Chapter 0061 - 541R - S Ver of SB1299

Be it enacted by the Legislature of the State of Arizona:

Section 1. Title 35, chapter 1, article 1, Arizona Revised Statutes, is amended by adding section 35-101.01, to read:

START_STATUTE35-101.01. Definition of substitute check

In this title, unless the context otherwise requires, "substitute check" means a paper reproduction of an original warrant or check that is created from an electronic image of the original warrant or check and that meets all of the following:

1. Contains an image of the front and back of the original warrant or check.

2. Bears a magnetic ink character recognition line containing all of the information in the magnetic ink character recognition line of the original warrant or check.

3. Conforms in paper stock and dimension and otherwise with generally applicable industry standards for substitute checks.

4. Is suitable for automated processing in the same manner as the original warrant or check. END_STATUTE

Sec. 2. Section 35-131, Arizona Revised Statutes, is amended to read:

START_STATUTE35-131. Accounting system; reports; notice of deficiency; forms

A. In accordance with generally accepted governmental accounting principles, the department of administration shall develop and prescribe for the use of all budget units a uniform accounting system so designed as to ensure compliance with all legal and constitutional requirements, including those respecting the receipt and expenditure of receiving, spending and the accountability accounting for public monies.

B. The department of administration shall maintain complete, accurate and current financial records relating to state monies and to other public monies in the state treasury available to, encumbered by or expended by each budget unit, including trust monies or other monies not subject to appropriation, setting out all revenues, charges against all funds, fund and appropriation balances, interfund transfers, outstanding warrants, checks, electronic funds transfer vouchers and encumbrances, in a manner consistent with the uniform state accounting system, for the preparation of to prepare statewide financial statements in accordance with generally accepted governmental accounting principles.

C. Each month the department of administration shall prepare and submit to the governor a report summarizing by budget unit and appropriation or other fund source the above information prescribed in subsection B of this section in such a form as that will most clearly and accurately set out the current fiscal condition of the state and shall furnish to each budget unit a report of its transactions by appropriation or other fund source in a form that will clearly and accurately show the fiscal activity and condition of such the appropriation or fund source.

D. The responsible official for each budget unit shall monitor reports prepared pursuant to subsection C of this section to identify any projected total deficiency for the budget unit fiscal year. On a determination of a projected deficiency, the official shall take any action necessary to assure ensure continuing compliance with section 1‑254 by notifying the governor, the speaker of the house of representatives, the president of the senate and the chairman of the joint legislative budget committee of the deficiency and the reasons for the deficiency. The initial notification of the deficiency shall be followed within ten business days by a report from the responsible budget unit official that includes the following:

1. A complete explanation of the causes of the deficiency.

2. A plan that assures ensures that the deficiency will be resolved within the fiscal year without supplemental appropriation and that includes the policy and programmatic implications of the deficiency and the plan.

3. A commitment to provide a progress report if the projected degree of deficiency changes substantially. The report shall include additional measures necessary to assure ensure resolution of the deficiency within the fiscal year.

E. On or before December 1 of each year, the director of the department of administration shall submit to the governor a complete report of the financial transactions of the preceding fiscal year and of the financial condition of the state at the end of that year with such comments and supplementary data as the director of the department of administration deems necessary to make the report complete and readily understandable. The report shall include all appropriated and nonappropriated monies in no less detail than the state general fund.

F. On or before February 1 of each year, the director of the department of administration and the state treasurer shall submit to the joint legislative budget committee a report explaining any differences between the department of administration's estimate of the previous fiscal year's state general fund ending balance submitted pursuant to subsection E of this section and the state treasurer's estimate of the invested balance, including the state general fund share of that balance, as of June 30 of the previous fiscal year submitted pursuant to section 41‑172.

G. In preparing the comprehensive annual financial report published in accordance with the generally accepted accounting principles, the department of administration shall include supplementary schedules that reconcile any differences between the state general fund as reported in the comprehensive annual financial report and the state general fund as reported in the annual financial report required by subsection E of this section. This reconciliation shall address revenues, expenditures and fund balances.

H. The director of the department of administration shall prescribe uniform classifications for assets, liabilities, receipts and expenditures and forms for the periodic reporting of financial accounts, transactions and other matters by budget units compatible with the reports required of the director of the department of administration under this section. Such records and accounts shall be maintained and reconciled by budget units. If required for reporting, the department of administration may establish or delete funds and budget units may maintain additional records for reporting to the federal government or other funding source.

I. Each organization that is included in the state's reporting entity as defined by generally accepted accounting principles shall submit all necessary financial statements or information to the department of administration on a basis of accounting that is consistent with generally accepted accounting principles and that is in accordance with the policies and procedures of the department of administration. END_STATUTE

Sec. 3. Section 35-142, Arizona Revised Statutes, is amended to read:

START_STATUTE35-142. Monies kept in funds separate from state general fund; receipt and withdrawal

A. All monies received for and belonging to the state shall be deposited in the state treasury and credited to the state general fund except the following, which shall be placed and retained in separate funds:

1. The unexpendable principal of monies received from federal land grants shall be placed in separate funds and the account of each such separate fund shall bear a title indicating the source and the institution or purpose to which the fund belongs.

2. The interest, rentals and other expendable money monies received as income from federal land grants shall be placed in separate accounts, each account bearing a title indicating the source and the institution or purpose to which the fund belongs. Such expendable monies shall be expended only as authorized, regulated and controlled by the general appropriations act or other act of the legislature.

3. All private or quasi‑private monies authorized by law to be paid to or held by the state treasurer shall be placed in separate accounts, each account bearing a title indicating the source and purpose of the fund.

4. All monies legally pledged to retirement of retire building indebtedness or bonds issued by those institutions authorized to incur such indebtedness or to issue such bonds shall be placed in separate accounts.

5. Monies of a multi‑county water conservation district authorized by law to be paid to or held by the state treasurer shall be placed in separate accounts, each account bearing a title indicating the source and purpose of the fund.

6. All monies collected by the Arizona game and fish department shall be deposited in a special fund known as the state game and fish protection fund for the use of the Arizona game and fish commission in carrying out the provisions of title 17.

7. All federal monies that are received by the department of economic security for family assistance benefits and medical eligibility as a result of efficiencies developed by the department of economic security and that would otherwise revert to the state general fund pursuant to section 35‑190 shall be retained for use by the department of economic security in accordance with the terms and conditions imposed by the federal funding source in an account or accounts established or authorized by the state treasurer.

8. Monies designated by law as special state funds shall not be considered a part of the state general fund. Unless otherwise prescribed by law, the state treasurer shall be the custodian of all such funds.

9. All monies received and any accounts established and maintained by the director of the Arizona state retirement system or the administrator of the public safety personnel retirement system, the corrections officer retirement plan and the elected officials' retirement plan.

10. Monies received by a state agency or institution as a gift, devise or donation shall not be considered a part of the state general fund or transferred to the state general fund unless the gift, devise or donation specifically authorizes a general state use for the monies. A state agency or institution that receives a monetary gift, devise or donation shall account for those monies separately.

11. All monies received by the Arizona game and fish commission in connection with clean water act in‑lieu fee projects shall be deposited in a special trust fund, known as the game and fish in‑lieu fee program restoration endowment trust fund, established by section 17‑265 for the use of the Arizona game and fish commission solely for the following:

(a) The purposes authorized under any enabling instrument between the commission and the department of environmental quality or between the commission, the United States army corps of engineers and the United States environmental protection agency.

(b) Site selection, design, implementation, monitoring, management and administrative costs related to the Arizona game and fish department's responsibilities as an in‑lieu fee sponsor pursuant to sections 401 and 404 of the clean water act.

B. No money Monies shall not be received or held by the state treasurer except as authorized by law, and in every instance the treasurer shall issue a receipt for money monies received and shall record the transaction in the statewide accounting system. No money Monies shall not be withdrawn from the treasury except on the warrant, Check or substitute check, or electronic funds transfer voucher of the department of administration.

C. Monies received for and belonging to this state and resulting from compromises or settlements by or against this state, excluding restitution and reimbursement to state agencies for costs or attorney fees, shall be credited to the state general fund unless specifically credited to another fund by law. A fund consisting of monies other than monies received for restitution, costs or attorney fees shall not be established on the basis of by a court order without prior legislative authorization. For the purposes of this subsection, "restitution" means monies intended to compensate a specific, identifiable person, including this state, for economic loss.

D. All federal monies granted and paid to this state by the federal government shall be accounted for in the accounts or funds of this state in the necessary detail to meet federal and state accounting, budgetary and auditing requirements, and all appropriations for matching such federal monies shall be transferred from the state general fund to such separate funds as needed, except as otherwise required by the federal government.

