DEPOSIT OF CERTAIN MUNICIPAL FUNDS IN SAVINGS AND LOAN ASSOCIATIONS

OFFICES AND OFFICERS ‑- COUNTY ‑- TREASURER ‑- FUNDS ‑- BANKS AND BANKING ‑- DEPOSITARIES ‑- DEPOSIT OF CERTAIN MUNICIPAL FUNDS IN SAVINGS AND LOAN ASSOCIATIONS

(1) A county treasurer continues to be authorized to invest funds under his/her control within the provisions of RCW 36.29.020 in savings or time accounts in mutual savings banks or savings and loan associations up to the insurance limits afforded such accounts by the Federal Savings and Loan Insurance Corporation even though the particular institution has not also been approved as a qualified depositary under chapter 66, Laws of 1983‑-except to the extent that specific statutes which were repealed or amended by chapter 66 might come into play.

 (2) Consideration, and identification, of certain specific municipal funds which, by virtue of the enactment of chapter 66, Laws of 1983, may no longer be invested or deposited with thrift institutions which have not been approved as qualified public depositaries.

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                                                               September 30, 1983 

 Honorable Robert V. Graham
State Auditor
Legislative Building
Olympia, Washington 98504

Cite as:  AGO 1983 No. 19                                                                                                         

Dear Sir:

             By letter previously acknowedged [acknowledged] you asked for our opinion on the following questions posed in light of chapter 66, Laws of 1983:

             1.   Does a county treasurer have authority to continue to invest funds under his/her control within the provisions of RCW 36.29.020 in savings or time accounts in mutual savings banks or savings and loan associations up to the insurance limits afforded such accounts by the Federal Savings and Loan Insurance Corporation?

             2.         If the answer to question 1 is yes, must those savings institutions also be approved as a qualified public depositary by the Public Deposit Protection Commission (PDPC)?

              [[Orig. Op. Page 2]]

            3.   If investments of school, sewer and water district funds are restricted to investments in thrift institutions approved by the PDPC, can a county treasurer invest other funds under his/her control in savings and loan institutions not approved by the PDPC?

             4.         How does chapter 66, Laws of 1983 impact investments of other districts or municipal corporations not specifically mentioned who have opted to be their own treasurer; specifically:  Hospital districts (RCW 70.44.171), irrigation districts (RCW 87.03.440), port districts (RCW 53.36.010 and 53.36.050), public utility districts (RCW 54.24.010), transit authorities (chapter 151, Laws of 1983‑-RCW 36.57A.130)?

             5.         Chapter 57, Laws of 1983 allows, under certain conditions, sewer and water districts to designate their own treasurers.  Both new § 2 and § 4 contain the proviso, ". . . Such a treasurer shall possess all of the powers, responsibilities, and duties that the county treasurer and auditor possess for a sewer [water] district related to creating and maintaining funds, issuing warrants, and investing surplus district funds. . . ."

             Does chapter 66, Laws of 1983 supersede chapter 57 and require that sewer and water districts invest in those thrift institutions approved by the PDPC?

             We answer questions 1, 3, and 5 in the affirmative, question 2 in the negative, and question 4 in the manner indicated in our analysis below.

                                                                      ANALYSIS

             The thrust of your questions involves the state of the law following the passage of chapter 66, Laws of 1983, and specifically the relationship between various portions of chapter 66 and other statutes relating to the same general subject which were not repealed or amended by the new law.

             The primary effect of chapter 66 is to allow stock savings banks, mutual savings banks and savings and loan associations  [[Orig. Op. Page 3]] engaged in business in this state to become qualified public depositaries as defined in chapter 39.58 RCW.  Before the 1983 amendments, only commercial banks (state banks or trust companies, national banking associations or branches of banks associated in the banking business in this state) could become qualified public depositaries.

