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State treasurer's portfolio manager briefs Payson on LGIP returns, town finance staff explains process
Summary
A State Treasurer portfolio manager described the Arizona Local Government Investment Pool's structure, short- and medium-term fund options and recent yields; Payson finance staff explained the LGIP is the town's operating 'savings' account into which state revenues are deposited and from which transfers are made to operating funds.
Jake Richardson, portfolio manager for the State Treasurer's office, presented the structure and performance of Arizona's Local Government Investment Pool (LGIP) to the Payson council on Feb. 12. Richardson described the LGIP's short-term pools (Pool 5 and Pool 7), medium-term pools (500, 700), and the Arizona Endowment Trust Fund and compared yields and liquidity characteristics.
Key figures Richardson reported (December/most-recent statements cited): Pool 5 one-month yield ~4.55% and Pool 7 ~4.49%; year-to-date and 12-month performance numbers were discussed as well as weighted-average maturities and expense ratios compared to private funds. Finance staff Dana O'Hanesian explained the town's LGIP account functions as the town's savings account: the Arizona Department of Revenue deposits state-collected taxes directly into the town's LGIP account and the town redeems funds to its operating account as needed to pay bills and payroll.
Why it matters: The LGIP produces monthly interest income for the town and holds approximately the municipality's idle funds. Council members asked about fund selection (why money is in Pool 7 versus Pool 5) and liquidity for payroll and capital needs. Staff said transfers are made frequently to cover payrolls and large disbursements; contributions to the LGIP are possible for large receipts but most flow is one direction from the Department of Revenue to the LGIP and then to the operating account.
What's next: Finance will continue to manage funds consistent with the town's investment policy; council asked for clarity on which funds (pools) hold operating versus reserve funds and confirmed water-utility funds are in the same pool.
