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Program D: Investment Management

Program Authorization on: La. Constitution , Article IV, Sec. 9 and Article VII, Secs. 9, 10.1, and 13; R.S. 49:307-32 7.1; R.S. 36:761-76 9; 17:3803

PROGRAM DESCRIPTION

The mission of the Investment Management Program is to invest state funds deposited in the State Treasury in a prudent manner, consistent with the cash needs of the state, the directives of the constitution and state legislature, and the guidelines and requirements of various funds under management.

The goal of the Investment Management Program is to invest monies on deposit in the State Treasury in a manner that provides a high degree of safety of public funds; allows for the daily cash needs of the state; and provides a reasonable investment return.

It is the responsibility of the Investment Management Program (organizationally expressed as the Office of State Depository Control and Investments) to invest funds in a safe manner and to protect and maximize the value of the state's investments as well as to maintain liquidity to meet the state's cash flow needs. The Investment Management Program maintains several investment portfolios, each with differing characteristics that, in combination, average $2.5 billion. Additionally, these portfolios are subject to over $12 billion per fiscal year in receipts and disbursement activity.

The Investment Management Program operates within a written investment policy adopted by the administration and written procedures that provide internal control of daily investment trading activity. This investment activity earned over $177 million in FY 1996-97.

The Investment Management Program also makes itself available to review and recommend investment policies and procedures of the various state agencies and colleges and universities, as requested, and to assist the Cash Management Review Board in its review of the investment policies adopted by each state college and university.

OBJECTIVES AND PERFORMANCE INDICATORS

1. In FY 1997-98, the Investment Management Program will provide safety of investment principal.

1 The State Treasury requires financial institutions to place certain types of securities with a market value equal to or greater than 102% of the amounts placed with the financial institution by the State Treasury in a third party custodian financial institution or the Federal Reserve in the name of the State Treasury.

2. In FY 1997-98, the Investment Management Program will provide for the liquidity needs of the State of Louisiana.

3. During FY 1998-99, the Investment Management Program will invest monies on deposit in the State Treasury to equal or exceed the average yield on the 30-day Treasury Bill for the same period of time.

1 The amount of investment income earned depends primarily upon the amount of money available to invest and the prevailing market conditions--factors that are largely outside the control of the Investment Management Program. The FY 1997-98 estimates and FY 1998-99 projections could be adversely affected by these external factors despite the best management efforts of the program.

RESOURCE ALLOCATION FOR THE PROGRAM

SOURCE OF FUNDING

This program is funded with state general fund, interagency transfers, fees and self-generated revenues and statutory dedications. Interagency transfers are derived from various state agencies for their share of the cost in investing funds. Fees and self-generated revenues are derived from fees collected for preliminary review and final approval of bond applications; from implementation of the securities lending program, and from the Local Government Investment Pool revenue. Statutory dedications are derived from the Louisiana Quality Education Support Fund (8 (g)). (Per R.S. 39:32B.(8), see table below for a listing of expenditures out of each statutory dedicated fund.)

ANALYSIS OF RECOMMENDATION

GENERAL FUND

TOTAL

T.O.

 

DESCRIPTION

 

 

 

 

 

$132,480

$1,031,316

8

 

ACT 18 FISCAL YEAR 1997-1998

 

 

 

 

 

 

 

 

 

BA-7 TRANSACTIONS:

$0

$0

0

 

None

 

 

 

 

 

$132,480

$1,031,316

8

 

EXISTING OPERATING BUDGET - December 10, 1997

 

 

 

 

 

$0

$9,465

0

 

Annualization of 1997-'98 Merit Pay Adjustment(s)

$0

$4,919

0

 

1998 -'99 Merit Pay Adjustment(s)

$0

($11,656)

0

 

Attrition Adjustment

($2,507)

($2,507)

0

 

Retirement Rate Adjustment(s)

$0

($16,647)

0

 

Reductions in various Expenditure Categories; Including Reductions to fully fund Salaries

$0

$227,500

0

 

Increase equity investments for the La. Education Quality Trust Fund to 28%

 

 

 

 

 

$129,973

$1,242,390

8

 

TOTAL RECOMMENDED

 

 

 

 

 

($2,507)

$211,074

0

 

DIFFERENCE (TOTAL RECOMMENDED AND EXISTING OPERATING BUDGET)

The total means of financing for this program is recommended at 120.4% of the existing operating budget. It represents 94.7% of the total request ($1,311,686) for this program. Significant changes include an increase in the equity investments for the La. Educational Quality Trust Fund (8G).

PROFESSIONAL SERVICES.

This program does not have funding for Professional Services for Fiscal Year 1998-1999.

OTHER CHARGES

$96,404

 

Custodial services for the Louisiana Education Quality Trust Fund [8(g)]

$58,153

 

Rate services provided by Telerate/Knight Ridder

$705,700

 

Custodial services for the equity investment management program for the 8(g) fund

 

 

 

$860,257

 

TOTAL OTHER CHARGES

 

 

 

 

 

Interagency Transfers:

$1,181

 

Department of Civil Service

$900

 

Office of Information Services for data processing services

 

 

 

$2,081

 

TOTAL INTERAGENCY TRANSFERS

ACQUISITIONS AND MAJOR REPAIRS

This program does not have funding for Acquisitions and Major Repairs for Fiscal Year 1998-1999.


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