The following opinion is presented on-line for informational use only and does not replace the official version. (Mich Dept of Attorney General Web Site - www.ag.state.mi.us) STATE OF MICHIGAN FRANK J. KELLEY, ATTORNEY GENERAL Opinion No. 6905 June 6, 1996 DEPOSITING PUBLIC FUNDS: Deposit of public funds by the state and local units of government The conclusion in OAG, 1983-1984, No 6168, at p 153, that the state and the listed local units of government may not deposit their funds in financial institutions located in states other than Michigan, has only been modified to the extent that, under section 2a of 1855 PA 105, the state treasurer may now invest surplus state funds in out-of-state production credit associations and banks for cooperatives if the proceeds of the investment will be used to make qualified agricultural loans for Michigan farms. Honorable Michael J. Griffin State Representative The Capitol Lansing, Michigan You have asked if OAG, 1983-1984, No 6168, p 151 (July 11, 1983), has been modified by subsequent statutes. That opinion concluded, at p 153, "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." With one exception, there have been no subsequent statutes that modify this conclusion. The one exception involves section 2a of 1855 PA 105, MCL 21.142a; MSA 3.690(1), the statute dealing with, among other things, the investment of surplus state funds in financial institutions. This section was added by 1985 PA 12 and later amended by 1985 PA 90, 1986 PA 242 and 1987 PA 27. Section 2a(1) and (9)(c) now defines a "[f]inancial institution" eligible to receive an investment of surplus state funds to include: (1) The state treasurer may invest surplus funds under the state treasurer's control in certificates of deposit or other instruments of a financial institution qualified under this act to receive deposits or investments of surplus funds. (c) "Financial institution" includes, but is not limited to, a production credit association, a federal land bank association, or a bank for cooperatives. For purposes of this section, a production credit association or a bank for cooperatives may be qualified as a financial institution eligible to receive an investment under this section notwithstanding that its principal office is not located in this state if the proceeds of the investment will be committed to qualified agricultural loans in this state. [ Emphasis added.] The legislative history of HB 4690, which became 1985 PA 90, provides: In addition, the act allows an out-of-state production credit association to participate in the program, which formerly was limited to Michigan agricultural lenders, providing the loans made under the program were for Michigan farms. [ Emphasis added.] House Legislative Analysis, HB 4690, July 31, 1985. It is my opinion, therefore, that the conclusion in OAG, 1983-1984, No 6168, at p 153, that the state and the listed local units of government may not deposit their funds in financial institutions located in states other than Michigan, has only been modified to the extent that, under section 2a of 1855 PA 105, the state treasurer may now invest surplus state funds in out-of-state production credit associations and banks for cooperatives if the proceeds of the investment will be used to make qualified agricultural loans for Michigan farms. Frank J. Kelley Attorney General