AN ACT to amend the Indiana Code concerning state and local administration.
chapter.
(4) All administrative costs of each alternative program shall be
paid from the earnings on that program.
(5) A valuation of each member's account must be completed as
of:
(A) the last day of each quarter; or
(B) a time that the board may specify by rule.
(b) A member shall direct the allocation of the amount credited to
the member among the available alternative investment funds, subject
to the following conditions:
(1) A member may make a selection or change an existing
selection under rules established by the PERF board. The PERF
board shall allow a member to make a selection or change any
existing selection at least once each quarter.
(2) The PERF board shall implement the member's selection
beginning on the first day of the next calendar quarter that begins
at least thirty (30) days after the selection is received by the PERF
board or on an alternate date established by the rules of the board.
This date is the effective date of the member's selection.
(3) A member may select any combination of the available
investment funds, in ten percent (10%) increments or smaller
increments that may be established by the rules of the board.
(4) A member's selection remains in effect until a new selection
is made.
(5) On the effective date of a member's selection, the board shall
reallocate the member's existing balance or balances in
accordance with the member's direction, based on the market
value on the effective date.
(6) If a member does not make an investment selection of the
alternative investment programs, the member's account shall be
invested in the PERF board's general investment fund.
(7) All contributions to the member's account shall be allocated
as of the last day of the quarter in which the contributions are
received or at an alternate time established by the rules of the
board in accordance with the member's most recent effective
direction. The PERF board shall not reallocate the member's
account at any other time.
(c) When a member transfers the amount credited to the member
from one (1) alternative investment program to another alternative
investment program, the amount credited to the member shall be
valued at the market value of the member's investment, as of the day
before the effective date of the member's selection or at an alternate
time established by the rules of the board. When a member retires,
becomes disabled, dies, or withdraws from the fund, the amount
credited to the member shall be the market value of the member's
investment as of the last day of the quarter preceding the member's
distribution or annuitization at retirement, disability, death, or
withdrawal, plus contributions received after that date or at an alternate
time established by the rules of the board.
(d) The PERF board shall determine the value of each alternative
program in the defined contribution fund, as of the last day of each
calendar quarter, as follows:
(1) The market value shall exclude the employer contributions
and employee contributions received during the quarter ending on
the current allocation date.
(2) The market value as of the immediately preceding quarter end
date shall include the employer contributions and employee
contributions received during that preceding quarter.
(3) The market value as of the immediately preceding quarter end
date shall exclude benefits paid from the fund during the quarter
ending on the current quarter end date.
the alternative investment program, as specified in section 4 of
this chapter.
Each member shall be credited individually with the amount of the
member's contributions and interest credits.
(b) Each board shall maintain the annuity savings account program
in effect on December 31, 1995 (referred to in this chapter as the
guaranteed program). In addition, the board of the Indiana state
teachers' retirement fund shall establish and maintain a guaranteed
program within the 1996 account. Each board may establish investment
guidelines and limits on all types of investments (including, but not
limited to, stocks and bonds) and take other actions necessary to fulfill
its duty as a fiduciary of the annuity savings account, subject to the
limitations and restrictions set forth in IC 5-10.3-5-3 and
IC 5-10.4-3-10.
(c) Each board shall establish alternative investment programs
within the annuity savings account of the public employees' retirement
fund, the pre-1996 account, and the 1996 account, based on the
following requirements:
(1) Each board shall maintain at least one (1) alternative
investment program that is an indexed stock fund and one (1)
alternative investment program that is a bond fund. Each board
may maintain one (1) or more alternative investment
programs that:
(A) invest in one (1) or more commingled or pooled funds
that consist in part or entirely of mortgages that qualify as
five star mortgages under the program established by
IC 24-5-23.6; or
(B) otherwise invest in mortgages that qualify as five star
mortgages under the program established by IC 24-5-23.6.
(2) The programs should represent a variety of investment
objectives under IC 5-10.3-5-3.
