AB1220: Bill Text

14. Assist students in need of additional low-cost student loans in financing the cost of higher education.

Under the bill, an 11-member governing board exercises the powers and duties of the Public Bank. Board members include the state treasurer, the state superintendent of public instruction, and the president of the University of Wisconsin System, or their designees, along with eight members of varying backgrounds appointed by the governor. Board members are not compensated for their services but may be reimbursed for expenses. The board must appoint a chief executive officer (CEO) of the Public Bank and may delegate powers and duties to the CEO. As the executive and administrative head of the Public Bank, the CEO is responsible for the Public Bank’s management, administration, and legal compliance.

The bill generally requires the state to deposit the state’s public moneys in the Public Bank. The required deposits are phased in over a four-year period, with at least 30 percent of the state’s public deposits required to be in the Public Bank by January 1, 2025, and all of the state’s public deposits required to be in the Public Bank by January 1, 2028, subject to limited exceptions.

Under the bill, with limited exceptions, the Public Bank has all the powers of a state-chartered bank. Among the exceptions, the Public Bank accepts only state public deposits and, if the Public Bank is serving as a banker’s bank (discussed below), deposits from state-chartered financial institutions. The Public Bank may not pay interest on deposit accounts. The Public Bank may accept and solicit property, including donations, grants, and loans, for any purpose of the Public Bank. The Public Bank’s governing board must operate the Public Bank to ensure its soundness and sustainability and to accomplish its purposes, but the governing board may direct the Public Bank’s earnings to be added to the Public Bank’s capital, invested in the State Investment Fund managed by the Investment Board, or distributed to the state. The governing board must regularly review the Public Bank’s financial statements and other records to ensure that the Public Bank is in compliance with all applicable laws and reporting requirements. The governing board must also establish technical advisory committees and consult with public and private sector experts related to the Public Bank’s mission, objectives, and duties. The governing board, along with the secretary of administration, must ensure that the Public Bank maintains at all times cash or demand deposits in an amount needed to meet the operational needs of the state.

The bill authorizes or requires specific activities of the Public Bank, including all of the following:

1. The Public Bank must use its powers to extend affordable financing to eligible recipients that have entered into labor peace agreements. The bill defines “affordable financing,” “labor peace agreement,” and “eligible recipient,” the latter of which includes in part a local governmental unit; a nonprofit organization involved in community development; a land trust; a cooperative; an entity created by financial institutions that pools funds to lend for affordable housing development; a developer of housing or preservation projects if all the entities financing a project invite the Public Bank to participate; a state-chartered financial institution if the financing extended is used to support another eligible recipient; a community development authority, redevelopment authority, housing authority, or community development corporation; a small business enterprise that meets certain criteria; and a small- or medium-sized farm and its related industries.

2. The Public Bank, in partnership with independent community banks, credit unions, community development authorities, redevelopment authorities, housing authorities, or community development corporations, may do the following: 1) leverage at least 30 percent of public deposits as financial capital and resources to provide access to low-cost capital or credit to small businesses, minority-owned and women-owned business enterprises, entrepreneurs, start-up businesses, farmers, and communities and individuals of this state having below average income, to further economic growth, create jobs, reduce greenhouse gases, and build and sustain affordable housing; 2) leverage the Public Bank’s financial capital and resources to provide access to low-cost capital to bring fiscally sound and financially successful businesses into this state; and 3) leverage the Public Bank’s financial capital and resources to provide access to low-cost capital or credit to established businesses in this state for the purpose of providing financial stability for the Public Bank.

3. The Public Bank may join in making participation loans in which the Public Bank shares in funding the loan with community banks, credit unions, community development authorities, redevelopment authorities, housing authorities, and community development corporations in this state, to qualified individuals and businesses residing or doing business in this state if the originator of the loan is a state-chartered financial institution.

4. The Public Bank may facilitate investment in, and financing of, construction or improvement of new and existing public infrastructure systems, but the Public Bank must first submit to the governor and legislature an implementation plan that includes certain information.

