Accomplishments

Protecting Public Deposits: After losing $15 million of local government funds in a small bank failure my third day in office, we recovered these funds from the banking community and with their help rewrote state statutes, giving me greater authority to protect public deposits. Since then, another 18 banks have failed but not a dime of public funds have been lost – every tax dollar is now fully collateralize or insured!

Improving Cash Management: Last December I had to warn the Governor and Legislature that the Treasury was at risk of running out of cash. Working with them we were able to overhaul cash management statutes to consolidate cash investment activities across state government, and ensure that the spending reductions and tax increases enacted would alleviate a cash shortfall. This move paid off in a big way this summer when we were able to position the State Treasury to weather a possible default or shut down of the federal government.

This summer, we began our “Buy Washington Bonds” program to give Washington residents the opportunity to buy our bonds first, before we let Wall Street bid on them. This keeps some of our $1.5 billion annual debt service payments in-state, where they can help our economy!

First Ever Debt Affordability Study: When I ran for this office three years ago, I focused on the need to do a better job planning for the capital infrastructure investments we need to keep our economy growing and moving forward. To begin this work, the Legislature requested that my office conduct a comprehensive debt affordability study last year. The results of that study clearly showed that Washington’s debt load is among the top ten in the country – no matter what measure was used – and we were up against our debt limit with little capacity to finance new capital projects for the current biennium.

Governor Gregoire and both Houses of the Legislature wanted to temporarily increase our debt capacity, but the Senate wanted a longer term change to smooth out gyrations in capital spending and lower the constitutional debt limit to bring is more in line with other states. I agreed with the Senate in principle, but felt that there was considerable room for compromise. In the end, I helped the Legislature agree to temporarily increase debt capacity and statutorily lower our working debt limit over the next 10 years.

Debt Commission: As part of the compromise on the capital budget, the 2011 Legislature created a Debt Commission to conduct a comprehensive assessment of debt financed capital spending and make recommendations for possible amendments to our constitutional debt limit. In addition to key Legislators, the Governor and I will each appoint three members and serve on the Commission. My goal is to use this Commission to do three things: 1) ensure that we manage the state’s overall capital debt exposure to retain our excellent AA+/Aa1 bond rating; 2) smooth out gyrations in capital debt spending so that we can sustain our construction industry and do a better job planning for future capital investments; and 3) instigate a long term capital planning process that integrates transportation and infrastructure plans to improve the efficiency of capital investments and minimize capital costs.

Challenged Big Banks and Credit Rating Agencies: When CALPERS sued their custody bank, State Street, for deliberately overcharging on foreign exchange transactions, I led the investigation of our previous custody contract with State Street and negotiated the first full price settlement with them in the country, recovering $11.7 million for pension beneficiaries.

Working with Sound Alliance, a coalition of union and religious groups in the Puget Sound region, I challenged Bank of America to change their business practice for responding to distressed homeowners. As a result, they changed their national model – starting in Seattle – from one of telephone trees, rotating advisors, and constant delay, to in-person consultations and outreach by lending officers with the ability to revise mortgages. We aren’t out of the woods yet on this, but it’s a start.

In 2010, Standard & Poor’s issued a 50-state evaluation of pension funding that seriously mischaracterized Washington’s generally well-funded public pension system. I challenged them publicly, forcing them to retract the report and issue a corrected one.

Increasing Corporate Accountability: On the State Investment Board, which invests our $75 billion of pension and worker’s comp fund assets, I led the effort to vote our proxies on both domestic and international public equity investments. To date, the Board has withheld support for 20% of corporate directors for lack of independence or excessive compensation, and opposed 37% of proposed executive compensation packages.

Fully Fund Public Pensions: In 2010, the State Actuary released a detailed Risk Assessment for Washington’s Public Pension Systems. Knowing the likelihood that a report like this would receive little public attention and even less understanding, I prepared a shorter report, Pension Funding Reform for WashingtonState, to provide more context on the issue. In that report, I called on the Legislature to do a better job fully funding the actuary’s recommended state contributions – or adopt a constitutional amendment that would require them to do so – to avoid having to pay more later. For the first time in several years, the Legislature fully funded the actuary’s required contribution in 2011. While the constitutional amendment also attracted broad bipartisan support in the Legislature, it wasn’t passed in the 2011 session. I will continue to advocate this kind of sustainable budgeting for public pensions.

Leadership Positions: For the past two years, I have served as President of the Western State Treasurers Association and Western Regional Vice President of the National Association of State Treasurers. I have also been elected as Chair of the Washington State Investment Board, which oversees approximately $82 billions of investments for Washington public pensions, the Labor and Industries Insurance Fund, the Guaranteed Education Tuition (GET) program, and other trust funds.

Doing More With Less: The Treasury now has more funds invested and is financing more projects than when I took office, but we are doing so 7% fewer employees and operating funds! In addition, we are working with state agencies to help them save money by managing credit card costs through ACH payments.