PSDLAF and Bond Proceeds: Should Pennsylvania Issuers Keep Proceeds in the Pool?

A Pennsylvania issuer can keep bond proceeds in PSDLAF, and whether the pool or a competitively bid investment fits a given fund turns on the pool's daily floating rate, the withdrawal terms the fund's documents set, and how much of the balance can be committed to a fixed term.

This page covers what PSDLAF is, how its published rate is built, what arbitrage tracking its bond proceeds program markets, and where a bid investment fits alongside it.

What is PSDLAF and who can invest in it?

PSDLAF is a fund created in 1982 specifically to assist local governments, schools and municipal entities in the Commonwealth of Pennsylvania, and it provides its programs under the Pennsylvania Intergovernmental Cooperation Act.

It is one example of what the MSRB glossary calls local government investment pools: an investment pool established by a state or local governmental entity or instrumentality that serves as a vehicle for investing public funds of participating governmental units, with participants buying shares or units, often in a trust.

The fund's site said in October 2026 that it had held S&P's AAAm rating since its founding, and ratings and balances change, so the fund's own publications are where a present-day rating check belongs.

The site is operated by PMA, a firm that serves several states, but this fund is for the Commonwealth of Pennsylvania.

In October 2026 the fund's site identified the MAX Series and GTS as the active Multiple Series.

The GTS series, open to Pennsylvania municipal entities only, was described on the site in October 2026 as 100% liquid, with no deposit requirements, rated AAAm by S&P and invested under Act 10 of 2016.

How is PSDLAF's yield set, and where is it published?

PSDLAF publishes a Daily Rate and a 7-Day Average Rate on its home page, and the Daily Rate refers to income generated over the previous one-day period, which is then annualized.

The 7-Day Average Rate is built the same way over the prior seven days, so both figures move with the fund's recent income rather than being fixed for a term.

The published figures are therefore measures of income already earned, and nothing on the fund's rate page commits the yield a balance will earn over a construction period.

This page does not quote the fund's rates: they change daily, and the fund's home page is where the current figures sit.

For market context on the bid side, mGIC posts today's reinvestment rates, and its daily rate-update emails carry Treasury yields, SOFR and SLGS links each business day.

How do arbitrage and rebate tracking work for proceeds held in the pool?

PSDLAF markets a Bond Proceeds Investment program that it describes as a comprehensive strategy to invest and track bond proceeds, and its listed features include arbitrage rebate monitoring by a third party at no cost.

The site also lists professional investment recommendations, customized account structuring, secure disbursement options at no cost, online access and cash flow verification reporting as program features.

What the site does not describe is the scope of that monitoring or who provides it, so those details would have to come from the fund's program documents.

Pennsylvania law adds its own housekeeping rules for Local Government Unit Debt Act funds: under 53 Pa.C.S. §8224(c)–(e), investments must be held in the local government unit's name, income received from any deposit or investment is part of the fund or account invested, and accounts for one or more bond series with the same depository may be combined for investment with each receiving a pro rata share.

Those state provisions govern where earnings sit; the federal arbitrage and rebate rules apply separately, and §8224 does not address arbitrage.

Federal vocabulary differs as well: 26 CFR 1.148-1(b) defines a commingled fund as one holding gross proceeds plus more than $25,000 of other amounts invested collectively, and it states that an open-end regulated investment company is not a commingled fund.

How a particular pool deposit fits an issue's arbitrage rebate computation, including what records the issuer needs from the pool, is a determination for tax counsel.

How does same-day pool liquidity compare with a draw-matched agreement?

Liquidity in PSDLAF is whatever the fund's series documents provide, and the fund describes its GTS series as 100% liquid with no deposit requirements.

A registered money market fund works under prescribed rules: SEC Rule 2a-7 does not let a fund buy a non-daily-liquid asset if that would leave it with less than 25% of total assets in daily liquid assets, or a non-weekly-liquid asset if that would leave it with less than 50% in weekly liquid assets, and it caps instrument maturity at 397 calendar days, portfolio WAM at 60 days and WAL at 120 days (the 25%/50% liquidity levels are the post-2023 figures; 17 CFR 270.2a-7(d)(4)(ii)–(iii)).

