No. 41866 (Amendment): Rule R628-4. Bonding of Public Treasurers

(Amendment)

DAR File No.: 41866
Filed: 06/29/2017 02:48:38 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

This change is being made to address a statute amendment in Section 51-7-15 that allows public treasurers to procure crime or theft insurance in place of a surety bond. The change was made by H.B. 268 in the 2017 General Session.

Summary of the rule or change:

The rule has been changed to give public treasurers the ability to procure either a surety bond or crime insurance through either a Utah-licensed insurer or with an inter-local agency created under Section 11-13-101. The crime insurance must be purchased through an insurer that is licensed in the State of Utah and has the same rating as a surety provider, "A" or better by AM Best Rating Agency. The inter-local public mutual must maintain a restricted account in the PTIF equal to 50% of the per occurrence limit of coverage.

Statutory or constitutional authorization for this rule:

• Section 51-7-15

Anticipated cost or savings to:

the state budget:

If a state entity that participates in risk management opts to drop their surety bond and rely on crime insurance coverage provided through risk management, there could be the savings of the cost of the surety. That savings would vary by the size of each entity.

local governments:

Public treasurers may now procure crime insurance in place of a surety bond. There could be savings to the treasurer in that they do not have to purchase the additional surety as some public treasurers may already have crime insurance in place. Any savings would vary by entity as the amount is based on the budgeted gross revenue of each entity.

small businesses:

There would be no additional cost or savings to a small business because this rule change simply gives public treasurers the ability to procure a surety bond or crime insurance, which will only affect the state and local governments.

persons other than small businesses, businesses, or local governmental entities:

There would be no additional cost or savings to a small business because this rule change simply gives public treasurers the ability to procure a surety bond or crime insurance, which will only affect the state and local governments.

Compliance costs for affected persons:

Public treasurers are already procuring a surety bond, so there are no additional costs to comply with the changes to this rule.

Comments by the department head on the fiscal impact the rule may have on businesses:

After conducting a thorough analysis, it was determined that this proposed rule will not result in a fiscal impact to business as the change provides more options to public treasurers when procuring either a surety bond or crime insurance.

Marina Scott, Chair

The full text of this rule may be inspected, during regular business hours, at the Office of Administrative Rules, or at:

Money Management Council
Administration
Room 180 UTAH STATE CAPITOL COMPLEX
350 N STATE ST
SALT LAKE CITY, UT 84114

Direct questions regarding this rule to:

• Ann Pedroza at the above address, by phone at 801-538-1883, by FAX at 801-538-1465, or by Internet E-mail at [e-mail]
• Marina Scott at the above address, by phone at 801-535-6565, by FAX at , or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

08/14/2017

This rule may become effective on:

08/21/2017

Authorized by:

Marina Scott, Chair

RULE TEXT

R628. Money Management Council, Administration.

R628-4. Bonding of Public Treasurers.

R628-4-1. Authority.

This rule is issued pursuant to Section 51-7-15.

 

R628-4-2. Fidelity Bond or Crime Insurance.

A. Every public treasurer shall secure a fidelity bond or crime insurance in the amount shown in R628-4-4. Bonds must be issued by a corporate surety licensed to do business in the state of Utah and having a current A.M. Best Rating of "A" or better.

1. Crime insurance must be issued by:

a) an insurer licensed to do business in the state of Utah and having a current A.M. Best Rating of "A" or better; or

b) an interlocal agency created under Section 11-13-101 operating as a joint self-insurance fund. A joint self-insurance fund providing crime coverage under this section must maintain a restricted account in the PTIF equal to 50% of the per occurrence limit of coverage.

B. Bonds should be effective as of the date the treasurer assumes the duties of the office or is sworn in.

 

R628-4-3. Budgeted Gross Revenue.

The basis used shall be the budgeted gross revenue for the previous accounting year. Budgeted gross revenue includes all funds collected or handled by the public treasurer. For purposes of this rule, taxes, fees, service charges, interest, proceeds from sale of assets, and borrowing proceeds are examples of revenue categories which are considered.

 

R628-4-4. Amount of Bond or Crime Insurance.

 

TABLE

 
 Budget                       Percent for Bond 
 
$        0  to  $    10,000  n/a  but not less than  $        0 
    10,001  to      100,000  9%   but not less than       5,000 
   100,001  to      500,000  8%   but not less than       9,000 
   500,001  to    1,000,000  7%   but not less than      40,000 
 1,000,001  to    5,000,000  6%   but not less than      70,000 
 5,000,001  to   10,000,000  5%   but not less than     300,000 
10,000,001  to   25,000,000  4%   but not less than     500,000 
25,000,001  to   50,000,000  3%   but not less than   1,000,000 
50,000,001  to  500,000,000  2%   but not less than   1,500,000 
over            500,000,000       not less than      10,000,000

 

KEY: bonding requirements, public treasurers, accounts, state and local affairs

Date of Enactment or Last Substantive Amendment: [1990]2017

Notice of Continuation: October 5, 2015

Authorizing, and Implemented or Interpreted Law: 51-7-15

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