CHAPTER 12. BOARD FOR DEPOSITORIES
IC 5-13-12
Chapter 12. Board for Depositories
IC 5-13-12-1
Creation; purpose; public deposit insurance fund; tax exemption
Sec. 1. (a) There is created an independent body politic andcorporate, constituting an instrumentality of the state for the publicpurposes set out in this chapter, to be known as the board fordepositories. The board is separate from the state in its corporate andsovereign capacity. The purpose of the board is to insure thesafekeeping and prompt payment of all public funds deposited in anydepository, to the extent they are not covered by insurance of anyfederal deposit insurance agency, by maintaining and operating in itsown name the public deposit insurance fund under this chapter.
(b) Every depository that has public funds shall pay into thepublic deposit insurance fund the assessments provided in thischapter and comply with all lawful requirements of the board fordepositories. The public deposit insurance fund shall be maintainedby the assessments payable by the depositories and by the collectionof all claims created under IC 5-13-13 and by the receipt of allinterest and other earnings of the insurance fund from any source.
(c) All property in the public deposit insurance fund, the interestor income derived from it or through its use, and all propertyotherwise held by the board for depositories under this chapter isexempt from all taxes imposed by the state or any politicalsubdivision.
As added by P.L.19-1987, SEC.14.
IC 5-13-12-2
Membership; term; officers; quorum; conduct of meetings; notice;proceedings; executive sessions; records
Sec. 2. (a) The board for depositories consists of the governor, thetreasurer of state, the auditor of state, the chairperson of thedepartment of financial institutions, the chief examiner of the stateboard of accounts, and four (4) appointed members. Forappointments after June 30, 2010, one (1) member shall be appointedby the speaker of the house of representatives, one (1) member shallbe appointed by the president pro tempore of the senate, and two (2)members shall be appointed by the governor. All appointed membersmust be residents of Indiana. The speaker of the house ofrepresentatives shall make the appointment to fill the first vacancyon the board, and the president pro tempore of the senate shall makethe appointment to fill the second vacancy on the board that occursafter June 30, 2010. In making the governor's two (2) appointments,the governor shall assure that no more than two (2) of the four (4)appointees identify with the same political party. For appointmentsafter June 30, 2010, all four (4) appointed members must be a chiefexecutive officer or a chief financial officer of a depository at thetime of the appointment if the depository is domiciled in Indiana. Ifthe depository is not domiciled in Indiana, the appointee must be the
most senior corporate officer of the depository with management oroperational responsibility, or both, or the person designated tomanage public funds for the depository that is located in Indiana. Inmaking the governor's appointments, the governor shall provide forgeographic representation of all regions of Indiana, including bothurban and rural communities. In addition, the appointees must, at thetime of the appointment, be employed by the following depositories:
(1) One (1) member appointed by the governor who must be thechief executive officer or the chief financial officer of adepository that is a state chartered credit union.
(2) One (1) member appointed by the governor who must beemployed by a depository that:
(A) is not a state chartered credit union; and
(B) has total deposits of less than two hundred fiftymillion dollars ($250,000,000).
(3) The member appointed by the president pro tempore of thesenate must be employed by a depository that:
(A) is not a state chartered credit union; and
(B) has total deposits of at least two hundred fifty milliondollars ($250,000,000) but less than one billion dollars($1,000,000,000).
(4) The member appointed by the speaker of the house ofrepresentatives must be employed by a depository that:
(A) is not a state chartered credit union; and
(B) has total deposits of at least one billion dollars($1,000,000,000).
Total deposits shall be determined using the depository's reporteddeposits based on the information contained in the most recent June30th FDIC Summary of Deposits, Market Share Selection forIndiana. The term of an appointed member is four (4) years from theeffective date of the member's appointment. Each appointed memberholds office for the term of this appointment and serves after theexpiration of that appointment until the member's successor isappointed and qualified. An appointed member may be reappointedif the individual satisfies the requirements of this subsection at thetime of the reappointment. Any appointed member may be removedfrom office by, and at the pleasure of, the appointing authority.
(b) The officers of the board consist of a chairman, asecretary-investment manager, a vice chairman, and other officers theboard determines to be necessary. The governor shall name amember of the board to serve as its chairman. The treasurer of stateshall serve as the secretary-investment manager of the board. Theboard, by majority vote, shall elect the other officers. Officers,except the secretary-investment manager, shall be named or electedfor one (1) year terms in January of each year. The members andofficers of the board are not entitled to any compensation for theirservices but are entitled to reimbursement for actual and necessaryexpenses on the same basis as state employees.
(c) Five (5) members of the board constitute a quorum for thetransaction of business, and all actions of the board must be approved
by at least a simple majority of those members voting on eachindividual business issue. The board may adopt, amend, or repealbylaws and rules for the conduct of its meetings and the number andtimes of its meetings. The board shall hold a regular meeting at leastonce each calendar quarter and may hold other regular and specialmeetings as prescribed in its rules. All meetings of the board areopen to the public under IC 5-14-1.5. However, the board shalldiscuss the following in executive session:
(1) The financial strength of a particular financial institution.
(2) The collateral requirements of a particular financialinstitution.
(3) Any other matters concerning a particular financialinstitution.
All records of the board are subject to public inspection underIC 5-14-3. However, records regarding matters that are discussed inexecutive session are confidential.
