corporation or quasi-municipal
11  corporation of the state of Kansas which are general obligations of the
12  municipal or quasi-municipal corporation issuing the same;
13    (7)  warrants of any municipal corporation or quasi-municipal corpo-
14  ration of the state of Kansas the issuance of which is authorized by the
15  state board of tax appeals and which are payable from the proceeds of a
16  mandatory tax levy;
17    (8)  bonds of either a Kansas not-for-profit corporation or of a local
18  housing authority that are rated at least Aa by Moody's Investors Service
19  or AA by Standard & Poor's Corp.;
20    (9)  bonds issued pursuant to K.S.A. 12-1740 et seq., and amendments
21  thereto, that are rated at least MIG-1 or Aa by Moody's Investors Service
22  or AA by Standard & Poor's Corp.;
23    (10)  notes of a Kansas not-for-profit corporation that are issued to
24  provide only the interim funds for a mortgage loan that is insured by the
25  federal housing administration;
26    (11)  bonds issued pursuant to K.S.A. 74-8901 through 74-8916, and
27  amendments thereto;
28    (12)  bonds issued pursuant to K.S.A. 68-2319 through 68-2330, and
29  amendments thereto; or
30    (13)  commercial paper that does not exceed 270 days to maturity and
31  which has received one of the two highest commercial paper credit ratings
32  by a nationally recognized investment rating firm; or
33    (13) (14) (A)  negotiable promissory notes together with first lien
34  mortgages on one to four family residential real estate located in Kansas
35  securing payment of such notes when such notes or mortgages:
36    (i)  Are underwritten by the federal national mortgage association, the
37  federal home loan mortgage corporation, the federal housing administra-
38  tion or the veterans administration standards; or are valued pursuant to
39  rules and regulations which shall be adopted by both the state bank com-
40  missioner and the savings and loan commissioner after having first being
41  submitted to and approved by both the state banking board under K.S.A.
42  9-1713, and amendments thereto, and the savings and loan board. Such
43  rules and regulations shall be published in only one place in the Kansas
Sub. for SB 86--Am. by HCW
                                     

 1  administrative regulations as directed by the state rules and regulations
 2  board;
 3    (ii)  have been in existence with the same borrower for at least two
 4  years and with no history of any installment being unpaid for 30 days or
 5  more; and
 6    (iii)  are valued at not to exceed 50% of the lesser of the following
 7  three values: Outstanding mortgage balance; current appraised value of
 8  the real estate; or discounted present value based upon current federal
 9  national mortgage association or government national mortgage associa-
10  tion interest rates quoted for conventional, federal housing administration
11  or veterans administration mortgage loans.
12    (B)  Securities under (A) shall be taken at their value for not more
13  than 50% of the security required under the provisions of this section.
14    (C)  Securities under (A) shall be withdrawn immediately from the
15  collateral pool if any installment is unpaid for 30 days or more.
16    (D)  A status report on all such loans shall be provided to the investing
17  governmental entity by the financial institution on a quarterly basis.
18    (e)  No state or national such bank, state or federally chartered savings
19  and loan association or federally chartered savings bank may deposit and
20  maintain for the benefit of the governing body of a municipal or quasi-
21  municipal corporation of the state of Kansas, any securities which consist
22  of:
23    (1)  Bonds secured by revenues of a utility which has been in opera-
24  tion for less than three years; or
25    (2)  bonds issued under K.S.A. 12-1740 et seq., and amendments
26  thereto, unless such bonds have been refunded in advance of their ma-
27  turity as provided in subsection (d) or such bonds are rated at least Aa by
28  Moody's Investors Service or AA by Standard & Poor's Corp.
29    (f)  Whenever a bond is authorized to be pledged as a security under
30  this section, such bond shall be accepted as a security if
31    (1)  In the case of a certificated bond, it is assigned, delivered or
32  pledged to the holder of the deposit for security;
33    (2)  in the case of an uncertificated bond, registration of a pledge of
34  the bond is authorized by the system and the pledge of the uncertificated
35  bond is registered; or
36    (3)  in a form approved by the attorney general, which assures the
37  availability of the bond proceeds pledged as a security for public deposits.
38    (g) (f)  Any expense incurred in connection with granting approval of
39  revenue bonds shall be paid by the applicant for approval.
40    Sec. 5. [4.]  K.S.A. 9-1403 is hereby amended to read as follows: 9-
41  1403. (a) During the periods of peak deposits occurring at tax paying time
42  and tax distributing time and continuing for a period of not to exceed 60
43  continuous days at any given time and not to exceed 120 days in any
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 1  calendar year the amount of security for the deposit of public moneys as
 2  required under K.S.A. 9-1402, and amendments thereto, may be reduced
 3  by not more than 1/2 in an amount thereof.
 4    (b)  The provisions of this section shall apply only to the deposits of
 5  all municipal corporations and quasi-municipal corporations, but the cus-
 6  todian of the funds of each of such municipal corporations or quasi-mu-
 7  nicipal corporations together with an officer of the depository state or
 8  national bank, state or federally chartered savings and loan association or
 9  federally chartered savings bank may enter into an agreement which des-
10  ignates in writing the beginning of each such sixty-day period, and a copy
11  thereof, fully executed, shall be kept on file in the office of the governing
12  body of such municipal corporation or quasi-municipal corporation and
13  in the files of such bank, state or federally chartered savings and loan
14  association or federally chartered savings bank.
15    Sec. 6. [5.]  K.S.A. 1996 Supp. 9-1405 is hereby amended to read as
16  follows: 9-1405. (a) All bonds and securities given by any bank, state or
17  federally chartered savings and loan association or federally chartered
18  savings bank to secure public moneys of the United States or any board,
19  commission or agency thereof, shall be deposited as required by the
20  United States government or any of its designated agencies.
21    (b)  All bonds and securities pledged to secure securities, security en-
22  titlements and financial assets securing the deposits of any municipal cor-
23  poration or quasi-municipal corporation shall be deposited in a securities
24  account with a bank, trust company, or national bank authorized to do
25  business in Kansas bank or trust company incorporated under the laws
26  of this state having adequate modern facilities for the safekeeping of se-
27  curities [or any other state, any national bank], the federal reserve
28  bank of Kansas City, the federal home loan bank of Topeka or with the
29  state treasurer, pursuant to a written custodial agreement and a joint
30  custody receipt taken therefor with one copy going to the municipal cor-
31  poration or quasi-municipal corporation making the public deposit and
32  one copy going to the bank, state or federally chartered savings and loan
33  association or federally chartered savings bank which has secured such
34  public deposits. The receipt shall identify the securities, security entitle-
35  ments and financial assets which are subject to a security interest to secure
36  payment of the deposits of the municipal corporation or quasi-municipal
37  corporation. This section shall not prohibit any custodial bank or trust
38  company receiving securities for safekeeping, security entitlements and
39  financial assets on deposit from issuing a joint custody receipt and placing
40  those depositing securities, security entitlements and financial assets iden-
41  tified in the receipt in such bank's account with any bank chartered in
42  Kansas or any other state, any trust company chartered in Kansas or any
43  other state, any national bank, or any centralized securities depository
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 1  wherever located within the United States. No bonds or securities
 2  pledged to secure, security entitlements and financial assets securing pub-
 3  lic deposits shall be left for safekeeping deposited in any bank, trust com-
 4  pany, or national bank which is owned directly or indirectly by any parent
 5  corporation of the depository bank, or with any bank, trust company, or
 6  national bank, having common controlling shareholders, having a com-
 7  mon majority of the board of directors or having common directors with
 8  the ability to control or influence directly or indirectly the acts or policies
 9  of the bank, state or federally chartered savings and loan association or
10  federally chartered savings bank securing such public deposits.  When
11  bonds and securities, security entitlements and financial assets are de-
12  posited with the state treasurer as authorized by this subsection, the state
13  treasurer shall make a charge for such service which is equivalent to the
14  reasonable and customary charge made therefor. Securities, security en-
15  titlements and financial assets securing the deposits of any municipal cor-
16  poration or quasi-municipal corporation may be deposited with the fed-
17  eral reserve bank of Kansas City to be there held in such manner, under
18  regulations and operating letters of the bank, as to secure payment of the
19  deposits of the municipal corporation or quasi-municipal corporation in
20  the depository institution.
21    (c)  All such bonds and securities shall be deposited under a joint
22  custody receipt issued by a bank or trust company within the state of
23  Kansas or the federal reserve bank of Kansas City, the federal home loan
24  bank of Topeka or with the state treasurer. All bonds or securities held
25  by any depository and for which a joint custody receipt has been issued
26  shall be retained by such depository and not released except upon consent
27  of both the municipal corporation or quasi-municipal corporation making
28  the deposit and the bank, state or federally chartered savings and loan
29  association or federally chartered savings bank taking or securing such
30  deposit. In every report required to be published by any bank, state or
31  federally chartered savings and loan association or federally chartered
32  savings bank it shall show in full all of the assets pledged or deposited as
33  security for public moneys. The depository bank, savings and loan asso-
34  ciation or savings bank and any agent, trustee, wholly-owned subsidiary
35  or affiliate having identical ownership granting a security interest shall
36  enter into a written agreement with the municipal corporation or quasi-
37  municipal corporation granting the municipal corporation or quasi-mu-
38  nicipal corporation a security interest in the securities, security entitle-
39  ments and financial assets qualified under K.S.A. 9-1402, and
40  amendments thereto, to secure payment of deposits of public moneys of
41  the municipal corporation or quasi-municipal corporation. Such security
42  interests shall be perfected by the depository bank, savings and loan as-
43  sociation or savings bank and any agent, trustee, wholly-owned subsidiary
Sub. for SB 86--Am. by HCW
                                     

