State earns $57.5 million on investments
Amount highest since fiscal ’09; treasurer cites his team, Fed rates increase
The state treasury earned $57.5 million on its investment of more than $3 billion in fiscal 2017, the largest amount in almost a decade, according to Treasurer Dennis Milligan’s office.
The fiscal 2017 interest earnings are the largest since fiscal 2009’s $72.6 million, the office’s records show. Fiscal
2017 ended June 30.
By comparison, the treasury earned $22.3 million in fiscal 2015 and $48.9 million in fiscal 2016.
The records show that the treasury had an average of $3.4 billion to invest in fiscal 2017 — up from $3.2 billion in fiscal 2016 and $2.8 million in fiscal 2015 — so the office’s increased earnings are based on a larger pool of investments.
The investments include $3.28 billion in bonds, about $277,500 in demand accounts and about $155,000 in money market accounts, said Milligan spokesman Stacy Peterson.
Milligan’s office released information about the investment earnings last week in response to this newspaper’s request under the Arkansas Freedom of Information Act.
An employee in the treasurer’s office, Celeste Gladden, notified the state Board of Finance on Thursday that “it has been the policy of Treasurer Milligan not to release these results until the Board has been notified
first. However, our quarterly meeting is not until next month and we must respond to this [FOI] request.
“As always, details will be provided to the Board at our quarterly meeting in August,” Gladden wrote.
The state Board of Finance includes the governor or his representative; treasurer; auditor; bank commissioner; director of the state Department of Finance and Administration; the securities commissioner; and two appointees each by the House speaker and Senate president pro tempore.
Milligan, a Benton Republican who has been treasurer since January 2015, which was midway through fiscal 2015, said Friday that increased interest rates by the Federal Reserve contributed “a little bit to the growth” in the earnings.
“Part of the success that we’ve had is simply because we are on this every day. We went from a passive treasury to an active treasury, which means we are looking at numbers,” Milligan said in an interview.
“I’m in here very early in the mornings. I’m looking at overnight markets. Since it is a global economy, I’m looking at how things are changing, especially with our shortterm investments because something happens politically around the world, then it can change our attitudes,” he said.
“I would certainly credit the investment team. I would credit our whole administration,” Milligan said.
In a special session held in May 2016, the GOP-controlled Legislature enacted Republican Gov. Asa Hutchinson’s highway funding legislation. The legislation relies largely on using a portion of general revenue surpluses and increased earnings from the treasury to raise about $50 million a year to match another $200 million in federal highway funds available each year. Starting in fiscal 2018, the plan relies in part on $20 million a year in treasury earnings.
While Milligan has praised his investment team, two of the team members have left in recent months.
Earlier this month, Larry Tate, who had worked in the treasurer’s investment department, went to work as the Arkansas Development Finance Authority’s housing programs manager at a salary of $69,776 a year, said Cheryl Schluterman, vice president of finance and administration at the authority.
Tate, who was paid $68,400 a year as a treasury manager, resigned his post in the treasurer’s office, effective June 30. In his resignation letter, he said he enjoyed working with the investment team for the past two-plus years and has been “most impressed with both the quality of the state Board of Finance and the quality of the staff in the Investment Group.”
Tate is a former business manager for First Baptist Church in Little Rock. He was operations manager for Hutchinson’s unsuccessful campaign for governor in 2006, according to his resume. The Development Finance Authority is an agency that reports to the governor.
In March, legislation that would have shifted senior investment manager Ed Garner, treasurer manager Gladden and Tate under the purview of the Board of Finance cleared the state Senate but failed to clear a House committee. Chief Investment Officer Autumn Sanson currently works under the board’s purview under a law enacted in 2013.
The sponsor of the ill-fated legislation — Sen. Terry Rice, R-Waldron — sought the change after Milligan hired Ronald Roberson, a former vice president and senior trader at the Bank of Oklahoma, as a senior investment manager in February. Rice said the position requires a college degree, which Roberson lacked. But Milligan spokesman Stacy Peterson said Roberson was placed in a post for which a degree is preferred, not required.
In May, Roberson resigned his job, which paid $70,000 a year, after the Board of Finance blocked Milligan’s plans to reclassify Roberson as a senior investment manager. The Board of Finance voted to require that the person hired to fill the new senior investment manager II position have a college degree.
Roberson, who had 38 years of investment experience, had completed 135 college hours at the University of Arkansas at Little Rock. Roberson cited “the opinions raised … by a few members of the state Board of Finance” in his resignation letter.
After Tate’s and Roberson’s resignations, Milligan said Friday “right now we are just in a holding pattern. We have to adhere to the state Board of Finance education requirements. We’re looking at potential replacements for both.”