(d) Two (2) days notice of the time and place of all meetings todetermine and fix the assessment rate to be paid by depositories onaccount of insurance on public funds or the establishment orredetermination of the reserve for losses of the insurance fund shallbe given by one (1) publication in a newspaper of general circulationprinted and published in the city of Indianapolis. The time, place,notice, and waiver requirements for the members of the board for allmeetings shall be determined by its rules. The secretary-investmentmanager of the board shall enter its proceedings at length in a recordprovided for that purpose, and the records of the proceedings shall beapproved and signed respectively by the chairman or vice chairmanand attested by the secretary-investment manager.
As added by P.L.19-1987, SEC.14. Amended by P.L.115-2010,SEC.13.
IC 5-13-12-2.5
Member participating in board meeting by alternate means ofcommunication
Sec. 2.5. (a) This section applies to a meeting of the board fordepositories at which at least five (5) members of the board arephysically present at the place where the meeting is conducted.
(b) A member of the board may participate in a meeting of theboard by using a means of communication that permits:
(1) all other members participating in the meeting; and
(2) all members of the public physically present at the placewhere the meeting is conducted;
to simultaneously communicate with each other during the meeting.
(c) A member who participates in a meeting under subsection (b)is considered to be present at the meeting.
(d) A member who participates in a meeting under subsection (b)may act as a voting member on official action only if that officialaction is voted upon by at least five (5) members of the boardphysically present at the place where the meeting is conducted.
(e) The memoranda of the meeting prepared under IC 5-14-1.5-4
must also state the name of each member who:
(1) was physically present at the place where the meeting wasconducted;
(2) participated in the meeting by using a means ofcommunication described in subsection (b); and
(3) was absent.
(f) A member who participates in a meeting under subsection (b)may not cast the deciding vote on any official action.
As added by P.L.141-2000, SEC.1.
IC 5-13-12-3
Function, powers, and purpose
Sec. 3. (a) The board for depositories exercises essential publicfunctions, and has a perpetual existence. The board has all powersnecessary, convenient, or appropriate to carry out and effectuate itspublic and corporate purposes, including but not limited to thepowers to do the following:
(1) Adopt, amend, and repeal bylaws and rules consistent withthis chapter to regulate its affairs and to effect the powers andpurposes of the board, all without the necessity of adopting arule under IC 4-22-2.
(2) Adopt its budget on a calendar year or fiscal year as it shalldetermine.
(3) Sue and be sued in its own name.
(4) Have an official seal and alter it at will.
(5) Maintain an office or offices at a place or places withinIndiana as it may designate.
(6) Make and execute contracts and all other instruments witheither public or private entities.
(7) Communicate with the employees of the Indiana financeauthority to the extent reasonably desirable in working on aguarantee of an industrial development obligation or creditenhancement obligation.
(8) Deposit all uninvested funds of the public deposit insurancefund in a separate account or accounts in financial institutionsthat are designated as depositories to receive state funds underIC 5-13-9.5. The money in these accounts shall be paid out onchecks signed by the chairman or other officers or employees ofthe board as it shall authorize.
(9) Take any other act necessary or convenient for theperformance of its duties and the exercise of its powers andfunctions under this chapter.
(b) In enforcing any obligation of the borrower or any otherperson under the documents evidencing a guarantee, the board mayrenegotiate the guarantee, modify the rate of interest, term of theindustrial development obligation or credit enhancement obligation,payment of any installment of principal or interest, or any other termof any documents, settle any obligation on the security or receipt ofproperty or the other terms as in its discretion it deems advantageousto the public deposit insurance fund, and take any other action
necessary or convenient to such enforcement.
(c) The records of the board for depositories relating tonegotiations between it and prospects for industrial developmentobligation or credit enhancement obligation guarantees are exceptedfrom the provisions of IC 5-14-3-3.
As added by P.L.19-1987, SEC.14. Amended by P.L.11-1990,SEC.106; P.L.18-1996, SEC.24; P.L.235-2005, SEC.80.
IC 5-13-12-3.1
Code of ethics
Sec. 3.1. (a) The board for depositories shall:
(1) adopt:
(A) rules under IC 4-22-2; or
(B) a policy;
establishing a code of ethics for its employees; or
(2) decide it wishes to be under the jurisdiction and rulesadopted by the state ethics commission.
(b) A code of ethics adopted by rule or policy under this sectionmust be consistent with state law and approved by the governor.
As added by P.L.5-1996, SEC.6.
IC 5-13-12-4 Version a
Secretary-investment manager; powers and duties; pensiondistribution fund
Note: This version of section effective until 1-1-2011. See alsofollowing version of this section, effective 1-1-2011.
Sec. 4. (a) The secretary-investment manager shall administer,manage, and direct the affairs and activities of the board under thepolicies and under the control and direction of the board. In carryingout these duties, the secretary-investment manager has the power todo the following:
(1) Approve all accounts for salaries and allowable expenses ofthe board, including, but not limited to:
(A) the employment of general or special attorneys,consultants, and employees and agents as may be necessaryto assist the secretary-investment manager in carrying outthe duties of that office and to assist the board in itsconsideration of applications for a guarantee of an industrialdevelopment obligation or credit enhancement obligationguarantee; and
(B) the setting of compensation of persons employed underclause (A).
(2) Approve all expenses incidental to the operation of thepublic deposit insurance fund.
(3) Perform other duties and functions that may be delegated tothe secretary-investment manager by the board or that arenecessary to carry out the duties of the secretary-investmentmanager under this chapter.
