Date: 01/20/2010
Final
Presentation by Department of Treasury
COMMITTEE ON JOINT FINANCE
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12:12 PM
The meeting was called to order.
12:12 PM -- Presentation by Department of Treasury
Ms. Cary Kennedy, the Colorado State Treasurer, testified about the current state of Colorado's assets. She distributed a copy of her presentations to the members (Attachment A). She also distributed a report about the state's assets (Attachment B) and a copy of Standard & Poor's November rating of Colorado (Attachment C).
Ms. Kennedy began by explaining that while 2009 has been a difficult year for financial markets, Colorado has positive news to report. The state of Colorado closed 2009 with positive earnings. She explained that the investment pool is approximately $5 billion and discussed liquidity and the state's daily cash flow needs. Ms. Kennedy also provided an overview of the programs managed by the department.
12:16 PM
Ms. Kennedy continued her presentation by explaining that the total operating budget for the state Treasury is about $1.8 million. She discussed how the department has reduced its costs and increased the amount of money it saves.
The market value of the five largest funds currently under management by the department was also provided. Ms. Kennedy stated that as State Treasurer, she has followed a long tradition in Colorado of using a more conservative investing approach with the guidance of state law. She continued by explaining that Colorado neither holds any collateralized debt obligations nor does it have any holdings in the five largest investment banks. All of the state's assets are posted on the department's website and taxpayers can see each investment holding the state owns.
12:21 PM
Ms. Kennedy provided an overview of the department's accounting practices and procedures. She discussed the accounts for all cash received by the state and the process for electronic deposits. Ms. Kennedy also discussed the disbursement of Highway User Tax Funds (HUTF) and Federal Mineral Lease (FML) dollars. In addition, she explained the state's cash flow borrowing and stated that if Amendment 61 is approved by voters, it would prevent the department from cash flow borrowing in the future.
12:25 PM
Ms. Kennedy provided background information about the interest-free school loan program. This program was established by the General Assembly in order to address the school district's cash flow needs, and she stated if Amendment 61 is approved, the state would be prohibited from providing these loans to school districts. Ms. Kennedy also discussed several state bond programs.
12:30 PM
Ms. Kennedy responded to questions about charter schools' participation in the bond program. Ms. Kennedy explained that in order for a charter school to participate in this program, the school must have a bond rating. Senator King also stated that the program was created to ensure the risk to the state was minimal. Discussion ensued about this issue.
Committee members also asked Ms. Kennedy about the potential impact of Amendment 61 on short term borrowing. She explained that if the state could not do General Fund cash flow borrowing, the state would have to borrow the money from itself. The department would also have to sit down with school districts on a case by case basis. Discussion continued about Amendment 61 and its potential to increase the cost of borrowing.
12:38 PM
Representative Roberts asked Ms. Kennedy about proposed Amendment 61's potential impact on the state's investment earnings. Members also asked about what the department is doing to enhance transparency.
12:44 PM
Ms. Kennedy explained to committee members that Colorado did not invest in variable rate debt agreements or derivatives. This has left Colorado in a better position than many other states that invested in such investments. She closed her presentation to committee members by discussing state refinancing.