PRIOR PRINTER'S NOS. 1947, 2051 PRINTER'S NO. 2737
No. 1679 Session of 1993
INTRODUCED BY ITKIN, CESSAR, DeWEESE, STEIGHNER, VEON, TRELLO,
GEORGE, BUXTON, NICKOL, CAPPABIANCA, KUKOVICH, COLAIZZO,
PESCI, GORDNER, MIHALICH, LAUB, BEBKO-JONES, CURRY, BOYES,
FAJT, TIGUE, LINTON, COY, FREEMAN, BATTISTO, STABACK, KENNEY,
DERMODY, McCALL, ROONEY, JOSEPHS, PISTELLA, LAUGHLIN,
PETRONE, RUDY, BELFANTI, KASUNIC, SCRIMENTI, HANNA, PETRARCA
AND MERRY, MAY 26, 1993
AS RE-REPORTED FROM COMMITTEE ON APPROPRIATIONS, HOUSE OF
REPRESENTATIVES, AS AMENDED, NOVEMBER ,23 1993
AN ACT
1 Amending the act of April 9, 1929 (P.L.343, No.176), entitled,
2 as amended, "An act relating to the finances of the State
3 government; providing for the settlement, assessment,
4 collection, and lien of taxes, bonus, and all other accounts
5 due the Commonwealth, the collection and recovery of fees and
6 other money or property due or belonging to the Commonwealth,
7 or any agency thereof, including escheated property and the
8 proceeds of its sale, the custody and disbursement or other
9 disposition of funds and securities belonging to or in the
10 possession of the Commonwealth, and the settlement of claims
11 against the Commonwealth, the resettlement of accounts and
12 appeals to the courts, refunds of moneys erroneously paid to
13 the Commonwealth, auditing the accounts of the Commonwealth
14 and all agencies thereof, of all public officers collecting
15 moneys payable to the Commonwealth, or any agency thereof,
16 and all receipts of appropriations from the Commonwealth,
17 authorizing the Commonwealth to issue tax anticipation notes
18 to defray current expenses, implementing the provisions of
19 section 7(a) of Article VIII of the Constitution of
20 Pennsylvania authorizing and restricting the incurring of
21 certain debt and imposing penalties; affecting every
22 department, board, commission, and officer of the State
23 government, every political subdivision of the State, and
24 certain officers of such subdivisions, every person,
25 association, and corporation required to pay, assess, or
26 collect taxes, or to make returns or reports under the laws
27 imposing taxes for State purposes, or to pay license fees or
28 other moneys to the Commonwealth, or any agency thereof,
1 every State depository and every debtor or creditor of the
2 Commonwealth," further providing for investment of moneys of
3 the Commonwealth.
4 The General Assembly of the Commonwealth of Pennsylvania
5 hereby enacts as follows:
6 Section 1. Section 301.1 of the act of April 9, 1929
7 (P.L.343, No.176), known as The Fiscal Code, amended May 7, 1982
8 (P.L.390, No.113) and May 2, 1986 (P.L.145, No.45), is amended
9 to read:
10 Section 301.1. Investment of Moneys.--(a) The Treasury
11 Department may, from time to time, invest [in direct short-term
12 obligations of the United States government] such amounts of the
13 moneys of the Commonwealth, with the exception of moneys in any
14 fund authorized by law to be invested by any board, commission
15 or State officer, on deposit from time to time in State
16 depositories, as shall have accumulated beyond the ordinary
17 needs of various funds. The Treasury Department shall, from time
18 to time as necessary, sell [such short-term obligations] the
19 investments authorized by this section and deposit the proceeds
20 in State depositories as provided by this act. [The Treasury
21 Department shall not, at any one time, have invested in short-
22 term obligations of the United States government more than an
23 aggregate of such total sum as the Board of Finance and Revenue
24 shall, by resolution, with the Governor's approval, have
25 prescribed.
26 (b) The Treasury Department may, from time to time, invest
27 its excess funds in United States Treasury and United States
28 Agency obligations, with a maturity of up to and including two
29 years.]
30 (c) The Treasury Department [may, from time to time, subject
31 to the hereinafter stated conditions and limitations,] shall
19930H1679B2737 - 2 -
1 have the exclusive management and full power to invest and
2 reinvest the moneys of any fund as shall have accumulated beyond
3 the ordinary needs of the various funds, and which are not
4 authorized by law to be invested by any board, commission or
5 State officer [in commercial paper.
6 As used herein, "commercial paper" shall mean unsecured
7 promissory notes issued either in discount or interest-bearing
8 form by any industrial, common carrier, or finance company and
9 must bear Moody's Credit Service "Prime One Rating," or the
10 equivalent by Standard and Poor's or Fitch's Rating Service.
