New R.I. Treasurer Ready to Tackle Fiscal Challenges

Seth Magaziner is settling into his new role as Rhode Island treasurer, saying he is ready to tackle many financial challenges facing the Ocean State.

Magaziner won the seat Gina Raimondo vacated to launch her successful run for governor.

Magaziner, a Democrat, defeated independent candidate Ernest A. Almonte on Nov. 4 and was sworn in for a four-year term on Jan. 6. He appointed Patrick Marr, who served as director of finance under Raimondo, to serve as his chief operating officer and deputy treasurer for operations.

"My predecessor showed that this is an office that can have a big impact," said Magaziner, referring to Raimondo's role in obtaining passage of a landmark 2011 law overhauling the state's pension system. "We have a great team so we're getting up and running."

Magaziner previously worked as a vice president at Boston-based Trillium Asset Management.

The pension overhaul Raimondo initiated is challenged in a lawsuit brought by public-sector unions. The law reduced benefits for active participants in the $8 billion Employees' Retirement System of Rhode Island by shifting them to a hybrid model that combines defined benefit and defined contribution plans.

Magaziner said a deal was nearly struck last year that would have addressed cost-of-living adjustments while still maintaining 95% of expected savings from the original reform. He said there is optimism early in the New Year that the sides can come together, but if not he is confident the state has a plan that will hold up in court.

"There does seem to be a willingness to get together and get a new deal," said Magaziner, whose father Ira Magaziner was a policy advisor to President Clinton. "I'm hopeful that we can get a settlement out of court."

Another challenge facing Magaziner in his early term as treasurer will be continued debate over repaying moral obligation debt issued for video game maker 38 Studios to lure the firm, run by former Boston Red Sox World Series hero Curt Schilling, to Rhode Island. The company went on to liquidate in Chapter 7 bankruptcy in 2012, leaving the state holding the bag on $75 million in principal. The state made payments on the bonds in the last two years, but only after debate in the legislature.

Magaziner said there should be a commitment to repay bondholders and this can be achieved with the help of the state receiving money from pending lawsuits.

"In the context of an $8 billion budget we'll find a way to do it," said Magaziner.

Raimondo came under fire for increasing state investments in hedge funds, which have higher fees and less transparency. Magaziner said he still wants to include hedge funds as part of a "diversified portfolio," but that their fee structure needs a closer examination.

Magaziner took office on the heels of Rhode Island getting a revised outlook by Moody's Investors Services to stable from negative on its Aa2 general obligation bond rating. He is confident the state can improve its credit conditions after 2014 provided the biggest job growth since 2000 and biggest increase in employed Rhode Islanders in 30 years combined with improved liquidity.

"The financial condition is improving," he said.

In addition to overseeing state pension investments, Magaziner is also tasked with leading Rhode Island's 529 college savings plan, a crime victim compensation fund and a cash management unit among other responsibilities. Much like his predecessor, Magaziner wants the Rhode Island Office of the General Treasurer to make a difference locally and be a leader nationally.

"The treasurer's office here is more extensive than many other states," he said. "This office can have a big impact."

For reprint and licensing requests for this article, click here.
Rhode Island
MORE FROM BOND BUYER