Institutional Federal Compliance Report 2021

______________________________________________________________________________________________ STATE OF NEW YORK • 67

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, 2019 (except for New York’s 529 College Savings Program, which is as of December 31, 2018), the State had the following investments and maturities (amounts in millions):

result in the available balances being undercollateral- ized at various times during the fiscal year. The State’s cash management policy is to invest all major revenues as soon as the monies are available within the banking system, which limits undercollateralization. The State’s cash deposits with financial institutions had a book and bank balance of $9.3 billion and were fully collat- eralized at the end of the 2019 fiscal year. Included in these balances were certificates of deposit held in the STIP with a book and bank balance of $2 billion. Also included are deposits with a book and bank balance of $313 million that were held by the State’s fiscal agent and were exposed to custodial credit risk because they were uninsured and uncollateralized, except for $22 million in deposits that were fully collateralized. For the fiscal year ended March 31, 2019, the average daily balance of the STIP was $17.7 billion, with an average annual yield of 2.2 percent and total investment income of $379 million.

Investment Maturities (in Years)

Carrying

Investment Type

Value

Less than 1

1-5

6-10

Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ U.S. Treasury bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Government-sponsored agency bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Municipal bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . U.S. Treasury notes/bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Investments held in an agent or trust capacity . . . . . . . . . . . . . . . . . . . . . . . . . . 28,550 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 43,615 3,007 2,577 604 427 4

8,446 $

8,446 $

—00000 $

—00000 —00000

3,007 2,478

—00000 —00000

99 87

—00000

517 203

224

—00000 —00000

4

—00000

15,065 $ 14,159 $

720 $

186

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 $28.1 billion at December 31, 2018. 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 $236 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 $260 million at March 31, 2019. The State holds cash and securities deposited by contractors in lieu of retainage on contract payments (carrying amount and fair value of $2 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.