 1  or affiliate having identical ownership granting a security interest causing
 2  control of the securities, security entitlements and financial assets under
 3  the Kansas uniform commercial code to be given to the municipality or
 4  quasi-municipality. The security agreement and the custodial agreement
 5  shall be in writing, executed by all parties thereto, maintained as part of
 6  their official records, and except for the municipal corporations or quasi-
 7  municipal corporation, approved by their boards of directors or their loan
 8  committees, which approvals shall be reflected in the minutes of the
 9  boards or committees.
10    (d)  A bank, state or federally chartered savings and loan association
11  or federally chartered savings bank which fails to pay according to its
12  terms any deposit of public moneys of any municipal or quasi-municipal
13  corporation shall immediately take such actions as are required to enable
14  bonds and securities pledged to secure such deposit to be sold to satisfy
15  its obligation to the municipal or quasi-municipal corporation.
16    (e)  As used in this section:
17      ``Centralized securities depository'' means a clearing agency regis-
18  tered with the securities and exchange commission which provides safe-
19  keeping and book-entry settlement services to its participants.
20    Sec. 7. [6.]  K.S.A. 9-1406 is hereby amended to read as follows: 9-
21  1406. No public officer nor the sureties upon such officer's bond shall be
22  liable for any loss sustained by the failure or default of any designated
23  depository or depositories after a deposit or deposits have been made in
24  an officially designated bank, state or federally chartered savings and loan
25  association or federally chartered savings bank as provided in this act.
26  This exemption from liability shall apply even though other statutes shall
27  require the furnishing of a bond or other securities by the designated
28  depositories of public moneys.
29    Sec. 8. [7.]  K.S.A. 9-1407 is hereby amended to read as follows: 9-
30  1407. That portion of any deposit of public moneys or funds which is
31  insured by the federal deposit insurance corporation, or its successor, or
32  the federal savings and loan insurance corporation, or its successor, need
33  not be secured as provided in this act.
34    New Sec. 9. [8.]  As used in K.S.A. 12-1675, 12-1676 and 12-1677
35  and K.S.A. 1996 Supp. 12-1677a and 12-1677b, and amendments thereto:
36    (a)  ``Bank'' means any bank incorporated under the laws of this state,
37  or organized under the laws of the United States or another state and
38  which has a main or branch office in this state;
39    (b)  ``savings and loan association'' means any savings and loan asso-
40  ciation incorporated under the laws of this state, or organized under the
41  laws of the United States or another state and which has a main or branch
42  office in this state;
43    (c)  ``savings bank'' means any savings bank organized under the laws
Sub. for SB 86--Am. by HCW
                                     

