LEGISLATIVE FISCAL OFFICE
Fiscal Note
Fiscal Note On: HB 284 HLS 21RS 625
Bill Text Version: ENROLLED
Opp. Chamb. Action:
Proposed Amd.:
Sub. Bill For.:
Date: June 7, 2021 6:46 PM Author: ILLG
Dept./Agy.: Treasury
Subject: Provides relative to securities lending Analyst: Alan M. Boxberger
TREASURER EN INCREASE SG RV See Note Page 1 of 1
Provides relative to securities lending
Present law authorizes the treasurer to engage in securities lending and to engage financial institutions to act as agents for
the state; requires a security lending agent to indemnify the state for any losses resulting from the default of a borrower;
requires the borrower to provide collateral and specifies the forms of collateral; and requires collateral with a value equal to
or greater than 102% of the market value of securities lent by the state plus any accrued interest. Proposed law defines
“securities lending” to mean a contract by which securities are supplied to a lending agent for a fee and secured by a pledge
of collateral with value equal to or greater than the securities supplied; provides for definitions; requires indemnification for
losses resulting from insolvency of a borrower; authorizes investment of cash collateral in securities authorized for
investment for the LA Education Quality Trust Fund; lowers the collateral value that must be maintained for cash collateral
100% of the total market value of securities lent plus accrued interest; provides for required submission of additional
collateral in certain circumstances; and provides for determination of the market value.
EXPENDITURES 2021-22 2022-23 2023-24 2024-25 2025-26 5 -YEAR TOTAL
State Gen. Fd. $0 $0 $0 $0 $0 $0
Agy. Self-Gen. $0 $0 $0 $0 $0 $0
Ded./Other $0 $0 $0 $0 $0 $0
Federal Funds $0 $0 $0 $0 $0 $0
Local Funds $0 $0 $0 $0 $0 $0
Annual Total $0 $0 $0 $0 $0 $0
REVENUES 2021-22 2022-23 2023-24 2024-25 2025-26 5 -YEAR TOTAL
State Gen. Fd. $0 $0 $0 $0 $0 $0
Agy. Self-Gen. $0 $0 $0 $0 $0 $0
Ded./Other INCREASE INCREASE INCREASE INCREASE INCREASE
Federal Funds $0 $0 $0 $0 $0 $0
Local Funds $0 $0 $0 $0 $0 $0
Annual Total
EXPENDITURE EXPLANATION
There is no anticipated direct material effect on governmental expenditures as a result of this measure. Proposed law may
result in an increase in revenues from securities lending, which contributes to the SGR providing for general operating costs
of the Treasury.
REVENUE EXPLANATION
Proposed law may result in an increase of approximately $2.1 - $2.8 M of SGR revenue for the Treasury to the extent
changes to the authority to lend securities results in an increase in returns. The Treasury reports that the state currently
has approximately $2.6 B U.S. Treasury securities on loan through various securities lending transactions. Proposed law will
amend the securities statute to comport with modern securities lending rules, regulations and best practices, which in turn
the Treasury estimates will result in an increase in fees the Treasury may earn from 3.5 to 4 basis points to around 21 basis
points. To the extent the Treasury is able to realize the anticipated fee revenue increase for securities lending, the
estimated revenue increase on $2.6 B market value of securities on loan may generate an additional $2.1 M to $2.8 M SGR
annually.
Senate Dual Referral Rules House
13.5.1 >= $100,000 Annual Fiscal Cost {S & H} 6.8(F)(1) >= $100,000 SGF Fiscal Cost {H & S}
Christopher A. Keaton
13.5.2 >= $500,000 Annual Tax or Fee 6.8(G) >= $500,000 Tax or Fee Increase
Change {S & H} Legislative Fiscal Officer
or a Net Fee Decrease {S}


Statutes affected:
HB284 Original:
HB284 Engrossed:
HB284 Enrolled:
HB284 Act :