As Amended by House Committee
         
Session of 1999
         
HOUSE BILL No. 2554
         
By Committee on Appropriations
         
3-8
         
10             AN  ACT concerning agriculture; creating the Kansas agricultural linked
11             deposit program; providing certain requirements; prescribing certain
12             duties for the state treasurer; amending K.S.A. 75-4209 and 75-
13             4237 and repealing the existing sections.
14      
15       Be it enacted by the Legislature of the State of Kansas:
16             Section  1. This act The provisions of sections 1 through 8 shall
17       be known and may be cited as the Kansas agricultural linked deposit
18       program.
19             Sec.  2. As used in this act: (a) "Agricultural linked deposit" means a
20       certificate of deposit placed by the state treasurer an investment ac-
21       count placed by the director of investments under the provisions
22       of article 42 of chapter 75 of the Kansas Statutes Annotated with
23       an eligible lending institution for the purpose of carrying out the intent
24       of this act;
25             (b) "agricultural linked deposit loan package" means the forms pro-
26       vided by the state treasurer for the purpose of applying for an agricultural
27       linked deposit;
28             (c) "eligible lending institution" means a financial institution bank,
29       as defined under K.S.A. 75-4201, and amendments thereto that
30       agrees to participate in the Kansas agricultural linked deposit program
31       and is eligible to be a depository of state funds; and
32             (d) "farm operations" means an individual or organization involved
33       in farming except that "farm operations" shall not include a corporation
34       other then a family farm corporation as defined in K.S.A. 17-5903 and
35       amendments thereto.
36             Sec.  3. (a) The state treasurer is hereby authorized to administer the
37       Kansas agricultural linked deposit program. Such program shall be for
38       the exclusive purpose of providing funding incentives for the making
39       of loans for the construction of new or used grain storage facilities. The
40       state treasurer shall promulgate rules and regulations to carry out the
41       provisions of this act.
42             (b) The state treasurer shall submit an annual report outlining the
43       status of the program to the governor and the legislature.

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  1             Sec.  4. (a) The state treasurer is hereby authorized to disseminate
  2       information and to provide agricultural linked deposit loan packages to
  3       the lending institutions eligible for participation in this act.
  4             (b) The agricultural linked deposit loan package shall be completed
  5       by the borrower before being forwarded to the lending institution for
  6       consideration.
  7             (c) (1) An eligible lending institution that agrees to receive an ag-
  8       ricultural linked deposit shall accept and review applications for loans
  9       from eligible farm operations. The lending institution shall apply all usual
10       lending standards to determine the credit worthiness of eligible farm
11       operations. No single linked deposit loan for the construction of new or
12       used grain storage facilities shall exceed $50,000. The total amount of
13       agricultural linked deposit loans shall not exceed $7,000,000 in any one
14       year.
15             (2) Only one linked deposit loan shall be made and be outstanding
16       at any one time to any farm operation.
17             (3) No loan shall be amortized for a period of more than eight years.
18             (d) An eligible farm operation shall certify on its loan application that
19       the reduced rate loan will be used exclusively for the purposes of this act.
20             (e) The eligible lending institution may approve or reject an agricul-
21       tural linked deposit loan package based on the lending institution's eval-
22       uation of the eligible farm operation included in the package, the amount
23       of the individual loan in the package, and other appropriate
24       considerations.
25             (f) The eligible lending institution shall forward to the state treasurer,
26       an approved agricultural linked deposit loan package, in the form and
27       manner prescribed and approved by the state treasurer. The package shall
28       include information regarding the amount of the loan requested by each
29       farm operation and such other information regarding each farm operation
30       the state treasurer requires. The lending institution shall certify that each
31       applicant is an eligible farm operation, including a certification by the
32       applicant that such applicant is an eligible farm operation.
33             Sec.  5. (a) The state treasurer may accept or reject an agricultural
34       linked deposit loan package based on the state treasurer's evaluation of
35       whether the loan to the eligible farm operation meets the purposes of
36       this act. If sufficient funds are not available for a linked deposit, then the
37       applications may be considered in the order received when funds are once
38       again available subject to a review by the lending institution.
39             (b) Upon acceptance, the state treasurer may place certificates of
40       deposit shall certify to the director of investments the amount re-
41       quired for such agricultural linked deposit loan package and the
42       director of investments shall place an agricultural link deposit in
43       the amount certified by the state treasurer with the eligible lending

