35-185.01. Treasurer's warrant notes; form; redemption; exception

A. If monies are not available to pay warrants, checks or substitute checks, or electronic funds transfer vouchers of the department of administration presented to the state treasurer pursuant to section 35-185, the treasurer, in lieu of payment, shall issue and shall exchange or sell a treasurer's warrant note or notes in the amount or amounts equal to the sum of the face value of the warrants, checks or substitute checks, or electronic funds transfer vouchers presented for payment. Treasurer's warrant notes shall be issued in lieu of payment of state general fund warrants, checks or substitute checks, or electronic funds transfer vouchers only or in exchange for previously issued treasurer's warrant notes. Before issuing warrant notes, the state treasurer is not required to divest from program funding obligations issued pursuant to section 15-2157, board funding obligations issued pursuant to section 28-7678, monies in the budget stabilization fund or operating monies invested in securities that are earning a rate of interest greater than the cost of issuing warrant notes. For the purposes of this subsection, " monies are not available" means an operating cash balance is not available to pay warrants, checks or substitute checks, or electronic funds transfer vouchers except for those operating monies invested in program funding obligations issued pursuant to section 15-2157, board funding obligations issued pursuant to section 28-7678, monies in the budget stabilization fund or operating monies invested in securities that are earning a rate of interest greater than the total cost of issuing any warrant notes.

B. The face value of a treasurer's warrant note may be equal to the sum of any combination of warrants, checks or substitute checks, and electronic funds transfer vouchers presented for payment. The treasurer may sell warrant notes at public or private sale and shall use the proceeds of the sale to pay warrants, checks or substitute checks, and electronic funds transfer vouchers previously presented pursuant to section 35-185. Treasurer's warrant notes shall not be sold at a price below their face value.

C. Each treasurer's warrant note sold or exchanged shall be dated the date the respective warrants are presented for payment. If the date of delivery of a treasurer's warrant note that is sold is later than the date of presentment of the respective warrant or warrants, the purchaser of the treasurer's warrant note shall pay the accrued interest as an additional purchase price. The accrued interest shall be paid to the holder of the respective unpaid warrant or warrants, which shall be deemed to bear interest at the same rate as the respective treasurer's warrant note from presentment to payment from the proceeds of warrant notes sold.

D. The treasurer shall establish a maturity date for each treasurer's warrant note of not longer than ninety days from the date of initial issue. The treasurer may specify that treasurer's warrant notes may be called for redemption at any time before the specified maturity date.

E. The treasurer shall pay interest from the treasurer's warrant note redemption fund on the face value of each warrant note at the rate established by the state treasurer at the time of issuing the warrant note. Interest shall be paid from the date of the treasurer's warrant note until the maturity date or redemption date. The treasurer shall establish the interest rate before the exchange or sale of warrant notes at a rate of not more than the maximum rate permitted by the state loan commissioners.

F. The state loan commissioners, at a meeting called and chaired by the state treasurer, shall fix or change the maximum rate of interest that may be paid on warrant notes. Any change of the maximum allowable rate of interest as established by the state loan commissioners shall not affect warrant notes issued before the date of the change.

G. Each treasurer's warrant note shall be signed by the treasurer or the treasurer's designated agent and countersigned by the director of the department of administration or the director's designated agent. The required signatures may be electronic signatures. All treasurer's warrant notes shall be substantially in the following form:

Treasurer's warrant note

(20__ to ____ fiscal year)

Number _____________________

Phoenix, Arizona _________________, 20__

On __________________, 20__, the treasurer of the state of Arizona will pay to the order of _____________________ at _______________________________ $_____________ with interest at __________ per annum from the date of issuance until paid (calculated on a 365/366 day basis).

(insert early redemption provisions)

____________________________ ____________________________

(Countersigned) State Treasurer

Director of the department

of administration

H. Treasurer's warrant notes may be exchanged or sold for the combined face value of any number of treasurer's warrant notes previously issued. Except for those treasurer's warrant notes issued in exchange for or to redeem treasurer's warrant notes previously issued, treasurer's warrant notes may not be issued, exchanged or sold except in payment of or to provide monies to pay warrants, checks or substitute checks, and electronic funds transfer vouchers presented for payment as provided in section 35-185.

