Legislature(2023 - 2024)SENATE FINANCE 532
01/23/2023 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| Savings, Reserves, and Investment Funds - Department of Revenue | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
SENATE FINANCE COMMITTEE
January 23, 2023
9:00 a.m.
9:00:55 AM
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee
meeting to order at 9:00 a.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Donny Olson, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Jesse Kiehl
Senator Kelly Merrick
Senator David Wilson
MEMBERS ABSENT
Senator Click Bishop
ALSO PRESENT
Adam Crum, Commissioner, Department of Revenue; Pam Leary,
Director, Treasury Division, Department of Revenue; Senator
Cathy Giessel.
SUMMARY
^SAVINGS, RESERVES, and INVESTMENT FUNDS - DEPARTMENT OF
REVENUE
9:02:42 AM
ADAM CRUM, COMMISSIONER, DEPARTMENT OF REVENUE, (DOR)
introduced himself and Ms. Leary.
9:03:18 AM
PAM LEARY, DIRECTOR, TREASURY DIVISION, DEPARTMENT OF
REVENUE, introduced herself, and discussed her professional
background.
Ms. Leary discussed the presentation, "Update on the
State's Cash Reserve Funds and Discussion of State Cash
Flows" (copy on file). She highlighted slide 2, "Agenda":
Meet the Treasury
Update on Cash Reserve and Other Funds
State Cash Flows
Ms. Leary discussed slide 3, "Meet the Treasury":
Investment Management
Cash Management
Debt Management
Unclaimed Property
Ms. Leary addressed slide 4, "Treasury Statistics":
45 Treasury Division staff positions, most of whom
touch investments in some capacity via portfolio
management, accounting, operations, compliance, debt
management, cash management and unclaimed property.
$46.8 billion in assets under management (AUM) as of
12/31/22
Combined operating budget of $15.3 million.
The Division is a resource to state fiduciaries, state
agencies, the legislature and the general public.
9:05:00 AM
Co-Chair Stedman asked about the $46.8 billion, and whether
it was included or excluded in the Permanent Funds
approximately $70 billion.
Ms. Leary replied that it was considered separate.
Ms. Leary pointed to slide 5, "Investment Management":
At 12/31/22, managed $46.8 billion in assets in 47
separate accounts.
14 defined benefit funds under the direction of
the Alaska Retirement Management Board (ARMB):
$30.3B
4 participant directed funds under the direction
of ARMB: $8.0B
25 funds under the direction of the Commissioner
of Revenue: $8.2B
4 funds under the direction of other state
fiduciaries: $288M
Accounts are managed in a pooled environment which is
an efficient way to invest multiple funds.
State assets: 9 pools that state funds can
invest in
ARMB assets: 23 investment pools that roll up to
7 asset classes that the retirement funds invest
in:
•Cash Equivalents
•Fixed Income
•Broad Domestic Equity
•Global Equity ex US
•Multi Assets
•Real Assets
•Private Equity
Ms. Leary highlighted slide 6, "Investment Management
(cont.)":
The Chief Investment Officer and staff meet regularly
with the Commissioner, ARMB or other fiduciary to
discuss and determine asset allocations.
Consideration is given to:
the type and use of the fund.
how long the fund is expected to be invested.
what type of risk the fund can take.
Callan's Capital Markets Assumptions and other
industry data are used to build models to generate
potential asset allocation targets.
Invest, Invest, Invest!
State Investment Review and ARMB meetings are held
quarterly to review performance, investment policy,
and asset allocations with an independent investment
advisory committee. Summaries and materials for the
meetings are publicly available on our website.
Ms. Leary displayed slide 7, "Cash Management":
Monitor all cash in and out of the state.
Manage procurement, administration, and implementation
of all statewide banking service contracts including:
Warrant clearing contract
Primary and alternate depository services
contract
Automated Clearing House (ACH) Origination
contract
Credit card acceptance contract
Treasury Management System contract
Consult and coordinate with all departments on banking
service needs.