E. Nothing in This section requires does not require the establishment of separate accounts or funds for such federal monies unless otherwise required by federal or state law. The department of administration has the authority to may use the most efficient system of accounts and records, consistent with legal requirements and standard and necessary fiscal safeguards.

F. Nothing in This section precludes the creation by does not preclude the department of administration of from establishing a clearing account or other acceptable accounting method to effect prompt payment of claims from an approved budget or appropriation. The department of administration shall report each account or fund established or cancelled to the directors of the joint legislative budget committee and the governor's office of strategic planning and budgeting.

G. Nothing in This section or and any other section precludes do not preclude the use of monies kept in funds separate from the state general fund, the interest from which accrues to the state general fund, for payment of to pay claims against the state general fund, provided if sufficient monies remain available for payment of to pay claims against such funds.

H. The department of administration may issue warrants, checks or electronic funds transfer vouchers for qualified expenditures of federal program monies before they are deposited in the state treasury. The receipt of federal monies shall be timed to coincide, as closely as administratively feasible, with the redemption of warrants, checks or substitute checks, or electronic funds transfer vouchers by the state treasurer. The department of administration shall limit expenditures to the amount that has been made available for the to use under the grant award by the federal government. The state agency initiating the expenditures is responsible for ensuring that expenditures qualify for coverage under the guidelines of the federal grant award.

I. The department of administration shall establish the policies and procedures for all state agencies for drawing federal monies. When the established method results in federal monies being held by this state, the department of administration may use the interest earned on the monies to pay the federal government for any related interest liability. If an interest liability is incurred due to a state agency varying from the established policies and procedures, the department of administration shall charge the appropriate agency account or fund. Any federal interest liability owed to this state as a result of resulting from the delayed federal disbursements shall be used to offset this state's interest liability to the federal government. Any remaining interest earnings shall be deposited in the state general fund.

J. Any state agency or authorized agent of a state agency may accept credit cards pursuant to an agreement entered into by the state treasurer pursuant to section 35‑315 for the payment of to pay any amount due to that agency or agent or this state.

K. Except for the department of revenue, agencies or authorized agents on behalf of state agencies that accept credit cards shall deduct any applicable discount fee and processing fee associated with the transaction amount before depositing the net amount in the appropriate state fund. No other reduction is permitted against the transaction amount. The net amount deposited in the appropriate state fund shall be considered as the full deposit required by law of monies received by the agency or the authorized agent. Payment of any applicable discount fee and processing fee shall be accounted for in the annual report submitted to the governor's office of strategic planning and budgeting in accordance with section 41‑1273. The transaction amount of any credit card transaction shall not be reduced by any discount fee or processing fee in an amount in excess of more than the merchant card settlement fees reflected in the state banking contract with the state treasurer's office.

L. Any state agency that contracts with an authorized agent for the electronic processing of to electronically process transactions pursuant to title 41, chapter 23 may include a provision in the contract to allow the authorized agent to impose a convenience fee or a service fee or surcharge. If allowed, the convenience fee or the service fee or surcharge shall be charged to the cardholder in addition to the transaction amount, except for the following:

1. Except as provided in subsection R of this section, any permits, licenses or other authorizations needed to pursue a trade or occupation in this state.

2. Except as provided in subsection R of this section, any permits, licenses or other authorizations needed to establish, expand or operate a business in this state.

3. Except as provided in subsection R of this section, any permits, licenses or other authorizations needed to register a vehicle or license a driver in this state.

M. Each state agency or its authorized agent shall:

1. Deduct the amount of the convenience fee or the service fee or surcharge before depositing the transaction amount or the transaction amount reduced by the discount fee or the processing fee, or both, into the appropriate state fund.

2. Not deduct any part of the convenience fee or the service fee or surcharge from the transaction amount before depositing the net amount into the appropriate state fund.

3. Deduct the amount of the discount fee or the processing fee, or both, from the transaction amount before depositing the net amount into the appropriate state fund.

N. The net amount deposited in the appropriate state fund pursuant to subsection L or M of this section shall be considered as the full deposit of monies that is required by law and that is received by the agency.

O. Before charging a convenience fee or a service fee or surcharge, a state agency shall submit the proposed convenience fee or the proposed service fee or surcharge to the state treasurer for approval. If the state treasurer determines that the proposed convenience fee or the proposed service fee or surcharge is necessary to ensure the efficient processing of payments to the state agency and is in compliance complies with the standards of the credit card industry, the state treasurer shall approve the convenience fee or the service fee or surcharge. Notwithstanding section 35‑142.01, convenience fees received by a state agency or its authorized agent may be used to offset the costs imposed by the authorized agent in processing the transactions.

P. When the percentage of electronic transactions first exceeds at least thirty percent of a state agency's total transactions, the state agency shall perform a cost benefit report, including costs of convenience fees or the service fee or surcharge, the amount of revenue generated and any realized cost savings.

Q. Nothing in This section or and any other provision of law authorizes do not authorize any state agency, authorized agent of any state agency or budget unit to establish a bank account for any government monies. All monies received by or on behalf of this state shall be deposited with and in the custody of the state treasurer or in an account that is authorized by the state treasurer pursuant to this section. This subsection does not apply to monies received and any accounts established and maintained by the director of the Arizona state retirement system or the administrator of the public safety personnel retirement system, the corrections officer retirement plan and the elected officials' retirement plan.

R. If a state agency provides an alternative method of payment, the convenience fee or the service fee or surcharge may be charged to the cardholder in addition to the transaction amount. END_STATUTE

Sec. 4. Section 35-149, Arizona Revised Statutes, is amended to read:

START_STATUTE35-149. Disposition of private monies; contributions and suspense funds; exception

A. Every department, institution, board or commission receiving private funds monies or contributions available for its support or for the purpose of defraying expenses or work done under its direction, or other receipts which may be that are subject to refund or return to the sender or receipts which that have not yet accrued to the state shall, in depositing such monies with the state treasurer as provided in this chapter, certify to the department of administration:

1. The source from which such monies were received.

2. The terms and conditions under which and the purpose for which they the monies were received.

3. The names of the trustees or administrators of the funds monies or contributions.

4. The name of the person authorized to approve expenditures from each fund.

B. The department, institution, board or commission shall keep an accounting of each such fund or contribution mentioned prescribed in subsection A of this section entirely separate and distinct from all other funds.

C. All disbursements from such funds and contributions shall be made on warrants, checks or electronic funds transfer vouchers of the department of administration, who which shall issue such warrants, checks or electronic funds transfer vouchers only upon on adequate vouchers approved by the person or persons authorized to approve the disbursements. Separate sets of accounts with each of such funds and contributions, and the receipts and disbursements thereof, shall be maintained by the department of administration.

D. The provisions of This chapter shall does not apply to monies received by universities for the subsistence of dining halls, dormitories, bookstores or student activities, to federal monies or private monies of students received by state educational institutions, or to private monies of patients or inmates of state institutions, when such monies deposited with an officer of such an institution are declared not to be state monies. END_STATUTE

Sec. 5. Section 35-171, Arizona Revised Statutes, is amended to read:

START_STATUTE35-171. Bookkeeping procedures for treasurer

All public money monies in the custody or possession of the state treasurer shall be placed and retained in a state fund pursuant to the provisions of section 35‑142. The total of these funds shall constitute monies constitutes the cash fund of the state. Warrants, checks or substitute checks, or electronic funds transfer vouchers shall be credited to the fund as they are paid. END_STATUTE

Sec. 6. Section 35-183, Arizona Revised Statutes, is amended to read:

START_STATUTE35-183. Countersigning of warrants, checks and electronic funds transfer vouchers

All warrants, checks and electronic funds transfer vouchers issued by the department of administration shall be countersigned by the governor, or shall bear the facsimile signature of the governor, before presentation to the state treasurer for payment or endorsement. Unless so countersigned, the warrants, Checks or Electronic funds transfer vouchers shall not be considered complete in form or effect as legal obligations against the this state. END_STATUTE

Sec. 7. Section 35-184, Arizona Revised Statutes, is amended to read:

START_STATUTE35-184. Numbering of warrants, checks and electronic funds transfer vouchers

A. All warrants, checks and electronic funds transfer vouchers issued by the department of administration shall be numbered in the manner prescribed by the director of the department of administration to maintain accountability.