(b) The secretary-investment manager shall keep a record of theproceedings of the board, and shall maintain and be custodian of all
books, documents, and papers filed with the board, and its officialseal. The secretary-investment manager may make copies of allminutes and other records and documents of the board, and may givecertificates under seal of the board to the effect that the copies aretrue copies. All persons dealing with the board may rely upon thecertificates.
(c) Each year, beginning in 2001 and ending in 2021, after thetreasurer of state prepares the annual report required byIC 4-8.1-2-14, the secretary-investment manager shall determine:
(1) the amount of interest earned by the public depositinsurance fund during the state fiscal year ending on thepreceding June 30, after deducting:
(A) all expenses and other costs of the board for depositoriesthat were not paid from other sources during that state fiscalyear; and
(B) all expenses and other costs associated with the Indianaeducation savings authority that were not paid from othersources during that state fiscal year; and
(2) the amount of interest earned during the state fiscal yearending on the preceding June 30 by the pension distributionfund established by subsection (g).
(d) On or before November 1 of each year, beginning in 2001 andending in 2021, the public employees' retirement fund shall providea report to the secretary-investment manager concerning theindividual and aggregate payments made by all units of localgovernment (as defined in IC 5-10.3-11-3) during the precedingcalendar year for benefits under the police and firefighter pensionfunds established by IC 36-8-6, IC 36-8-7, and IC 36-8-7.5.
(e) On or before the last business day of November of each year,beginning in 2001 and ending in 2021, the secretary-investmentmanager shall compute the amount of earned interest to bedistributed under this section to each unit of local government (asdefined in IC 5-10.3-11-3) in accordance with subsection (h)according to the following formula:
STEP ONE: Add the amount determined under subsection(c)(1) to the amount determined under subsection (c)(2).
STEP TWO: Divide the STEP ONE sum by the aggregateamount of payments made by all units of local governmentduring the preceding calendar year for benefits under the policeand firefighter pension funds established by IC 36-8-6,IC 36-8-7, and IC 36-8-7.5, as reported under subsection (d).
STEP THREE: Multiply the STEP TWO quotient by theamount of payments made by each unit of local governmentduring the preceding calendar year for benefits under the policeand firefighter pension funds established by IC 36-8-6,IC 36-8-7, and IC 36-8-7.5, as reported under subsection (d).
(f) Subject to subsection (j), on or before the last business day ofDecember of each year, beginning in 2001 and ending in 2021, thesecretary-investment manager shall provide to the auditor of state:
(1) a report setting forth the amounts to be distributed to units
of local government, as determined under subsection (e); and
(2) a check payable from the public deposit insurance fund tothe pension distribution fund established by subsection (g) in anamount equal to the amount determined under subsection (c)(1).
(g) The pension distribution fund is established. The pensiondistribution fund shall be administered by the treasurer of state. Thetreasurer of state shall invest money in the pension distribution fundnot currently needed to meet the obligations of the pensiondistribution fund in the same manner as other public money may beinvested. Interest that accrues from these investments shall bedeposited in the pension distribution fund. Money in the pensiondistribution fund at the end of a state fiscal year does not revert to thestate general fund.
(h) Subject to subsection (j), on June 30 and October 1 of eachyear, beginning in 2002 and ending in 2022, the auditor of state shalldistribute in two (2) equal installments from the pension distributionfund to the fiscal officer of each unit of local government identifiedunder subsection (d) the amount computed for that unit undersubsection (e) in November of the preceding year.
(i) Each unit of local government shall deposit distributionsreceived under subsection (h) in the pension fund or funds identifiedby the secretary-investment manager and shall use those distributionsto pay a portion of the obligations with respect to the pension fundor funds.
(j) Before providing a check to the auditor of state undersubsection (f)(2) in December of any year, the secretary-investmentmanager shall determine:
(1) the total amount of payments made from the public depositinsurance fund under IC 5-13-13-3 after June 30, 2001;
(2) the total amount of payments received by the board fordepositories and deposited in the public deposit insurance fundunder IC 5-13-13-3 after June 30, 2001; and
(3) the total amount of interest earned by the public depositinsurance fund after the first of the payments described insubdivision (1).
If the total amount of payments determined under subdivision (1) lessthe total amount of payments determined under subdivision (2)(referred to in this subsection as the "net draw on the fund") exceedsten million dollars ($10,000,000) and also exceeds the total amountof interest determined under subdivision (3), thesecretary-investment manager may not provide a check to the auditorof state under subsection (f)(2) and a distribution may not be madefrom the pension distribution fund under subsection (h) in thefollowing calendar year until the total amount of interest earned bythe public deposit insurance fund equals the net draw on the fund. Acheck may not be provided under subsection (f)(2) and a distributionmay not be made under subsection (f) in any subsequent calendaryear if a study conducted by the board under section 7(b) of thischapter demonstrates that payment of the distribution would reducethe balance of the public deposit insurance fund to a level
insufficient to ensure the safekeeping and prompt payment of publicfunds to the extent they are not covered by insurance of any federaldeposit insurance agency.
As added by P.L.19-1987, SEC.14. Amended by P.L.281-2001,SEC.1; P.L.146-2008, SEC.39.
IC 5-13-12-4 Version b
Secretary-investment manager; powers and duties; pensiondistribution fund
Note: This version of section effective 1-1-2011. See alsopreceding version of this section, effective until 1-1-2011.
