State Treasurer Lillard provides options for depositing ARP funds

As local government entities begin to receive federal dollars from the American Rescue Plan, I want to point out the options available to you through the Tennessee Department of Treasury for depositing public funds. This educational information may help you evaluate your investment options.

The Tennessee Department of Treasury manages state and local governments’ short-term investments through pooled funds known as the State Pooled Investment Fund (SPIF) and the Local Government Investment Pool (LGIP). Treasury manages all of these funds with the objectives of safety, liquidity, and a competitive return on investments. The LGIP is commingled with the SPIF for investment purposes and provides local public finance officials an option to invest funds until they are needed, earning the same return on investments as the State Treasurer earns on the State’s cash portfolio.

Funds from the American Rescue Plan received through the state may be directly deposited into an LGIP account. A separate LGIP account for ARP funds may also be established, allowing the funds to be tracked separately from operating funds. If your entity receives ARP funds directly from the federal government, you may establish an LGIP account and transfer the funds to the Treasury Department for investment in the LGIP. If your entity has an existing LGIP account for managing operating cash, you may wish to consider requesting an additional LGIP account for ARP funds. The application for the LGIP can be found at Treasury.tn.gov/LGIP under the “Apply or Manage Your Account” section.
Participants of the LGIP may also utilize a second pooled investment option managed by the Tennessee Treasury Department, which is the Intermediate Term Investment Fund (ITIF). The ITIF is a longer-term investment option for public funds where participants may benefit from a longer yield curve. The objective of the fund is to achieve a superior level of total return at a reasonable level of risk measured over a longer-term investment horizon. The disclosure for the ITIF outlines the requirements for participation as well as the investment risks, which may be found at: Treasury.tn.gov/LGIP

While the LGIP or the ITIF may provide options for investment of federal dollars, we would also like to remind local governments that there may be restrictions, conditions, or limitations on how federal dollars (specifically federal funds received as part of the American Rescue Plan) may be invested or managed. Treasury is not responsible for compliance with any restrictions, conditions, or limitations relative to the investment or use of federal funds in the SPIF/LGIP. We recommend consulting with the appropriate legal, tax, or other advisors to evaluate the risks and merits of any investment in the LGIP.

Please note, investment returns in an LGIP or ITIF account are not guaranteed and may fluctuate based on market changes, and losses or gains will be distributed to all participants on a pro rata basis. Both the principal contributed to an LGIP or ITIF account and any investment returns are not an obligation of the State of Tennessee nor are they guaranteed or insured by the State of Tennessee, the State Treasurer, the State Funding Board, the Federal Deposit Insurance Corporation, the Federal Reserve Board, or any other state or federal agency. LGIP investments and earnings can be found at Treasury.tn.gov/LGIP.

I appreciate the important work you do for your community, and the Tennessee Department of Treasury would like to support you in any way we can. If you would like more information regarding participation in the LGIP or ITIF or to establish an LGIP Account, visit Treasury.tn.gov/LGIP or call Casey Wright in the Treasury Investments Division at (615) 532-1163.