Should Georgia Issuers Keep Bond Proceeds in Georgia Fund 1?

Georgia Fund 1 is the investment pool the State of Georgia offers, and Georgia's bond-proceeds statute, O.C.G.A. §36-82-7, lets the proceeds of Georgia public-body bonds be placed in the state's local government investment pool or invested in the securities it lists, "and no others."

Whether proceeds should stay there for a whole project is a comparison: the pool produces a short-term return, while a competitively bid GIC-type arrangement, full-flex repo or Treasury portfolio prices a term against the issuer's draw schedule.

What is Georgia Fund 1 and who can invest in it?

Georgia Fund 1 is the local government investment pool offered by the Office of the State Treasurer of Georgia to counties, municipalities, public colleges and universities, boards of education, special districts, state agencies and other authorized entities, with stated objectives of safety of capital, liquidity, yield and diversification.

The MSRB glossary defines a local government investment pool as a pool established by a state or local governmental entity or instrumentality for investing the public funds of participating governmental units, whose participants buy shares or units, often in a trust.

Georgia's pool statute, O.C.G.A. §36-83-8, creates a state local government investment pool whose policies the State Depository Board sets and whose assets the state treasurer administers and invests under a prudent-person standard limited to the investments listed in §50-5A-7 and Chapter 17 of Title 50.

The statute does not use the name Georgia Fund 1; the brand name and the pool's operating terms come from the Treasurer's own Georgia Fund 1 materials.

For bond proceeds specifically, O.C.G.A. §36-82-7 governs: proceeds of bonds issued by Georgia counties, cities, school districts, authorities and other public bodies are to be invested in the securities it lists, "and no others," and the same section lets proceeds be placed in the state pool.

That list runs from the issuer's own obligations and other public bodies' obligations to U.S. obligations, U.S. agency and instrumentality obligations rated in at least one of the three highest rating categories with a national market, insured in-state certificates of deposit, and certain no-load open-end funds and bank common trust funds limited to those obligations, and repurchase agreements on them, at constant NAV, bought through in-state banks with trust powers.

In general, GFOA cautions that local government investment pools are not registered with the SEC and that investments in them are not insured or guaranteed, a point about pools generally that the guide to local government investment pools develops in full.

The complete Georgia list, section by section, is on the page about Georgia permitted investments.

How is Georgia Fund 1's yield set, and how has it moved?

A pool deposit is a share of a portfolio, not a contract for a future rate, so the Treasurer publishes the yield the pool has already credited: the Georgia Fund 1 page posts monthly disclosure statements, LGIP Trust financial statements and a GF1 yield history document.

The Treasurer's July 2, 2026 GASB 40 letter describes Georgia Fund 1 as a AAAf-rated investment pool by Fitch Ratings and reports a weighted average maturity of 53 days as of June 30, 2026.

A reported WAM of 53 days as of June 30, 2026 means the portfolio's holdings matured, on average, within weeks of that date, so the income credited to participants follows short-term rates rather than a fixed term rate; both figures are dated, and the Treasurer's current disclosures supersede them.

Accounting differs from a registered fund's as well: the same letter states that Georgia Fund 1 is managed as a stable net asset value fund but does not meet all GASB 79 requirements, so participants are told to report their investments at fair market value.

For the market backdrop, mGIC's page of today's reinvestment rates shows the Treasury par yield curve and SOFR and links to Treasury's daily SLGS rate table.

How do arbitrage and rebate tracking work for proceeds held in Georgia Fund 1?

A pool deposit does not lift an issue out of the federal arbitrage rules: section 148 tests bonds under both the yield restriction rules of 148(a) and the rebate rules of 148(f), and Treasury's commingled-fund definition below contemplates gross proceeds held collectively with other money.

One definitional marker comes from Treasury's own regulations: 26 CFR 1.148-1(b) defines a commingled fund as a fund holding gross proceeds plus more than $25,000 of other amounts invested collectively, and states that an open-end regulated investment company is not a commingled fund.

Where an interest in a state pool sits within the arbitrage definitions is a question for tax counsel; the arbitrage section covers the mechanics.

What the pool statute contributes to the tracking is documentation: §36-83-8(e) gives participants in the pool it creates a monthly report, and accumulated income is credited at least monthly under (f).

The Georgia Fund 1 page's monthly disclosure statements are where participants confirm what earnings detail the pool provides; issuers needing pool-level data for a rebate computation can ask the pool directly.

