Chapter 16

16.52(8) (8) Refund accounts. The secretary shall promulgate rules permitting agencies, authorized to do so by the governor, to issue checks, share drafts or other drafts to refund amounts not to exceed $5 each. The secretary may establish petty cash funds for such agencies for the purpose of paying refunds.

16.52(9) (9) Secretary to require accounts of state money, etc. The secretary shall require all persons receiving money or securities or having the disposition or management of any property of the state, of which an account is kept in the secretary’s office, to render statements thereof to the secretary; and all such persons shall render such statements at such time and in such form as the secretary shall require.

16.52(10) (10) Department of public instruction. The provisions of sub. (2) with respect to refunds and sub. (5) (a) with respect to reimbursements for the prior fiscal year shall not apply to the appropriation under s. 20.255 (2) (ac).

16.52(11) (11) Secretary to allocate departmental central services costs. The secretary may allocate and charge, and may prescribe the procedures for departments to allocate and charge, the central services costs of the department of administration or of individual departments to selected federal grants or contracts. The charges to departments for the central services costs incurred by the department of administration and the indirect costs incurred by the departments in the administration of federally-aided programs under grants or contracts shall be made in accordance with the procedures adopted by the secretary.

16.52(12) (12) Date for interfund transfers. Whenever it is provided by law for a transfer of moneys to be made from one fund to another fund and no date is specified for the transfer to be made, the department shall determine a date on which the transfer shall be made or provide for partial transfers to be made on different dates, and transfer the moneys in accordance with its determination.

16.52 History History: 1971 c. 125, 261; 1973 c. 243; 1975 c. 41 s. 52; 1977 c. 29; 1977 c. 196 s. 130 (3), (4); 1977 c. 272, 273, 418; 1979 c. 34 ss. 65 to 67, 2102 (43) (a); 1981 c. 14; 1983 a. 27 ss. 73, 74, 2202 (42); 1983 a. 368; 1985 a. 29; 1987 a. 399; 1989 a. 31, 336, 359; 1991 a. 39, 316; 1995 a. 27 ss. 296, 297, 9145 (1); 1997 a. 27; 2001 a. 16; 2003 a. 33; 2005 a. 25, 74, 335; 2007 a. 20, 97; 2009 a. 28, 276; 2011 a. 7, 10; 2013 a. 20.

16.525 16.525 State aid recipients’ accounting. Every association, society, institute or other organization that receives aid in any form through appropriations from the state shall report to the department in August of each year. Such annual report shall contain a detailed statement of all receipts and expenditures of such association, society, institute or organization for the fiscal year concluded on the preceding June 30, and such portions as are of special importance may be published in the biennial report of the department under s. 15.04 (1) (d).

16.525 History History: 1977 c. 196 s. 131; 1987 a. 186.

16.527 16.527 Appropriation obligations.

16.527(1) (1) Legislative findings and determinations.

16.527(1)(a) (a) Recognizing that the state, by prepaying part or all of the state’s unfunded prior service liability under s. 40.05 (2) (b) and the state’s unfunded liability under s. 40.05 (4) (b), (bc), and (bw) and subch. IX of ch. 40, may reduce its costs and better ensure the timely and full payment of retirement benefits to participants and their beneficiaries under the Wisconsin Retirement System, the legislature finds and determines that it is in the public interest for the state to issue appropriation obligations to obtain proceeds to pay the state’s anticipated unfunded prior service liability under s. 40.05 (2) (b) and to pay part or all of the state’s unfunded prior service liability under s. 40.05 (2) (b) and the state’s unfunded liability under s. 40.05 (4) (b), (bc), and (bw) and subch. IX of ch. 40.

16.527(1)(b) (b) The legislature finds and determines that the purchase of any of the tobacco settlement revenues that had been sold by the secretary under s. 16.63 from the net proceeds of appropriation obligations issued under this section is appropriate and in the public interest and will serve a public purpose.

16.527(2) (2) Definitions. In this section:

16.527(2)(ad) (ad) “Aggregate expected debt service and net exchange payments” means the sum of the following:

16.527(2)(ad)1. 1. The aggregate net payments expected to be made and received under a specified interest exchange agreement under sub. (4) (e).

16.527(2)(ad)2. 2. The aggregate debt service expected to be made on obligations related to that agreement.

