Concerning the creation of a special purpose authority to invest certain public money, and, in connection therewith, creating a process for government entities to choose to have their money invested by the authority and using a portion of th...
SB26-180 would create a new “Investment Performance Authority,” a special purpose authority that could invest certain public money on behalf of eligible state and local governmental entities that opt in. The authority would be governed by a seven-member board including the state treasurer, the director of the office of state planning and budgeting, investment professionals, and representatives connected to the child care field and child care advocacy. The bill authorizes the authority to pool funds, offer multiple investment options, and invest in a broader range of securities than many existing public-money investment rules allow.
The bill also directs the authority to use investment earnings in several ways: to distribute returns back to participating entities, cover administrative costs, build reserves, and send a portion to counties for child care assistance for families with low incomes. The child care distribution formula would be developed in coordination with the child care assistance program allocation committee and the Department of Early Childhood. The bill includes legislative findings tying the proposal to child care shortages, waitlists, workforce participation, and the economic costs of inadequate child care funding.
If enacted, SB26-180 would add a new article to Title 24 creating a politically independent public authority with power to manage and invest certain special-fund, enterprise-fund, and special-purpose-authority money. It would also amend the state’s definition of “special purpose authority” to include the new entity. The bill would change how participating public funds may be invested by allowing the authority to use investment vehicles that are not otherwise available under existing public-money investment statutes, subject to opt-in approval and prudential standards. It would also create a new mechanism for redirecting a portion of investment earnings to county child care assistance programs, while imposing reporting, audit, conflict-of-interest, and administrative-cost limits.
The bill’s stated purpose and structure suggest generally supportive sentiment around expanding child care funding and improving returns on public money. Its findings frame the proposal as a response to child care shortages, enrollment freezes, and the economic harm caused when parents cannot work because of lack of care. The inclusion of child care advocates and child care field representation on the board also indicates an effort to align the investment mechanism with child care policy goals. However, the bill was ultimately postponed indefinitely in the Senate Appropriations Committee, which suggests that fiscal, operational, or policy concerns prevented it from advancing.
Likely points of contention include the creation of a new quasi-independent authority to invest public funds, the use of potentially higher-risk or less traditional investments, and the extent to which public entities should shift money away from the state treasurer or other existing investment managers. The bill also raises questions about governance and accountability, including board composition, conflict-of-interest rules, and the authority’s exemption from the procurement code. Another possible area of concern is the diversion of a portion of investment earnings to child care assistance, which may be viewed as an innovative funding source by supporters but as a departure from conventional fund-management priorities by skeptics. The postponement indefinitely in Appropriations suggests that budgetary risk or uncertainty about returns may have been a significant objection.