25.0245.02000
Sixty-ninth
Legislative Assembly HOUSE BILL NO. 1026
of North Dakota
Introduced by
Legislative Management
(Government Finance Committee)
1 A BILL for an Act to amend and reenact sections 23-24-07, 26.1-01-03, 26.1-21-01, 26.1-21-02,
2 26.1-21-04, 26.1-21-07, 26.1-21-09.1, 26.1-21-10, 26.1-21-11, 26.1-21-12, 26.1-21-14,
3 26.1-21-16, 26.1-21-18, 26.1-21-19, 26.1-21-21, 26.1-21-23, 61-06-08, and 61-16.1-05 of the
4 North Dakota Century Code, relating to changing the administration of the state bonding fund
5 from the insurance commissioner to the office of management and budget; to repeal sections
6 26.1-21-03, 26.1-21-08, 26.1-21-09, 26.1-21-13, 26.1-21-15, 26.1-21-17, 26.1-21-20,
7 26.1-21-22, and 26.1-21-24 of the North Dakota Century Code, relating to the administration of
8 the state bonding fund; and to provide a continuing appropriation.
9 BE IT ENACTED BY THE LEGISLATIVE ASSEMBLY OF NORTH DAKOTA:
10 SECTION 1. AMENDMENT. Section 23-24-07 of the North Dakota Century Code is
11 amended and reenacted as follows:
12 23-24-07. Bonds of officers and employees.
13 The treasurer of the district must be bonded in suchan amount as is required by the board
14 of commissioners but suchthe bond may not be less than one thousand dollars. Other district
15 employees must be bonded in suchan amount asdetermined by the board may prescribe. Every
16 officer or employee of whom a bond is required must be deemed bonded with the state bonding
17 fund upon notice of the person's appointment of the individual given to the state insurance
18 commissioneradministrator of the fund by the secretary of the district. Upon notification of the
19 state bonding fund of the premium required, the treasurer shall remit the samepayment.
20 SECTION 2. AMENDMENT. Section 26.1-01-03 of the North Dakota Century Code is
21 amended and reenacted as follows:
22 26.1-01-03. Duties of commissioner.
23 The commissioner shall:
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1 1. See that all the laws of this state respecting insurance companies and benevolent
2 societies are executed faithfully.
3 2. Report in detail to the attorney general any violation of law relative to insurance
4 companies and their officers or agents.
5 3. File the articles of incorporation of all insurance companies organized or doing
6 business in this state, and on application furnish a certified copy thereof.
7 4. Furnish the insurance companies required to make reports to the commissioner and
8 the benevolent societies the necessary blank forms for required statements and
9 reports. The commissioner is not required to send blank forms to those insurance
10 companies which submit their reports on printed forms conforming to those furnished
11 by the commissioner.
12 5. Preserve in permanent form a full record of the commissioner's proceedings and a
13 concise statement of each company or agency visited or examined.
14 6. Furnish at the request of any person, upon the payment of the required fee, certified
15 copies of any record or paper in the commissioner's office, if the commissioner deems
16 it not prejudicial to the public interests to do so, and give such other certificates as
17 may be provided by law.
18 7. Submit a biennial report as prescribed by section 54-06-04 to the governor and the
19 secretary of state. In addition to the requirements of section 54-06-04, the report must
20 contain an abstract only of the reports of the various insurance companies doing
21 business in this state showing the condition of the companies.
22 8. Upon request, send a copy of the commissioner's annual report to the insurance
23 commissioner, or other similar officer, of every other state and to each company doing
24 business in this state.
25 9. Communicate, on request, to the insurance commissioner of any other state any facts
26 that by law it is the commissioner's duty to ascertain respecting companies of this
27 state doing business within that state.
28 10. Manage, control, and supervise the state bonding fund.
29 11. Manage, control, and supervise the state fire and tornado fund and the insurance of
30 public buildings in that fund.
31 12.11. Manage, control, and supervise the state fire marshal.
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1 SECTION 3. AMENDMENT. Section 26.1-21-01 of the North Dakota Century Code is
2 amended and reenacted as follows:
3 26.1-21-01. Definitions.
4 InAs used in this chapter, unless the context otherwise requires:
5 1. "Blanket bond" means a bond that covers collectively all public employees and public
6 officials without the necessity of scheduling names or positions as a part of the bond,
7 and a bond whereby new public employees and new public officials entering
8 employment or office during the period of the bond are automatically included without
9 notice to the fund.
10 2. "Fund" means the state bonding fund.