B. All warrants, checks and electronic funds transfer vouchers issued by the department of administration shall bear on the face of the warrant, Check or electronic funds transfer voucher a void date that does not to exceed two years from after the date of issuance. END_STATUTE

Sec. 8. Section 35-185, Arizona Revised Statutes, is amended to read:

START_STATUTE35-185. Disbursements of monies

A. All warrants, checks and electronic funds transfer vouchers of the department of administration issued pursuant to this chapter shall constitute full and sufficient authority for the state treasurer to disburse public monies in the amount set forth on the face of the warrant, Check or electronic funds transfer voucher. The state treasurer shall issue a check on a state depository bank or authorize the transfer of monies by the state depository bank in payment of the warrants, Checks or substitute checks, and Electronic funds transfer vouchers. The director of the department of administration may establish by rule and collect a fee for each warrant, check and Electronic funds transfer voucher issued to a vendor that provides materials, services or construction to this state. The fee shall be deposited in the state general fund.

B. The director of the department of administration shall credit the state treasurer with the amount of all warrants, checks or substitute checks, or electronic funds transfer vouchers retired or paid by him that the state treasurer redeems. If no monies are not available for payment of to pay such warrants, checks or substitute checks, or electronic funds transfer vouchers, the state treasurer shall issue in lieu of payment a treasurer's warrant note or notes as provided in section 35‑185.01.

C. Money Monies shall not be withdrawn from the treasury for any purpose unless for the payment of except to pay warrants, checks and electronic funds transfer vouchers issued by the director of the department of administration or for the payment of to pay treasurer's warrant notes.

D. This chapter shall does not be construed to apply to withdrawals of monies from state depository banks for immediate redeposit into other state depository banks. END_STATUTE

Sec. 9. Section 35-185.01, Arizona Revised Statutes, is amended to read:

START_STATUTE35-185.01. Treasurer's warrant notes; form; redemption; exception

A. If no monies are not available for payment of to pay warrants, checks or substitute checks, or electronic funds transfer vouchers of the department of administration presented to the state treasurer pursuant to section 35‑185, the treasurer, in lieu of payment, shall issue and shall exchange or sell a treasurer's warrant note or notes in the amount or amounts equal to the sum of the face value of the warrants, checks or substitute checks, or electronic funds transfer vouchers presented for payment. Treasurer's warrant notes shall be issued in lieu of payment of state general fund warrants, checks or substitute checks, or electronic funds transfer vouchers only or in exchange for previously issued treasurer's warrant notes. Before issuing warrant notes, the state treasurer is not required to divest from program funding obligations issued pursuant to section 15‑2157, board funding obligations issued pursuant to section 28‑7678, monies in the budget stabilization fund or operating monies invested in securities that are earning a rate of interest greater than the cost of issuing warrant notes. For the purposes of this subsection, "no monies are not available" means no an operating cash balance is not available to pay warrants, checks or substitute checks, or Electronic funds transfer vouchers except for those operating monies invested in program funding obligations issued pursuant to section 15‑2157, board funding obligations issued pursuant to section 28‑7678, monies in the budget stabilization fund or operating monies invested in securities that are earning a rate of interest greater than the total cost of issuing any warrant notes.

B. The face value of a treasurer's warrant note may be equal to the sum of any combination of warrants, checks or substitute checks, and Electronic funds transfer vouchers presented for payment. The treasurer may sell warrant notes at public or private sale and shall use the proceeds of the sale for payment of to pay warrants, checks or substitute checks, and Electronic funds transfer vouchers previously presented pursuant to section 35‑185. Treasurer's warrant notes shall not be sold at a price below their face value.

C. Each treasurer's warrant note sold or exchanged shall be dated the date the respective warrants are presented for payment. If the date of delivery of a treasurer's warrant note that is sold is later than the date of presentment of the respective warrant or warrants, the purchaser of the treasurer's warrant note shall pay the accrued interest as an additional purchase price. The accrued interest shall be paid to the holder of the respective unpaid warrant or warrants, which shall be deemed to bear interest at the same rate as the respective treasurer's warrant note from presentment to payment from the proceeds of warrant notes sold.

D. The treasurer shall establish a maturity date for each treasurer's warrant note of not longer than ninety days from the date of initial issue. The treasurer may specify that treasurer's warrant notes may be called for redemption at any time before the specified maturity date.

E. The treasurer shall pay interest from the treasurer's warrant note redemption fund on the face value of each warrant note at the rate established by the state treasurer at the time of issuing the warrant note. Interest shall be paid from the date of the treasurer's warrant note until the maturity date or redemption date. The treasurer shall establish the interest rate before the exchange or sale of warrant notes at a rate of not in excess of more than the maximum rate permitted by the state loan commissioners.

F. The state loan commissioners, at a meeting called and chaired by the state treasurer, shall fix or change the maximum rate of interest that may be paid on warrant notes. No Any change of the maximum allowable rate of interest as established by the state loan commissioners shall not affect warrant notes issued before the date of the change.

G. Each treasurer's warrant note shall be signed by the treasurer or the treasurer's designated agent and countersigned by the director of the department of administration or the director's designated agent. The required signatures may be electronic signatures. All treasurer's warrant notes shall be substantially in the following form:

Treasurer's warrant note

(20__ to ____ fiscal year)

Number _____________________

Phoenix, Arizona _________________, 20__

On __________________, 20__, the treasurer of the state of Arizona will pay to the order of _____________________ at _________________ ______________ $_____________ with interest at __________ per annum from the date of issuance until paid (calculated on a 365/366 day basis).

(insert early redemption provisions)

____________________________ ____________________________

(Countersigned) State Treasurer

Director of the department

of administration

H. Treasurer's warrant notes may be exchanged or sold for the combined face value of any number of treasurer's warrant notes previously issued. Except for those treasurer's warrant notes issued in exchange for or to redeem treasurer's warrant notes previously issued, no treasurer's warrant notes may not be issued, exchanged or sold except in payment of or to provide monies for the payment of a warrant or to pay warrants, Checks or substitute checks, and Electronic funds transfer vouchers presented for payment as provided in section 35‑185.

I. Treasurer's warrant notes issued in any fiscal year shall be numbered consecutively beginning with the number one. Treasurer's warrant notes shall be redeemed in numerical order. If the treasurer has sufficient monies to pay only a portion of the lowest numbered outstanding warrant note, he the treasurer may deposit the monies with the paying agent pursuant to subsection K of this section or call in the lowest numbered warrant note, before maturity according to its terms, and pay the bearer the amount available and issue to the bearer a new warrant note bearing a number that will preserve, for the new warrant note, the priority of the partially paid warrant note and bearing a value equal to the amount of principal and interest remaining unpaid. The new warrant note and the partial payment of principal and interest on the partially paid warrant note shall be exchanged for the partially paid warrant note. The new warrant note shall pay interest at the same rate as the partially paid warrant note. The treasurer may make the changes in the form and date of the new warrant note as necessary to reflect the amount of unpaid interest on the partially paid warrant note.

J. The treasurer may include in the form of the treasurer's warrant notes such provisions regarding the redemption and payment of treasurer's warrant notes before maturity as are consistent with subsections I and K of this section and section 35‑185.02. If prior redemption is to be a provision of a treasurer's warrant note, the note shall provide a method of notification of to notify the holder of the note by publication or written, telegraphic or electronic means as chosen by the treasurer.

K. The treasurer may appoint a paying agent for the purpose of facilitating to facilitate the redemption and payment of treasurer's warrant notes. Monies deposited with the paying agent shall be allocated to the payment of pay the principal of, interest on and any prior redemption premiums associated with treasurer's warrant notes in numerical order. A treasurer's warrant note shall be is deemed paid for all purposes of this section and section 35‑185.02 when there is deposited with the paying agent sufficient monies to pay all amounts when due on the treasurer's warrant note and all amounts when due on all outstanding treasurer's warrant notes bearing a lower number. A paying agent appointed pursuant to this subsection shall provide security deposits as required by the treasurer.

L. When the treasurer or the paying agent, if payment is made to a paying agent, pursuant to subsection K of this section, pays treasurer's warrant notes or when the warrant notes are redeemed, he the treasurer or paying agent shall mark on the face of the treasurer's warrant notes the word "cancelled" or shall cancel the warrant notes by electronic means indicating the date of cancellation and shall promptly present the notes to the director of the department of administration who shall give the state treasurer a receipt therefor.

M. If the state loan commissioners determine that it will result in a lower net effective interest rate on one, some or all warrant notes to be issued by the treasurer during the current fiscal year, the commissioners may authorize the treasurer to purchase letters of credit and to incur and pay insurance premiums, attorney fees or other related costs incurred with respect to treasurer's warrant notes. All such payments shall be treated in the same manner as interest to be paid on treasurer's warrant notes and shall be paid from the treasurer's warrant note redemption fund.

