No. 87-06 AG Alpha No.TR AD AGAQD - July 20, 1987

Separate Federal Deposit Insurance Coverage for the State Compensation Insurance Authority

Summary
This new legislation provides that moneys in the State Compensation Insurance Authority Fund are no longer the responsibility of a state agency, but instead are under the control of a distinct political subdivision of the state. The State Compensation Insurance Authority is therefore a separate public unit for purposes of federal law. Even though the state treasurer remains custodian of these moneys, federal law authorizes deposit insurance coverage for the Authority's funds separate from other deposits for which the treasurer also serves as custodian.

As you are aware the controlling opinion or the application of federal insurance coverage would be that of the appropriate officials for the FDIC and the FSLIC. Consequently, before you act upon the opinions expressed in this letter you should seek review of this response, and your policy, by the appropriate federal officials.


FORMAL
OPINION

of

DUANE WOODARD
Attorney General

No. 87-6

AG Alpha No. TR AD AGAQD

July 20, 1987


Nancy Coleman
Deputy State Treasurer
Department of the Treasury
State Capitol, Room 140
Denver, Colorado 80203

 

RE: Separate Federal Deposit Insurance Coverage for the State Compensation Insurance Authority

Dear Ms. Coleman:

I am writing in response to your request for a legal opinion concerning the extent of federal insurance coverage for deposits of moneys of the State Compensation Insurance Authority. This opinion updates past opinions which discussed federal insurance coverage for deposits of the former State Compensation Insurance Fund.

 

QUESTION PRESENTED AND CONCLUSION

Whether deposits of moneys of the State Compensation Insurance Authority placed in federally insured institutions are entitled to deposit insurance coverage up to $100,000 separately from deposits of state funds for which the treasurer also serves as custodian.

 

Yes.

 

ANALYSIS

Federal law provides that the official custodian of moneys of a "public unit," which term includes the State and its political subdivisions, is insured separately by the Federal Deposit Insurance Corporation (FDIC) or the Federal Savings and Loan Insurance Corporation (FSLIC) up to $100,000 for deposits in a federally insured institution. See 12 U.S.C. sec. 1728(d)(1)(ii) (1980), 12 U.S.C. sec. 1813(m)(1) (1986 Supp.), 12 U.S.C. sec. 1821(a)(2)(A)(ii) (1980). If the same person is official custodian for more than one public unit, she is separately insured to the maximum amount with respect to the aggregate amount of public funds held by her for each public unit at a federally insured institution. 12 C.F.R. secs. 330.8(a)(6), 564.8(a)(2) and Appendix (1987).

This office has had occasion to review federal law on deposit insurance coverage several times in recent years. Most recently, in an opinion dated May 8, 1985, I concluded that deposits of funds in the State Compensation Insurance Fund would be aggregated with other moneys of the Colorado Department of Labor and Employment, a principal department of state government. I further concluded that that department's deposits would be entitled to insurance coverage separate from other state deposits.

During the 1986 legislative session, the Colorado General Assembly enacted Senate Bill 22, which made significant changes in the administration of the workmen's compensation system. Key to this opinion, the legislation removed the workmen's compensation system from the responsibility of the Department of Labor and Employment and created a new political subdivision of the state, the State Compensation Insurance Authority, to administer that system. Section 8-54-102.5, C.R.S. (1986). All moneys in the former State Compensation Insurance Fund were transferred to the State Compensation Insurance Authority Fund, and placed under the control of the board of directors of the State Compensation Insurance Authority. Section 8-54-102, C.R.S. (1986). Effective July 1, 1987, the legislation makes the state treasurer custodian of that fund. Section 8-54-121, C.R.S. (1986).

 

SUMMARY

This new legislation provides that moneys in the State Compensation Insurance Authority Fund are no longer the responsibility of a state agency, but instead are under the control of a distinct political subdivision of the state. The State Compensation Insurance Authority is therefore a separate public unit for purposes of federal law. Even though the state treasurer remains custodian of these moneys, federal law authorizes deposit insurance coverage for the Authority's funds separate from other deposits for which the treasurer also serves as custodian.

As you are aware the controlling opinion or the application of federal insurance coverage would be that of the appropriate officials for the FDIC and the FSLIC. Consequently, before you act upon the opinions expressed in this letter you should seek review of this response, and your policy, by the appropriate federal officials.

Sincerely,

DUANE WOODARD
Attorney General

DW:5746:wp
AG Alpha No. TR AD AGAQD
AG File No. OAG8704704/AQD

TREASURER, STATE
PUBLIC FUNDS
BANKS AND BANKING
Savings and Loan Associations

12 U.S.C. sec. 1728
12 U.S.C. sec. 1813
12 U.S.C. sec. 1821

Section 8-54-102, C.R.S. (1986)
Section 8-54-102.5, C.R.S. (1986)
Section 8-54-121, C.R.S. (1986)

TREASURY, DEPT. OF

Deposits of funds in the State Compensation Insurance Authority Fund are entitled to federal deposit insurance coverage separate from other deposits for which the treasurer is custodian.

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