(3) No program may permit a member to withdraw money from
the member's account except as provided in IC 5-10.2-3 and
IC 5-10.2-4.
(4) All administrative costs of each alternative program shall be
paid from the earnings on that program or as may be determined
by the rules of each board.
(5) Except as provided in section 4(e) of this chapter, a valuation
of each member's account must be completed as of:
(A) the last day of each quarter; or
(B) another time as each board may specify by rule.
(d) The board must prepare, at least annually, an analysis of the
guaranteed program and each alternative investment program. This
analysis must:
(1) include a description of the procedure for selecting an
alternative investment program;
(2) be understandable by the majority of members; and
(3) include a description of prior investment performance.
(e) A member may direct the allocation of the amount credited to
the member among the guaranteed fund and any available alternative
investment funds, subject to the following conditions:
(1) A member may make a selection or change an existing
selection under rules established by each board. A board shall
allow a member to make a selection or change any existing
selection at least once each quarter.
(2) The board shall implement the member's selection beginning
on the first day of the next calendar quarter that begins at least
thirty (30) days after the selection is received by the board or on
an alternate date established by the rules of each board. This date
is the effective date of the member's selection.
(3) A member may select any combination of the guaranteed fund
or any available alternative investment funds, in ten percent
(10%) increments or smaller increments that may be established
by the rules of each board.
(4) A member's selection remains in effect until a new selection
is made.
(5) On the effective date of a member's selection, the board shall
reallocate the member's existing balance or balances in
accordance with the member's direction, based on:
(A) for an alternative investment program balance, the market
value on the effective date; and
(B) for any guaranteed program balance, the account balance
on the effective date.
All contributions to the member's account shall be allocated as of
the last day of that quarter or at an alternate time established by
the rules of each board in accordance with the member's most
recent effective direction. The board shall not reallocate the
member's account at any other time.
(f) When a member who participates in an alternative investment
program transfers the amount credited to the member from one (1)
alternative investment program to another alternative investment
program or to the guaranteed program, the amount credited to the
member shall be valued at the market value of the member's
investment, as of the day before the effective date of the member's
selection or at an alternate time established by the rules of each board.
When a member who participates in an alternative investment program
retires, becomes disabled, dies, or suspends membership and withdraws
from the fund, the amount credited to the member shall be the market
value of the member's investment as of the last day of the quarter
preceding the member's distribution or annuitization at retirement,
disability, death, or suspension and withdrawal, plus contributions
received after that date or at an alternate time established by the rules
of each board.
(g) When a member who participates in the guaranteed program
transfers the amount credited to the member to an alternative
investment program, the amount credited to the member in the
guaranteed program is computed without regard to market value and is
based on the balance of the member's account in the guaranteed
program as of the last day of the quarter preceding the effective date of
the transfer. However, each board may by rule provide for an alternate
valuation date. When a member who participates in the guaranteed
program retires, becomes disabled, dies, or suspends membership and
withdraws from the fund, the amount credited to the member shall be
computed without regard to market value and is based on the balance
of the member's account in the guaranteed program as of the last day
of the quarter preceding the member's distribution or annuitization at
retirement, disability, death, or suspension and withdrawal, plus any
contributions received since that date plus interest since that date.
However, each board may by rule provide for an alternate valuation
date.
political subdivision not governed by sections 1 through 3 of this
chapter constitutes a board of finance for that political subdivision. A
school corporation (as defined in IC 36-1-2-17) may determine if a
board of finance meeting is needed on an annual basis.
(b) Each board of finance has supervision of the revocation of
public depositories for the respective political subdivisions for which
they act.
(c) The members of the boards serve without compensation other
than the members' salaries allowed by law for the members' services as
officers of the members' respective political subdivisions.
percentage of investments outstanding under this subsection to exceed
twenty-five percent (25%).
confirmations evidencing ownership of the form of securities of or
interests in an investment company or investment trust described in
subsection (a).
must provide that the authority granted in the ordinance or resolution
expires on a date that is not later than two (2) years after the date the
ordinance or resolution is adopted.
