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Bill to let counties, schools seek higher CD rates draws split testimony over local reinvestment
Summary
House Bill 1523 would allow many county treasurers and school districts to consider depositories beyond financial institutions with a physical presence in their jurisdiction when placing public deposits, aiming to increase competitive returns for taxpayer funds.
House Bill 1523, presented by Representative Pierce, would expand the permissible pool of approved depositories for certain local units of government by removing a statutory territorial preference that currently directs many units to invest public deposits (e.g., certificates of deposit) at in‑jurisdiction financial institutions when available.
Supporters said the rule is outdated and, in many counties and school districts, limits competition and yields for taxpayer funds. Brian Burdick, representing the Indiana County Treasurers Association, said consolidation in the banking industry means some local units effectively have few competitive options and that allowing broader competition could increase interest earnings that reduce pressure on local property taxes. School finance groups and the Association of Indiana Counties joined in support, saying the change simply extends for counties and schools what cities and towns already may do.
Opponents — chiefly the Indiana Credit Union League and the Indiana Bankers Association — argued territorial investing serves the public-interest purpose of keeping public deposits local, which in turn supports lending in the local economy. Industry witnesses said the statutory preference helps ensure that local deposits are recycled as local loans, supporting small-business credit and community banks or credit unions.
Several witnesses and committee members referenced a 2018 statutory clarifying amendment; HB 1523 also proposes a limited safe harbor for investments made since 2018 so that prior actions do not generate audit exceptions. Committee members said they expected continued negotiation in the coming week to reconcile promoting competition with protecting local reinvestment.
Why it matters: Public-deposit investment rules balance two public objectives: maximizing yield for taxpayers and keeping deposits local to support local lending and community banking. Lawmakers must weigh those competing goals, especially amid banking consolidation that has reduced the number of local institutions in some areas.
Next steps: Representative Pierce and stakeholders said they would continue discussion on potential amendments that preserve local reinvestment goals while enabling broader competition where local options are not competitive.
