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Treasurer's office briefs committee on LGIP, diversified bond fund, idle pool and Millennium endowment; staff request interest reports by fund
Summary
The state treasurer's office outlined four investment programs used to manage local government cash, state daily cash, longer-term bond investments and the Millennium Permanent Endowment Fund; staff agreed to post fund-level interest reports to SharePoint and answer follow-up questions about how interest postings are directed by statute.
Christopher Lahoset, a budget analyst with Legislative Services Office, reviewed the treasurer's office investment vehicles and summarized recent interest-generation figures.
Program descriptions: Lahoset summarized four state-run investment vehicles: - Local Government Investment Pool (LGIP): a short-term, low-risk pooled account for cities, counties, school districts and other local governments seeking liquidity and modest yields; investments emphasize high-quality short-term securities. - Diversified Bond Fund (DBF): a longer-horizon bond fund for state and public agencies (typical horizon ~3.5 years), benchmarked to a blended corporate/government and mortgage index; higher expected returns and higher market risk; $250,000 minimum to participate. - Idle Pool: the treasurer's daily cash-management pool that invests surplus state balances in short-term instruments; Lahoset reported the idle pool earned over $249,000,000 in interest in fiscal 2024. - Millennium Permanent Endowment Fund (MPEF): long-term management of the Master Settlement Agreement (MSA) tobacco settlement proceeds, invested to preserve principal and fund anti-tobacco and health-related programs.
Interest reporting and statutory direction: committee members asked whether interest earned on specific funds flows back through JFAC appropriations or bypasses the general-fund appropriation process. Lahoset and staff said statute determines where fund-level interest is credited and that a published SharePoint report breaks out interest earnings by fund and agency; staff agreed to post a report that shows earnings and the statutory direction for each fund (e.g., interest retained in the fund versus interest credited to the general fund).
Why it matters: interest earned on pooled or dedicated funds can materially change agency balances and available resources. Representative Tanner asked how to ensure interest that should be available for appropriation is routed through the legislature rather than bypassing it; staff said changing those directions requires statutory amendment.
Ending: Lahoset said the treasurer's detail report is on SharePoint and staff will post fund-by-fund interest assumptions and historical earnings for committee review.