 1  of the United States or another state and which has a main or branch
 2  office in this state;
 3    (d)  ``municipality'' includes each investing governmental unit under
 4  K.S.A. 12-1675, and amendments thereto;
 5    (e)  ``main office'' means the place of business specified in the articles
 6  of association, certificate of authority or similar document, where the
 7  business of the institution is carried on and which is not a branch; and
 8    (f)  ``branch'' means any office, agency or other place of business
 9  within this state, other than the main office, at which deposits are re-
10  ceived, checks paid or money lent with approval of the appropriate reg-
11  ulatory authorities. Branch does not include an automated teller machine,
12  remote service unit or similar device.
13    Sec. 10. [9.]  K.S.A. 1996 Supp. 12-1675 is hereby amended to read
14  as follows: 12-1675. (a) The governing body of any county, city, township,
15  school district, area vocational-technical school, community college, fire-
16  [chmen's relief association, community mental health center, community fa-
17  cility for the mentally retarded or any other governmental entity, unit or
18  subdivision in the state of Kansas having authority to receive, hold and
19  expend public moneys or funds may invest any moneys which are not
20  immediately required for the purposes for which the moneys were col-
21  lected or received, and the investment of which is not subject to or reg-
22  ulated by any other statute.
23    (b)  Such [Except as provided in section 19, such] moneys shall
24  be invested only:
25    (1)  In temporary notes or no-fund warrants issued by such investing
26  governmental unit;
27    (2)  in time deposit, open accounts or, certificates of deposit with ma-
28  turities of not more than two years: (A) In commercial banks which have
29  offices located in such investing governmental unit; or (B) if the office of
30  no commercial bank is located in such investing governmental unit, then
31  in commercial banks or time certificates of deposit with maturities of not
32  more than two years: (A) In banks, savings and loan associations and
33  savings banks, which have main or branch offices located in such investing
34  governmental unit; or (B) if no main or branch office of a bank, savings
35  and loan association or savings bank is located in such investing govern-
36  mental unit, then in banks, savings and loan associations and savings
37  banks, which have main or branch offices in the county or counties in
38  which all or part of such investing governmental unit is located;
39    (3)  in time certificates of deposit with maturities of not more than
40  two years: (A) With state or federally chartered savings and loan associ-
41  ations or federally chartered savings banks which have offices located in
42  such investing governmental unit; or (B) if the office of no state or fed-
43  erally chartered savings and loan association or federally chartered savings
Sub. for SB 86--Am. by HCW
                                     

 1  bank is located in such governmental unit, then with state or federally
 2  chartered savings and loan associations or federally chartered savings
 3  banks which have offices in the county or counties in which all or part of
 4  such investing governmental unit is located;
 5    (4) (3)  in repurchase agreements with: (A) Commercial banks, state
 6  or federally chartered savings and loan associations or federally chartered
 7  savings banks Banks, savings and loan associations and savings banks,
 8  which have main or branch offices located in such investing governmental
 9  unit, for direct obligations of, or obligations that are insured as to principal
10  and interest by, the United States government or any agency thereof; or
11  (B) (i) if the office of no commercial bank, state or federally chartered
12  savings and loan association or federally chartered savings bank no main
13  or branch office of a bank, savings and loan association or savings bank,
14  is located in such investing governmental unit; or (ii) if no commercial
15  such bank, state or federally chartered savings and loan association or
16  federally chartered savings bank has an having a main or branch office
17  located in such investing governmental unit is willing to enter into such
18  an agreement with the investing governmental unit at an interest rate
19  equal to or greater than the investment rate, as defined in subsection (l)
20  (j) of K.S.A. 75-4201, and amendments thereto, then such repurchase
21  agreements may be entered into with commercial banks, state or federally
22  chartered savings and loan associations or federally chartered savings
23  banks which have main or branch offices in the county or counties in
24  which all or part of such investing governmental unit is located; or (C) if
25  no bank, state or federally chartered savings and loan association or fed-
26  erally chartered savings bank which has its, having a main or branch office
27  in such county or counties is willing to enter into such an agreement with
28  the investing governmental unit at an interest rate equal to or greater
29  than the investment rate, as defined in subsection (l) (j) of K.S.A. 75-
30  4201, and amendments thereto, then such repurchase agreements may
31  be entered into with commercial banks, state or federally chartered sav-
32  ings and loan associations or federally chartered savings banks which have
33  offices in the state of Kansas [which have offices in the state of Kan-
34  sas];
35    (5) (4)  in United States treasury bills or notes with maturities as the
36  governing body shall determine, but not exceeding two years. Such in-
37  vestment transactions shall only be conducted with the following, which
38  is doing business within the state of Kansas, any state or national bank,
39  state or federally chartered savings and loan association, or federally char-
40  tered savings bank banks, savings and loan associations and savings
41  banks; the federal reserve bank of Kansas City, Missouri; or with primary
42  government securities dealers which report to the market report division
43  of the federal reserve bank of New York, or any broker-dealer engaged
Sub. for SB 86--Am. by HCW
                                     

 1  in the business of selling government securities which is registered in
 2  compliance with the requirements of section 15 or 15C of the securities
 3  exchange act of 1934 and registered pursuant to K.S.A. 17-1254, and
 4  amendments thereto;
 5    (6) (5)  in the municipal investment pool fund established in K.S.A.
 6  1996 Supp. 12-1677a, and amendments thereto;
 7    (7) (6)  in the investments authorized and in accordance with the con-
 8  ditions prescribed in K.S.A. 1996 Supp. 12-1677b, and amendments
 9  thereto; or
10    (8) (7)  in multiple municipal client investment pools managed by the
11  trust departments of commercial banks which have main or branch offices
12  located in the county or counties where such investing governmental unit
13  is located or with trust companies incorporated under the laws of this
14  state which have contracted to provide trust services under the provisions
15  of K.S.A. 9-2107, and amendments thereto, with commercial banks which
16  have main or branch offices located in the county or counties in which
17  such investing governmental unit is located. Public moneys invested un-
18  der this paragraph shall be secured in the same manner as provided for
19  under K.S.A. 9-1402, and amendments thereto. Pooled investments of
20  public moneys made by trust departments under this paragraph shall be
21  subject to the same terms, conditions and limitations as are applicable to
22  the municipal investment pool established by K.S.A. 1996 Supp. 12-
23  1677a, and amendments thereto.
24    (c)  The investments authorized in paragraphs (4), (5), (6), or (7) or
25    (8) of subsection (b) shall be utilized only if the appropriate eligible com-
26  mercial banks, which have offices located in the investing governmental
27  unit or in the county or counties in which all or a part of such investing
28  governmental unit is located if no such bank has an office which is located
29  within such governmental unit, or the appropriate eligible state or fed-
30  erally chartered savings and loan associations or federally chartered sav-
31  ings banks, which have offices located in the investing governmental unit
32  or in the county or counties in which all or a part of such investing gov-
33  ernmental unit is located if no such state or federally chartered savings
34  and loan association or federally chartered savings bank has an office
35  which is located within such governmental unit banks, savings and loan
36  associations and savings banks eligible for investments authorized in par-
37  agraph (2) of subsection (b), cannot or will not make the investments
38  authorized in paragraph (2) or (3) of subsection (b) available to the in-
39  vesting governmental unit at interest rates equal to or greater than the
40  investment rate, as defined in subsection (l) (j) of K.S.A. 75-4201, and
41  amendments thereto.
42    (d)  In selecting a depository pursuant to paragraph (2) or (3) of sub-
43  section (b), if a commercial bank, state or federally chartered savings and
Sub. for SB 86--Am. by HCW
                                     

