MISSISSIPPI LEGISLATURE

1999 Regular Session

To: Public Health and Welfare

By: Senator(s) Bryan

AN ACT TO AMEND SECTION 27-105-365, MISSISSIPPI CODE OF 1972, TO GIVE COMMUNITY HOSPITALS MORE FLEXIBILITY IN REGARD TO WHERE THEY MAY INVEST THEIR FUNDS; TO AUTHORIZE COMMUNITY HOSPITALS TO INVEST SPECIAL FUNDS IN CERTAIN OPEN-END OR CLOSED-END MANAGEMENT TYPE INVESTMENT COMPANIES OR INVESTMENT TRUSTS; TO AUTHORIZE COMMUNITY HOSPITALS TO INVEST AND REINVEST ANY FUNDS RECEIVED BY SUCH HOSPITALS THROUGH ITS OWN ACTIVITIES AND OPERATIONS AND NOT RECEIVED FROM ITS OWNERS IN CERTAIN REAL OR PERSONAL PROPERTY AND IN CERTAIN POOLED OR COMMON FUNDS; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. Section 27-105-365, Mississippi Code of 1972, is amended as follows:

27-105-365. (1) The commissioners or board of trustees of any hospital owned and operated separately or jointly by one or more counties, cities, towns, supervisors districts, or election districts or combinations thereof, including hospitals established under the authority of Sections 41-13-1 through 41-13-9, as now or hereafter amended, are hereby authorized and empowered to deposit the funds of such hospital in one or more financial institutions whose accounts are insured by the Federal Deposit Insurance Corporation, selected by the board * * * of supervisors pursuant to Section 27-105-305, located in its county or counties, except as otherwise provided in the following paragraphs.

At the regular December meeting of the board of trustees in 1995, or at any regular December meeting of the board thereafter, the board may, in its discretion, give notice to all financial institutions in its county or counties whose accounts are insured by the Federal Deposit Insurance Corporation by publication, that bids will be received from financial institutions at the following January meeting, or some subsequent meeting, for the privilege of keeping the hospital funds or any part thereof for a period of three (3) years, subject to earlier termination as authorized in this paragraph. Such bids shall be submitted and accepted in the same manner as provided in Section 27-105-305. After the board has selected a depository or depositories as provided in this paragraph, the board may, at any regular December meeting during the three-year period, give notice to and receive bids from financial institutions in the manner provided in this paragraph, for the privilege of keeping the hospital funds or any part thereof for a period of three (3) years, subject to earlier termination as authorized in this paragraph; and after receiving such bids, the board may reject all bids and elect to keep the funds in the current depository or depositories for the remainder of the three-year period under the terms originally agreed to with the depository or depositories, or if the board determines it to be in the best interests of the hospital, it may terminate the agreement with the current depository or depositories and select a new depository or depositories or the same depository or depositories from the bids received, choosing the bid or bids proposing the best terms for the hospital.

Such hospital funds, when so deposited, shall have the same security and protection as required for county funds in Section 27-105-315. When more than one (1) depository of whatever type is authorized, the said commissioners or board of trustees may select one or more of such depositories and may apportion such deposits, at their discretion, if more than one (1) depository is selected. If there be no financial institution located within such county or counties, the commissioners or board of trustees of such hospital may select, in their discretion, a depository located outside of such county or counties.

The commissioners or boards of trustees of such community hospitals shall deposit the funds of such hospital into the depository selected under this section on the day when they are received or collected, or on the next business day thereafter.

