Bill Text: IN HB1336 | 2010 | Regular Session | Amended
Bill Title: Mortgages and public deposits.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Passed) 2010-03-26 - Section 21 effective 07/01/2010 [HB1336 Detail]
Download: Indiana-2010-HB1336-Amended.html
Citations Affected: IC 5-10.2; IC 5-13; IC 28-1; IC 34-30.
Effective: Upon passage; July 1, 2010.
January 13, 2010, read first time and referred to Committee on Financial Institutions.
January 28, 2010, amended, reported _ Do Pass.
Digest Continued
quoting the highest interest rate with the authority to invest in a depository offering any one of the top three interest rates so long as the reason for choosing the alternate depository is noted in the memorandum of quotes. Provides that a unit may not invest more than 50% of the unit's total public funds that are invested at any point in time in nonfederally insured deposit accounts. Adds federally chartered credit unions as a type of financial institution that may become a depository for public funds. Limits the maximum deposit of state and local public funds a federally chartered credit union may have at any time to 20% of the total shares of the federally chartered credit union. Requires the board for public depositories to meet at least once each calendar quarter. Provides for geographical representation on the board for public depositories. Requires the four governor appointments to include a chief executive officer or a chief financial officer of a depository and that each appointment represent a different segment of the financial institutions industry based on total assets. Specifies that the terms of the appointed member is four years and that a member's term does not extend beyond the appointed term. Permits the governor to reappoint a member if the individual meets the requirements at the time of reappointment. Provides that a simple majority of the board members voting is required to approve an action by the board instead of a unanimous vote. Changes the notice requirement for meeting notices from ten days to two days. Allows the board to fix the assessment rate at the times the board determines are necessary instead of twice each year. Provides that the board for depositories may consider capital adequacy, liquidity, and asset quality in addition to any study by actuaries in establishing any change in the reserve for losses. Increases the amount of anticipatory warrants the board may issue to pay immediate claims when the assets in the public deposit insurance fund are not sufficient to pay claims from $1,500,000 to $300,000,000. Permits the board to accept as collateral bonds or other obligations that the board could not invest in if the board determines the obligations are acceptable collateral. Permits the board to determine whether a depository may withdraw collateral when the amount of public funds on deposit is at least 10% less than the market value of securities pledged as collateral. Allows the board to determine the amount and type of substituted securities a depository may provide to insure the insurance fund's solvency. Provides that the market value of the substituted securities as of the date of delivery may be less than, but not exceed, the amount determined by the board. Provides that a joint investment fund may be invested or reinvested only in investments that are permitted for political subdivisions. Limits the maximum deposit of state and local public funds a public depository may have at any time to 100% of the balance in the public deposit insurance fund unless the depository securitizes the excess amount of the deposit with assets of the depository. Eliminates a report by the public employees' retirement fund to the board for depositories' secretary-investment manager and an interest calculation concerning the coverage of local police and firefighter pension funds.
PRINTING CODE. Amendments: Whenever an existing statute (or a section of the Indiana Constitution) is being amended, the text of the existing provision will appear in this style type, additions will appear in this style type, and deletions will appear in
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A BILL FOR AN ACT to amend the Indiana Code concerning state
and local administration.
Chapter 11. Divestment From Aggressive Lenders
Sec. 1. As used in this chapter, "aggressive lender" has the meaning set forth in IC 28-1-2-40(b).
Sec. 2. As used in this chapter, "board" refers to the following:
(1) The board of trustees of the Indiana state teachers' retirement fund.
(2) The board of trustees of the public employees' retirement fund.
Sec. 3. As used in this chapter, "cost of divestment" means the sum of the following:
(1) The costs associated with the sale, redemption, divestment, or withdrawal of an investment.
(2) The costs associated with the acquisition and maintenance of a replacement investment.
(3) A cost not described in subdivision (1) or (2) that is incurred by the fund in connection with a divestment transaction.
Sec. 4. (a) As used in this chapter, "direct holdings" means all securities of a company held directly by a fund or in an account in which the fund owns all shares or interests.
(b) The term does not include securities of a company that are:
(1) held in an account or a fund; and
(2) managed by one (1) or more persons:
(A) who are not employed by the fund; and
(B) in which the fund owns shares or interests together with other investors not subject to this chapter.
Sec. 5. As used in this chapter, "fund" refers to the following:
(1) The Indiana state teachers' retirement fund.
(2) The public employees' retirement fund.
Sec. 6. Each calendar quarter, after the department of financial institutions publishes its quarterly update of the aggressive lender list in the Indiana Register under IC 28-1-2-40(f), the board shall immediately identify the companies on the aggressive lender list in which the fund administered by the board has direct holdings.
Sec. 7. (a) If a lender appears on the aggressive lender list under IC 28-1-2-40(f) for a continuous period of one hundred eighty (180) days, and continues to remain on the aggressive lender list for the time periods specified in subdivisions (1) through (3), the fund shall sell, redeem, divest, or withdraw all publicly traded securities of the lender that are held as direct holdings by the fund, as follows:
(1) At least fifty percent (50%) of the securities shall be removed from the fund's assets under management within three (3) years after the lender's appearance on the aggressive lender list.
