SENATE AMENDED
PRIOR PRINTER'S NOS. 1329, 2539, 2675 PRINTER'S NO. 3137
No. 1194 Session of 1981
INTRODUCED BY LEVI, SIRIANNI, DeMEDIO, FRYER AND
A. C. FOSTER, JR., APRIL 21, 1981
SENATOR CORMAN, LOCAL GOVERNMENT, IN SENATE, AS AMENDED,
APRIL 14, 1982
AN ACT
1 Amending the act of July 28, 1953 (P.L.723, No.230), entitled,
2 as amended, "An act relating to counties of the second class
3 and second class A; amending, revising, consolidating and
4 changing the laws relating thereto," further providing for
5 investment of funds.
6 The General Assembly of the Commonwealth of Pennsylvania
7 hereby enacts as follows:
8 Section 1. Section 1963, act of July 28, 1953 (P.L.723,
9 No.230), known as the "Second Class County Code," is amended to
10 read:
11 Section 1963. Designation and Qualification of
12 Depositories.--At said meeting or at any subsequent meeting
13 agreed upon, said board shall designate the depositories and the
14 rate of interest to be paid by them to the county.
15 Depositories so designated shall, upon receipt of notice of
16 their selection as a depository of county funds, furnish
17 collateral to secure payment of deposits and interest to the
18 county by depositing in escrow securities to be approved by the
1 board. Such securities shall be of the kind and in the amount to
2 be fixed by the board. Substitution of such securities may be
3 made with the approval of the board in each case. The board may
4 designate a branch bank of the Federal Reserve Bank of the
5 district, located within the county, as escrow agent for the
6 keeping of securities and to perform such functions as the board
7 may prescribe.
8 The county treasurer, upon the designation of such depository
9 or depositories, shall immediately transfer thereto all county
10 funds to be deposited, and shall thereafter keep such deposits
11 solely in such depository or depositories, in the name of the
12 county. WITHDRAWALS FROM SUCH DEPOSITORY SHALL BE ONLY DRAWN BY <--
13 THE TREASURER UPON PROPERLY AUTHORIZED CHECKS OR BY OTHER
14 COMMERCIALLY ACCEPTED METHODS FOR COUNTY FUND TRANSFERS.
15 Section 2. Section 1964 of the act, added November 5, 1971
16 (P.L.516, No.124), is amended to read:
17 Section 1964. Investment of Moneys.--(a) The county
18 treasurer shall have the power, subject to subsection (b) and
19 the hereinafter stated conditions and limitations, to invest and
20 reinvest the moneys of the general fund and special funds as
21 shall have accumulated beyond the ordinary needs of said various
22 funds[, and which are not authorized by law to be invested by <--
23 any board, commission or county officer[, in the following type <--
24 investments:
25 (1) In any and all obligations of the United States, of this
26 Commonwealth, or of any municipality or other political
27 subdivision of this Commonwealth, registered or otherwise as to
28 principal and interest.
29 (2) Savings accounts or share accounts of institutions
30 insured by the Federal Deposit Insurance Corporation or the
19810H1194B3137 - 2 -
1 Federal Savings and Loan Insurance Corporation to the extent
2 that such accounts are so insured.
3 (3) In one or more banks or bank and trust companies in one
4 or more special accounts, and each of such special accounts to
5 the extent the same is not insured shall be continuously secured
6 by a pledge of direct obligations of the United States of
7 America or of the Commonwealth or of any of its political
8 subdivisions having an aggregate market value, exclusive of
9 accrued interest, at all times at least equal to the balance on
10 deposit in such account.
11 (b) As used herein "commercial paper" shall mean unsecured
12 promissory notes issued at a discount from par by any
13 industrial, common carrier, public utility or finance company
14 and "prime commercial paper" shall mean notes issued by
15 corporations whose credit has been approved by the National
16 Credit Office, Incorporated, New York, or its successor. The
17 treasurer shall have obtained the following prior to any
18 commitment to purchase commercial paper:
19 (1) A certification or other evidence that such commercial
20 paper is rated prime by the National Credit Office,
21 Incorporated;
22 (2) A certification or other evidence that the paper
23 proposed to be delivered is not subordinate to any other debt of
24 the issuer;
25 (3) A certificate or other evidence that there is no
26 litigation pending or threatened affecting said paper;
27 (4) A certificate or other evidence that the issuer is not
28 in default as to the payment of principal and interest upon any
29 of its outstanding obligations; and
30 (5) A certificate or other evidence that the issuer was
19810H1194B3137 - 3 -
1 incorporated within the United States, is transacting business
2 within the United States, and has assets of one billion dollars
3 ($1,000,000,000) or more, or is a wholly owned subsidiary of a
4 Pennsylvania corporation having assets of one billion dollars
5 ($1,000,000,000) or more.
