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Bill to let counties, schools and libraries seek higher CD rates draws mixed support from treasurers and bankers
Summary
House Bill 1523 would let counties, school districts and libraries invest public funds at state-approved depositories anywhere in Indiana instead of requiring a brick-and-mortar branch inside the local unit's borders, a change supporters say would raise returns for taxpayers.
The House Financial Institutions Committee heard House Bill 1523, a proposal to give counties, school corporations and libraries the option to invest public funds in any state-approved depository rather than limiting certificates of deposit and other public investments to financial institutions with brick-and-mortar branches inside a local unit's territorial boundaries.
Sponsor Representative Pierce said the bill responds to banking consolidation and uneven local offerings that can leave some school districts, counties and libraries with few competitive options for short-term deposits. "This bill deals with allowing local units of government more flexibility in their investment opportunities, resulting in higher potential financial returns," Pierce said, adding the measure includes a technical safe harbor for investments made since 2018.
Support and rationale: county treasurers and school business officials testified in support. Brian Burdick, representing the Indiana County Treasurers Association, argued that the existing territorial limits sometimes prevent treasurers from obtaining competitive rates and that increased earnings on CDs directly benefit taxpayers and reduce pressure to raise property taxes. The Indiana Association of School Business Officials and the Indiana School Boards Association also supported the proposal, saying some districts reported multi-hundred-thousand-dollar differences in earnings when local options were noncompetitive.
Opposition and caution: banks and credit unions urged caution. The Indiana Bankers Association and the Indiana Credit Union League opposed the bill as drafted, arguing territorial requirements help keep deposits local and that local deposits support nearby lending, small-business credit and community banking relationships. Chris Beaumont of the Indiana Credit Union League said the statutory territorial preference helps ensure the public-policy goal of reinvesting deposits in local communities and asked that the restriction remain in force where adequate local options exist.
Neutral party: the Indiana Board for Depositories (BFD), which insures public deposits beyond FDIC limits, said it remained neutral but noted it will need to continue educating local officials about deposit insurance and compliance if the law changes.
Committee action: members indicated they will work toward a compromise that preserves the value of local deposits while allowing options where communities lack competitive in-county choices. The bill includes language protecting actions taken since a 2018 statutory change and was held for amendment and further discussion.
Ending: Sponsor said negotiators will meet and try to find a compromise next week that balances higher returns with the local reinvestment value of public deposits.