(2) At least seventy-five percent (75%) of the securities shall be removed from the fund's assets under management within four (4) years after the lender's appearance on the aggressive lender list.
(3) One hundred percent (100%) of the securities shall be removed from the fund's assets under management within five (5) years after the lender's appearance on the aggressive lender list.
(b) A board is not required to divest the board's direct holdings in an aggressive lender under subsection (a) if the estimated cost of divestment is greater than ten percent (10%) of the total value of the board's direct holdings in the aggressive lender. The board
shall include any direct holdings in an aggressive lender that are
exempted from divestment under this subsection in the board's
report submitted to the legislative council under section 9 of this
chapter.
Sec. 8. A fund shall not acquire securities of lenders on the
aggressive lender list.
Sec. 9. (a) On or before November 1, 2011, and as directed by
the legislative council, each board shall submit a report in an
electronic format under IC 5-14-6 to the legislative council.
Notwithstanding IC 5-14-6-4(b)(2), the submission of a report
under this subsection to the executive director of the legislative
services agency fulfills the board's requirement to send a copy of
the report to each member of the general assembly using the
member's senate or house of representatives electronic mail
address.
(b) A report submitted by the board of a fund under this section
must include at least the following information, as of the date of the
report:
(1) All investments sold, redeemed, divested, or withdrawn by
the fund in compliance with section 7(a) of this chapter.
(2) All direct holdings in an aggressive lender that are
exempted from divestment under section 7(b) of this chapter.
(3) A copy of the most recently published aggressive lender
list under IC 28-1-2-40(f).
Sec. 10. With respect to actions taken in compliance with this
chapter, a fund is exempt from any conflicting statutory or
common law obligations, including any obligations with respect to
choice of asset managers, investment funds, or investments for
fund securities portfolios.
Sec. 11. (a) Both:
(1) the state and its officers, agents, and employees; and
(2) each fund and its board members, executive director,
officers, agents, and employees;
are immune from civil liability for any act or omission related to
the removal of an asset from the fund under this chapter.
(b) In addition to the immunity provided under subsection (a),
both:
(1) the officers, agents, and employees of the state; and
(2) the board members, executive director, officers, agents,
and employees of a fund;
are entitled to indemnification from the fund for all losses, costs,
and expenses, including reasonable attorney's fees, associated with
defending against any claim or suit relating to an act authorized
under this chapter.
(1) A bank, trust company, or mutual savings bank that:
(A) was incorporated under the law of Indiana or any other state; and
(B) has its principal office or a branch in Indiana.
(2) A national banking association with its principal office or a branch in Indiana.
(3) A savings association operating as a deposit association incorporated under Indiana law.
(4) A federally chartered savings association with its principal office or a branch in Indiana.
(5) A federally chartered savings bank with its principal office or a branch in Indiana.
(6) A state chartered credit union in Indiana that is federally insured or privately insured and that has assets of three million dollars ($3,000,000) or more.
(7) A federally chartered credit union that has assets of three million dollars ($3,000,000) or more and with its principal office or a branch in Indiana.
(b) Each board of finance of a political subdivision:
(1) that is not a city, town, or school corporation; and
(2) whose jurisdiction crosses one (1) or more county lines;
may limit its boundaries for the purpose of this section to that portion of the political subdivision within the county where its principal office is located.
(c) If there is no principal office or branch of a financial institution located in the county or political subdivision, or if no financial institution with a principal office or branch in the county or political subdivision will accept public funds under this chapter, the board of finance of the county and the boards of finance of the political subdivisions in the county shall designate one (1) or more financial institutions with a principal office or branch outside of the county or political subdivision, and in the state, as a depository or depositories.
(d) The board of trustees for a hospital organized or operated under IC 16-22-1 through IC 16-22-5 or IC 16-23-1 may invest any money in the hospital fund anywhere in the state with any financial institution designated by the state board of finance as depositories for state deposits.
(e) If only one (1) financial institution that has a branch or principal office in a county or political subdivision is willing to accept public funds, the board of finance for the county or political subdivision may:
(1) treat the financial institution that is located within the county or political subdivision as if the financial institution were not located within the county or political subdivision; and
(2) designate one (1) or more financial institutions to receive public funds under the requirements of subsection (c).
(f) The investing officer shall maintain the deposits as follows:
(1) In one (1) or more depositories designated for the political subdivision, if the sum of the monthly average balances of all the transaction accounts for the political subdivision does not exceed one hundred thousand dollars ($100,000).
(2) In each depository designated for the political subdivision, if subdivision (1) does not apply and fewer than three (3) financial institutions are designated by the local board of finance as a depository.
(3) In at least two (2) depositories designated for the political subdivision, if subdivision (1) does not apply and at least three (3) financial institutions are designated by the local board of finance as a depository.
(g) This subsection applies to a depository that is a federally chartered credit union. An investing officer may not make a deposit and the federally chartered credit union may not accept a deposit of public funds if the deposit would cause the federally chartered credit union to have total deposit accounts and investments of public funds that exceed twenty percent (20%) of the total shares of the federally chartered credit union as of the end of the preceding calendar quarter. However, a deposit that complies with this subsection when the deposit is made remains legal even if a subsequent decrease in the value of the total shares of the federally chartered credit union causes the percentage of investments and deposit accounts of public funds to exceed twenty percent (20%) of the total shares of the federally chartered credit union.
in section 1 of this chapter may deposit, invest, or reinvest any funds
that are held by the officer and available for investment in transaction
accounts issued or offered by a designated depository of a political
subdivision for the rates and terms agreed upon periodically by the
officer making the investment and the designated depository.