 1  loan association or federally chartered savings bank eligible for an invest-
 2  ment deposit thereunder has an office located in the investing govern-
 3  mental unit and such financial institution will make such deposits available
 4  to the investing governmental unit at interest rates equal to or greater
 5  than the investment rate, as defined in subsection (l) (j) of K.S.A. 75-
 6  4201, and amendments thereto, and such financial institution otherwise
 7  qualifies for such deposit, the investing governmental unit shall select one
 8  or more of such eligible financial institutions for deposit of funds pursuant
 9  to this section. If no such financial institution qualifies for such deposits,
10  the investing governmental unit shall select for such deposits one or more
11  commercial eligible banks, state or federally chartered savings and loan
12  associations or federally chartered savings banks which have offices in the
13  county or counties in which all or a part of such investing governmental
14  unit is located which will make such deposits available to the investing
15  governmental unit at interest rates equal to or greater than the investment
16  rate, as defined in subsection (l) (j) of K.S.A. 75-4201, and amendments
17  thereto, and which otherwise qualify for such deposits.
18    (e) (1)  All security purchases and repurchase agreements shall occur
19  on a delivery versus payment basis.
20    (2)  All securities, including those acquired by repurchase agreements,
21  shall be perfected in the name of the investing governmental unit and
22  shall be delivered to the purchaser or a third-party custodian which may
23  be the state treasurer.
24    Sec. 11. [10.]  K.S.A. 12-1676 is hereby amended to read as follows:
25  12-1676. Except as otherwise provided in K.S.A. 12-1678a, and amend-
26  ments thereto, the provisions of this act authorizing the investment of
27  moneys shall not apply to moneys collected or received by a county for
28  apportionment, credit or distribution to the state or any political subdi-
29  vision thereof. Interest paid by commercial eligible banks, savings and
30  loan associations and savings banks on time deposit, open accounts, time
31  certificates of deposit and certificates of deposit of investing governmental
32  units and by state or federally chartered savings and loan associations or
33  federally chartered savings banks on time certificates of deposit of in-
34  vesting governmental units shall be at rates agreed upon by the govern-
35  mental units and the eligible banks, state or federally chartered savings
36  and loan associations or federally chartered savings banks.
37    Sec. 12. [11.]  K.S.A. 1996 Supp. 12-1677a is hereby amended to
38  read as follows: 12-1677a. (a) Moneys deposited by any municipality with
39  the state treasurer for investment authorized in paragraph (6) (5) of sub-
40  section (b) of K.S.A. 12-1675, and amendments thereto, shall be depos-
41  ited in the municipal investment pool fund which is hereby created in
42  the state treasury. The state treasurer shall provide the board a monthly
43  record of the deposits and withdrawals of municipalities. Such record may
Sub. for SB 86--Am. by HCW
                                     

 1  include the amount of the deposit, the date of the deposit and such other
 2  information as the pooled money investment board may require.
 3    (b)  The director of investments may invest and reinvest moneys in
 4  the municipal investment pool fund in accordance with investment poli-
 5  cies established by the pooled money investment board under K.S.A. 75-
 6  4232, and amendments thereto, and in accordance with K.S.A. 1996
 7  Supp. 75-4234 and K.S.A. 75-4209, and amendments thereto.
 8    (c)  The director of investments shall apportion earnings and losses
 9  among the accounts of the depositors in the various investment options
10  of the municipal investment pool in accordance with policies approved
11  and published by the board. A statement for each municipality partici-
12  pating unit account showing deposits, withdrawals, earnings and losses
13  distributions shall be provided monthly to the municipality. The director
14  of investments shall make comprehensive reports monthly to those mu-
15  nicipalities participating in the municipal investment pool fund and to
16  other interested parties requesting such reports. Such reports shall in-
17  clude a summary of transactions for the month, the current market value
18  of the pooled money investment portfolio investments, the weighted av-
19  erage maturity of the portfolio, the original costs of the investments in
20  the portfolio, including any fees associated with such investments and
21  such other relevant information the director of investments may wish to
22  include in such report.
23    (d)  The municipal investment pool reserve fund is abolished effective
24  July 1, 1996, and any unencumbered balance remaining therein shall be
25  applied to net losses in the municipal investment pool fund. The munic-
26  ipal investment pool fund fee fund is abolished on July 1, 1997, and any
27  unencumbered balance remaining therein shall be transferred to the
28  pooled money investment portfolio fee fund and such amounts shall be
29  applied to net losses, as of July 1, 1996, in the municipal investment pool
30  fund.
31    (e)  The pooled money investment board may adopt rules and regu-
32  lations necessary for the administration and operation of the municipal
33  investment pool fund and may enter into agreements with any munici-
34  pality as to methods of deposits, withdrawals and investments.
35    (f)  Deposits in the municipal investment pool fund: (1) May only be
36  made for the same maturity as the maturity which is offered under par-
37  agraphs (2) and (3) paragraph (2) of subsection (b) of K.S.A. 12-1675 and
38  amendments thereto; and (2) upon the maturity of such deposits, such
39  moneys shall be offered for investment under paragraphs (2) or (3) par-
40  agraph (2) of subsection (b) of K.S.A. 12-1675, and amendments thereto,
41  and may be reinvested in such fund only if the conditions contained in
42  subsection (c) of K.S.A. 12-1675, and amendments thereto, have been
43  satisfied.
Sub. for SB 86--Am. by HCW
                                     