Project and reconcile, on a daily basis, all incoming
and outgoing cash flows to determine excess funds that
can be invested by the investment staff.
State bank accounts are reviewed for accuracy daily.
Process and apply financial coding to all daily
banking transactions from five financial institutions
for interface to the Statewide accounting system for
departments to record revenue and expenditures.
Ms. Leary pointed to slide 8, "Debt Management":
Implement directives from the Commissioner's office
and the State Bond Committee ('SBC') on policy
decisions related to debt issuances, rating
strategies, and potential use of debt capacity.
Coordinate activity among various professionals for
any authorized debt issuance (bond counsel, financial
advisor, arbitrage, and underwriter).
Conduct meetings with Rating Agencies.
Prepare all statutorily required reporting:
Revenue Sources Book
Annual Comprehensive Financial Report
Alaska Public Debt Book
Alaska Debt Affordability Analysis
Perform all continuing disclosure undertakings for
outstanding bonds.
Provide leadership and staff for the Alaska Municipal
Bond Bank Authority (AMBBA).
Ms. Leary pointed to slide 9, "Unclaimed Property":
Receive and account for unclaimed property in the form
of cash, securities, and safe deposit boxes from
companies, organizations (profit and nonprofit) and
government agencies throughout the United States in
accordance with Alaska's Unclaimed Property Act.
Provide services to reunite owners, heirs, or legal
representatives with their unclaimed property.
Determine entitlement by analyzing statutes, court
orders, legal cases, and reviewing evidence.
Promote unclaimed property reporting.
Alaska currently has 1,847,763 claimable properties
with a value of $258 million.
9:11:09 AM
Co-Chair Stedman queried the time limit on claiming the
property.
Ms. Leary replied that there was no time limit.
Co-Chair Stedman wondered whether money that would be
considered unclaimed property from territorial days would
still be in the account.
Ms. Leary replied that a portion of the money from the
unclaimed property was put into the general fund, because
it was known that not all of the money would be claimed by
a person or entity. She stated that there was more
information on that subject in the upcoming slides.
Ms. Leary looked at slide 10, "Treasury Accomplishments":
Professional Certifications:
Increase in professional designations: CFAs,
CPAs, CIPMs and CTPs
Delivered outstanding investment performance results:
In FY22, PERS and TRS performance of 4.1
percent resulted in an average of 9.0 percent
during the 38 year history of the retirement
systems. Over the past decade, the systems have
outperformed their benchmark by 126 basis points
and the median peer plan by 98 bps. This
performance places the systems well into the top
quartile, outperforming over 85 percent of peer
plans.
State assets have grown by 9.0 percent in the
last 12 months, largely outperforming fund
benchmarks.
ARMB Savings:
$35 million annual savings in management fees by
reducing the amount of assets invested with
external investment managers and investing those
assets utilizing Treasury Investment Officers.
Co-Chair Stedman queried the basis point.
Ms. Leary replied that the basis point was one one-
hundredth of a percent.
Co-Chair Stedman wondered asked what the number would be at
126 basis points above a number.
Ms. Leary replied that it would be 1.2 percent more than
what would be in the public market sector, which was the
benchmark.
Co-Chair Stedman queried the reason for the benchmark
versus zero.
Ms. Leary replied that the benchmark represented what would
be the number if the money was put into a public fund. She
stated that showing that performance was above the
benchmark reflected that the active performance was better
than a public fund.
9:15:00 AM
Co-Chair Stedman surmised that the benchmark was a
collection of target components.
Ms. Leary stated that each asset class had specific
benchmarks.
Senator Wilson wondered whether the investment officers had
the high certification level.
Ms. Leary replied that they were either at that level or
working toward that designation.
Co-Chair Stedman remarked that it would be a question for
the subcommittee.
Ms. Leary addressed slide 11, "Treasury Accomplishments":
Increase in the State's credit rating outlook with
Fitch and Standard and Poor's.
