SB178 Alabama 2022 Session

Updated Feb 22, 2026

Summary

Primary Sponsor: Sam GivhanSenator
Republican
Session: Regular Session 2022
Title: Counties and municipalities, investment of certain funds in commercial paper and banker's acceptances, authorized under certain conditions, Sec. 11-81-21 am'd.
Summary: SB178 broadens and updates how Alabama counties and municipalities can invest their funds, with new allowed investments and safeguards.
What This Bill Does
It amends Section 11-81-21 to permit investments in additional instruments, including U.S. Treasury direct obligations, certain federally backed agency obligations, U.S. dollar deposits and CDs with qualified public depositories, pre-refunded public obligations with strict safeguards, common trust or investment fund holdings under defined limits, top-rated commercial paper, and banker's acceptances. It sets conditions for common trust fund investments (at least 65% in authorized assets, up to 35% in specified mortgage- or agency-related instruments, with collateral and rating requirements, and fee disclosures). It also expands the definition of municipal and county funds, assigns investment responsibility to the appropriate local official or agency, allows proceeds to be credited back to the original fund, and permits safekeeping with banks.

Who It Affects
Municipalities and counties in Alabama (cities, towns, and their funds) may invest more types of funds under defined rules.
Local government officials or agencies responsible for managing and disbursing funds now have the authority and duty to make and monitor these investments, and to credit proceeds back to the originating fund.
Banks, trust companies, savings associations, investment managers, and investment funds (including common trust funds and investment companies) may participate as custodians, advisors, or managers for these investments, with required fee disclosures to beneficiaries.

Key Provisions
Allows municipal and county funds to invest in direct U.S. Treasury obligations and in certain federal agency obligations backed by the full faith and credit of the United States (e.g., GNMA, FHA, HUD, SBA, GSA, U.S. Maritime Administration).
Permits U.S. dollar-denominated deposits and certificates of deposit with banks or savings associations that are qualified public depositories under Chapter 14A of Title 41.
Authorizes pre-refunded public obligations with specific safeguards: non-callable, fully secured by a cash or eligible collateral fund, and verifiable by an independent CPA to cover principal and interest.
Expands to investments in common trust funds or certain investment companies, with at least 65% of the portfolio in authorized assets and up to 35% in specified mortgage-related or agency securities and repurchase agreements that are fully collateralized and properly custodied.
Allows commercial paper with the highest credit rating at purchase and banker's acceptances as permissible investments.
Keeps definitions broad for municipal and county funds, covering all funds held or administered by local governments and their officials or agencies.
Investment decisions must be made by the officer or agency controlling disposition; funds can be sold, and proceeds credited back to the original fund; investments may be safekept by banks or trust institutions.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.
Subjects: Local GovernmentBanks and Banking