Richard Ellis

One of the main functions of the State Treasurer’s office is managing the investments of the Public Treasurers’ Investment Fund (PTIF). The PTIF has operated in its present form since the early 1980s. It has become the primary investment vehicle for most public treasurers in the state.

The PTIF operates similar to a money market fund. Its investments are short-term in nature with an average maturity of less than 60 days in today’s market environment. Participants are able to transfer money into or out of the fund daily. All General and Education Fund moneys of the state are invested in the PTIF. In addition, all of the counties, higher education institutions, school districts and most cities, towns and special service districts in the state participate in the PTIF. In all, more than 450 government entities participate in the PTIF.

The balance of the PTIF has peaked at more than $11.0 billion in the past several months. All the investments are limited to those authorized by the Money Management Act. The PTIF is attractive to public treasurers for several reasons. First, public treasurers are able to benefit from the investment expertise of the State Treasurer’s office. Second, they receive same day liquidity but are able to take advantage of extending out the yield curve to enhance their return. Third, aggregating the investments of all public treasurers allows everyone to enjoy economies of scale by purchasing investments in larger block sizes thereby minimizing transaction costs. 

For the fiscal year that began July 1, 2006 and ended on June 30, 2007, the PTIF earned more than $480 million of investment income for its participants. This represents $480 million available for appropriation that did not come from taxpayer pockets in the form of taxes or fees. This helps keep taxes down. Of course, this amount fluctuates because of the relative level of interest rates. Recent interest rate cuts by the Federal Reserve Bank will directly impact the interest earning of investments in the PTIF.

In future blogs, I’ll discuss some of the challenges that local government investment pools, similar to the PTIF, are facing in very tumultuous credit markets.

I went to dinner with a good friend several weeks ago and he asked me several probing questions about the office of State Treasurer and why I was running. His conclusion was, “You are running for an office for which there is a limited political platform, and in which no one shows much interest.” I was impressed with how quickly he cut to the core elements of the campaign. Let me provide some background about the office.

The result of the Utah Constitutional Convention was the establishment of five constitutional officers. I suppose that five were created to provide an additional check and balance within the Executive Branch. Three of these, the Attorney General, State Auditor and State Treasurer were given very simple, yet professional roles. The Attorney General is the “legal adviser of the state officers.” We would expect that the Attorney General hold a law degree and be an experienced attorney.

The State Auditor is to “perform financial post audits of public accounts.” We would expect the auditor to be a Certified Public Accountant and experienced in performing audits.

The State Treasurer is designated as “the custodian of public moneys.” Again, we would expect the treasurer to have a degree in accounting or finance and some expertise in both the collection and investment of money. As a custodian, the treasurer is entrusted with guarding and keeping safe taxpayers’ moneys. With this comes a fiduciary duty.

Each of these three offices is also directed by the constitution to “perform other duties as provided by statute.” Note that their roles are not that of a policymaker, but rather to perform professional duties requiring certain expertise and experience.

The State Treasurer’s office performs four basic functions: 1) Manages the banking relationships and contracts for the state; 2) Invests public funds; 3) Issues debt as authorized by the Legislature; and 4) Administers the Unclaimed Property program.

I believe the citizens of Utah aren’t looking for a treasurer to politicize the office by grabbing headlines or pushing an agenda as a stepping stone to higher elected office. In Utah, we have a long tradition of electing a treasurer that has a background as a treasurer at a city, county or other organization.

So, as we work our way through the next several weeks and months to narrow the field of candidates, I leave you with this question:  Is it important to have a qualified, experienced State Treasurer to protect your tax dollars? If you believe, like me, that this is a professional position, then your job as a delegate or voter is to peel back the layers of rhetoric and uncover the core competence and experience of the candidates. The choice will be obvious.