N. If treasurer's warrant notes are to be exchanged for warrants, checks or substitute checks, or Electronic funds transfer vouchers held by banks or savings and loan associations, the treasurer may enter into agreements with such banks or savings and loan associations to provide for the issuance, reissuance and custody of treasurer's warrant notes, the fixing of the interest rates on the treasurer's warrant notes and the method of giving notice to the holders of the notes. Such agreements may provide for a book entry system for the treasurer's warrant notes or may provide for the issuance of one note with an appropriate grid on the reverse, which shall show the advancements made by the banks or savings and loan associations and also the payments of interest and reductions of principal. Such agreements may be continuing in nature, may be executed at any time and may apply to any treasurer's warrant notes exchanged for either warrants, checks or substitute checks, or Electronic funds transfer vouchers or treasurer's warrant notes at any time during the remainder of the fiscal year in which the agreement is made. The agreements shall provide a method to preserve the priority of, interest rate on and other terms of each treasurer's warrant note exchanged pursuant to the agreement. No Any such agreement shall not become effective until approved by the state loan commissioners. END_STATUTE

Sec. 10. Section 35-185.02, Arizona Revised Statutes, is amended to read:

START_STATUTE35-185.02. Treasurer's warrant note redemption fund; receipt; appropriation

A. The treasurer's warrant note redemption fund is established. Any time that treasurer's warrant notes have been are issued and remain outstanding, all monies that would otherwise be paid into the state general fund, except for amounts sufficient to pay the salaries of constitutional officers of this state, shall be deposited into in the treasurer's warrant note redemption fund. All monies in the treasurer's warrant note redemption fund shall be used exclusively to pay the principal of and interest on treasurer's warrant notes, and to pay the fees and charges authorized by this chapter. Monies in the treasurer's warrant note redemption fund shall be invested by the state treasurer, or a paying agent appointed pursuant to section 35‑185.01, subsection K, and shall be credited to the treasurer's warrant note redemption fund.

B. At such time as If all warrant notes have been redeemed and the principal of and interest on such warrant notes have been paid along with any fees and charges authorized by this chapter, the paying agent shall return all unused and unneeded monies to the treasurer and the treasurer shall transfer any remaining amounts in the treasurer's warrant note redemption fund to the state general fund.

C. All monies deposited in the treasurer's warrant note redemption fund are appropriated to the state treasurer to pay the principal of and interest on outstanding treasurer's warrant notes and to pay any fees and charges authorized by this chapter. The amount appropriated to the treasurer pursuant to this subsection constitutes a continuing appropriation and shall not exceed the sum of the face values of the treasurer's warrant notes issued plus an additional one‑fifth of that sum for payment of paying interest on the treasurer's warrant notes and fees and charges authorized by this chapter. The state treasurer may, if authorized by the state loan commission, may provide for the payment of a premium upon on redemption and payment of warrant notes before the maturity date established at the time of issuance.

D. The presentation on or after its the maturity date or earlier call date of a treasurer's warrant note shall constitute full and sufficient authority for the state treasurer or a paying agent appointed pursuant to section 35‑185.01, subsection K to disburse public monies from the treasurer's warrant note redemption fund in the amount stated on the face of the treasurer's warrant note plus any interest and prior redemption premiums, if applicable, when due.

E. All amounts deposited in the treasurer's warrant note redemption fund are pledged and held in trust for the benefit of the holders of the treasurer's warrant notes for the exclusive payment of the principal of and interest on outstanding treasurer's warrant notes and the payment of the fees and charges authorized by this chapter. All monies so pledged and received by the treasurer to be placed in the treasurer's warrant note redemption fund shall be are immediately deemed assigned to and held in trust, without notice or recording of any nature whatsoever, for the holders of outstanding treasurer's warrant notes and other persons to be paid as provided by this article. END_STATUTE

Sec. 11. Section 35-186, Arizona Revised Statutes, is amended to read:

START_STATUTE35-186. Duplicate warrants or checks; notice; bond; form and effect

A. When If it appears to the satisfaction of the department of administration, by affidavit or otherwise, that any warrant or check has been lost or destroyed prior to before payment and there is no reasonable probability of its being found or presented or that a warrant or check has not been presented for payment within the time specified on the face of the warrant or check, the department of administration may issue to the owner a duplicate of such the lost, destroyed or out‑of‑date warrant or check. Before issuing such the duplicate, the department of administration shall send a written stop payment notice to the state treasurer giving the number, amount and date of the lost, destroyed or out-of-date warrant or check, the payee and the fund on which drawn.

B. The director of the department of administration shall establish procedures for issuing duplicate warrants or checks that protect this state and provide the owner with a duplicate warrant or check within a reasonable time. END_STATUTE

Sec. 12. Section 35-187, Arizona Revised Statutes, is amended to read:

START_STATUTE35-187. Warrants, checks and substitute checks; limit on payment

A warrant, upon check or substitute check on the state treasury shall not be paid unless presented to the state treasurer for payment prior to before the void date printed on the face of the warrant, check or substitute check. Any warrant, check or substitute check that includes federal, trust or donated monies held for the payment of void warrants or checks shall be transferred or reverted to the fund from which it was drawn. All other monies held for the payment of void warrants, checks or substitute checks are deemed property presumed abandoned under section 44‑302, subsection A, paragraph 11 and shall be transmitted to the department of revenue on a monthly basis each month. For the purposes of this section and title 44, chapter 3, a warrant, check or substitute check does not include a state issued state‑issued check for support as defined in section 25‑500 or for spousal maintenance. END_STATUTE

Sec. 13. Section 35-190, Arizona Revised Statutes, is amended to read:

START_STATUTE35-190. Incurring obligations after close of fiscal year; lapsing appropriations; exceptions

A. Except as provided in section 35‑191, no an officer or other agency of the state shall, after the close of any fiscal year, shall not incur or order or approve the incurring of any obligation or expenditure under any appropriation made by the legislature for such that fiscal year. , and no An expenditure shall not be made from or be charged to any appropriation made by the legislature for any fiscal year which that has expired at the time the obligation for such an expenditure was incurred.

B. The department of administration may draw warrants, checks or Electronic funds transfer vouchers against the available balances of appropriations made for a fiscal year for a period of one month after the close of such that fiscal year:

1. For payment of To pay obligations incurred during the fiscal year for which such appropriations were made.

2. In fulfillment of To fulfill contracts properly made during such the year as determined by the director of the department of administration.

C. After expiration of such period of One month from after the beginning of each fiscal year, all balances of appropriations for the prior fiscal year shall lapse and no further payments shall not be made on any claim on account of due to expenditures of such for the prior fiscal year.

D. Appropriations for construction or other permanent improvements shall do not lapse until the purpose for which the appropriation was made has been accomplished or abandoned, unless such the appropriation is available during the entire fiscal year without an expenditure therefrom from or encumbrance thereon on the appropriation.

E. Nothing in This section shall be construed to does not require reversion to the state general fund of any balance derived wholly or partly from federal grants, earnings or other sources, and remaining in any special revenue, endowment, interest, redemption or suspense agency fund at the close of the fiscal year unless expressly so provided by law, or to require reversion to the state general fund of any balance of fiscal year appropriations made for state institutions under the control of the Arizona board of regents. END_STATUTE

Sec. 14. Section 35-191, Arizona Revised Statutes, is amended to read:

START_STATUTE35-191. Administrative adjustment; refunds; presentation and disposition of claims; report; exemption

A. A claim against this state arising out of contractual relations that has not been paid because of failure to file within the time prescribed by law, or because of any other technical defect not affecting the validity or the contractual liability of this state, is subject to administrative adjustment as provided in this section. A claim against this state arising from orders for goods or services made in one fiscal year and received in the next fiscal year is subject to administrative adjustment as provided in this section if written documentation is provided by the ordering budget unit and written approval is granted by the director of the department of administration. The budget unit shall keep on file the written documentation and authorization by the director.

B. If a claim from the prior fiscal year is presented within one year and if sufficient funds remain in the reverted appropriation to pay the claim, the department of administration, on approval of the claim, shall draw a warrant, in payment of check or Electronic funds transfer voucher to pay the claim and the warrant, check or Electronic funds transfer voucher shall be paid out of the fund to which the unused appropriation reverted.

C. If a claim is presented that is more than one fiscal year and less than four fiscal years old and if sufficient funds monies remain in the reverted appropriation to pay the claim, the department of administration shall present the claim to the legislature requesting an appropriation of monies sufficient for payment of to pay the claim.

