Bill Text: CA SB116 | 2009-2010 | Regular Session | Enrolled

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: State warrants.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2009-07-28 - Chaptered by Secretary of State. Chapter 23, Statutes of 2009. [SB116 Detail]

Download: California-2009-SB116-Enrolled.html

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BILL NUMBER: SB 116	ENROLLED
	BILL TEXT

	PASSED THE SENATE  MAY 18, 2009
	PASSED THE ASSEMBLY  JULY 24, 2009
	AMENDED IN SENATE  APRIL 28, 2009
	AMENDED IN SENATE  APRIL 21, 2009
	AMENDED IN SENATE  MARCH 19, 2009

INTRODUCED BY   Senator Calderon

                        JANUARY 29, 2009

   An act to amend Sections 16430, 17211, 17212, 17222, 17240, 17243,
17244, 17245, 17253, 17271, 17275, and 17276 of the Government Code,
relating to public finance, and declaring the urgency thereof, to
take effect immediately.



	LEGISLATIVE COUNSEL'S DIGEST


   SB 116, Calderon. State warrants.
   (1) Existing law specifies the types of securities that are
eligible for the investment of surplus state funds.
   This bill would include warrants as a type of security that is
eligible for the investment of surplus state funds.
   (2) Existing law sets forth the procedures for the sale and
payment of registered warrants, reimbursement warrants, and
registered reimbursement warrants, including the manner in which
interest is fixed for the warrants.
   This bill would modify the procedures for the sale of, applicable
interest rates for, and payment of interest for, registered warrants,
reimbursement warrants, and registered reimbursement warrants in
specified circumstances.
   (3) This bill would declare that it is to take effect immediately
as an urgency statute.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  Section 16430 of the Government Code is amended to
read:
   16430.  Eligible securities for the investment of surplus moneys
shall be any of the following:
   (a) Bonds or interest-bearing notes or obligations of the United
States, or those for which the faith and credit of the United States
are pledged for the payment of principal and interest.
   (b) Bonds or interest-bearing notes on obligations that are
guaranteed as to principal and interest by a federal agency of the
United States.
   (c) Bonds, warrants, and notes of this state, or those for which
the faith and credit of this state are pledged for the payment of
principal and interest.
   (d) Bonds or warrants, including, but not limited to, revenue
warrants, of any county, city, metropolitan water district,
California water district, California water storage district,
irrigation district in the state, municipal utility district, or
school district of this state.
   (e) Bonds, consolidated bonds, collateral trust debentures,
consolidated debentures, or other obligations issued by federal land
banks or federal intermediate credit banks established under the
Federal Farm Loan Act, as amended, in debentures and consolidated
debentures issued by the Central Bank for Cooperatives and banks for
cooperatives established under the Farm Credit Act of 1933, as
amended, in bonds or debentures of the Federal Home Loan Bank Board
established under the Federal Home Loan Bank Act, in stock, bonds,
debentures and other obligations of the Federal National Mortgage
Association established under the National Housing Act as amended,
and in the bonds of any federal home loan bank established under that
act, obligations of the Federal Home Loan Mortgage Corporation, in
bonds, notes, and other obligations issued by the Tennessee Valley
Authority under the Tennessee Valley Authority Act as amended, and
bonds, notes, and other obligations guaranteed by the Commodity
Credit Corporation for the export of California agricultural products
under the Commodity Credit Corporation Charter Act as amended.
   (f) (1) Commercial paper of "prime" quality as defined by a
nationally recognized organization that rates these securities.
Eligible paper is further limited to issuing corporations, trusts, or
limited liability companies approved by the Pooled Money Investment
Board that meet the conditions in either subparagraph (A) or
subparagraph (B):
   (A) Both of the following:
   (i) Organized and operating within the United States.
   (ii) Having total assets in excess of five hundred million dollars
($500,000,000).
   (B) Both of the following:
   (i) Organized within the United States as a special purpose
corporation, trust, or limited liability company.
   (ii) Having programwide credit enhancements including, but not
limited to, overcollateralization, letters of credit, or surety bond.