(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.
of each county, and the fiscal body of each political subdivision
other than a county, may by ordinance or resolution authorize the
investing officer of each, respectively, to invest public funds in
certificates of deposit in accordance with the following conditions:
(1) The funds are initially invested through a depository that
is selected by the investing officer.
(2) The selected depository arranges for the deposit of the
funds in certificates of deposit in one (1) or more federally
insured banks or savings and loan associations, wherever
located, for the account of the county or political subdivision.
(3) The full amount of the principal and any accrued interest
of each certificate of deposit are covered by insurance of any
federal deposit insurance agency.
(4) The selected depository acts as a custodian for the county
or political subdivision with respect to the certificates of
deposit issued for its account.
(5) At the same time that the county's or political
subdivision's funds are deposited and the certificates of
deposit are issued, the selected depository receives an amount
of deposits covered by insurance of any federal deposit
insurance agency from customers of other institutions,
wherever located, at least equal to the amount of the funds
invested by the county or political subdivision through the
selected depository.
(b) Public funds invested in accordance with subsection (a) are
not subject to any security or pledging requirements that may
otherwise be applicable to the deposit or investment of public
funds.
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) Subject to subsection (d), 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.
public funds of the state qualifies a depository to receive public funds
of a political subdivision. Applications for the state board of finance
must be filed with the treasurer of state. The treasurer shall submit each
application to the board.
(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:
(1) fails to maintain a capital ratio in excess of the minimum
required by the governmental supervisory body of the institution;
or
(2) has been found by the department of financial institutions
under IC 28-1-2-40, or the financial institution's primary
federal regulator, to not be in substantial compliance with the
federal Credit Card Accountability Responsibility and
Disclosure Act of 2009 as it applies to Indiana borrowers.
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 shall furnish to the board a certificate
executed by an officer of the institution signifying that the institution
satisfies:
(1) the requirements of subsection (c); and
(2) the requirement in section 6(b) of this chapter that the sum of:
(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.
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. However, the board shall
discuss the following in executive session:
(1) The financial strength of a particular financial institution.
(2) The collateral requirements of a particular financial
institution.
(3) Any other matters concerning a particular financial
institution.
All records of the board are subject to public inspection under
IC 5-14-3. However, records regarding matters that are discussed
in executive session are confidential.
(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.
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).
date established by the board. In fixing the rate, if any, the board
shall consider the amount of public funds currently on deposit, the
liabilities of the insurance fund, contingent and accrued, and the
determination of the board on the amount of the reserve for losses of
the insurance fund as set out in section 7(b) of this chapter. For any six
(6) month period, the maximum assessment rate that may be fixed by
the board is two percent (2%). The board may lower or waive the
assessment on any or all classifications of deposit if in its discretion it
determines that a lower rate or waiver will not prevent the fund from
attaining sufficient assets to equal the reserve for losses. Subject to the
board's power to implement an assessment at any time by action
by the board, if at the beginning of any six (6) month period, no action
has been taken by the board for depositories fixing the assessment rate,
if any, on public funds, for the succeeding six (6) month period, the
assessment rate is the same rate, if any. in effect during the preceding
six (6) month period. Whenever as of July 1, or January 1, or another
date established by the board, 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. For purposes of this section, deposits that are
federally insured are not considered public funds deposits in a
depository. 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.
[EFFECTIVE UPON PASSAGE]: Sec. 7. (a) The board for
depositories shall manage and operate the insurance fund. All expenses
incident to the administration of the fund shall be paid out of the money
accumulated in it subject to the direction of the board for depositories.
(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.
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.
the assets in the insurance fund are not sufficient to pay the claims of
any kind that have been finally determined and have become payable,
the board for depositories shall issue anticipatory warrants for the
purpose of raising money for the immediate payment of the claims. The
warrants outstanding and unpaid must not at any time exceed the sum
of one million five hundred thousand dollars ($1,500,000). three
hundred million dollars ($300,000,000). Interest may be paid upon
the warrants from the date the rate was established by the board for
depositories. Interest is payable at the end of each year or for a shorter
period as the warrants remain unpaid.