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  1       institution at a zero interest rate. When necessary, the state treasurer may
  2       place certificates of deposit request the director of investments to
  3       place such agricultural link deposit prior to acceptance of an agricul-
  4       tural linked deposit loan package.
  5             (c) The eligible lending institution shall enter into an agricultural
  6       linked deposit agreement with the state treasurer, which shall include
  7       requirements necessary to implement the purposes of the Kansas agri-
  8       cultural linked deposit program. Such requirements shall include an
  9       agreement by the eligible lending institution to lend an amount equal to
10       the agricultural linked deposit to eligible farm operations at an interest
11       rate that does not exceed 4%. The agreement shall include provisions for
12       the certificates of agricultural link deposit to be placed for any a ma-
13       turity considered appropriate by the state treasurer in coordination with
14       the underlying linked deposit loan. Interest shall be paid at the times
15       determined by the state treasurer. The agreement shall include pro-
16       visions for the reduction of the agricultural link deposit in an
17       amount equal to any payment of loan principal by the eligible farm
18       operations.
19             Sec.  6. (a) Upon the placement of an agricultural linked deposit with
20       an eligible lending institution, the institution shall fund the loan to each
21       approved eligible farm operation listed in the agricultural linked deposit
22       loan package in accordance with the agricultural linked deposit agreement
23       between the institution and the state treasurer. The loan shall be at a rate
24       as provided in section 5 and amendments thereto. A certification of com-
25       pliance with this section in the form and manner as prescribed by the
26       state treasurer shall be required of the eligible lending institution.
27             (b) The state treasurer shall take any and all steps necessary to im-
28       plement the Kansas agricultural linked deposit program.
29             Sec.  7. The state and the state treasurer shall not be liable to any
30       eligible lending institution in any manner for payment of the principal or
31       interest on the loan to an eligible farm operation. Any delay in payments
32       or default on the part of an eligible farm operation does not in any manner
33       affect the agricultural linked deposit agreement between the eligible
34       lending institution and the state treasurer.
35             Sec.  8. The provisions of this act shall expire on July 1, 2002.
36        Sec.  9. K.S.A. 75-4209 is hereby amended to read as follows:
37       75-4209. (a) The director of investments may invest and reinvest
38       state moneys eligible for investment which are not invested in ac-
39       cordance with K.S.A. 75-4237, in the following investments:
40             (1) Direct obligations of, or obligations that are insured as to
41       principal and interest by, the United States of America or any
42       agency thereof and obligations and securities of the United States
43       sponsored enterprises which under federal law may be accepted

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  1       as security for public funds, on and after the effective date of this
  2       act moneys available for investment under this subsection shall not
  3       be invested in mortgage-backed securities of such enterprises and
  4       of the government national mortgage association, except that any
  5       such mortgage-backed securities held prior to the effective date
  6       of this act may be held to maturity;
  7             (2) repurchase agreements with a bank or a primary govern-
  8       ment securities dealer which reports to the market reports division
  9       of the federal reserve bank of New York for direct obligations of,
10       or obligations that are insured as to principal and interest by, the
11       United States government or any agency thereof and obligations
12       and securities of United States government sponsored enterprises
13       which under federal law may be accepted as security for public
14       funds;
15             (3) commercial paper that does not exceed 270 days to matur-
16       ity and which has received one of the two highest commercial pa-
17       per credit ratings by a nationally recognized investment rating
18       firm.
19             (b) When moneys are available for deposit or investments, the
20       director of investments may invest in SKILL act projects and bonds
21       pursuant to K.S.A. 1998 Supp. 74-8920, and amendments thereto,
22       and in state agency bonds and bond projects.
23             (c) When moneys are available for deposits or investments, the
24       director of investments may invest in preferred stock of Kansas
25       venture capital, inc., under terms and conditions prescribed by
26       K.S.A. 74-8203, and amendments thereto, but such investments
27       shall not in the aggregate exceed a total amount of $10,000,000.
28             (d) When moneys are available for deposits or investments, the
29       director of investments may invest in loans pursuant to legislative
30       mandates, except that not more than the lesser of 10% or
31       $80,000,000 of the state moneys shall be invested.
32             (e) Interest on investment accounts in banks is to be paid at
33       maturity, but not less than annually.
34             (f) Investments made by the director of investments under the
35       provisions of this section shall be made with judgment and care,
36       under circumstances then prevailing, which persons of prudence,
37       discretion and intelligence exercise in the management of their
38       own affairs, not for speculation, but for investment, considering
39       the probable safety of their capital as well as the probable income
40       to be derived.
41             (g) Investments under subsection (a) or (b) of this section or
42       under K.S.A. 75-4237 shall be for a period not to exceed four years,
43       except that agricultural link deposits authorized under the provisions of