Sec. 4. (a) The secretary-investment manager shall administer,manage, and direct the affairs and activities of the board under thepolicies and under the control and direction of the board. In carryingout these duties, the secretary-investment manager has the power todo the following:
(1) Approve all accounts for salaries and allowable expenses ofthe board, including, but not limited to:
(A) the employment of general or special attorneys,consultants, and employees and agents as may be necessaryto assist the secretary-investment manager in carrying outthe duties of that office and to assist the board in itsconsideration of applications for a guarantee of an industrialdevelopment obligation or credit enhancement obligationguarantee; and
(B) the setting of compensation of persons employed underclause (A).
(2) Approve all expenses incidental to the operation of thepublic deposit insurance fund.
(3) Perform other duties and functions that may be delegated tothe secretary-investment manager by the board or that arenecessary to carry out the duties of the secretary-investmentmanager under this chapter.
(b) The secretary-investment manager shall keep a record of theproceedings of the board, and shall maintain and be custodian of allbooks, documents, and papers filed with the board, and its officialseal. The secretary-investment manager may make copies of allminutes and other records and documents of the board, and may givecertificates under seal of the board to the effect that the copies aretrue copies. All persons dealing with the board may rely upon thecertificates.
(c) Each year, beginning in 2001 and ending in 2021, after thetreasurer of state prepares the annual report required byIC 4-8.1-2-14, the secretary-investment manager shall determine:
(1) the amount of interest earned by the public depositinsurance fund during the state fiscal year ending on thepreceding June 30, after deducting:
(A) all expenses and other costs of the board for depositoriesthat were not paid from other sources during that state fiscalyear; and (B) all expenses and other costs associated with the Indianaeducation savings authority that were not paid from othersources during that state fiscal year; and
(2) the amount of interest earned during the state fiscal yearending on the preceding June 30 by the pension distributionfund established by subsection (e).
(d) Subject to subsection (g), on or before the last business day ofDecember of each year, beginning in 2001 and ending in 2021, thesecretary-investment manager shall provide to the auditor of state acheck payable from the public deposit insurance fund to the pensiondistribution fund established by subsection (e) in an amount equal tothe amount determined under subsection (c)(1).
(e) The pension distribution fund is established. The pensiondistribution fund shall be administered by the treasurer of state. Thetreasurer of state shall invest money in the pension distribution fundnot currently needed to meet the obligations of the pensiondistribution fund in the same manner as other public money may beinvested. Interest that accrues from these investments shall bedeposited in the pension distribution fund. Money in the pensiondistribution fund at the end of a state fiscal year does not revert to thestate general fund.
(f) Subject to subsection (g), before June 30 and after June 30 andbefore October 1 of each year, beginning in 2002 and ending in 2022,the auditor of state shall distribute in two (2) equal installments fromthe pension distribution fund to the public employees' retirementfund for deposit in the pension relief fund, established byIC 5-10.3-11-1, the following:
(1) The amount determined under subsection (c)(2).
(2) The amount deposited in the pension distribution fund inDecember of the preceding year under subsection (d).
The installments shall be used for distributions to units of localgovernment under IC 5-10.3-11-4.7.
(g) Before providing a check to the auditor of state undersubsection (d) in December of any year, the secretary-investmentmanager shall determine:
(1) the total amount of payments made from the public depositinsurance fund under IC 5-13-13-3 after June 30, 2001;
(2) the total amount of payments received by the board fordepositories and deposited in the public deposit insurance fundunder IC 5-13-13-3 after June 30, 2001; and
(3) the total amount of interest earned by the public depositinsurance fund after the first of the payments described insubdivision (1).
If the total amount of payments determined under subdivision (1) lessthe total amount of payments determined under subdivision (2)(referred to in this subsection as the "net draw on the fund") exceedsten million dollars ($10,000,000) and also exceeds the total amountof interest determined under subdivision (3), thesecretary-investment manager may not provide a check to the auditorof state under subsection (d) and a distribution may not be made
from the pension distribution fund under subsection (f) in thefollowing calendar year until the total amount of interest earned bythe public deposit insurance fund equals the net draw on the fund. Acheck may not be provided under subsection (d) and a distributionmay not be made under subsection (d) in any subsequent calendaryear if a study conducted by the board under section 7(b) of thischapter demonstrates that payment of the distribution would reducethe balance of the public deposit insurance fund to a levelinsufficient to ensure the safekeeping and prompt payment of publicfunds to the extent they are not covered by insurance of any federaldeposit insurance agency.
As added by P.L.19-1987, SEC.14. Amended by P.L.281-2001,SEC.1; P.L.146-2008, SEC.39; P.L.115-2010, SEC.14.
IC 5-13-12-5
Assessment rate; determination and fixing; assessment base;waiver or elimination of assessment rate
Sec. 5. (a) Subject to the limitations prescribed in this chapter, theboard for depositories may fix the assessment rate to provide assetsin the fund sufficient to equal the reserve for losses of the fund forthe insurance of public funds on deposit in depositories. Effective onJuly 1, and January 1, of each year, and from time to time as theboard determines necessary, the board shall determine and fix thefair and reasonable assessment rate for each classification of deposit,if any, to be used by depositories in determining the assessments.This determination shall be made by the board before or as soon aspracticable after the applicable July 1, January 1, or other dateestablished by the board. In fixing the rate, if any, the board shallconsider the amount of public funds currently on deposit, theliabilities of the insurance fund, contingent and accrued, and thedetermination of the board on the amount of the reserve for losses ofthe insurance fund as set out in section 7(b) of this chapter. For anyperiod, the maximum assessment rate that may be fixed by the boardis two percent (2%). The board may lower or waive the assessmenton any or all classifications of deposit if in its discretion itdetermines that a lower rate or waiver will not prevent the fund fromattaining sufficient assets to equal the reserve for losses. Subject tothe board's power to implement an assessment at any time by actionby the board, if no action has been taken by the board fordepositories fixing the assessment rate, if any, on public funds, theassessment rate is the same rate, if any. Whenever as of July 1, orJanuary 1, or another date established by the board, the value of theassets in the fund equals or exceeds the reserve for losses, the boardshall eliminate the assessment requirement for each classification ofdeposit.