(2) The commissioners or board of trustees of any such hospital may, in their or its discretion, maintain one or more special funds for the purpose of making necessary repairs, necessary purchases of equipment, meeting operational and maintenance expenses, allowing for depreciation, providing contingent funds for emergencies, funding hospital improvements, or providing for other special needs, and may deposit any part of such special fund in accordance with the provisions contained in this subsection (1) of this section for the deposit of other funds of such hospital. The commissioners or board of trustees may also invest any part of such special fund in any bonds or other direct obligations of the United States of America or the State of Mississippi, or of any county, school district or municipality of this state, which such county, school district or municipal bonds have been approved by a reputable bond attorney or have been validated by decree of the chancery court, or in obligations issued or guaranteed in full as to principal and interest by the United States of America which are subject to a repurchase agreement with a financial institution certified as a qualified depository. In any event, the bonds or obligations in which such funds are invested shall mature or be redeemable prior to the time the funds so invested will be needed for expenditures. When bonds or other obligations have been so purchased, the same may be sold or surrendered for redemption at any time by order or resolution of the commissioners or board of trustees of any such hospital, and the president or vice-president, when authorized by such order or resolution, shall have the power and authority to execute all instruments and take such other action as may be necessary to effectuate the sale or redemption thereof. In addition, the commissioners or board of trustees of any such hospital may likewise invest such special funds in an account or accounts in one or more financial institutions located in this state, and such funds when so invested shall have the same security and protection as required in Section 27-105-315. Or the commissioners or board of trustees in any such hospital may likewise invest such special funds in an insured account or accounts in one or more financial institutions in this state, whose accounts are insured by the Federal Deposit Insurance Corporation, * * * provided that the amount in any single account shall not exceed the amount which at any one (1) time is insured by the Federal Deposit Insurance Corporation * * *. Furthermore, the commissioners or board of trustees of any such hospital may, in their or its discretion, invest such special funds in any open-end or closed-end management type investment company or investment trust registered under the provisions of 15 U.S.C. Section 80(a)-1 et seq., provided that the portfolio of such investment company or investment trust is limited to direct obligations issued by the United States of America, United States government agencies, United States government instrumentalities or United States government sponsored enterprises, and to repurchase agreements fully collateralized by direct obligations of the United States of America, United States government agencies, United States government instrumentalities or United States government sponsored enterprises, and the investment company or investment trust takes delivery of such collateral for the repurchase agreement, either directly or through an authorized custodian.

When any such special fund is maintained for a purpose that requires contract letting or other action by the governing authority or authorities of the counties, cities, towns, supervisors districts or election districts, separately or jointly owning and operating such hospital, the commissioners or board of trustees of the hospital may transfer the whole or any part of any such special fund to the governing authority or authorities aforesaid on condition that the same be used for such purpose or returned to the transferring commissioners or board of trustees within the time designated in the conditions.

(3) In addition to an investment otherwise authorized herein or by law, the commissioners or board of trustees of any such hospital may, in their or its discretion, invest and reinvest any funds received by the hospital through its own activities and operations (including borrowed funds) and not received from its owner or owners (a) in any real or personal property deemed advisable by the commissioners or board of trustees, whether or not it produces a current return, including mortgages, stocks, bonds, debentures and other securities of profit or nonprofit corporations, shares in or obligations of associations, partnerships or individuals, and obligations of any government or subdivision or instrumentality thereof, (b) in any pooled or common fund sponsored by one or more hospitals located in the state, or (c) in any other pooled or common fund available for investment, including shares or interests in any open-end or closed-end management type investment company or investment trust registered under the provisions of 15 U.S.C. Section 80(a)-1 et seq.

(4) All funds which shall be derived from any tax levied for the support and maintenance of any such hospital, and all other funds which may be made available for the support and maintenance of any such hospital by the state or any county or municipality, and all fees and other monies which may be collected or received by or for such hospital shall be placed in a special fund to the credit of such hospital within sixty (60) days after collection, and all such funds shall be expended and paid out upon the allowance of the board of trustees or commissioners of said hospital, as the case may be, and disbursed by checks signed by such person, officer or officers, as may be designated by such board of trustees or commissioners. Any officer or person who shall be designated by such board of trustees or commissioners to execute such checks shall furnish to such board of trustees or commissioners a good and sufficient surety bond in such amount as such board of trustees may fix, conditioned upon the faithful discharge of his duties, and the premium on such bond shall be paid from the funds available for the support and maintenance of such hospital. No funds shall be disbursed by any such hospital until the board of trustees or the commissioners thereof shall have adopted an annual budget and submitted same to the respective governing authority or authorities of the counties, cities, towns, supervisors districts, or election districts, separately or jointly owning and operating such hospital, and until such budget shall have been approved by the said governing authority or authorities, as the case may be, which approval shall be evidenced by a proper order recorded upon the minutes of each such authority. The accounts and records of any such hospital shall be audited by the State Department of Audit at the same time and in the same manner as the accounts and financial records of the county are audited, and for such purpose shall be considered in all respects as county accounts and records; provided, however, that this provision with regard to such audits shall be applicable only to hospitals owned wholly or in part by a county.

(5) The provisions of this section shall not apply to hospitals owned jointly by a city and county and operated by lease agreement or contract with a nonprofit hospital corporation.

SECTION 2. This act shall take effect and be in force from and after July 1, 1999.