(b) The investing officer making a deposit in a certificate of deposit
shall obtain quotes of the specific rates of interest for the term of that
certificate of deposit that each designated depository will pay on the
certificate of deposit. Quotes may be solicited and taken by telephone.
A memorandum of all quotes solicited and taken shall be retained by
the investing officer as a public record of the political subdivision
under IC 5-14-3. A deposit made under this subsection shall be If the
deposit is not placed in the designated depository quoting the highest
rate of interest, If more than one (1) depository submits a quote of the
highest interest rate quoted for the investment, the deposit may be
placed in any or all of the designated depositories quoting the highest
rate in the amount or amounts determined by the investing officer, in
the investing officer's discretion. the investing officer shall:
(1) place the deposit in the depository quoting the second or
third highest rate of interest; and
(2) note the reason for placing the deposit on the
memorandum of quotes.
(c) If all of the designated depositories of a political subdivision
decline to issue or receive any deposit account, or to issue or receive
the deposit account at a rate of interest equal to the highest rate being
offered other investors, investments may be made in the deposit
accounts of any financial institution designated for state deposits as a
depository by the state board of finance under IC 5-13-9.5.
(b) With respect to any money to be invested in a deposit account under subsection (a), the investing officer shall solicit quotes for the
certificates of deposit from at least three (3) depositories. If only one
(1) depository has been designated for the political subdivision by its
local board of finance, a quote must be solicited from that depository.
If two (2) or more depositories have been designated for the political
subdivision by its local board of finance, at least two (2) quotes must
be solicited from the depositories thus designated. The quotes may be
solicited and taken by telephone. A memorandum of all quotes solicited
and taken shall be retained by the investing officer as a public record
of the political subdivision under IC 5-14-3.
(c) Investments in any certificates of deposit to which this section
applies shall be placed in the depository quoting the highest rate of
interest under subsection (b), as determined after deducting any fee
charged by the depository. If two (2) or more depositories submit the
same highest quote, the investment shall be placed as follows:
(1) If only one (1) of the highest quoters is a depository
designated for the political subdivision by its local board of
finance, the investment shall be placed in that depository.
(2) If more than one (1) of the highest quoters are depositories
designated for the political subdivision by its local board of
finance, the investment shall be placed by the investing officer in
any or all of these depositories in the amount or amounts
determined by the investing officer, in the investing officer's
discretion.
(3) If none of the highest quoters is a depository designated for
the political subdivision by its local board of finance, the
investment shall be placed by the investing officer in one (1) of
the depositories submitting the highest quote.
(c) If a deposit is not placed in the designated depository quoting
the highest rate of interest, the investing officer shall follow the
procedures and priority for placing deposits that are set forth in
section 4 of this chapter and note the reason for placing the deposit
on the memorandum of quotes.
estimate the service charge and adjust the interest rate based on this
estimate. The service charge may be paid by direct charge to the
deposit or other account or in any other manner mutually agreed upon
by the investing officer and the depository. A service charge may not
be imposed on a political subdivision for the purchase of a United
States Treasury Note.
(1) Purchase securities on margin.
(2) Open a securities margin account for the investment of public funds.
(3) Invest more than fifty percent (50%) of the unit of government's total public funds that are invested at any point in time in nonfederally insured deposit accounts under this chapter.
(b) An investing officer of a political subdivision that enters into a written master agreement under subsection (a) may pay funds that are held by the investing officer and that are available for investment into the joint investment fund.
(c) The fund shall be administered by a board, which must be comprised of the investing officer of each of the participating political subdivisions and which must be an instrumentality of the participating political subdivisions. Each officer of a political subdivision located within the county who is designated in section 1 of this chapter may pay funds that are held by the officer and available for investment into a joint fund known as a joint investment fund. The fund is administered by a board comprised of the investing officer of each of the participating political subdivisions and is an instrumentality of the participating political subdivisions.
(d) A joint investment fund must be invested and reinvested as a separate and individual fund. A joint investment fund may be invested or reinvested only in investments that are permitted for political subdivisions by this chapter.
(e) A written master agreement under subsection (a) must provide
the following:
(1) A political subdivision may participate in a joint investment
fund only with the written authorization of its local board of
finance.
(2) A political subdivision may participate in a joint investment
fund only if its legislative body approves the written master
agreement.
(3) The board of a joint investment fund shall establish written
policies for the investment and reinvestment of joint investment
funds in the manner provided by IC 30-4-3-3.
(4) A fund shall be invested and reinvested as prescribed in
subdivision (3).
(5) A custodian bank or trust company located in Indiana must:
(A) be selected and contracted by the board of a joint
investment fund to hold the securities and other investments
of the joint investment fund;
(B) collect the income and other receipts from the securities
and other investments; and
(C) provide any other services appropriate and customary for
a custodian;
subject to the direction of the board of a joint investment fund.
