Surety bond underwriters, sureties and individuals with a morbid interest in understanding the statutes underlying public official bond obligations should take a look at the new requirements that an Indiana public official bond must meet. The law (Indiana Senate Enrolled Act 393) modified the Indiana Code Section 5-4-1-5.1 to more clearly define what positions must be bonded and legitimize the “stacking” of bond liability, clearly a concern to sureties and their underwriters.
The law requires every elected or appointed officer, official, deputy, employee, or contractor of a political subdivision who is required by section 18 to file a public official bond to guarantee faithful performance of his or her duties, except the county recorder and deputies and employees of the recorder, must file the surety bond with the fiscal officer of the political subdivision and in the office of the county recorder in the county in which the bonded party resides. The county recorder and deputies and employees of the recorder must file with the county auditor and in the office of the clerk of the circuit court in the appropriate jurisdiction.
Except as provided in subsections (j), and (k) of the statute, the fiscal bodies of the respective units must set the public official bond penalty of city controllers, city clerk-treasurers, town clerk-treasurers, Barrett Law fund custodians, county treasurers, county sheriffs, circuit court clerks, township trustees, and conservancy district financial clerks as follows:
(1) The amount must equal thirty thousand dollars ($30,000) for each one million dollars ($1,000,000) of receipts of the officer’s office during the last complete fiscal year before the purchase of
the bond, subject to subsection (2).
(2) The amount may not be less than thirty thousand dollars ($30,000) nor more than three hundred thousand dollars ($300,000) unless the fiscal body approves a greater amount for the officer or employee.
*County auditors shall file bonds in amounts of not less than thirty thousand dollars ($30,000), as fixed by the fiscal body of the county.
Those Indiana public official bond principals not defined above but that are required to file an individual bond, will be directed to file the appropriate amount by the fiscal body of the policital unit as follows:
(1) If the person is not described in subsection (a)(7) of the statute, then the bond must be no less than fifteen thousand dollars ($15,000).
(2) If the person is described in subsection (a)(7), then the bond must be no less than than five thousand dollars ($5,000)
*A controller of a solid waste management district established under IC 13-21 or IC 13-9.5 (before its repeal) must provide an Indiana public official bond in an amount:
(1) fixed by the board of directors of the solid waste management district; and
(2) that is at least thirty thousand dollars ($30,000).
There is an exception to the preceding requirements. The state board of accounts may fix the amount of the Indiana public official bond for a city controller, city clerk-treasurer, town clerk-treasurer, Barrett Law fund custodian, county treasurer, county sheriff, circuit court clerk, township trustee, or conservancy district financial clerk at an amount that exceeds thirty thousand dollars ($30,000) for each one million dollars ($1,000,000) of receipts of the officer’s office during the last complete fiscal year before the purchase of the surety bond not to exceed three hundred thousand dollars ($300,000). The increased bond penalty may be required only if the state examiner issues a report under IC 5-11-5-1 that includes a finding that the public officer engaged in malfeasance, misfeasance, or nonfeasance that resulted in the misappropriation of, diversion of, or inability to account for public monies.
Now, for the “not good” part. Each Indiana public official bond must have a term of one (1) year commencing on the first day of the: (A) calendar year; (B) fiscal year of the political subdivision or governmental unit; or (C) individual’s service in the office or employment position for which a bond is required. Consecutive annual surety bonds must be provided each year even for those public officials that are elected, appointed or employed for multiple year terms. The statute clearly states that each consecutive bond must provide separate coverage for each year. The aggregate liability of the surety FOR ONE YEAR is the penalty specified on the bond. The Surety and Fidelity Association of American and interested parties are purportedly working with the State to modify this onerous provision.
National surety leader, Surety One, Inc. offers this class of bond to all elected and appointed officials at all levels of government and all political subdivisions. Our special underwriting strategy permits us to offer an public official surety bond to an public officer regardless of his or her credit situation. For more information visit us at SuretyOne.com, call (800) 373-2804, or email us at Underwriting@SuretyOne.com.
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