TALCB staff outline investment approach and $2.6M operations reserve
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Summary
Agency finance staff told the board their funds are held at the Texas Treasury Safekeeping Trust Company and described a laddered U.S. Treasury note strategy; the board discussed whether to retain or return roughly $2.6 million in reserves.
During the Nov. 13 workshop accounting staff reviewed the TALCB investment report and the agency's funds-management arrangements.
Staff explained the statutory requirement to deposit agency funds with the Texas Treasury Safekeeping Trust Company (TTSDC) and described the funds-management agreement and the agency's laddered approach to purchasing U.S. Treasury notes and maintaining short-term repurchase agreements for liquidity. The presenter outlined report fields such as purchase date, par value, accrued interest and market value and described how maturing securities are reinvested to align with cash-flow needs.
The accounting presentation included operating-reserve policy details: the agency targets roughly six months of operating expenses as a reserve and reported $2,600,000 available in the ending balance for operations. Board members debated options for those funds, including returning some money to license holders, keeping reserves to cover projected declines in licensure revenue, or setting a higher long-term investment target to generate revenue through interest. Staff noted statutory limits in the funds-management agreement and Texas Government Code that constrain allowable investments to low-risk options (repurchase agreements, direct obligations of the U.S. government, etc.).
Board members asked staff to review the funds-management agreement with TTSDC to confirm whether minor changes or alternative allowable instruments could improve yield while maintaining the statutory safety and liquidity priorities.
The board moved on to scheduling and adjourned after the investment discussion.
