- Senate Bill No. 473-Committee on Government Affairs
CHAPTER
354
- AN ACT relating to state financial administration; enlarging the duties of the state board of finance and the sources from which commercial paper may be purchased; revising the procedures for drawing and delivering warrants; authorizing the exchange of payments based on interest rates; and providing other matters properly relating thereto.
[Approved July 8, 1997]
- THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:
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Section 1. NRS 355.045 is hereby amended to read as follows:
355.045 The state board of finance shall review and approve or disapprove the [investment] policies established by the state treasurer for investment of money of the state [.] and of money in the local government pooled investment fund. The board shall review [those] both sets of policies at least every 4 months.
Sec. 2. NRS 355.140 is hereby amended to read as follows:
355.140 1. In addition to other investments provided for by a specific statute, the following bonds and other securities are proper and lawful investments of any of the money of this state, of its various departments, institutions and agencies, and of the state insurance fund:
(a) Bonds and certificates of the United States;
(b) Bonds, notes, debentures and loans if they are underwritten by or their payment is guaranteed by the United States;
(c) Obligations or certificates of the United States Postal Service, the Federal National Mortgage Association, the Federal Home Loan Banks, the Federal Home Loan Mortgage Corporation or the Student Loan Marketing Association, whether or not guaranteed by the United States;
(d) Bonds of this state or other states of the Union;
(e) Bonds of any county of this state or of other states;
(f) Bonds of incorporated cities in this state or in other states of the Union, including special assessment district bonds if those bonds provide that any deficiencies in the proceeds to pay the bonds are to be paid from the general fund of the incorporated city;
(g) General obligation bonds of irrigation districts and drainage districts in this state which are liens upon the property within those districts, if the value of the property is found by the board or commission making the investments to render the bonds financially sound over and above all other obligations of the districts;
(h) Bonds of school districts within this state;
(i) Bonds of any general improvement district whose population is 200,000 or more and which is situated in two or more counties of this state or of any other state, if:
(1) The bonds are general obligation bonds and constitute a lien upon the property within the district which is subject to taxation; and
(2) That property is of an assessed valuation of not less than five times the amount of the bonded indebtedness of the district;
(j) Medium-term obligations for counties, cities and school districts authorized pursuant to chapter 350 of NRS;
(k) Loans bearing interest at a rate determined by the state board of finance when secured by first mortgages on agricultural lands in this state of not less than three times the value of the amount loaned, exclusive of perishable improvements, and of unexceptional title and free from all encumbrances;
(l) Farm loan bonds, consolidated farm loan bonds, debentures, consolidated debentures and other obligations issued by federal land banks and federal intermediate credit banks under the authority of the Federal Farm Loan Act, formerly 12 U.S.C. §§ 636 to 1012, inclusive, and §§ 1021 to 1129, inclusive, and the Farm Credit Act of 1971, 12 U.S.C. §§ 2001 to 2259, inclusive, and bonds, debentures, consolidated debentures and other obligations issued by banks for cooperatives under the authority of the Farm Credit Act of 1933, formerly 12 U.S.C. §§ 1131 to 1138e, inclusive, and the Farm Credit Act of 1971, 12 U.S.C. §§ 2001 to 2259, inclusive, excluding such money thereof as has been received or which may be received hereafter from the Federal Government or received pursuant to some federal law which governs the investment thereof;
(m) Negotiable certificates of deposit issued by commercial banks or insured savings and loan associations;
(n) Bankers' acceptances of the kind and maturities made eligible by law for rediscount with Federal Reserve banks or trust companies which are members of the Federal Reserve System, except that acceptances may not exceed 180 days' maturity, and may not, in aggregate value, exceed 20 percent of the total par value of the portfolio as determined on the date of purchase;
(o) Commercial paper issued by a corporation organized and operating in the United States or by a depository institution licensed by the United States or any state and operating in the United States that:
(1) [Is purchased from a registered broker-dealer;
(2)] At the time of purchase has a remaining term to maturity of no more than 270 days; and
