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Minnesota Legislature

Office of the Revisor of Statutes

9.031 DEPOSITORIES FOR STATE FUNDS.
    Subdivision 1. Requirements for depositories. The Executive Council shall designate
banks, trust companies, or credit unions within the state as depositories to receive state funds. The
commissioner of finance is not liable for the safekeeping of the funds so lawfully deposited. The
banks, trust companies, or credit unions so designated as depositories must:
(1) have been organized for at least one year; or
(2) have taken over or absorbed a bank, trust company, or credit union that has been
organized for at least one year.
    Subd. 2. Bond. Except as provided in subdivision 3, a depository shall furnish and file with
the commissioner of finance a corporate surety bond to secure state funds deposited with it.
The Executive Council shall approve the bond.
The Executive Council shall not approve any depository bond until fully satisfied that the
bond is in proper form, the securities sufficient, the depository prosperous and financially sound,
and the capital stock claimed by it fully paid up and not impaired. Each depository bond shall
provide that during the time the bond is in force the depository will pay all the state funds
deposited with it to the commissioner of finance, free of exchange, at any place in the state
designated by the commissioner of finance. If the deposit is a time deposit it shall be paid,
together with interest, only when due. At any time the Executive Council or the commissioner of
finance may require a new or additional bond from any depository.
    Subd. 3. Collateral. In lieu of the corporate bond required in subdivision 2, a depository may
deposit with the commissioner of finance collateral to secure state funds that are to be deposited
with it. The Executive Council must approve the collateral.
The Executive Council shall not approve any collateral except:
(1) bonds and certificates of indebtedness, other than bonds secured by real estate, that are
legal investments for savings banks under any law of the state; and
(2) bonds of any insular possession of the United States, of any state, or of any agency
of this state, the payment of the principal and interest of which is provided for by other than
direct taxation.
The collateral deposited shall be accompanied by an assignment thereof to the state, which
assignment shall recite that:
(1) the depository will pay all the state funds deposited with it to the commissioner of finance,
free of exchange or other charge, at any place in this state designated by the commissioner of
finance; if the deposit is a time deposit it shall be paid, together with interest, only when due; and
(2) in case of default by the depository the state may sell the collateral, or as much of
it as is necessary to realize the full amount due from the depository, and pay any surplus to
the depository or its assigns.
Upon the direction of the Executive Council, the commissioner of finance, on behalf of the
state, may reassign in writing to the depository any registered collateral pledged to the state by
assignment thereon.
A depository may deposit collateral of less value than the total designation and may, at any
time during the period of its designation, deposit additional collateral, withdraw excess collateral,
and substitute other collateral for all or part of that on deposit. Approval of the Executive Council
is not necessary for the withdrawal of excess collateral.
If the depository is not in default the commissioner of finance shall pay the interest collected
on the deposited collateral to the depository.
    Subd. 4. Bonds and collateral. A depository may furnish more than one bond or both
bonds and collateral to secure state funds to be deposited with it. If both bonds and collateral
are furnished the depository may withdraw all or any part of the collateral without in any way
impairing the bond unless there is a provision in the bond that the collateral will not be withdrawn
without the consent of the surety on the bond.
    Subd. 5. Maximum deposit. The Executive Council shall prescribe the maximum amount
that may be deposited in each depository. In no case shall the amount of the deposit exceed:
(1) the penalty on the bonds;
(2) 90 percent of the market value of the bonds; or
(3) the penalty on the bonds plus 90 percent of the market value of the collateral, if both are
furnished.
    Subd. 6. Power to deposit. The commissioner of finance may deposit in any qualified
depository, in the name of the state, state funds in hand.
    Subd. 7. Special deposits; interest. The Executive Council may permit any designated
depository to receive from any official, department, institution, or other agency of the state special
deposits of state moneys that have not been paid into the state treasury. All moneys so deposited
are deemed deposited pursuant to such designation.
Upon direction of the commissioner of finance a depository may receive and carry as a
special deposit an amount of money withdrawn from the treasury that may be immediately
required to pay principal or interest, or both, of maturing obligations of the state. Upon the
direction of the commissioner of finance the depository may pay out of such deposit the maturing
obligations and surrender them to the commissioner of finance for cancellation.
The Executive Council shall fix the rate of interest to be paid upon the special accounts
authorized by this subdivision or may waive payment of interest if in its judgment the average
amount deposited is not sufficient to justify charging interest.
    Subd. 8. Active and inactive depositories. Depositories shall be divided into two classes to
be known as active and inactive. A depository may be designated as a depository of both classes.
All state funds deposited in active depositories are subject to withdrawal by the commissioner
of finance upon demand and no interest shall be charged on these deposits.
Surplus funds not required to meet the state's current disbursements shall be deposited for
a definite period in inactive depositories and interest shall be paid on these deposits at a rate of
not less than one percent per annum nor more than the maximum rate authorized to be paid by
Minnesota state banks other than savings banks. This rate shall be fixed by the Executive Council
in accordance with the current rate upon similar deposits.
    Subd. 9. Statement of financial condition. When the Executive Council deems necessary it
may require any depository of state funds or any surety on a depository bond to furnish a sworn
statement of the financial condition of the depository or surety. Failure to render a statement
within a reasonable time is sufficient ground for revocation of the designation.
Any person who makes a false statement to the Executive Council with regard to the financial
condition of a depository or the surety on a depository bond is guilty of a gross misdemeanor.
    Subd. 10. Closing; default. The closing of a depository is a default by the depository and no
demand by the state or its commissioner of finance is necessary to establish the default. When a
depository closes, any time deposit therein is immediately due and payable.
    Subd. 11. Winding up. In any proceeding to wind up an insolvent depository of state funds
the state is a preferred creditor.
Where a bond has been given by the depository the state may proceed either as a preferred
creditor against the assets of the insolvent depository or as the obligee on the surety bond against
the surety thereon or against both as the Executive Council deems advisable.
If the state receives or recovers any amount of its claim from the surety, the latter is not, by
reason thereof, subrogated to the claim of the state against the assets of the insolvent depository as
a preferred creditor.
    Subd. 12. Revoking designation of depository. The Executive Council may revoke
its designation of any depository at any time. Upon revocation of an active depository the
commissioner of finance shall withdraw the state funds deposited therein immediately and shall
make no further deposits therein. Upon revocation of an inactive depository the commissioner
of finance shall withdraw state funds deposited therein when they become due and shall make
no further deposits therein.
    Subd. 13. Required community reinvestment rating. Banks and trust companies
designated as depositories must have received ratings of "outstanding" or "satisfactory" as their
most recent rating under United States Code, title 12, section 2906. If a state depository receives
a rating that is below "satisfactory," the Executive Council shall revoke its designation as a
depository. The Executive Council may delay the effective date of the revocation if necessary to
allow a reasonable period of time to arrange for a replacement depository.
History: 1953 c 492 s 3; 1965 c 32 s 1; 1965 c 45 s 1; 1976 c 239 s 1; 1986 c 444; 1991 c 42
s 1; 1992 c 587 art 2 s 1; 1995 c 171 s 1; 1996 c 414 art 1 s 1; 2003 c 112 art 2 s 50