Office of the State Treasurer

 

 

At a Glance

 

DENISE L. NAPPIER, State Treasurer

Howard G. Rifkin, Deputy State Treasurer

Established – 1639

Statutory authority – State Constitution

Central office - 55 Elm Street,

Hartford, CT 06106

Average number of full-time employees – 150

Recurring operating expenses  -

      General Fund: $3,263,825.10 

      Bond Funds: $5,683,649.46

      Investment Funds: $50,818,619.31 

      Second Injury Fund: $7,132,142.27 

      Unclaimed Property Fund: $3,550,929.25 

      Short-Term Investment Fund: $1,011,206.69 

Capital outlay –

      General Fund: $100.00

      Investment Funds: $2,237.43

      Second Injury Fund: $3,005.52

      Unclaimed Property Fund: $1,667.11

      Short-Term Investment Fund: $336.91

Total abandoned property receipts - $102,958,696.61

Amount returned to owners - $10,862,103.84

 

Mission

To serve as the premier Treasurer’s Office in the nation through effective financial management of public resources, high standards of professionalism and integrity, and expansion of opportunity for the citizens and businesses of Connecticut.

   

Statutory Authority

     The Office of the Treasurer was established following the adoption of the Fundamental Orders of Connecticut in 1638. As described in Article Four, Section 22 of the Connecticut State Constitution, the Treasurer shall receive all funds belonging to the State and disburse the same only as may be directed by law. Denise L. Nappier was sworn in as the 82^nd State Treasurer on January 6, 1999 and was elected to her second term in 2002. The Office of the Treasurer includes an Executive Office and five distinct divisions, each with specific responsibilities:  Cash Management, Debt Management, Second Injury Fund, Pension Fund Management, and Unclaimed Property. 

     The Treasurer is a member of the following boards, commissions and legislative committees: Banking Commission; Connecticut Development Authority; Connecticut Health and Educational Facilities Authority; Connecticut Higher Education Supplemental Loan Authority; Connecticut Housing Finance Authority; Finance Advisory Committee; Investment Advisory Council; Connecticut Lottery Corporation; Standardization Committee; State Bond Commission; State Information and Telecommunications Systems Executive Committee, Waterbury Financial Planning and Assistance Board, Connecticut Higher Education Trust, and Council of Fiscal Officers.

 

 

Information Reported as Required by State Statute

Affirmative Action

     In compliance with Connecticut General Statutes Section 46a-78, the Treasurer annually submits an affirmative action program to the State Commission on Human Rights and Opportunities.  The Office pledges to make every good-faith effort to achieve all objectives, goals and timetables in its affirmative action plan.  Contracts, leases and purchase orders by the Treasurer’s Office contain clauses requiring non-discrimination and vendors are required to certify the same.

 

Improvements/Achievements 2003-04

Cash Management Division

     The division achieved an annual return of 1.16 percent in the Short-Term Investment Fund (STIF), exceeding its primary benchmark by 41 basis points, thereby earning an additional $15.5 million in interest income for Connecticut’s governments and their taxpayers.  Municipalities opened 17 new STIF accounts, bringing the total number of municipal accounts to 580.  The division maintained the fund’s AAAm rating from Standard & Poor’s, the highest available.  STIF’s annual report received a Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association.

     During the year, the division improved the efficiency of the state’s cash management program through the streamlining and automating of deposits, payments and related data.  In one major development, a system was implemented to pass bank data to agencies for their review and posting, which reduces duplicate data entry, speeds the flow of information to our office, reduces data entry errors, facilitates corrections, and erases reconciliation activities.  The new system covers 98 percent of deposit data, up from 28 percent.  In addition, the division continued several initiatives with state agencies aimed at: accelerating payments to state agencies via electronic transfers and the Internet; streamlining the flow of funds between concentration accounts and individual disbursement accounts to reduce manual processes and increase invested funds; speeding the flow of bank information to and between state agencies; and consolidating bank accounts to reduce service fees and unproductive balances.

