Download this newsletter as a PDF
View News & Notes Archive
News & Notes
Update on Local Government Investment Pool (LGIP)
Since the turn of the New Year there have been several items of note regarding the state's Local Government Investment Pool (LGIP). On January 3, 2008 the LGIP Advisory Committee met and heard status reports from SBA Interim Executive Director General Bob Milligan and BlackRock, the LGIP's investment manager. They reported on the current status of the LGIP ($10 billion invested); the process undertaken in seeking and receiving an AAAm rating for the LGIP from Standard and Poor's and host of other topics.
FAC President Teresa Jacobs testified before the committee, stressing the need for the SBA to be forward thinking in identifying ways to increase the availability of LGIP funds to local governments, as one of the largest outstanding issues continues to be liquidity. Gen. Milligan announced that based upon the current maturity schedule, the SBA expects that it will be able to increase the percentage of funds that entities may withdraw (their Available Liquid Balance - ALB) from its current level of 15% to upward of 40% by late March or early April. While the ALB is likely to be incrementally increased over the next few months, after April there are no major maturities until September of 2008. That means the ALB is not likely to significantly increase above 40-45% until September, unless other means are taken to achieve additional liquidity in the LGIP.
In addition to the meeting on January 3, two legislative committees held hearings to better ascertain the circumstances related to the run on and subsequent freezing of the LGIP. On Tuesday the Joint Legislative Auditing Committee (JLAC) heard testimony from General Milligan; Jim Cassady, chief of staff for CFO Alex Sink; and Melinda Miguel, chair of the audit committee that is examining the circumstances which caused the LGIP balance to plummet from $28 billion to $10 billion. On Wednesday, the Senate Governmental Operations Committee (Gov. Ops.) heard testimony regarding the LGIP from General Milligan and Melinda Miguel. The JLAC's questions focused on various aspects of the questionable investments held in LGIP; the lack of a policy detailing how funds would be invested; and the SBA's efforts, or lack thereof, to communicate the true state of affairs to LGIP investors. The Gov. Ops Committee's questions related mainly to the troubled investments sold to the SBA and which brokers the state may need to take legal action against for selling it bad securities.
To view the Joint Statement from the Florida Association of Counties, Florida League of Cities, Florida School Boards Association, Florida Superintendents Association and Florida Association of Court Clerks and Comptrollers regarding the handling of tax dollars by the State Board of Administration through the Local Government Investment Pool, click here.