Res 1988-140 - Laserfiche WebLink

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Legislative Position Paper REVISION OF INVESTMENT LAWS Background Passage of the Public Funds Investment Act of 1987 was an important step forward in clarification of investment authority for cities, counties, and school di stricts in Texas. For the fi rst time, a consoli dated 1 ist of permitted investments for these public entities was written into state law. In addition to granting investment authority, protection of public funds was al so addressed through the requirement that governing bodies adopt written investment pol icies with primary emphasis on safety and 11 qui di ty. As important as the Public Funds Investment Act was, it did not completely satisfy the need for diversification in the management of public funds or the need for specialized investment vehicles to deal with the arbitrage rebate requirements of the Tax Reform Act of 1986. Recomnendations 1. It is recommended that the Public Funds Investment Act be expanded to incl ude the compl ete 1 ist of prime money market instruments and investment securities as defined by the Government Finance Officers Association. Additions to the Public Funds Investment Act should include: . Collateralized certificates of deposit at savings and loan associations . Prime domestic bankers' acceptances . Prime commercial paper, rated A-l/P-l . Money market funds with portfolios consisting of authorized investments* Collateralized securities lending agreements with Texas banks or primary government securities dealers 2. The Local Government Code should be upgraded with simple clarifying headings for each section as related to specific branches of government. Sections should be added for Hospital Districts and other government branches to be i ncl uded in an expanded investment bill. 3. Bidding procedures should be clarified for certificates of deposit to permit telephone bidding and to exempt certificates of deposit from the bidding procedures in depository law. 7