(6) The board of a joint investment fund may select and contract
with a fund administrator to provide investment advice to the
board and any other services determined by the board to be
appropriate and necessary for the efficient administration and
accounting of the joint investment fund. The fund administrator
shall agree to recommend only securities and other investments
as prescribed in the written policies established by the board in
rendering investment advice to the board and shall agree to be
responsible, accountable, and liable for any breach of this
provision. The fund administrator must have experience in the
investment of public funds for governmental entities and must be
either of the following:
(A) A financial institution located in Indiana.
(B) Registered as an investment adviser with the United States
Securities and Exchange Commission under the Investment
Advisers Act of 1940, as amended (15 U.S.C. 80a-9 et seq.),
with public funds under management in the amount of at least
one hundred million dollars ($100,000,000).
(7) A joint investment fund must be audited at least annually by
an independent auditing firm, with a copy of the audit provided to
each participating political subdivision.
(8) The administrative expenses of a joint investment fund, including fees for the fund administrator, custodian, auditor, and other professional services, must be paid from the fund's interest earnings.
(9) The interest earnings that exceed the administrative expenses of a joint investment fund must be credited to each political subdivision participating in the joint investment fund in a manner that equitably reflects the differing amounts and terms of the political subdivision's investment in the joint investment fund.
(10) Each participating political subdivision shall receive reports, including a daily transaction confirmation reflecting any activity in the political subdivision's account and monthly reports reflecting its investment activity in the joint investment fund and the performance and composition of the joint investment fund itself.
(11) The board of a joint investment fund shall meet at least annually to review the operation and performance of the joint investment fund, the custodian, the fund administrator, the auditor, and any other professional retained by the board.
(12) The board of a joint investment fund shall provide for any other policies that are necessary for the efficient administration and accounting of the joint investment fund and are consistent with the law governing the investment, management, deposit, and safekeeping of public funds of political subdivisions.
(b) An application must:
(1) be made in writing on forms prescribed under section 8 of this chapter;
(2) contain terms and conditions as required and authorized by this chapter; and
(3) offer to:
(A) receive public funds of the state on deposit; and
(B) provide the security required by IC 5-13-13-7 for the safekeeping and prompt payment of the deposited funds.
(c) A financial institution is ineligible to become a depository and receive public funds of the state if the institution fails to maintain a capital ratio in excess of the minimum required by the governmental supervisory body of the institution. If the financial institution is already a depository, the institution may continue to hold the public funds until maturity to avoid the imposition of a penalty upon the depositor, although the financial institution may not accept the public funds for reinvestment and may not accept additional public funds. A determination of the ratio described in this subsection must be based on the institution's most recent periodic statement of condition filed with the institution's governmental supervisory body under the regulatory accounting principles as prescribed by the supervisory body.
(d) A financial institution is ineligible to become a depository and receive public funds of the state during any period in which the institution is determined to be an aggressive lender by the department of financial institutions under IC 28-1-2-40. If the financial institution is already a depository, the institution may continue to hold the public funds until maturity to avoid the imposition of a penalty upon the depositor, although the financial institution may not accept the public funds for reinvestment and may not accept additional public funds.
(1) satisfies the requirements of subsection (c);
(2) is not an aggressive lender as determined by the department of financial institutions under IC 28-1-2-40; and
(A) the total principal amount of the depository's outstanding loans to Indiana residents; plus
(B) the total value of the depository's investments in Indiana residents;
is at least equal to the total amount of public funds of the state and political subdivisions of the state that are on deposit in the depository.
The board may rely on a certificate furnished under this subsection in determining whether to deposit public funds or reinvest public funds in the institution.
revoke the commission of any depository at any time for any cause
considered sufficient by the board for depositories.
(b) The causes for which the board for depositories may revoke the
commission of a depository under subsection (a) include:
(1) the failure of the depository to conduct lending activities in
Indiana to such an extent that, at the end of each quarter, pursuant
to the depository's certification, the sum of:
(1) (A) the total principal amount of the depository's
outstanding loans to Indiana residents (as defined in
IC 5-13-8-7); plus
(2) (B) the total value of the depository's investments in
Indiana residents (as defined in IC 5-13-8-7);
is at least equal to the total amount of public funds of the state and
political subdivisions of the state that are on deposit in the
depository; or
(2) the determination by the department of financial
institutions under IC 28-1-2-40 that the depository is an
aggressive lender.
(c) Upon revocation, the depository shall immediately render an
accounting and make settlement for all public funds deposited with the
depository.
(1) the lesser of the following:
(A) fifty percent (50%) of the combined capital, surplus, and undivided profits of that depository, as determined by its last published statement of condition filed with the treasurer of state; or
(B) the amount that would cause the total investments and deposit accounts of public funds in the designated depository to exceed one hundred percent (100%) of the balance in the public deposit insurance fund as of the end of the preceding calendar quarter, unless the depository securitizes the excess amount of the deposit with assets of the depository; or
(2) in the case of a federally chartered credit union, twenty percent (20%) of the total shares of the federally chartered credit union.