 1    (g)  Moneys and investments in the municipal investment pool fund
 2  shall be managed by the pooled money investment board in accordance
 3  with investment policies provided for in K.S.A. 75-4209, and amendments
 4  thereto. A copy of such published policies shall be distributed to all mu-
 5  nicipalities participating in the municipal investment pool fund and to
 6  other interested persons requesting a copy of such policies. The pooled
 7  money investment board shall not contract for management of invest-
 8  ments by a money manager.
 9    (h)  For the purpose of this section, ``municipality'' means those en-
10  tities specified in subsection (a) of K.S.A. 12-1675, and amendments
11  thereto, and K.S.A. 1996 Supp. 75-4263, and amendments thereto.
12    Sec. 13. [12.]  K.S.A. 1996 Supp. 12-1677b is hereby amended to
13  read as follows: 12-1677b. (a) The governing body of any city or county
14  which has a written investment policy approved by the governing body
15  of such city or county and approved by the pooled money investment
16  board may invest and reinvest pursuant to the approved investment policy
17  in the following investments, as authorized under paragraph (7) (6) of
18  subsection (b) of K.S.A. 12-1675, and amendments thereto:
19    (1)  Direct obligations of, or obligations that are insured as to principal
20  and interest by, the United States of America or any agency thereof and
21  obligations and securities of United States sponsored enterprises which
22  under federal law may be accepted as security for public funds, except
23  that such investments shall not be in mortgage-backed securities;
24    (2)  interest-bearing time deposits in any of the following, which is
25  doing business within the state of Kansas, any state or national bank, state
26  or federally chartered savings and loan association, or federally chartered
27  savings bank banks, savings and loan associations and savings banks; or
28    (3)  repurchase agreements with a Kansas bank, savings and loan as-
29  sociation, a federally chartered savings bank banks, savings and loan as-
30  sociations and savings banks, or with a primary government securities
31  dealer which reports to the market reports division of the federal reserve
32  bank of New York for direct obligations of, or obligations that are insured
33  as to principal and interest by, the United States government or any
34  agency thereof and obligations and securities of United States govern-
35  ment sponsored enterprises which under federal law may be accepted as
36  security for public funds.
37    (b)  The investment policy of any city or county approved by the
38  pooled money investment board under this section shall be reviewed and
39  approved at least annually by such board or when such city or county
40  makes changes in such investment policy.
41    (c)  City and county investment policies shall address liquidity, diver-
42  sification, safety of principal, yield, maturity and quality, and capability of
43  investment management staff.
Sub. for SB 86--Am. by HCW
                                     

 1    (d) (1)  All security purchases shall occur on a delivery versus pay-
 2  ment basis.
 3    (2)  All securities shall be perfected in the name of the city or county
 4  and shall be delivered to the purchaser or a third party custodian which
 5  may be the state treasurer.
 6    (3)  Investment transactions shall only be conducted with the follow-
 7  ing, which is doing business within the state of Kansas, any state or na-
 8  tional bank, state or federally chartered savings and loan association, or
 9  federally chartered savings bank banks, savings and loan associations and
10  savings banks; or with primary government securities dealers which re-
11  port to the market report division of the federal reserve bank of New
12  York; or any broker-dealer which is registered in compliance with the
13  requirements of section 15C of the securities exchange act of 1934 and
14  registered pursuant to K.S.A. 17-1254, and amendments thereto.
15    (4)  The maximum maturity for investments under subsection (a) shall
16  be four years.
17    (e)  Investments in securities under paragraph (1) of subsection (a)
18  shall be limited to securities which do not have any more interest rate
19  risk than do direct United States government obligations of similar ma-
20  turities. For purposes of this subsection, ``interest rate risk'' means market
21  value changes due to changes in current interest rates.
22    (f)  A city or county which violates subsection (c) or (d) of K.S.A. 12-
23  1675 and amendments thereto or the rules and regulations of the pooled
24  money investment board shall forfeit its rights under this section for a
25  two year period and shall be reinstated only after a complete review of
26  its investment policy as provided for in subsection (b). Such forfeiture
27  shall be determined by the pooled money investment board after notice
28  and opportunity to be heard in accordance with the Kansas administrative
29  procedure act.
30    Sec. 14. [13.]  K.S.A. 17-5002 is hereby amended to read as follows:
31  17-5002. (a) Administrators, executors, conservators, trustees, insurance
32  companies and other financial institutions, charitable, educational, elee-
33  mosynary corporations and organizations are authorized, in addition to
34  investments now authorized by law, to invest funds which they are au-
35  thorized by law to invest, in shares or savings deposits of federally insured
36  savings and loan associations or federally chartered savings banks with
37  home main or branch offices, as defined in section 9 [8], in the state of
38  Kansas and in credit unions which are, in whole or in part, insured with
39  an insurer or guarantee corporation as required under K.S.A. 17-2246,
40  and amendments thereto, and such investment shall be deemed and held
41  to be legal investments for such funds.
42    (b)  The governing body of any municipal corporation or quasi-mu-
43  nicipal corporation, county, township, school district, area vocational-
Sub. for SB 86--Am. by HCW
                                     

