House Bill 953

AN ACT TO AMEND SECTIONS 19-9-29, 21-33-323 AND 37-59-43, MISSISSIPPI CODE OF 1972, TO ALLOW COUNTIES, MUNICIPALITIES AND SCHOOL DISTRICTS TO INVEST SURPLUS FUNDS IN BONDS ISSUED BY CERTAIN GOVERNMENT SPONSORED ENTERPRISES THAT ARE OF THE HIGHEST-RATED CREDIT QUALITY; AND FOR RELATED PURPOSES.

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

SECTION 1. Section 19-9-29, Mississippi Code of 1972, is amended as follows:

19-9-29. Whenever any county has on hand any bond and interest funds, any funds derived from the sale of bonds, special funds, or any other funds in excess of the sums that will be required to meet the current needs and demands of no more than seven (7) business days, the board of supervisors of the county shall invest the excess funds in the following manner:

(a) The excess funds shall be invested for periods of from fourteen (14) days to one (1) year in interest-bearing time certificates of deposit with county depositories serving in accordance with Section 27-105-303 that are willing to accept the same, at a negotiated rate of interest. The negotiated rate of interest shall be at the highest rate possible at the date of purchase or investment for those time certificates of deposit or interest-bearing accounts, but the rate of interest shall not be less than the rate of interest paid to the general public on passbook savings. The rate of interest established in this paragraph (a) shall be the minimum rate of interest and there shall be no maximum rate of interest.

(b) The balance, if any, of the excess funds shall be invested in interest-bearing time certificates of deposit for the same maturity periods and at the same rate of interest as prescribed in paragraph (a) of this section in state depositories located in the county that are willing to accept the same, to the same extent as the depositories are eligible for invested state funds.

(c) To the extent that the board of supervisors finds that the excess funds cannot be invested under paragraphs (a) and (b) of this section for the stated maturity of from fourteen (14) days to one (1) year, the board of supervisors may:

(i) Invest the funds in any bonds or other direct obligations of the United States of America, the State of Mississippi, or any county, municipality or school district of this state, if the county, municipal or school district bonds have been approved by a reputable bond attorney or have been validated by a decree of the chancery court;

(ii) Invest the funds, together with any other funds required for current operation, in obligations issued or guaranteed in full as to principal and interest by the United States of America that are subject to a repurchase agreement with a county or state depository;

(iii) Invest the funds in any bonds issued by the Federal Home Loan Bank System, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation or the Federal Farm Credit Bank that are of the highest-rated credit quality; or * * *

(iv) Deposit the funds in interest-bearing accounts with a county or state depository.

The bonds or obligations purchased may have any maturity date, provided that they shall mature or be redeemable before the time that the funds so invested will be needed for expenditure.

Any excess funds invested in certificates of deposit or interest-bearing accounts with county or state depositories under this section shall be secured in the manner required by Section 27-105-315. The proceeds of the certificates of deposit shall be immediately reinvested on the date of maturity in accordance with paragraphs (a), (b) and (c) of this section, unless the board of supervisors determines that the funds are required for current operation.

When bonds or other obligations have been purchased, the same may be sold or surrendered for redemption at any time, except certificates of deposit that must mature, by order or resolution of the board of supervisors. The president of the board of supervisors, when authorized by that 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 of the bonds or other obligations. When the bonds or other obligations are sold or redeemed, the proceeds of the sale or redemption, including accrued interest on the proceeds, shall be paid into the same fund as that from which the investment was made and shall in all respects be dealt with as are other monies in the fund.

Except as hereinafter provided, any interest derived from the investments authorized in this section may, as an alternative, be deposited into the general fund of the county. Any interest derived from the investment of sums received under the terms of the federal State and Local Fiscal Assistance Act of 1972 and any later revisions or reenactments of that act shall be paid into the same fund as that from which the investment was made. Any interest derived from the investment of school bond funds shall be handled as provided in Section 37-59-43. Any interest derived from investment of other bond proceeds or from investment of any bond and interest fund, bond reserve fund or bond redemption sinking fund shall be deposited either in the same fund from which the investment was made or in the bond and interest fund established for payment of the principal or interest on the bonds. Any interest derived from special purpose funds that are outside the function of general county government shall be paid into that special purpose fund.

SECTION 2. Section 21-33-323, Mississippi Code of 1972, is amended as follows:

21-33-323. Whenever any municipality has on hand any bond and interest funds, any funds derived from the sale of bonds, special funds, or any other funds in excess of the sums that will be required for immediate expenditure and that are not needed or cannot by law be used for the payment of the current obligations or expenses of the municipality, the governing authorities of the municipality shall have the power and authority to invest the excess funds in:

(a) Any bonds or other direct obligations of the United States of America or the State of Mississippi, or of any county or municipality of this state, or of any school district, which * * * county or municipal or school district bonds have been approved by a reputable bond attorney or have been validated by a decree of the chancery court; * * *

(b) Any obligations issued or guaranteed in full as to principal and interest by the United States of America that are subject to a repurchase agreement with a qualified depository; or

(c) Any bonds issued by the Federal Home Loan Bank System, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation or the Federal Farm Credit Bank that are of the highest-rated credit quality.