D. A claim of three hundred dollars $300 or less from a prior fiscal year presented for payment by on or before June 30 of the fourth subsequent fiscal year may be paid out of an available current year appropriation of the budget unit if the claim is determined to be in the best interest of this state and is approved by the director of the department of administration.

E. A claim for refund on any fee, license, permit or erroneous payment, the revenue having been placed in any separate fund, or the state general fund, is subject to this section if no specific provision for refund is prescribed by law. If a claim for refund is approved, payment shall be made out of from any unexpended or unappropriated balance in the separate fund or the state general fund.

F. If this state's liability cannot be determined until a subsequent fiscal year but is resolved administratively after one fiscal year, the claim shall be paid from the appropriation for the year in which the liability is determined in accordance with the procedures established by the department of administration.

G. All claims filed under this section shall be presented to the department of administration in the manner prescribed by law and procedures established by the department of administration for presentation and audit of claims.

H. On or before November 1 of each year, the director of the department of administration shall submit a report to the director of the joint legislative budget committee listing the written approvals granted by the director of the department of administration for administrative adjustment of orders for goods or services made in one fiscal year and received on or after August 31 of the next fiscal year.

I. This section does not apply to a claim for damages for injury to a person or property or to any claim if the goods or services were received four fiscal years prior to before the presentation of the claim. END_STATUTE

Sec. 15. Section 35-193, Arizona Revised Statutes, is amended to read:

START_STATUTE35-193. Revolving funds

A. The supervisory official of a budget unit may apply to the department of administration to provide a revolving fund in an amount which that will allow the budget unit to pay operating expense items under procedures prescribed by the department of administration.

B. The application for a revolving fund shall state the purposes for which required, the amount deemed necessary, the particular person who shall will have custody of and be charged with the handling and accounting of the fund and the appropriation or other fund to which the revolving fund is to be charged.

C. The department of administration shall review the application as to purpose and reasonableness of amount requested and if acceptable may draw a warrant, check or Electronic funds transfer voucher to the order of the officer applying therefor, and charge the amount thereof against the appropriation or other fund of that budget unit as requested.

D. The manner of accounting for a revolving fund shall be as prescribed by the director of the department of administration. A revolving fund established under this section does not revert to the state general fund at the end of the fiscal year.

E. At the request of the director of the department of administration, the applicant shall return to the state treasurer the full amount of the revolving fund or amount requested, and no claims for services of the officer applying therefor or the head of the budget unit shall not be paid until such the request has been complied with. END_STATUTE

Sec. 16. Section 35-212, Arizona Revised Statutes, is amended to read:

START_STATUTE35-212. Injunctive and civil remedies; time limit; definition

A. The attorney general in the attorney general's discretion may bring an action in the name of the state to:

1. Enjoin the illegal payment of public monies, including violations of section 11‑952 and title 41, chapter 23.

2. Recover illegally paid public monies plus twenty percent of that amount together with interest and costs, including reasonable attorney fees, to be paid to the state treasurer or other appropriate official, or, in the case of public monies of a political subdivision that did not originate or were not received from this state, to the political subdivision, to the credit of the fund from which the payment was made.

B. The attorney general may bring an action to recover illegally paid public monies against:

1. Any person who received the illegal payment.

2. The public body or the public officer acting in the officer's official capacity who ordered or caused the illegal payment or has supervisory authority over the person that ordered or caused the illegal payment.

3. The public official, employee or agent who ordered or caused the illegal payment, including a payment ordered or caused to be made without authorization of law.

C. A public official, employee or agent of this state, a political subdivision of this state or a budget unit who is charged with collecting, receiving, safekeeping, transferring or disbursing public monies may be held personally liable for an illegal payment of public monies, including payment made without authorization of law.

D. A public official, employee or agent of this state, a political subdivision of this state or a budget unit who is responsible for disbursing, collecting, receiving, safekeeping or transferring public monies pursuant to a warrant, check or substitute check, electronic funds transfer voucher or other form of claim that does not originate from the public official, employee or agent making the disbursal may not be held personally liable for illegal payments made pursuant to such warrants, checks or substitute checks, Electronic funds transfer vouchers or other claims unless the public official, employee or agent knew or should have known that a warrant, check or substitute check, Electronic funds transfer voucher or other claim would result in an illegal payment of public monies.

E. An action brought pursuant to this article is subject to title 12, chapter 7, article 2. If the action is brought by the attorney general, the action must be brought within five years after the date an illegal payment was ordered and section 12-821.01 does not apply to the action.

F. For the purposes of this section, "public monies" includes all monies coming into the lawful possession, custody or control of budget units, state agencies, boards, commissions or departments or a state officer, employee or agent in an official capacity, and all monies coming into the lawful possession, custody or control of a tax‑supported political subdivision or an officer, employee or agent of a tax-supported political subdivision in an official capacity irrespective of the source from which, or the manner in which, the monies are received. END_STATUTE

Sec. 17. Section 35-301, Arizona Revised Statutes, is amended to read:

START_STATUTE35-301. Duties and liabilities of custodian of public monies; violations; classification

A public officer or other person, including justices of the peace and constables, who is charged with the receipt receiving, safekeeping, transfer transferring or disbursement of disbursing public money monies is guilty of a class 4 felony who:

1. Without authority of law, appropriates it, the monies or any portion thereof, to his the person's own use, or to the use of another.

2. Knowingly loans it, the monies or any portion thereof.

3. Knowingly fails to keep it the monies in his the person's possession until disbursed or paid out by authority of law.

4. Without authority of law knowingly deposits it, the monies or any portion thereof, in a bank, or with a banker or other person, except on special deposit for safekeeping.

5. Knowingly keeps a false account, or makes a false entry or erasure in an account of, or relating to it the monies.

6. Alters, falsifies, conceals, destroys or obliterates such an account with an intent to defraud or deceive.

7. Knowingly refuses or omits to pay over, on demand, public monies in his hands, upon the person's custody on presentation of a draft, order or warrant, check or substitute check, or Electronic funds transfer voucher drawn upon on such monies by competent authority.

8. Knowingly omits or refuses to transfer the money monies when a transfer is required by law.

9. Knowingly transfers the money monies when not authorized or directed by law.

10. Knowingly omits or refuses to pay over to an officer or person authorized by law to receive it, the monies any money monies received by him when the person if a duty is imposed by law to pay over the money monies. END_STATUTE

Sec. 18. Section 35-312, Arizona Revised Statutes, is amended to read:

START_STATUTE35-312. Eligible depositories; collateral

A. Any eligible depository that receives an investment or any deposit of treasury monies in excess of more than the amount insured by an instrumentality of the United States shall collateralize those deposits with any of the following:

1. Securities listed in section 35‑313, subsection A, paragraphs 1 and 3.

2. State treasurer's warrant notes.

3. The safekeeping receipt of a federal reserve bank or any bank located in a reserve city, or any bank authorized to do business in this state, whose combined capital, surplus and outstanding capital notes and debentures on the date of the safekeeping receipt are one hundred million dollars $100,000,000 or more, evidencing the deposit therein of any securities or instruments described in this section. A safekeeping receipt shall does not qualify as security, if issued by a bank to secure its own public deposits, unless issued directly through its trust department. The safekeeping receipt shall show upon on its face that it is issued for the account of the state treasurer and shall be delivered to the state treasurer.

4. Letters of credit issued by a federal home loan bank if:

(a) The letter of credit has been delivered pursuant to this section or chapter 10, article 1 of this title to the statewide collateral pool administrator.

(b) The letter of credit meets the required conditions of:

(i) Being irrevocable.

(ii) Being issued, presentable and payable at a federal home loan bank in United States dollars. Presentation may be made by the beneficiary submitting the original letter of credit, including any amendments, and the demand in writing, by overnight delivery.

(iii) If the letter of credit is for purposes of chapter 10, article 1 of this title, containing a statement that identifies the statewide collateral pool administrator as the beneficiary.

(iv) Containing an issue date and a date of expiration.

(c) For the purposes of chapter 10, article 1 of this title, the eligible depository, if notified by the statewide collateral pool administrator, is not allowed to may not use new letters of credit issued by a federal home loan bank if that federal home loan bank fails to pay a draw request as provided for in the letters of credit or fails to properly complete a confirmation of the letters of credit.

B. The securities, warrants or safekeeping receipt for those items shall be accepted at market value equal to one hundred two per cent percent of the deposit liability to the state treasurer, and, if at any time their market value becomes less than one hundred two per cent percent of the deposit liability to the state treasurer, additional items required to guarantee deposits shall be deposited immediately with the state treasurer by the eligible depository. When items pledged as collateral mature or are called for redemption, the cash received for the item shall be held in place of the items until the eligible depository has obtained a written release or provided substitute securities, instruments or warrants.

