SENATE BILL NO. 260
INTRODUCED BY D. MAHLUM, COCCHIARELLA, DOHERTY, GLASER, GRIMES, KITZENBERG, LAWSON, LEHMAN, MASOLO, OLSON, A. PETERSON, RIPLEY, RYAN, SHEA, SMITH, TASH, TESTER, TOOLE
AN ACT AUTHORIZING TRUSTEES OF A SCHOOL DISTRICT TO ESTABLISH AND TEMPORARILY TRANSFER DISTRICT FUNDS INTO INDEPENDENT INVESTMENT ACCOUNTS TO INCREASE SCHOOL BOARD CONTROL OVER INVESTMENTS; ESTABLISHING GUIDELINES FOR DISTRICT EXPENDITURES FOR INVESTMENT ACCOUNTS; AUTHORIZING A DISTRICT TO INVEST MONEY IN INVESTMENTS AUTHORIZED BY THE BOARD OF INVESTMENTS UNDER TITLE 17, CHAPTER 6, MCA; REQUIRING A DISTRICT TO COMPLY WITH THE REQUIREMENTS OF TITLE 17, CHAPTER 6, PART 1, FOR DEPOSITS IN EXCESS OF THE AMOUNT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR THE NATIONAL CREDIT UNION ADMINISTRATION; REQUIRING A DISTRICT TO PAY THE AUTOMATED CLEARINGHOUSE SYSTEM CHARGES FOR ALL TRANSFERS MADE BY THE OFFICE OF PUBLIC INSTRUCTION; AMENDING SECTIONS 20-9-213 AND 20-9-346, MCA; AND PROVIDING AN IMMEDIATE EFFECTIVE DATE AND AN APPLICABILITY DATE.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
Section 1. Authorization for school district investment account. (1) The trustees of a school district may establish investment accounts and may temporarily transfer into the accounts all or a portion of any of its budgeted or nonbudgeted funds. The trustees shall establish a separate account for each fund from which transfers are made.
(2) Money transferred into investment accounts established under this section may be expended from a subsidiary checking account under the conditions specified in subsection (3)(b).
(3) The district may either:
(a) establish and use the accounts as nonspending accounts to ensure that district funds remain in an interest-bearing status until money is reverted to the budgeted or nonbudgeted fund of original deposit as necessary for use by the county treasurer to pay claims against the district. The district shall ensure that sufficient money is reverted to the district's budgeted and nonbudgeted funds maintained by the county treasurer in sufficient time to pay all claims presented against the applicable funds of the district. The county treasurer shall accept all money that is reverted upon tendered transfer of the district.
(b) establish a subsidiary checking account for expenditures from the investment accounts. The district may write checks on or provide electronic payments from the account if:
(i) the payments made from the accounts representing budgeted funds are in compliance with the budget adopted by the trustees;
(ii) the accounts are subject to the audit of district finances completed for compliance with 2-7-503 and 20-9-503; and
(iii) the district complies with all accounting system requirements required by the superintendent of public instruction.
(4) (a) A district that chooses to establish a school district investment account described in this section shall enter into a written agreement with the county treasurer. The agreement must:
(i) establish specific procedures and reporting dates to comply with the requirements of subsection (3);
(ii) be binding upon the district and the county treasurer for a period of not less than 5 years;
(iii) be signed by the presiding officer of the board of trustees and the county treasurer; and
(iv) except as provided in subsection (4)(b), coincide with fiscal years beginning on July 1 and ending on June 30.
(b) An agreement that establishes a school district investment account for fiscal year 2002 must be entered into no later than October 1, 2001.
(c) The district and the county treasurer may renew an agreement, including terms and conditions on which they agree, provided that the terms and conditions comply with the provisions of this section.
(5) Except for electronic transfers of BASE aid and state advances for county equalization sent directly to a participating district's investment account under 20-9-346(3), the county treasurer shall, as required by law, continue to collect money and report to the districts that elect to establish a school district investment account.
(6) The trustees shall implement an accounting system for the investment account pursuant to rules adopted by the superintendent of public instruction. The rules for the accounting system must include but are not limited to:
(a) providing for the internal control of deposits into and transfers between a district's investment accounts and budgeted and nonbudgeted funds of the district;
(b) requiring that the principal and interest earned on the principal is allocated to the budgeted or nonbudgeted fund from which the deposit was originally made; and
(c) ensuring that other proper accounting principles are followed.
(7) All interest earned on the district's general fund deposits must be allocated for district property tax reduction as required by 20-9-141.
(8) In making deposits to investment accounts under this section, a district shall comply with the requirements of Title 17, chapter 6, part 1, with respect to deposits in excess of the amount insured by the federal deposit insurance corporation or the national credit union administration, as applicable.
(9) A district establishing investment accounts under the section shall pay the automated clearinghouse system charges for all automated clearinghouse transfers made by the office of public instruction to the district's accounts.
Section 2. Section 20-9-213, MCA, is amended to read:
"20-9-213. Duties of trustees. The trustees of each district have the authority to transact all fiscal business and execute all contracts in the name of the district. A person other than the trustees acting as a governing board may not expend money of the district. In conducting the fiscal business of the district, the trustees shall:
(1) cause the keeping of an accurate, detailed accounting of all receipts and expenditures of school money for each fund and account maintained by the district in accordance with generally accepted accounting principles and the rules prescribed by the superintendent of public instruction. The record of the accounting must be open to public inspection at any meeting of the trustees.
