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Security for Alabama Funds Enhancement
(SAFE) Program
SAFE
WEB - an
online system that allows qualified public depositories the
ability to submit their monthly SAFE reports
electronically.
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Total Public Deposits with
Designated Concentration Level
2007
SAFE
Training Powerpoint Presentation Handout
1 Handout
2
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The Security for Alabama Funds Enhancement, or SAFE
Program, is encompassed in Title 41, Chapter 14A,
Code of Alabama 1975, as amended, to provide a
uniform program for the security of public funds
deposited with financial institutions in the State
of Alabama that qualify to serve as depositories for
public funds. The Program requires any bank or
financial institution in the State of Alabama,
accepting any deposits of public funds, to ensure
those funds by pledging eligible collateral to the
State Treasurer for the SAFE collateral pool. The
law further provides for safeguarding of public
deposits by requiring the entire pool and each
participating financial institution to stand behind
each deposit. Rules of the Program have been
developed subject to the Administrative Procedures
Act, whereby the public was given the opportunity to
make comments prior to their adoption. The Rules
provide the details of the Program. The Rules,
legislation and forms are located
here.
A Board of Directors is charged with the
responsibility and authority to assess and manage
the sufficiency of the collateral pool. The board
meets at least quarterly and is comprised of 8
members who serve without compensation, except for
reimbursement for travel associated with the meeting
in accordance with state per diem rates. The
Treasurer serves as a permanent, voting member and
Chairman. The Superintendent of Banks serves as a
permanent, non-voting member. The remaining six
members are 4 representatives from the banking
industry, one representative from the League of
Municipalities, and one representative from the
County Commission Association. The term of office of
each appointed member is four years with any
appointed member being eligible for reappointment
and serving until a successor is selected.
SAFE Member Application Process. All public
depositors are required by SAFE law to place their
public deposit funds with one or more bank or
savings institution that has met the requirements to
become a member or "Qualified Public Depository" (QPD).
Bank or savings institutions interested in becoming
a QPD are strongly encouraged to thoroughly read the
SAFE Law (Sections 41-14A-1 through 14) and Rules
(Chapter 892-S-1-.01 though .19) prior to submitting
their application documents. These documents provide
detailed information on the operational environment
for the program. The full text of both documents may
be found here.
To become a member in the SAFE Program, a bank or
savings institution must be organized and existing
under Alabama or any other state law, be in the
business of making loans and accepting deposits in
Alabama, and have FDIC coverage. To apply for
membership, the following documents must be
completed by the applying institution and submitted
as an application package to the Treasurer's Office.
These documents must be submitted without changes.
1. Contingent Liability Agreement - establishes
operational relationship between the SAFE Program
and the applicant. This agreement must be approved
by the applicant’s Board of Directors.
2. Collateral Agreement - establishes custodial
relationship between the applicant, the custodian
institution, and the Treasurer's Office. The
applicant initiates this document by signature,
chooses the custodian, sends the agreement to the
custodian for execution, and receives the returned
agreement. This agreement is included in the
application package to the Treasurer. The applicant
may have one or more custodians. Whenever a
custodian is changed or selected, this agreement
must be executed.
3. Authorized Representative Signature Certification
- up to four officers/staff of the applicant bank
must sign the form and are designated as "authorized
representatives" for purposes of the SAFE Program.
This form must be adopted by the applicant’s Board
of Directors.
4. Certification of Adoption of Director's
Resolution - to be completed by the applicant's
board of directors confirming adoption of the three
forms listed above.
5. Confirmation of Security Pledge with minimum
$100,000 market value - applicant must pledge (and
maintain) through their custodian a minimum pledge
of eligible securities confirmed by a security
receipt issued to the Treasurer's Office.
The above five documents should be submitted to the
Treasurer's Office in one package. The SAFE Program
will review the documents upon receipt and, if
correct, issue a Qualified Public Depository
Certificate to the applicant. Upon receipt of this
document the applicant is authorized to begin
accepting public funds for deposit. Public
depositors may request a copy of your Certificate
for their file in order to confirm your membership
to their auditors.
The definition of public entity and public deposit
are included in the SAFE law available on the
Treasurer’s website. A bank’s operational staff
should know and understand these definitions well.
The depositor should notify the bank representative
that the deposits are public, and then it is the
responsibility of the banking institution to code
the deposits as such. If the bank is uncertain about
whether the deposits meet the definition provided in
the SAFE law, their legal counsel should be
consulted, as well as the depositor.
If the applicant chooses to pledge FHLB Letters of
Credit, additional forms are necessary and are
available here.
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