Updates on Local Government Programs
- Issuer
- Congressional materials
- Document type
- 2020 01 14 A26164 D208660 Snyder Office Of State Treasurer Ppt
- Date
- 2020-01-14
- Case
- 2020 01 14 A26164 D208660 Snyder Office Of State Treasurer Ppt
Summary
A slide presentation titled Updates on Local Government Programs from the Office of State Treasurer Duane A. Davidson to the Senate Financial Institutions, Economic Development & Trade Committee, dated January 14, 2020. It covers debt management, including credit ratings and borrowing costs, certificates of participation, the LOCAL Program and the School Bond Guarantee Program, which it states has guaranteed $24.6 billion since 1999. It describes the Public Deposit Protection Commission, which it reports oversees 8.9 Billion in public deposits in 60 banks and 20 credit unions. It also reviews investment management, reporting that the Local Government Investment Pool had a net position of $17.4 billion in FY 2019, and describes the Separately Managed Accounts program authorized by HB 1284. The presentation closes with staff contacts.
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Full text
Updates on Local Government Programs
Office of State Treasurer Duane A. Davidson
Senate Financial Institutions,
Economic Development & Trade Committee
January 14, 2020
Debt Management
Debt Management Overview
Transportation Budget
MVFT GO, MVFT/VRF
GO, Triple Pledge,
GARVEE, TIFIA
Capital Budget LOCAL Program
VP GO & State COPs
COPs
OST Debt
Management
Division
School Bond Washington
Guarantee Fund
Program Directory
3
Credit Ratings/Costs of Funds
VPGO Bond
Credit Ratings
Aaa AA+ AA+
Moody's S&P Fitch
Borrowing Average Life
Series & Sale Date
Cost (years)
MVFT, MVFT/VRF, VP GO
September 10, 2019
2.88% 15.289
Triple Pledge Credit Ratings
Aaa AA+ AA+ MVFT VRF GO
September 10, 2019
2.89% 15.173
Moody's S&P Fitch
COP
September 24, 2019
2.07% 7.169
COP
Credit Rating
Aa1
Moody's
4
Certificates of Participation - Financing Contracts
• Issued to finance equipment and real
estate on behalf of the State and
Local Governments
⁻ The State Lease-Purchase Program
⁻ Local Option Capital Asset Lending
(LOCAL) Program
• COPs are issued three times per year (June, October,
February)
• Property financed through the State Lease-Purchase
Program
⁻ Helen Summers building
⁻ Community College facilities
⁻ State vehicle fleet
5
LOCAL Program Overview
• Financing program offered by OST to help Local Governments finance
essential real estate and equipment
• Pools the local financing with the State Lease-Purchase Program
6
LOCAL Program Benefits
• The LOCAL Program helps Local Governments by
providing:
⁻ Low interest rates
⁻ Low issuance costs
⁻ No out of pocket expenses
⁻ Ease of administration
⁻ Economies of scale
• These benefits are achieved by pooling the Local
Government and State lease-purchases together
in a single COP financing
7
School Bond Guarantee Program
• The School Bond Guarantee (SBG) Program pledges the State’s Aaa/AA+/AA+
credit to guarantee the repayment of voter approved school district GO
bonds
⁻ Provides extra security for school bonds, strengthening their rating and reducing interest
costs
⁻ The program saves taxpayers around $21 million annually
• The State has never been called upon to pay debt service on guaranteed
school debt
• $24.6 billion guaranteed since
program inception (1999)
• As of September 1, 2019:
⁻ 178 districts participated in the
program
⁻ 488 separate issuances totaling
$14.8 billion guaranteed Photo Credit: Bellingham School District 8
Washington Fund Directory (wafunddirectory.wa.gov)
9
Example of Funding Programs Listed In Fund Directory
10
Public Deposit Protection Commission
PDPC – Protecting Public Deposits
• Public Deposit Protection Commission (PDPC)
• Protecting Public Funds on Deposit at Financial Institutions
⁻ Makes and enforces regulations
⁻ Safeguards against loss if financial institution becomes insolvent
- Safeguards against loss if financial institution becomes insolvent
- Monitor public depositaries & identify financial condition concerns
- Administer collateral program to secure federally uninsured public deposits
12
PDPC – Protecting Public Deposits
Public Deposits
FDIC/NCUA vs PDPC
• PDPC Oversight
⁻ 8.9 Billion public deposits in 60
banks & 20 credit unions
⁻ Up to $250,000 of public 4%
deposits are insured by FDIC &
NCUA FDIC/NCUA
PDPC
⁻ Public deposits exceeding
federal limits are protected by
PDPC
96%
13
PDPC – Protecting Public Deposits
• Overview, Intent, and updates
⁻ PDPC Secures/Protects Public Funds
⁻ Collateralization Requirements
⁻ PDPC is a Safety Net for Deposit Protection
⁻ The PDPC Protected and Modernized Public Fund Protection from Loss During Bank
Failures
⁻ SHB 1209 (2018)--Credit Unions as Public Depositaries
14
PDPC – Protecting Public Deposits
• Overhaul of PDPC Website
• Greater transparency through
additional reporting data