I. Treasurer's warrant notes issued in any fiscal year shall be numbered consecutively beginning with the number one. Treasurer's warrant notes shall be redeemed in numerical order. If the treasurer has sufficient monies to pay only a portion of the lowest numbered outstanding warrant note, the treasurer may deposit the monies with the paying agent pursuant to subsection K of this section or call in the lowest numbered warrant note, before maturity according to its terms, and pay the bearer the amount available and issue to the bearer a new warrant note bearing a number that will preserve, for the new warrant note, the priority of the partially paid warrant note and bearing a value equal to the amount of principal and interest remaining unpaid. The new warrant note and the partial payment of principal and interest on the partially paid warrant note shall be exchanged for the partially paid warrant note. The new warrant note shall pay interest at the same rate as the partially paid warrant note. The treasurer may make the changes in the form and date of the new warrant note as necessary to reflect the amount of unpaid interest on the partially paid warrant note.

J. The treasurer may include in the form of the treasurer's warrant notes provisions regarding the redemption and payment of treasurer's warrant notes before maturity as are consistent with subsections I and K of this section and section 35-185.02. If prior redemption is to be a provision of a treasurer's warrant note, the note shall provide a method to notify the holder of the note by publication or written, telegraphic or electronic means as chosen by the treasurer.

K. The treasurer may appoint a paying agent to facilitate the redemption and payment of treasurer's warrant notes. Monies deposited with the paying agent shall be allocated to pay the principal of, interest on and any prior redemption premiums associated with treasurer's warrant notes in numerical order. A treasurer's warrant note is deemed paid for all purposes of this section and section 35-185.02 when there is deposited with the paying agent sufficient monies to pay all amounts when due on the treasurer's warrant note and all amounts when due on all outstanding treasurer's warrant notes bearing a lower number. A paying agent appointed pursuant to this subsection shall provide security deposits as required by the treasurer.

L. When the treasurer or the paying agent, if payment is made to a paying agent, pursuant to subsection K of this section, pays treasurer's warrant notes or when the warrant notes are redeemed, the treasurer or paying agent shall mark on the face of the treasurer's warrant notes the word " cancelled" or shall cancel the warrant notes by electronic means indicating the date of cancellation and shall promptly present the notes to the director of the department of administration who shall give the state treasurer a receipt therefor.

M. If the state loan commissioners determine that it will result in a lower net effective interest rate on one, some or all warrant notes to be issued by the treasurer during the current fiscal year, the commissioners may authorize the treasurer to purchase letters of credit and to incur and pay insurance premiums, attorney fees or other related costs incurred with respect to treasurer's warrant notes. All such payments shall be treated in the same manner as interest to be paid on treasurer's warrant notes and shall be paid from the treasurer's warrant note redemption fund.

N. If treasurer's warrant notes are to be exchanged for warrants, checks or substitute checks, or electronic funds transfer vouchers held by banks or savings and loan associations, the treasurer may enter into agreements with such banks or savings and loan associations to provide for the issuance, reissuance and custody of treasurer's warrant notes, the fixing of the interest rates on the treasurer's warrant notes and the method of giving notice to the holders of the notes. Such agreements may provide for a book entry system for the treasurer's warrant notes or may provide for the issuance of one note with an appropriate grid on the reverse, which shall show the advancements made by the banks or savings and loan associations and also the payments of interest and reductions of principal. Such agreements may be continuing in nature, may be executed at any time and may apply to any treasurer's warrant notes exchanged for either warrants, checks or substitute checks, or electronic funds transfer vouchers or treasurer's warrant notes at any time during the remainder of the fiscal year in which the agreement is made. The agreements shall provide a method to preserve the priority of, interest rate on and other terms of each treasurer's warrant note exchanged pursuant to the agreement. Any such agreement shall not become effective until approved by the state loan commissioners.