C. The deposit of securities, warrants or a safekeeping receipt must be such that the eligible depository will promptly pay to the state treasurer monies in its custody, upon on lawful demand, and will, when required by law, pay the monies to the state treasurer.

D. The securities, warrants or safekeeping receipt of an eligible depository shall be deposited with the state treasurer, and the state treasurer is the custodian of those items. The state treasurer may then deposit with the eligible depository monies then in his the state treasurer's possession in accordance with this article.

E. Eligible depositories shall report to the state treasurer monthly and upon on demand the par and market value of any pledged collateral and the total deposits of the state treasurer. END_STATUTE

Sec. 19. Section 35-313, Arizona Revised Statutes, is amended to read:

START_STATUTE35-313. Investment of trust and treasury monies; loan of securities

A. The state treasurer shall invest and reinvest trust and treasury monies in any of the following items:

1. Obligations issued or guaranteed by the United States or any of its agencies, sponsored agencies, corporations, sponsored corporations or instrumentalities.

2. Repurchase agreements collateralized with securities that are authorized for investment pursuant to state law and that are purchased from authorized counterparties that have adequate capital and liquidity as determined by the state treasurer.

3. Bonds or other evidences of indebtedness of this state or any of the counties or incorporated cities, towns or duly organized school districts.

4. Commercial paper whose issuer is investment grade for short‑term obligations by any two nationally recognized statistical rating organizations.

5. Bills of exchange or time drafts known as banker's acceptances that are drawn on and accepted by a commercial bank.

6. Negotiable certificates of deposit issued by a nationally or state chartered state-chartered bank or savings and loan association.

7. Bonds, debentures, notes or other evidences of indebtedness that are denominated in United States dollars and that carry an investment grade rating by a nationally recognized bond rating agency.

8. Securities of or any other interests in any open‑end or closed‑end management type investment company or investment trust, including exchange traded products whose underlying investments are invested in securities allowed by state law, registered under the investment company act of 1940 (54 Stat. 789; 15 United States Code sections 80a‑1 through 80a‑64), as amended. For any treasurer investment pool that seeks to maintain a constant share price, both of the following apply:

(a) The investment company or investment trust takes delivery of the collateral for any repurchase agreement either directly or through an authorized custodian.

(b) The investment policy of the investment company or investment trust includes seeking to maintain a constant share price.

9. Certificates of deferred property taxes as provided by section 42‑17309.

10. Treasurer's warrant notes issued pursuant to section 35‑185.01 or registered warrants of a county issued pursuant to section 11‑605, if the yield is equal to or greater than yields on eligible investment instruments of comparable maturities.

11. Shares in the treasurer's local government investment pools pursuant to section 35‑326 provided that if investment policies of the pool seek to maintain a constant share price.

12. Shares in the treasurer's long‑term local government investment pools, which the terms of which are determined by the state board of investment, pursuant to section 35‑326.01.

13. Subject to subsection D of this section, state transportation board funding obligations delivered pursuant to section 28‑7678.

14. Deposits placed in accordance with the procedures prescribed in section 35‑323.01.

15. Institutional common trust funds whose underlying investments are invested in securities allowed by state law.

16. Program funding obligations delivered by the credit enhancement eligibility board pursuant to section 15‑2157.

B. In case of default or failure to honor a county treasurer's warrant, the state treasurer may withhold the first state shared revenues that would otherwise be distributed to the defaulting county in the amount necessary to honor the note, including accrued interest to and beyond the date of default.

C. The state treasurer may contract to loan securities owned by the trust funds and operating monies deposited in the investment pools pursuant to section 35‑316, subsection B to the financial or dealer community through one or more of the entities listed in section 35‑317, subsection A, or authorized by the board of investment pursuant to section 35‑311, subsection E, if the borrower transfers collateral to the state treasurer or acting agent of the state in the form of cash or securities authorized for investment pursuant to state law. Collateral posted in the form of cash shall be in an amount equal to at least one hundred percent of the market value of the loaned securities as agreed. Collateral posted in the form of securities shall be in an amount of at least one hundred two percent of the market value of the loaned securities as established from time to time by the board of investment. The loaned securities shall be valued as to market value daily, and, if necessary, the borrower shall post additional collateral, as agreed, to ensure that the required margin is maintained. The state treasurer may collect from the borrower all dividends, interest, premiums, rights and other distributions to which the lender of securities would otherwise be entitled. The state treasurer may terminate the contract on not less than at least five business days' notice, as agreed, and the borrower may terminate the contract on not less than at least two business days' notice, as agreed.

D. The state treasurer shall invest operating monies in state transportation board funding obligations delivered pursuant to section 28‑7678 pursuant to the following:

1. The state treasurer shall liquidate investments of operating monies if necessary in order to invest in state transportation board funding obligations, except that if operating monies in the state general fund fall below an eight hundred million dollar $800,000,000 average over the previous twelve consecutive months, the state treasurer is not required to purchase state transportation board funding obligations pursuant to this subsection.

2. Each series of state transportation board funding obligations shall bear interest at a fixed interest rate equal to the mean bid‑ask price of the United States treasury obligation with a maturity date closest to the maturity date of the state transportation board funding obligation as determined by the pricing system used by the state treasurer before the date the state treasurer receives a certificate from the state transportation board that states the board's determination to deliver an obligation to the state treasurer and the anticipated delivery date of the obligation. The delivery date shall be between fifteen and sixty days after the day the state treasurer receives the certificate.

3. The state treasurer shall provide written notice to notify the state transportation board and the director of the department of transportation in writing when the operating monies fall below four hundred million dollars $400,000,000. If operating monies fall below two hundred million dollars $200,000,000, the state treasurer may call the investment in the state transportation board funding obligations in twenty‑five million dollar $25,000,000 increments up to the amount that the operating monies are below two hundred million dollars $200,000,000. The state treasurer shall give the state transportation board and the director of the department of transportation at least fifteen days' notice of the call. END_STATUTE

Sec. 20. Section 35-315, Arizona Revised Statutes, is amended to read:

START_STATUTE35-315. Servicing banks; qualifications; proposals

A. Any bank that is eligible to become an eligible depository having a total capital structure of ten million dollars $10,000,000 or more and assets of one hundred million dollars $100,000,000 or more and being that is otherwise in a sound condition is eligible to be the servicing bank for the state.

B. The state board of investment shall provide for public notice to the banks qualified to be a servicing bank of the time and place at which servicing proposals will be received. Requests for proposals shall clearly specify all services required to be performed by the servicing bank. The servicing proposal submitted shall be the compensation for which the qualified bank will agree to perform the required services as a servicing bank for the ensuing period of designation as established by the board of investment. The award shall be made for a period not to exceed of not more than five years and may be paid from state general fund interest earnings according to rules adopted by the board of investment.

C. The state treasurer shall receive the servicing proposals in writing. Only those proposals that conform to the specifications set forth in the request for proposals shall be considered. The qualified bank submitting the proposal with the highest value to this state, as determined by the state treasurer and the board of investment, shall be designated as the servicing bank. Designations shall be evidenced by the signing of the final proposal by the state treasurer, the board of investment and the designee bank. The state treasurer may maintain a bank account in conjunction with the servicing bank account, which must always have on deposit at all times a sum of money approximating the average dollar value of daily warrants paid by the bank the previous month.

D. The state treasurer may request and qualified banks may submit proposals for any or all of the services required. The state treasurer may specify differing contract periods for any or all of the services required.

E. The state treasurer or servicing bank may terminate a servicing bank contract at any time after sixty days' prior written notice is given.

F. In addition to the services required of the servicing bank, the state treasurer shall contract for all other banking services required by any state agency. No A state agency shall not contract for banking services except with the written permission of the state treasurer.

G. This section does not require the state treasurer to utilize use a servicing bank.

H. This section or the specifications set forth in the request for proposals shall do not be construed to require the servicing bank to purchase warrants.

I. Deposits and withdrawals of monies shall be made by the state treasurer on the servicing bank. END_STATUTE

Sec. 21. Section 35-323, Arizona Revised Statutes, is amended to read:

START_STATUTE35-323. Investment of public monies; bidding; security; requirements

A. The treasurer shall invest and reinvest public monies in securities and deposits with a maximum maturity of five years. All public monies shall be invested in eligible investments. Eligible investments are:

1. Certificates of deposit in eligible depositories.

2. Deposits in one or more federally insured banks or savings and loan associations placed in accordance with the procedures prescribed in section 35‑323.01.