In the past two fiscal years, the Alaska Municipal
Bond Bank Authority has funded $408.1 million in loans
resulting in an estimated $55.4 million in savings to
Alaskans through lowered borrowing costs.
Restructured outstanding debt of the airport system
saving $81.8 million from future debt service
payments.
During FY22, Unclaimed Property returned approximately
$13.5 million to current or former Alaska owners and
businesses, transferred $12.0 million into the state
general fund, had a 16 percent increase in reported
holdings.
Maintained a reduced claims backlog since
transitioning to a new unclaimed property system in
FY21, despite a 15 percent increase in claims being
received.
Since FY19, $90.9 million in cash and stock sale
proceeds have been received as unclaimed property,
$45.5M million was transferred into the state general
fund and over $34.4 million dollars has been returned
to current or former Alaska owners and businesses.
Co-Chair Stedman remarked that some of the communities were
dealing with the issue of the reissuing of standing debt.
He wondered whether the airport debt had stretched out the
amortization in time, or whether it was the same timeframe
of debt service payments or the decline in interest rates.
Ms. Leary agreed to provide that information, and remarked
that the total savings was $81.8 million.
Co-Chair Stedman noted that there was a concern about not
taking advantage of the lower interest rates.
Ms. Leary paused on slide 12, "Update of Cash Reserve and
Other Funds." She summarized the upcoming slides.
9:21:33 AM
Ms. Leary displayed slide 13, "Constitutional Budget
Reserve Fund (CBRF); Historical Invested Assets (in
billions)":
In 1990, voters of Alaska adopted an amendment to the
constitution creating the CBRF.
CBRF has been used to fund temporary cash flow
expense/revenue mismatches.
CBRF has been used to appropriate/cover budget revenue
shortfalls.
Appropriations from the CBRF must be repaid.
Co-Chair Olson queried the reason for the discrepancy in
the information he had been given about the fund.
Ms. Leary replied stated that she would address that
question in the presentation, but stated that the slide
showed the actual cash balances that were not currently
invested in the bank. She stated that the $2+ billion was
the number that would be available for appropriation once
the final transfer from the general fund went to the CBR.
Co-Chair Olson wondered how the public would be convinced
that it was not a consideration of imaginary money.
Ms. Leary replied that the Division of Finance was using
the number as a transfer target.
9:25:35 AM
Co-Chair Stedman surmised that the $1.37 billion total in
cash was the balance on July 1, 2022.
Ms. Leary replied in the affirmative.
Co-Chair Stedman requested the financial statements, and
understood that the exercise was not complete.
Ms. Leary agreed to provide that information. She stated
that there would be estimates and footnotes.
Co-Chair Stedman stressed that sometimes people fixated on
a specific number, so he wanted to be able to show the
reasonings for the forecasts.
Ms. Leary understood.
Co-Chair Hoffman recalled that there had been a target to
not go below $500 million, and queried a target for DOR in
the CBR.
Ms. Leary replied that the number had shifted throughout
the years, based on a variety of models and circumstances.
Co-Chair Stedman requested a range of a minimum number.
Ms. Leary agreed to provide that information.
9:30:03 AM
Ms. Leary looked at slide 14, "Constitutional Budget
Reserve Fund (CBRF) Fiduciary oversight: Commissioner of
Revenue." She remarked that the slide showed a low risk
tolerance, because the fund needed to be fairly liquid. She
remarked that the fund was 100 percent invested in capital
cash equivalents. She remarked that the current cash
balance before the transfers from the general fund for FY
22 was $1.065 billion as of December 2022.
Ms. Leary pointed to slide 15, "Power Cost Equalization
(PCE) Historical Invested Assets (in millions)":
The purpose of the PCE Endowment fund is to provide
for a long term stable financing source that provides
affordable levels of electric utility costs in
otherwise high cost service areas of the state.