(b) A deposit that is not prohibited by subsection (a)(1)(B) when
the deposit is made in a depository remains legal even if a
subsequent decrease in the balance in the public deposit insurance
fund causes the investments and deposit accounts of public funds
in the depository to exceed one hundred percent (100%) of the
balance in the public deposit insurance fund.
(c) Each depository shall file with the treasurer of state each
periodic statement of condition required to be filed by it with its
governmental supervisory body. If the state board for depositories finds
that excess cash of the state is substantially more than that which had
been anticipated, it may increase that maximum percentage in any
depository, and the treasurer of the state may invest the additional
funds in deposit accounts distributed among the depositories
substantially in proportion to their respective capital, surplus, and
undivided profits.
employed by the following depositories:
(1) One (1) must be employed by a depository that has total
assets of less than five hundred million dollars ($500,000,000).
(2) One (1) must be employed by a depository that has total
assets of less than one billion dollars ($1,000,000,000).
(3) One (1) must be employed by a depository that has total
assets of at least one billion dollars ($1,000,000,000) but less
than five billion dollars ($5,000,000,000).
(4) One (1) must be employed by a depository that has total
assets of at least five billion dollars ($5,000,000,000).
Total assets shall be determined using the depository's most recent
statement of condition. The terms of the appointed members extend
for are four (4) year periods. years from the effective date of the
member's appointment. Each appointed member holds office for the
term of this appointment. and serves after the expiration of that
appointment until the member's successor is appointed and qualified.
An appointed member may be reappointed if the individual
satisfies the requirements of this subsection at the time of the
reappointment. Any appointed member may be removed from office
by, and at the pleasure of, the governor.
(b) The officers of the board consist of a chairman, a
secretary-investment manager, a vice chairman, and other officers the
board determines to be necessary. The governor shall name a member
of the board to serve as its chairman. The treasurer of state shall serve
as the secretary-investment manager of the board. The board, by
majority vote, shall elect the other officers. Officers, except the
secretary-investment manager, shall be named or elected for one (1)
year terms in January of each year. The members and officers of the
board are not entitled to any compensation for their services but are
entitled to reimbursement for actual and necessary expenses on the
same basis as state employees.
(c) Five (5) members of the board constitute a quorum for the
transaction of business, and all actions of the board must be approved
by at least five (5) a simple majority of those members voting on
each individual business issue. The board may adopt, amend, or
repeal bylaws and rules for the conduct of its meetings and the number
and times of its meetings, and shall hold a regular meeting at least
once each calendar quarter, and may hold other regular and special
meetings as prescribed in its rules. All meetings of the board are open
to the public under IC 5-14-1.5. All records of the board are subject to
public inspection under IC 5-14-3.
(d) Ten (10) Two (2) days notice of the time and place of all
meetings to determine and fix the assessment rate to be paid by
depositories on account of insurance on public funds or the
establishment or redetermination of the reserve for losses of the
insurance fund shall be given by one (1) publication in a newspaper of
general circulation printed and published in the city of Indianapolis.
The time, place, notice, and waiver requirements for the members of
the board for all meetings shall be determined by its rules. The
secretary-investment manager of the board shall enter its proceedings
at length in a record provided for that purpose, and the records of the
proceedings shall be approved and signed respectively by the chairman
or vice chairman and attested by the secretary-investment manager.
(1) Approve all accounts for salaries and allowable expenses of the board, including, but not limited to:
(A) the employment of general or special attorneys, consultants, and employees and agents as may be necessary to assist the secretary-investment manager in carrying out the duties of that office and to assist the board in its consideration of applications for a guarantee of an industrial development obligation or credit enhancement obligation guarantee; and
(B) the setting of compensation of persons employed under clause (A).
(2) Approve all expenses incidental to the operation of the public deposit insurance fund.
(3) Perform other duties and functions that may be delegated to the secretary-investment manager by the board or that are necessary to carry out the duties of the secretary-investment manager under this chapter.
(b) The secretary-investment manager shall keep a record of the proceedings of the board, and shall maintain and be custodian of all books, documents, and papers filed with the board, and its official seal. The secretary-investment manager may make copies of all minutes and other records and documents of the board, and may give certificates under seal of the board to the effect that the copies are true copies. All persons dealing with the board may rely upon the certificates.
(c) Each year, beginning in 2001 and ending in 2021, after the
treasurer of state prepares the annual report required by IC 4-8.1-2-14,
the secretary-investment manager shall determine:
(1) the amount of interest earned by the public deposit insurance
fund during the state fiscal year ending on the preceding June 30,
after deducting:
(A) all expenses and other costs of the board for depositories
that were not paid from other sources during that state fiscal
year; and
(B) all expenses and other costs associated with the Indiana
education savings authority that were not paid from other
sources during that state fiscal year; and
(2) the amount of interest earned during the state fiscal year
ending on the preceding June 30 by the pension distribution fund
established by subsection (g). (e).
(d) On or before November 1 of each year, beginning in 2001 and
ending in 2021, the public employees' retirement fund shall provide a
report to the secretary-investment manager concerning the individual
and aggregate payments made by all units of local government (as
defined in IC 5-10.3-11-3) during the preceding calendar year for
benefits under the police and firefighter pension funds established by
IC 36-8-6, IC 36-8-7, and IC 36-8-7.5.