5. The Public Bank, in partnership with independent community banks, credit unions, or community development corporations, may administer a state guarantee loan program to assist students in need of low-cost student loans and related loan benefits, including the refinancing of existing student loan debt. Before doing so, the Public Bank must develop an implementation plan for the program that includes specified elements.

6. The Public Bank may serve as a clearinghouse for financial institutions that make the Public Bank a reserve depository.

7. The Public Bank may serve as a banker’s bank for this state’s state-chartered financial institutions by providing correspondent banking services and other related services for these financial institutions in unbanked and underserved communities. The Public Bank may not compete with this state’s state-chartered financial institutions, particularly in unbanked and underserved communities.

8. The Public Bank may make loans and incur debt and other nondeposit liabilities, including money market borrowing, federal reserve borrowing, and capital market borrowing. The Public Bank may buy and sell federal funds; issue letters of credit for public deposits; rediscount paper; and provide a safekeeping service for securities, bonds, and other investments.

9. The Public Bank must provide to the state all reasonable and necessary depository services and may charge its cost of services to the state. The Public Bank may provide corporate trust services for the state.

The bill requires the Public Bank to develop and maintain a business plan that sets forth the Public Bank’s strategy for accomplishing its statutory directives through safe and sound operation. The bill specifies a process for developing the business plan that includes input from the public. The business plan must include the method of providing security or insurance for the public deposits that the Public Bank receives. The Public Bank must make the business plan available to the public, and the business plan must be updated at least once every four years. In developing the business plan and in conducting its operations, the Public Bank must give priority to the following considerations:

1. Supporting eligible recipients subject to the historic and current economic inequities experienced by communities in underserved neighborhoods, as well as eligible recipients working to remedy those inequities.

2. Supporting eligible recipients subject to the historic and current economic inequities experienced by women throughout the state.

3. Supporting rural business and farming concerns.

4. Supporting businesses with compensation structures that provide a livable wage or demonstrate a commitment to equitable pay.

5. Supporting entities that address the impacts of climate change and the reduction of greenhouse gases.

6. Funding the need of municipalities to update and build safe and sustainable infrastructure.

7. Supporting the operation of local governmental units, nonprofit organizations, credit unions, local community banks, community development authorities, redevelopment authorities, housing authorities, community development corporations, and state-chartered financial institutions, including by complementing or partnering rather than competing with these entities to strengthen them and to expand affordable financing in the state.

8. Seeking participation loan options with the entities identified in 7., when appropriate, rather than originating or servicing the loan itself.

9. Promoting equitable distribution of the Public Bank’s resources across the state, including ensuring that rural areas are given full and fair consideration.

The bill requires the Public Bank’s CEO to implement the business plan and manage the Public Bank consistently with the business plan. The Public Bank must conduct its operations in compliance with the business plan, and the Public Bank’s governing board must monitor the Public Bank’s compliance. The business plan may only be overridden under certain emergency circumstances. As part of its examination of the Public Bank as a state-chartered bank, the Division of Banking must assess the Public Bank’s compliance with the business plan, and this assessment is available to the public six months after the examination.

Numerous provisions of current law treat state-created authorities similar to state agencies for certain purposes. Although the Public Bank is not a state agency, the bill treats the Public Bank similar to a state agency in the following respects, among others: 1) it is generally subject to the open records and open meetings laws, although certain information must be held confidential; 2) it is subject to auditing by the Legislative Audit Bureau; 3) its CEO and members of the governing board are subject to certain provisions of the state code of ethics; 4) its employees may participate in the system for state retirement benefits and health insurance coverage; and 5) it is exempt from sales and use taxes, property taxes, and income taxes. Under the bill, the Public Bank is also subject to certain conflict-of-interest restrictions, including that it may not transact business with its board members or its officers or their immediate family members.

The bill requires the Public Bank to submit an annual report to the governor and the legislature that includes specified information, including audited financial statements, a description of the benefits of the Public Bank’s activities to the state, and certain compensation information.

