Gov. Tom Wolf and State Treasurer Timothy Reese Thursday announced the transfer and consolidation of three investment funds worth approximately $2.3 billion combined to cut millions in tax dollars sent yearly to private Wall Street managers.
The consolidation will move the investment management of the State Workers’ Insurance Fund, Workers’ Compensation Security Fund, and Underground Storage Tank Indemnification Fund to the Department of Treasury eliminating private managers and achieving savings of $5.6 million annually.
“With the Commonwealth facing a serious budget deficit, we cannot afford to hand money from any fund to Wall Street when we could better manage the money ourselves and save millions of dollars,” Gov. Wolf said. “This effort further reflects my focus on cutting costs and creating efficiencies in state government to avoid disastrous cuts and preserve our investment in education, middle-class job creation and vital services like drug treatment. I want to applaud Treasurer Reese for his collaborative work on this project and hope this is the beginning of a larger effort to cut fees to Wall Street.”
“Considering the current budget constraints we face as a state, it simply doesn’t make sense to continue to pay someone else to do what Treasury can do for a fraction of the cost,” said Treasurer Timothy Reese. “I am pleased that the Governor recognizes, and is confident in Treasury’s ability to efficiently safeguard and invest the money in these funds, and I want to thank him and his team for working to make the transfer seamless.”
The savings by fund include:
-- State Workers’ Insurance Fund: Currently managed by 24 firms for $3.3 million annually. Treasury will manage the funds for approximately $145,000, saving $3.1 million annually.
-- Workers’ Compensation Security Fund: Currently managed by 12 firms for $2.9 million annually. Treasury will manage the funds for approximately $500,000, saving $2.4 million annually.
-- Underground Storage Tank Indemnification Fund: Currently managed by 9 firms for $600,000 annually. Treasury will manage the funds for approximately $75,000, saving $525,000 annually.
The savings are part of a larger effort by Gov. Wolf to take on the status quo and force state government to change and live within its means rather than make broad cuts to education and services for the Commonwealth’s most vulnerable residents.
Gov. Wolf has already announced four other ways he will control spending in his upcoming budget presented to the General Assembly, including: reducing the amount of money the Commonwealth spends on prisons and corrections, eliminating thousands of unfilled state jobs, consolidating information technology and human resources services, minimizing new and renewed leases by state agencies and closing two state mental health facilities.
Gov. Wolf also asked each agency to look at how to flatten and streamline across their organizations to achieve operational efficiencies and allow agencies to better focus resources on delivering programs and services to Pennsylvania.
In addition, the Governor’s Office of Transformation, Innovation, Management, and Efficiency (GO-TIME) has leveraged inter-agency coordination and collaboration to maximize efficiency, modernize state government operations, and provide the highest quality services.State agencies already saved over $156 million and Gov. Wolf challenged GO-TIME to build upon this success by achieving $500 million in savings by 2020.