AGO 2004-05.

Case DateMay 07, 2004
CourtIndiana
Indiana Attorney General Opinions 2004. AGO 2004-05. May 7, 2004OFFICIAL OPINION 2004-5The Honorable Tim BerryTreasurer of the State of Indiana Indianapolis, IN 46204 Dear Treasurer Berry: You have requested our opinion on Indiana law relating to contracts for banking services1 for state agencies. In your letter you advised us that some banks have solicited various state agencies for deposit, checking and cash handling services without the knowledge or consent of your office. Several individual agencies are considering entering into a contract with a bank with fees and charges much less favorable than those that your office negotiates on behalf of the state as a whole. Moreover, the agencies would not be required to purchase their own banking services by paying these fees and charges. Instead, banks would charge their fees against the investment income on state treasury funds your office has invested pursuant to Indiana Code article 5-13. Your office wishes to clarify the underlying statutory authority to contract for banking services on behalf of agencies of the State of Indiana. Accordingly, you have asked for an official opinion on whether a state agency may deposit public funds and earn interest and incur transaction fees on an account without the prior approval and consent of the state treasurer. SHORT ANSWER It is our opinion that the authority to contract for banking services for state agencies rests exclusively with the treasurer of the state. Individual state agencies are not authorized to enter into independent contracts for banking services. STATE OF INDIANA OFFICE OF THE ATTORNEY GENERAL INDIANA GOVERNMENT CENTER SOUTH, FIFTH FLOOR 302 W. WASHINGTON STREET · INDIANAPOLIS, IN 46204-2770 STEVE CARTER ATTORNEY GENERAL TELEPHONE (317) 232-6201 1 For the purposes of this Advisory Opinion, "banking services" shall mean the maintenance of any checking, deposit or other account into which public funds are placed, the computation, posting and payment of any interest thereon, the transfer of any public funds (whether by warrant, check, wire transfer, ACH or other means), the making of any loans or advancements on any account in which public funds are placed, and the preparation and maintenance of all statements, notices, computations, postings and charges in connection with such accounts. STATUTORY ANALYSIS The deposit and investment of public funds2 is extensively regulated by law. We begin with the receipt of funds by a state agency. Indiana Code section 4-13-2-21 requires that All receipts from any source coming into the possession of any state agency3 shall be deposited with the state treasurer each day or as soon as practicable after the same is received, unless otherwise provided by law . . . . (emphasis added). Our laws further provide that "[t]he treasurer of state shall receive, account for, and pay over all moneys which are required by law to be paid into the state treasury"4, the state treasury being composed of, among other things "all monies from any source paid, belonging, or accruing to the state for the use of the state or to a state fund for any purpose."5 It is the treasurer of state, and not an employee of a state agency, who "is responsible for the safekeeping and investment of moneys and securities paid into the state treasury."6 It is the treasurer of the state, and not an employee of an individual agency, who is required to "give bond in an amount determined by the auditor of the state and the governor . . . conditioned on the faithful performance of the duties as treasurer. "7 2 "Public funds" means "all fees and funds of whatever kind or character coming into the possession of any public officer by virtue of that office." IND. CODE 5-13-4-20 3 As used in IND. CODE 4-13-2-1: [T]he term 'agencies of the state', 'agency', or 'agencies' shall mean and...

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