State treasurer educating voters on Amendment A

WORLAND —Two years ago, State Treasurer Mark Gordon and members of his staff approached the Wyoming Legislature with an proposal to allow the state to invest non-permanent state funds in equity. In two weeks, Wyoming voters will decide if the Wyoming Constitution should be changed to allow that type of investment.

The question that is before the voters is “Currently, the Wyoming Constitution allows the legislature to authorize the investment of public employee retirement systems funds and permanent state funds in equities, such as stock or shares in private or public companies. Permanent funds of the state include funds designated as permanent funds by the Constitution. The Wyoming Constitution does not allow the state to invest any other funds in equities. The adoption of this amendment would allow the legislature, by two-thirds vote of the members of both houses, to authorize the investment of additional specified state funds in equities.”

Voters either vote “for” the amendment or “against.”

For an amendment to the state Constitution to pass it must be approved by a majority of the voters casting ballots in that election, thus a non-vote on the amendment is counted as a no vote.

Gordon has been touring Wyoming, visiting with members of the media and different organizations to explain the amendment, encourage people to vote in the general election and ideally to support Amendment A. He stopped in Worland Saturday on a partial tour of Big Horn Basin that included Worland, Thermopolis and Cody.

Gordon said voters allowed the permanent funds to be invested starting in 1996. The Wyoming Legislature put certain parameters on the investments in that only 55 percent of the funds could be invested in equity. Gordon said at the present time the state is investing the full percentage allotted in equity.

He said overall, permanent and non-permanent investments total $19.8 billion being invested at this time. “The returns off of the whole portfolio have given anywhere from $1,300 to $1,700 in taxes saved for every Wyoming citizen.” The permanent funds, he said have outperformed the non-permanent funds, which are currently only invested in bonds.

The permanent funds include the Permanent Mineral Trust Funds, Permanent Land Funds, Hathaway Scholarship Endowment Fund, Excellence in Higher Education Endowment Fund and the Worker’s Compensation Fund.

The non-permanent funds being addressed with this year’s amendment, makes up about a third of the state’s investment portfolio and includes state agency pool (each state agency), Tobacco Settlement Fund, Wildlife Natural Resource Trust, the state’s Legislative Stabilization Reserve (rainy day account), capital construction and more and amounts to about $6 billion.

Gordon said the non-permanent funds are diversified into a variety of bonds. He said bonds used to be the safe investment over equity but that’s not the case anymore. He added that corporate bonds have their own risk.

Bonds have come down so low, Gordon said, that it is a concern. He said if the Federal Reserve increases interest rates, those holding bonds at the lower rates would see losses.

The bond market that used to be safer is not as safe as it used to be.”

Pros and cons

The Wyoming League of Women Voters developed a pro and con flier. Providing the “con” opinions were Wyoming Senate President Phil Nicholas and House Speaker Kermit Brown. Gordon addressed the concerns the two legislators wrote, noting that the two supported the bill in 2015 to send the question to the voters.

One of the concerns is about “future treasurers.” Gordon said, “I don’t have the latitude to pick the stocks. He said the state has a qualified financial consultant chosen every four years with the fourth year following an election year. The current consultant is RVK of Portland. The company provides quarterly updates to the State Loan and Investment Board which is the top five elected officials in Wyoming.

He said the Legislature, just as they did with the permanent funds, will have to set parameters and could set the amount to be invested at anywhere from 1 percent to 55 percent to match the percentage for the permanent funds. They can also specify which non-permanent funds can be invested in equity.

The Legislature also requires a two-thirds vote in each the House and the Senate to approve investing any of the funds in equity.

Investments and Wyoming’s investment policy, available on the state treasurer’s website, statetreasurer.wyo.gov, is reviewed periodically by SLIB to ensure Wyoming is “getting the best return for the lowest risk.”

The LWV pro-con pamphlet, Brown and Nicholas wrote that the state saw a loss of a nearly $750,000 in six months in 2008. They ask, “what happens if … accounts were suddenly reduced by 20 percent to 40 percent? How would the funds be made up and by whom?”

Gordon said, “The world is a risky place. We always maintain a very generous cash balance. We manage our cash very carefully. Some people think gold is a great alternative. We’ve looked at gold. One of the problems with gold is we don’t have don’t have a facility to hold gold bullion.”

He said if approved, the options would “allow us to be more much more defensive. The point of this for the treasurer’s office is to be diversified so that we can give the state the best defense against economic uncertainties that we can.”

“This gives us a better chance to do a better job with taxpayer money,” Gordon said. “We would not go out and buy all the stocks in the world right away. Part of this is the opportunity. You wouldn’t buy stocks just to own stocks. You buy stocks when the opportunity presented itself that was beneficial for the state. This is a long haul thing, it’s not a one year at a time thing.

Gordon added that if voters approve the amendment Nov. 8, it will be more than likely a year before the Legislature sets parameters and approves any of the funds to be invested. The investments won’t happen overnight.

He said the investment portfolio is also available on the website and people with questions are welcome to contact the treasurer’s office at 307-777-7408.