5 percent of the monthly average market value of the
fund for the previous 3 fiscal years may be
appropriated. If prior years earnings exceed this
amount, 70 percent (not to exceed $55M) of the
difference can be spent on related identified
programs.
Co-Chair Hoffman requested the outline of how the fund was
faring, specifically whether it was above or below the
benchmarks.
Ms. Leary replied with slide 16, "Power Cost Equalization
(PCE) Fiduciary oversight: Commissioner of Revenue." She
remarked that the fund currently had a high risk tolerance.
She noted that legislation was passed in the previous
session that changed how the fund was invested, which
directed the commissioner of DOR to uphold the prudent
investment rule.
Co-Chair Stedman wondered whether the benchmark had not
been met.
Ms. Leary replied in the affirmative.
9:34:37 AM
Co-Chair Hoffman recalled when the guideline was 7 percent,
and then was changed to a new guideline. He looked at 2018
to 2021, with the 5 percent increasing without any
reductions, but the prudent investment rule showed that the
fund had lost $200 million. He wondered whether the
committee should consider eliminating the prudent
investment rule and returning to the 5 percent rule. He
remarked that he did not want to request more funds.
Ms. Leary replied that the current year was a negative
market. She stated that there had a been a switch, which
indicated that overtime investing toward a higher rate of
return showed a positive overall. She expected that
management according to the prudent investment rule.
Co-Chair Hoffman stressed that the CBR was considered low
risk, and the benchmarks were met in that fund. He felt
that keeping the PCE in the low risk category would still
provide a substantial amount in the bank. He questioned the
comments about keeping the PCE in high risk and
potentially halt the effort to come up with more fund.
Co-Chair Stedman requested a presentation on the PCE broken
out by quarter.
9:42:24 AM
Senator Kiehl noted the significant difference between the
PCE and other endowments. He wondered whether there could
be a five-year lookback.
Commissioner Crum agreed to provide that information.
Senator Wilson queried the Callan inflation rate projection
for 2023.
Commissioner Crum replied that it was around 2.25 percent,
and agreed to provide further information.
Ms. Leary furthered that the target was 2.5 percent as the
long-term forecast for inflation.
Co-Chair Stedman felt that those targeted inflation rates
were slightly off.
Co-Chair Olson recalled that there was a loss of about 20
percent of the states nest egg, and felt that the loss
would cause great stress. He wondered what would happen if
there was an elimination of the prudent investment rule.
Commissioner Crum remarked that it was a policy decision,
and the department would respond to whatever policy was
written by the legislature.
9:45:22 AM
Co-Chair Stedman felt that the prudent investment rule
matches other investors portfolios. He felt that the
discussion might better be around the asset allocation.
Commissioner Crum remarked that PCE was one of the funds
that immediately impacted rural Alaskans.
Co-Chair Stedman stressed that he would like to see when
and how quickly there was a shift in the asset allocation.
Ms. Leary clarified that the funds were important to all
people in Alaska, and stressed that she understood how
important the numbers were to the people.
Ms. Leary pointed to slide 17, "Alaska Higher Education
Investment Fund (AHEIF) Historical Invested Assets (in
millions)":
On September 1, 2012, the AHEIF was capitalized with a
$400 million deposit from receipts of the Alaska
Housing Capital Corporation for use in paying Alaska
Performance Scholarship Awards and AlaskAdvantage
Education Grants.
On June 29, 2022, $394.6M was swept to the General
Fund for FY21, of which $342.6M came directly from the
AHEIF and $52M came from the CBRF due to FY22
investment losses in the AHEIF.
9:50:27 AM
Ms. Leary addressed slide 18, "Alaska Higher Education
Investment Fund (AHEIF) Fiduciary oversight: Commissioner
of Revenue." She displayed slide 19, "General Fund and
Other Non Segregated Investments (GeFONSI) Historical
Invested Assets (in billions)":
GeFONSI includes the General Fund and Other Non
segregated funds invested in a pooled environment (GF
proper carries a minimum balance of $400 million to
pay our bills).