             The change in the definition of "qualified public depositary" to include stock and mutual savings banks and savings and loan associations necessitated fairly extensive changes in the language of chapter 39.58 RCW, and the legislature also found it advisable to change a number of other laws relating to the deposit and investment of various types of public funds.  Specifically, chapter 66, supra, makes the following changes in the investment authority of public treasurers:

             (1) Section 1 amends RCW 28A.58.440, concerning the investment of school district funds by a county treasurer, to replace language tying the amount of investments permissible in any particular institution to the amount of federal insurance with new language allowing ". . . investment deposits in any qualified public depositary. . . ."

             (2) Cities operating under the Optional Municipal Code (Title 35A RCW) are permitted by § 2 to look to chapter 39.58 RCW, as amended, for authority concerning the investment of excess and inactive city funds.

             (3) Sections 18 through 20 redefine the institutions in which the state treasurer is permitted to deposit state funds, replacing such terms as "state depositary bank" and "bank or banks in the state" with "qualified public depositary."

             (4) Sections 21 and 22 change the standard for the investment of excess sewer district and water district funds from (a) one permitting investment in banks, mutual savings banks or savings and loan associations in an amount no greater than the amount insured by an agency of the United States government to (b) a standard permitting investment of such funds in qualified public depositaries.

             (5) Section 23 repeals several statutes which prohibited city, town and county treasurers from designating, as depositaries, banks claiming exemption from the payment of sales, compensating use or ad valorem taxes.  (Financial institutions claiming exemption from such taxes are still ineligible to become qualified public  [[Orig. Op. Page 4]] depositaries, however, by virtue of language in § 3(2) of chapter 66.)

             Bearing in mind this general outline of the effect of chapter 66,supra, and the related statutes amended or repealed by the new legislation, we now proceed to answer the specific questions you have asked.

             Questions 1 and 2:

             Your first two questions ask:

             Does a county treasurer have authority to continue to invest funds under his/her control within the provisions of RCW 36.29.020 in savings or time accounts in mutual savings banks or savings and loan associations up to the insurance limits afforded such accounts by the Federal Savings and Loan Insurance Corporation?

             If the answer to question 1 is yes, must those savings institutions also be approved as a qualified public depositary by the Public Deposit Protection Commission (PDPC)?

             These two questions arise from the fact that the legislature, while amending or repealing a number of other statutes relating to the deposit and investment powers of various types of public treasurers, failed in chapter 66,supra, to amend or repeal RCW 36.29.020 which relates to the investment of funds by county treasurers.  Although only certain portions of RCW 36.29.020 are directly pertinent to your questions, we here set forth the entire statute to show the critical language in context:

             "The county treasurer shall keep all moneys belonging to the state, or to any county, in his own possession until disbursed according to law.  He shall not place the same in the possession of any person to be used for any purpose; nor shall he loan or in any manner use or permit any person to use the same; but it shall be lawful for a county treasurer to deposit any such moneys in any regularly designated qualified public depositary.  Any municipal corporation may by action of its governing body authorize any of its funds which are not required for immediate expenditure, and which are in the custody of the county treasurer or other municipal corporation treasurer, to be invested by such treasurer in savings or  [[Orig. Op. Page 5]] time accounts in banks, trust companies and mutual savings banks which are doing business in this state, up to the amount of insurance afforded such accounts by the federal deposit insurance corporation, or in savings or time accounts in savings and loan associations which are doing business in this state, up to the amount of insurance afforded such accounts by the federal savings and loan insurance corporation, or in certificates, notes, or bonds of the United States, or other obligations of the United States or its agencies, or of any corporation wholly owned by the government of the United States; in bankers' acceptances purchased on the secondary market, in federal home loan bank notes and bonds, federal land bank bonds and federal national mortgage association notes, debentures and guaranteed certificates of participation, or the obligations of any other government sponsored corporation whose obligations are or may become eligible as collateral for advances to member banks as determined by the board of governors of the federal reserve system or deposit such funds or any portion thereof in investment deposits as defined in RCW 39.58.010 secured by collateral in accordance with the provisions of chapter 193, Laws of 1969 ex. sess.:  PROVIDED, Five percent of the interest or earnings, with an annual minimum of ten dollars or annual maximum of fifty dollars, on any transactions authorized by each resolution of the governing body shall be paid as an investment service fee to the office of the county treasurer or other municipal corporation treasurer when the interest or earnings become available to the governing body.

