HOUSE BILL REPORT
HB 2463
This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent. |
As Reported by House Committee On:
Financial Institutions & Insurance
Title: An act relating to funding sources for time certificate of deposit investments.
Brief Description: Funding sources for time certificate of deposit investments.
Sponsors: Representatives Kelley, Bailey, Chandler, Morrell and Kirby; by request of State Treasurer.
Brief History:
Committee Activity:
Financial Institutions & Insurance: 1/12/10, 1/14/10 [DP].
Brief Summary of Bill |
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HOUSE COMMITTEE ON FINANCIAL INSTITUTIONS & INSURANCE |
Majority Report: Do pass. Signed by 11 members: Representatives Kirby, Chair; Kelley, Vice Chair; Bailey, Ranking Minority Member; Parker, Assistant Ranking Minority Member; Hurst, McCoy, Nelson, Roach, Rodne, Santos and Simpson.
Staff: Alison Hellberg (786-7152).
Background:
Time Certificate of Deposit Program.
State law provides a procedure for the management of short term treasury surplus funds by the State Treasurer in order to insure a maximum return while they are on deposit in public depositaries. The objectives of the procedures are to minimize non-interest earning demand deposits and provide fair compensation to financial institutions for services rendered to the state through the investment of state funds in time deposits.
Funds not held as demand deposits in public depositaries must be available for the Time Certificate of Deposit Investment Program (TCD Program) according to a formula. The State Treasurer apportions an amount equal to 5 percent of the three-year average mean of general state revenues, as certified in accordance with the constitutional debt limit, or 50 percent of the total surplus treasury investment availability, whichever is less, to participating depositaries. Within 30 days after certification, those funds determined to be available according to the formula for the TCD Program must be deposited in qualified public depositaries. These deposits are allocated among the participating depositaries on a basis determined by the State Treasurer.
The formula used to determine what funds will be available to the TCD Program is devised in consideration of deposits, assets, loans, capital structure, and investments. The State Treasurer may, however, adjust the amount of the allocation if the cash flow needs of the State Treasury will be impaired.
Of all funds available under this program, the State Treasurer may use up to $190 million per year for the Linked Deposit Program.
Local Government Investment Pool.
The State Treasurer also operates the Local Government Investment Pool (Investment Pool). Local governments may make public funds available for investment and reinvestment by the State Treasurer. The State Treasurer is directed to invest the funds in such manner as to effectively maximize the yield to the Investment Pool. The stated purpose of the Investment Pool is to enable political subdivisions, community and technical college districts, the state board for community and technical colleges, and public four-year institutions of higher education to participate with the state in providing maximum opportunities for the investment of surplus public funds consistent with the safety and protection of the funds.
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Summary of Bill:
The funds made available by the State Treasurer for the TCD Program may be provided from either treasury surplus funds or funds held under the Investment Pool. The State Treasurer may only use state funds available under the TCD Program for use in the Linked Deposit Program.
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Appropriation: None.
Fiscal Note: Not requested.
Effective Date: The bill takes effect 90 days after adjournment of the session in which the bill is passed.
Staff Summary of Public Testimony:
(In support) This is a technical bill that would give the State Treasurer more discretion without bringing more risk. With some flexibility, the State Treasurer can benefit both the state treasury and the Investment Pool. The current process is a drag on the state treasury, but could benefit the Investment Pool.
(Opposed) None.
Persons Testifying: (In support) Representative Kelley, prime sponsor; and Wolf Opitz, Office of the State Treasurer.
Persons Signed In To Testify But Not Testifying: None.