(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.
recognized rating agencies; and
(B) the irrevocable letter of credit provides that the board
for depositories may draw on the letter when necessary to
satisfy losses to the public deposit insurance fund under
state law.
(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.
(e) A depository may elect at any time to pledge and deliver
collateral to the board in an amount equal to one hundred percent
(100%) of the public funds the depository has on deposit. A
depository that:
(1) elects this option;
(2) has pledged and delivered the collateral to the board; and
(3) has maintained a one hundred percent (100%) collateral
level continuously for the twelve (12) months immediately
preceding an assessment;
is exempt from paying any assessment authorized by this article
while the collateral continues to be maintained with the board.
(f) If the fund balance is zero (0), each depository shall pledge
and deliver collateral to the board equal to the depository's pro
rata share of total deposit accounts of public funds based on an
average of the depository's total deposit accounts of public funds
for the previous four (4) quarters, as reported under this article, as
determined by the board from time to time, with at least fifteen
(15) days notice to the depository, to secure the safekeeping and
prompt payment of public funds.
the following criteria:
(1) The program must be available on a voluntary basis to
creditors that offer mortgages to Indiana customers after
June 30, 2010.
(2) To participate in the program, a creditor must submit a
certification, on a form prescribed by the department,
attesting that the creditor qualifies as a five star mortgage
lender.
(3) To qualify as a five star mortgage lender under the
program, a creditor must certify, on the form described in
subdivision (2), that the creditor meets the following
conditions:
(A) The creditor offers or will offer to Indiana customers
after June 30, 2010, at least one (1) mortgage product that
qualifies as a five star mortgage under the program.
(B) The creditor does not have a record of any significant
or recurring violation of:
(i) IC 24-5-23.5-7; or
(ii) any other state or federal law, regulation, or rule
applicable to mortgage transactions;
as of the date of the creditor's certification. If the creditor
is not certain whether it meets the criterion set forth in this
clause, the creditor shall consult with the department
before filing a certification to participate in the program.
(C) The creditor does not have a director or an executive
officer who has been convicted of or pleaded guilty or nolo
contendere to a felony involving fraud, deceit, or
misrepresentation under the laws of Indiana or any other
jurisdiction, as of the date of the creditor's certification. If
the creditor is not certain whether it meets the criterion set
forth in this clause, the creditor shall consult with the
department before filing a certification to participate in
the program.
(4) To qualify as a five star mortgage under the program, a
mortgage must include the following terms and conditions:
(A) If the mortgage involves a purchase money transaction,
the mortgage must require a down payment by the debtor,
or a person acting on behalf of the debtor, of at least ten
percent (10%) of the purchase price of the dwelling that is
the subject of the mortgage. If the mortgage involves the
refinancing of an existing mortgage, the customer must
have equity of at least ten percent (10%) in the dwelling
that is the subject of the mortgage.
(B) The mortgage must have a fixed rate of interest.
(C) The mortgage must provide for an escrow account
that:
(i) is established by the creditor, or a person acting on
behalf of the creditor, for the benefit of the debtor;
(ii) is maintained by the creditor, or a person acting on
behalf of the creditor, during the life of the mortgage;
and
(iii) is used during the life of the mortgage to pay taxes
and insurance owed with respect to the dwelling that is
the subject of the mortgage.
However, this clause does not apply if, in the creditor's
ordinary course of business, the creditor does not regularly
establish and maintain, or contract for the establishment
and maintenance of, escrow accounts for the payment of
taxes and insurance, on behalf of the creditor's customers.
(D) The term of the mortgage may not exceed thirty (30)
years.
(E) The mortgage may not include a prepayment penalty
or fee.