             "Whenever the funds of any municipal corporation which are not required for immediate expenditure are in the custody or control of the county treasurer, and the governing body of such municipal corporation has not taken any action pertaining to the investment of any such funds,   the county finance committee shall direct the county treasurer to invest, to the maximum prudent extent, such funds or any portion thereof in savings or time accounts in mutual savings banks which are doing business in this state, up to the amount of insurance afforded such accounts by the federal deposit insurance corporation, or in savings or time accounts in savings and loan associations which are doing business in this state, up to the amount of insurance afforded such  [[Orig. Op. Page 6]] accounts by the federal savings and loan insurance corporation, or in certificates, notes, or bonds of the United States, or other obligations of the United States or its agencies, or of any corporation wholly owned by the government of the United States, in bankers' acceptances purchased on the secondary market, in federal home loan bank notes and bonds, federal land bank bonds and federal national mortgage association notes, debentures and guaranteed certificates of participation,!es or the obligations of any other government sponsored corporation whose obligations are or may become eligible as collateral for advances to member banks as determined by the board of governors of the federal reserve system or deposit such funds or any portion thereof in investment deposits as defined in RCW 39.58.010 secured by collateral in accordance with the provisions of chapter 193, Laws of 1969 ex. sess.:  PROVIDED, That the county treasurer shall have the power to select the specific qualified financial institution in which said funds may be invested.  The interest or other earnings from such investments or deposits shall be deposited in the current expense fund of the county and may be used for general county purposes.  The investment or deposit and disposition of the interest or other earnings therefrom authorized by this paragraph shall not apply to such funds as may be prohibited by the state Constitution from being so invested or deposited."  (Emphasis supplied)

             This statute was neither repealed nor amended by chapter 66, supra.  Because of the fact, we conclude that county treasurers acting pursuant thereto may continue to invest county funds and other municipal funds under their control in financial institutions which are not qualified public depositaries to the extent permitted by the language of RCW 36.29.020‑-and except to the extent that specific statutes which were repealed or amended by chapter 66 might come into play.

             In reaching that conclusion we have considered, but rejected, the following possibilities:  (a) that RCW 36.29.020 was impliedly amended by specific language in § 11, chapter 66, Laws of 1983; or (b) that RCW 36.29.020 was impliedly amended to the extent it is inconsistent with an evident general scheme underlying the enactment of chapter 66, Laws of 1983, concerning qualified public depositaries.

              [[Orig. Op. Page 7]]

            We note initially that implied amendments, like implied repeals, are disfavored by the courts.  Misterek v. Washington Mineral Products, Inc., 85 Wn.2d 166, 531 P.2d 805 (1975);Generaux v. Petit, 172 Wash. 132, 19 P.2d 911 (1933).  Chapter 66,supra, will therefore not be read as impliedly amending language in RCW 36.29.020 unless the language of the earlier statute is plainly inconsistent with and cannot be harmonized with the language of the later act.

             At first blush it might appear that § 11, chapter 66, supra, is directly inconsistent with RCW 36.29.020.  That section amends RCW 39.58.080 to read as follows:

             "No public deposit shall be made except in a qualified public depositary located in this state."