16.527(2)(ad)3. 3. The aggregate net payments expected to be made and received under all other interest exchange agreements under sub. (4) (e) relating to those obligations that are in force at the time of executing the agreement.

16.527(2)(am) (am) “Appropriation obligation” means an undertaking by the state to repay a certain amount of borrowed money that is payable from all of the following:

16.527(2)(am)1. 1. Moneys annually appropriated by law for debt service due with respect to such undertaking in that year.

16.527(2)(am)2. 2. Proceeds of the sale of appropriation obligations described in sub. (3) (b) 3.

16.527(2)(am)3. 3. Payments received for that purpose under agreements and ancillary arrangements described in sub. (4) (e).

16.527(2)(am)4. 4. Investment earnings on amounts in subds. 1. to 3.

16.527(2)(b) (b) “Evidence of appropriation obligation” means a written promise to pay an appropriation obligation.

16.527(2)(c) (c) “Refunding obligation” means an appropriation obligation contracted to fund or refund all or any part of one or more outstanding appropriation obligations.

16.527(2)(d) (d) “Tobacco settlement agreement” has the meaning given in s. 16.63 (1) (b).

16.527(2)(e) (e) “Tobacco settlement revenues” has the meaning given in s. 16.63 (1) (c).

16.527(3) (3) Authorization of appropriation obligations.

16.527(3)(a) (a) The department shall have all powers necessary and convenient to carry out its duties, and exercise its authority, under this section.

16.527(3)(b) (b)

16.527(3)(b)1. 1. Subject to the limitation under subd. 2., the department may contract appropriation obligations of the state under this section for the purpose of paying part or all of the state’s unfunded prior service liability under s. 40.05 (2) (b) and the state’s unfunded liability under s. 40.05 (4) (b), (bc), and (bw) and subch. IX of ch. 40.

16.527(3)(b)2. 2. The sum of appropriation obligations issued under this section for the purpose under subd. 1., excluding any obligations that have been defeased under a cash optimization program administered by the building commission and any obligations issued pursuant to subd. 3. may not exceed $1,500,000,000.

16.527(3)(b)3. 3. The department may contract appropriation obligations as the department determines is desirable to fund or refund outstanding appropriation obligations issued under this section, to pay issuance or administrative expenses, to make deposits to reserve funds, to pay accrued or funded interest, to pay the costs of credit enhancement, or to make payments under other agreements entered into under sub. (4) (e).

16.527(3)(c) (c)

16.527(3)(c)1. 1. Before July 1, 2009, subject to the limitation under subd. 2., the department may contract appropriation obligations of the state under this section for the purpose of purchasing any of the tobacco settlement revenues that had been sold by the secretary under s. 16.63.

16.527(3)(c)2. 2. The sum of appropriation obligations issued under this section for the purpose under subd. 1. may not exceed $1,700,000,000, excluding amounts representing original issue discount, unless a higher amount is required by Badger Tobacco Asset Securitization Corporation to defease any outstanding indebtedness secured by such tobacco settlement revenues and to release repurchased tobacco settlement revenues to the state free and clear of any security interest therein. The secretary’s certification as to the amount so required shall be conclusive for all purposes of this section.

16.527(4) (4) Terms.

16.527(4)(a) (a) Money may be borrowed and evidences of appropriation obligation issued therefor pursuant to one or more written authorizing certifications under sub. (5), unless otherwise provided in the certification, at any time, in any specific amounts, at any rates of interest, for any term, payable at any intervals, at any place, in any manner, and having any other terms or conditions that the department considers necessary or useful. Appropriation obligations may bear interest at variable or fixed rates, bear no interest, or bear interest payable only at maturity or upon redemption prior to maturity.

16.527(4)(b) (b) The department may authorize evidences of appropriation obligation having any provisions for prepayment considered necessary or useful, including the payment of any premium.

16.527(4)(c) (c) Interest shall cease to accrue on an appropriation obligation on the date that the obligation becomes due for payment if payment is made or duly provided for, but the obligation and accrued interest shall continue to be a binding obligation according to its terms until 6 years overdue for payment, or such longer period as may be required by federal law. At that time, unless demand for its payment has been made, it shall be extinguished and considered no longer outstanding.

