As General Treasurer Gina Raimondo charts a course for Rhode Island’s financial future, she believes progress over the past two years is a positive omen for things to come. Raimondo released a State of the Treasury report Monday, outlining her achievements and goals to put the state on a secure path to growth.
“I believe government touches our lives every day and people deserve a government that works. As I look back … the overall message is that Treasury is working,” Raimondo said.
Most notably, Raimondo points to nearly $5.8 billion in taxpayer savings achieved by the Treasury. Those savings include $1 billion over the next 20 years for municipalities from pension reform, $7 million in interest saved due to successful bond refinancing, $450,000 annually saved in rent by moving to a state-owned building and another $300,000 annually by changing the pension fund’s custodial bank.
The bulk of the savings come through the treasurer’s comprehensive pension reform package. The $4 billion saved over the next 20 years, however, hangs in the balance, with the fate of reform left to the courts.
“Certainly I hope that the court does uphold the great work of the General Assembly. If it is not upheld, it will put a substantial burden on our cities and towns and probably more important, it will weaken the system,” she said.
Pension reform, she says, has prevented the bankruptcy of “more than one” city and town, saving municipalities $100 million in FY 2013. Providence, Cranston and Warwick are among the top five beneficiaries of reform, saving $13 million, $11 million and $8.8 million respectively, this year alone.
Most municipalities have followed suit with plans of their own, some of which have been supported by the Treasury. The office has hosted municipal workshops with experts and has also brought the Pew and Arnold Foundations on board to work with municipalities on their pension problems.
“If there is a city and town out there that wants to work on their plan … they should call our office. We could set them up with these technical experts at no cost to them,” Raimondo said.
Aside from pension reform, municipalities are supported through programs available under the Treasury, such as the Ocean State Investment Pool. The pool includes roughly $600 million under management, though only Bristol, Lincoln and Cranston participate, along with several quasi-state agencies, such as URI and the Narragansett Bay Commission.
“We’re going to raise awareness and let people know that this is available,” Raimondo said.
Through the Ocean State Investment Pool, cities and towns can take advantage of lower fees and benefit from economies of scale. When asked why more cities and towns are not participating, she said, “I think they will,” and noted that the program has only been available for one year. Stepping outside the box and doing things differently, she said, can take time to get used to, especially in government.
“We’re asking them to be open to doing things differently,” she said.
Raimondo says her office has seen the firsthand benefit of doing things differently. Changing the workflow in the department and reviewing procedures has shortened the processing of unclaimed property from an average of six to eight weeks to only one week. The department has also eliminated a 900-claim backlog from the Crime Victim Compensation Program. Raimondo promises that when constituents call, phone calls are returned.
“We have not added staff but we are working harder and more efficiently. We’ve engaged a LEAN manufacturing consultant, somebody who is an expert at making our system more effective,” she said. “In some instances, people were waiting years for their claims to be processed and that’s unacceptable. We’ve changed the workflow to be more efficient and more effective.”
Project LEAN was born out of that consulting relationship, focusing on improving the taxpayers’ experience with the department. In an effort to protect state bank accounts, the Treasury completed a system-wide audit of each account. Project LEAN also modernized the Unclaimed Property Division, returning about $7 million in unclaimed life insurance proceeds to individuals.
“We’re doing things differently. The way we solved problems 50 years ago is not going to be the way we solve problems today,” Raimondo added.
Part of the general treasurer’s approach in problem solving has been a grassroots effort to empower Rhode Islanders. Through a partnership with the Capital Good Fund, she has made the Financial Coaching Corps available to all residents. More than 50 people have volunteered as coaches, and anyone with financial questions or a desire to make sound fiscal decisions can tap into the program.
“So far, it’s been going incredibly well. We’ve been overwhelmed with interest in the program both from people that want to coach and demand from the community,” Raimondo said. “The Capital Good Fund and my whole Financial Empowerment Plan is making Rhode Island financially stronger one person at a time.”
At the classroom level, the department offers Everfi, an online financial literacy tool currently being used by 25 high schools.
“That’s very motivating to know that this program is there helping people,” Raimondo said.
Building trust among taxpayers and potential investors requires transparency and accountability. Raimondo’s report cites the creation of the state’s Investor Relations Portal as an example of transparency, providing an online source for much of the state’s financial information. The department has additionally implemented a “no campaign donation acceptance” policy for those bidding on Treasury contracts, eliminating the perception of impropriety or “pay to play” accusations.
These efforts put taxpayer concerns at ease but can impact how potential investors view the state. The state has refinanced $122.9 million in bonds to save more than $7 million, and the $81.4 million General Obligation bond sale is priced at the lowest cost of capital in Rhode Island history. According to the report, the sale generated $200 million worth of demand, lowering the cost of infrastructure projects.
Raimondo pointed to her department’s support of the affordable housing bond as another area that could benefit from savings.
“That was a great example of being able to bond to rebuild Rhode Island,” she said. “I think as a general matter, all of the work we have done in Treasury is about trying to provide economic opportunities for Rhode Islanders.”
Monday’s report was released amid speculation that Raimondo could throw her hat into the gubernatorial race in 2014. She maintains that the good news coming from the department isn’t part of a campaign for higher office, though.
“I’m thinking hard about it, but I’ve made no decision,” she said. “[The report] means that I’m hard at work as treasurer and I’m very proud of my team and the accomplishments that they’ve made. We’re working for the people of Rhode Island.”