April 6, 1988
Mr. Donald W. Kallenberger
Campbell County State's Attorney
Box 658
Herried, South Dakota 57632
Official Opinion No. 88-10
Deposit of county funds
Dear Mr. Kallenberger:
You have requested an official opinion from this Office regarding the following factual situation:
FACTS:
The Board of County Commissioners of Campbell County is currently reviewing its deposit of county funds because of concerns expressed by taxpayers. There is a single bank with a separate branch bank located within the county. There are no savings and loan associations located within the county.
Based on the foregoing, you have asked the following questions:
QUESTION NO. 1
Is it proper for the Board of County Commissioners to solicit bids or quotes for the deposit of county funds?
QUESTION NO. 2
If such bids or quotes are solicited, does this constitute an application for the deposit of county funds?
QUESTION NO. 3
If the local bank makes application for the deposit of all county funds in compliance with the statutes for collateral segregation, is the Board of County Commissioners obligated to deposit all funds with this bank?
QUESTION NO. 4
If more than one bank makes application for the deposit of county funds, how does the Board of County Commissioners allocate the deposits?
QUESTION NO. 5
If there is no savings and loan association located within the county, does the Board of County Commissioners still have the discretion to deposit with a savings and loan association in an adjacent county?
IN RE QUESTION NO. 1:
SDCL 7-20-1 provides as follows:
The county treasurer shall deposit and at all times keep on deposit the money in his possession as county treasurer in state or national banks within the county. In the event that such deposits exceed the limit prescribed in 7-20-10 or if there is but one bank located within the county then such deposits may be made in other banks or branch banks within an adjacent county of this state having an approved and responsible financial standing. Any such bank may apply for the privilege of keeping such funds upon the conditions herein prescribed and shall state in the application the amount of money desired. If bond or securities are segregated as provided in section 4-6A-3, it shall be the duty of the board of the county commissioners to approve such application.
The statute makes reference to and provides for an application process to assist county government in determining which banks may be designated as depositories for the receipt of county funds. Banks are authorized thereunder to submit applications for the privilege of keeping county funds and if a bank's application bears sufficient information to establish that the bank is a qualified public depository under the provisions of SDCL ch. 4-6A and is in all other respects legally eligible to keep county funds, the board of county commissioners is obligated to approve the bank's application. Approval of the application amounts to an official designation by the county that the bank is a qualified and eligible depository under state law.
The statute does not control the actual deposit of county funds among appropriately designated depositories. Although not otherwise required under statute a board of county commissioners has the authority to solicit bids or quotes for the purposes of selecting which designated depositories will actually receive county funds. The county commission may properly solicit bids or quotes simultaneously with its solicitation of applications for approval and designation under SDCL 7-20-1 or may solicit bids or quotes from banks that have previously made application and been declared an eligible depository. The solicitation of bids or quotes is clearly not prohibited and insofar as county commissioners are charged under SDCL 7-8-20(7) "to superintend the fiscal concerns of the county and secure their management in the best possible manner," the solicitation of bids or quotes should be considered.
IN RE QUESTION NO. 2:
In responding to your second question, I assume you are asking whether a bid or quote received on solicitation by the county commission is an "application" as that term is used in SDCL 7‑20‑1.
Bids or quotes as they are normally understood would not in my opinion, be applications under the statute. As earlier indicated, however, the application process provided for under SDCL 7-20-1 could be combined with the solicitation of bids or quotes from financial institutions. Bidding notices or quote requests could require the same information submitted by application under SDCL 7-20-1.
IN RE QUESTION NO. 3:
In response to your third question, I reiterate that SDCL 7-20-1 only sets forth a procedure for the designation of local banks as depositories. Approval of an application for county funds in accordance with the statute operates as a designation or declaration by the board of county commissioners that a particular bank is legally eligible and authorized to receive county funds. Such designation does not obligate or require the actual deposit of funds with that bank. The statute prohibits a board of county commissioners from arbitrarily denying designation, but the ultimate decision to deposit funds in an appropriately designated depository is a separate matter entirely within the proper discretion of the board.
IN RE QUESTION NO. 4:
In answer to your fourth question, I refer you to the foregoing. In short, county funds must be deposited with an officially designated depository but county commissioners may choose or select from the designated depositories which depository will actually receive county funds.
IN RE QUESTION NO. 5:
SDCL 7-20-1.1 provides:
Domestic savings and loan associations whether chartered by this state or the United States are official depositories for county funds; provided such funds are invested only in the accounts of such associations which are insured by the federal savings and loan insurance corporation. The amount so invested in any one association may not exceed the amount which is covered by such insurance unless such association qualifies as a savings and loan depository as provided by chapter 4-6A. Such funds shall only be deposited with savings and loan associations located within the county where the funds originate. If there is but one such association located within the county, then such deposit may be made in other savings and loan depositories within an adjacent county.
The statute authorizes a county to deposit its funds in savings and loan depositories in an adjacent county if there is "but one such association located within the [depositing] county." That language does not prohibit counties, wherein no savings and loan association is located, from depositing funds in savings and loan associations located in adjacent counties within this State.
SDCL 2-14-12 states that all of the code "provisions and all proceedings under it are to be liberally construed with a view to effect its objects and to promote justice." Furthermore, "[t]he manifest intent of a statute must be derived from the statute as a whole, from its language, and affording the language its plain, ordinary and popular meaning." Moulton v. State, 263 N.W.2d 405, 408 (S.D. 1985).
Generally speaking, the obvious intent of SDCL 7-20-1.1 is to authorize counties to deposit their funds with savings and loan associations. The apparent purpose or intent of the particular language at issue is to insure that counties have a choice in selecting savings and loan associations as depositories. The ability to select between two or more savings and loan associations should encourage competition among the associations which may, to some extent, financially benefit depositing counties.
The absence of a savings and loan association within a county does not preclude that county from depositing its funds in any savings and loan association in an adjacent county within the State. Such an interpretation would be clearly unreasonable, contrary to the express language and manifest intent of the statute as a whole.
Respectfully submitted,
Roger A. Tellinghuisen
Attorney General