(e) On or before the last business day of November of each year,
beginning in 2001 and ending in 2021, the secretary-investment
manager shall compute the amount of earned interest to be distributed
under this section to each unit of local government (as defined in
IC 5-10.3-11-3) in accordance with subsection (h) according to the
following formula:
STEP ONE: Add the amount determined under subsection (c)(1)
to the amount determined under subsection (c)(2).
STEP TWO: Divide the STEP ONE sum by the aggregate amount
of payments made by all units of local government during the
preceding calendar year for benefits under the police and
firefighter pension funds established by IC 36-8-6, IC 36-8-7, and
IC 36-8-7.5, as reported under subsection (d).
STEP THREE: Multiply the STEP TWO quotient by the amount
of payments made by each unit of local government during the
preceding calendar year for benefits under the police and
firefighter pension funds established by IC 36-8-6, IC 36-8-7, and
IC 36-8-7.5, as reported under subsection (d).
(f) (d) Subject to subsection (j), (g), on or before the last business
day of December of each year, beginning in 2001 and ending in 2021,
the secretary-investment manager shall provide to the auditor of state
(1) the total amount of payments made from the public deposit insurance fund under IC 5-13-13-3 after June 30, 2001;
(2) the total amount of payments received by the board for depositories and deposited in the public deposit insurance fund under IC 5-13-13-3 after June 30, 2001; and
(3) the total amount of interest earned by the public deposit insurance fund after the first of the payments described in subdivision (1).
If the total amount of payments determined under subdivision (1) less the total amount of payments determined under subdivision (2) (referred to in this subsection as the "net draw on the fund") exceeds
ten million dollars ($10,000,000) and also exceeds the total amount of
interest determined under subdivision (3), the secretary-investment
manager may not provide a check to the auditor of state under
subsection (f)(2) (d) and a distribution may not be made from the
pension distribution fund under subsection (h) (f) in the following
calendar year until the total amount of interest earned by the public
deposit insurance fund equals the net draw on the fund. A check may
not be provided under subsection (f)(2) (d) and a distribution may not
be made under subsection (f) (d) in any subsequent calendar year if a
study conducted by the board under section 7(b) of this chapter
demonstrates that payment of the distribution would reduce the balance
of the public deposit insurance fund to a level insufficient to ensure the
safekeeping and prompt payment of public funds to the extent they are
not covered by insurance of any federal deposit insurance agency.
January 1, the value of the assets in the fund equals or exceeds the
reserve for losses, the board shall eliminate the assessment requirement
for the succeeding six (6) month period for each classification of
deposit.
(b) During any period when an assessment rate is in effect, the
assessment base for each depository of public funds shall be
determined monthly. The assessment base must be equal to the sum
total of all the minimum balances of each classification of public funds
on deposit in each and all accounts during the month, the minimum
balance of each account being taken respectively as of the date on
which it occurs. On or before the second day of each month in which
an assessment rate is in effect, each depository shall compute the
amount of the assessment due from it to the insurance fund on account
of public funds on deposit with it during the preceding month. The
amount of the monthly assessment, if any, is the product obtained by
multiplying one-twelfth (1/12) times the assessment base for the month
for which the assessment is being computed.
(c) During the time the assessment rate on public funds has been
waived or eliminated by the board for depositories, the respective
depositories are not obligated to pay any assessment but shall continue
to prepare and file the reports that would otherwise be required to be
prepared and filed under this chapter.
(b) Effective January 1 and July 1 in each year, the board shall before those dates redetermine the amount of the reserve to be maintained by the insurance fund. The establishment or any change in the reserve for losses shall be determined by the board based on information the board considers, including but not limited to capital adequacy, liquidity, and asset quality, and a study to be made or updated by actuaries, economists, or other consultants based on the history of losses, earnings on the funds, conditions of the depositories, economic conditions affecting particular depositories or depositories in general, and any other factors that the board considers relevant in making its determination. The reserve determined by the board must be sufficient to ensure the safekeeping and prompt payment of public funds to the extent they are not covered by insurance of any federal deposit insurance agency.
(c) At the end of each biennial period during which depositories have had public funds on deposit under this chapter and paid the assessments levied by the board, the board shall compute its receipts from assessments and all other sources and its expenses and losses and determine the profit derived from the operation of the fund for the period. Until the amount of the reserve for losses has been accumulated, all assessments levied for a biennial period shall be retained by the fund. The amount of the assessments, if any, levied by the board shall, to the extent the fund exceeds the reserve for losses at the end of a biennial period commencing July 1 of each odd-numbered year, be distributed to the depositories that had public funds on deposit during the biennial period in which the assessments were paid. The distribution shall be made to the respective depositories in the proportion that the total assessments paid by each depository during that period bears to the total assessments then paid by all depositories. A distribution to which any closed depository would otherwise be entitled shall be set off against any claim that the insurance fund may have against the closed depository.
(d) The board may invest, reinvest, and exchange investments of the insurance fund in excess of the cash working balance in any of the following:
(1) In bonds, notes, certificates, and other valid obligations of the United States, either directly or, subject to the limitations in subsection (e), in the form of securities of or other interests in an open-end no-load management-type investment company or investment trust registered under the provisions of the Investment Company Act of 1940, as amended (15 U.S.C. 80a et seq.).