16.527(4)(d) (d) All money borrowed by the state pursuant to evidences of appropriation obligation issued under this section shall be lawful money of the United States, and all appropriation obligations shall be payable in such money.

16.527(4)(e) (e) Subject to pars. (h) and (i), at the time of, or in anticipation of, contracting for the appropriation obligations and at any time thereafter so long as the appropriation obligations are outstanding, the department may enter into agreements and ancillary arrangements relating to the appropriation obligations, including trust indentures, liquidity facilities, remarketing or dealer agreements, letter of credit agreements, insurance policies, guaranty agreements, reimbursement agreements, indexing agreements, or interest exchange agreements. Any payments made or received pursuant to any such agreement or ancillary arrangement shall be made from or deposited as provided in the agreement or ancillary arrangement. The determination of the department included in an interest exchange agreement that such agreement relates to an appropriation obligation shall be conclusive.

16.527(4)(f) (f) All evidences of appropriation obligation owned or held by any state fund are outstanding in all respects and the state agency controlling the fund shall have the same rights with respect to an evidence of appropriation obligation as a private party, but if any sinking fund acquires evidences of appropriation obligation that gave rise to such fund, the obligations are considered paid for all purposes and no longer outstanding and shall be canceled as provided in sub. (8) (e). All evidences of appropriation obligation owned by any state fund shall be registered to the fullest extent registrable.

16.527(4)(g) (g) The state shall not be generally liable on evidences of appropriation obligation and evidences of appropriation obligation shall not be a debt of the state for any purpose whatsoever. Evidences of appropriation obligation, including the principal thereof and interest thereon, shall be payable only from amounts that the legislature may, from year to year, appropriate for the payment thereof.

16.527(4)(h) (h)

16.527(4)(h)1. 1. Subject to subd. 2., the terms and conditions of an interest exchange agreement under par. (e) shall not be structured so that, as of the trade date of the agreement, both of the following are reasonably expected to occur:

16.527(4)(h)1.a. a. The aggregate expected debt service and net exchange payments relating to the agreement during the fiscal year in which the trade date occurs will be less than the aggregate expected debt service and net exchange payments relating to the agreement that would be payable during that fiscal year if the agreement is not executed.

16.527(4)(h)1.b. b. The aggregate expected debt service and net exchange payments relating to the agreement in subsequent fiscal years will be greater than the aggregate expected debt service and net exchange payments relating to the agreement that would be payable in those fiscal years if the agreement is not executed.

16.527(4)(h)2. 2. Subd. 1. shall not apply if either of the following occurs:

16.527(4)(h)2.a. a. The department receives a determination by the independent financial consulting firm that the terms and conditions of the agreement reflect payments by the state that represent on-market rates as of the trade date for the particular type of agreement.

16.527(4)(h)2.b. b. The department provides written notice to the joint committee on finance of its intention to enter into an agreement that is reasonably expected to satisfy subd. 1., and the joint committee on finance either approves or disapproves, in writing, the department’s entering into the agreement within 14 days of receiving the written notice from the commission.

16.527(4)(h)3. 3. This paragraph shall not limit the liability of the state under an agreement if actual contracted net exchange payments in any fiscal year exceed original expectations.

16.527(4)(i) (i) With respect to any interest exchange agreement or agreements specified in par. (e), all of the following shall apply:

16.527(4)(i)1. 1. The department shall contract with an independent financial consulting firm to determine if the terms and conditions of the agreement reflect a fair market value, as of the proposed date of the execution of the agreement.

16.527(4)(i)2. 2. The interest exchange agreement must identify by maturity, bond issue, or bond purpose the obligation to which the agreement is related. The determination of the department included in an interest exchange agreement that such agreement relates to an obligation shall be conclusive.

16.527(4)(i)3. 3. The resolution authorizing the department to enter into any interest exchange agreement shall require that the terms and conditions of the agreement reflect a fair market value as of the date of execution of the agreement, as reflected by the determination of the independent financial consulting firm under subd. 1., and shall establish guidelines for any such agreement, including the following:

16.527(4)(i)3.a. a. The conditions under which the department may enter into the agreements.

16.527(4)(i)3.b. b. The form and content of the agreements.

16.527(4)(i)3.c. c. The aspects of risk exposure associated with the agreements.