(b) During any period when an assessment rate is in effect, theassessment base for each depository of public funds shall bedetermined monthly. The assessment base must be equal to the sumtotal of all the minimum balances of each classification of publicfunds on deposit in each and all accounts during the month, the
minimum balance of each account being taken respectively as of thedate on which it occurs. For purposes of this section, deposits thatare federally insured are not considered public funds deposits in adepository. On or before the second day of each month in which anassessment rate is in effect, each depository shall compute theamount of the assessment due from it to the insurance fund onaccount of public funds on deposit with it during the precedingmonth. The amount of the monthly assessment, if any, is the productobtained by multiplying one-twelfth (1/12) times the assessment basefor the month for which the assessment is being computed.
(c) During the time the assessment rate on public funds has beenwaived or eliminated by the board for depositories, the respectivedepositories are not obligated to pay any assessment but shallcontinue to prepare and file the reports that would otherwise berequired to be prepared and filed under this chapter.
As added by P.L.19-1987, SEC.14. Amended by P.L.115-2010,SEC.15.
IC 5-13-12-6
Depositories; duty to file monthly report and pay assessment toinsurance fund; failure to pay; forms
Sec. 6. (a) On or before the fifth day of each month, everydepository that had public funds on deposit with it during thepreceding month shall:
(1) file with the board for depositories a certified report underoath showing for the preceding month the amount of theassessment base and the amount of the monthly assessment duethe insurance fund, as determined under section 5 of thischapter; and
(2) pay the insurance fund the amount of the monthlyassessment it is required to certify. The board for depositoriesmay waive all or part of the reporting requirement under thissection during any period when the board does not levy anassessment.
(b) If any depository fails to pay the insurance fund on or beforethe fifth day of each one (1) month period the full assessment duefrom it for the preceding one (1) month period on account of publicfunds deposited with it, the depository is liable for double theassessment. This amount may be recovered in any court of competentjurisdiction in a civil action by the state on the relation of the boardfor depositories.
(c) The state board of accounts, with the approval of the attorneygeneral, shall prepare and prescribe the forms of reports required bythis section.
As added by P.L.19-1987, SEC.14.
IC 5-13-12-7
Insurance fund; management and operation; establishment ofreserve; determination of profit distribution; investment;limitations; immunity of members Sec. 7. (a) The board for depositories shall manage and operatethe insurance fund. All expenses incident to the administration of thefund shall be paid out of the money accumulated in it subject to thedirection of the board for depositories.
(b) Effective January 1 and July 1 in each year, the board shallbefore those dates redetermine the amount of the reserve to bemaintained by the insurance fund. The establishment or any changein the reserve for losses shall be determined by the board based oninformation the board considers, including but not limited to capitaladequacy, liquidity, and asset quality, and a study to be made orupdated by actuaries, economists, or other consultants based on thehistory of losses, earnings on the funds, conditions of thedepositories, economic conditions affecting particular depositoriesor depositories in general, and any other factors that the boardconsiders relevant in making its determination. The reservedetermined by the board must be sufficient to ensure the safekeepingand prompt payment of public funds to the extent they are notcovered by insurance of any federal deposit insurance agency.
(c) At the end of each biennial period during which depositorieshave had public funds on deposit under this chapter and paid theassessments levied by the board, the board shall compute its receiptsfrom assessments and all other sources and its expenses and lossesand determine the profit derived from the operation of the fund forthe period. Until the amount of the reserve for losses has beenaccumulated, all assessments levied for a biennial period shall beretained by the fund. The amount of the assessments, if any, leviedby the board shall, to the extent the fund exceeds the reserve forlosses at the end of a biennial period commencing July 1 of eachodd-numbered year, be distributed to the depositories that had publicfunds on deposit during the biennial period in which the assessmentswere paid. The distribution shall be made to the respectivedepositories in the proportion that the total assessments paid by eachdepository during that period bears to the total assessments then paidby all depositories. A distribution to which any closed depositorywould otherwise be entitled shall be set off against any claim that theinsurance fund may have against the closed depository.
(d) The board may invest, reinvest, and exchange investments ofthe insurance fund in excess of the cash working balance in any ofthe following:
(1) In bonds, notes, certificates, and other valid obligations ofthe United States, either directly or, subject to the limitations insubsection (e), in the form of securities of or other interests inan open-end no-load management-type investment company orinvestment trust registered under the provisions of theInvestment Company Act of 1940, as amended (15 U.S.C. 80aet seq.).
(2) In bonds, notes, debentures, and other securities issued bya federal agency or a federal instrumentality and fullyguaranteed by the United States either directly or, subject to thelimitations in subsection (e), in the form of securities of or other
interests in an open-end no-load management-type investmentcompany or investment trust registered under the provisions ofthe Investment Company Act of 1940, as amended (15 U.S.C.80a et seq.).