[(3)] (2) Is rated by a nationally recognized rating service as "A-1," "P-1" or its equivalent, or better,
except that investments pursuant to this paragraph may not, in aggregate value, exceed 20 percent of the total par value of the portfolio as determined on the date of purchase, and if the rating of an obligation is reduced to a level that does not meet the requirements of this paragraph, it must be sold as soon as possible;
(p) Notes, bonds and other unconditional obligations for the payment of money, except certificates of deposit that do not qualify pursuant to paragraph (m), issued by corporations organized and operating in the United States or by depository institutions licensed by the United States or any state and operating in the United States that:
(1) Are purchased from a registered broker-dealer;
(2) At the time of purchase have a remaining term to maturity of no more than 3 years; and
(3) Are rated by a nationally recognized rating service as "A" or its equivalent, or better,
except that investments pursuant to this paragraph may not, in aggregate value, exceed 20 percent of the total par value of the portfolio, and if the rating of an obligation is reduced to a level that does not meet the requirements of this paragraph, it must be sold as soon as possible;
(q) Money market mutual funds which:
(1) Are registered with the Securities and Exchange Commission;
(2) Are rated by a nationally recognized rating service as "AAA" or its equivalent; and
(3) Invest only in securities issued by the Federal Government or agencies of the Federal Government or in repurchase agreements fully collateralized by such securities; and
(r) Collateralized mortgage obligations that are rated by a nationally recognized rating service as "AAA" or its equivalent.
2. Repurchase agreements are proper and lawful investments of money of the state and the state insurance fund for the purchase or sale of securities which are negotiable and of the types listed in subsection 1 if made in accordance with the following conditions:
(a) The state treasurer shall designate in advance and thereafter maintain a list of qualified counterparties which:
(1) Regularly provide audited and, if available, unaudited financial statements to the state treasurer;
(2) The state treasurer has determined to have adequate capitalization and earnings and appropriate assets to be highly credit worthy; and
(3) Have executed a written master repurchase agreement in a form satisfactory to the state treasurer and the state board of finance pursuant to which all repurchase agreements are entered into. The master repurchase agreement must require the prompt delivery to the state treasurer and the appointed custodian of written confirmations of all transactions conducted thereunder, and must be developed giving consideration to the Federal Bankruptcy Act.
(b) In all repurchase agreements:
(1) At or before the time money to pay the purchase price is transferred, title to the purchased securities must be recorded in the name of the appointed custodian, or the purchased securities must be delivered with all appropriate, executed transfer instruments by physical delivery to the custodian;
(2) The state must enter a written contract with the custodian appointed pursuant to subparagraph (1) which requires the custodian to:
(I) Disburse cash for repurchase agreements only upon receipt of the underlying securities;
(II) Notify the state when the securities are marked to the market if the required margin on the agreement is not maintained;
(III) Hold the securities separate from the assets of the custodian; and
(IV) Report periodically to the state concerning the market value of the securities;
(3) The market value of the purchased securities must exceed 102 percent of the repurchase price to be paid by the counterparty and the value of the purchased securities must be marked to the market weekly;
(4) The date on which the securities are to be repurchased must not be more than 90 days after the date of purchase; and
(5) The purchased securities must not have a term to maturity at the time of purchase in excess of 10 years.
3. As used in subsection 2:
(a) "Counterparty" means a bank organized and operating or licensed to operate in the United States pursuant to federal or state law or a securities dealer which is:
(1) A registered broker-dealer;
(2) Designated by the Federal Reserve Bank of New York as a "primary" dealer in United States government securities; and
(3) In full compliance with all applicable capital requirements.
(b) "Repurchase agreement" means a purchase of securities by the state or state insurance fund from a counterparty which commits to repurchase those securities or securities of the same issuer, description, issue date and maturity on or before a specified date for a specified price.
4. No money of this state may be invested pursuant to a reverse-repurchase agreement, except money invested pursuant to chapter 286 or chapters 616A to 616D, inclusive, of NRS.