16.527(4)(i)3.d. d. The standards and procedures for counterparty selection.

16.527(4)(i)3.e. e. The standards for the procurement of, and the setting aside of reserves, if any, in connection with, the agreements.

16.527(4)(i)3.f. f. The provisions, if any, for collateralization or other requirements for securing any counterparty’s obligations under the agreements.

16.527(4)(i)3.g. g. A system for financial monitoring and periodic assessment of the agreements.

16.527(4)(j) (j) Semiannually, during any year in which the state is a party to an agreement entered into pursuant to par. (e), the department shall submit a report to the cochairpersons of the joint committee on finance listing all such agreements. The report shall include all of the following:

16.527(4)(j)1. 1. A description of each agreement, including a summary of its terms and conditions, rates, maturity, and the estimated market value of each agreement.

16.527(4)(j)2. 2. An accounting of amounts that were required to be paid and received on each agreement.

16.527(4)(j)3. 3. Any credit enhancement, liquidity facility, or reserves, including an accounting of the costs and expenses incurred by the state.

16.527(4)(j)4. 4. A description of the counterparty to each agreement.

16.527(4)(j)5. 5. A description of the counterparty risk, the termination risk, and other risks associated with each agreement.

16.527(5) (5) Procedures.

16.527(5)(a) (a) No evidence of appropriation obligation may be issued by the state unless the issuance is pursuant to a written authorizing certification. The certification shall set forth the aggregate principal amount of appropriation obligations authorized thereby, the manner of sale of the evidences of appropriation obligation, and the form and terms thereof. The certification shall be signed by the secretary, or his or her designee, and shall be transmitted to the governor.

16.527(5)(b) (b) Appropriation obligations may be sold at either public or private sale and may be sold at any price or percentage of par value. The department may provide in any authorizing certification for refunding obligations under sub. (7) that they be exchanged privately in payment and discharge of any of the outstanding obligations being refinanced. All appropriation obligations sold at public sale shall be noticed as provided in the authorizing certification. Any bid received at public sale may be rejected.

16.527(6) (6) Form.

16.527(6)(a) (a) Evidences of appropriation obligation may be in the form of bonds, notes, or other evidences of obligation, and may be issued in book-entry form or in certificated form. Notwithstanding s. 403.104 (1), every evidence of appropriation obligation is a negotiable instrument.

16.527(6)(b) (b) Every evidence of appropriation obligation shall be executed in the name of and for the state by the governor and shall be sealed with the great seal of the state or a facsimile thereof. The facsimile signature of the governor may be imprinted in lieu of the manual signature of such officer, as the department directs, if approved by such officer. An evidence of appropriation obligation bearing the manual or facsimile signature of a person in office at the time such signature was signed or imprinted shall be fully valid notwithstanding that before or after the delivery thereof such person ceased to hold such office.

16.527(6)(c) (c) Every evidence of appropriation obligation shall be dated not later than the date issued, shall contain a reference by date to the appropriate authorizing certification, shall state the limitation established in sub. (4) (g), and shall be in accordance with the authorizing certification.

16.527(6)(d) (d) An evidence of appropriation obligation shall be in such form and contain such statements or terms as determined by the department, and may not conflict with law or with the appropriate authorizing certification.

16.527(7) (7) Refunding obligations.

16.527(7)(a) (a)

16.527(7)(a)1. 1. The department may authorize the issuance of appropriation obligation refunding obligations. Refunding obligations may be issued, subject to any contract rights vested in owners of obligations being refinanced, to refinance all or any part of one or more issue of obligations notwithstanding that the obligations may have been issued at different times. The principal amount of the refunding obligations may not exceed the sum of: the principal amount of the obligations being refinanced; applicable redemption premiums; unpaid interest on the obligations to the date of delivery or exchange of the refunding obligations; in the event the proceeds are to be deposited in trust as provided in par. (c), interest to accrue on the obligations from the date of delivery to the date of maturity or to the redemption date selected by the department, whichever is earlier; and the expenses incurred in the issuance of the refunding obligations and the payment of the obligations.

16.527(7)(a)2. 2. A determination by the department that a refinancing is advantageous or that any of the amounts provided under subd. 1. should be included in the refinancing shall be conclusive.