The bill also creates an 18-member Board of Advisors, a state agency attached to the Department of Financial Institutions, that reviews the Public Bank’s activities. The Board of Advisors must hold public meetings and maintain a website that contains a comments portal that allows the public to comment on the activities and future initiatives of the Public Bank. The Board of Advisors also communicates to the Public Bank policy recommendations and concerns regarding the Public Bank. The Public Bank must pay from its operating budget expenses incurred by the Board of Advisors. The Public Bank must keep the Board of Advisors informed of the Public Bank’s operations, and the Public Bank and Board of Advisors must hold an annual joint meeting.

For further information see the state fiscal estimate, which will be printed as an appendix to this bill.

AB1220,,4 The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB1220,1 Section 1. 13.172 (1) of the statutes is amended to read:

AB1220,,6 13.172 (1) In this section, “agency” means an office, department, agency, institution of higher education, association, society, or other body in state government created or authorized to be created by the constitution or any law, that is entitled to expend moneys appropriated by law, including the legislature and the courts, and any authority created in subch. II of ch. 114 or in ch. 231, 233, 234, 238, 239, or 279.

AB1220,2 Section 2. 13.48 (13) (a) of the statutes is amended to read:

AB1220,,8 13.48 (13) (a) Except as provided in par. (b) or (c), every building, structure or facility that is constructed for the benefit of or use of the state, any state agency, board, commission or department, the University of Wisconsin Hospitals and Clinics Authority, the Fox River Navigational System Authority, the Public Bank of Wisconsin, the Wisconsin Economic Development Corporation, or any local professional baseball park district created under subch. III of ch. 229 if the construction is undertaken by the department of administration on behalf of the district, shall be in compliance with all applicable state laws, rules, codes and regulations but the construction is not subject to the ordinances or regulations of the municipality in which the construction takes place except zoning, including without limitation because of enumeration ordinances or regulations relating to materials used, permits, supervision of construction or installation, payment of permit fees, or other restrictions.

AB1220,3 Section 3. 13.62 (2) of the statutes is amended to read:

AB1220,,10 13.62 (2) “Agency” means any board, commission, department, office, society, institution of higher education, council, or committee in the state government, or any authority created in subch. II of ch. 114 or in ch. 231, 232, 233, 234, 237, 238, 239, or 279, except that the term does not include a council or committee of the legislature.

AB1220,4 Section 4. 13.94 (1) (dt) of the statutes is created to read:

AB1220,,12 13.94 (1) (dt) Biennially, beginning in 2025, conduct a financial audit of the Public Bank of Wisconsin and a program evaluation audit of the programs administered by the Public Bank of Wisconsin under ch. 239. The legislative audit bureau shall file a copy of each audit report under this paragraph with the distributees specified in par. (b).

AB1220,5 Section 5. 13.94 (1s) (c) 11. of the statutes is created to read:

AB1220,,14 13.94 (1s) (c) 11. The Public Bank of Wisconsin for the cost of the audit required to be performed under sub. (1) (dt).

AB1220,6 Section 6. 13.94 (4) (a) 1. of the statutes is amended to read:

AB1220,,16 13.94 (4) (a) 1. Every state department, board, examining board, affiliated credentialing board, commission, independent agency, council or office in the executive branch of state government; all bodies created by the legislature in the legislative or judicial branch of state government; any public body corporate and politic created by the legislature including specifically the Fox River Navigational System Authority, the Lower Fox River Remediation Authority, the Wisconsin Aerospace Authority, the Public Bank of Wisconsin, the Wisconsin Economic Development Corporation, a professional baseball park district, a local professional football stadium district, a local cultural arts district, and a long-term care district under s. 46.2895; every Wisconsin works agency under subch. III of ch. 49; every provider of medical assistance under subch. IV of ch. 49; technical college district boards; every county department under s. 51.42 or 51.437; every nonprofit corporation or cooperative or unincorporated cooperative association to which moneys are specifically appropriated by state law; and every corporation, institution, association or other organization which receives more than 50 percent of its annual budget from appropriations made by state law, including subgrantee or subcontractor recipients of such funds.

