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State treasurer's office outlines four investment pools and reports $249 million in idle-pool interest in FY2024
Summary
Legislative staff briefed the committee on four state investment programs managed by the treasurer's office — LGIP, diversified bond fund, idle pool, and the Millennium Permanent Endowment Fund — and reported the idle pool generated about $249 million in FY2024 interest earnings.
Christopher Lahoset, budget and policy analyst with the Legislative Services Office, summarized the treasurer's investment programs for JFAC and provided earnings context for FY2024.
Lahoset described four programs the treasurer manages: the Local Government Investment Pool (LGIP), the Diversified Bond Fund (DBF), the idle pool (which handles the state's daily cash flow), and the Millennium Permanent Endowment Fund (MPEF) created to invest the Master Settlement Agreement proceeds for tobacco prevention programs.
Key points and figures: Lahoset said the LGIP allows local governments to pool idle cash for conservative investment in short-term, high-quality securities. The DBF is a higher-yield, longer-horizon option for agencies that can lock funds for roughly 3.5 years; it is benchmarked to a blended corporate/government and mortgage index and charges a small annual fee (0.017%). The idle pool, which manages daily state cash flows, produced more than $249 million in interest in fiscal year 2024, Lahoset reported.
He also described the MPEF's purpose: long-term preservation of settlement proceeds to support tobacco-prevention and public-health programs.
Agency reporting and next steps: Lahoset said the LSO has posted a spreadsheet on the JFAC SharePoint showing interest earned by fund and by agency, and committee members asked for further detail on which funds receive interest distributions and where interest is directed by statute. Lahoset confirmed the destination for interest is determined by statute and that addressing changes to interest direction would require legislative action across multiple codes and funds.
Why it matters: increasing interest rates and portfolio returns change the state's cash-management picture and can materially affect agency receipts, fund balances and the general fund's net resources. Committee members requested the LSO's fund-by-fund interest report, and Lahoset said he had posted a report to the SharePoint that includes fund-level interest earnings and that staff could follow up with statutory direction for specific funds if members request it.