3. Interest bearing savings accounts in banks and savings and loan institutions doing business in this state whose accounts are insured by federal deposit insurance for their industry, but only if deposits in excess of more than the insured amount are secured by the eligible depository to the same extent and in the same manner as required under this article.

4. Repurchase agreements with a maximum maturity of one hundred eighty days.

5. The pooled investment funds established by the state treasurer pursuant to section 35‑326.

6. Obligations issued or guaranteed by the United States or any of the senior debt of its agencies, sponsored agencies, corporations, sponsored corporations or instrumentalities.

7. Bonds, notes or other evidences of indebtedness of this state or any of its counties, incorporated cities or towns, school districts or special taxing districts, including registered warrants, substitute checks, and electronic funds transfers transfer vouchers that bear interest pursuant to section 11‑635.

8. Bonds, notes or evidences of indebtedness of any county, municipal district, municipal utility or special taxing district of any state that are payable from revenues, earnings or a special tax specifically pledged for the payment of the principal of and interest on the obligations, and for the payment of which a lawful sinking fund or reserve fund has been established and is being maintained, but only if no a default in payment on principal or interest on the obligations to be purchased has not occurred within five years of after the date of investment, or, if such obligations were issued less than five years before the date of investment, no a default in payment of principal or interest has not occurred on the obligations to be purchased nor or any other obligations of the issuer within five years of after the investment.

9. Bonds, notes or evidences of indebtedness issued by any county improvement district or municipal improvement district of any state to finance local improvements authorized by law, if the principal and interest of the obligations are payable from assessments on real property within the improvement district. An investment shall not be made if:

(a) The face value of all such obligations, and similar obligations outstanding, exceeds fifty percent of the market value of the real property, and if improvements on which the bonds or the assessments for the payment of principal and interest on the bonds are liens inferior only to the liens for general ad valorem taxes.

(b) A default in payment of principal or interest on the obligations to be purchased has occurred within five years of after the date of investment, or, if the obligations were issued less than five years before the date of investment, a default in the payment of principal or interest has occurred on the obligations to be purchased or on any other obligation of the issuer within five years of after the investment.

10. Commercial paper of prime quality that is rated within the top two ratings by a nationally recognized rating agency. All commercial paper must be issued by corporations organized and doing business in the United States.

11. Bonds, debentures, notes or other evidences of indebtedness that are denominated in United States dollars and that carry at a minimum an "A" or better rating, at the time of purchase, from at least two nationally recognized rating agencies.

12. Negotiable or brokered certificates of deposit issued by a nationally or state chartered state-chartered bank or savings and loan association.

13. Securities of or any other interests in any open‑end or closed‑end management type investment company or investment trust, including exchange traded funds whose underlying investments are invested in securities allowed by state law, registered under the investment company act of 1940 (54 Stat. 789; 15 United States Code sections 80a‑1 through 80a‑64), as amended.

B. Certificates of deposit shall be purchased from the eligible depository bidding the highest permissible rate of interest. No Monies over one hundred thousand dollars $100,000 may not be awarded at any interest rate less than one hundred three percent of the equivalent bond yield of the offer side of United States treasury bills having a similar term. If the eligible depository offering to pay the highest rate of interest has bid only for a portion of the monies to be awarded, the remainder of the monies shall be awarded to eligible depositories bidding the next highest rates of interest.

C. An eligible depository is not eligible to receive total aggregate deposits from this state and all its subdivisions in an amount exceeding twice its capital structure as outlined in the last call of condition of the superintendent of financial institutions.

D. If two or more eligible depositories submit bids of an identical rate of interest for all or any portion of the monies to be deposited, the award of the deposit of the monies shall be made to the eligible depository among those submitting identical bids having, at the time of the bid opening, the lowest ratio of total public deposits in relation to its capital structure.

E. Each bid that is submitted, and not withdrawn prior to before the time specified, constitutes an irrevocable offer to pay interest as specified in the bid on the deposit, or portion bid for, and the award of a deposit in accordance with this section obligates the depository to accept the deposit and pay interest as specified in the bid pursuant to which the deposit is awarded.

F. The treasurer shall maintain a record of all bids received and shall make available to the board of deposit at its next regularly scheduled meeting a correct list showing the bidders, the bids received and the amount awarded. These records shall be available to the public and shall be kept in the possession of the treasurer for not less than at least two years from after the date of the report.

G. Any eligible depository, before receiving a deposit in excess of more than the insured amount under this article, shall deliver collateral for the purposes of this subsection equal to at least one hundred two percent of the deposit. The collateral shall be any of the following:

1. A bond executed by a surety company that is approved by the treasury department of the United States and authorized to do business in this state. The bond shall be approved as to form by the legal advisor of the treasurer.

2. Securities or instruments of the following character:

(a) United States government or agency obligations.

(b) State, county, school district and other district municipal bonds.

3. The safekeeping receipt of a federal reserve bank or any bank located in a reserve city, or any bank authorized to do business in this state, whose combined capital, surplus and outstanding capital notes and debentures on the date of the safekeeping receipt are ten million dollars $10,000,000 or more, evidencing the deposit therein of any securities or instruments described in this section. A safekeeping receipt shall not qualify as security, if issued by a bank to secure its own public deposits, unless issued directly through its trust department. The safekeeping receipt shall does show on its face that it is issued for the account of the treasurer and shall be delivered to the treasurer. The safekeeping receipt may provide for the substitution of securities or instruments that qualify under this section with the affirmative act of the treasurer.

4. Letters of credit issued by a federal home loan bank if:

(a) The letter of credit has been delivered pursuant to this section or chapter 10, article 1 of this title to the statewide collateral pool administrator.

(b) The letter of credit meets the required conditions of:

(i) Being irrevocable.

(iii) If the letter of credit is for purposes of chapter 10, article 1 of this title, containing a statement that identifies the statewide collateral pool administrator as the beneficiary.

(iv) Containing an issue date and a date of expiration.

(c) For the purposes of chapter 10, article 1 of this title, the eligible depository, if notified by the statewide collateral pool administrator, is not allowed to use new letters of credit issued by a federal home loan bank if that federal home loan bank fails to pay a draw request as provided for in the letters of credit or fails to properly complete a confirmation of such letters of credit.

H. The securities, instruments or safekeeping receipt for the securities and instruments shall be accepted at market value if not above par, and, if at any time their market value becomes less than the deposit liability to that treasurer, additional securities or instruments required to guarantee deposits shall be deposited immediately with the treasurer who made the deposit and deposited by the eligible depository in which the deposit was made.

I. The condition of the surety bond, or the deposit of securities, instruments or a safekeeping receipt, must be such that the eligible depository will promptly pay to the parties entitled public monies in its custody, on lawful demand, and will, when required by law, pay the monies to the treasurer making the deposit.

J. Notwithstanding the requirements of this section, any institution qualifying as an eligible depository may accept deposits of public monies to the total then authorized insurance of accounts, insured by federal deposit insurance, without depositing a surety bond or securities in lieu of the surety bond.

K. An eligible depository shall report monthly to the treasurer the total deposits of that treasurer and the par value and the market value of any pledged collateral securing those deposits.

L. When a security or instrument pledged as collateral matures or is called for redemption, the cash received for the security or instrument shall be held in place of the security until the depository has obtained a written release or provided substitute securities or instruments.

M. The surety bond, securities, instruments or safekeeping receipt of an eligible depository shall be deposited with the treasurer making the deposit, and the treasurer shall be is the custodian of the bond, securities, instruments or safekeeping receipt. The treasurer may then deposit with the depository public monies then in the treasurer's possession in accordance with this article, but not in an amount in excess of more than the surety bond, securities, instruments or safekeeping receipt deposited, except for federal deposit insurance.

N. The following restrictions on investments are applicable apply:

1. An investment of Public operating fund monies shall not be invested for a maturity of longer than five years.

2. The board of deposit may order the treasurer to sell any of the securities, and any order shall specifically describe the securities and fix the date on which they are to be sold. Securities so ordered to be sold shall be sold for cash by the treasurer on the date fixed in the order, at the then current then-current market price. The treasurer and the members of the board are not accountable for any loss occasioned by sales of securities at prices lower than their cost. Any loss or expense shall be charged against earnings received from investment of public funds monies.

