HB1260 HD1.DOC

SECTION 1. Chapter 36, Hawaii Revised Statutes, is amended by adding two new sections to be appropriately designated and to read as follows:

"§36-A State securitization account. (a) There is created in the state treasury, the state securitization account that shall be located in the department of budget and finance. By July 30 of each year, the director of finance shall transfer all excess non-general funds into the state securitization account; provided that the director may subsequently transfer non-general funds from the account back to its source.

For the purposes of this section, "excess non-general funds" means funds that are not from the general fund and are not appropriated or are deemed by the director of finance as in excess of planned expenditure of the source of the non-general funds.

(b) The account shall serve as a depository for non-general funds to meet the qualifications imposed upon the State with respect to the issuance of general obligation bonds.

(d) The director of finance shall notify the legislature within ten days of each transfer under subsection (a). The director of finance shall also report quarterly to the legislature, beginning August 1, 2009, and include all transfers made from, and to the account, including the source of the transfers, and any related expenditures made within that reporting period.

§36-B Capital improvement projects; use of non-general funds. (a) Except as provided in section 36-A and notwithstanding any other law to the contrary, no non-general funds shall be used at any time for the purpose of financing capital improvement projects unless the non-general funds are from the state securitization account.

(b) Except as permitted in subsection (a), all capital improvement projects shall be financed by the issuance of general obligation bonds."

SECTION 2. Section 36-21, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) The director of finance may invest any moneys of the State [~~which~~] that in the director's judgment are in excess of the amounts necessary for meeting the immediate requirements of the State and where in the director's judgment the action will not impede or hamper the necessary financial operations of the State in:

(1) Any bonds or interest-bearing notes or obligations:

(A) Of the State (including state director of finance's warrant notes issued pursuant to chapter 40), subject to sections 36-A and 36-B;

(B) Of the United States;

(2) Federal Farm Credit System notes and bonds;

(3) Federal Agricultural Mortgage Corporation notes and bonds;

(4) Federal Home Loan Bank notes and bonds;

(5) Federal Home Loan Mortgage Corporation bonds;

(6) Federal National Mortgage Association notes and bonds;

(7) Student Loan Marketing Association notes and bonds;

(8) Tennessee Valley Authority notes and bonds;

(9) Securities of a mutual fund whose portfolio is limited to bonds or securities issued or guaranteed by the United States or an agency thereof or repurchase agreements fully collateralized by any such bonds or securities;

(10) Securities of a money market mutual fund that is rated AAA, or its equivalent, by a nationally recognized rating agency or whose portfolio consists of securities that are rated as first tier securities by a nationally recognized statistical rating organization as provided in 17 Code of Federal Regulations section 270.2a-7;

(11) Federally insured savings accounts;

(12) Time certificates of deposit;

(13) Certificates of deposit open account;

(14) Repurchase agreements with federally insured banks, savings and loan associations, and financial services loan companies;

(15) Student loan resource securities including:

(A) Student loan auction rate securities;

(B) Student loan asset-backed notes;

(D) Securities issued pursuant to Rule 144A of the Securities Act of 1933, including any private placement issues;

issued with either bond insurance or overcollateralization guaranteed by the United States Department of Education; provided all insurers maintain a triple-A rating by Standard & Poor's, Moody's, Duff & Phelps, Fitch, or any other major national securities rating agency;

(16) Commercial paper with an A1/P1 or equivalent rating by any national securities rating service; and

(17) Bankers' acceptances with an A1/P1 or equivalent rating by any national securities rating service;

provided that the investments are due to mature not more than five years from the date of investment. Income derived from those investments shall be a realization of the general fund; provided that income earned from moneys invested by the general funds, special funds, bond funds, and trust and agency funds on an investment pool basis shall be paid into and credited to the respective funds based on the contribution of moneys into the investment pool by each fund. As used in this section, "investment pool" means the aggregate of state treasury moneys that are maintained in the custody of the director of finance for investment and reinvestment without regard to fund designation."

SECTION 3. Section 36-25, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) [~~When~~] Except as provided in sections 36-A and 36-B, when there are excess moneys, as provided in section 36-21, the director of finance may make temporary transfers of the moneys to the loan fund for the temporary uses thereof. The total of the transfers to the loan fund shall not exceed the sum of unissued general obligation bonds of the State as authorized by the legislature. The general, special, or revolving funds shall be reimbursed from the proceeds of bond sales upon the eventual issuance and sale of the bonds."

SECTION 4. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 5. In codifying the new sections added by section 1 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 7. This Act shall take effect upon its approval.

HOUSE OF REPRESENTATIVES	H.B. NO.	1260
TWENTY-FIFTH LEGISLATURE, 2009		H.D. 1
STATE OF HAWAII