 

Debt Management Division

     The Division managed $13.8 billion in total debt outstanding at June 30, 2004 composed of the following debt directly issued by the State and bond issues of State quasi-public authorities for which the State pays the debt service:

                General Obligations                                                             $8,655,109,698

                UCONN 2000                                                                             717,907,147

                General Fund Obligations and Leases                                     93,175,000

                Special Tax Obligations                                                        3,142,057,825

                Revenue Bonds                                                                      1,176,680,000

 

This year several initiatives and noteworthy actions resulted in significant savings including:

• ·         Close monitoring of falling interest rates and issuing $2.0 billion in refunding bonds in five transactions for the General Obligation, Special Tax Obligation, and UCONN 2000 programs will save taxpayers $128.2 million over the remaining life of the bonds.  This refunding activity included a $1.03 billion sale in April, the largest single transaction ever executed by the State, which had debt service savings of $58.4 million.  
• Utilized $46.5 million of positive cash flow from the Second Injury Fund to defease all of the Fund’s remaining Series 1996 bonds and some Series 2000 bonds.  As a result, future annual debt service was reduced to $10.5 million from $19.3 million.
• Issued $355 million in new money and refunding bonds for the Clean Water Fund, completing a significant restructuring of the credit while maintaining the Fund’s triple A ratings.  The refunding will result in savings of $30.6 million over the life of the bonds.
• Issued $97.7 million in Economic Recovery Notes to finance the FY 2003 General Fund deficit and $205.3 million in Rate Reduction Bonds to provide budgeted funding to the General Fund for FY 2004.  The Rate Reduction Bonds will allow the continuation of programs to encourage electricity conservation, renewable energy development and load management.  The Rate Reduction Bonds will be repaid from a charge on electric utility customer bills to be offset by a reduction in the Conservation and Load Management and Clean Energy Fund customer charges.

 

Pension Funds Management Division

     As of June 30, 2004 the Connecticut Retirement Plans and Trust Funds (CRPTF) had $20.2 billion in assets under management. The Fund also achieved a five-year annualized return (gross of fees) of 3.97 percent, placing the pension fund in the 38^th percentile of the Trust Universe Comparison Services (TUCS) universe, a database of plan sponsor information of public funds with assets of greater than $1 billion. This indicates that CRPTF outperformed 62 percent of other public pension plans with assets greater than $1 billion. 

     The Office of the State Treasurer and the State’s Investment Advisory Council (IAC) developed a comprehensive Investment Policy Statement in 2001 that provides policy guidelines for investments by the state pension fund. The formal Investment Policy Statement is an important element in the comprehensive Treasury reform law approved by the Connecticut legislature. Treasurer Nappier proposed and advocated the creation of such a guiding document, which underscores the Treasurer’s commitment to professional management, high standards of excellence and the utmost integrity. The members of the Investment Advisory Council were consulted throughout its development, unanimously approving its adoption on March 13, 2002.  During FY 2004 changes were made to Part III, Article III – Asset Guidelines for the International Stock Fund and to Part III, Article VI – Asset Guidelines for the Real Estate Income Fund. 

     Treasurer Nappier successfully launched her administration’s comprehensive program to become active shareholders during the 2001 proxy season, following adoption, for the first time since 1995, of comprehensive proxy voting policies.  During 2004, the Treasurer’s Office, widely viewed as among the more active public pension funds advocating corporate governance reforms, engaged over 25 companies on key corporate governance issues including annual election of members of the board of directors, climate change/global warming and global labor standards, executive compensation, expensing of stock options, board diversity and shareholder communications with board members.  

     The Treasurer also was an active participant in addressing corporate governance reforms before members of Congress, the Securities and Exchange Commission, and the major stock exchanges. 

