Agency: State Treasurer

Line Item: State Treasurer

Function

The State Treasurer budget consists of one line item.

The line item has three programs:

1. Treasury and Investment
2. Unclaimed Property
3. Money Management Council

Intent Language

Under section 63J-1-603 of the Utah Code, the Legislature intends that appropriations provided for the State Treasurer in Item 10 of Chapter 11 Laws of Utah 2012 not lapse at the close of fiscal year 2013.

Funding Detail

For more detail about a particular source of finance or organizational unit, click a linked entry in the left column of the table(s) below.

Program: Treasury and Investment

Function

This program adheres to the Money Management Act and Rules of the Money Management Council, and uses appropriate investment research tools to maximize the safety of state and local government funds invested and to earn competitive yields. The Treasurer also maintains the Public Treasurers' Investment Fund (PTIF) so that other governmental entities can pool their idle money together for professional management, a high degree of liquidity and optimal return on funds.

All available funds are invested each day at competitive interest rates. The primary investment instruments used are bank certificates of deposit, commercial paper, short-term corporate notes, and obligations of the U. S. Treasury and government agencies.

The Treasurer is a member of the State Bonding Commission and the State Building Ownership Authority, which issues debt for the state. He oversees the team of professionals who work together to issue debt including the financial advisor, bond counsel, disclosure counsel and underwriters. He coordinates all relations with bond rating agencies including formal presentations at least once a year.

The Treasurer also manages the investments of the State School and Institutional Trust Funds. The dividend and interest earnings from the State School Fund provide income for the Permanent School Fund, which allocates funding directly to individual schools statewide.

Performance

The following chart shows historical interest rates earned by the PTIF. Rates have been less than one percent since June of 2009. A review of records back to 1981 shows this is the first time interest rates have fallen below one percent in that time frame.

The PTIF invests only in securities authorized by the Money Management Act and while yield is important, the primary objective of the PTIF is safety of principal. Returns are directly correlated to the relative level of short-term interest rates. Considering that State and local government budgets are constrained, interest earned on PTIF investments is of critical importance. In FY 2013 the rate fluctuated between a low of .4835 percent (May 2013) and a high of .7769 percent (July 2012).

The next measure provides a comparison between PTIF performance and that of a fund with similar characteristics, the Vanguard Prime Money Market Fund. FY 2013 Spread between PTIF interest rate and benchmark interest rate: 0.57%

The dividend and interest earnings from the State School Fund provide funding directly to schools statewide. The State School and Institutional Trust Fund portfolios hold a broadly diversified mix of investments, including domestic equities, domestic fixed income, international equities and real estate.

Given the substantial breadth of underlying investments held within the portfolio, the factors which impact the investments are numerous, but in simplest terms, the investments are impacted primarily by global economic conditions and the financial performance of the underlying diversified investments (stocks and bonds, primarily) that are maintained within the portfolio. The chart below depicts historical dividend and interest income to the Permanent School Fund by fiscal year and provides a measure of its investment performance over time.

Interest and dividend earnings increased from FY 2012 to FY 2013 for three primary reasons:

• The Total International Stock Index Fund changed the distribution frequency from annually to a quarterly, which resulted in two additional quarterly payments.
• Investments in higher-yielding real estate assets have increased steadily over the past five fiscal years.
• Dividend yields on common stocks continue to rebound after having retracted in 2008 and 2009.

Funding Detail

Program: Unclaimed Property

Function

The Unclaimed Property Program is responsible for reuniting lost or abandoned property with its rightful owners. Property types include savings accounts, life insurance policies, payroll checks, safe deposit box contents, stocks and mutual funds, and other types of property. Any amount not returned to rightful owners is deposited in the Uniform School Fund.

Each year the division is required, under UCA 67-4a-402, to publish notice of property received during the year in a newspaper having general circulation in Utah. Additional outreach programs include billboard ads, radio ads, locating services which enable owners to search for their names in the database, and listing all names and addresses on mine.utah.gov and missingmoney.com. Several employees are actively involved in locating efforts.

The Unclaimed Property Division maximizes returns of abandoned property to owners through examining current business processes and implementing improvements where needed. In addition, the division continues to increase productivity through the adoption of new IT enabled processes such as document imaging.

Statutory Authority

Statutory authority is provided within UCA 67-4a, "Unclaimed Property Act."

Performance

The top three measures identified for this program include 1) Number of claims paid 2) Amount of unclaimed property claims paid, and 3) Number of claims initiated.

The purpose of the Unclaimed Property Division is to reunite rightful owners with their properties, and to safeguard those properties until such disbursements are made. This measure tracks the number of such disbursements and is a primary way to gauge the effectiveness of the division's efforts.

This is the total dollar amount of claims paid to the rightful owners of Unclaimed Property, and is another primary measure of the division's efficacy in its primary mission.

The number of claims initiated is tracked and evaluated in concert with total number of claims paid. It provides an additional measure of the division's efforts to ensure that properties are safeguarded and paid out only to rightful owners. The division must process every claim submitted in such a way as to ensure that properties are only paid to rightful owners. Some initiated claims do not result in disbursements, but require significant processing and due diligence nonetheless.

Funding Detail

The program's administrative costs are paid from the Unclaimed Property Trust Fund as allowed in UCA 67-4a-405. The fund receives proceeds from intangible property escheated to the state, including proceeds from the sale of abandoned property.

Program: Money Management Council

Function

The Utah Money Management Council is responsible for the oversight of bank deposits and investments maintained by all Utah public treasurers. This involves overseeing and supporting over 500 public treasurers from municipalities of all types; large and small, urban and rural. Additionally, the council must oversee and monitor the degree to which, over 60 financial institutions which hold public funds, comply with the Money Management Act and Rules of the Money Management Council. The State Treasurer's Office provides staff to the council, and the Treasurer serves as the Council's executive secretary without voting rights.

The council is comprised of five members appointed by the Governor with the advice and consent of the Senate. At least one member must be from banking, one must be an elected treasurer, one must be an appointed treasurer and one must be experienced in the field of investments. No more than three members of the council may be from the same political party.

Statutory Authority

Statutory authority for this program is provided within UCA 51 Chapter 7, "Money Management Act."

Funding Detail