(2) In bonds, notes, debentures, and other securities issued by a federal agency or a federal instrumentality and fully guaranteed by the United States either directly or, subject to the limitations in subsection (e), in the form of securities of or other interests in an open-end no-load management-type investment company or investment trust registered under the provisions of the Investment Company Act of 1940, as amended (15 U.S.C. 80a et seq.).
(3) In bonds, notes, certificates, and other valid obligations of a state or of an Indiana political subdivision that are issued under law, the issuers of which, for five (5) years before the date of the investment, have promptly paid the principal and interest on their bonds and other legal obligations.
(4) In bonds or other obligations of the Indiana finance authority issued under IC 4-13.5.
(5) In investments permitted the state under IC 5-13-10.5.
(6) In guarantees of industrial development obligations or credit enhancement obligations, or both, for the purposes of retaining and increasing employment in enterprises in Indiana, subject to the limitations and conditions set out in this subdivision, subsection (e), and section 8 of this chapter. An individual guarantee of the board under this subdivision must not exceed eight million dollars ($8,000,000).
(7) In guarantees of bonds or notes issued under IC 5-1.5-4-1, subject to the limitations and conditions set out in subsection (e) and section 8 of this chapter.
(8) In bonds, notes, or other valid obligations of the Indiana finance authority that have been issued in conjunction with the authority's acquisition, development, or improvement of property or other interests for an industrial development project (as defined in IC 4-4-10.9-11) that the authority has undertaken for the purposes of retaining or increasing employment in existing or new enterprises in Indiana, subject to the limitations in subsection (e).
(9) In notes or other debt obligations of counties, cities, and towns that have been issued under IC 6-1.1-39 for borrowings from the industrial development fund under IC 5-28-9 for purposes of retaining or increasing employment in existing or new enterprises in Indiana, subject to the limitations in subsection (e).
(10) In bonds or other obligations of the Indiana housing and community development authority.
(e) The investment authority of the board under subsection (d) is subject to the following limitations:
(1) For investments under subsection (d)(1) and (d)(2), the portfolio of an open-end no-load management-type investment company or investment trust must be limited to:
(A) direct obligations of the United States and obligations of a federal agency or a federal instrumentality that are fully guaranteed by the United States; and
(B) repurchase agreements fully collateralized by obligations described in clause (A), of which the company or trust takes delivery either directly or through an authorized custodian.
(2) Total outstanding investments in guarantees of industrial development obligations and credit enhancement obligations under subsection (d)(6) must not exceed the greater of:
(A) ten percent (10%) of the available balance of the insurance fund; or
(B) fourteen million dollars ($14,000,000).
(3) Total outstanding investments in guarantees of bond bank
obligations under subsection (d)(7) must not exceed the greater
of:
(A) twenty percent (20%) of the available balance of the
insurance fund; or
(B) twenty-four million dollars ($24,000,000).
(4) Total outstanding investments in bonds, notes, or other
obligations of the Indiana finance authority under subsection
(d)(8) may not exceed the greater of:
(A) fifteen percent (15%) of the available balance of the
insurance fund; or
(B) twenty million dollars ($20,000,000).
However, after June 30, 1988, the board may not make any
additional investment in bonds, notes, or other obligations of the
Indiana finance authority issued under IC 4-4-11, and the board
may invest an amount equal to the remainder, if any, of:
(i) fifteen percent (15%) of the available balance of the
insurance fund; minus
(ii) the board's total outstanding investments in bonds, notes,
or other obligations of the Indiana finance authority issued
under IC 4-4-11;
in guarantees of industrial development obligations or credit
enhancement obligations, or both, as authorized by subsection
(d)(6). In such a case, the outstanding investments, as authorized
by subsection (d)(6) and (d)(8), may not exceed in total the
greater of twenty-five percent (25%) of the available balance of
the insurance fund or thirty-four million dollars ($34,000,000).
(5) Total outstanding investments in notes or other debt
obligations of counties, cities, and towns under subsection (d)(9)
may not exceed the greater of:
(A) ten percent (10%) of the available balance of the insurance
fund; or
(B) twelve million dollars ($12,000,000).
(f) For purposes of subsection (e), the available balance of the
insurance fund does not include the outstanding principal amount of
any fund investment in a corporate note or obligation or the part of the
fund that has been established as a reserve for losses.
(g) Except as provided in section 4 of this chapter, all interest and
other income earned on investments of the insurance fund and all
amounts collected by the board accrue to the fund.
(h) Members of the board and any officers or employees of the
board are not subject to personal liability or accountability by reason
of any investment in any of the obligations listed in subsection (d).
(i) The board shall, when directed by the state board of finance constituted by IC 4-9.1-1-1, purchase the loan made by the state board of finance under IC 4-10-18-10(i). The loan shall be purchased by the board at a purchase price equal to the total of:
(1) the principal amount of the loan;
(2) the deferred interest payable on the loan; and
(3) accrued interest to the date of purchase by the board.
Members of the board and any officers or employees of the board are not subject to personal liability or accountability by reason of the purchase of the loan under this subsection.