6 (c) A Board of Investment is hereby created. Said board
7 shall be composed of three members, to wit: the treasurer, who
8 shall act as chairman of the board; the chairman of the county
9 commissioners; and the controller. The treasurer shall not, at
10 any time, have invested in prime commercial paper more than an
11 aggregate of such total sum as the board shall have prescribed.
12 Two members of the board shall be sufficient for a quorum,
13 provided reasonable notice of the meeting has been given to all
14 board members.
15 (d) All income earned on any of the aforesaid investments
16 shall inure to the benefit of the county and shall be placed in
17 the general fund.] consistent with sound business practice.
18 (b) A Board of Investment is hereby created. Said board
19 shall be composed of three members, to wit: the treasurer, who
20 shall act as a chairman of the board; the chairman of the county
21 commissioners; and the controller. The board shall provide for
22 an investment program, including temporary investments, subject
23 to restrictions contained in this act, and in any other
24 applicable statute and any rules and regulations adopted by the
25 board. County boards, commissions or other county officers
26 authorized to make investments under subsection (a) shall make
27 investments in conformity with the board's investment program.
28 (c) Authorized types of investments for county funds shall
29 be:
30 (1) United States Treasury bills.
19810H1194B3137 - 4 -
1 (2) Short-term obligations of the United States Government
2 or its agencies or instrumentalities.
3 (3) Deposits in savings accounts or time deposits, other
4 than certificates of deposit, or share accounts of institutions
5 having their principal place of business in the Commonwealth and
6 insured by the Federal Deposit Insurance Corporation or the
7 Federal Savings and Loan Insurance Corporation or the National
8 Credit Union Share Insurance Fund or the Pennsylvania Deposit
9 Insurance Corporation or the Pennsylvania Savings Association
10 Insurance Corporation to the extent that such accounts are so
11 insured, and, for any amounts above the insured maximum,
12 provided that approved collateral as provided by law therefore
13 shall be pledged by the depository.
14 (4) Obligations of the United States of America or any of
15 its agencies or instrumentalities backed by the full faith and
16 credit of the United States of America, the Commonwealth of
17 Pennsylvania or any of its agencies or instrumentalities backed
18 by the full faith and credit of the Commonwealth, or of any
19 political subdivision of the Commonwealth of Pennsylvania or any
20 of its agencies or instrumentalities backed by the full faith
21 and credit of the political subdivision.
22 (5) Shares of an investment company registered under the
23 Investment Company Act of 1940, whose shares are registered
24 under the Securities Act of 1933, provided that the only
25 investments of that company are in the authorized investments
26 for county funds listed in clauses (1) through (4).
27 (6) Certificates of deposit purchased from institutions
28 having their principal place of business in the Commonwealth and
29 insured by the Federal Deposit Insurance Corporation or the
30 Federal Savings and Loan Insurance Corporation or the National
19810H1194B3137 - 5 -
1 Credit Union Share Insurance Fund or the Pennsylvania Deposit
2 Insurance Corporation or the Pennsylvania Savings Association
3 Insurance Corporation to the extent that such accounts are so
4 insured, however, for any amounts above the insured maximum,
5 such certificates of deposit need not be collateralized.
6 Certificates of deposit purchased from commercial banks shall be
7 limited to an amount equal to twenty per centum of a bank's
8 total capital and surplus. Certificates of deposit purchased
9 from savings and loan associations or savings banks shall be
10 limited to an amount equal to twenty per centum of an
11 institutions assets minus liabilities.
12 (7) Any investment authorized by 20 Pa.C.S. Chapter 73
13 (relating to fiduciaries investments) shall be an authorized
14 investment for any pension or retirement fund.
