TITLE: CONCERNING THE AUTHORIZED MATURITY DATE FOR CERTAIN SECURITIES THAT COLLATERALIZE REPURCHASE AGREEMENTS FOR LEGAL INVESTMENTS OF PUBLIC FUNDS.

Fiscal Impact Summary	FY 1999/2000	FY 2000/2001
State Revenues General Fund Cash Funds	Potential Investment Earnings Increase
State Expenditures General Fund
FTE Position Change	0.0 FTE	0.0 FTE
Other State Impact: Possible TABOR Impact
Effective Date: Upon signature of the Governor
Appropriation Summary for FY 1999-2000: None Required
Local Government Impact: The bill broadens the types of securities that may be used as collateral on repurchase agreements entered into by certain local governments.

This bill, as amended in the House Local Government Committee, permits public entities to purchase United States government securities that have maturities of greater than five years for purposes of collateralizing repurchase agreements for the securities when they are part of lawful investments of public funds. As amended, investments by the State Treasurer would be exempted from the provisions of the bill. In order to qualify, the security must be collateralized at no less than 102 percent and must be marked to market no less frequently than weekly.

The bill broadens the types of United States government securities that may be used by brokers as collateral on repurchase agreements entered into with public entities. Section 24-75-601, C.R.S. defines a public entity to include, among others, the State of Colorado; any institution, agency, instrumentality, authority, county, municipality, city and county, district, any other political subdivision of the state, any local government investment pool, or any public entity insurance pool. As amended, investments by the State Treasurer would be exempted from the provisions of the bill. The bill would apply to other investments of state monies, such as from institutions of higher education, for example.

Expanding the types of United States government backed securities that may be used to collateralize repurchase agreements will allow investment brokers to offer additional types of inventory as collateral to public entities who provide funds to the brokers on a short-term basis. This increased amount of collateral inventory may have an effect of increasing the rates offered by brokers to public entities on these instruments due to the increase in the supply of collateral. Increased rates would increase the rate of return achieved by the public entity on their invested funds.

The use of repurchase agreements as a short-term investment tool may result in a greater return on investment for public entities that choose to use this form of investment. The amount of increased investment earnings cannot be quantified at this time. Therefore, the bill is assessed as having a conditional fiscal impact on affected state and local public entities.

Local public entities would be impacted by the bill in the same manner as has been identified in the State Revenue Impact of the fiscal note. The amount of increased investment earnings for local public entities cannot be quantified at this time.

The fiscal note implies that no new state appropriations or spending authority are required to implement the provisions of the bill in FY 1999-00.