TREASURY - Investments of Surplus Funds of Political Subdivisions

Public Act 20 of 1943 as amended through June 30, 1997	Public Act 20 of 1943 as amended through December 31, 1997
129.91
Sec. 1. (1) The legislative or governing body of a county, city, village, township, or special assessment district, or an agency, board, or commission of a county, city, village or township, by resolution may authorize its treasurer or other chief fiscal officer to invest surplus funds belonging to and under the control of the political subdivision, special assessment district, or agency, board, or commission of a county as follows:	Sec. 1. (1) Except as provided in section 5, the governing body by resolution may authorize its investment officer to invest the funds of the public corporation in 1 or more of the following:
(a) In bonds, securities, and other obligations of the United States, or an agency or instrumentality of the United States in which the principal and interest is fully guaranteed by the United States. This subdivision shall include securities issued or guaranteed by the government national mortgage association.	(a) Bonds, securities, and other obligations of the United States or an agency or instrumentality of the United States.
(b) In certificates of deposit, savings accounts, deposit accounts, or depository receipts of a financial institution, but only if the financial institution complies with subsection (2).	(b) Certificates of deposit, savings accounts, deposit accounts, or depository receipts of a financial institution, buy only if the financial institution complies with subsection (2).
(c) In commercial paper rated at the time of purchase within the 3 highest classifications established by not less than 2 standard rating services and which matures not more than 270 days after the date of purchase. Not more than 50% of any fund may be invested in commercial paper at any time.	(c) Commercial paper rated at the time of purchase within the 2 highest classifications established by not less than 2 standard rating services and that matures not more than 270 days after the date of purchase.
(d) In United States government or federal agency obligation repurchase agreements.	(d) Repurchase agreements consisting of instruments listed in subdivision (a).
(e) In bankers' acceptances of United States banks.	(e) Bankers' acceptances of United States banks.
	(f) Obligations of this state or any of its political subdivisions that at the time of purchase are rated as investment grade by not less than 1 standard rating service.
(f) In mutual funds composed of investment vehicles which are legal for direct investment by local units of government in this state.
	(g) Mutual funds registered under the investment company act of 1940, title I of chapter 686, 54 Stat. 789, 15 U.S.C. 80a-1 to 80a-3 and 80a-4 to 80a-64, with the authority to purchase only investment vehicles that are legal for direct investment by a public corporation. However, a mutual fund is not disqualified as a permissible investment solely by reason of either of the following: (i) The purchase of securities on a when-issued or delayed delivery basis. (ii) The ability to lend portfolio securities as long as the mutual fund receives collateral all times equal to at least 100% of the securities loaned. (iii) The limited ability to borrow and pledge a like portion of the portfolio's assets for temporary or emergency purposes.
	(h) Obligations described in subdivisions (a) through (g) if purchased through an interlocal agreement under the Urban Cooperations Act, PA 7 of 1967 (Ex Sess), MCL 124.501 to 124.512.
	(i) Investment pools organized under the surplus funds investment pool act, PA 367 of 1982, 129.111 to 129.118.
	(j) The investment pools organized under the local government investment pool act, PA 121 of 1985, MCL 129.141 to 129.150.
(2) A county, city, village, township, or special assessment district investing funds under subsection (1) shall not deposit or invest the funds in a financial institution which is not eligible to be a depository of surplus funds belonging to the state under section 6 of PA 105 of 1855, MCL 21.146.	(2) A public corporation that invests its funds under subsection (1) shall not deposit or invest the funds in a financial institution that is not eligible to be a depository of funds belonging to the state under a law or rule of this state or the United States.
(3) Assets acceptable for pledging to secure deposits of public funds are limited to any of the following: (a) (b) (i) (ii) (iii) (c)	(3) Assets acceptable for pledging to secure deposits of public funds are limited to assets authorized for direct investment under section (1).
(4) As used in this section, "financial institution" means a state or nationally chartered bank or a state or federally chartered savings and loan association, savings bank, or credit union whose deposits are insured by an agency of the United States government and which maintains a principal office or branch office in this state under the laws of this state or the United States.	(4) As used in this section, "financial institution" means a state or nationally chartered bank or a state or federally chartered savings and loan association, savings bank, or credit union whose deposits are insured by an agency of the United States government and which maintains a principal office or branch office in this state under the laws of this state or the United States.

(a) "Governing body" means the legislative body, council, commission, board or other body having legislative powers of a public corporation.
(b) "Funds" means the money of a public corporation, the investment of which is not otherwise subject to a public act of this state or bond authorizing ordinance or resolution of a public corporation that permits investment in fewer than all of the investment options listed in subsection (1) or imposes 1 or more conditions upon an investment in an option listed in subsection (1).
(c) "Investment officer" means the treasurer or other person designated by statute or charter of a public corporation to act as the investment officer. In the absence of statute or charter designation, the governing body of a public corporation shall designate the investment officer.
(d) "Public corporation" means a county, city, village, township, port district, drainage district, special assessment district, or metropolitan district of this state, or a board, commission, or another authority or agency created by or under an act of the legislature of this state.

Sec. 3. Investments made before the effective date of the amendatory act that repealed section 2 of the surplus funds, sinking funds, or insurance funds of a political subdivision of this state in bonds and other obligations of the United States or its intrumentalities or certificates of deposit or depository receipts of a bank that is a member of the federal deposit insurance corporation as provided under section 1 and former section 2 of this act are hereby ratified and validated.

Sec. 5. (1) Not more that 180 days after the end of a public corporation's first fiscal year that ends after the effective date of the amendatory act that repealed section 2, a governing body, in conjunction with the investment officer, shall adopt an investment policy that, at a minimum, includes all of the following:

(a) A statement of the purpose, scope, and objectives of the policy, including safety, diversification, liquidity, and return on investment.
(b) A delegation of authority to make investments.
(c) A list of authorized investment instruments. If the policy authorizes an investment in mutual funds, it shall indicate whether the authorization is limited to securities whose intention is to maintain a net asset value of $1.00 per share or also includes securities whose net asset value per share may fluctuate on a periodic basis.
(d) A statement concerning safekeeping, custody, and prudence.

(2) A governing body that as of the effective date of the amendatory act that repealed section 2 has adopted an investment policy that substantially complies with the minimum requirements under subsection (1) is not in violation of this section as long as that policy remains in effect.

Sec 6.(1) Subject to subsection (2), before executing an order to purchase or trade the funds of a public corporation, the financial intermediary, broker, or dealer shall be provided with a copy of the public corporation's investment policy and shall do both of the following:

(a) Acknowledge receipt of the investment policy.
(b) Agree to comply with the terms of the investment policy regarding buying or selling of securities.

(2) A public corporation is subject to subsection (1) beginning on the date that the investment policy of a public corporation takes effect or 180 days after the end of the public corporation's first fiscal year ending after the effective date of the amendatory act that repealed section 2, whichever is earlier.

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