PHOENIX - The Oregon State Treasury is offering a new intermediate-term investment tool for local governments.
The new Oregon Local Government Intermediate Fund provides cities, counties, school districts and special districts with a Treasury-overseen investment pool for longer-term deposits such as reserves, the Treasury announced this month. The intermediate fund is in addition to the existing Oregon Short Term Fund.
The Treasury said the new option came about as the result of demand. The intermediate term fund is structured to potentially yield higher returns, depending on market conditions. However, unlike the Oregon Short Term Fund, invested principal will be at risk. Oregon local governments already can invest in private sector options with longer investment horizons, but requested that such a longer-duration vehicle also be made available through the State Treasury.
"We rely on our local governments in Oregon to improve public safety and well-being, to supply irrigation water, and to guide education and job training," said State Treasurer Ted Wheeler. "At the Oregon Treasury, we worked diligently – in consultation with legislators -- to design a program that responds to the evolving financial needs of our vital local governments, while also ensuring appropriate oversight and diversification to reduce volatility."
Treasury-overseen options for local governments are a relatively recent development in the state. In 2013 the legislature approved allowing local governments to participate in the state's investment pools when appropriate, and in 2015 lawmakers approved additional staffing and oversight capacity at the State Treasury. Treasury also added new technology and research capacity to aid in risk management across state-managed trust fund portfolios.
With the necessary capacity in place, the Oregon Investment Council approved investment guidelines for the new intermediate fund in March. The council oversees policy for public investments and trust funds. The fund was opened to investments on July 1. Only surplus funds can be invested in the intermediate term fund. The Oregon Investment Council approved investment guidelines for the new intermediate fund in March. The fund was opened to investments on July 1. Only surplus funds can be invested in the intermediate term fund. To be eligible to participate, local governments must meet requirements such as the inclusion of necessary language in local investment policies, and investment policies must be reviewed by the Oregon Short Term Fund Board.
Don Hudson, finance director for the City of Tualatin, president of the Oregon Government Finance Officers Association and chair of the League of Oregon Cities Finance and Tax Committee, said many local governments have financial reserves – such as for infrastructure projects.
"This is a welcome development for Oregon local governments in those instances when we have longer-term investment needs," he said.
