9-1402.   Securing the deposits of public funds;acceptable items; items notacceptable; expenses.(a) Before any deposit of public moneys or funds shall be made by anymunicipal corporation or quasi-municipal corporation of the state of Kansaswith any bank, savingsandloan association or savings bank, such municipal orquasi-municipal corporation shall obtain security for such deposit in oneof the following manners prescribed by this section.

      (b)   Such bank, savingsand loan association or savings bank may give to themunicipal corporation or quasi-municipal corporation a personal bond indouble the amount which may be on deposit at any given time.

      (c)   Such bank, savingsand loan association or savings bank may give a corporate surety bond of some suretycorporation authorized to do business in this state, which bond shall bein an amount equal to the public moneys or funds on deposit at any giventime less the amount of such public moneys or funds which is insured by thefederal deposit insurance corporation or its successor and such bond shall beconditioned that such deposit shall be paidpromptly on the order of the municipal corporation or quasi-municipalcorporation making such deposits.

      (d)   Such bank,savings and loan association or savings bank maydeposit,maintain, pledge, assign, and grant a security interest in, orcause its agent, trustee, wholly-owned subsidiary or affiliate having identicalownership to deposit, maintain, pledge, assign, and granta security interest in,for the benefit ofthe governing body of the municipal corporation or quasi-municipalcorporation in the manner provided in this act, securities, securityentitlements, financial assets and securities accounts owned by thedepository institution directlyor indirectly through its agent ortrustee holding securities on its behalf, or owned by the depositoryinstitutions wholly-owned subsidiary or by such affiliate,the market value of which is equal to100% of the total deposits at any given time, and such securities, securityentitlements, financial assets and securities accounts, may beaccepted orrejected by the governing body of the municipal corporation or quasi-municipalcorporation andshall consist of the following and security entitlements thereto:

      (1)   Direct obligations of, or obligations that are insured as to principaland interest by, the United States of America or any agency thereof andobligations, including but not limited to letters of credit, and securitiesof United States sponsored corporations whichunder federal law may be accepted as security for public funds;

      (2)   bonds of any municipal corporation or quasi-municipal corporation ofthe state of Kansas which have been refunded in advance of their maturityand are fully secured as to payment of principal and interest thereon bydeposit in trust, under escrow agreement with a bank, of direct obligationsof, or obligations the principal of and the interest on which areunconditionally guaranteed by, the United States of America;

      (3)   bonds of the state of Kansas;

      (4)   general obligation bonds of any municipal corporation orquasi-municipal corporation of the state of Kansas;

      (5)   revenue bonds ofany municipal corporation or quasi-municipal corporation of the state ofKansas if approved by the state bank commissioner in the case of banks andby the savings and loan commissioner in the case of savings and loanassociations or federally chartered savings banks;

      (6)   temporary notesof any municipal corporation or quasi-municipal corporation of thestate of Kansas which are general obligations of the municipal orquasi-municipal corporation issuing the same;

      (7)   warrants of any municipal corporation orquasi-municipal corporation of the state of Kansas the issuance of whichis authorized by the state court of tax appeals and whichare payable from the proceeds of a mandatory tax levy;

      (8)   bonds of either a Kansas not-for-profit corporation or of a localhousing authority that are rated at least Aa by Moody's Investors Serviceor AA by Standard & Poor's Corp.;

      (9)   bonds issued pursuant to K.S.A. 12-1740 et seq., andamendments thereto, that are rated at least MIG-1 or Aa by Moody's InvestorsServiceor AA by Standard & Poor's Corp.;

      (10)   notes of a Kansas not-for-profit corporation that areissued to provideonly the interim funds for a mortgage loan that is insured by the federalhousing administration;

      (11)   bonds issued pursuant to K.S.A. 74-8901 through74-8916, and amendments thereto;

      (12)   bonds issued pursuant to K.S.A. 68-2319 through68-2330, and amendments thereto;

      (13)   commercial paper that does not exceed 270 days to maturity and whichhas received one of the two highest commercial paper credit ratings by anationally recognized investment rating firm; or

      (14) (A)   negotiable promissory notes together with first lienmortgageson one to four family residential real estate located inKansas securing payment of such notes when such notes or mortgages:

      (i)   Are underwritten by the federal national mortgage association, thefederal home loan mortgage corporation, the federal housing administration orthe veterans administration standards;or are valued pursuant to rules andregulations which shall be adopted by both the state bank commissioner and thesavings and loan commissioner after having first being submitted to andapproved by both the state banking board under K.S.A. 9-1713, and amendmentsthereto, and the savings and loan board. Such rules and regulations shall bepublished in only one place in the Kansas administrative regulations asdirected by the state rules and regulations board;

      (ii)   have been in existence with the same borrower for at least two yearsand with no history of any installment being unpaid for 30 days or more; and

      (iii)   are valued at not to exceed 50% of the lesser of the following threevalues: Outstanding mortgage balance; current appraised value of the realestate; or discountedpresent value based upon current federal national mortgage association orgovernment national mortgage association interest rates quoted forconventional,federal housing administration or veterans administration mortgage loans.

      (B)   Securities under (A)shall be taken at their value for not more than 50% of the securityrequired under the provisions of this section.

      (C)   Securities under (A) shall be withdrawn immediately from thecollateral pool if any installment is unpaid for 30 days or more.

      (D)   A status report on all such loans shall be provided to the investinggovernmental entity by thefinancial institution on a quarterly basis.

      (e)   No such bank, savings and loan associationor savings bank may deposit and maintain for thebenefitof the governingbody of a municipal or quasi-municipal corporation of the state ofKansas, any securities which consist of:

      (1)   Bonds secured by revenues of a utility which has been in operation forless than three years; or

      (2)   bonds issued under K.S.A. 12-1740 et seq., and amendments thereto,unless such bondshave been refunded in advance of their maturity as provided in subsection(d) or such bonds are rated at least Aa by Moody's Investors Service orAA by Standard & Poor's Corp.

      (f)   Any expense incurred inconnection with granting approval of revenue bonds shall be paid by theapplicant for approval.

      History:   L. 1947, ch. 102, § 64;L. 1965, ch. 76, § 1;L. 1968, ch. 236, § 1;L. 1970, ch. 63, § 1;L. 1973, ch. 48, § 1;L. 1976, ch. 79, § 1;L. 1978, ch. 45, § 1;L. 1980, ch. 47, § 1;L. 1982, ch. 52, § 2;L. 1983, ch. 49, § 17;L. 1983, ch. 47, § 3;L. 1983, ch. 49, § 18;L. 1985, ch. 58, § 1;L. 1985, ch. 58, § 2;L. 1986, ch. 76, § 2;L. 1986, ch. 76, § 3;L. 1987, ch. 56, § 1;L. 1989, ch. 48, § 42;L. 1989, ch. 209, § 18;L. 1992, ch. 146, § 25;L. 1994, ch. 74, § 1;L. 1997, ch. 180, § 4;L. 2008, ch. 109, § 22; July 1.