Issue Position: Investment of Capital Reserve Funds

Issue Position

Greater return on capital reserve funds is now available to communities like Barrington.

Governor Hassan will sign into law HB 297 that expands capital reserve investment opportunities and fee reporting requirements, giving the Trustees of Trust Funds much of the same flexibility with capital reserve funds as it now has with trust funds. HB 297 provides a way for Trustees of Trust Funds to pay the investment fees out of the proceeds of the capital reserve funds, and provide transparency to the taxpayers as to the amount of those fees.

I am pleased to have chaired the subcommittee that helped craft this new legislation, giving more flexibility and accountability to Trustees of Trust Funds for maximizing our communities capital reserve funds. The result will be increased return on our capital reserve funds and greater transparency.

Details of this bill state the governing body may authorize the Trustees of Trust Funds to charge any expenses incurred against the capital reserve funds with this authority remaining in effect until rescinded by the governing body for 5 years. The vote to allow this will be held during town meeting and if passed, grants the authority to the Trustees to use the proceeds of capital reserve funds to pay the investment fees generated by any bank, brokerage firm, portfolio management department, or investment advisor with any professional banking and brokerage fees reported in the annual report of the trustees of the trust funds as expenditures out of capital reserves.

In a unanimous decision, the Municipal and County Government Committee felt HB 297 clearly shows taxpayers how the investment fees are paid, and may allow towns to realize more growth in their capital reserve funds. These revisions do not change Trustees authority to invest trust and capital reserve funds as they see fit.

Other innovations in this bill includes allowing municipalities to keep certain trust records in electronic format, changes the date by which certain municipal sums shall be transferred and allows library trustees to govern investments through application of the prudent investor rule.

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