Fee Agency Bank Accounts
K.S.A. 75-4214 requires state agencies to obtain the approval of the Pooled Money InvestmentBoard (PMIB) when selecting a financial institution for a fee agency account. State agencies are required by K.S.A. 75-4215 to remit fee agency account balances to the state treasurer on a daily basis, unless authorized by the PMIB to remit less frequently than daily.
Collateral Requirements
State agencies are responsible for monitoring their fee agency bank account balances to ensure that they are adequately secured. K.S.A. 75-4218 requires that depository banks collateralize all deposits of state monies for amounts exceeding the current FDIC insurance limit of $250,000 per depositor. (Collateral is required to be maintained at 100% of the amount of the account plus accrued interest, less the amount which is insured by the FDIC.) K.S.A. 75-4221 requires each state agency to monitor the adequacy of the collateral securing their demand deposits.
A list of the securities which are acceptable collateral, approved by the PMIB, can be found in the PMIB Investment Policy . Under K.S.A. 75-4218, securities securing state bank accounts must be held on deposit with a bank having the prior approval of the PMIB, the Federal Home Loan Bank of Topeka, the Federal Reserve Bank of Kansas City, or with the State Treasurer. The State Treasurer’s Office is responsible for administering the pledged collateral on all state accounts.
Required Documentation
K.S.A. 75-4218 requires depository banks granting a security interest to enter into a written agreement with the state granting the state a security interest in the securities to secure payment of the state bank account. State agencies should use the forms found at the links below for the security agreement, the custodial agreement, and the bank resolution. (Please note that a custodial agreement is not necessary if the State Treasurer, Federal Reserve Bank or Federal Home Loan Bank serves as the custodian for the pledged securities.) State agencies should also secure a bank resolution indicating that the bank’s board of directors has approved the agreements.
Security Agreement for Demand Deposit Fee Agency Accounts
Please contact PMIB staff at 785-296-3701 if you have any questions about these requirements.