In any event, the bonds or obligations in which the funds are invested shall mature or be redeemable before the time the funds so invested will be needed for expenditure.

However, the excess funds may first be offered for investment in interest-bearing time certificates of deposit with municipal depositories serving in accordance with Section 27-105-353 at a rate of interest not less than a simple interest rate numerically equal to the average bank discount rate on United States Treasury bills of comparable maturity. The rate of interest established in this section shall be the minimum rate of interest and there shall be no maximum rate of interest. The excess funds may also be invested in time certificates of deposit in state depositories located in the municipality to the same extent as the depositories are eligible for invested state funds.

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 governing authorities of the municipality, and the mayor of the municipality, when authorized by that 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 of the bonds or other obligations. When the bonds or other obligations are sold or redeemed, the proceeds of the sale or redemption, including accrued interest on the proceeds, shall be paid into the same fund as that from which the investment was made and shall in all respects be dealt with as are other monies in the fund.

Except as hereinafter provided, any interest derived from the investments authorized in this section may, as an alternative, be deposited into the general fund of the municipality. Any interest derived from the investment of sums received under the terms of the federal State and Local Fiscal Assistance Act of 1972 and any later revisions or reenactments of that act shall be paid into the same fund as that from which the investment was made. Any interest derived from the investment of school bond funds shall be handled as provided in Section 37-59-43. Any interest derived from investment of other bond proceeds or from investment of any bond and interest fund, bond reserve fund or bond redemption sinking fund shall be deposited either in the same fund from which the investment was made or in the bond and interest fund established for payment of the principal or interest on the bonds. Any interest derived from special purpose funds that are outside the function of general municipal government shall be paid into that special purpose fund.

The authority granted by this section shall be cumulative and in addition to any other law relating to the investment of funds by municipalities.

SECTION 3. Section 37-59-43, Mississippi Code of 1972, is amended as follows:

37-59-43. (1) Whenever any school district or levying authority, as defined in Section 37-57-1(1)(b), acting on behalf of a school district, has on hand any bond and interest funds, any funds derived from the sale of bonds, or any other funds in excess of the sums that will be required for payment of current obligations and expenses as they come due, and that are not needed or cannot by law be used for the payment of the current obligations or expenses of the school district, the school board of the district shall have the power and authority to invest the excess funds in:

(a) Any bonds or other direct obligations of the United States of America or the State of Mississippi, or of any county or municipality of this state, which * * * county or municipal bonds have been approved by a reputable bond attorney or have been validated by a decree of the chancery court;

(b) Any bonds issued by the Federal Home Loan Bank System, the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation or the Federal Farm Credit Bank that are of the highest-rated credit quality;

(c) Interest-bearing time certificates of deposit or interest-bearing accounts with any financial institution approved for the deposit of state funds, and the institution shall be eligible to hold school district funds to the extent that it is qualified as a depository for state funds; or * * *

(d) Any type of investment permitted by Sections 27-105-33(d) and 27-105-33(e).

The rate of interest on the time certificates of deposit and interest-bearing accounts may be negotiated. The negotiated rate of interest shall be at the highest rate possible at the date of purchase or investment for the time certificates of deposit or interest-bearing accounts. In any event, the bonds or obligations in which the funds are invested shall mature or be redeemable before the time the funds so invested will be needed for expenditure.

When bonds or other obligations have been so purchased, the same may be sold or surrendered for redemption at any time, except certificates of deposit that must mature, by order or resolution of the school board, and the president of the school board, when authorized by that 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 of the bonds or other obligations. In addition to the foregoing, any school board may invest any of the funds in the same manner as provided for the investment of sixteenth section principal funds under Section 29-3-113.

(2) The provisions of subsection (1) of this section shall also apply to funds of community and junior college districts, and the governing authorities of those districts are vested with all power and authority with respect to those funds and matters * * * mentioned in this section as are vested in the other boards mentioned above with respect to those matters.

(3) All earnings from funds other than bond funds or bond sinking funds in excess of One Hundred Dollars ($100.00) in any fiscal year that are invested according to the provisions of subsections (1) and (2) of this section shall be deposited in the district fund from which the investment was made, or the treasury of the community or junior college, as the case may be. Earnings from the school district funds that are less than One Hundred Dollars ($100.00) in any fiscal year may be deposited in the school district maintenance fund, or in the district fund from which the investment was made, in the discretion of the school board. Earnings from funds invested out of bond funds or bond sinking funds, together with the principal thereof, shall be deposited in the fund from which the investment was made.

(4) Nothing contained in this section shall be construed to prevent the payment of a portion of the earnings derived from the investment of bond proceeds or any other amounts in the bond fund or related reserve or sinking funds to the federal government to the extent required by the federal laws applicable to the bonds or the interest income on the bonds in order to maintain their tax exempt status.

SECTION 4. This act shall take effect and be in force from and after its passage.