Investing in Stocks a Hot Topic

How local government entities can invest their funds in the stock market was a main topic of the Capital Finance Committee’s meeting in Casper on September 6th.

The committee considered two bills, Local government funds-direct investment in equities and Local government funds-pooled equity investments.

The bills would provide additional options to local governments who want to invest reserves into the stock market, in addition to Senate File 090, that passed in the 2024 legislative session, and set up a WyoStar 3 equities pool with the State Treasurers Office.

The draft bills are in response to private investment firms, who also wanted an opportunity to invest local government funds, and the Wyoming County Commissioner’s Association, who would like to set up their own investment pool.

The direct investment bill draft required any local government entity that wanted to invest in equities to first set up an investment committee, comprised of members with professional investment experience, that would help guide investment decisions. The Capital Financing Committee amended the bill, first by restricting the bill to apply only to cities, towns and counties, excluding school districts and special districts, then by removing any language in the bill about forming an investment fund committee. The Capital Finance Committee amended the broker criteria, requiring participating brokers to have 10 years experience and controlling more than $110 million in assets. The committee then removed all language regarding fees and eliminated the requirement for investments to be a duration of a minimum of 5 years. Provisions requiring the investments to be in excess of a certain amount of the operating budget and that monies had to be held five years before being invested were also struck. The committee set the cap on funds that can be invested in equities at 30% of a city or county’s total investment portfolio.

The pooled equity bill would set up a Joint Powers Board that would contract with an investment firm and administer the fund, similar to Wyoming CLASS or WGIF. That board would then form an investment committee of experienced individuals to help guide investments and make recommendations to the Joint Powers Board.

The Capital Financing Committee added a provision to allow the Board to compensate members of the investment fund committee the same per diem rate as legislators, to be paid from the fees assessed to participating entities, and made other amendments to conform with the ideas presented for the direct investment bill draft.

Both bills will be reworked by LSO and presented again at the next Capital Financing and Investments meeting on October 30.

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