11 3. "International peace garden" means an entity located upon the international boundary
12 line between the United States and Canada used and maintained as a memorial to
13 commemorate the long-existing relationship of peace and good will between the
14 people and the governments of the United States and Canada and to further
15 international peace among the nations of the world.
16 4. "Office" means the office of management and budget.
17 5. "Political subdivision" means a county, township, park district, school district, city,
18 andor any other unit of local government which is created either by statute or by the
19 Constitution of North Dakota for local government or other public purposes.
20 5.6. "Public employee" means an individual employed by a state agency or any political
21 subdivision, an officer or employee eligible under section 57-15-56, an employee
22 under section 61-16.1-05, andor an officer or employee of an international peace
23 garden. "Public employee"The term does not include an individual employed by an
24 occupational and professional board or commission under title 43 or by the state bar
25 association.
26 6.7. "Public official" means an elected or appointed officer or deputy of a state agency or a
27 political subdivision, except for. The term does not include an officer of an
28 occupational and professional board or commission under title 43 or of the state bar
29 association.
30 7.8. "State agency" means a state board, bureau, commission, department, agency,
31 industry, andor institution and the international peace garden.
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1 SECTION 4. AMENDMENT. Section 26.1-21-02 of the North Dakota Century Code is
2 amended and reenacted as follows:
3 26.1-21-02. State bonding fund - Management by commissionerOffice of management
4 and budget - Administrative services - Continuing appropriation - Report.
5 A fund must be maintained as a fund
6 1. There is created in the state treasury the state bonding fund for the bonding of public
7 employees and public officials. AllThe fund consists of all assessments, interest,
8 profits on investments, and allinvestment earnings, and other income collected under
9 this chapter must be paid into the fund.
10 2. The commissioneroffice shall manage the fund. The office may contract for
11 administrative services from the North Dakota insurance reserve fund or another entity
12 to assist with the management of the fund. A contract for administrative services must
13 have a two-year term ending on June thirtieth of each odd-numbered year, and the
14 contract may not be terminated except at the end of the two-year term. If either party
15 does not anticipate renewing the contract for another two-year term, the party shall
16 give notice of the intent to not renew by September thirtieth of the even-numbered
17 year during the two-year term.
18 3. Moneys in the fund are appropriated to the office on a continuing basis for paying
19 claims against the fund, contracting for administrative services as provided under
20 subsection 2, paying costs incurred by the state auditor for investigations under
21 section 26.1-21-12, and paying reinsurance costs under section 26.1-21-21.
22 4. If the balance of the fund is less than three million dollars, the office shall collect
23 assessments from state agencies and political subdivisions. If the balance of the fund
24 exceeds three million dollars, the office shall waive assessments until the balance of
25 the fund is less than two million dollars at which time the office shall resume collecting
26 assessments.
27 5. If the office determines the interests of the fund are jeopardized by the misconduct or
28 inefficiency of any public official, the office shall notify the state auditor to conduct an
29 investigation.
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1 6. The office shall include a summary of the fund in the biennial report submitted in
2 accordance with section 54-06-04. The summary must include the revenues,
3 expenditures, and balance of the fund.
4 SECTION 5. AMENDMENT. Section 26.1-21-04 of the North Dakota Century Code is
5 amended and reenacted as follows:
6 26.1-21-04. Attorney general is attorney for fund.
7 The attorney general shall act as attorneylegal counsel for the commissioneroffice in any
8 proceeding to which the commissioneroffice is a party on behalf of the fund.
9 SECTION 6. AMENDMENT. Section 26.1-21-07 of the North Dakota Century Code is
10 amended and reenacted as follows:
11 26.1-21-07. Coverage - Assessments - Minimum.
12 1. The amount of coverage afforded to each state agency or political subdivision must be
13 determined by the commissioneroffice based upon the amount of money or property
14 handled and the opportunity for defalcation but the amount must at least. Except as
15 otherwise required by law, the minimum amount of coverage must equal the amount of
16 money or property actually handled or ten thousand dollars, whichever is less. The
17 coverage may be greater than but not less than the amount required by law or
18 determined under law for a position.
19 2. The coverage for a state legislative or judicial branch agency, however, may be
20 determined by the legislative council or supreme court, respectively.
21 3. Notwithstanding any other provision of law, the commissioneroffice may issue bonds in
22 such amounts as the commissioner determines necessary to carry out the purposes of
23 the fund and, in. In determining the amount of coverage to be offered, the
24 commissioneroffice may consider the reserves necessary to pay the bonds and for all
25 other necessary costs or expenses to carry out the purposes of the fund.
