September 9, 1998

The State Finance Committee met in special meeting after notice duly given to the press and radio of Thurston County.

Present:

Michael J. Murphy, State Treasurer Brad Owen, Lieutenant Governor

Also Present:

John Fricke, Office of Financial Management Donna Lawrence, Office of the State Treasurer Dean Torkelson, Seattle Northwest Securities Dan Gottlieb, Gottlieb Fisher & Andrews Allan J. Martin, Office of the State Treasurer Mike Clarey, Office of the State Treasurer Nancy Adams, Office of the State Treasurer Jay Kirkevold, Office of the State Treasurer Rusty Fallis, Office of the Attorney General Tim Kerr, Office of the State Treasurer Martin Reynoso, Office of the State Treasurer

Chairman Murphy called the meeting to order and noted that Governor Locke was unavailable and would not attend this meeting.

Lieutenant Governor Owen moved the minutes for the August 17, 1998, meeting be approved.  Chairman Murphy seconded the motion.  The motion passed and the minutes were adopted.

Mr. Kerr introduced proposed Resolution No. 880 providing for the award of sale of $180,000,000 state of Washington General Obligation Bonds, Series 1999A.

Mr. Kerr stated that preparations had been made for competitive bids to be received for the above-referenced bond issue which was authorized by the Committee at its August 17 meeting.  A preliminary official statement was circulated electronically and in hard copy form to prospective bidders and investors.  Invitations to bid were published in national and state financial papers as well as electronically.

Mr. Kerr explained that currently there is very light volume of bond issuance—the 30-day visible supply of bonds is $3.6 billion during the current week.  Apart from a $200 million Florida Board of Education bond issue also offered on September 9, there are no other large issuers scheduled in the market this week.

Mr. Kerr stated that municipal bonds continue to be "cheap" relative to taxable U.S. Treasury notes and bonds.  This situation makes state bonds attractive to crossover buyers from the taxable side, and their presence is significant.  The Russian financial situation has prompted a "flight to quality" that has sent bond prices to historical levels.  Treasury bonds have responded dramatically during the past few weeks, and municipal bonds have improved grudgingly in their wake.

Mr. Kerr explained that competitive bid procedures for today's sale were the same as those routinely used for state bond sales, and that four bids were submitted as of 7:30 AM today.  All the bids were in conformance with the official notice of sale.  The bidders took advantage of SUREBID, which is a good faith surety insurance policy, and they will be sending us $1.8 million as soon as the winning bidder is selected.  The apparent low bidder was J. P. Morgan Securities, Inc., with a true interest cost of 4.9053 percent.  Lehman Brothers submitted a true interest cost bid of 4.9185 percent, Salomon Smith Barney, Inc., submitted a true interest cost bid of 4.926050 percent, and Merrill Lynch & Co., submitted a true interest cost bid of 4.9300 percent.  Mr. Kerr stated that it was a successful bond sale, and that he knows of no controversy related to these bond issues.

Mr. Kerr then asked Mr. Torkelson, the state's financial advisor, for his comments.  Mr. Torkelson said that in the current economic market the state is less than 10 basis points away from a potential $162.5 million refunding, and 20 basis points from a $300 million refunding.

Mr. Kerr presented proposed Resolution No. 880 to the committee.

Resolution No. 880 providing for the award of sale of $180,000,000 state of Washington General Obligation Bonds, Series 1999A, authorized by Chapter 14, Laws of 1989, 1st ex. sess., as amended (Chapter 43.99H RCW), Chapter 17, Laws of 1995, 2nd sp. sess., as amended (Chapter 43.99K RCW) and Chapter 456, Laws of 1997 reg. sess., (Chapter 43.99L RCW), and Chapter 39.42 RCW.

Chairman Murphy moved to accept the bid from J. P. Morgan and adoption of Resolution No. 880.  Lieutenant Governor Owen seconded the motion and the resolution was adopted.

Mr. Kerr then introduced one housekeeping item.  The State Finance Committee minutes of July 9, 1997, contain a typographical error, and he requested the Committee to approve a correction of those minutes and have the approval recorded in the record.  Chairman Murphy identified the error on page 114 of the minutes book, fifth paragraph, line one, Resolution No. 864 should read Resolution No. 865.

Lieutenant Governor Owen moved approval of correction of the July 9, 1997, minutes.  Chairman Murphy seconded the motion and the correction was approved.

There being nothing further to come before the committee, the meeting was adjourned at 9:15 AM.

	STATE FINANCE COMMITTEE STATE OF WASHINGTON   _______________________________________ Michael J. Murphy, State Treasurer & Chairman   ________________________________________ Gary Locke, Governor   ________________________________________ Brad Owen, Lieutenant Governor
________________________________________ Tim Kerr Deputy State Treasurer & Secretary