A bill for an act relating to eligibility requirements for financial institutions in which public funds may be deposited.(Formerly SSB 1061.)
Summary
Senate File 458 would change Iowa law governing where public funds may be deposited by repealing Code section 12C.6A, the provision that currently limits public deposits to financial institutions that demonstrate a commitment to serving the needs of the local community in which they are chartered. The bill also makes conforming changes to related public-deposit statutes, including provisions on the treasurer of state’s notices and enforcement authority, and updates language in the bank enforcement section to reflect the repeal.
Under current law, the treasurer of state maintains a list of financial institutions eligible to accept public funds and can evaluate institutions based on community reinvestment-related criteria, public comments, annual submissions, and a challenge process. SF 458 would remove that eligibility framework and instead allow public funds to be placed in insured deposits or certificates of deposit arranged through a depository in federally insured banks or savings associations regardless of location, so long as the remaining statutory requirements are met. The bill therefore narrows the state’s ability to use public-deposit policy as a tool for encouraging local lending or community investment.
Impact
The bill would repeal section 12C.6A of the Iowa Code and eliminate the statutory requirement that a financial institution demonstrate a commitment to the needs of its local community in order to receive public deposits. It would also remove the treasurer of state’s eligibility-list process and the associated public-comment, annual reporting, and challenge procedures, while making related amendments to chapters 12B, 12C, and 524 to conform enforcement and notice provisions to the repeal. In practical terms, the measure would broaden the pool of institutions that may hold public funds and reduce state oversight tied to community-benefit criteria.
Sentiment
The recorded committee action suggests the bill moved with little overt opposition at the committee stage, as the Senate State Government report was approved 17-0. However, the bill was later withdrawn, indicating that despite initial support or at least lack of recorded dissent, it did not advance to enactment. With no committee transcript available, the broader discussion appears limited in the record, but the legislative history suggests the proposal was not ultimately carried forward.
Contention
The main point of contention is the policy choice between using public deposits purely for safety and access to insured banking services versus using them to promote local community reinvestment. Supporters of repeal would likely favor simplifying eligibility and expanding the number of institutions that can receive public funds, while opponents would be concerned that removing the community-commitment standard weakens incentives for banks to serve local needs. The bill also affects the treasurer of state’s administrative role by eliminating the eligibility list and related review process, which may be viewed as either reducing bureaucracy or removing an accountability mechanism.
Similar To
A bill for an act relating to eligibility requirements for financial institutions in which public funds may be deposited. (Formerly HSB 252.) Effective date: 07/01/2025.
A bill for an act relating to eligibility requirements for financial institutions in which public funds may be deposited. (Formerly HSB 252.) Effective date: 07/01/2025.
A bill for an act relating to public libraries, including eligibility requirements for state assistance and oversight by city councils.(Formerly HSB 720.)