The Investment Division of the State Treasurer’s Office primarily invests the cash balances that are temporarily idle between the time revenue is collected and the time budgeted amounts are disbursed. The Division is also responsible for a number of longer-term investment activities associated with the purchase of 20-year development easements on agricultural land and the payment of lottery prizes over 19-year periods. The Division manages the investment of General Obligation bond proceeds and also directs the short-term and long-term investments of a number of trustee accounts under State agency revenue bond indentures. Sections 6-222 through 6-226 of the State Finance and Procurement Article govern the investment of the State’s unexpended or surplus money. Investments are made according to the State law and the Treasurer’s Investment Policy.
The Investment Division is not responsible for the investment and management of all funds. Other State agencies are responsible for the investment and management of the State’s pension funds, the insurance reserves of the Maryland Automobile Insurance Fund, Injured Workers Insurance Fund and certain endowment funds at public colleges and universities. Interest earnings on investments accrue to the General Fund unless State law or regulation directs that the interest should accrue to a specific fund. During the 1990 session, the General Assembly enacted legislation, sponsored by the Treasurer’s Office, to allow all operating funds invested by the Treasurer to be invested in a common pool. Interest earned from this pool is allocated to the various State agencies and to the General Fund on a pro-rata basis.
Under State law, investments by the State Treasurer’s Office are limited to secured bank accounts, full faith and credit obligations of the federal government, obligations of certain federal agencies or instrumentalities, repurchase agreements collateralized by those securities, certain money market funds and limited amounts of commercial paper.
U.S. government agency investment securities are procured competitively through approved brokerage firms. To be approved, a firm (1) must be a primary dealer reporting to the Federal Reserve or a registered member of the New York Stock Exchange, or (2) file financial statements exhibiting financial resources considered adequate by the Investment Division and approved by the Treasurer, and (3) provide competitive bids to the Investment Division on a regular basis.
The Treasurer’s policy is to make sure that local, regional and minority brokerage firms have an opportunity to bid on a portion of the State’s investable funds. Please be advised that this is a highly competitive process. The fiduciary responsibility to Maryland residents requires scrupulously seeking the best prices for all investments. Inclusion on the list grants the privilege of submitting bids and offers but does not guarantee a transaction.
Maryland Local Government Investment Pool
Sections 17-301 through 17-309 of the Local Government Article of the Annotated Code of Maryland establish the Maryland Local Government Investment Pool (LGIP) and assigns to the State Treasurer’s Office the responsibility for administering the Pool. The actual management of the Pool has been contracted out to The PNC Financial Services Group, Inc.
The Treasurer has encouraged local governments and eligible authorities to participate in the Pool, a “AAAm” rated money market account.
Direct link to MLGIP website here.