By Corinne Murdock |
As the 2022 fiscal year closed, the Arizona Treasurer’s Office continued its positive years-long trajectory of the state’s finances.
Highlights of these year-end reports included a 2,126 percent increase in the Local Government Investment Pool (LGIP) total October earnings: over $13.4 million. Total LGIP assets were just under $5.7 million.
Arizona operates four LGIPs. Pool 5 LGIP earnings were over $6.7 million, Pool 7 LGIP earnings were just under $5 million, Pool 500 LGIP earnings were over $1.2 million, and Pool 700 LGIP earnings were over $446,000. Total participant earnings reached over $40.1 million.
The treasurer’s office also reported a 29 percent increase over the past three years in the Permanent Land Endowment’s market value: $7.1 billion.
The Permanent Land Endowment Trust Fund (PLETF) issues funds for 13 beneficiaries, including the state’s K-12 education, universities, prisons, hospital, school for the deaf and blind, retirement home, and legislature. K-12 funding will receive a $402 million boost from this increase in this upcoming fiscal year. They are the largest beneficiary of the PLETF.
These reports were issued during the Board of Investment (BOI) meeting on Tuesday.
Treasurer Kimberly Yee’s administration has yielded high dividends from the start.
In Yee’s first 100-day report after taking office in April 2019, they reported in that quarter a $426 million increase (seven percent) in the PLETF, a $5 million increase (62 percent) in general fund interest income, a $10.2 million increase (65 percent) in state agency interest income, and an $8.1 million increase (69 percent) in local government interest income. The PLETF increase enabled a $369 million distribution to K-12 schools, a 6.5 percent increase. For the 2020 fiscal year, K-12 education received $342 million; a $21 million increase from the previous fiscal year.
By the end of her first year in office, Yee announced a number of record highs: investment earnings of $567 million, a PLETF total of $6.23 billion, assets under management total of nearly $18 billion, state operating balance total of $3.75 billion, and distributions to K-12 schools and government totaling $567 million.
The pandemic didn’t hinder these positive performances. By the end of 2020, Yee raised the endowment to a then-record high of $7.1 billion. The treasurer’s office also reported a record distribution of nearly $400 million to PLETF beneficiaries; an increase of nearly four percent, namely for K-12 schools. In October 2020, the treasurer’s office also took on oversight of the AZ529 Plan, or Arizona Education Savings Plan (AFCSP).
Last March, the PLETF outperformed the long-term average returns of the largest university and college endowments in the country.
By the end of last year, the treasurer’s office achieved more record highs. Total assets under management increased to $26.1 billion, the state operating fund balance reached $7.7 billion last June (excluding federal pandemic aid), and the PLE reached nearly $8 billion with a one-year return of 27.5 percent.
The treasurer’s office also distributed $448.5 million to K-12 schools, state agencies, and local governments; a total of $1.57 billion in three years. That included an expansion of distributions to K-12 schools for this year, totaling $372 million. Yee’s administration also increased the LGIP assets by over 19 percent; a total of over 59 percent since Yee took office.
Yee has emphasized that her approach to treasury management focuses on less costs for taxpayers consistently. At the end of her first year in office, Yee shared that her management philosophy focused on reducing taxpayers’ burden.
“The more we earn, the less Arizonans have to pay in direct taxes,” stated Yee. “Each investment dollar we earn is one less dollar that has to be collected from taxpayers while staying committed to our investment philosophy of ‘safety, before liquidity, before yield.’”
In recent months, Yee implemented safeguards to prevent non-pecuniary factors from influencing, and potentially hindering, state investments. In September, the BOI modified its investment rules to prevent Environmental, Social, Governance (ESG) ratings from being factors of consideration when investing.