26 4. The office shall determine the amount of the bond assessment. The minimum
27 assessment is two dollars and fifty cents per public employee per year. Each state
28 agency and political subdivision shall pay the assessment in advance, and the
29 assessments collected must be deposited in the fund unless the assessment is waived
30 in accordance with section 26.1-21-02.
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1 SECTION 7. AMENDMENT. Section 26.1-21-09.1 of the North Dakota Century Code is
2 amended and reenacted as follows:
3 26.1-21-09.1. Bonds of agents appointed to distribute hunting and fishing licenses or
4 stamps - PremiumsAssessment - Determination of eligibility.
5 The annual premiumassessment for a bond of an agent appointed by the director of the
6 game and fish department to distribute hunting and fishing licenses or stamps pursuant to
7 section 20.1-03-17 is ten dollars. The premium must be paid to the fund pursuant to rules
8 adopted by the commissioner. The commissioner shall deposit the premiums with the state
9 treasurer to the credit of the fund. The commissioneroffice may reduce or waive the
10 premiumassessment if it is determinedthe office determines that funds received pursuant
11 tounder this section are sufficient to cover potential claims on the bonds of agents appointed to
12 distribute hunting and fishing licenses or stamps. The commissioneroffice shall determine the
13 conditions and qualifications of agents bonded under this section. The minimum amount of
14 coverage afforded under this section is fifteen thousand dollars per agent per year.
15 SECTION 8. AMENDMENT. Section 26.1-21-10 of the North Dakota Century Code is
16 amended and reenacted as follows:
17 26.1-21-10. Automatic insurance of state and political subdivisions.
18 1. Each state agency and each political subdivision shall apply to be bonded in the fund
19 no less often than on a biennial basisat least once per biennium or when a change in
20 coverage is requested, whichever occurs first. Unless an application is denied within
21 sixty days from the date it is received by the commissioneroffice, the application will be
22 deemed approved and bond coverage in force. If a bond is in the discretion of the
23 state agency or political subdivision and a bond is not requested, the state agency or
24 political subdivision is exempt from this section.
25 2. The application must include a:
26 a. The requested amount of bond coverage based on the amount of money and
27 property handled and, the opportunity for defalcation, and any other condition
28 imposed by law and list;
29 b. An amount equal to twenty-five percent of the money in control of the public
30 officials or employees for which the bond is requested for the preceding year
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1 based on the total monthly balances. In addition, the application must include
2 any; and
3 c. Any other information requested by the commissioneroffice to determine the
4 amount of money and property handled and the opportunity for defalcation,
5 including the procedure used to determine the amount of bond requested,
6 revenues for the last budget period by type, expenditures for the last budget
7 period by type, the number of people that handle money, any portion of the last
8 audit, and any financial procedures.
9 3. A blanket bond automatically includes coverage for new employees and new public
10 officials.
11 SECTION 9. AMENDMENT. Section 26.1-21-11 of the North Dakota Century Code is
12 amended and reenacted as follows:
13 26.1-21-11. Default of public employees or public officialsClaims - Limitation on filing
14 of claims against fund - Register of claims - Review and payment of claims.
15 1. Within sixty days after the discovery of any default or wrongful act on the part of any
16 public employee or public official for which the fund is or may become liable, the state
17 auditor, county auditor, city auditor, township clerk, or business manager of the school
18 district; the treasurer of the state or state agency or political subdivision if the
19 defaulting officer is the auditor or clerk of the state or state agency or political
20 subdivision; and any other officer having supervision of a defaulting public employee
21 or public official shall file a claim with the commissioneroffice against the fund.
22 2. Any person injured by a default or wrongful act may present the claim to the
23 commissioner within sixty days after the discovery of such default or wrongful act. If a
24 claim is not filed within the time limited by this section, the claim is waived. A claim
25 filed under this section must contain an abstract of the facts upon which the claim is
26 based and must be verified by the claimant or by someone in the claimant's behalf.
27 The claim and all papers relating to the claim must remain on file with the
28 commissionerThe office may prescribe the forms for claims.
29 3. The office may administer oaths and examine witnesses in connection with a claim
30 presented to the office.
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1 4. The office shall maintain a register of all claims filed against the fund, including a brief
2 description of each claim, the name of the public entity, the amount and character of
3 the claim, the action taken upon the claim, and the date action was taken.
4 5. The office shall retain claims and documents relating to claim