15 (8) "Commercial paper" and "prime commercial paper" as
16 provided for in subsection (d).
17 (d) As used herein "commercial paper" shall mean unsecured
18 promissory notes issued at a discount from par by any
19 industrial, common carrier, public utility or finance company
20 and "prime commercial paper" shall mean notes issued by
21 corporations whose credit has been approved by the National
22 Credit Office, Incorporated, New York, or its successor. The
23 treasurer shall have obtained the following prior to any
24 commitment to purchase commercial paper:
25 (1) A certification or other evidence that such commercial
26 paper is rated prime by the National Credit Office,
27 Incorporated.
28 (2) A certification or other evidence that the paper
29 proposed to be delivered is not subordinate to any other debt of
30 the issuer.
19810H1194B3137 - 6 -
1 (3) A certificate or other evidence that there is no
2 litigation pending or threatened affecting said paper.
3 (4) A certificate or other evidence that the issuer is not
4 in default as to the payment of principal and interest upon any
5 of its outstanding obligations.
6 (5) A certificate or other evidence that the issuer was
7 incorporated within the United States, is transacting business
8 within the United States, and has assets of one billion dollars
9 ($1,000,000,000) or more, or is a wholly owned subsidiary of a
10 Pennsylvania corporation having assets of one billion dollars
11 ($1,000,000,000) or more.
12 (6) The treasurer shall not, at any time, have invested in
13 prime commercial paper more than an aggregate of such total sum
14 as the board shall have prescribed.
15 (e) In making investments of county funds, the county
16 treasurer (or other elected officials when authorized as
17 provided in subsection (a)) shall have authority:
18 (1) To permit assets pledged as collateral under subsection
19 (c)(3), to be pooled in accordance with the act of August 6,
20 1971 (P.L.281, No.72), entitled "An act standardizing the
21 procedures for pledges of assets to secure deposits of public
22 funds with banking institutions pursuant to other laws;
23 establishing a standard rule for the types, amounts and
24 valuations of assets eligible to be used as collateral for
25 deposits of public funds; permitting assets to be pledged
26 against deposits on a pooled basis; and authorizing the
27 appointment of custodians to act as pledgees of assets,"
28 relating to pledges of assets to secure deposits of public
29 funds.
30 (2) To combine moneys from more than one fund under county
19810H1194B3137 - 7 -
1 control for the purchase of a single investment, provided that
2 each of the funds combined for the purpose shall be accounted
3 for separately in all respects and that the earnings from the
4 investment are separately and individually computed and
5 recorded, and credited to the accounts from which the investment
6 was purchased.
7 (3) To join with one or more other political subdivisions
8 and municipal authorities in accordance with the act of July 12,
9 1972 (P.L.762, No.180), entitled "An act relating to
10 intergovernmental cooperation," in the purchase of a single
11 investment, provided that the requirements of clause (2) on
12 separate accounting of individual funds and separate
13 computation, recording and crediting of the earnings therefrom
14 are adhered to.
15 (f) All income earned on any of the aforesaid investments
16 shall inure to the benefit of the county and shall be placed in
17 the general fund.
18 Section 3. Section 1994 of the act is repealed.
19 Section 4. Section 1995 of the act is amended to read:
20 Section 1995. [Deposits of Money Received; Interest.--All
21 moneys received by the commission at any time shall immediately
22 be deposited in one or more banks or banking institutions which
23 are now or hereafter shall be designated as county depositories.
24 The rate of interest to be paid by depositories to the
25 commission shall be the highest rate obtainable, calculated on
26 daily balances. The commission may reinvest said interest with
27 the other income from the bonds in their possession.] Investment
28 of Sinking Fund Moneys.--The commission shall have power to make
29 investment of county sinking funds as authorized by the act of
30 July 12, 1972 (P.L.781, No.185), known as the "Local Government
19810H1194B3137 - 8 -
1 Unit Debt Act"; and liquidate any such investment, in whole or
2 in part, by disposing of securities or withdrawing funds on
3 deposit. Any action taken to make or to liquidate any investment
4 shall be made by the commission.
5 Section 5. This act shall take effect in 60 days.
B26L16JR/19810H1194B3137 - 9 -