11 The Treasury Department shall not, at any time, have invested
12 in commercial paper more than an aggregate of such total sum as
13 the Board of Finance and Revenue shall, by resolution, with the
14 Governor's approval, have prescribed.], subject to the terms, <--
15 conditions, limitations and restrictions imposed by law upon
16 fiduciaries., SUBJECT, HOWEVER, TO THE EXERCISE OF THAT DEGREE <--
17 OF JUDGMENT AND CARE UNDER THE CIRCUMSTANCES THEN PREVAILING
18 WHICH PERSONS OF PRUDENCE, DISCRETION AND INTELLIGENCE, WHO ARE
19 FAMILIAR WITH SUCH MATTERS, EXERCISE IN THE MANAGEMENT OF THEIR
20 OWN AFFAIRS NOT IN REGARD TO SPECULATION, BUT IN REGARD TO THE
21 PERMANENT DISPOSITION OF THE FUNDS, CONSIDERING THE PROBABLE
22 INCOME TO BE DERIVED THEREFROM AS WELL AS THE PROBABLE SAFETY OF
23 THEIR CAPITAL. The Treasury Department shall have the power to
24 hold, purchase, sell, assign, transfer and dispose of any
25 securities and investments in any such fund, as well as the
26 proceeds of such investments and of the money belonging to any
27 such fund. In exercising its fiduciary duties under this <--
28 section, the THE Treasury Department may, WHEN POSSIBLE AND <--
29 CONSISTENT WITH ITS FIDUCIARY DUTIES IMPOSED BY THIS SUBSECTION
30 OR OTHER LAW, consider whether an investment in any project or
19930H1679B2737 - 3 -
1 business enhances and promotes the general welfare of this
2 Commonwealth and its citizens, including, but not limited to,
3 investments that increase and enhance the employment of
4 Pennsylvania COMMONWEALTH residents, encourage the construction <--
5 and retention of adequate housing and stimulate further
6 investment and economic activity in this Commonwealth. THE <--
7 TREASURY DEPARTMENT SHALL, THROUGH THE GOVERNOR, SUBMIT TO THE
8 GENERAL ASSEMBLY ANNUALLY, AT THE SAME TIME THE TREASURY
9 DEPARTMENT SUBMITS ITS BUDGET COVERING ADMINISTRATIVE EXPENSES,
10 A REPORT IDENTIFYING THE NATURE AND AMOUNT OF ALL EXISTING
11 INVESTMENTS MADE PURSUANT TO THIS SECTION.
12 [(d) The Treasury Department may, from time to time pursuant
13 to regulations adopted by the Board of Finance and Revenue
14 invest and reinvest such moneys of any fund as shall be
15 accumulated beyond the ordinary needs of the various funds and
16 which are not authorized by law to be invested by any other
17 board or commission or State officer by purchasing certificates
18 of deposit from commercial banks domiciled in this Commonwealth
19 up to the level equal to twenty per centum of such bank's total
20 capital and surplus. Certificates of deposit may likewise be
21 purchased from savings and loan associations or savings banks
22 domiciled in the Commonwealth up to a level equal to twenty per
23 centum of such association's or savings bank's assets minus
24 liabilities. Such certificates of deposit need not be
25 collateralized. In applying the proceeding limitation on
26 investments in certificates of deposit, the Treasury Department
27 must include the similar investments of the State Employees'
28 Retirement Board and the Public School Employees' Retirement
29 Board. The Treasury Department shall not at anytime have
30 invested in uncollateralized certificates of deposit more than
19930H1679B2737 - 4 -
1 the total amount authorized by resolution of the Board of
2 Finance and Revenue and approved by the Governor. The Treasury
3 Department shall purchase certificates of deposit under this
4 subsection pursuant to procedures established in regulations by
5 the Board of Finance and Revenue and shall take into account the
6 differences, if any, in competitive bids, the financial strength
7 of each of the bidders and the services provided to or at the
8 request of the Commonwealth and any of its departments, agencies
9 or bureaus by each of the bidders.
10 (e) The Treasury Department may from time to time enter into
11 repurchase agreements secured by Federal obligations.
12 (f) The Treasury Department may, from time to time, invest
13 its excess funds in Banker's Acceptances.
14 As used herein, "Banker's Acceptances" shall mean short term
15 trade financing agreements secured by the accepting bank and the
16 goods being purchased, and shall be limited to domestic banks
17 whose parent companies bear a Moody's Credit Service "AA
18 Rating," or the equivalent by Standard and Poor's or Fitch's
19 Rating Service.
20 (g) Notwithstanding any limitations, conditions or
21 restrictions imposed on the making of investments by this act,
22 except those contained in subsection (h), and notwithstanding
23 any limitations, conditions or restrictions imposed by any other
24 law, the Treasury Department may, at its discretion, invest a
25 maximum of ten per centum of the book value of the assets of the
26 fund in any investments except common stock not otherwise
27 specifically authorized.
28 (h) All investments allowed under this section must be made
29 with the exercise of that degree of judgment and care under the
30 circumstances then prevailing which persons of prudence,
19930H1679B2737 - 5 -
1 discretion and intelligence exercise in the management of their
2 own affairs not in regard to speculation, but in regard to the
3 permanent disposition of the funds, considering the probable
4 income to be derived therefrom as well as the probable safety of
5 their capital. The exercise of such degree of judgment and care
6 shall include, but shall not be limited to:
7 (1) The daily investment of available investable funds
8 necessary to maintain maximum effectiveness of the Treasury
9 Department investment portfolio at all times.
10 (2) The maintenance of portfolio reporting system.
11 (3) The adherence to Moody's Credit Service "Prime One
12 Rating" or the equivalent of Standard and Poor's or Fitch's
13 Rating Service for institutions with whom investments are
14 transacted pursuant to subsection (g).
15 (4) At least quarter-annual bank performance ranking
16 according to maximum efficiency in cash management.]
17 Section 2. This act shall take effect immediately.
C12L72DGS/19930H1679B2737 - 6 -