19460     TRUST INVESTMENT  
(Revised 5/97)

Government Code section 11012 requires any state agency with some exceptions, that is authorized to deposit funds in bank accounts or to invest trust funds in securities to obtain prior approval from the Department of Finance (DOF).  However, DOF approval is required only on transactions or balances exceeding $25,000 for securities and $100,000 for each bank account.  Therefore, if any one transaction or the balance in an account exceeds the limits, the state agency must obtain DOF approval.  DOF approval is not required for the state agencies listed in Government Code section 11012 or exempted by other statutes.

Generally, trust money not under the control of the State Treasurer should be deposited or invested only if the interest earnings (1) will accrue to the individual accounts of or directly benefit a group of wards, patients, students, or inmates, or (2) will accrue to a trust account or fund established for gifts and donations that is dedicated to assisting wards, patients, students, or inmates, or (3) will affect the charges for auxiliary nonprofit and nonstate supported activities and services furnished to wards, patients, students, or inmates.

In any circumstance, it is the state agency's responsibility to insure that the bank or savings and loan association is insured by the Federal Deposit Insurance Corporation (FDIC) or Federal Savings and Loan Insurance Corporation (FSLIC), respectively.  Additionally, the state agencies may deposit in excess of the maximum ($100,000) in any one bank or savings and loan association, if the state agency notifies the State Treasurer that the collateral requirement have been met.  See SAM section 8002 for collateral requirements.