Sec. 3. NRS 356.020 is hereby amended to read as follows:
356.0201. All money deposited by the state treasurer which is not within the limits of insurance provided by an instrumentality of the United States must be secured by collateral composed of the following types of securities:
(a) [Obligations of the] United States [;] treasury notes, bills, bonds or obligations as to which the full faith and credit of the United States are pledged for the payment of principal and interest, including the guaranteed portions of Small Business Administration loans if the full faith and credit of the United States is pledged for the payment of the principal and interest;
(b) Bonds of this state;
(c) Bonds of any county, municipality or school district within this state;
(d) Promissory notes secured by first mortgages or first deeds of trust which meet the requirements of NRS 356.025;
(e) Mortgage-backed pass-through securities guaranteed by the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation or the Government National Mortgage Association;
(f) Collateralized mortgage obligations or real estate mortgage investment conduits that are rated "AAA," "Aaa" or its equivalent by a nationally recognized rating service; or
(g) Instruments in which the state is permitted by NRS 355.140 to invest.
2. Collateral deposited by the depository bank, credit union or savings and loan association must be pledged with the state treasurer or with any Federal Home Loan Bank, any bank or any insured credit union or savings and loan association, other than the depository bank, credit union or savings and loan association, which will accept the securities in trust for the purposes of this section.
3. The fair market value of the deposit of securities as collateral by each depository bank, credit union or savings and loan association must be at least the amount of the state treasurer's deposit with the depository bank, credit union or association. The fair market value of any collateral consisting of promissory notes with first mortgages or first deeds of trust shall be deemed to be 75 percent of the unpaid principal of the notes.
4. All securities to be used as such collateral are subject to review by the state treasurer and the state board of finance. The depository bank, credit union or savings and loan association shall submit monthly reports to the state treasurer showing the securities which constitute the collateral and their fair market value.
5. The state treasurer or the state board of finance may, from time to time, require the deposit of additional securities as collateral if, in their judgment, the additional securities are necessary to secure the state treasurer's deposit.
Sec. 4. NRS 226.110 is hereby amended to read as follows:
226.110 The state treasurer [shall:
1. Receive] :
1. Shall receive and keep all money of the state which is not expressly required by law to be received and kept by some other person.
2. [Receipt] Shall receipt to the state controller for all money received, from whatever source, at the time of receiving it.
3. [Establish] Shall establish the policies to be followed in the investment of money of the state, subject to the periodic review and approval or disapproval of those policies by the state board of finance.
4. [Disburse] Shall disburse the public money upon warrants drawn upon the treasury by the state controller, and not otherwise. The warrants must be registered, and paid in the order of their registry. The state treasurer may use any sampling or post-audit technique, or both, which he considers reasonable to verify the proper distribution of warrants.
5. [Keep] Shall keep a just, true and comprehensive account of all money received and disbursed.
6. [Deliver] Shall deliver in good order to his successor in office all money, records, books, papers and other things belonging to his office.
7. [Fix,] Shall fix, charge and collect reasonable fees for:
(a) Investing the money in any fund or account which is credited for interest earned on money deposited in it; and
(b) Special services rendered to other state agencies or to members of the public which increase the cost of operating his office.
8. [Serve] Serves as the primary representative of the state in matters concerning any nationally recognized bond credit rating agency for the purposes of the issuance of any obligation authorized on the behalf and in the name of the state, except as otherwise provided in NRS 538.206 and except for those obligations issued pursuant to chapter 319 of NRS and NRS 349.400 to 349.987, inclusive.
9. [Be] Is directly responsible for the issuance of any obligation authorized on the behalf and in the name of the state, except as otherwise provided in NRS 538.206 and except for those obligations issued pursuant to chapter 319 of NRS and NRS 349.400 to 349.987, inclusive. The state treasurer shall issue such an obligation as soon as practicable after receiving a request from a state agency for the issuance of the obligation.
10. May organize and facilitate statewide pooled financing programs, including lease purchases, for the benefit of the state and any political subdivision, including districts organized pursuant to NRS 450.550 to 450.700, inclusive, and chapters 244A, 309, 318, 379, 474, 541, 543 and 555 of NRS.
Sec. 5. Chapter 227 of NRS is hereby amended by adding thereto a new section to read as follows:
Unless the state controller determines that earlier payment is necessary, he shall not draw a warrant for less than $25, but shall accumulate claims for less than $25 until:
1. The claims of a particular claimant amount to $25 or more; or
2. The end of the fiscal year.
Sec. 6. NRS 227.160 is hereby amended to read as follows:
227.1601. The state controller shall:
(a) Audit all claims against the state, for the payment of which an appropriation or authorization has been made but of which the amount has not been definitely fixed by law, which have been examined and passed upon by the state board of examiners, or which have been presented to the board and not examined and passed upon by it within 30 days from their presentation.
