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State Treasurer programs explained to JFAC: LGIP, Diversified Bond Fund, idle pool and Millennium Permanent Endowment; interest reporting discussed
Summary
The committee heard from Legislative Services staff summarizing treasurer-managed investment programs (Local Government Investment Pool, Diversified Bond Fund, Idle Pool, and the Millennium Permanent Endowment Fund) and asked staff to provide granular interest-by-fund reports and statutory directions for interest distribution.
Christopher Lahoset, a Legislative Services Office budget analyst, walked JFAC through the state treasurer—s major investment vehicles and the way interest earnings are reported and directed by statute.
Lahoset described four programs: the Local Government Investment Pool (LGIP), which helps local governments invest idle cash in short-term high-quality securities; the Diversified Bond Fund (DBF), intended for longer horizons (roughly three to five years) and benchmarked to a blended corporate/government mortgage index; the Idle Pool, which manages the state—s day-to-day cash flow and invests surplus in short-term instruments; and the Millennium Permanent Endowment Fund (MPEF), which holds and invests settlement proceeds from the national tobacco settlement to fund prevention and public-health programs.
Results and interest: Lahoset said the Idle Pool earned approximately $249,000,000 in interest in fiscal year 2024. He explained that the direction of earned interest depends on statute: some funds retain interest earnings within the same fund, while others direct interest to the general fund or other accounts. When committee members asked whether interest that bypasses the general fund can be redirected to JFAC-controlled appropriations, Lahoset said the statutory direction of interest is established in code and would require legislative changes to alter.
Why it matters: Interest earnings on pooled cash and long-term endowments are increasingly significant as interest rates have risen; the committee noted that much of this interest has not historically been displayed in the front end of the budget documents and requested staff follow-up to make the ownership and direction of interest more transparent.
Follow-up: Staff said they posted a report to SharePoint that itemizes interest earnings by fund and agency and that they can provide a more detailed spreadsheet showing the statutory direction of those earnings. Committee leaders said they expected interest reporting to become a routine part of the budget front end going forward.
Ending: The presentation did not include policy decisions; staff will provide the interest-by-fund report and identify statutes that control the distribution of interest earnings.