16.527(7)(b) (b) If the department determines to exchange refunding obligations, they may be exchanged privately for and in payment and discharge of any of the outstanding obligations being refinanced. Refunding obligations may be exchanged for such principal amount of the obligations being exchanged therefor as may be determined by the department to be necessary or advisable. The owners of the obligations being refunded who elect to exchange need not pay accrued interest on the refunding obligations if and to the extent that interest is accrued and unpaid on the obligations being refunded and to be surrendered. If any of the obligations to be refinanced are to be called for redemption, the department shall determine which redemption dates are to be used, if more than one date is applicable and shall, prior to the issuance of the refunding obligations, provide for notice of redemption to be given in the manner and at the times required by the certification authorizing the outstanding obligations.

16.527(7)(c) (c)

16.527(7)(c)1. 1. The principal proceeds from the sale of any refunding obligations shall be applied either to the immediate payment and retirement of the obligations being refinanced or, if the obligations have not matured and are not presently redeemable, to the creation of a trust for and shall be pledged to the payment of the obligations being refinanced.

16.527(7)(c)2. 2. If a trust is created, a separate deposit shall be made for each issue of appropriation obligations being refinanced. Each deposit shall be with the secretary of administration or a bank or trust company that is a member of the Federal Deposit Insurance Corporation. If the total amount of any deposit, including money other than sale proceeds but legally available for such purpose, is less than the principal amount of the obligations being refinanced and for the payment of which the deposit has been created and pledged, together with applicable redemption premiums and interest accrued and to accrue to maturity or to the date of redemption, then the application of the sale proceeds shall be legally sufficient only if the money deposited is invested in securities issued by the United States or one of its agencies, or securities fully guaranteed by the United States, and only if the principal amount of the securities at maturity and the income therefrom to maturity will be sufficient and available, without the need for any further investment or reinvestment, to pay at maturity or upon redemption the principal amount of the obligations being refinanced together with applicable redemption premiums and interest accrued and to accrue to maturity or to the date of redemption. The income from the principal proceeds of the securities shall be applied solely to the payment of the principal of and interest and redemption premiums on the obligations being refinanced, but provision may be made for the pledging and disposition of any surplus.

16.527(7)(c)3. 3. Nothing in this paragraph may be construed as a limitation on the duration of any deposit in trust for the retirement of obligations being refinanced that have not matured and that are not presently redeemable. Nothing in this paragraph may be construed to prohibit reinvestment of the income of a trust if the reinvestments will mature at such times that sufficient cash will be available to pay interest, applicable premiums, and principal on the obligations being refinanced.

16.527(8) (8) Fiscal regulations.

16.527(8)(a) (a) The department shall act as registrar for each evidence of appropriation obligation. No transfer of a registered evidence of appropriation obligation is valid unless made on a register maintained by the department, and the state may treat the registered owner as the owner of the instrument for all purposes. Payments of principal and interest shall be by electronic funds transfer, check, share draft, or other draft to the registered owner at the owner’s address as it appears on the register, unless the department has otherwise provided. Information in the register is not available for inspection and copying under s. 19.35 (1). The department may make any other provision respecting registration as it considers necessary or useful. The department may enter into a contract for the performance of any of its functions relating to appropriation obligations.

16.527(8)(b) (b) The department, or the department’s agent, shall maintain records containing a full and correct description of each evidence of appropriation obligation issued, identifying it, and showing its date, issue, amount, interest rate, payment dates, payments made, registration, destruction, and every other relevant transaction.

16.527(8)(c) (c) The secretary may appoint one or more trustees and fiscal agents for each issue of appropriation obligations. The secretary may be denominated the trustee and the sole fiscal agent or a cofiscal agent for any issue of appropriation obligations. Every other fiscal agent shall be an incorporated bank or trust company authorized by the laws of the United States or of the state in which it is located to do a banking or trust company business. There may be deposited with a trustee, in a special account, moneys to be used only for the purposes expressly provided in the certification authorizing the issuance of evidences of appropriation obligation or an agreement between the department and the trustee. The department may make other provisions respecting trustees and fiscal agents as the department considers necessary or useful and may enter into a contract with any trustee or fiscal agent containing such terms, including compensation, and conditions in regard to the trustee or fiscal agent as the department considers necessary or useful.