(b) Allow of those claims mentioned in paragraph (a) as not having been passed upon by the state board of examiners within 30 days after presentation the whole, or such portion thereof as he deems just and legal; and of claims examined and passed upon by the state board of examiners, such an amount as he decrees just and legal not exceeding the amount allowed by the board.
2. No claim for services rendered or advances made to the state or any officer thereof [shall] may be audited or allowed unless [such] the services or advancement have been specially authorized by law and an appropriation or authorization made for its payment.
3. For the purpose of satisfying himself of the justness and legality of any claim, [he] the state controller may examine witnesses under oath and receive and consider documentary evidence in addition to that furnished him by the state board of examiners. [He] Except as otherwise provided in section 5 of this act, he shall draw warrants on the state treasurer for such amounts as he allows of claims of the character [above described,] described in this section, and also for all claims of which the amount has been definitely fixed by law and for the payment of which an appropriation or authorization has been made.
Sec. 7. NRS 227.200 is hereby amended to read as follows:
227.200 [The] Except as otherwise provided in section 5 of this act, the state controller shall:
1. Draw a warrant in favor of any person [, business firm] or governmental payee certified by an agency of state government to receive money from the treasury and deliver or mail the warrant to the state treasurer who shall sign the warrant and:
(a) Deliver or mail the countersigned warrant, if it is for an account payable, directly to the payee [;] or his representative;
(b) Deliver the warrant, if it is for payment of an employee, to the employee or to the appropriate state agency for distribution; or
(c) [Directly deposit the warrant, through an electronic] Deposit the warrant to the credit of the payee through a funds transfer.
2. Keep a warrant register, in which he shall enter all warrants drawn by him. The arrangement of this book must be such as to show the bill and warrant number, the amount, out of which fund the warrants are payable, and a distribution of the warrants under the various appropriations.
3. Credit the state treasurer with all warrants paid.
Sec. 8. Chapter 281 of NRS is hereby amended by adding thereto a new section to read as follows:
When an officer or employee receives a cash advance for travel from the state treasurer or uses a charge card issued at the request of the state for cash advances or travel expenses, or both, and the receipt of his travel reimbursement may be delayed more than 5 working days after the date of the initial submission of the travel reimbursement claim, the administrative head or his designee shall immediately issue to the officer or employee, for payment to the state treasurer or the issuer of the charge card issued at the request of the state, a cash advance as described in NRS 281.172 in the amount of the cash advance made by the state treasurer or the total travel expenses charged on the charge card, whichever is applicable.
Sec. 9. NRS 281.172 is hereby amended to read as follows:
281.1721. Any state officer or employee may apply for advance money for authorized travel expenses and subsistence allowances arising out of his official duties or employment, in the amounts as provided for in NRS 281.160, by filing a request with the administrative head of the state office, department or agency by which he is employed.
2. If the administrative head or his designee approves the request he shall [forward] process a voucher for a cash advance for travel in the approved amount in the same manner as other claims against the state are processed.
3. Unless otherwise approved by the budget division of the department of administration before the travel occurs, all cash advances for travel issued by the administrative head or his designee must be charged to the budget account to which money was appropriated or authorized for expenditure for the travel.
4. If the administrative head or his designee cannot process a cash advance for travel because of a temporary budget restriction, the administrative head or his designee may forward a copy of the request and approval to the state treasurer.
[3.] 5. Upon receiving a copy of the request and approval from the administrative head or his designee, the state treasurer or one of his officers or employees whom he has designated for the purpose may issue a check or warrant drawn upon the account for travel advances for the amount of the advance requested.
Sec. 10. NRS 281.173 is hereby amended to read as follows:
281.173[Such request when approved by the state treasurer shall constitute] A cash advance for travel, when approved by the administrative head or his designee or the state treasurer, constitutes a lien in favor of the State of Nevada upon the accrued wages of the requesting officer or employee in an amount equal to the sum advanced, but the administrative head or his designee or the state treasurer may, in his discretion, advance more than the amount of the accrued wages of the officer or employee.