GeFONSI II was created in 2018 to target a higher risk
return profile for a subset of funds.
Co-Chair Stedman wondered whether any of the funds were
having difficulty within GeFONSI.
Ms. Leary replied that she could not speak to that, because
it was the purview of the agencies that manage the funds.
Co-Chair Stedman requested an examination of any problem
areas in the fund.
Ms. Leary pointed to slide 20, "General Fund and Other Non
Segregated Investments (GeFONSI I and II), Fiduciary
oversight: Commissioner of Revenue."
Co-Chair Stedman noted that there seemed to be similar
asset allocation, and wondered whether there was a
comingling within the same allocation.
Ms. Leary replied that each fund will invest some portion
into an asset class. She stated that GeFONSI was invested
85 percent in cash equivalents, and 15 percent in short-
term fixed income.
Co-Chair Stedman stressed that the public school fund pie
chart looked like the same pie chart as the PCE and other
funds.
Ms. Leary replied that they were the high risk long term
asset allocations that were identified during the process.
9:56:15 AM
Co-Chair Stedman wondered whether there were other funds in
the group.
Ms. Leary agreed to confirm the information.
Senator Kiehl noted that GeFONSI II may be the only one
that did not beat the benchmark.
Ms. Leary replied that GeFONSI II was one of the
performance returns that was just under the benchmarks.
Senator Kiehl requested a follow up on GeFONSI II.
Co-Chair Stedman noted that there would be benchmarks
discussions in a future presentation.
Ms. Leary discussed slide 21, "Public School Trust Fund
(PSTF) Historical Invested Assets (in millions)."
The PSTF was established in 1978, replacing the
territorial era public school land grant originally
created by congress in 19 15, by a transfer of the
balance from the permanent school trust.
Following passage of HB 213 in 2018, the fund is now
managed as one fund, under a percentage of market
value method (5 percent of the average market value
for the 5 years preceding the last previous fiscal
year).
Ms. Leary addressed slide 22, "Public School Trust Fund
(PSTF) Fiduciary oversight: Commissioner of Revenue."
10:00:23 AM
Co-Chair Olson discussed Public Employees' Retirement
System (PERS) and the Teacher Retirement System (TRS). He
requested an expectation for the future of the funds.
Co-Chair Stedman felt that question might be better for the
Alaska Retirement Management (ARM) Board, and the upcoming
slide may also have some information.
Ms. Leary pointed to slide 23, "Public Employees Retirement
System (PERS) and Teachers Retirement System (TRS) Pension
and Health Defined Benefit Plans Historical Invested Assets
(in billions)":
The Alaska Retirement Management Board (ARMB) is a 9
person board and fiduciary of the state's pension and
health systems.
The defined benefit plans currently experiences net
outflows from the funds.
The 38 year return Average for PRS/TRS was 9 percent.
10:04:49 AM
Co-Chair Stedman stressed that the liabilities exceeded the
assets, so there needed to be caution when having
conversations about the assets. He wondered why the PERS
and TRS system was not similar to the other funds.
Ms. Leary replied with slide 24, "Public Employees
Retirement System and Teachers Retirement System Fiduciary
oversight: Alaska Retirement Management Board."
Co-Chair Stedman surmised that the estimation had an
accounting process.
Ms. Leary agreed, and explained that the cash flows were
apparent, but there was a lag in the included returns.
Co-Chair Stedman felt that there was a difference between
mark to market, versus something that was not traded for
many years.
Ms. Leary agreed.
Co-Chair Stedman stated that there should be caution when
seeing liquid assets in tough times and ensuring that
there was an accurate reflection of those assets.
Senator Kiehl requested the risk of missing a normal cost
for retirement in a year.
Co-Chair Stedman felt that the question would be better
addressed to the ARM Board.