             On closer examination, however, the newly amended language of RCW 39.58.020 is not inconsistent with the cited language from RCW 36.29.020.  First, the critical language in RCW 39.58.080 is not new language.  The 1983 legislation amended that section only to eliminate an exemption rendered unnecessary by other portions of chapter 66.  The remainder of RCW 39.58.080 dates back to 1969, and thus is actually older than the authority of county treasurers to invest idle funds in financial institutions up to the amount of federal insurance provided‑-since most of that authority derives from a 1980 amendment to RCW 36.29.020.1/

             Second, RCW 39.58.080 is not in fact inconsistent with RCW 36.29.020.  One statute relates to the making of "public deposits" while the other statute relates to the "investment" of certain funds.  "Public deposit" is defined in RCW 39.58.010 (as amended by § 3(1) of chapter 66, supra,) as follows:

             "Public deposit" means moneys under the control of a treasurer or custodian belinging to, or held for the benefit of the state or any of its political subdivisions, municipal corporations, agencies, courts, boards, commissions, or committees, including moneys held as trustee,  agent, or bailee,when deposited in any qualified public depositary;"  (Emphasis supplied)

             The definition of "public deposit" is thus circular, since "public deposit" means funds held in a public depositary.  By definition, therefore, any public funds not held in a public  [[Orig. Op. Page 8]] depositary are not "public deposits."  RCW 39.58.080 is, accordingly, not a particularly useful statute.

             Furthermore, that provision relates to deposits of public funds, while the second paragraph of RCW 36.29.020 relates to the investment of public funds.  Our statutes consistently distinguish between deposits and investments (blurred as the distinction might have become in actual practice), as evidenced by the use of both terms in RCW 36.29.020 itself.  See also RCW 39.58.130 concerning "investment deposits."

             We thus conclude that RCW 36.29.020 is not inconsistent with RCW 39.58.080 as amended by chapter 66, supra, and therefore was not impliedly amended by the 1983 legislation.

             We recognize that chapter 66 appears to be a comprehensive attempt to revise the law with respect to qualified public depositaries and the investment of public funds in financial institutions.  Given the number of statutes relating to the investment of public funds which were amended or repealed by the act, it may have been inadvertent that the legislature failed to amend RCW 36.29.020.  Even if there were strong evidence to that effect, however, we do not think the courts would correct the legislature's oversight by reading into chapter 66 an implied amendment to RCW 36.29.020.  The recent opinion ofState v. Taylor, 97 Wn.2d 724, 649 P.2d 633 (1982) contains a discussion by the Washington Supreme Court of its consistent reluctance to compensate for legislative omissions.  The Court has divided the cases concerning such legislative omissions into three classes, and we believe this situation, like the situation in State v. Taylor itself, would fall into the second class and would be governed by the following test:

             "In a second class of cases, the court concedes the Legislature's omission was clearly inadvertent.  While the legislative omission created some inconsistencies, it did not undermine the purposes of the statute.  It simply kept the purposes from being effectuated comprehensively.  The court in these cases has not supplied the omitted language because it was not "imperative" to make the statute rational.  To do so would have been to arrogate to ourselves the power to make legislative schemes more perfect, more comprehensive and more consistent.  The statutes in these cases remained rational with the omission even though there were inconsistencies in the comprehensive scheme.  Jenkins,supra; State v. Martin,  [[Orig. Op. Page 9]] 94 Wn.2d 1, 614 P.2d 164 (1980);State ex rel. Thigpen v. Kent, 64 Wn.2d 823, 394 P.2d 686 (1964)."  (97 Wn.2d at 729-730)

             As inState v. Taylor, the omission of RCW 36.29.020 from the legislature's scheme for qualified public depositaries creates an anomaly with respect to the investments standards for certain classes of public funds, but the anomaly is not so serious as to undermine the essential purposes of the new statute.  RCW 36.29.020 still requires, of course, that all investments and deposits made pursuant to that statute be fully covered by insurance so that the underlying purpose of all the statutes we are dealing with‑-the protection of public funds from loss‑-will continue to be served.  In light of that fact, it remains possible that the omission of an amendment to RCW 36.29.020 was intentional, not inadvertent, and we believe the courts would give the legislature the benefit of the doubt.

