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The Public Deposit Insurance Fund (PDIF) was created by the Acts of 1937 to protect the public funds of the state and its political subdivisions deposited in approved financial institutions. The PDIF insures those public funds deposited in approved financial institutions which exceed the limits of coverage provided by any federal deposit insurance.
The PDIF is administered by the Board for Depositories. The Board's members include the Governor, the Treasurer of State, the Auditor of State, the Chairman of the Department of Financial Institutions, the Chief Examiner of the State Board of Accounts and four gubernatorial appointees. The Treasurer of State serves as Secretary-Investment Manager and directs the day-to-day activities of the Board. The Board for Depositories maintains a small staff whose budget is funded from the investment earnings of the PDIF. The staff is responsible for collecting and monitoring information relating to the level of public funds on deposit in the state and the financial strength of approved financial institutions.
The Board is charged with the responsibility of periodically determining the adequacy of the PDIF. The Board, through its responsibility for administering and preserving the PDIF, has the authority to levy assessments against approved financial institutions. From its inception until 1985, approved financial institutions were assessed a monthly fee not to exceed 2% of the sum of the minimum public fund balances they held during that period. These assessments were suspended in 1985 when it was determined the PDIF had sufficient reserves for losses. Investment earnings have contributed to the growth in the fund balance since that time.
In the event an institution becomes a closed depository, the Department of Financial Institutions and public officers with funds on deposit will report independently to the Attorney General and Auditor of State the amount of public funds in that depository which may constitute a claim against the PDIF. The Attorney General and Auditor make the final determination of valid claims against the fund. This decision is appealable under certain time constraints.