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Treasurer staff briefs JFAC on LGIP, diversified bond fund, idle pool and interest reporting
Summary
Treasury and legislative staff told JFAC about the state's four public investment programs — LGIP, DBF, Idle Pool and the Millennium Permanent Endowment Fund — and said the Idle Pool earned about $249 million in FY2024; they also noted statute determines where interest earnings are directed.
The State Treasurer's Office and legislative analysts presented an overview of the state's cash‑management and investment programs and discussed how interest earnings flow back to funds.
Christopher Lahoset, a budget and policy analyst with the Legislative Services Office who presented materials prepared with the treasurer's staff, described four programs managed or overseen by the treasurer: the Local Government Investment Pool (LGIP), the Diversified Bond Fund (DBF), the state's Idle Pool (which manages day‑to‑day cash), and the Millennium Permanent Endowment Fund (MPEF), which holds Master Settlement Agreement proceeds.
Lahoset summarized each program's purpose: LGIP lets local governments pool short‑term cash for slightly higher returns with strong liquidity; the DBF accepts larger, longer‑term deposits and invests in higher‑quality bonds for longer horizons; the Idle Pool manages state daily cash flows; and the MPEF preserves settlement proceeds while generating earnings to fund tobacco‑prevention efforts.
He also provided an earnings point estimate: "In fiscal year 2024, the idle pool earned over $249,000,000 in interest," Lahoset said. Committee members asked how interest earnings are directed; Lahoset said the direction of interest earnings depends on statute and that staff have reports showing interest earned by fund and agency. Representative Tanner asked whether interest that accrues to dedicated funds ever bypasses appropriation and how the committee could ensure interest earnings flow through the budget process; staff said direction of interest is determined by code and that multiple statutes would need amendment to change flows.
Why it matters: Interest earnings on large cash balances can meaningfully affect fund balances and near‑term fiscal position. Earning, allocation and statutory direction of interest affect how much of those dollars are available to the general fund versus dedicated funds or program accounts.
Follow‑up: Lahoset and Legislative Services staff said detailed reports — including interest by fund and the statutory direction of interest — are available on the committee's SharePoint and that technical follow‑up can show which statutes would have to change to route interest differently.