             We conclude, therefore, that a county treasurer can continue to invest funds under his/her control within the provisions of RCW 36.29.020 in savings or time deposits in mutual savings banks or savings and loan associations up to the insurance limits afforded such accounts by the Federal Savings and Loan Insurance Corporation, whether or not such financial institutions are qualified public depositaries under chapter 39.58 RCW.  We do not know whether any significant number of mutual savings banks or savings and loan associations will choose not to become qualified public depositaries, or whether county treasurers will choose to continue to invest funds in institutions not so qualifying.  In any case, however, investments in such institutions will continue to be protected by the federal insurance program.

             Question 3:

             Next you have asked:

             If investments of school, sewer and water district funds are restricted to investments in thrift institutions approved by the PDPC, can a county treasurer invest other funds under his/her control in savings and loan institutions not approved by the PDPC?

             This question stems from the fact that chapter 66, supra, specifically provides that school district funds (§ 1), sewer district funds (§1) and water district funds (§ 22) must now be invested in qualified public depositaries (or in certain direct  [[Orig. Op. Page 10]] obligations of the United States).  Because the language of those sections is specific, we believe that they do impliedly amend RCW 36.29.020, supra, to the extent that county treasurers previously had broader investment authority with respect to the funds of school districts, sewer districts and water districts. The provisions of a specific statute will prevail if there is a conflict with provisions of a general statute and the specific statute is passed subsequent to the general.  Muije v. Department of Social and Health Services, 97 Wn.2d 451, 645 P.2d 1086 (1982).

            While the authority of the county treasurer to invest school district, sewer district or water district funds has thus been modified by chapter 66,supra, the authority of the county treasurer is otherwise unchanged, as noted in our discussion of your first and second questions.  We therefore answer your third question in the affirmative.

             Question 4:

             This question asks:

             How does chapter 66, Laws of 1983 impact investments of other districts or municipal corporations not specifically mentioned who have opted to be their own treasurer; specifically:  Hospital districts (RCW 70.44.171), irrigation districts (RCW 87.03.440), port districts (RCW 53.36.010 and 53.36.050), public utility districts (RCW 54.24.010), transit authorities (chapter 151, Laws of 1983‑-RCW 36.57A.130)?

            In posing this question, you noted the existence of a number of other statutes (other than RCW 36.29.020) which relate to the treasurer functions of various types of municipal corporations and other local public bodies that, likewise, were not expressly amended or repealed by chapter 66, supra.

             As in the case of RCW 36.29.020 itself, we conclude that none of those other statutes have been repealed or amended by implication.  Thus, the authority of the treasurers in question remains unaffected by the enactment of chapter 66.  To avoid any misunderstanding, however, we will discuss each of the statutes briefly in turn:

             (1) RCW 70.44.171 provides that the treasurer of the county in which a public hospital district is located shall be the treasurer of the district, unless the hospital district commission shall  [[Orig. Op. Page 11]] designate by resolution some other person to be treasurer.  If the treasurer of the district is the county treasurer, the statute directs that all district funds be deposited with county depositaries (which are required to be qualified public depositaries‑-see RCW 36.48.020).  However, if the treasurer of the district is some other person, RCW 70.44.171 authorizes the deposits of hospital district funds

             ". . . in such bank or banks authorized to do business in this state as the commission by resolution shall designate, and with surety bond to the district or securities in lieu thereof of the kind, no less in amount, as provided in RCW 36.48.020 for deposit of county funds . . ."

             As for the investment of hospital district funds not required for immediate expenditure, we conclude that the commissioners of the district (by virtue of language in the first paragraph of RCW 36.29.020) may direct such funds to be

             ". . . invested by such treasurer in savings or time accounts in banks, trust companies and mutual savings banks which are doing business in this state, up to the amount of insurance afforded such accounts by the federal deposit insurance corporation, or in savings or time accounts and savings and loan associations which are doing business in this state, up to the amount of insurance afforded such accounts by the federal savings and loan insurance corporation, or in certificates, notes, or bonds of the United States, . . ."