The 25% daily floor does not apply to tax-exempt funds.

Rule 2a-7 governs registered money market funds; the rules PSDLAF itself operates under are set out in the fund's own documents.

A competitively bid GIC works the other way around: as the federal tax rules define it, a GIC is a nonpurpose investment with a specifically negotiated interest rate and specifically negotiated withdrawal or reinvestment provisions (26 CFR 1.148-1(b)), so the withdrawal terms are negotiated rather than set by the pool.

How those negotiated withdrawals behave in practice is on the GIC withdrawal provisions page.

When does a GIC, full-flex repo or Treasury portfolio fit better than the pool?

Which of them fits a fund better than the pool turns on what each structure commits: a GIC carries a specifically negotiated interest rate and specifically negotiated withdrawal or reinvestment provisions, with the solicitation's terms taking the issuer's reasonably expected deposit and drawdown schedule into account; a full-flex repurchase agreement, the other agreement mGIC evaluates and competitively bids, commits whatever its own terms provide; and a structured portfolio of U.S. Treasury securities is matched to anticipated cash needs with a money-market allocation for faster-than-expected spend-down.

State law frames what can go into these structures at all: under 53 Pa.C.S. §8224(b), money in sinking funds and other bond funds established under the Debt Act that is not needed promptly and not deposited at interest must, as far as practicable and reasonable, be invested in securities the Commonwealth itself may invest in, subject to any stricter requirements in the contract with bondholders.

The statute names neither GICs nor repurchase agreements, so it neither authorizes nor bars them by name, and it does not inventory the Commonwealth's eligible securities for this page to list.

Issuer type matters too: for borough funds generally, 8 Pa.C.S. §1316(c) lists the authorized investments, including Treasury bills, short-term U.S. and agency obligations, insured or collateralized deposits, full-faith-and-credit U.S., Commonwealth and Pennsylvania political-subdivision obligations, 1940-Act funds limited to those items and certificates of deposit within limits, and that list names neither repos nor GICs, though for Debt Act bond funds §8224 is the specific provision.

The borough code covers boroughs only; counties, townships, cities and school districts have their own codes.

Whether an investment type is open to a given Pennsylvania issuer and fund is a question for its bond counsel, and the state-by-state detail sits on the Pennsylvania permitted investments page.

Price is the other side of the comparison: Treasury Regulation §1.148-5(d)(6)(iii) treats a GIC's purchase price as fair market value on the purchase date when the bidding safe harbor's requirements are met, from a bona fide solicitation through qualifying bids, winning-bid rules, provider certification and record retention, a mechanism the fair-market-value safe harbor page walks through.

The safe harbor is a presumption, not a conclusion: failing it costs the issuer the presumption, and meeting it does not itself settle any issue's tax position.

The general tradeoffs between a pool deposit and a bid agreement, fund type by fund type, are on the LGIP vs GIC comparison page.

A direct test on the numbers is to compare your pool yield with real bids on the same balance and draw schedule.

Can an issuer use PSDLAF and a bid investment together?

A fund does not have to pick one home for all of its proceeds: near-term draws can sit in the pool while the balance is put out to bid, with the bid sized to the draws it is meant to cover.

The solicitation rules anticipate that structure: Treasury Regulation §1.148-5(d)(6)(iii)(A)(5) requires that the terms of a GIC solicitation take into account the issuer's reasonably expected deposit and drawdown schedule, so the solicitation is built around when money will arrive and when it will be drawn.

mGIC is an independent, SEC-registered municipal advisor and Bidding Agent that helps issuers structure, competitively bid and close investments of bond proceeds, and it sells no investment product, does not act as principal, and is paid by the winning provider at or below the safe-harbor maximum in the Treasury arbitrage regulations, with the fee disclosed.

If you want an independent read on whether PSDLAF or a bid investment fits your fund's remaining draws, mGIC offers a free, no-obligation reinvestment review, and the contact page is where it starts.

Final determinations about permitted investments, arbitrage and tax treatment for a Pennsylvania issue belong to its 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.