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What is the LGIP?

Tennessee Code Annotated Title 9, Chapter 4, Part 7, establishes an investment pool for the idle funds of local governments to earn income in order to reduce the need for taxes. These funds are placed by the entities into accounts that are held and invested by the State Treasurer. By combining the funds of the state's local government entities the buying power of the pool allows the LGIP to get competitive investments and usually offers better rates of return than the entities can obtain by themselves.

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How do I become a participant?
Submit the Application and Agreement to Participate to The Local Government Investment Pool, P. O. Box 198785, Nashville, TN, 37219-8785. The application will be reviewed for eligibility and completeness, and you will be contacted by a member of the LGIP team.

 

What is the account structure?

LGIP participants are issued a six digit participant number that identifies the entity. Each participant can have up to 99 sub accounts for use in separating funds.

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How are the funds invested?

The LGIP invests in time deposits, commercial paper, U.S. agency securities, repurchase agreements, and U.S. Treasuries. Please view the Investment Policy to examine the directives that govern the investing of these funds. A copy of the portfolio for the most recent month and historical periods is available on this website in order to see the specific investments held. The longest maturity allowed is 397 days.  The fund must also maintain a weighted average maturity (WAM) of 60 days or less, a weighted average life (WAL) of 120 days or less, and must maintain at least 10% in daily liquid assets and 30% in weekly liquid assets.  All of these requirements, and more, are the requirements of a fund that maintains compliance with GASB 79.  Full compliance with GASB 79 is required in order for the fund to operate and report at amortized cost.

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Is the LGIP a secure investment option?

No investment is completely risk-free, and the LGIP is no exception.  However, in order to maintain a stable dollar value, a fund must have the following objectives, in this order: safety, liquidity, and a competitive return.  The SPIF invests only in securities that offer the least amount of risk in order to maintain a safe and liquid environment for investing taxpayer dollars.

 

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How are earnings calculated?

Earnings for LGIP participants are calculated and accrued monthly. Earnings are distributed by multiplying the daily balance of each LGIP account by the total portfolio yield of the State Pooled Investment Fund for the month being calculated, less an administrative charge (currently 4 basis points or .04%), and dividing the result by 365. Each day's earnings are summed to determine the monthly income to be posted to the LGIP account.

The administrative fees are reviewed periodically to ascertain that the fees are commensurate with the costs associated with managing the fund. Fees are set at a rate which will recover costs only and are not designed as a profit center for the fund managers or the State.

 

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What information is available to participants?

Participants receive detailed statements every month for each individual account. This statement shows all transactions, beginning balances, total deposits, total withdrawals, interest, average balances, and ending balances. The website also contains monthly holdings reports, the most current Investment Policy, and historical net earnings rates.

 


What is the administrative fee?
The Treasury Department assesses an administrative fee to cover the costs of operations.  The fees are netted against earnings, and the current fee is 4 basis points, or .04%.  Periodically, the fees are reviewed to determine that they are sufficient to cover all the costs of operating the fund, but are not a source of profit for the Treasury Department or the fund manager.