3. Investments shall not be made in companies identified pursuant to section 35‑392, subsection A, paragraph 1.

O. If the total amount of subdivision monies available for deposit at any time is less than the maximum coverage amount of the federal deposit insurance corporation, the subdivision board of deposit shall award the deposit of the funds monies to an eligible depository in accordance with an ordinance or resolution of the governing body of the subdivision. Deposits of less than the maximum coverage amount of the federal deposit insurance corporation are not subject to the requirements of this chapter. END_STATUTE

Sec. 22. Section 35-327, Arizona Revised Statutes, is amended to read:

START_STATUTE35-327. Treasurer; duties; safekeeping of securities; warrants of financial officers; earnings; exemptions; responsibilities

A. In the investment of investing trust funds monies, the responsible financial officer shall draw a warrant, check or electronic funds transfer voucher at the direction of the treasurer, payable from the proper fund for the payment of to pay for the security purchased.

B. A treasurer is responsible for the safekeeping of all securities acquired by the treasurer under this section. Any such securities may be deposited for safekeeping with any trust company that has its principal place of business in this state or that is qualified to do a trust business in this state.

C. A treasurer shall regularly account for, itemize and inventory according to general public fund accounting practices all securities coming lawfully into the treasurer's possession. Such practice shall be audited by the auditor general for the counties and by an independent auditor for cities and towns at the time of the regular audit as prescribed by law.

D. The treasurer, may at the expense of the subdivision and with the approval of the governing board, may enter into an agreement with the trust department of any bank or banks authorized to do a trust business in this state, for the safekeeping and handling of securities of which the treasurer is lawful custodian. The agreement shall be entered into under terms and conditions which that secure the proper safeguarding, inventory, withdrawal and handling of the securities. Access to, deposits of or withdrawals of the securities from any place of deposit selected by the officers shall not be permitted or made except as the terms of the agreement provide. The agreement need not require that securities be physically located in this state, if the securities are represented by safekeeping receipts issued for the account of the treasurer by a federal reserve bank or any bank located in a reserve city whose combined capital and surplus on the date of the safekeeping receipt is ten million dollars $10,000,000 or more.

E. When securities acquired under this section mature and become due and payable, the treasurer shall present them for payment according to their terms and collect the monies payable on them. The monies collected shall be treated as subdivision monies subject to reinvestment or operating needs or trust monies subject to the provisions of the trust.

F. The treasurer shall allocate pooled income earnings on a pro rata basis to agency pool participants. Involuntary pool participants shall have the income earnings for their funds monies deposited in the general fund of the collecting entity.

G. As provided in this article, the governing body of any subdivision or of any agency, department, board or commission of this state or of any subdivision may, by the adoption of adopting a resolution of continuing effect, may authorize the treasurer to invest funds monies collected for the governing body.

H. The investment of public monies as provided in this section is exempt from the provisions of section 35‑142, subsection B and sections 35‑154, 35‑181.01, 35‑181.02, 35‑182 through, 35-183, 35-184, 35‑185, 35‑185.01, 35‑185.02, 35‑186, through 35-187, 35-188, 35-189, 35‑190, 35‑190.01, 35‑191, 35‑192, 35‑192.01, 35‑192.02, 35‑193, 35‑193.02 and 41‑732.

I. A treasurer is responsible for the safekeeping, management managing and disbursement of disbursing any investment made and any interest received in compliance with this article. END_STATUTE

Sec. 23. Section 35-381, Arizona Revised Statutes, is amended to read:

START_STATUTE35-381. Acceptance of warrants in payment of debts; exception

Warrants that are lawfully issued by a county, city or town, or by a county school superintendent on behalf of a school district, are assignable and shall be accepted at face value with accrued interest in payment of not to exceed more than seventy‑five per cent percent of any debt or demand, including taxes, due the political subdivision on behalf of which the warrants are issued. , but no Any such warrant shall not be accepted in payment of to pay taxes levied for a political subdivision other than that against which it the warrant is drawn. END_STATUTE

Sec. 24. Section 35-406, Arizona Revised Statutes, is amended to read:

START_STATUTE35-406. Sale of bonds; use of proceeds

A. The tax anticipation bonds shall be sold to the highest bidder who that meets the conditions imposed by the loan commissioners, but shall not be sold at less than par.

B. When the issuance and sale of any bonds have been completed, the treasurer shall immediately call in and pay from the proceeds of the sale all state warrants, checks or substitute checks, and Electronic funds transfer vouchers that are registered and accumulated at such that date, or otherwise the proceeds of the bonds shall be used solely for the purposes for which the taxes upon on which the bonds are based were levied. END_STATUTE

Sec. 25. Section 35-426, Arizona Revised Statutes, is amended to read:

START_STATUTE35-426. Application of proceeds to redemption of indebtedness; notice to redeem

A. The money received by The state treasurer shall be applied by him apply monies received to the redemption of redeem the indebtedness for the redemption of which the bonds were issued, and the treasurer shall give notice, in the same manner as for the payment paying and redemption of redeeming state warrants, of his readiness to redeem checks and substitute checks, and electronic funds transfer vouchers. After the state treasurer redeems such indebtedness, and thereafter interest on all such indebtedness due and outstanding shall cease.

B. Before such indebtedness is paid, the director of the department of administration shall endorse on each certificate the amount due thereon, and write across the face of each the date of its surrender and the name of the person surrendering, and shall keep a record thereof. END_STATUTE

Sec. 26. Section 35-430, Arizona Revised Statutes, is amended to read:

START_STATUTE35-430. Cancellation of redeemed bonds; record of redemption; transmittal of abstract of record; payment of interest

A. When the state treasurer pays or redeems any indebtedness, he the treasurer shall endorse, by writing or stamping in ink, on the face of the paper evidencing such indebtedness so paid or redeemed, the words "redeemed and canceled" with the date of cancellation.

B. The state treasurer shall keep a complete record of all bonds redeemed and surrendered, and shall transmit to the governor an abstract of all proceedings relative thereto the record with his the annual report, which shall be submitted by the governor to the legislature.

C. The treasurer shall pay the interest on the bonds, when it falls due, from the interest fund, if sufficient, and if not sufficient, from the state general fund. , and for such If a deficiency exists, the director of the department of administration shall draw his a warrant, check or Electronic funds transfer voucher on the state treasurer, payable to the order of the state treasurer from the state general fund. END_STATUTE

Sec. 27. Section 35-491, Arizona Revised Statutes, is amended to read:

START_STATUTE35-491. Registration of bonds; payment of principal and interest; paying agent; security for deposits; record date; definition

A. Bonds of this state, any department, agency or instrumentality of this state or any political subdivision, municipal corporation or other entity authorized by statute to issue bonds may be issued in a form which that is registrable as to the principal or as to both principal and interest by a registrar designated by the issuer for such a purpose or may be in book entry form on the books of the registrar. In the case of entities for which bonds are issued by other bodies, the issuing body shall employ registrars, transfer agents or paying agents if requested to do so by the governing body of the entity or entities obligated to repay the bonds. All costs incurred by virtue of the employment of due to employing registrars or paying agents are the liability of the entity or entities obligated to repay the bonds. The costs may be paid from bond proceeds.

B. Evidence of registration shall be entered in a bond register, disclosing the name of the holder, the number and amount of the bond, the date of registry and other information deemed necessary. If required by the proceedings authorizing the issuance of the bonds, the registrar shall endorse upon on the bond a certificate, signed by him the registrar, that the bond is registered and that the principal or principal and interest are payable to the registered holder only, naming him the registered holder or his the registered holder's legal representative.

C. Notwithstanding any provision of law pertaining to the authorization and issuance of any bond, in addition and supplemental to the form of bond prescribed in such law, the issuer may prescribe a form of bond which that meets the provisions of this section.

D. Notwithstanding any provision of law pertaining to the authorization and issuance of any bond, the governing body which that authorizes the issuance of any bond may prescribe that the bond be executed by one or more facsimile signatures of designated officials. The governing body of the issuer may, but is not required to, provide that a bond be authenticated by the registrar or by an authorized officer of the registrar.

E. The issuer may provide for the payment of paying principal of or principal and interest on any bond by check or warrant drawn on either the treasurer of the issuer or on a paying agent and may provide for mailing of the check to the registered owner or may provide for wire or other electronic means of transfer of monies to the registered owner. An issuer may contract with one or more banks or trust companies as paying agents and a registrar for any issue or series of bonds and may pay the costs either from bond proceeds or current revenues collected by the issuer. All banks and trust companies shall pledge assets to secure the deposits made for the purpose of paying either principal of, or interest on or both principal and interest on any series of bonds.

F. The proceedings for the issuance of any bond may provide for the setting of a record date before each date set for payment of to pay principal or interest. The record date is then the date the registrar shall use to determine the ownership of the bonds for the next payment of principal or interest.

G. For the purposes of this article, "registrar" includes the recorder, secretary or clerk of the issuer or any other entity designated by the issuer to act as the registrar. END_STATUTE