A bill authored by Senate DFLers unanimously passed the Local Government Policy Committee this week. Under the bill, Minnesota counties, statutory cities, or home rule charter cities with at least an AA credit rating would be permitted to invest up to 15% of certain eligible funds in privately traded mutual index funds.
Currently, most local governments are only permitted to invest in government-backed securities that offer a very low return on investment. Local government leaders testified in support of this legislation as it would allow eligible local governments to raise significantly more revenue that could then be used to support public programs and efforts. For instance, the City of Robbinsdale stated that this change could allow the city to earn an additional $330,000 per year in new funding.
The bill contains safeguards that require investments to be made through the State Board of Investment or directly with fund management, limits which funds may be used, and restricts private investment to only lower risk index mutual funds.
The bill now moves to the State Government and Elections Committee for further action. (SF 2952)
