LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 74th Regular Session April 5, 1995 TO: Honorable Ken Armbrister, Chair IN RE: Senate BillNo. 1128 Committee on State Affairs By: Ellis Senate Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on Senate Bill No. 1128 (Relating to the deposit, investment, safekeeping, and records and reports of, and collateral requirements for the deposit of, funds held by the state treasurer.) this office has determined the following: The bill would abolish the State Depository Board and transfer the responsibilities to the state treasurer. The bill would require financial institutions to enter into depository agreements with the state treasurer to hold state deposits. The bill would also require the treasurer to charge a processing fee of $25 for each eligible depository and deposit the revenue into the general revenue fund. The bill would require the state treasurer to limit the amount of derivatives purchased to no more than five percent of the treasury's total investments. The bill would authorize the treasurer to contract with registered investment advisors and other consultants to assist in investment management and to pay fees directly from investment earnings. The bill would remove the investment limitation of $500,000 a day with a maximum risk of loss of $5 million for hedging transactions, and removes the expiration of the program is cumulative losses exceed $5 million. The bill would require certain state agencies to impose a penalty if eligible payments are not remitted by electronic funds transfer, however the penalty may be waived, if appropriate. The fiscal implication to the State cannot be determined. No fiscal implication to units of local government is anticipated. Source: Treasury Department LBB Staff: JK, MS, DF