NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A7509
TITLE OF BILL: An act to amend the state finance law, in relation to
increasing the limit on short term investment pool investments
PURPOSE: This bill would allow for an increase in the dollar amount
the Comptroller is permitted to hold in indebtedness of certain agen-
cies, corporations and bank or trust companies.
SUMMARY OF PROVISIONS: This bill would amend subdivisions 3-a, 18 and
19 of section 98 of the State Finance Law to increase from 250 million
dollars to 500 million dollars the maximum investment that the Comp-
troller may hold in (i) the debt of a single federal agency which
receives the highest rating of all independent rating agencies that rate
its obligations; (ii) obligations of certain corporations; and (iii)
investments in banker's acceptance of any one bank or trust company.
JUSTIFICATION: In the late 1980's, more than two decades ago, legis-
lation was enacted that expanded the list of investments that the Comp-
troller may invest in for the State's Short Term Investment Pool (STIP).
At that time the maximum balance in STIP was under five billion dollars
and the limit for each investment was set at 250 million dollars which
represented approximately five percent of the total pool. Since that
time the STIP balance has more than tripled, at times exceeding 16
billion dollars, while the limits have remained unchanged. At current
levels, the investment limits are met very quickly resulting in a large
portion of STIP being invested in lower yielding Treasury bills and
securities. Increasing the limits to 500 million dollars will allow STIP
to enhance investment income. If over the next few years current condi-
tions continue to prevail, with this change, STIP could potentially earn
an additional 7.5 million dollars yearly due to the difference in
spreads between low yielding Treasury bills and securities and those
investments that currently are limited to 250 million dollars.
The Comptroller urges the passage of this legislation.
PRIOR LEGISLATIVE HISTORY: New Bill
FISCAL IMPLICATIONS: None to the State.
EFFECTIVE DATE: This act shall take effect immediately.