AB1220,7 Section 7. 13.95 (intro.) of the statutes is amended to read:

AB1220,,18 13.95 Legislative fiscal bureau. (intro.) There is created a bureau to be known as the “Legislative Fiscal Bureau” headed by a director. The fiscal bureau shall be strictly nonpartisan and shall at all times observe the confidential nature of the research requests received by it; however, with the prior approval of the requester in each instance, the bureau may duplicate the results of its research for distribution. Subject to s. 230.35 (4) (a) and (f), the director or the director’s designated employees shall at all times, with or without notice, have access to all state agencies, the University of Wisconsin Hospitals and Clinics Authority, the Wisconsin Aerospace Authority, the Lower Fox River Remediation Authority, the Public Bank of Wisconsin, the Wisconsin Economic Development Corporation, and the Fox River Navigational System Authority, and to any books, records, or other documents maintained by such agencies or authorities and relating to their expenditures, revenues, operations, and structure.

AB1220,8 Section 8. 15.07 (1) (a) 7. of the statutes is created to read:

AB1220,,20 15.07 (1) (a) 7. Members of the board of advisors shall be appointed as provided in s. 15.185 (3), without senate confirmation.

AB1220,9 Section 9. 15.07 (2) (n) of the statutes is created to read:

AB1220,,22 15.07 (2) (n) In addition, the board of advisors shall hold a meeting to elect a chairperson whenever a majority of the members of the board of advisors call for such an election.

AB1220,10 Section 10. 15.07 (3) (bm) 7. of the statutes is created to read:

AB1220,,24 15.07 (3) (bm) 7. The board of advisors shall meet quarterly.

AB1220,11 Section 11. 15.07 (5) (g) of the statutes is created to read:

AB1220,,26 15.07 (5) (g) Members of the board of advisors appointed under s. 15.185 (3) (a) 2. to 13., an amount determined by the governing board of the Public Bank of Wisconsin.

AB1220,12 Section 12. 15.185 (3) of the statutes is created to read:

AB1220,,28 15.185 (3) Board of advisors. (a) There is created a board of advisors, attached to the department of financial institutions under s. 15.03. Subject to par. (c) 1., the board of advisors shall consist of the following members:

AB1220,,29 1. The lieutenant governor or the lieutenant governor’s designee.

AB1220,,30 2. One member appointed by the community development experts of the Federal Reserve Bank of Chicago.

AB1220,,31 3. One member nominated by state-chartered financial institutions, including credit unions, that receive more than 90 percent of their deposits from residents of this state or nominated by associations representing predominantly these financial institutions, appointed by the governor.

AB1220,,32 4. One member nominated by a minority-owned financial institution, appointed by the governor.

AB1220,,33 5. Two members, each nominated by separate community development authorities, redevelopment authorities, housing authorities, or community development corporations that focus primarily on supporting economic development in this state, including rural and economic cooperative models and worker-owned enterprises, appointed by the governor.

AB1220,,34 6. Two members, each nominated by separate nonprofit organizations that support underserved neighborhoods, appointed by the governor.

AB1220,,35 7. Two members, each nominated by separate associations representing the interests of small business entities, particularly businesses owned by cognizable groups currently receiving less credit than proportional to their size or serving in areas operating in underserved neighborhoods, appointed by the governor.

AB1220,,36 8. One member nominated by nonprofit organizations that support sustainable agriculture, appointed by the governor.

AB1220,,37 9. One member nominated by nonprofit organizations that support food security, appointed by the governor.

AB1220,,38 10. One member nominated by nonprofit organizations that support climate change amelioration and environmental finance, appointed by the governor.

AB1220,,39 11. One member nominated by nonprofit organizations that support environmental justice, appointed by the governor.

AB1220,,40 12. Two members, each nominated by separate municipalities or state-based associations or chapters of municipal planners or professionals, appointed by the governor.

