PRINTER'S NO. 2191
No. 1821 Session of 1981
INTRODUCED BY L. E. SMITH, DeVERTER AND SPENCER, SEPTEMBER 22,
1981
REFERRED TO COMMITTEE ON FINANCE, SEPTEMBER 22, 1981
AN ACT
1 Amending the act of April 9, 1929 (P.L.343, No.176), entitled
2 "An act relating to the finances of the State government;
3 providing for the settlement, assessment, collection, and
4 lien of taxes, bonus, and all other accounts due the
5 Commonwealth, the collection and recovery of fees and other
6 money or property due or belonging to the Commonwealth, or
7 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 and
17 imposing penalties; affecting every department, board,
18 commission, and officer of the State government, every
19 political subdivision of the State, and certain officers of
20 such subdivisions, every person, association, and corporation
21 required to pay, assess, or collect taxes, or to make returns
22 or reports under the laws imposing taxes for State purposes,
23 or to pay license fees or other moneys to the Commonwealth,
24 or any agency thereof, every State depository and every
25 debtor or creditor of the Commonwealth," further providing
26 for investment of funds by the Treasury Department.
27 The General Assembly of the Commonwealth of Pennsylvania
28 hereby enacts as follows:
29 Section 1. Section 301.1, act of April 9, 1929 (P.L.343,
1 No.176), known as "The Fiscal Code," added June 19, 1961
2 (P.L.468, No.235), amended June 18, 1968 (P.L.215, No.102), July
3 11, 1980 (P.L.554, No.115) and July 1, 1981 (P.L.187, No.54), is
4 amended to read:
5 Section 301.1. Investment of Moneys.--(a) The Treasury
6 Department may, from time to time, invest in direct short-term
7 obligations of the United States government such amounts of the
8 moneys of the Commonwealth, with the exception of moneys in any
9 fund authorized by law to be invested by any board, commission
10 or State officer, on deposit from time to time in State
11 depositories, as shall have accumulated beyond the ordinary
12 needs of various funds. The Treasury Department shall, from time
13 to time as necessary, sell such short-term obligations and
14 deposit the proceeds in State depositories as provided by this
15 act. The Treasury Department shall not, at any one time, have
16 invested in short-term obligations of the United States
17 government more than an aggregate of such total sum as the Board
18 of Finance and Revenue shall, by resolution, with the Governor's
19 approval, have prescribed.
20 (b) The Treasury Department may, from time to time, invest
21 its excess funds in United States Treasury and United States
22 Agency obligations, with a maturity of up to and including two
23 years.
24 [(b)] (c) The Treasury Department may, from time to time,
25 subject to the hereinafter stated conditions and limitations,
26 invest and reinvest the moneys of any fund as shall have
27 accumulated beyond the ordinary needs of the various funds, and
28 which are not authorized by law to be invested by any board,
29 commission or State officer in [prime rated] commercial paper.
30 As used herein, "commercial paper" shall mean unsecured
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1 promissory notes issued [at a discount from par by any
2 industrial, common carrier or finance company, and
3 "Prime commercial paper" shall mean notes issued by
4 corporations whose credit has been approved by the National
5 Credit Office, Inc., New York, or its successor.
6 The Treasury Department shall have obtained the following,
7 prior to any commitment to purchase commercial paper:
8 (1) A certification or other evidence that such commercial
9 paper is rated prime by the National Credit Office, Inc.;
10 (2) A certification or other evidence that the paper
11 proposed to be delivered is not subordinated to any other debt
12 of the issuer;
13 (3) A certification or other evidence that there is no
14 litigation pending or threatened affecting said paper;
15 (4) A certification or other evidence that the issuer is not
16 in default as to the payment of principal or interest upon any
17 of its outstanding obligations; and
18 (5) A certification or other evidence that the issuer was
19 incorporated within the United States, is transacting business
20 within the United States, and has assets of one billion dollars
21 or more, or is a wholly owned subsidiary of a Pennsylvania
22 corporation having assets of one billion dollars or more] either
23 in discount or interest-bearing form by any industrial, common
24 carrier, or finance company and must bear Moody's Credit Service
25 "Prime One Rating," or the equivalent by Standard and Poor's or
26 Fitch's Rating Service.
27 The Treasury Department shall not, at any time, have invested
28 in [prime] commercial paper more than an aggregate of such total
29 sum as the Board of Finance and Revenue shall, by resolution,
30 with the Governor's approval, have prescribed.
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1 [(c)] (d) The Treasury Department may, from time to time
2 pursuant to regulations adopted by the Board of Finance and
3 Revenue invest and reinvest such moneys of any fund as shall be
4 accumulated beyond the ordinary needs of the various funds and
5 which are not authorized by law to be invested by any other
6 board or commission or State officer by purchasing certificates
7 of deposit from commercial banks domiciled in this Commonwealth
8 up to the level equal to twenty per centum of such bank's total
9 capital and surplus. Certificates of deposit may likewise be
10 purchased from savings and loan associations domiciled in the
11 Commonwealth up to a level equal to twenty per centum of such
12 association's assets minus liabilities. Such certificates of
13 deposit need not be collateralized. In applying the proceeding
14 limitation on investments in certificates of deposit, the
15 Treasury Department must include the similar investments of the
16 State Employees' Retirement Board and the Public School
17 Employees' Retirement Board. The Treasury Department shall not
18 at anytime have invested in uncollateralized certificates of
19 deposit more than the total amount authorized by resolution of
20 the Board of Finance and Revenue and approved by the Governor.
21 The Treasury Department shall purchase certificates of deposit
22 under this subsection pursuant to procedures established in
23 regulations by the Board of Finance and Revenue and shall take
24 into account the differences, if any, in competitive bids, the
25 financial strength of each of the bidders and the services
26 provided to or at the request of the Commonwealth and any of its
27 departments, agencies or bureaus by each of the bidders.
28 [(d)] (e) The Treasury Department may from time to time
29 enter into repurchase agreements secured by Federal obligations.
30 (f) The Treasury Department may, from time to time, invest
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1 its excess funds in Banker's Acceptances.
2 As used herein, "Banker's Acceptances" shall mean short term
3 trade financing agreements secured by the accepting bank and the
4 goods being purchased, and shall be limited to domestic banks
5 whose parent companies bear a Moody's Credit Service "AA
6 Rating," or the equivalent by Standard and Poor's or Fitch's
7 Rating Service.
8 (g) Regardless of any limitations, conditions or
9 restrictions imposed on the making of investments by this act or
10 any other law, the Treasury Department may, at its discretion,
11 invest a maximum of ten per centum of the book value of the
12 assets of the fund in any investments not otherwise specifically
13 authorized, provided that such investments are made with the
14 exercise of that degree of judgment and care under the
15 circumstances then prevailing which persons of prudence,
16 discretion and intelligence exercise in the management of their
17 own affairs not in regard to speculation, but in regard to the
18 permanent disposition of the funds, considering the probable
19 income to be derived therefrom as well as the probable safety of
20 their capital
21 (h) All investments allowed under this section must be made
22 with the exercise of that degree of judgment and care under the
23 circumstances then prevailing which persons of prudence,
24 discretion and intelligence exercise in the management of their
25 own affairs not in regard to speculation, but in regard to the
26 permanent disposition of the funds, considering the probable
27 income to be derived therefrom as well as the probable safety of
28 their capital.
29 Section 2. This act shall take effect in 60 days.
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