How does Georgia Fund 1's liquidity compare with a draw-matched agreement?

The pool is structured around participant access, while a GIC-type agreement or repo is structured around a term, so the liquidity comparison turns on the pool's current withdrawal terms and the issuer's draw schedule.

Georgia's pool statute contemplates that fluctuating use: it lets a local government remit funds "not required by law or by any covenant or agreement with bondholders or others to be segregated and invested in a different manner" (§36-83-8(d)(1)), and it requires a statement of intended duration with each later deposit under (d)(3).

The treasurer may set minimum amounts and minimum holding periods under §36-83-8(b)(3)(A); this page does not restate the pool's current withdrawal terms, and the Treasurer's Georgia Fund 1 disclosures are where to check them.

That (d)(1) language matters for bond proceeds: if the bond documents require proceeds to be segregated and invested in a different manner, those funds fall outside what (d)(1) lets a local government remit, and bond counsel reads the documents first.

A competitively bid agreement works from the term side: its withdrawal provisions can be scheduled against expected construction draws, as the guide to GIC withdrawal provisions explains.

Georgia's own list anticipates term arrangements with that feature: §36-82-7(7) requires each time deposit, repurchase agreement, reverse repurchase agreement, rate guarantee agreement or similar banking arrangement to let the money be available at the time provided for its use.

When does a GIC, flex repo or Treasury portfolio earn more than Georgia Fund 1?

The structural difference is term: a provider bidding a GIC-type arrangement, a full-flex repo or a structured Treasury portfolio prices a commitment across the issuer's draw schedule, while the pool credits a return that follows short-term rates, as the reported WAM above indicates.

When a stable core of proceeds stays invested through a known schedule, that term can carry a different rate from the pool's short yield, and whether it is higher for a given issue on a given day is what the competitive bid measures.

mGIC evaluates and bids all three bid-side structures, sells none of them and does not act as principal; the pages on guaranteed investment contracts, full-flex repurchase agreements and structured Treasury portfolios describe each in detail.

A registered money market fund is another alternative the list reaches through §36-82-7(6), which allows certain no-load open-end funds and bank common trust funds limited to U.S. and agency obligations, and repurchase agreements on them, at constant NAV, bought through in-state banks with trust powers; Rule 2a-7 caps maturities at 397 days, WAM at 60 days and WAL at 120 days, with 25 percent daily and 50 percent weekly liquid-asset floors (the daily floor does not apply to tax-exempt funds), so a money market fund's yield is also a short-rate yield.

The head-to-head tradeoffs are laid out in the guide to LGIP vs GIC, and if proceeds already sit in the pool, the existing investment review is the checklist for setting a pool position beside the alternatives.

Using both: the pool for near-term draws, a bid investment for the rest

O.C.G.A. §36-82-7 says Georgia bond proceeds "be invested and reinvested" in the securities it lists, and how a given fund divides among them is an arrangement to confirm with bond counsel.

A split structure, the pool holding the fluctuating near-term balance and a competitively bid agreement the stable core, is one option Georgia issuers can put to bond counsel: the pool through §36-82-7's placement authority, the core through §36-82-7(7)'s banking arrangements if the counterparty and terms fit that paragraph, with bond counsel confirming the fit.

Georgia's general standard for local funds frames the exercise: "the highest rate of return shall be the objective, given equivalent conditions of safety and liquidity" (O.C.G.A. §36-83-4(c)), a statute that governs money a governing authority controls generally while §36-82-7 remains the provision for bond proceeds.

On the bid side, mGIC's Bidding Agent work covers bid specifications, soliciting qualified providers, managing questions, receiving bids, comparing rate and non-rate terms, and delivering Bidding Agent and provider certifications to bond counsel.

mGIC has provided Bidding Agent and reinvestment advisory services to issuers since 2002, and a free, no-obligation reinvestment review through the contact page can set a pool balance beside the bid alternatives before the issuer decides.

Which investments fit a given issue, and how the arbitrage rules treat it, are conclusions for bond counsel and tax counsel.

Last updated 2026-10-06.

This page is general educational information about municipal finance and federal and state rules as of the date shown. It is not legal, tax or investment advice, and it is not a recommendation about any particular investment. Product availability, legality and suitability depend on the issuer, jurisdiction, governing documents and transaction-specific facts. Final legal and tax determinations remain with the issuer's bond counsel, tax counsel and other advisors.