 

 

Unclaimed Property Division

     During FY 2004, the Division exceeded its return of unclaimed property from the previous year, paying $10.8 million to 7,700 owners (or 11,938 claims) for a total increase of $1.4 million more paid in unclaimed property than last year.   Also in the fiscal year, the Treasury's Unclaimed Property Division, with an enhanced holder outreach program, collected an unprecedented $104.4 million -- the largest amount ever collected in one year in the State's history.  The unprecedented one-year total was in large part a consequence of the Treasury’s successful sponsorship of changes to Connecticut’s Unclaimed Property law during the 2003 legislative session, which shortened the dormancy period years in which several property types were due, resulting in more unclaimed property remitted to Connecticut in FY 2004.  The Division’s Corporate Claims Service returned $851,584 to businesses in 2003-2004, the highest total returned in its three-year history.

     During FY 2004, the Division initiated a project to scan all holder reports from 1960 to current.  Scanning the reports provides for improved claims processing and preserves the original documents, required by law to be held in perpetuity.  In addition, the Division prioritized stocks claims, processing more than 900 claims during the fiscal year. 

 

Second Injury Fund (SIF) Division

     The Second Injury Fund in FY 2004 generated $31 million in excess cash due to the recovery of underpaid assessments and interest payments through its assessment audit program while experiencing lower than projected injured worker costs.  With an additional $15.1 million available from debt service and reserve funds, due to the defeasance of long-term debt, a total of $37.3 million was used to pay off all of the remaining 1996 Series A bonds and $9.2 million was used to pay down the 2000 Series A bonds.  As of June 30, 2004, long-term debt has been reduced to $54.3 million.  Debt service payments are now $10.5 million annually and long-term debt obligations have been reduced by five years.

     Assessment audits of insurance companies and self-insured employers during FY 2004 resulted in the recovery of $10.0 million.  A total of $50.0 million in underpaid assessments and interest payments has been collected since the program began.

     Recovery of outstanding receivables amounted to $1,125,917, of which $862,250 was collected from uninsured employers.

     The Fund settled 170 cases during FY 2004 for $9.1 million thereby reducing future liabilities.

     Benefit payments to injured workers totaled $34.9 million in FY 2004 while open claims have been reduced to 2,259.

     Unfunded reserves are now $497.0 million.

 

Connecticut Higher Education Trust (CHET)

     Changes to the CHET program, Connecticut’s 529-college savings program, and the federal tax revisions contributed to solid growth in the number of account owners.  The fee charged CHET account owners remains the lowest in the programs history and among the lowest in the country.  The fee charge ranges from .69 to .71 percent.  In addition, online enrollment and account access is available.  At the close of the 2003-04 fiscal year, the number of accounts had reached 41,569 with total assets of $472.4 million, compared with just over 4,000 accounts and $18 million in assets, when Treasurer Nappier took office in 1999.

 

Financial Education / Individual Development Account (IDA) Program

     Treasurer Nappier is committed to using the Office of State Treasurer as a catalyst to advocate financial education and expand economic opportunity, and is working to encourage partnerships between state agencies, community organizations and the private sector.

     Those efforts included the establishment of a Task Force on Individual Development Accounts in 1999, which led to legislative approval of a Connecticut IDA Initiative to be operated through the State Department of Labor.  Individual Savings Accounts allow working poor Connecticut families to save to purchase a home, continue their education, or start-up a small business.  There are now at least 19 IDA Programs operating in the State, with additional grant and private funds received during the past year that will permit additional programs to get underway. 

     The Treasury has also served as a catalyst to bring national financial education programs to our state for the first time and create new initiatives with funding from private sources, utilizing local community organizations to deliver the services to individual participants.  These include the Money Conference for Women, a statewide summit on youth financial education, youth financial education programs, a family economic success conference for community based organizations and policymakers, personal financial management training for housing authority residents, banking access and credit management for community action agency clients, and a project to advance the development of affordable housing by providing technical assistance and capacity building for nonprofit developers.