Gov. Tom Wolf and state Treasurer Timothy Reese announced the transfer and consolidation of three investment funds worth roughly $2.3 billion combined to reduce its fee payout to Wall Street managers.

"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," Wolf said Thursday.

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.

Savings by fund include the State Workers' Insurance Fund, which 24 firms now manage for $3.3 million annually. Treasury will manage the funds for about $145,000, saving $3.1 million per year.

In addition, Treasury will manage the Workers' Compensation Security Fund, which 12 firms now manage it for $2.9 million annually, for about $500,000. It will also manage for about $75,000 the Underground Storage Tank Indemnification Fund, which none firms now manage for $600,000 annually.

Wolf is scheduled to propose his fiscal 2018 state budget on Feb. 7. The Independent Fiscal Office projects that Pennsylvania's structural deficit could rise to $3 billion by 2012.

S&P Global Ratings and Fitch Ratings rate Pennsylvania's general obligation bonds AA-minus with outlooks of negative and stable, respectively. Moody's Investors Service rates them Aa3 with a negative outlook.

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