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  1       sections 1 through 8 shall not exceed a period of eight years.
  2             (h) Investments in securities under paragraph (1) of subsection
  3       (a) shall be limited to securities which do not have any more in-
  4       terest rate risk than do direct United States government obliga-
  5       tions of similar maturities. For purposes of this subsection, "inter-
  6       est rate risk" means market value changes due to changes in
  7       current interest rates.
  8             (i) The director of investments shall not invest state moneys
  9       eligible for investment under subsection (a), in the municipal in-
10       vestment pool fund, created under K.S.A. 1997 Supp. 12-1677a,
11       and amendments thereto.
12             (j) The director of investments shall not invest moneys in the
13       pooled money investment portfolio in derivatives. As used in this
14       subsection, "derivatives" means a financial contract whose value
15       depends on the value of an underlying asset or index of asset
16       values.
17             (k) Moneys and investments in the pooled money investment
18       portfolio shall be invested and reinvested by the director of in-
19       vestments in accordance with investment policies developed, ap-
20       proved, published and updated on an annual basis by the board.
21       Such investment policies shall include at a minimum guidelines
22       which identify credit standards, eligible instruments, allowable
23       maturity ranges, methods for valuing the portfolio, calculating
24       earnings and yields and limits on portfolio concentration for each
25       type of investment. Any changes in such investment policies shall
26       be approved by the pooled money investment board. Such invest-
27       ment policies may specify the contents of reports, methods of cred-
28       iting funds and accounts and other operating procedures.
29             (l) The board shall adopt rules and regulations to establish an
30       overall percentage limitation on the investment of moneys in in-
31       vestments authorized under paragraph (3) of subsection (a), and
32       within such authorized investment, the board shall establish a per-
33       centage limitation on the investment in any single business entity.
34             Sec.  10. K.S.A. 75-4237 is hereby amended to read as follows:
35       75-4237. (a) The director of investments shall accept requests from
36       banks interested in obtaining investment accounts of state moneys.
37       Such requests may be submitted any business day and shall specify
38       the dollar amount, maturity or maturity range and interest rate.
39       Except as provided in subsection (c), if the interest rate bid by the
40       bank is at or greater than the market rate determined by the di-
41       rector of investments in accordance with subsection (b), the direc-
42       tor of investments is authorized to award the investment account
43       to the bidding bank at the market rate. Awards of investment ac-

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  1       counts pursuant to this section shall be subject to investment pol-
  2       icies of the pooled money investment board. When multiple bids
  3       are received and are in excess of the amount available for invest-
  4       ment that day for any maturity, awards shall be made available in
  5       ascending order from smallest to largest dollar amount bid, subject
  6       to investment policies of the board.
  7             (b) The market rate shall be determined each business day by
  8       the director of investments, in accordance with any procedures
  9       established by the pooled money investment board. Subject to any
10       policies of the board, the market rate shall reflect the highest rate
11       at which state moneys can be invested on the open market in in-
12       vestments authorized by subsection (a) of K.S.A. 75-4209 and
13       amendments thereto for equivalent maturities.
14             (c) Notwithstanding the provisions of this section, agricultural link de-
15       posits made pursuant to the provisions of sections 1 through 8, and
16       amendments thereto, shall be at zero interest rate.
17             Sec.  11.  K.S.A. 75-4209 and 75-4237 are hereby repealed.
18        Sec.  9. 12. This act shall take effect and be in force from and after
19       its publication in the Kansas register.