(3) In bonds, notes, certificates, and other valid obligations ofa state or of an Indiana political subdivision that are issuedunder law, the issuers of which, for five (5) years before thedate of the investment, have promptly paid the principal andinterest on their bonds and other legal obligations.
(4) In bonds or other obligations of the Indiana financeauthority issued under IC 4-13.5.
(5) In investments permitted the state under IC 5-13-10.5.
(6) In guarantees of industrial development obligations or creditenhancement obligations, or both, for the purposes of retainingand increasing employment in enterprises in Indiana, subject tothe limitations and conditions set out in this subdivision,subsection (e), and section 8 of this chapter. An individualguarantee of the board under this subdivision must not exceedeight million dollars ($8,000,000).
(7) In guarantees of bonds or notes issued under IC 5-1.5-4-1,subject to the limitations and conditions set out in subsection(e) and section 8 of this chapter.
(8) In bonds, notes, or other valid obligations of the Indianafinance authority that have been issued in conjunction with theauthority's acquisition, development, or improvement ofproperty or other interests for an industrial development project(as defined in IC 4-4-10.9-11) that the authority has undertakenfor the purposes of retaining or increasing employment inexisting or new enterprises in Indiana, subject to the limitationsin subsection (e).
(9) In notes or other debt obligations of counties, cities, andtowns that have been issued under IC 6-1.1-39 for borrowingsfrom the industrial development fund under IC 5-28-9 forpurposes of retaining or increasing employment in existing ornew enterprises in Indiana, subject to the limitations insubsection (e).
(10) In bonds or other obligations of the Indiana housing andcommunity development authority.
(e) The investment authority of the board under subsection (d) issubject to the following limitations:
(1) For investments under subsection (d)(1) and (d)(2), theportfolio of an open-end no-load management-type investmentcompany or investment trust must be limited to:
(A) direct obligations of the United States and obligations ofa federal agency or a federal instrumentality that are fullyguaranteed by the United States; and
(B) repurchase agreements fully collateralized by obligationsdescribed in clause (A), of which the company or trust takesdelivery either directly or through an authorized custodian.
(2) Total outstanding investments in guarantees of industrial
development obligations and credit enhancement obligationsunder subsection (d)(6) must not exceed the greater of:
(A) ten percent (10%) of the available balance of theinsurance fund; or
(B) fourteen million dollars ($14,000,000).
(3) Total outstanding investments in guarantees of bond bankobligations under subsection (d)(7) must not exceed the greaterof:
(A) twenty percent (20%) of the available balance of theinsurance fund; or
(B) twenty-four million dollars ($24,000,000).
(4) Total outstanding investments in bonds, notes, or otherobligations of the Indiana finance authority under subsection(d)(8) may not exceed the greater of:
(A) fifteen percent (15%) of the available balance of theinsurance fund; or
(B) twenty million dollars ($20,000,000).
However, after June 30, 1988, the board may not make anyadditional investment in bonds, notes, or other obligations ofthe Indiana finance authority issued under IC 4-4-11, and theboard may invest an amount equal to the remainder, if any, of:
(i) fifteen percent (15%) of the available balance of theinsurance fund; minus
(ii) the board's total outstanding investments in bonds,notes, or other obligations of the Indiana finance authorityissued under IC 4-4-11;
in guarantees of industrial development obligations or creditenhancement obligations, or both, as authorized by subsection(d)(6). In such a case, the outstanding investments, asauthorized by subsection (d)(6) and (d)(8), may not exceed intotal the greater of twenty-five percent (25%) of the availablebalance of the insurance fund or thirty-four million dollars($34,000,000).
(5) Total outstanding investments in notes or other debtobligations of counties, cities, and towns under subsection(d)(9) may not exceed the greater of:
(A) ten percent (10%) of the available balance of theinsurance fund; or
(B) twelve million dollars ($12,000,000).
(f) For purposes of subsection (e), the available balance of theinsurance fund does not include the outstanding principal amount ofany fund investment in a corporate note or obligation or the part ofthe fund that has been established as a reserve for losses.
(g) Except as provided in section 4 of this chapter, all interest andother income earned on investments of the insurance fund and allamounts collected by the board accrue to the fund.
(h) Members of the board and any officers or employees of theboard are not subject to personal liability or accountability by reasonof any investment in any of the obligations listed in subsection (d).
(i) The board shall, when directed by the state board of finance
constituted by IC 4-9.1-1-1, purchase the loan made by the stateboard of finance under IC 4-10-18-10(i). The loan shall be purchasedby the board at a purchase price equal to the total of:
(1) the principal amount of the loan;
(2) the deferred interest payable on the loan; and
(3) accrued interest to the date of purchase by the board.
Members of the board and any officers or employees of the board arenot subject to personal liability or accountability by reason of thepurchase of the loan under this subsection.
As added by P.L.19-1987, SEC.14. Amended by P.L.67-1989, SEC.2;P.L.69-1989, SEC.1; P.L.11-1990, SEC.107; P.L.1-1992, SEC.10;P.L.28-1993, SEC.6; P.L.18-1996, SEC.25; P.L.281-2001, SEC.2;P.L.4-2005, SEC.26; P.L.235-2005, SEC.81; P.L.1-2006, SEC.100;P.L.115-2010, SEC.16.