 1  technical school, community college, firemen's relief association, com-
 2  munity mental health center, community facility for the mentally retarded
 3  or any other governmental entity, unit or division in the state of Kansas
 4  having authority to receive, hold and expend public moneys or funds may
 5  invest the same in state or federally chartered savings and loan associa-
 6  tions incorporated under the laws of this state, and savings and loan as-
 7  sociations or federally chartered savings banks organized under the laws
 8  of the United States or another state with main or branch offices [with a
 9  main office], as defined in section 9 [8], home offices in the state of
10  Kansas subject to and as provided by K.S.A. 9-1401, 9-1402, 9-1405, 9-
11  1407, 12-1675 and 12-1676 and amendments to such sections thereto.
12    Sec. 15. [14.]  K.S.A. 1996 Supp. 75-4201 is hereby amended to read
13  as follows: 75-4201. As used in this act, unless the context otherwise re-
14  quires:
15    (a)  ``Treasurer'' means state treasurer.
16    (b)  ``Controller'' means director of accounts and reports.
17    (c)  ``Board'' means the pooled money investment board.
18    (d)  ``Bank'' means a state bank incorporated under the laws of Kansas
19  or a national bank having such bank's home office within the state of
20  Kansas this state, or organized under the laws of the United States or
21  another state and which has a main or branch office in this state [and
22  which has a main office in this state, except that for purposes set
23  forth in K.S.A. 75-4205 and 75-4208[, 75-4208 and 75-4214] and
24  amendments thereto, ``bank'' means a bank incorporated under
25  the laws of this state, or organized under the laws of the United
26  States or another state and which has a main or branch office in
27  this state].
28    (e)  ``State moneys'' means all moneys in the treasury of the state or
29  coming lawfully into the possession of the treasurer.
30    (f)  ``State bank account'' means state moneys or fee agency account
31  moneys deposited in accordance with the provisions of this act.
32    (g)  ``Operating account'' means a state bank account which is payable
33  or withdrawable, in whole or in part, on demand.
34    (h)  ``Investment account'' means a state bank account which is not
35  payable on demand.
36    (i)  ``Market rate'' means the average of the average equivalent yields,
37  with equivalent maturities, of: (1) United States government securities;
38  and (2) debt obligations of the following United States government agen-
39  cies, federal home loan banks, federal national mortgage association and
40  federal farm credit bank.
41    (j)  ``Investment rate'' means a rate which is the equivalent yield for
42  United States government securities having a maturity date as published
43  in the Wall Street Journal, nearest the maturity date for equivalent ma-
Sub. for SB 86--Am. by HCW
                                     

 1  turities.  The 0-90 day rate shall be computed on the average effective
 2  federal funds rate as published by the federal reserve system for the
 3  previous week.
 4    (k)  ``Fee agency account'' means a state bank account of any state
 5  agency consisting of fees, tuition or charges authorized by law prior to
 6  remittance to the state treasurer.
 7    (l)  ``Disbursement'' means a payment of any kind whatsoever made
 8  from the state treasury or from any operating account, except transfer of
 9  moneys between or among operating accounts and investment accounts
10  or either or both of them.
11    (m)  ``Securities'' means, for the purposes of this section and K.S.A.
12  75-4218, and amendments thereto, securities, security entitlements, fi-
13  nancial assets and securities accounts consisting of any one or more of
14  the following, and security entitlements thereto, which may be accepted
15  or rejected by the pooled money investment board:
16    (1)  Direct obligations of, or obligations that are insured as to principal
17  and interest by, the United States government or any agency thereof and
18  obligations, letters of credit and securities of United States sponsored
19  enterprises which under federal law may be accepted as security for pub-
20  lic funds.
21    (2)  Kansas municipal bonds which are general obligations of the mu-
22  nicipality issuing the same.
23    (3)  Revenue bonds of any agency or arm of the state of Kansas.
24    (4)  Revenue bonds of any municipality, as defined by K.S.A. 10-101,
25  and amendments thereto, within the state of Kansas or bonds issued by
26  a public building commission as authorized by K.S.A. 12-1761, and
27  amendments thereto, if approved by the state bank commissioner, except
28  (A) bonds issued under the provisions of K.S.A. 12-1740 et seq., and
29  amendments thereto, unless such bonds are rated at least MIG-1 or Aa
30  by Moody's Investors Service or AA by Standard & Poor's Corp. and (B)
31  bonds secured by revenues of a utility which has been in operation for
32  less than three years. Any expense incurred in connection with granting
33  approval of revenue bonds shall be paid by the applicant for approval.
34    (5)  Temporary notes of any municipal corporation or quasi-municipal
35  corporation within the state of Kansas which are general obligations of
36  the municipal corporation or quasi-municipal corporation issuing the
37  same.
38    (6)  Warrants of any municipal corporation or quasi-municipal cor-
39  poration within the state of Kansas the issuance of which is authorized
40  by the state board of tax appeals and which are payable from the proceeds
41  of a mandatory tax levy.
42    (7)  Bonds of any municipal or quasi-municipal corporation of the
43  state of Kansas which have been refunded in advance of their maturity
Sub. for SB 86--Am. by HCW
                                     

 1  and are fully secured as to payment of principal and interest thereon by
 2  deposit in trust, under escrow agreement with a bank, of direct obligations
 3  of, or obligations the principal of and the interest on which are uncon-
 4  ditionally guaranteed by, the United States of America. A copy of such
 5  escrow agreement shall be furnished to the treasurer.
 6    (8)  Securities listed in paragraph (13) (14) of subsection (d) of K.S.A.
 7  9-1402 and amendments thereto within limitations of K.S.A. 9-1402 and
 8  amendments thereto.
 9    (9)  A corporate surety bond guaranteeing deposits in a bank, savings
10  or savings and loan association in excess of federal deposit insurance cor-
11  poration insurance, underwritten by an insurance company authorized to
12  do business in the state of Kansas.
13    (10)  Commercial paper that does not exceed 270 days to maturity
14  and which has received one of the two highest commercial paper credit
15  ratings by a nationally recognized investment rating firm.
16    (11)  All of such securities shall be current as to interest according to
17  the terms thereof.
18    (12)  Whenever a bond is authorized to be pledged as a security under
19  this section, such bond shall be accepted as a security if: (i) In the case
20  of a certificated bond, it is assigned, delivered or pledged to the holder
21  of the deposit for security; (ii) in the case of an uncertificated bond,
22  registration of a pledge of the bond is authorized by the system and the
23  pledge of the uncertificated bond is registered; or (iii) in a form approved
24  by the attorney general, which assures the availability of the bond pro-
25  ceeds pledged as a security for public deposits.
26    (n)  ``Savings bank'' means a federally chartered savings bank organ-
27  ized under the laws of the United States or another state insured by the
28  federal deposit insurance corporation or its successor and doing business
29  within the state of Kansas having a main or branch office in the county
30  in which a state agency making collection of any fees, tuition or charges
31  is located.
32    (o)  ``Savings and loan association'' means a state or federally chartered
33  savings and loan association incorporated under the laws of this state, or
34  organized under the laws of the United States or another state, insured
35  by the federal deposit insurance corporation or its successor and doing
36  business within the state of Kansas having a main or branch office in the
37  county in which a state agency making collection of any fees, tuition or
38  charges is located.
39    (p)  ``Custodial bank'' means a bank designated to keep safely holding
40  on deposit collateral pledged as which is security for state bank accounts.
41    (q)  ``Centralized securities depository'' means a clearing agency reg-
42  istered with the securities and exchange commission which provides safe-
43  keeping and book-entry settlement services to its participants.
Sub. for SB 86--Am. by HCW
                                     