10:11:29 AM
Ms. Leary pointed to slide 25, "State Cash Flows." She
addressed slide 26, "Cash vs. Accrual Balances
Cash balance is what you have in the bank at a given
point in time.
Accrual balance is what you have earned and what
liabilities have been incurred at a particular point
in time. It is what you should have at a particular
point in time after all expected receipts and
expenditures come in and out.
Treasury fund balances are cash balances, not what is
available to spend in the budget.
Ms. Leary pointed to slide 27, "SOA Treasury Cash Flow":
Cash Inflows
Tax Revenues: Oil and Gas, Excise, Other
Federal Dollars: Grants, Medicaid, FHWA,
Education, Other
Earnings Reserve Funds
Agency Receipts: Fees, Licenses, Permits, Fines,
Other
Cash Outflows
School Education Payments
Payroll and Pension Payments
Vendor Payments
Medicaid Payments
External Program Grant Payments
Debt Service Payments
Ms. Leary discussed slide 28, "Revenue":
Commodity Volatility
Petroleum revenues are 47 percent of FY23
projected unrestricted general fund revenues.
Uncertainty exists "in year" for FY23 and
beyond.
Will always have in year uncertainty because we
base budget on in year oil collections.
Investment Return Volatility
Investment earnings are 47 percent of FY23
projected unrestricted general fund revenues.
Certainty exists today for FY24 (due to a
lagging POMV formula; $3.5 billion in FY24).
Uncertainty exists today for FY25 and beyond.
Ms. Leary addressed slide 29, "Expenditures":
Expenditures can occur prior to receipt of revenue,
resulting in cash flow timing mismatches:
Federal programs require expenditures before
reimbursement.
• i.e. Medicaid, Transportation, etc.
Beginning of year appropriation transfers do not
match incoming revenue.
• i.e. State pension payments, transfers to
subfunds for programs.
Seasonal Cash Flow needs.
• i.e. Summer is the peak season for
construction projects and seasonal workers.
Ms. Leary pointed to slide 30, "Cash Flow Deficiencies":
Prior to 1985, most unrestricted revenues flowed into
and stayed in the General Fund for expenditure.
Over time, the legislature established many subfunds
of the general fund to segregate cash for budgeting
purposes, resulting in less cash available to pay day
to day operating costs.
The legislature typically includes language in the
budget bill allowing for a transfer from the
Constitutional Budget Reserve Fund if unrestricted
revenue is insufficient to cover the general fund
appropriations in a given year.
10:15:32 AM
Co-Chair Stedman stressed that using the CBR required a
three-quarter vote, and felt that the legislature may not
need to use that fund.
Co-Chair Hoffman queried the plan to address the three-
quarter vote, and whether the legislature might be called
back into session in the upcoming summer.
Commissioner Crum replied that DOR would be in close
contact with the committee about volatility of oil prices.
Co-Chair Hoffman queried a timeframe.
Commissioner Crum replied that there was an examination of
funding based on the current circumstances, but stressed
that there would be continued conversations if the oil
price saw sudden volatility.
Co-Chair Stedman remarked that there had been a request of
a review of negative appropriations to avoid a crisis.
Co-Chair Olson felt that Commissioner Crum was more
optimistic than what was actually occurring, and stressed
that a three-quarter vote would be nearly impossible.
Co-Chair Stedman remarked that there would be an
examination of any negative appropriations.
10:20:28 AM
Ms. Leary addressed slide 31, "Cash Deficiency Memorandum
of Understanding":
Developed in 1994 between DOR, DOA, OMB and DOL.
Updated as needed.
Targets $400 million minimum cash threshold in the
General Fund proper.
Outlines procedures for addressing cash flow timing
mismatches:
Develop monthly cash projections.
Monitor daily general fund cash balances. Update
forecasts based on new cash flows.
Execute appropriated transfers from ERA, CBR, or
others.
Perform temporary fund borrowing (CBR, ERA,
subfunds) to be repaid by fiscal year end.