   (2) Purchases of eligible commercial paper may not exceed 180 days'
maturity, represent more than 10 percent of the outstanding paper of
an issuing corporation, trust, or limited liability company, nor
exceed 30 percent of the resources of an investment program. At the
request of the Pooled Money Investment Board, this investment shall
be secured by the issuer by depositing with the Treasurer securities
authorized by Section 53651 of a market value at least 10 percent in
excess of the amount of the state's investment.
   (g) Bills of exchange or time drafts drawn on and accepted by a
commercial bank, otherwise known as bankers acceptances, which are
eligible for purchase by the Federal Reserve System.
   (h) Negotiable certificates of deposits issued by a federally or
state-chartered bank or savings and loan association, a
state-licensed branch of a foreign bank, or a federally or
state-chartered credit union. For the purposes of this section,
negotiable certificates of deposits do not come within the provisions
of Chapter 4 (commencing with Section 16500) and Chapter 4.5
(commencing with Section 16600).
   (i) The portion of bank loans and obligations guaranteed by the
United States Small Business Administration or the United States
Farmers Home Administration.
   (j) Bank loans and obligations guaranteed by the Export-Import
Bank of the United States.
   (k) Student loan notes insured under the Guaranteed Student Loan
Program established pursuant to the Higher Education Act of 1965, as
amended (20 U.S.C. Sec. 1001 and following) and eligible for resale
to the Student Loan Marketing Association established pursuant to
Section 133 of the Education Amendments of 1972, as amended (20
U.S.C. Sec. 1087-2).
   (l) Obligations issued, assumed, or guaranteed by the
International Bank for Reconstruction and Development, the
Inter-American Development Bank, the Asian Development Bank, the
African Development Bank, the International Finance Corporation, or
the Government Development Bank of Puerto Rico.
   (m) Bonds, debentures, and notes issued by corporations organized
and operating within the United States. Securities eligible for
investment under this subdivision shall be within the top three
ratings of a nationally recognized rating service.
  SEC. 2.  Section 17211 of the Government Code is amended to read:
   17211.  Registered warrants described in subdivisions (b) and (c)
of Section 17212 issued in connection with any credit enhancement or
liquidity agreement (including in the form of a letter of credit,
standby purchase agreement, liquidity facility, or other similar
arrangement) entered into by the state to secure or support any
reimbursement warrants or refunding warrants issued pursuant to this
chapter shall be based upon the same claims, and shall have the same
priority as to payment from unapplied money in the General Fund, as
the reimbursement warrants or refunding warrants paid with funds
disbursed under or in connection with the credit enhancement or
liquidity agreement. These warrants shall be issued and registered in
the amounts requested by the provider of the credit enhancement or
liquidity agreement.
  SEC. 3.  Section 17212 of the Government Code is amended to read:
   17212.  (a) Notwithstanding Section 17222, if at any time it is
necessary to register warrants pursuant to this chapter for the
payment of principal of or interest on notes issued pursuant to
Section 17302, the warrants shall bear interest at either the fixed
or variable interest rate specified in the notes as the interest rate
for that warrant or, if no rate is set forth, the fixed or variable
interest rate borne by the notes. In both cases, the interest rate on
those warrants shall not exceed 12 percent per annum.
   (b) Notwithstanding Section 17222, if at any time it is necessary
to register warrants pursuant to this chapter for the payment of any
obligations of the state under any credit enhancement or liquidity
agreement, including in the form of a letter of credit, standby
purchase agreement, reimbursement agreement, liquidity facility, or
other similar arrangement, authorized pursuant to Section 5922, the
warrants shall bear interest at the fixed or variable rate specified
in the credit enhancement or liquidity agreement as the interest rate
for those warrants. Those registered warrants may provide for
periodic payment of interest thereon prior to redemption.
   (c) Notwithstanding Section 17222, if at any time it is necessary
to register warrants pursuant to this chapter for the payment of any
periodic interest payment on registered warrants described in
subdivision (b), the warrants shall bear interest at the fixed or
variable rate specified in the credit enhancement or liquidity
agreement as the interest rate for those warrants and shall be
payable only upon redemption of the warrants.
   (d) Notwithstanding subdivisions (b) and (c), in no case shall the
total sum of interest payments under the credit enhancement or
liquidity agreement and on any warrants described in subdivisions (b)
and (c) exceed the amount of the appropriation pursuant to law for
the payment of interest under the credit enhancement or liquidity
agreement.
  SEC. 4.  Section 17222 of the Government Code is amended to read:
   17222.  By a majority vote, the committee shall fix the rate of
interest paid on registered warrants at not more than 5 percent per
annum, except, if the committee determines that it is in the best
interests of the state to do so, the committee may fix the rate of
interest paid on any registered warrants at no more than 12 percent
per annum.
  SEC. 5.  Section 17240 of the Government Code is amended to read:
   17240.  As used in this chapter:
   (a) "Reimbursement warrants" refers to warrants drawn by the
Controller on the General Fund pursuant to this article to reimburse
the General Cash Revolving Fund for demands against the General Fund
for which warrants were drawn against the General Cash Revolving
Fund.
   (b) "Refunding warrants" refers to warrants drawn by the
Controller on the General Fund pursuant to this article to provide
funds for the payment of reimbursement warrants bearing a fixed
maturity date or warrants issued pursuant to Section 17211.
  SEC. 6.  Section 17243 of the Government Code is amended to read:
   17243.  The Controller may fix a maturity date for reimbursement
warrants, and indorse upon each warrant, the date upon which the
principal amount of the warrant will be paid and redeemed. The
Controller, with the concurrence of the Department of Finance and the
Office of the State Treasurer, may fix periodic payment dates for
interest on reimbursement warrants or provide that interest on
reimbursement warrants be paid only upon redemption, provided that
interest on registered reimbursement warrants for which the committee
has not fixed a maximum rate of interest pursuant to Section 17244
shall be paid only upon redemption of the registered reimbursement
warrant.
  SEC. 7.  Section 17244 of the Government Code is amended to read:
   17244.  (a) Notwithstanding any other provision of law, in lieu of
prescribing a precise interest rate on registered reimbursement
warrants, the committee may fix a maximum rate of interest for the
warrants, not to exceed 12 percent per annum for either fixed or
variable interest rate warrants, and prescribe that the interest rate
on the warrants, not in excess of that maximum, shall be either of
the following:
   (1) Fixed in accordance with the best bids for the warrants if the
warrants are sold at public sale.
   (2) Fixed or variable on the terms and conditions the Controller
shall approve at the time of sale of the warrants if the warrants are
sold in negotiated sales.
   (b) Different rates of interest for any reimbursement warrants may
be so fixed or established by the Controller.
  SEC. 8.  Section 17245 of the Government Code is amended to read:
   17245.  Registered reimbursement warrants shall be sold by the
Controller at public sale to the best bidders or in negotiated sales
on the terms and conditions the Controller shall approve, but at no
less than face value of the registered reimbursement warrants
offered.
  SEC. 9.  Section 17253 of the Government Code is amended to read:
   17253.  The proceeds of the sale of any registered reimbursement
warrant shall be deposited in the State Treasury; an amount equal to
its face value shall be credited to the General Cash Revolving Fund;
and any premium received shall be deposited in the General Fund and
used for the payment of interest on the registered reimbursement
warrants.
  SEC. 10.  Section 17271 of the Government Code is amended to read:
   17271.  (a) A registered warrant that bears a maturity date shall
be paid by the Treasurer upon that date out of any unapplied money in
the General Fund on the due date, available therefor.
   (b) Notwithstanding subdivision (a), accrued interest on a
registered reimbursement warrant shall be paid by the Treasurer on
each payment date established pursuant to Section 17243 out of any
unapplied money in the General Fund available therefor on the payment
date.
   (c) Notwithstanding subdivision (a), a registered reimbursement
warrant may provide that it may be redeemed at the option of the
committee prior to the maturity date of the warrant at a redemption
price not to exceed 110 percent of the principal amount of the
warrant plus accrued interest. The optional redemption price shall be
paid by the Treasurer out of any unapplied money in the General Fund
available therefor on the optional redemption date.
  SEC. 11.  Section 17275 of the Government Code is amended to read:
   17275.  Any interest paid on any registered warrant shall accrue
to the person holding the warrant on the date of redemption, except a
registered reimbursement warrant may provide otherwise. A registered
warrant ceases to bear interest on the first of the following dates:

