Committee hears bill to let local units seek higher CD returns beyond territorial limits; debate over local reinvestment

House Bill 1523, which would relax territorial limits on where certain local governments may invest public funds, drew contrasting testimony from county treasurers, school officials and financial trade groups at a House Financial Institutions Committee hearing.

Representative Pierce introduced the measure as a bid to give counties, school corporations and library districts the same flexibility that cities and towns already have to invest certificates of deposit (CDs) beyond a local brick‑and‑mortar boundary. Pierce said the bill also includes a limited retroactive safe harbor for investments made since a 2018 change to the code.

Supporters argued the current territorial restriction can leave local units stuck with uncompetitive local offers, reducing interest earned for taxpayers. Brian Burdick of Barnes & Thornburg, testifying for the Indiana County Treasurers Association, said the law can force treasurers to accept lower rates when local loan demand is weak and noted that higher CD returns translate into real taxpayer dollars and less pressure on property tax levies. "If somebody will offer us 5% and I can only get 2% at home, it seems like we ought to get the extra 3% for the taxpayers," Burdick said.

Representatives of school finance organizations — including the Indiana Association of School Business Officials, which spoke for school business officers, school boards and superintendents — said the change would help districts maximize returns and cited examples where district officials estimated hundreds of thousands of dollars in potential additional interest over multiple years.

Opponents from the banking and credit union sectors urged caution. Chris Beaumont of the Indiana Credit Union League said the territorial preference directs public deposits to local, state‑chartered institutions that then recycle those funds as local loans. "Part of it obviously is to let local units get as much return out of the public funds as they can get. But there's also the value of that money and the role it plays in the community," he said. Dax Denton of the Indiana Bankers Association said territorial restrictions, while imperfect, help ensure deposits stay in the community to support small business and home loans and pledged to continue conversations with sponsors.

The treasurer's office, which administers the Board for Depositories that insures public deposits beyond FDIC limits, said it was neutral and would educate depositors about any changed rules. Several witnesses endorsed a negotiated fix and the sponsor said he expected further amendments; the committee did not vote and the bill will be held for amendment and further work.

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