BILL ANALYSIS Ó
SB 797
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Date of Hearing: July 15, 2015
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Jimmy Gomez, Chair
SB 797
(Committee on Governmental Organization) - As Amended April 15,
2015
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|Policy |Banking and Finance |Vote:|11 - 0 |
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Urgency: No State Mandated Local Program: NoReimbursable: No
SUMMARY:
This bill adds prime-rated commercial paper, issued by a
federally- or state-chartered bank or a state-licensed branch of
a foreign bank that is approved by the Pooled Money Investment
Board (PMIB), to the list of eligible securities for investment
of funds in the Pooled Money Investment Account (PMIA). The
bill also makes clarifying amendments and deletes obsolete
language relating to various bond acts.
FISCAL EFFECT:
SB 797
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Insignificant fiscal impact to the PMIB and/or State Treasurer.
COMMENTS:
1)Purpose. According to the authors, adding commercial paper
issued by federally- or state-chartered banks and
state-licensed branches of foreign banks will allow PMIB to
continue to access a diverse variety of short-term securities.
Commercial paper is short-term unsecured debt, rarely with
maturities longer than 270 days, issued by banks and other
companies to finance working capital and other short-term
liquidity needs.
2)Pooled Money Investment Account. The PMIA is the account
through which the Treasurer invests state money from the
General and Special Funds as well as funds deposited by local
governments. PMIA moneys can only be invested in securities
and other instruments authorized by law. Those instruments
currently include U.S. government securities, securities of
federally-sponsored agencies, domestic corporate bonds, time
deposits in California banks, prime-rated commercial paper,
and similar low-risk financial instruments.
The Treasurer's Office claims commercial paper has been useful
for managing daily cash investments. Current law limits PMIA
commercial paper investments to prime-rated paper issued by
corporations, trusts, or limited liability companies, and
restricts maturities to 180 days. This bill adds prime-rated
commercial paper issued by a federally- or state-chartered
bank or a state-licensed branch of a foreign bank to the list
of approved investments, and increases the maximum maturity to
270 days in line with market standards.
SB 797
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Analysis Prepared by:Joel Tashjian / APPR. / (916)
319-2081