Transcription:
Chip Barnett: (
Hi, and welcome to another Bond Buyer podcast. I'm Chip Barnett and I'm joined today by my colleague Thomas Nocera. My special guest today is Deborah Goldberg, the Treasurer of Massachusetts. She's been Treasurer since 2015 and is the first Jewish woman elected to statewide office in Massachusetts. Previously, she was on the Board of Selectmen for the town of Brookline. Today, we're gonna be taking a look at all things Bay State with a special emphasis on its finances, ESG bond issuance and special initiatives, such as diversity and inclusion. Welcome to The Bond Buyer, treasurer Goldberg.
Deborah Goldberg: (
Thank you so much. It's good to be with you.
Thomas Nocera: (
Hi Treasurer and welcome. I was just hoping you could tell our listeners a bit about the current state of the Commonwealth's finances.
Deborah Goldberg: (
Well, given how uncertain the world feels today, it's always interesting for people to hear from me that the current state of the Commonwealth's finances are actually quite good. We are in a very strong position due to tax collections that have actually exceeded projections. In fact in this fiscal year just ended, they exceeded our benchmark by $2.668 billion after adjustments. Each category, unprecedented capital gains revenue, income tax and strong retail sales, were the drivers. And we have the largest Stabilization Fund that we've had in our history, $6.608 billion. And we have projections to continue to make deposits into this current fiscal year, which makes me feel really terrific because when I arrived it was significantly smaller. And that was something I talked about even before I was elected as Treasurer because I am a very big believer in having a Rainy Day Fund that is strong and ready for a rainy day.
Chip Barnett: (
You know it sounds like the state's finances are in really good shape after COVID. Could you talk a little bit about how the Federal aid helped?
Deborah Goldberg: (
Well, the Federal aid did significantly help us. We were throughout COVID in much better shape than a lot of the other states. During that timeframe, I was actually President of the National Association of State Treasurers and so convened all of the Treasurers and fiscal officers weekly in order for us to all support each other. And what I saw is that we had prepared ourselves well — that our cash flow situation was superior to many of my colleagues and they required use of the Treasury Facility down in D.C., which we did not. Yet on the other hand, the federal aid helped in many areas — education, public safety, healthcare, local governments, and businesses that were impacted with the shutdowns. In my shop, I have the Clean Water Trust and we received almost $90 million in ARPA funds. Now what Clean Water Trust does is we subsidize projects that address Mass DEP's priority public health initiatives for clean water, such as PFAS remediation in drinking water systems, combined sewer overflow, remediation, sewer, and drinking water infrastructure projects. And it did so in communities that were disproportionately impacted by the COVID-19 pandemic. So that was a terrific thing that helped, that sort of literally was below the surface and yet is very important to public health initiatives and creates jobs, I might add.
Thomas Nocera: (
Treasurer, the state just sold $2.7 billion of
Deborah Goldberg: (
So I am really proud of this bond deal and for many, many different reasons. Number one, obviously the Commonwealth was hugely impacted by unemployment. You know, if you look at the number of people who did get COVID, sadly the number of deaths in our state, and the way in which we had to do a complete shutdown with people on leaves and the like, we really had a huge amount of outflow. The thing that I found really terrific was the coordination through so many different departments within state government. It was a two year multi-agency effort and it was a very innovative bond offering — taxable, which is challenging in its own right. But what it does is it provides our employers with rate relief as our economy continues to recover and strengthens the unemployment system. The proceeds repaid loans from the federal unemployment trust fund.
Deborah Goldberg: (
And despite the volatile market conditions, all of the maturities saw an over subscription in orders, which, you know, don't know what's gonna happen. And there's a lot of volatility in the market today, but we had orders from over 130 different investors, including $118 million from retail investors. We had municipalities and state government orders that totaled nearly $300 million and another $62 million came from the state pension funds. So it was clearly seen as a good offering. It was a large, large deal for our state and it required incredible coordination. Now you don't typically see all of that. And so I am very proud of what we were able to accomplish. And it also says something about how other people view the financial stability of the Commonwealth.