             (2) Under RCW 53.36.010, a port district may designate its own treasurer in lieu of using the county treasurer, but the port treasurer has the same powers and duties as a county treasurer acting on behalf of the port.  Port funds which are deposited are required to be placed in county depositaries (RCW 53.36.050) which are qualified public depositaries.  The first paragraph of RCW 36.29.020 would govern the investment of excess port funds by the port treasurer upon instructions from the port commissioners.

            (3) RCW 54.24.010 authorizes public utility districts to designate their own treasurers.  If the treasurer of the district is the county treasurer, all district funds must be deposited in county depositaries (RCW 54.24.010).  However, if the treasurer of the district is some other person  [[Orig. Op. Page 12]]

             ". . . all funds shall be deposited in such bank or banks authorized to do business in this state as the commission by resolution shall designate, and with surety bond to the district or securities in lieu thereof of the kind, no less in amount, as provided in RCW 36.48.020 for deposit of county funds. . . ."

             Since there are no specific provisions in Title 54 RCW concerning the investment of excess public utility district funds, we conclude that the first paragraph of RCW 36.29.020 would govern such investments.

             (4) RCW 36.57A.130, amended by chapter 151, Laws of 1983, authorizes public transportation benefit area authorities in certain cases to designate their own treasurers.  As in the case of public utility districts, if the county treasurer is acting as treasurer of the public transportation benefit area, PTBA funds are required to be deposited in county depositaries.  If the public transportation benefit area authority designates its own treasurer, however, the authority can designate a bank or banks authorized to do business in the state which are qualified for insured deposits under any federal deposit insurance act to receive deposits of public transportation benefit area funds.  The passage of this particular amendment to RCW 36.57A.130 in the same session as chapter 66,supra, is also additional evidence regarding the question of whether chapter 66 was intended to provide a "comprehensive scheme" for the use of qualified public depositaries.  The first paragraph of RCW 36.29.020 would presumably govern the investment of public transportation benefit area funds.

             (5) RCW 87.03.440 permits irrigation districts to designate their own treasurers.  This statute is silent as to any standards for the deposit or investment of irrigation district funds.  To the extent such funds are held in the county treasury we believe that RCW 36.29.020 would govern in the same manner as discussed above.

             Question 5:

             Finally, you have stated that:

             Chapter 5         7, Laws of 1983 allows, under certain conditions, sewer and water districts to designate their own treasurers.  Both new § 2 and § 4 contain the proviso, ". . . Such a treasurer shall possess all of the powers, responsibilities, and duties that the county  [[Orig. Op. Page 13]] treasurer and auditor possess for a sewer [water] district related to creating and maintaining funds, issuing warrants, and investing surplus district funds. . . ."

             Accordingly, you have asked:

             Does chapter 66, Laws of 1983 supersede chapter 57 and require that sewer and water districts invest in those thrift institutions approved by the PDPC?

             As thus noted, chapter 57, Laws of 1983, authorizes sewer districts and water districts under certain circumstances to designate their own treasurers.  Sections 2 (sewer districts) and 4 (water districts) of chapter 57 provide that

             ". . . Such a treasurer shall possess all of the powers, responsibilities, and duties that the county treasurer and auditor possess for a sewer [water] district related to creating and maintaining funds, issuing warrants, and investing surplus district funds. . ."

             As we observed in our answer to your third question, the authority of a county treasurer to invest surplus water district and sewer district funds has been modified by language in § § 21 and 22 of chapter 66, Laws of 1983.  County treasurers henceforth can invest such funds only in qualified public depositaries.  Consistent with that position we similarly conclude that, where a sewer district or water district has designated its own treasurer pursuant to chapter 57, Laws of 1983, that treasurer likewise must deposit or invest sewer district moneys in qualified public depositaries (or in direct obligations of the United States government).  To the extent chapter 57 and chapter 66 are inconsistent (and we believe they are not), chapter 66 is the later enacted statute and would control.  See, RCW 1.12.025.

             We trust that the foregoing will be of assistance to you.

 Very truly yours,
KENNETH O. EIKENBERRY
Attorney General 

JAMES K. PHARRIS
Assistant Attorney General