IC 5-13-12-8
Industrial development obligation or credit enhancementobligation guarantees; limitations; conditions; claims, losses, ordebts
Sec. 8. (a) The board for depositories, in making the industrialdevelopment obligation or credit enhancement obligation guaranteesauthorized under section 7(d)(6) of this chapter, shall comply withthe following limitations:
(1) A guarantee shall be made only of industrial developmentobligations or credit enhancement obligations for the purposeof retaining, retaining and expanding, or bringing significantemployment into Indiana, as determined by the board undersubdivision (3)(A).
(2) Each industrial development obligation or creditenhancement obligation must be guaranteed not only by theboard but also by the Indiana economic developmentcorporation created by IC 5-28-3-1. Each guarantee mustprovide that in the event of a valid claim of loss by the lender,the lessor, or the issuer of the credit enhancement arising underthe industrial development obligation or credit enhancementdocuments, the amount of the loss, up to two million dollars($2,000,000), shall first be paid by the industrial developmentproject guaranty fund created by IC 5-28-30-9, and only theremainder of the loss, if any, shall to the extent guaranteed bepaid by the public deposit insurance fund. Neither fund isresponsible for the amount due from the other under itsguarantee.
(3) The guarantee of the industrial development obligation orcredit enhancement obligation by the board for depositoriesmust be recommended by the Indiana economic developmentcorporation. Subject to that recommendation, the board fordepositories may make the guarantee if it determines:
(A) that the guarantee creates a reasonable probability thatloss in Indiana employment that would occur will besignificantly reduced or that Indiana's employment will be
significantly expanded;
(B) that the consequent reduction in employment loss or theexpansion in employment will enhance the economicstability of the community or communities in the state wherethe borrower or lessee conducts its business;
(C) that there is reasonable probability that the industrialdevelopment obligation will be repaid or satisfied or that thecredit enhancement will be satisfied; and
(D) that the industrial development obligation or creditenhancement obligation and guarantee are protected againstloss and the borrower or lessee has agreed to pay theinsurance fund a guarantee premium annually as provided insubdivision (6).
(4) Protection against loss on the industrial developmentobligation or credit enhancement obligation guaranteed will beprovided:
(A) in loan transactions by:
(i) a valid security agreement;
(ii) mortgage;
(iii) combination of (i) and (ii); or
(iv) other document; and
(B) in lease transactions by the guaranteed party's rights asowner of the leased property.
(5) The term of the guarantee must not exceed twenty (20)years. The amount of the guarantee provided by the board,together with the corresponding guarantee to be provided by theindustrial development project guaranty fund under subdivision(2), must not exceed:
(A) the lesser of:
(i) ninety percent (90%) of the unpaid balance of theobligation; or
(ii) ninety percent (90%) of the appraised fair market valueof the real estate;
if the obligation is backed by real estate;
(B) the lesser of:
(i) seventy-five percent (75%) of the unpaid balance of theobligation; or
(ii) seventy-five percent (75%) of the appraised fair marketvalue of the equipment;
if the obligation is backed by equipment; or
(C) a weighted average of the figures derived under clauses(A)(ii) and (B)(ii) if the obligation is backed by real estateand equipment.
(6) The guarantee premium to be received by the public depositinsurance fund for the guarantee must be at an annualpercentage rate on the outstanding principal amount of theindustrial development obligation or the credit enhancementobligation of not less, in the discretion of the board, than themarket rate for guarantees, mortgage insurance rates, or lettersof credit used for similar purposes at the time the guarantee is
made. However, the annual percentage rate must not exceed twopercent (2%) of the outstanding principal obligation.
(b) The following conditions apply to the making of bond bankobligation guarantees under section 7(d)(7) of this chapter:
(1) Each bond bank obligation guaranteed must be secured bya pledge of securities of a qualified entity (as defined inIC 5-1.5-1-8) under an indenture of trust requiring an adequatedebt reserve fund.
(2) The board for depositories shall fix the one (1) time orannual charge to be paid by the bond bank for each guarantee inan amount considered by the board to be appropriate andconsistent with the market rate for that guarantee, taking intoconsideration the terms of the indenture applicable to the bondbank obligation.
(3) The board for depositories may agree to other terms for eachguarantee that the secretary-investment manager certifies asbeing commercially reasonable and that the board, in itsjudgment, determines to be proper.
(c) Any claim, loss, or debt arising out of any guaranteeauthorized by section 7(d)(6) or 7(d)(7) of this chapter is theobligation of the board for depositories payable out of the publicdeposit insurance fund only and does not constitute a debt, liability,or obligation of the state or a pledge of the faith and credit of thestate. The document evidencing any guarantee must have on its facethe words, "The obligations created by this guarantee (or otherdocument as appropriate) do not constitute a debt, liability, orobligation of the state or a pledge of the faith and credit of the statebut are obligations of the board for public depositories and arepayable solely out of the public deposit insurance fund, and neitherthe faith and credit nor the taxing power of the state is pledged to thepayment of any obligation hereunder.".
(d) Any claim of loss by a lender or lessor under a guaranteeauthorized by section 7(d)(6) or 7(d)(7) of this chapter, at the time itis made in writing to the board, has priority against the fund on allclaims made after that time.
As added by P.L.19-1987, SEC.14. Amended by P.L.11-1990,SEC.108; P.L.235-2005, SEC.82; P.L.162-2007, SEC.20.
IC 5-13-12-8.5
Repealed
(Repealed by P.L.2-2005, SEC.131.)