In the event of forecasted revenue shortfall:
•Seek legislative action through the
Governor to access additional funds through
appropriation from other Cash Reserve Funds
discussed above.
•Prioritize disbursements, restrict
expenditures.
Co-Chair Hoffman wanted to examine the provisions for
borrowing from the CBR and the ERA.
Co-Chair Stedman asked that the provisions be provided to
the committee.
Ms. Leary agreed to provide that information.
10:25:35 AM
Co-Chair Stedman remarked that there was smoothing for the
agencies to protect the cash flow.
Ms. Leary agreed.
Senator Kiehl wondered whether the slide showed a fixed
number and the numbers origin.
Ms. Leary replied that it was approximately two days' worth
of payout all the bills at once.
Co-Chair Stedman stressed that the state could barely make
payroll, which he considered unacceptable.
Ms. Leary pointed to slide 32, "Cash Flow Deficiencies":
Use of budget reserve funds has been the solution of
cash flow timing mismatches and revenue shortfalls.
Appropriations From Reserve funds
The Legislature includes language annually in
the operating budget appropriating budget reserve
funds for revenue shortfalls.
•Treasury has relied on this appropriation
to authorize use of budget reserve
funds to address timing cashflow mismatches
as well.
The CBRF was fully repaid by FY10.
Borrowing from the CBRF recommenced in FY14.
Per FY21 ACFR $12.8 billion is owed to CBRF (FY22 is
expected to reduce the amount owed to the CBRF due to
sweep of unassigned balances and sub funds).
10:30:12 AM
Co-Chair Stedman wondered Co-Chair Hoffman had any comment
about the CBR being repaid in 2010.
Co-Chair Hoffman replied that "it was good times."
Co-Chair Stedman recalled that it was nice to see the CBR
paid off.
Ms. Leary addressed slide 33, "Volatility Management
Techniques":
Access Cash Reserve and Other Funds (CBR and other
fund balances).
Manage timing of Earnings Reserve Account transfers to
the General Fund.
Manage timing of expenditures.
Modernize fiscal tools to include lines of credit in
addition to revenue anticipation notes. (HB92)
Co-Chair Stedman recalled that there was not much interest
in revenue accumulation, but there was interest in a cash
position.
Ms. Leary pointed to slide 34, "Cash Flow Take Aways":
Even with balanced budgets and if all revenue is
received, cash flow timing mismatches will occur.
Cash flow forecasting changes due to amount and timing
of revenues and expenditures.
Revenue shortfalls may occur if forecasted assumptions
are wrong.
Higher revenue volatility requires greater cash
reserves until volatility decreases.
Volatility management techniques are available.
10:35:18 AM
Co-Chair Stedman asked about the periodic staff meetings,
and how decisions were made.
Commissioner Crum replied that there was a quarterly
investment review to ensure that the risk profiles were the
most prudent response, which was ongoing. He stated that
there other divisions that met at a biweekly basis, because
of the status on certain issues. He stated that the regular
updates were made to ensure that the commissioner's office
was always aware of the issues.
Co-Chair Stedman thanked Commissioner Crum for those
efforts to obtain information. He stressed that the
information and impacts were substantial to the state.
Commissioner Crum agreed to provide the process in future
presentations, especially related to the risk profiles
impacts on the asset allocations.
Co-Chair Stedman remarked that he felt that DOR was well-
run, and wanted to ensure that the legislature created a
good policy direction. He looked forward to working
together on the cash flow, and addressing the issue of the
risk profile of the PCE. He discussed the following day's
agenda.
ADJOURNMENT
10:41:40 AM
The meeting was adjourned at 10:41 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 012323 Savings Accounts and Cash Flow presentation to Senate Finance.pdf |
SFIN 1/23/2023 9:00:00 AM |
|
| 012323 Additional Document 2022_12_CBRF_SBRF_GeFONSI.pdf |
SFIN 1/23/2023 9:00:00 AM |