Sec. 11. NRS 281.174 is hereby amended to read as follows:
281.1741. Upon the return of the officer or employee, he is entitled to receive any authorized expenses and subsistence allowances in excess of the amount advanced, and a sum equal to the advance must be paid into the account [for travel advances.] from which the advance was made.
2. If an advance is not repaid, the administrative head or his designee or the state treasurer may file a claim with the state board of examiners for money to replenish the account [.] from which the advance was made. If the state board approves the claim it must be paid from the reserve for statutory contingency account.
3. If an officer or employee of an agency terminates his employment after he receives a payment from the account for travel advances but before repayment to the account, the state treasurer may collect from the agency the amount advanced.
Sec. 12. NRS 281.175 is hereby amended to read as follows:
281.175The state treasurer may make reasonable rules and regulations to carry out the provisions of NRS 281.171 to 281.175, inclusive [.] , and section 8 of this act.
Sec. 13. Chapter 349 of NRS is hereby amended by adding thereto a new section to read as follows:
1. A commission that has issued or proposes to issue state securities may enter into an agreement for an exchange of payments based on interest rates as provided in this section if it finds that such an agreement would be in the best interest of the state.
2. A commission may enter into an agreement to exchange payments based on interest rates only if:
(a) The long-term debt obligations of the person with whom the commission enters the agreement are rated "A" or better by a nationally recognized rating agency; or
(b) The obligations pursuant to the agreement of the person with whom the commission enters the agreement are:
(1) Guaranteed by a person whose long-term debt obligations are rated "A" or better by a nationally recognized rating agency; or
(2) Collateralized by obligations deposited with the commission or an agent of the commission which would be legal investments for the state pursuant to NRS 355.140 and which have a market value at the time agreement is made of not less than the principal amount upon which the exchange of payments based on interest rates is based.
3. A commission may agree, with respect to securities that the commission has issued or proposes to issue bearing interest at a variable rate, to pay sums equal to interest at a fixed rate or rates or at a different variable rate determined pursuant to a formula set forth in the agreement on an amount not to exceed the principal amount of the state securities with respect to which the agreement is made, in exchange for an agreement to pay sums equal to interest on the same principal amount at a variable rate determined pursuant to a formula set forth in the agreement.
4. A commission may agree, with respect to securities that the commission has issued or proposes to issue bearing interest at a fixed rate or rates, to pay sums equal to interest at a variable rate determined pursuant to a formula set forth in the agreement on an amount not to exceed the outstanding principal amount of the state securities with respect to which the agreement is made, in exchange for an agreement to pay sums equal to interest on the same principal amount at a fixed rate or rates set forth in the agreement.
5. The term of an agreement entered into pursuant to this section must not exceed the term of the state securities with respect to which the agreement was made.
6. An agreement entered into pursuant to this section is not a debt or indebtedness of the state for the purposes of any limitation upon the indebtedness of the state or any requirement for an election with regard to the issuance of securities that is applicable to the state.
7. Limitations upon the rate of interest on a state security do not apply to interest paid pursuant to an agreement entered into pursuant to this section.
8. A commission which has entered into an agreement pursuant to this section with respect to those securities may treat the amount or rate of interest on the securities as the amount or rate of interest payable after giving effect to the agreement for the purpose of calculating:
(a) Rates and charges of a revenue-producing enterprise whose revenues are pledged to or used to pay state securities;
(b) Statutory requirements concerning revenue coverage that are applicable to state securities;
(c) Tax levies to pay debt service on state securities; and
(d) Any other amounts which are based upon the rate of interest of state securities.
9. Subject to covenants applicable to the securities, any payments required to be made by the commission under the agreement may be made from money pledged to pay debt service on the securities with respect to which the agreement was made or from any other legally available source.
Sec. 14. NRS 349.150 is hereby amended to read as follows:
349.150NRS 349.150 to 349.364, inclusive, and section 13 of this act may be cited as the State Securities Law.
Sec. 15. This act becomes effective on July 1, 1997.
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