AB1220,,41 13. Two members, each nominated by separate organizations in which employees or workers participate and which exist for the purpose, in whole or in part, of representing the interests of workers concerning grievances, labor disputes, wages, rates of pay, hours of employment, or conditions of work, at least one organization of which represents the interests of low-income workers, appointed by the governor.

AB1220,,42 (b) The members under par. (a) 2. to 13. shall be appointed for a term of 4 years.

AB1220,,43 (c) 1. A nomination under par. (a) may not be made by an entity or organization unless the entity or organization has been in existence for at least 4 years.

AB1220,,44 2. All nominations under par. (a) shall be available to the public and posted on the Public Bank of Wisconsin’s website.

AB1220,,45 (d) An individual may not serve as a member of the board of advisors for more than 8 years.

AB1220,13 Section 13. 16.002 (2) of the statutes is amended to read:

AB1220,,47 16.002 (2) “Departments” means constitutional offices, departments, and independent agencies and includes all societies, associations, and other agencies of state government for which appropriations are made by law, but not including authorities created in subch. II of ch. 114 or in ch. 231, 232, 233, 234, 237, 238, 239, or 279.

AB1220,14 Section 14. 16.004 (4) of the statutes is amended to read:

AB1220,,49 16.004 (4) Freedom of access. The secretary and such employees of the department as the secretary designates may enter into the offices of state agencies and authorities created under subch. II of ch. 114 and under chs. 231, 233, 234, 237, 238, 239, and 279, and may examine their books and accounts and any other matter that in the secretary’s judgment should be examined and may interrogate the agency’s employees publicly or privately relative thereto.

AB1220,15 Section 15. 16.004 (5) of the statutes is amended to read:

AB1220,,51 16.004 (5) Agencies and employees to cooperate. All state agencies and authorities created under subch. II of ch. 114 and under chs. 231, 233, 234, 237, 238, 239, and 279, and their officers and employees, shall cooperate with the secretary and shall comply with every request of the secretary relating to his or her functions.

AB1220,16 Section 16. 16.004 (12) (a) of the statutes is amended to read:

AB1220,,53 16.004 (12) (a) In this subsection, “state agency” means an association, authority, board, department, commission, independent agency, institution, office, society, or other body in state government created or authorized to be created by the constitution or any law, including the legislature, the office of the governor, and the courts, but excluding the University of Wisconsin Hospitals and Clinics Authority, the Wisconsin Aerospace Authority, the Lower Fox River Remediation Authority, the Wisconsin Economic Development Corporation, the Public Bank of Wisconsin, and the Fox River Navigational System Authority.

AB1220,17 Section 17. 16.045 (1) (a) of the statutes is amended to read:

AB1220,,55 16.045 (1) (a) “Agency” means an office, department, independent agency, institution of higher education, association, society, or other body in state government created or authorized to be created by the constitution or any law, that is entitled to expend moneys appropriated by law, including the legislature and the courts, but not including an authority created in subch. II of ch. 114 or in ch. 231, 232, 233, 234, 237, 238, 239, or 279.

AB1220,18 Section 18. 16.15 (1) (ab) of the statutes is amended to read:

AB1220,,57 16.15 (1) (ab) “Authority” has the meaning given under s. 16.70 (2), but excludes the University of Wisconsin Hospitals and Clinics Authority, the Lower Fox River Remediation Authority, the Public Bank of Wisconsin, and the Wisconsin Economic Development Corporation.

AB1220,19 Section 19. 16.41 (4) of the statutes is amended to read:

AB1220,,59 16.41 (4) In this section, “authority” means a body created under subch. II of ch. 114 or under ch. 231, 233, 234, 237, 238, 239, or 279.

AB1220,20 Section 20. 16.417 (1) (b) of the statutes is amended to read:

AB1220,,61 16.417 (1) (b) “Authority” means a body created under subch. II of ch. 114 or ch. 231, 232, 233, 234, 237, 238, 239, or 279.

AB1220,21 Section 21. 16.52 (7) of the statutes is amended to read: