Bill Summary – FastDemocracy

Stricken language would be deleted from and underlined language would be added to present law.
                                           Act 826 of the Regular Session
 State of Arkansas
 94th General Assembly                        A Bill
 Regular Session, 2023                                                             HOUSE BILL 1713
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 By: Representative Perry
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                                    For An Act To Be Entitled
                AN ACT TO AMEND THE SELF-INSURED FIDELITY BOND
                PROGRAM; AND FOR OTHER PURPOSES.
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                                               Subtitle
                         TO AMEND THE SELF-INSURED FIDELITY BOND
                         PROGRAM.
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 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF ARKANSAS:
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        SECTION 1.       Arkansas Code § 19-5-954 is amended to read as follows:
        19-5-954.        Self-Insured Fidelity Bond Trust Fund.
        (a)    There is established on the books of the Treasurer of State, the
 Auditor of State, and the Chief Fiscal Officer of the State a fund to be
 known as the “Self-Insured Fidelity Bond Trust Fund”.
        (b)    The fund shall consist of bond premiums collected under § 21-2-701
 et seq., there to be administered and disbursed by the Governmental Bonding
 Board for the use and benefit of participating governmental entities for bond
 claims and board expenses.
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        SECTION 2.       Arkansas Code § 21-2-702(5)(A), concerning the definition
 of "fidelity bond" used under the Self-Insured Fidelity Bond Program, is
 amended to read as follows:
                (5)(A)      “Fidelity bond” means coverage for actual direct
 pecuniary loss of value sustained as defined in subdivisions (6), (10), and
 (13) of this section, that is incurred as a result of any fraudulent or
 dishonest act, whether or not the result of a single act or series of acts
 committed against a participating government entity by officials or
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 employees.
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      SECTION 3.      Arkansas Code § 21-2-703 is amended to read as follows:
      21-2-703.      Coverage in lieu of statutory fidelity bonds.
      (a)(1)     The fidelity bond coverage provided under this subchapter shall
 be in lieu of all statutorily required fidelity bonds for any fraudulent or
 dishonest act or acts committed by the various public officers, officials,
 and employees of a participating governmental entity participating in the
 Self-Insured Fidelity Bond Program.
               (2)   The various laws specifically requiring fidelity bonds or
 fidelity blanket bonds for the respective public officials, officers, and
 employees shall not be applicable so long as the fidelity bonds as provided
 in this subchapter are in effect covering the officials, officers, and
 employees.
      (b)     In the event coverage ceases to be provided for any fraudulent or
 dishonest act or acts committed by any public officials, officers, or
 employees pursuant to this subchapter, the laws currently in effect providing
 for fidelity bonds or fidelity blanket bonds shall again become applicable to
 the public officials, officers, and employees.
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      SECTION 4.      Arkansas Code § 21-2-704(a) and (b), concerning the
 establishment of and coverage under the Self-Insured Fidelity Bond Program,
 are amended to read as follows:
      (a)     There is established the Self-Insured Fidelity Bond Program for a
 fraudulent or dishonest act committed by any state officials and employees,
 county officials and employees, municipal officials and employees, and school
 district officials and employees the State of Arkansas and the counties,
 municipalities, and school districts of this state, to be administered by the
 Governmental Bonding Board.
      (b)(1)     The fidelity bond coverage provided by the program shall cover
 actual direct pecuniary losses sustained by a participating governmental
 entity only when the loss is sustained through any fraudulent or dishonest
 act or acts committed by any official or employee of the participating
 governmental entity acting alone or in collusion with another, during the
 bond period to an amount not exceeding the lesser of three hundred thousand
 dollars ($300,000) or the amount of the bond.
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               (2)   Coverage for loss of property other than money and
 securities, the loss of which is caused by theft or by a dishonest or
 fraudulent act or acts, shall be limited to the actual cash value of the
 property on the day the loss was discovered.
               (3)   No coverage shall be provided for any claim in which a
 participating governmental entity through fraudulent means takes money or
 other property from another participating governmental entity.
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      SECTION 5.      Arkansas Code § 21-5-705(b)(2), concerning the expenses of
 the Governmental Bonding Board, is amended to read as follows:
               (2)   The expense reimbursement of members of the board shall be
 paid from the Self-Insured Fidelity Bond Trust Fund.
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      SECTION 6.      Arkansas Code § 21-5-709(a)(2)(A), concerning loss payments
 under the Self-Insured Fidelity Bond Program, is amended to read as follows:
                     (A)   The Insurance Commissioner shall authorize fidelity
 bond loss payments from the Self-Insured Fidelity Bond Trust Fund to the
 participating governmental entity on a timely basis; and
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      SECTION 7.      Arkansas Code § 21-2-710(b), concerning the funds received
 from the Insurance Commissioner, is amended to read as follows:
      (b)   Upon receipt of these funds, the Insurance Commissioner shall
 deposit them in into the Self-Insured Fidelity Bond Trust Fund.
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      SECTION 8.      Arkansas Code § 21-2-711 is amended to read as follows:
      21-2-711.      Self-Insured Fidelity Bond Trust Fund.
      (a)   There is established on the books of the Treasurer of State, the
 Auditor of State, and the Chief Fiscal Officer of the State a separate fund
 to be known as the “Self-Insured Fidelity Bond Trust Fund”.
      (b)(1)      No money shall be appropriated from the fund for any purpose
 except for the use and benefit of participating governmental entities for
 bond claims and for Governmental Bonding Board expenses, including, but not
 limited to, without limitation travel, actuarial, consultant, and service
 contract fees.
               (2)   The fund shall be administered by and disbursed at the
 direction of the Governmental Bonding Board.
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      (c)(1)(A)      The assets of the fund may be invested and reinvested as the
 Governmental Bonding Board may determine with the advice of the State Board
 of Finance.
                     (B)   All incomes derived through investment of the fund
 shall be credited as investment income to the fund.
                     (C)   For the purposes of investment, fund moneys invested
 and interest earned on fund moneys invested shall be administered as trust
 funds pursuant to the provisions of § 19-3-219(a)[repealed] under § 19-3-518.
               (2)   Further, all moneys deposited to the fund shall not be
 subject to any deduction, tax, levy, or any other type of assessment.
      (d)    All moneys received by the Governmental Bonding Board for the
 Self-Insured Fidelity Bond Program, including premiums collected by the
 Governmental Bonding Board under this subchapter, restitution, interest
 payments, grants, gifts, and refunds shall be deposited into the fund.
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      SECTION 9.      DO NOT CODIFY.   Any funds that are appropriated and payable
 from the Fidelity Bond Trust Fund, § 21-2-711, shall also be deemed to be
 appropriated and payable from the Self-Insured Fidelity Bond Trust Fund, §
 21-2-711.
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                                  APPROVED: 4/13/23
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Statutes affected: 
HB 1713: 19-5-954, 21-2-701, 21-2-702(5), 21-2-703, 21-2-704(a), 21-5-705(b), 21-5-709(a), 21-2-710(b)
Act 826: 19-5-954, 21-2-701, 21-2-702(5), 21-2-703, 21-2-704(a), 21-5-705(b), 21-5-709(a), 21-2-710(b)