   (a) The maturity date indorsed on its face, if any, if on that
date unapplied money or the proceeds of refunding warrants are
available for its payment.
   (b) The date of redemption, so long as the date is at least three
days following the first day of published notice pursuant to Section
17273.
   (c) The date specified in subdivision (b) of Section 17280.1.
  SEC. 12.  Section 17276 of the Government Code is amended to read:
   17276.  (a) If on the maturity date indorsed on a registered
reimbursement warrant, there is no money available for its payment,
either from unapplied money, or from the proceeds of refunding
warrants the registered reimbursement warrant shall continue to bear
interest on the principal amount of the warrant and shall become
payable in the same manner as registered warrants not bearing
maturity dates.
   (b) Notwithstanding Section 17222, if at any time it is necessary
to register warrants pursuant to this chapter for the payment of any
interest payment on a registered reimbursement warrant, those
warrants shall bear interest at the fixed or variable rate determined
by the Controller and as specified in the registered reimbursement
warrant as the interest rate for those warrants. Interest on those
warrants shall be payable only upon redemption of the warrants.
   (c) Notwithstanding subdivision (b), in no case shall the total
sum of interest payments on the registered reimbursement warrant and
the warrants registered for the payment of any interest payment on
that registered reimbursement warrant exceed an amount equal to the
interest that could have accrued on the registered reimbursement
warrant at the maximum interest rate that could have been fixed by
the committee thereon pursuant to subdivision (a) of Section 17244.
  SEC. 13.  This act is an urgency statute necessary for the
immediate preservation of the public peace, health, or safety within
the meaning of Article IV of the Constitution and shall go into
immediate effect. The facts constituting the necessity are:
   In order to allow the state to promptly respond to its financial
needs and improve its ability to sell various warrants at the lowest
possible cost, it is necessary that this act take effect immediately.