A joint state House and Senate investigative committee approved a draft report yesterday that urges the state to recover its controversial investment in student loan-backed auction rate securities.

The committee also recommended that the Legislature conduct a further review of state investment practices.

The state bought more than $1 billion in auction rate securities from Citigroup Global Markets before the market froze in 2008. The state auditor determined last year that the state Department of Budget and Finance violated state law and policy with some of the purchases. The auditor found that some of the purchases involved securities with maturity dates significantly longer than the five years or less allowed under state law.

The state reached an agreement with Citigroup Global Markets in November that assures that the state can eventually recover about $869 million invested before the market froze. The state has sold about $200 million worth of the securities since 2008.

The investigative committee issued no opinion on the agreement. The committee met only once, in October, and by design will disband after its report is submitted.

State Sen. Donna Mercado Kim (D, Halawa-Moanalua-Kamehameha Heights), co-chairwoman of the committee, said lawmakers should consider whether to continue the investigation in the new session.

State Rep. Gene Ward (R, Kalama Valley-Hawaii Kai) was the only lawmaker to dissent on the 4-1 vote to adopt the report. He said the committee did not conduct a substantive investigation and should not make any conclusions about the investments.

Kalbert Young, interim state budget director, told lawmakers that he would proceed with a review of the agreement with Citigroup Global Markets and would also look at state investment practices.