(2) authorize all expenditures of district money and cause warrants or checks, as applicable, to be issued for the payment of lawful obligations;
(3) issue warrants or checks, as applicable, on any budgeted fund in anticipation of budgeted revenue, except that the expenditures may not exceed the amount budgeted for the fund;
(4) invest any money of the district, whenever in the judgment of the trustees the investment would be advantageous to
the district, by either by directing the county treasurer to invest any money of the district or by directly investing the money
of the district in eligible securities, as identified in 7-6-202, in savings or time deposits in a state or national bank, building
or loan association, savings and loan association, or credit union insured by the FDIC or NCUA located in the state, or in a
repurchase agreement that meets the criteria provided for in 7-6-213. All interest collected on the deposits or investments
must be credited to the fund from which the money was withdrawn, except that interest earned on account of the
investment of money realized from the sale of bonds must be credited to the debt service fund or the building fund, at the
discretion of the board of trustees. The placement of the investment by the county treasurer is not subject to ratable
distribution laws and must be done in accordance with the directive from the board of trustees. A district may invest money
under the state unified investment program established in Title 17, chapter 6, or in a unified investment program with the
county treasurer, with other school districts, or with any other political subdivision if the unified investment program is
limited to investments that meet the requirements of this subsection (4), including those investments authorized by the
board of investments under Title 17, chapter 6. A school district that enters into a unified investment program with another
school district or political subdivision other than the state shall do so under the auspices of and by complying with the
provisions governing interlocal cooperative agreements authorized under Title 7, chapter 11, and educational cooperative
agreements authorized under Title 20, chapter 9, part 7. A school district shall either shall contract for investment services
with any company licensed to do business in Montana under complying with the provisions of Title 30, chapter 10, or shall
contract with the state board of investments for investment services.
(5) cause the district to record each transaction in the appropriate account before the accounts are closed at the end of the fiscal year in order to properly report the receipt, use, and disposition of all money and property for which the district is accountable;
(6) report annually to the county superintendent, not later than August 15, the financial activities of each fund maintained by the district during the last-completed school fiscal year, on the forms prescribed and furnished by the superintendent of public instruction. Annual fiscal reports for joint school districts must be submitted not later than September 1 to the county superintendent of each county in which part of the joint district is situated.
(7) whenever requested, report any other fiscal activities to the county superintendent, superintendent of public instruction, or board of public education;
(8) cause the accounting records of the district to be audited as required by 2-7-503; and
(9) perform, in the manner permitted by law, other fiscal duties that are in the best interests of the district."
Section 3. Section 20-9-346, MCA, is amended to read:
"20-9-346. Duties of superintendent of public instruction for state and county equalization aid distribution. The superintendent of public instruction shall administer the distribution of the state and county equalization aid by:
(1) establishing the annual entitlement of each district and county to state and county equalization aid, based on the data reported in the retirement, general fund, and debt service fund budgets for each district that have been adopted for the current school fiscal year and verified by the superintendent of public instruction;
(2) for the purposes of state advances and reimbursements for school facilities, limiting the distribution to no more than the amount appropriated for the school fiscal year to the districts that are eligible under the provisions of 20-9-366 through 20-9-371 by:
(a) determining the debt service payment obligation in each district for debt service on bonds that were sold as provided in 20-9-370(3) that qualify for a state advance or reimbursement for school facilities under the provisions of 20-9-366 through 20-9-369 and 20-9-370;
(b) based on the limitation of state equalization aid appropriated for debt service purposes, determining the state advance for school facilities and the proportionate share of state reimbursement for school facilities that each eligible district must receive for the school fiscal year; and
(c) distributing that amount by May 31 of each school fiscal year to each eligible district for reducing the property tax
for the debt service fund for the ensuing school fiscal year.;
(3) distributing by electronic transfer the BASE aid and state advances for county equalization, for each district or county entitled to the aid, to the county treasurer of the respective county for county equalization or to the county treasurer of the county where the district is located or to the investment account identified by the applicable district for BASE aid, in accordance with the distribution ordered by the board of public education;
(4) keeping a record of the full and complete data concerning money available for state equalization aid, state advances for county equalization, and the entitlements for BASE aid of the districts of the state;
(5) reporting to the board of public education the estimated amount that will be available for state equalization aid; and
(6) reporting to the office of budget and program planning, as provided in 17-7-111:
(a) the figures and data available concerning distributions of state and county equalization aid during the preceding 2 school fiscal years;
(b) the amount of state equalization aid then available;
(c) the apportionment made of the available money but not yet distributed;
(d) the latest estimate of accruals of money available for state equalization aid; and
(e) the amount of state advances and repayment for county equalization."
Section 4. Codification instruction. [Section 1] is intended to be codified as an integral part of Title 20, chapter 9, part 2, and the provisions of Title 20, chapter 9, part 2, apply to [section 1].
Section 5. Effective date -- applicability. [This act] is effective on passage and approval and applies to the transfer of funds on or after [the effective date of this act].
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