IC 5-13-12-9
Investment in instruments of indebtedness of credit corporationissued certificate of election by secretary of state
Sec. 9. In addition to the investments authorized in section 7(d) ofthis chapter, the board may invest, reinvest, and exchangeinvestments of the insurance fund in excess of the cash workingbalance in instruments of indebtedness of a credit corporation towhich the secretary of state has issued a certificate of election under
IC 23-6-4-8.
As added by P.L.19-1987, SEC.14.
IC 5-13-12-10
Subordination of valid security agreement, mortgage,combinations thereof, or other appropriate document securingdirect obligations
Sec. 10. With regard to direct obligations of the Indiana financeauthority that have been issued in conjunction with an industrialdevelopment project undertaken by the authority, including thoseobligations that are guaranteed by the board under this chapter orpurchased by the board under section 7(d)(8) of this chapter, theboard may upon the request of the authority permit a subordinationof any valid security agreement, mortgage, combinations thereof, orother appropriate document securing the direct obligations, if theboard in its discretion determines that the subordination is reasonablynecessary to accomplish the objectives of the industrial developmentproject.
As added by P.L.19-1987, SEC.14. Amended by P.L.11-1990,SEC.109; P.L.235-2005, SEC.83.
IC 5-13-12-11
Loans to commuter transportation district
Sec. 11. (a) In addition to the authority given the board fordepositories in section 7 of this chapter, the board may lend, fromthat part of the insurance fund reserved for economic development,to any commuter transportation district that is established underIC 8-5-15 an amount not to exceed two million six hundred thousanddollars ($2,600,000).
(b) The board of trustees of a district that receives a loan underthis section shall do the following:
(1) Use the loan proceeds only for paying or reimbursing thefollowing costs and expenses of the district:
(A) Property and casualty insurance premiums.
(B) Trackage lease payments.
(C) Traction power expenses.
(D) Conducting a study of commuter transportation withinthe district under P.L.48-1986.
(E) Any expenses incurred by the district in the ordinarycourse of providing commuter rail service.
(2) Develop a financial plan for commuter rail service withinthe district for each year during the loan period. The financialplan must contain the elements prescribed in, and be subject toreview and approval under, subsection (c).
(3) Repay the loan in eight (8) annual installments on datesdetermined by the board for depositories, subject to thefollowing conditions:
(A) The first payment must be made on July 1, 1988.
(B) Each annual payment must equal one-eighth (1/8) of theprincipal of the loan plus interest at a rate determined by the
board for depositories. The rate of interest must not be:
(i) lower than the lowest interest rate set by the state boardof finance for a loan under IC 4-4-8-8 (transferred toIC 5-28-9-15) before April 1, 1986; or
(ii) greater than the average yield on investments made bythe board in January, February, and March of 1986.
(4) As required by subsection (d), report annually to the boardfor depositories on compliance with the financial plandeveloped under subsection (c).
(5) Notwithstanding subdivision (3), pledge to repay thebalance of the loan plus interest at a time and in a mannerspecified by the board for depositories whenever the board fordepositories determines that one (1) of the following hasoccurred:
(A) The board of trustees of the district has failed to developa financial plan that substantially complies with subsection(c).
(B) There has not been substantial compliance with afinancial plan.
(C) The board of trustees of the district has failed to make apayment on the date established under subdivision (3).
If repayment is required under this subdivision, the treasurer ofstate shall transfer the amount necessary to the insurance fundfrom the allocation to the district from the public masstransportation fund for the remainder of the state fiscal year inwhich the repayment is required. If the amount transferred fromthe allocation is insufficient, the balance shall be transferredfrom the commuter rail service fund until the repayment iscomplete.
(c) Before December 1 of each year, the board of trustees of adistrict receiving a loan under this section shall submit to the boardfor depositories, the Indiana department of transportation, and thebudget committee a financial plan for the following calendar year.The plan must provide for an annual operating budget under whichexpenses do not exceed revenues from all sources. The financial planmay identify supplemental revenue sources from within the districtthat will be dedicated during the year to commuter rail service in thedistrict. Within sixty (60) days after the plan is submitted, the boardfor depositories shall determine if the financial plan complies withthis subsection. In making its determination, the board fordepositories shall consider the recommendations of the budgetcommittee, which shall base its recommendations on the departmentof transportation's evaluation of the financial plan.
(d) Before April 1 of the second calendar year after a loan underthis section is made and before April 1 of each year thereafter, theboard of trustees of a district receiving a loan shall submit to theboard for depositories, the Indiana department of transportation, andthe budget committee a report covering the preceding calendar year.The report must summarize the district's compliance with thefinancial plan submitted under subsection (c) and must contain other
information as the board for depositories may require. Before July 1of that year, the board for depositories shall determine if the districthas substantially complied with the financial plan. In making itsdetermination, the board for depositories shall consider therecommendations of the budget committee, which shall base itsrecommendations on the Indiana department of transportation'sevaluation of the report.
(e) After January 1, 1988, the board for depositories and the boardof trustees of a district receiving a loan under this section may agreeto an early repayment of the loan. If an early repayment is agreed to,the board for depositories may guarantee a loan obtained by theboard of trustees under conditions established by the board fordepositories. These conditions may include the requirement that thedistrict pledge to repay from its allocations from the public masstransportation fund and the commuter rail fund service any losssustained by the insurance fund as a result of the guarantee.
As added by P.L.19-1987, SEC.14. Amended by P.L.18-1990,SEC.10; P.L.18-1996, SEC.26; P.L.4-2005, SEC.27.
IC 5-13-12-12
Board reports; presentment to budget committee
Sec. 12. (a) In June and December each year, the board shal