HF 1830

as introduced - 93rd Legislature (2023 - 2024) Posted on 02/15/2023 03:21pm

A bill for an act
relating to state government; specifying the types of collateral the Executive Council
may approve for deposit with the commissioner of management and budget;
amending Minnesota Statutes 2022, section 9.031, subdivision 3.

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

Section 1.

Minnesota Statutes 2022, section 9.031, subdivision 3, is amended to read:

Subd. 3.

Collateral.

(a) In lieu of the corporate bond required in subdivision 2, a
depository may deposit with the commissioner of management and budget collateral to
secure state funds that are to be deposited with it. The Executive Council must approve the
collateral.

(b) The Executive Council shall not approve any collateral except:

(1) deleted text begin bonds and certificates of indebtedness, other than bonds secured by real estate, that
are legal investments for savings banks under any law of the state; and
deleted text end

(2) deleted text begin bonds of any insular possession of the United States, of any state, or of any agency
of this state, the payment of the principal and interest of which is provided for by other than
direct taxation.
deleted text end

new text begin (1) United States government treasury bills, treasury notes, and treasury bonds;
new text end

new text begin (2) issues of United States government agencies and instrumentalities, as quoted by a
recognized industry quotation service available to the state;
new text end

new text begin (3) general obligation securities of any state other than the state and its agencies or local
government with taxing powers that is rated "A" or better by a national bond rating service,
or revenue obligation securities of any state other than the state and its agencies or local
government with taxing powers which is rated "AA" or better by a national bond rating
service;
new text end

new text begin (4) irrevocable standby letters of credit issued by Federal Home Loan Banks to the state
accompanied by written evidence that the bank's public debt is rated "AA" or better by
Moody's Investors Service, Inc., or Standard & Poor's Corporation; and
new text end

new text begin (5) time deposits that are fully insured by any federal agency.
new text end

(c) The collateral deposited shall be accompanied by an assignment thereof to the state,
which assignment shall recite that:

(1) the depository will pay all the state funds deposited with it to the commissioner of
management and budget, free of exchange or other charge, at any place in this state
designated by the commissioner of management and budget; if the deposit is a time deposit
it shall be paid, together with interest, only when due; and

(2) in case of default by the depository the state may sell the collateral, or as much of it
as is necessary to realize the full amount due from the depository, and pay any surplus to
the depository or its assigns.

(d) Upon the direction of the Executive Council, the commissioner of management and
budget, on behalf of the state, may reassign in writing to the depository any registered
collateral pledged to the state by assignment thereon.

(e) A depository may deposit collateral of less value than the total designation and may,
at any time during the period of its designation, deposit additional collateral, withdraw
excess collateral, and substitute other collateral for all or part of that on deposit. Approval
of the Executive Council is not necessary for the withdrawal of excess collateral.

(f) If the depository is not in default the commissioner of management and budget shall
pay the interest collected on the deposited collateral to the depository.

new text begin (g) In lieu of depositing collateral with the commissioner of management and budget,
collateral may also be placed in safekeeping in a restricted account at a Federal Reserve
bank, or in an account at a trust department of a commercial bank or other financial institution
that is not owned or controlled by the financial institution furnishing the collateral. The
selection shall be approved by the commissioner.
new text end