(5) A creditor that qualifies as a five star mortgage lender and
files a certification with the department under subdivision (3)
shall provide a written statement, on a form and in the
manner prescribed by the department, to any Indiana
customer who:
(A) applies for a five star mortgage offered by the creditor;
and
(B) does not qualify for the five star mortgage based on the
creditor's underwriting standards for the five star
mortgage.
The statement must set forth the reasons why the Indiana
customer did not qualify for the five star mortgage.
(6) A creditor that qualifies as a five star mortgage lender and
files a certification with the department may include that fact
in any marketing material or solicitation directed at Indiana
customers, subject to any conditions or limitations imposed by
the department in the guidelines adopted under this section.
(7) If a creditor:
(A) holds itself out as a five star mortgage lender and:
(i) the creditor has not filed an accurate certification,
including any renewal certification required by the
department under subsection (b)(3), with the department
under this chapter; or
(ii) the creditor has filed a certification or a renewal
certification with the department under this chapter and
subsequently ceases offering at least one (1) mortgage
product that qualifies as a five star mortgage; or
(B) fails to comply with any program requirement;
the department, upon discovering the act described in clause
(A) or (B), shall immediately provide written notice to the
creditor that the creditor does not qualify for participation in
the program, or no longer qualifies for participation in the
program, as appropriate. The notice provided under this
subdivision must inform the creditor of the reason or reasons
the creditor does not qualify for participation in the program,
or no longer qualifies for participation in the program, as
appropriate. Not later than seven (7) days after the date of the
notice provided to the creditor under this subdivision, the
department shall remove the creditor from the list of
creditors published on the department's Internet web site
under subsection (c), as appropriate, and shall post, on the
same Internet web page on which the list described in
subsection (c) is published, a link to the notice provided to the
creditor under this subdivision.
(b) In addition to the program criteria required by subsection
(a), the guidelines adopted by the department under this section
may include the following:
(1) Provisions allowing a creditor that qualifies as a five star
mortgage lender and files a certification with the department
to include in the paperwork associated with a five star
mortgage:
(A) a statement;
(B) a seal; or
(C) any other designation considered appropriate by the
department;
indicating that the particular mortgage product is a five star
mortgage.
(2) A requirement that a creditor that qualifies as a five star
mortgage lender and files a certification with the department
shall report the following information to the department on
an annual basis, or any other basis determined appropriate by
the department:
(A) The total number and types of residential mortgage
products that were offered by the creditor to Indiana
customers during the applicable reporting period,
including any five star mortgages reported under clause
(C).
(B) The total number of residential mortgages described in
clause (A) that were closed by the creditor during the
applicable reporting period, including any five star
mortgages that were closed during the reporting period, as
reported under clause (D).
(C) The number of mortgage products that:
(i) qualified as five star mortgages under the program;
and
(ii) were offered by the creditor to Indiana customers;
during the applicable reporting period.
(D) The number of five star mortgages offered to Indiana
customers that were closed by the creditor during the
applicable reporting period.
(3) A requirement that a creditor that qualifies as a five star
mortgage lender and files a certification with the department
shall periodically submit to the department a renewal
certification, on a form prescribed by the department, in
conjunction with a report filed under subdivision (2), or at
such other time as the department determines appropriate. In
any renewal certification required under this subdivision, a
creditor must attest that the creditor:
(A) continued to meet the criteria necessary to qualify as
a five star mortgage lender; and
(B) complied with all program requirements;
during the applicable reporting period.
(4) A fee fixed by the department under IC 28-11-3-5 for each
certification and recertification submitted by a creditor under
this chapter. However, any fee fixed by the department under
this subdivision may not exceed the department's actual costs
to:
(A) process certifications and renewal certifications;
(B) publish the list described in subsection (c) on the
department's Internet web site; and
(C) otherwise administer the program.
(5) Any other program requirements, criteria, or incentives
that the department determines necessary to implement and
evaluate a program to encourage creditors to offer stable
mortgage products to qualified Indiana customers.