(b) The warrants are the obligation of the board for depositories payable out of the public deposit insurance fund only and do not constitute a debt, liability, or obligation of the state or a pledge of the faith and credit of the state. Each warrant must have printed on its face the words, "This warrant is an obligation of the board for depositories payable solely out of the public deposits insurance fund, and neither the faith and credit nor the taxing power of the state is pledged to the payment of the principal, the interest, or any other amount owed on the warrants.".
(c) Subject to the limitations in subsections (a) through (b), the warrants shall be issued in the individual and gross amounts and in the form and at the rate of interest approved by the board for depositories.
constituted depositories to substitute other security in the amount and
type, as determined by the board from time to time, to secure the
safekeeping and prompt payment of public funds.
(b) The board may require any or all then constituted depositories
to deliver and pledge to the proper local board of finance or to the state
board of finance, under the conditions for joint control of the collateral
by the depositories as may be approved by the board for depositories,
bonds or other obligations of like character as those in which that the
board is authorized to invest the excess funds of the insurance fund
under IC 5-13-12-7(d). determines are acceptable collateral. The
market value of these securities, at the time of delivery, must equal be
an amount determined by the board, which may not exceed the
amount of public funds then on deposit with the respective
depositories. The board may require depositories to pledge acceptable
securities to such an extent that the market value of the pledge will at
all times be substantially equal to the amount of public funds on
deposit in the respective depositories.
(c) Whenever an order is in force and the amount of public funds on
deposit is at least ten percent (10%) less than the market value of
securities pledged to secure the payment, as required by the board,
the depository may withdraw the excess amount of pledged collateral.
(d) Any order of the board for depositories applies equally to all
depositories and becomes effective within the time fixed by the board.
However, the time of effectiveness must not be earlier than thirty (30)
days from the date of entry of the order by the board. The order
continues in force until rescinded by the board. Upon the entry of any
order by the board for depositories, all then constituted depositories
affected by the order shall comply with the order. Upon compliance,
and full payment of all its liabilities by the insurance fund, depositories
are not required to pay any further assessments for insurance under this
chapter until the order requiring collateral has been revoked or
rescinded and the collateral returned to the respective depositories.
(b) As used in this chapter, "aggressive lender" means a lender determined by the department under this section to be engaged in the practice of aggressive lending.
(c) As used in this section, "aggressive lending" means making consumer loans in Indiana that provide for a loan finance charge that exceeds the limits on loan finance charges for supervised loans
specified in IC 24-4.5-3-508, as adjusted in accordance with
IC 24-4.5-1-106. The term does not include:
(1) small loans as defined in IC 24-4.5-7-104; or
(2) the:
(A) offering of a credit card by a financial institution to the
financial institution's customers if the financial institution
is not the card issuer (as defined in 15 U.S.C. 1602(n)),
other than as an agent of the card issuer; or
(B) issuing of a credit card to a person that is not a resident
of Indiana;
regardless of whether the finance charge that applies to the
credit card offered or issued exceeds the limits on loan finance
charges for supervised loans specified in IC 24-4.5-3-508, as
adjusted in accordance with IC 24-4.5-1-106.
(d) If the department receives credible evidence from any source
that a lender is engaged in the practice of aggressive lending, the
department shall send a notice of the evidence by certified mail to
the lender's agent for service of process. The notice must:
(1) set forth the definition of an aggressive lender;
(2) describe the department's evidence that the lender meets
the definition of an aggressive lender;
(3) describe the consequences under IC 5-10.2-11 and
IC 5-13-9.5 of a finding that the lender is an aggressive
lender; and
(4) invite a reply that affirms or denies whether the lender is
engaged in the practice of aggressive lending.
If a lender disputes its designation as an aggressive lender under
this section, the lender may, within twenty (20) days of the date of
the notice, request a hearing on the determination. If a hearing is
requested, the department shall schedule the hearing not earlier
than twenty (20) days after the date of the request. If no hearing is
requested, the department's determination that the lender is an
aggressive lender is final.
(e) Except as otherwise provided in this section, any hearing
requested by a lender under subsection (d) and the determination
by the department are subject to IC 4-21.5-3. Judicial review of the
department's final determination may be had in accordance with
IC 4-21.5-5.
(f) Subject to subsections (g) and (h), at the beginning of each
calendar quarter, the department shall publish in the Indiana
Register:
(1) a list of those lenders determined by the department to be
aggressive lenders during the preceding calendar quarter;
and
(2) a cumulative list of lenders determined by the department
to be aggressive lenders.
(g) The department shall not place a lender that has made a
timely petition for judicial review under IC 4-21.5-5 of the
department's determination on the lists described in subsection (f)
until a final judgment affirming the department's determination is
made.
(h) A lender that has been determined by the department to be
an aggressive lender under this section may petition the
department for a hearing to demonstrate that the lender is no
longer engaged in the practice of aggressive lending. The hearing
and the determination by the department are subject to
IC 4-21.5-3. Judicial review of the department's final
determination may be had in accordance with IC 4-21.5-5. Upon
final determination by the department, or a final judgment in the
case of pending judicial review, that the lender is no longer an
aggressive lender, the department shall remove the lender's name
from the list required to be published under subsection (f)(2).