• Features include:
⁻ Historical Information
⁻ Listing of Qualified Public Depositaries
⁻ PDPC RCWs, WACs, and Resolutions
⁻ Reports
15
Investment Management
Investments Mission
• Efficient management of all state funds:
⁻ Ensuring cash needs of state agencies are met
⁻ Optimal investing of temporary surplus balances
⁻ All to achieve, in priority order: safety, liquidity and return
• Make OST investment expertise available to local governments through the
Local Government Investment Pool portfolio (LGIP) and Separately
Managed Account (SMA) program
• Promote prudent investment practices for all governmental entities in
Washington State
17
Local Government Investment Pool
• Objective: Provide a safe, liquid, short-term investment vehicle for local
governments
⁻ Patterned after private sector 2a-7 money market funds
⁻ Benchmark - net and gross yields of the iMoneyNet Government & Agency group of funds
⁻ 100% liquidity daily and NO maturity date
⁻ Safely invest while achieving a competitive rate of return
⁻ Voluntary
• By statute can only charge what it costs to run the LGIP
⁻ Fee includes all direct and indirect costs
⁻ FY 2019 Administrative Fee – 0.7 basis point (0.007%)
⁻ 13th consecutive year in a row the fee has been less than one basis point
• Liquidity
⁻ Participant Deposits - $57,605,541,228
⁻ Participant Withdrawals - $57,754,668,474 18
Local Government Investment Pool
• Currently has 633 participants and 982 accounts
• Financial Highlights for FY 2019:
⁻ Net position of $17.4 billion
⁻ Average balance of $15.4 billion
⁻ Increase in net position of $210 million
⁻ Earned $359.2 million, net of expenses for pool participants, which was an increase of
$172.1 million from the previous fiscal year
⁻ Participants earned $59 million over what the average comparable money market fund
would have generated
⁻ Average annualized monthly yield was 39 basis points greater than that of its benchmark
19
State Portfolio
• The Investments Division is responsible for investing balances in the State
Treasury and the custody of the State Treasurer that are not need for
current expenditures
• Funds are invested to ensure safety and availability of cash to meet day-to-
day requirements of state agencies, while maximizing returns
• By statute, OST holds and invests the funds of most Washington state
agencies. These captive funds are pooled, which allows a portion of the
total portfolio to be invested in securities with longer maturities
• Investments are divided into two portfolios:
⁻ Liquidity
⁻ Core
20
State Portfolio
21
State Portfolio
22
Separately Managed Accounts
• OST’s 2019 request legislation, HB 1284, authorized OST to provide separately
managed investment portfolios to eligible governmental entities
• Investment management of longer term balances for LGIP-eligible entities
• Leverages OST investment expertise as an additional resource for local governments
• Pierce County was OST’s pilot SMA portfolio, which started in June 2018
• Governed by interagency agreement
• Each participant has its own portfolio; all portfolios share the same investment
policy and benchmark
• Separate custody account that is not commingled with state funds
• Designed for stable balances; unanticipated withdrawals will affect duration and
could result in losses
• Eligible investments include Treasury, agency and supranational notes
• The City of Redmond joined the program January 2, 2020
23
Investment Involvement in Education
• OST strives to provide and promote investment training to local
governments
• We have been actively involved for more than 20 years with different
conferences and associations
• Every year people from our investment team attend the following:
⁻ Washington Public Treasurers Association (WPTA)
⁻ Washington State Association of County Treasurers (WSACT)
⁻ Washington Finance Officers Association (WFOA)
⁻ Government Investment Officers Association (GIOA)
⁻ National Association of State Treasurers (NAST)
• Our staff also participates on boards and committees
24
OST Staff Contacts
PDPC Debt Management Investments
Shad Pruitt, Deputy Treasurer of Jason Richter, Deputy Treasurer Jim Rosenkoetter, Deputy
Operations of Debt Management Treasurer of Investments
360-902-8904 360-902-9007 360-902-9012
shad.pruitt@tre.wa.gov jason.richter@tre.wa.gov james.rosenkoetter@tre.wa.gov
Amy Perry, PDPC Administrator Matt Schoenfeld, Program Staci Ashe, LGIP Administrator
360-902-8977 Administrator - Debt 360-902-9017
amy.perry@tre.wa.gov 360-902-9022 staci.ashe@tre.wa.gov
matthew.schoenfeld@tre.wa.gov
Erhiza Rivera, Assistant State Brenda Snyder, Director of
Treasurer Policy and External Relations
360-902-9002 360-902-9033
erhiza.rivera@tre.wa.gov brenda.snyder@tre.wa.gov
25
Office of the State Treasurer
Questions?
Office of State Treasurer Duane A. Davidson
Service, Security, Transparency
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