DENVER -- A controversial measure dealing with the investment of surplus Social Security trust funds in state and local government securities received tepid approval yesterday from delegates in a voice vote at the Government Finance Officers Association annual meeting.

The GFOA policy statement, which also found some dissent among members of the group;s executive board and debt and fiscal policy committee, recognized the importance of ensuring the safety of the trust funds. But the measure also stated the group's support for proposals that broaden the market for municipal securities.

Some delegages, who voted against the policy statment, said they were concerned the GFOA would be giving Congress a carte blanche to interfere in the market in the future. And the delegates biggest fear was that Congress could decide to one day remove the tax-exempt status of municipal bonds in an effort to increase the investment earnings of the trust fund.

Jeffrey Green, deputy general counsel of the Port Authority of New York and New Jersery and chairman of the debt and fiscal policy committee, said that was not the intent of the statement, which based its support on conditions concerning the trust fund's investment practices. He also said the trust fund's involvement in the market does not interfere with the private market for municipal securities.

But not all the delegates were convinced. Alan Desmaias, budget director of the Connecticut Resource Recovery Authority, said, "It's like letting loose a 2,000-pound gorilla into an area that's very stable."

Delegates unanimously approved other policy statements. One encourages governments to supplement their comprehensive annual financial and component unit financial reports with simpler, so-called popular reports designed to assist people who need a less detailed review of a government's financial activities.

Another statement approved by the delegates supports federal legislation amending the Government Securities Act to include sales practice rules that are similar to those in other regulated markets. The group also supported a "meaningful role" in enforcement for the Securities and Exchange Commission and called for a sunset provision in the act.

On the disclosure front, GFOA members reiterated the association's policy that any federal government involvement in state and local government disclosure practices should reflect the balance of power between states and the national government. However, the policy statement stipulated that the Municipal Securities Rulemaking Board should not be authorized to regulate state and local government issuers, directly or indirectly, and that the SEC should no try to regulate the market access of state and local governments in "the legitimate pursuit of financing their governmental purposes."

The group also listed its criteria for the centralized collection, storage and dissemination of disclosure information. That criteria included collecting the relevant information and making it available through "a range of media;" ensuring accessibility and accuracy of the information; charging users of the information to pay for any costs; and encouraging the collection, storage, and dissemination of information by private vendors.

The GFOA delegates also approved a policy urging Congress to amend the bankruptcy code to permit public employee retirement systems to serve as members on Chapter 11 committees of creditors and equity securities holders.

A measure on proposed Social Security regulations dealing with minimum benefit standards for public employee retirement systems also received a unanimous vote from the delegates.

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