STATE OF MICHIGAN

FRANK J. KELLEY, ATTORNEY GENERAL

Opinion No. 6168

July 11, 1983

PUBLIC MONEY:

Deposit in financial institutions located in Michigan

Public funds of the state, as well as community college districts, intermediate school districts, local school districts, counties, townships, cities and villages, may not be deposited in financial institutions located in states other than Michigan.

Honorable Michael J. Griffin

State Representative

State Capitol

Lansing, Michigan

You have requested my opinion on the following question:

Investment of the funds of the state and various governmental units is regulated by a number of separate statutes. These statutes and the funds to which they apply include the following:

These six statutes were amended in 1979 by a series of bills, House Bill Nos 4092-4097, which became 1979 PA 84, 77, 86, 87, 78, and 88, respectively. The primary purpose of these bills was to implement Proposal C, as approved by the voters at the November 7, 1978 election. Proposal C amended Const 1963, art 9, Sec. 20 to permit public money to be deposited in savings and loan associations and credit unions as well as banks. Each of these amendatory acts, however, also added, revised or retained language restricting such deposit of public funds in financial institutions located in Michigan.

OAG, 1979-1980, No 5704, p 760 (May 8, 1980), concluded that, pursuant to 1966 PA 331, Sec. 142, supra, as amended by 1979 PA 78, a community college district may not invest its general fund moneys in certificates of deposit issued by banks located in states other than Michigan and not having a principal office in Michigan. It is clear that in enacting the aforesaid series of six 1979 amendatory acts, the Legislature intended also to restrict in a similar manner the investments of all of the governmental entities affected by the amendatory acts. It is of particular significance in this regard that the two statutes--1855 PA 105, Sec. 3, supra, and 1932 1st Ex Sess PA 40, supra, Sec. 2, which had not theretofore specifically restricted investments in deposits to financial institutions located in Michigan, were expressly amended by 1979 PA 88 and 1979 PA 84, respectively, to require that the principal office of the financial institution in which investment of public funds were made be located in this state.

One additional statute to be considered is 1943 PA 20, Sec. 1; MCLA 129.91; MSA 3.843(1), which also regulates the investment of surplus funds of counties, cities, villages, townships, and special assessment districts. This section was amended by 1979 PA 79. While 1979 PA 79 was not one of the six-bill series above mentioned, it was enacted at the same time, was related to that series of bills, and was expressly tie-barred to enactment into law of 1979 PA 88.

1943 PA 20, Sec. 1, supra, as amended by 1979 PA 79, requires that the depository financial institution be eligible to be a depository of surplus funds of the state under section 5 or section 6 of 1855 PA 105, supra, as added by 1979 PA 88. Although 1855 PA 105, Secs. 5 and 6, supra, do not explicitly require that an eligible financial institution be located in Michigan, the sections clearly contemplate that the financial institution be located in Michigan. Moreover, 1855 PA 105, Sec. 3, supra, as amended by 1979 PA 88, expressly requires that a financial institution have its principal office in Michigan in order to be eligible to be a depository of surplus state funds.

Construing 1855 PA 105, supra, in light of its amendment by 1979 PA 88, as a whole, it must be concluded that in order for a financial institution to be eligible to be a depository of surplus funds of the state under sections 5 and 6 thereof, it is required to have its principal office located in this state. Deposits of surplus funds of local government units under 1943 PA 20, Sec. 1, supra, are, therefore, also restricted to financial institutions having their principal office in this state. The further amendment of 1943 PA 20, Sec. 1(1), supra, by 1982 PA 217 does not affect this conclusion.

1855 PA 105, Secs. 5 and 6, supra, prohibit deposit of surplus funds of the state in financial institutions which have not filed with the commissioner of the financial institutions bureau of the department of commerce the reports required by 1977 PA 135; MCLA 445.1601 et seq; MSA 23.1125(1) et seq, the so-called 'anti-redlining' law, or in financial institutions with respect to which the said commissioner has found to have engaged in certain discriminatory lending practices. 1977 PA 135, supra, applies, inter alia, to banks, savings and loan associations, and credit unions with main or branch offices or service centers doing business within Michigan. The requirement in 1943 PA 20, Sec. 1(2), supra, that deposits be made only in financial institutions eligible for investments pursuant to 1855 PA 105, Secs. 5 and 6, supra, clearly manifests a legislative intent that such institutions be located within Michigan because only financial institutions doing business within Michigan are subject to the supervision of the said commissioner under 1977 PA 135, supra. This same requirement that the institution be eligible for investments pursuant to 1855 PA 105, Secs. 5 and 6, supra, is also found in each of the other investment statutes discussed herein. See, 1966 PA 331, Sec. 142(3), supra; 1976 PA 451, Secs. 622(4), 1221(2), and 1223(7), supra; 1909 PA 99, Sec. 6a, supra; 1909 PA 321, Sec. 3, supra, 1932 1st Ex Sess PA 40, Sec. 4, supra.

It is my opinion, therefore, that the state, as well as community college districts, intermediate school districts, local school districts, counties, townships, cities, and villages may not deposit their funds in financial institutions located in states other than Michigan.

Frank J. Kelley