Institutional Federal Compliance Report 2021

______________________________________________________________________________________________ STATE OF NEW YORK • 63

credit risk because they were uninsured and uncollat- eralized, except for $2 million in deposits that were fully collateralized. For the fiscal year ended March 31, 2018, the average daily balance of the STIP was $13.9 billion, with an average annual yield of 1.3 percent and total investment income of $182 million. Investments The State holds investments both for its own benefit and as an agent for other parties. Major investment programs conducted for the direct benefit of the State include STIP, which is used for the temporary invest- ment of funds not required for immediate payments,

and sole custody funds administered by the Depart- ment of Taxation and Finance. Investments are made in accordance with State Finance Law and vary by fund but generally include: obligations of, or guaranteed by, the United States; obligations of New York State and its political subdi- visions; certificates of deposit; savings bank trust company notes; bankers’ acceptances; repurchase agreements; corporate bonds; and commercial paper. As of March 31, 2018 (except for New York’s 529 College Savings Program, which is as of December 31, 2017), the State had the following investments and maturities (amounts in millions):

Investment Maturities (in Years)

Carrying

Investment Type

Value

Less than 1

1-5

6-10

Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10,021 $ 10,021 $ U.S. Treasury bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,517 2,517 U.S. Treasury notes/bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,527 1,464 Municipal bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 713 11 Government-sponsored agency bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 526 457 U.S. Treasury strips . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 5

—00000 $

—00000 —00000 —00000

—00000

63 617 23

85 46

—00000 —00000

—00000 —00000

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investments held in an agent or trust capacity . . . . . . . . . . . . . . . . . . . . . . . . . . 28,568 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 43,879

15,311 $ 14,477 $

703 $

131

Included in the table are securities which either were not acquired for investment purposes or cannot be classified or categorized, and are being held by the State in an agent or trust capacity. Parents, grandpar- ents and other parties wishing to save for a child’s college education may deposit money into the College Savings Program. The State administers the program on behalf of the parents and holds the investment portfolio in a trust. The fair market value of the mutual fund portfolio was $28.2 billion at December 31, 2017. Employers seeking self-insurer status for workers’ com- pensation purposes may deposit securities specified by Section 235 of the New York State Banking Law with the Chairman of the Workers’ Compensation Board. Acting as an agent for the employers, the State holds these securities (carrying amount $201 million, which approximates fair value) only as an agent for the employers. Securities that are unclaimed at finan- cial institutions are transferred periodically to the State and are held temporarily by the State until they can be liquidated. The securities or proceeds can be claimed by the owners under established procedures. These securities had a carrying amount and fair value of $209 million at March 31, 2018. The State holds cash and securities deposited by contractors in lieu of retainage on contract payments (carrying amount and fair value of $3 million).

In addition to the securities held by the Workers’ Compensation Board noted above, the State holds $3 billion in surety bonds and letters of credit that are not included in the table above. Credit Risk State law limits investments in commercial paper, repurchase agreements, government-sponsored agency bonds and municipal bonds to the highest ratings issued by two nationally recognized statistical rating organizations (NRSROs). Investments in commercial paper and repurchase agreements are limited to a rating of A-1 by Standard & Poor’s Corporation (S&P) and P-1 by Moody’s Investors Service, Inc. (Moody’s). Investments in government-sponsored agency bonds and municipal bonds are limited to AAA by S&P and Aaa by Moody’s. If an investment in commercial paper drops in rating below the legal requirements during the year, the State’s investment staff would consult with appropriate advisors to determine what action, if any, should be taken. Repurchase agreements are collateralized with U.S. Treasury obligations. The portfolios of the College Savings Program, a Private Purpose Trust Fund, have underlying fixed income mutual funds which are not rated by any NRSRO.