Travis County Commissioners Court
October 23, 2007
Item 20
There is, yes, 20 is to consider and take appropriate action on the following. A, request to approve a disclosure statement for members of the investment advisory committee and 20 b is to request to participate in the tex star local government investment pool. We'll get you next ms. Flemming. Good morning.
>> good morning. I'm the investment manager for Travis County and I have with me our financial analyst, crystal routen who has been working with me on this project. Proposal a is to approve a disclosure statement for the investment advisory committee. We have never had one of these before. But in discussing the tex star issue, we discovered that one of our outside board members is the president of the board of tex star. As you know, local government investment pools must have participant members on the board by law. I should disclose that I am on a local government investment pool board that is a text as term which Travis County does the--texas term which Travis County does participate in. In the interest of transparency and full disclosure, the investment committee decided that we would do a disclosure statement. It does disclose, if you hold a position on a local government investment board, that Travis County might want to invest in, it also discloses if you have very large holdings in a company that Travis County might possibly buy commercial paper in. Again.
>> move approval.
>> second. It's been study pretty heavily in our committee meeting. It really is the right thing to do. Just to, the whole transparency thing. You know, at first we thought, we'll just ask. And he even volunteered to leave the board. When you really started getting around the table, I mean, you had about 14 or 15 people there that said, well, I mean, if bill is going to leave, guess what. Some of the investments that we do, I have a round about way, you know, if you follow the food chain, we eventually got to the point where there were about three people sitting around the table and mar mary was going great, I'll never be able to put together a board. This makes it crystal clear. If anybody has an issue, this thing really takes it out of the realm of question.
>> so barbara, we think a disclosure of these relationships will meet legal requirements and we will, I guess, keep an eye on the situation from time to time?
>> I think that it goes so far beyond meeting minimum legal requirements, what the law says you have to do, that how anybody can question this is beyond me. It's the sort of thing, the first issue that was raised is a conflict of interest. Well, there was no conflict of interest. It was just that it might seem like there was because there was some association even though the person that was on the advisory board wasn't making any decisio.
>> please point the microphone to you, please.
>> turn the mike toward you.
>> sorry. Because it was over there to begin with. I assumed it wasn't--
>> I said legal standards and you said minimum legal standards. It meets minimum standards too?
>> all legal standardsall right.
>> all right. There's a motion and second. Anymore discussion? All in favor. That passes by unanimous vote with Commissioner Davis temporarily off the danis.
>> the second proposed motion is that you approve the participation of Travis County in tex star which is is a local government investment pool and authorize judge Biscoe to sign the enrollment document. This is a pool much like tex pool which we and most of the governments in Texas have been in forever. It is, the yields are very similar, the staff actually used to run tex pool. It's a very professional group. And I do want to make you aware of perhaps the main reason why we are recommending that we add tex star at this time. It's not only for diversity. Tex pool, during the 80th tex legislature was authorized by house bill 860 to implement, to make changes in its investment policy which would allow tex pool to invest in riskier securities not allowed by the public funds investment act. We are still bound by the public funds investment act. Tex pool can now invest under the security and exchange commission rule 2 a 7, you may be familiar with it, that is the rule under which mutual funds are governed. So tex pool can do things for you like invest in a bond which is not rated by any credit agency. And the 2 a 7 rule gives their board lots of latitude in deciding what these might be. At any rate, the point is that barbara wilson has opined that the new authority extends only to tex pool. And should they decide to change their investment policy and invest in some of these securities, Travis County will be unable to invest in tex pool and in fact will have to pull out all of our investments. And so, in order to be prepared to do that, we need other attivities.
>> move approval.
>> second.
>> and then would tex star be the alternative?
>> yes, it would be for overnight funds. We also, the operating funds are invested in Texas daily, but that is a relatively new and smaller pool, and I would not feel comfortable moving all of the funds that we have in tex pool into that pool because I don't want Travis County to own too great a percentage of it.
>> but it is less riskier than tex pool.
>> at the moment they are about the same. Should tex pool choose to take advantage of this new authority, then both tex star and Texas daily would still be under the public funds investment act and they would be list risky.
>> any comments, barbara?
>> I guess my comment is we have study extensively with tex pool our concerns. I got the impression that they listened to what we had to say and took it rather seriously. So whether or not this become a real practical issue or whether it's just something that they thought was a good idea and have found that there are some negative ramifications to it remains to be seen but we can always keep hoping that they will stick to the more narrow definition.
>> isn't tex pool regulated by some state agency?
>> yes, the state come trollers office. They are in that office and they are actually managed through contract by federated securities and jp morgan chase.
>> interestingly, the legislation that mariy was referring to authorizes the comptroller to invest in the broader scheme of security but did not authorize the county government by amending the public funds investment act to invest in that broader.
>> do we need to have it on our list of issues to present to the legislature?
>> if you are asking me whether we would like to have the broader authority, I would say to you that the local government entities faught that broader authority legislature before last going into the public funds investment act and that maybe why this time they tried an end run to go through the comptroller's office thinking that that would take care of it.
>> seems we ought to just look at that even if we do nothing. But other counties are affected the same as we, right?
>> well, all government entities that are under the public funds investment act would be.
>> okay.
>> whether or not they are aware of it, I don't know.
>> okay. Anymore discussion? All in favor. Show Commissioners eckhardt, Gomez, Daugherty, yours truly voting in favor. Commissioner Davis.
>> abstain.
>> abstaining.
>> thank you.
>> let's try to get one more item this morning.
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Last Modified:
Wednesday, October 24, 2007, 18:30 AM