 1    (r)  ``Depository bank'' means a bank, savings bank or savings and loan
 2  association authorized and eligible to receive state moneys.
 3    (s)  ``Main office'' means the place of business specified in the articles
 4  of association, certificate of authority or similar document, where the
 5  business of the institution is carried on and which is not a branch.
 6    (t)  ``Branch office'' means any office, agency or other place of business
 7  within this state, other than the main office, at which deposits are re-
 8  ceived, checks paid or money lent with approval of the appropriate reg-
 9  ulatory authorities. Branch does not include an automated teller machine,
10  remote service unit or similar device.
11    (u)  ``securities,'' ``security entitlements,'' ``financial assets,'' ``securities
12  account,'' ``security agreement,'' ``security interest,'' ``perfection'' and
13  ``control'' shall have the meanings given such terms under the Kansas
14  uniform commercial code.
15    Sec. 16. [15.]  K.S.A. 1996 Supp. 75-4217 is hereby amended to read
16  as follows: 75-4217. Awards of all state bank accounts, aggregating more
17  than $100,000, shall be made pursuant to a written security agreement
18  between the depository bank and the board, granting the state of Kansas
19  a security interest in securities pledged to secure payment of deposits in
20  state bank accounts. This agreement shall be approved by the board of
21  directors of the depository bank, as and reflected in the minutes of the
22  board of directors. From the time of execution, the security agreement
23  shall remain continuously an official record of the depository bank. Sep-
24  arate security agreements shall be entered into for each class of account
25  in each depository bank.
26    Sec. 17. [16.]  K.S.A. 1996 Supp. 75-4218 is hereby amended to read
27  as follows: 75-4218. (a) All state bank accounts shall be secured by pledge
28  of securities as provided in this section.
29    (b)  The bank, savings bank or savings and loan association receiving
30  or having a state bank account shall deposit or cause its affiliate bank to
31  deposit securities acceptable to the board and owned by it or by its affiliate
32  bank, in one of the following ways:
33    (1)  Deposit with the treasurer.
34    (2)  Deposit with a custodial bank having adequate modern facilities
35  for the safekeeping of securities which shall have had the prior approval
36  of the board. Any such custodial bank receiving securities for safekeeping
37  shall be liable to the state for any loss suffered by the state in the event
38  such custodial bank relinquishes the custody of any such securities con-
39  trary to the provisions of this act or rules and regulations adopted there-
40  under. This section shall not prohibit any custodial bank receiving secu-
41  rities for safekeeping from issuing a joint custody receipt and placing
42  those securities in such bank's account with any bank chartered in Kansas
43  or any other state, any trust company chartered in Kansas or any other
Sub. for SB 86--Am. by HCW
                                     

 1  state, any national bank, or any centralized securities depository wherever
 2  located within the United States. No bonds or securities pledged to secure
 3  public deposits shall be left for safekeeping in any bank, trust company,
 4  or national bank which is owned directly or indirectly by any parent cor-
 5  poration of the depository bank, or with any bank, trust company, or
 6  national bank, having common controlling shareholders, having a com-
 7  mon majority of the board of directors or having common directors with
 8  the ability to control or influence directly or indirectly the acts or policies
 9  of the bank, state or federally chartered savings and loan association or
10  federally chartered savings bank securing such public deposits.
11    (3)  Deposit with the federal reserve bank of Kansas City, Missouri.
12    (4)  Deposit with the federal home loan bank of Topeka, Kansas.
13    (5)  Any combination of (1), (2), (3) and (4).
14    (c)  The depository bank shall obtain a written agreement from its
15  affiliate bank that the affiliate bank grants a security interest to the state
16  of Kansas in securities owned by the affiliate bank which are pledged on
17  behalf of the depository bank to secure payment of deposits made with
18  the depository bank pursuant to this section. Such agreement shall be
19  approved by the board of directors of the affiliate bank and reflected in
20  its minutes. From the time of execution of such agreement, the agree-
21  ment shall remain continuously an official record of the affiliate bank.
22  Any such deposit of securities, except with the treasurer, shall have a joint
23  custody receipt which shall constitute a perfected security interest taken
24  therefor with one copy going to the treasurer and one copy going to the
25  bank, savings bank or savings and loan association which deposits such
26  securities. In lieu of the initial deposit of securities provided for in this
27  subsection (c), the treasurer or the treasurer's duly authorized deputy,
28  for a period of not to exceed 10 calendar days, may accept the telephone
29  assurance of a bank qualified as provided in (2) or (3) of subsection (b),
30  that the depository bank has requested the issuance of a joint custody
31  receipt with the state of Kansas, specifying the securities pledged, for the
32  purpose of compliance with this section and that such joint custody re-
33  ceipt will be forthcoming.
34    (d)  The depository bank, the board and the custodial bank shall enter
35  into a written agreement for the safekeeping of securities and the agree-
36  ment shall be maintained in the records of the depository bank.
37    (e)  Securities deposited to comply with this section may be with-
38  drawn on application of the bank, savings bank or savings and loan asso-
39  ciation depositing the securities, if such application is approved by the
40  treasurer or the treasurer's duly authorized deputy for the reason that
41  such deposit of securities is no longer needed to comply with this section
42  or are required for collection by virtue of their maturity or for exchange.
43  Securities withdrawn for collection by virtue of their maturity or for
Sub. for SB 86--Am. by HCW
                                     

