AUTHORITY OF STATE TREASURER TO ALLOCATE TIME DESPOSITS

AGLO 1974 No. 57 - May 23 1974

Attorney General Slade Gorton

OFFICES AND OFFICERS ‑- STATE ‑- TREASURER ‑- INTEREST ‑- AUTHORITY OF STATE TREASURER TO ALLOCATE TIME DESPOSITS

On and after the effective date of chapter 50, Laws of 1974, 1st Ex. Sess., the state treasurer, acting pursuant to chapter 123, Laws of 1973, Ex. Sess., will continue to have the authority to allocate time deposits of state funds among participating depositaries "on a basis to be determined by the state treasurer. . . ."

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May 23, 1974

Honorable Robert S. O'Brien
State Treasurer
Legislative Building
Olympia, Washington 98504                                                                                                               Cite as: AGLO 1974 No. 57

Dear Sir:

            By recent letter you have directed our attention to the provisions of § 1, chapter 50, Laws of 1974, 1st Ex. Sess., and have asked for our opinion on a question which we paraphrase as follows:

            On and after the effective date of § 1, chapter 50, Laws of 1974, 1st Ex. Sess., will the state treasurer, acting pursuant to chapter 123, Laws of 1973, Ex. Sess., continue to have the authority to allocate time deposits of state funds among participating depositaries ". . . on a basis to be determined by the state treasurer. . . ."

            We answer the foregoing question in the affirmative.

                                                                     ANALYSIS

            We begin by noting the provisions of § 3, chapter 123, Laws of 1973, (RCW 43.86.030) as follows:

            "Funds held in public depositaries not as demand deposits as provided in section 2 of this act, shall be available for a time certificate of deposit investment program according to the following formula: The state treasurer shall apportion to all participating depositaries an amount equal to five percent of the three year average mean of general state revenues as certified in accordance with Article VIII, section 1(b) of the state Constitution, or fifty percent of the total surplus treasury investment availability, whichever is less. Within thirty days after certification, those funds determined to be available according to this formula for the time certificate of deposit investment program shall be deposited in qualified public depositaries. These deposits shall be allocated among the participating [[Orig. Op. Page 2]] depositaries on a basis to be determined by the state treasurer. The formula so devised shall be a matter of public record giving consideration to, but not limited to deposits, assets, loans, capital structure, investments or some combination of these factors." (Emphasis supplied.)

            The essence of your question is the extent, if any, to which the underscored portion of the foregoing statute has been modified by the legislature's later enactment of § 1, chapter 50, Laws of 1974, 1st Ex. Sess. As indicated in AGLO 1974 No. 23 [[to Robert S. O'Brien, State Treasurer on February 25, 1974 an Informal Opinion AIR-74523]], this enactment, which will become effective on July 24, 1974, (ninety days after final adjournment of the legislative session at which it was enacted) amends the preexisting provisions of RCW 39.58.120 to read as follows:

            "((The public deposit protection commission shall from time to time fix the rate of interest to be paid by qualified public depositaries upon investment deposits: PROVIDED, That)) Time deposits issued pursuant to this chapter shall bear interest at a rate ((which would)) not ((be)) in excess of ((one hundred percent of the average bill rate at the last U.S. Treasury 91 day bill market auction or in excess of)) the maximum rate permitted by any applicable governmental regulation."

            In the foregoing opinion to your office we concluded that because of this amendment, the public deposit protection commission will no longer be required, after its effective date, to set the rate of interest payable upon investment deposits of state funds when made by the state treasurer. Instead, interest rates will then be subject to negotiation between the state treasurer, as depositor, and each depositary ‑ subject only to the requirement that "Time deposits . . . shall bear interest at a rate not in excess of the maximum rate permitted by any applicable governmental regulation." And, most certainly, the rate of interest payable by a particular depositary will, logically, be one of the factors to be considered by the treasurer in making the allocations provided for in § 3, chapter 123, supra. However, we find nothing in chapter 50, supra, which purports to say that this is to be the only factor that the treasurer is to consider. It is for this reason that we answer your [[Orig. Op. Page 3]] question, as above paraphrased, in the affirmative.

            It is hoped that the foregoing will be of some assistance to you.

Very truly yours,

SLADE GORTON
Attorney General

PHILIP H. AUSTIN
Deputy Attorney General