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SENATE BILL NO. 889
A bill to amend 2003 PA 198, entitled
"Farm produce insurance act,"
by amending section 9 (MCL 285.319), as amended by 2016 PA 264.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 9. (1) The farm produce insurance fund is established 1
under the direction and control of the board. The fund shall 2
consist consists of administrative premiums, producer premiums, 3
money from any other source, and interest and earnings from fund 4
investments. The board shall direct payments from the fund only for 5
the following purposes: 6
March 26, 2026, Introduced by Senators VICTORY, DALEY, LAUWERS, OUTMAN and
CHERRY and referred to Committee on Appropriations.
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(a) Payment of valid claims under section 15. 1
(b) Payment of administrative premiums and producer premium 2
refunds under section 13. 3
(c) Payment of administrative expenses under subsection (2). 4
(d) Payment of legal fees and legal expenses under subsection 5
(3). 6
(e) Reimbursement of the director for producer security 7
activities. 8
(2) The board shall allocate money from the fund to a separate 9
administrative expenses account to pay administrative expenses and 10
to reimburse the director for producer security expenses. This The 11
allocation shall must not exceed $500,000.00 $950,000.00 in any 12
fiscal year. Administrative expenses under this subsection include 13
the actual cost of processing refunds of administrative premiums 14
and producer premiums, enforcement, record keeping, ordinary 15
management and investment fees connected with the operation of the 16
fund, verification cost under section 11(4), and any other expenses 17
approved by the board. Administrative expenses do not include 18
investments and the legal fees and legal expenses described in 19
subsection (3). 20
(3) For legal services requested by the board, the board shall 21
pay for any legal services and legal expenses required by the 22
authority, board, or fund from money in the fund. Legal services 23
and expenses described in this subsection are not administrative 24
expenses and shall must not be paid from the administrative 25
expenses account. 26
(4) All of the following apply to the investment of any money 27
in the fund that the board determines is not needed to meet the 28
immediate cash needs of the fund: 29
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(a) The treasurer of the board is the investment officer of 1
the fund and shall invest or direct the investment of the money in 2
the fund only in a manner that complies with this subsection. 3
(b) The money shall must only be invested through a bank trust 4
department or a professional investment advisor registered with the 5
securities Securities and exchange commission Exchange Commission 6
under the investment advisors advisers act of 1940, 15 USC 80b-1 7
80a-1 to 80b-21, as determined by the board. 8
(c) The money may only be invested in any of the following, as 9
determined by the board: 10
(i) United States government bonds, United States treasury 11
notes, or obligations issued by United States government agencies 12
or United States government-sponsored enterprises. 13
(ii) Deposit accounts in or certificates of deposit issued by a 14
financial institution if all of the following are met: 15
(A) Deposits in the financial institution are insured by an 16
agency of the United States government. 17
(B) The principal office of the financial institution is 18
located in the United States. 19
(C) Except as provided in sub-subparagraph (D), the amount 20
held in any 1 account does not exceed the federally insured amount 21
for that financial institution's accounts. 22
(D) The amount held in any 1 account in a state or nationally 23
chartered bank does not exceed $500,000.00. 24
(iii) Corporate bonds and municipal bonds, if all of the 25
following are met: 26
(A) The total investment in corporate and municipal bonds, and 27
in common and preferred stocks under subparagraph (iv), does not 28
exceed 45% of the amount of the fund. 29
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(B) The bonds are rated investment grade or better by at least 1
1 nationally recognized rating service. 2
(C) The amount invested in bonds of any 1 corporation or 3
municipality does not exceed more than 5% of the amount of the 4
fund. 5
(iv) Common or preferred stock, or a mutual fund or bank-pooled 6
fund that invests in common or preferred stocks, if all of the 7
following are met: 8
(A) The total investment under this subparagraph does not 9
exceed 11.25% of the amount of the fund. 10
(B) The common or preferred stock in which the fund invests, 11
or the stock held by the mutual fund or bank-pooled fund in which 12
the fund invests, is stock in a publicly owned company that trades 13
on a United States regulated exchange. 14
(d) The money shall must not be invested in a mutual fund, 15
unless the mutual fund is 1 of the following: 16
(i) A mutual fund described in subdivision (c)(iv). 17
(ii) A money market mutual fund, if all of the following are 18
met: 19
(A) The investment is money the board determines is needed to 20
meet short-term obligations of the fund. 21
(B) The money is invested for not more than 180 days. 22
(C) The money market mutual fund is subject to rule 2a-7 of 23
the securities Securities and exchange commission, Exchange 24
Commission, 17 CFR 270.2a-7. 25
(D) The money market mutual fund invests only in obligations 26
that are rated in the highest rating classification established by 27
at least 2 standard rating services, or in obligations issued by 28
government agencies, obligations issued by government-sponsored 29
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enterprises, or government bills, bonds, or notes. 1
(5) The board shall ensure that the bank trust department or 2
professional investment advisor described in subsection (4)(a) 3
completes a compliance review of the investment portfolio on a 4
quarterly basis and provides a copy of the investment review to the 5
fund and department within not later than 30 days after the end of 6
each quarter. 7
(6) The board shall ensure that the audit required under 8
section 17 includes a certification from the certified public 9
accountant concerning whether the fund complied with the 10
requirements of subsection (4) in the audit period. If an audit 11
does not include this certification, the director by order may 12
restrict or eliminate the board's authority to invest in corporate 13
or municipal bonds or common or preferred stocks under subsection 14
(4). 15
(7) The fund shall must operate on a fiscal year established 16
by the board. 17
(8) As used in subsection (4), "financial institution" means a 18
state or nationally chartered bank or a state or federally 19
chartered savings and loan association, savings bank, or credit 20
union. 21