 1  exchange shall be replaced within 15 calendar days, but until replaced
 2  the state shall retain a first lien on the withdrawn security or the proceeds
 3  therefrom.
 4    (f)  Operating accounts, investment accounts and fee agency accounts
 5  shall be secured by pledge of securities, the market value of which is
 6  equal to 100% of the amount of the deposits in the account plus accrued
 7  interest, less the amount of deposits in the account protected by the
 8  federal deposit insurance corporation. Any agency responsible for a fee
 9  agency account shall transfer immediately all moneys not so secured to
10  the state treasurer for deposit in the state treasury deposit, maintain,
11  pledge, assign, and grant a security interest in, or cause its agent, trustee,
12  wholly-owned subsidiary, or affiliate having identical ownership to de-
13  posit, maintain, pledge, assign, and grant a security interest in, for the
14  benefit of the state of Kansas, in the manner provided in this act, securities
15  owned by the depository bank directly or indirectly through its agent or
16  trustee holding securities on its behalf, or owned by the depository bank's
17  wholly-owned subsidiary or by such affiliate, the market value of which
18  is equal to 100% of the amount of the account plus accrued interest, less
19  that portion of the amount of the account plus accrued interest which is
20  insured by the federal deposit insurance corporation or its successor.
21    (b)  All securities securing state bank accounts shall be deposited in a
22  securities account with a bank having the prior approval of the board,
23  the federal home loan bank of Topeka or with the state treasurer pursuant
24  to a written custodial agreement, and a receipt taken therefor with one
25  copy going to the treasurer and one copy going to the bank, savings bank
26  or savings and loan association which has secured such state bank ac-
27  count. The receipt shall identify the securities which are subject to a se-
28  curity interest to secure payment of the state bank account. This section
29  shall not prohibit any custodial bank receiving securities on deposit from
30  issuing a receipt and depositing securities identified in the receipt in such
31  bank's account with any bank chartered in Kansas or any other state, any
32  trust company chartered in Kansas or any other state, any national bank,
33  or any centralized securities depository wherever located within the
34  United States. No securities securing state bank accounts shall be depos-
35  ited in any bank, trust company or national bank which is owned directly
36  or indirectly by any parent corporation of the depository bank, or with
37  any bank, trust company, or national bank having common controlling
38  shareholders, having a common majority of the board of directors or hav-
39  ing common directors with the ability to control or influence directly or
40  indirectly the acts or policies of the bank, savings and loan association or
41  savings bank securing such state bank account. Any custodial bank which
42  releases securities securing a state bank account without being authorized
43  to do so under the custodial agreement shall be liable to the state for any
Sub. for SB 86--Am. by HCW
                                     

 1  loss to the state resulting therefrom.
 2    (c)  Securities securing state bank accounts may be deposited with the
 3  federal reserve bank of Kansas City to be there held in such manner, under
 4  regulations and operating letters of the federal reserve bank, as to secure
 5  payment of the state bank account in the depository bank.
 6    (d)  The depository bank, and any agent, trustee, wholly-owned sub-
 7  sidiary or affiliate having identical ownership granting a security interest
 8  shall enter into a written agreement with the state of Kansas granting the
 9  state of Kansas a security interest in the securities to secure payment of
10  the state bank account. Such security interest shall be perfected by the
11  depository bank and any agent, trustee, wholly-owned subsidiary or af-
12  filiate having identical ownership granting a security interest causing con-
13  trol of the securities under the Kansas uniform commercial code to be
14  given to the state of Kansas. The security agreement and the custodial
15  agreement shall be in writing, executed by all parties thereto, maintained
16  as part of their official records, and, except for the state of Kansas, ap-
17  proved by their boards of directors or their loan committees, which ap-
18  provals shall be reflected in the minutes of the boards or committees.
19    Sec. 18. [17.]  K.S.A. 1996 Supp. 75-4220 is hereby amended to read
20  as follows: 75-4220. (a) Each depository or its affiliate bank pledging se-
21  curities for such depository bank and its agent, trustee, wholly-owned
22  subsidiary or affiliate having identical ownership granting a security in-
23  terest pursuant to K.S.A. 75-4218, and amendments thereto, shall be li-
24  able for payment if: (1) [(a)] The depository bank fails to: (A) [(1)] Pay
25  any check, draft or warrant drawn by the treasurer and director of ac-
26  counts and reports; or (B) [(2)] account for any check, draft, warrant,
27  order, or certificate of deposit, or any money entrusted to such bank by
28  the treasurer; or (2) [(b)] a conservator or receiver is appointed for the
29  depository bank.
30    Any loss incurred by the state by reason of failure by any depository
31  bank to safely keep and account for moneys and interest thereon shall be
32  recovered by the state from the depository bank and a sale of the secu-
33  rities pledged securing payment of such moneys under this act. The at-
34  torney general is authorized to prosecute in the name of the state any
35  and all actions for recovery of any loss incurred by the state under this
36  act.
37    In case of default by any depository bank having a state bank account
38  of any type, the securities pledged securing payment of such account
39  under this act, if not in the possession of the treasurer, shall be transferred
40  to the treasurer by the custodial bank to be sold by the treasurer and
41  payment of the proceeds of such sale shall be made to the state to the
42  extent of the state's interest, subject to the provisions of K.S.A. 75-4221,
43  and amendments thereto.
Sub. for SB 86--Am. by HCW
                                     

 1    [New Sec. 18.  In addition to the investments allowed under
 2  K.S.A. 12-1675, and amendments thereto, the board of directors
 3  of a rural water district having authority to receive, hold and ex-
 4  pend public moneys or funds may invest any moneys which are not
 5  immediately required for the purposes for which the moneys were
 6  collected or received and as provided in this section. Such board
 7  of directors shall have responsibility for the management of such
 8  moneys and with the assistance of a registered investment adviser,
 9  may invest and reinvest such moneys and acquire, retain, manage,
10  including the exercise of any voting rights, and dispose of invest-
11  ments of such fund. In investing or reinvesting moneys in such
12  fund, there shall be exercised the judgment and care under the
13  circumstances then prevailing which persons of prudence, discre-
14  tion and intelligence exercise in the management of their own af-
15  fairs, not in regard to speculation but in regard to the permanent
16  disposition of their funds, considering the probable income as well
17  as the probable safety of their capital.]
18    Sec. 19.  K.S.A. 9-1401, 9-1403, 9-1406, 9-1407, 12-1676 and 17-5002
19  and K.S.A. 1996 Supp. 9-701, 9-1402, 9-1405, 12-1675, 12-1677a, 12-
20  1677b, 75-4201, 75-4217, 75-4218 and 75-4220 are hereby repealed.
21    Sec. 20.  This act shall take effect and be in force from and after its
22  publication in the statute book.