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What is the LGIP?

Tennessee Code Annotated Title 9, Chapter 4, Part 7, establishes an investment pool for the idle funds of local governments to earn income in order to reduce the need for taxes. These funds are placed by the entities into accounts that are held and invested by the State Treasurer. By combining the funds of the state's local government entities, now at over $2 billion, the buying power of the pool allows the LGIP to get competitive investments and usually offers better rates of return than the entities can obtain by themselves.

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How do I find out more?
To find out more about LGIP, read through the information on the web, and contact the LGIP office at (615) 532-1163 for information to be mailed to you. Additionally, there are many governments in the state that participate, so many of your colleagues can probably offer testimony to the data.

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How do I become a member?
Submit the Application and Agreement to Participate to The Local Government Investment Pool, P. O. Box 198785, Nashville, TN, 37219-8785. The application will be reviewed for eligibility and completeness, and you will be contacted immediately. Most government entities are eligible, and usually only local schools and such present a problem. For instance, a single high school could not be a participant, but the school system of the county or city would be able to join.

 

What accounts and accesses are available?

LGIP participants are issued a six digit participant number that identifies that entity. Under this number we establish one-digit or two-digit account numbers. This allows up to 99 sub accounts for use of separating funds. For example, your new bond issue might be account 888888-2 and your general fund might be account 888888-10. This allows governments to maintain the integrity of accounting while earning higher rates of return on their cash.

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What investments are available?

The LGIP invests in time deposits, such as CDs, commercial paper, U.S. agency securities, repurchase agreements, and U.S. treasuries. Please view the Investment Policy to examine the directives that govern the investing of these funds, and last quarter's ending portfolio to see the specific investments that were being held. Our longest maturity is 13 months, and we are required to maintain a 90-day or less weighted-average-maturity.

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What other benefits are offered?

The Tennessee Department of Transportation requires that all local funds that are to be used in a project be held with the LGIP. Those who currently have LGIP accounts have an easy time using inter-account transfers to fund these accounts and receiving the remaining balance after the project is complete. If you are currently having to secure collateral individually, that hassle ends when you send your funds to LGIP. Also, when you deal with us personally, you will deal with the actual LGIP Administrator, who handles your transactions and accounts.


Is the LGIP a secure investment option?

Absolutely. The LGIP is one of the safest investment alternatives for local governments.

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How are rates calculated?

Earnings for LGIP participants are calculated and accrued monthly. Earnings are distributed by multiplying the daily balance of each LGIP account by the total portfolio yield of the State Pooled Investment Fund for the month being calculated, less an administrative charge (currently 5 basis points or .05%), and dividing the result by 365. Each day's earnings are summed to determine the monthly income to be posted to the LGIP account.

The administrative fees are reviewed periodically to ascertain that the fees are commensurate with the costs associated with managing the fund. Fees are set at a rate which will recover costs only and are not designed as a profit center for the fund managers or the State.

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What reports are offered?

Participants receive detailed statements every month for each individual account. This statement shows all transactions, beginning balances, total deposits, total withdrawals, interest, average balances, and ending balances. We also mail out a quarterly newsletter that will keep you informed about what is going on here.


Does this adversely affect our local economy?

No. The certificates of deposits held in the State Pooled Investment Fund (SPIF), of which LGIP is a part, are only invested with in-state banks. Therefore, any time a bank wants public funds they can contact the state's cash manager and a certificate of deposit will be placed with that bank.

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What is the fee to participate?
After the monthly purchase yield is calculated (see the question above), the LGIP retains 5 basis points, or .05%, as an administrative fee to cover some costs. There are no other fees, so you will never have to worry about paying money or having your account drawn against.