Chip Barnett: (
Okay. And we'll be right back after this important message. And we're back talking with Deborah Goldberg, Treasurer of Massachusetts.
Thomas Nocera: (
Treasurer, could you talk a little bit about a Baby Bond program, Connecticut and Washington D.C. have these programs and I was wondering if you thought it was time for Massachusetts to do the same?
Deborah Goldberg: (
Well, we were always thinking very innovatively in my shop. And I had heard about Baby Bonds from
Deborah Goldberg: (
And so we have put together a task force, because I don't believe in just jumping into things without investigating it, without understanding it. You know, I created a seeded savings account program, we call it Baby Steps for kids for either college, community college or vocational and technical training. And we did a multi-year pilot before we actually kicked it off in 2020. So this approach with Baby Bonds is the way in which I go about things. And we have put together this task force of experts, leaders and community members to look at what would a Baby Bond initiative in Massachusetts look like and how can we make it happen and be effective. They meet monthly, they're going to be providing their final recommendations to me by November ahead of a potential legislative filing deadline. But what we do know is they can help close the racial wealth gap.
Deborah Goldberg: (
I wanna explain what it is for those who don't know what it is. You actually create a bond for a newborn child and the investments are managed by the government and grow through that throughout that child's life, which can then be used at around 18 years old for asset enhancing activities. So for example, higher education, buying a house, starting a business, things that can increase in value over time and generate wealth. And again, this is good for everyone. And that's one of the things I talk about all the time — that having everyone achieve economic security and stability is better for us as a total community. And so that's the strategy with the Baby Bonds task force. And hopefully with the initiative.
Chip Barnett: (
You have been a champion of promoting diversity and inclusion, both within your office and around the state. Can you talk to us about why this is so important for women and people of color today?
Deborah Goldberg: (
Well, you know, that leverages right off of what I said earlier about Baby Bonds. When my family and I were in the grocery business, and that was a New York Stock Exchange Fortune 100 company, we did a lot of things that were very unusual that were investments in our people. And we did so because we strongly felt that it comes back in so many positive ways. You have a more stable workforce, they are economically stable, they contribute to their own communities. And when I ran for Treasurer, I said this is my personal mission. And I took those kind of ideas that came out of my business background and I bring it into the Treasurer's Office because I firmly believe it. And it was actually reinforced to me before I became Treasurer in talking to people around the state. I once said to a blue collar union worker, male, in a blue collar town, when he asked me what my issue was and I told him 'wage equality' he said to me, that's my issue. And I looked at him startled. And I said, 'Why is it your issue?' And he said to me, 'I have a wife and three girls, not one of them is paid what they're worth. And it all falls on me.' I think that story really explains why the wage gap should be important to everyone.
Deborah Goldberg: (
And it goes beyond pay. More women have the burden of childcare while childcare costs have skyrocketed — the pandemic pushed many more women out of the labor force than men. And so the battle continues for equality for women and for people of color. But one of the things I've always said too, is it must start at home. So when I first came into office, we did a wage audit. We have 800 employees within the Treasurer's Office, rectifying wage discrepancies for women and for men and creating wage scales for equivalent jobs so that there was predictability on how that occurred moving forward.
Deborah Goldberg: (
But we also provided opportunities and we provided them not only internally, but through our proxy voting guidelines and setting examples on how you can hire a diverse workforce in an area of state government that requires very strong skill sets, but that when people know you're the real deal, you'd be surprised at who applies and how qualified they are. So we searched for people with intention and yet we also ended up with amazing people working for us. And we've been able to set examples for other areas within state government and with businesses. And that again means that you're including everyone in a shared economy and a shared focus, which creates a strong community from a financial point of view. So that's sort of my concept and it has worked. We have the most diverse office in state government by a long shot. Our incoming classes continue to be diverse, but we've also helped others understand how to go about that. And I mean, a perfect example is internally at the Mass. pension fund , financial services, law firms, they're very, very challenged and yet the Mass. PRIM workforce is extremely diverse now with women and people of color and it's been quite a success. So this is the kind of work that you can do and it results in a lot of positive things for so many people.
Thomas Nocera: (
Looking ahead, can you talk about any possible economic threats on the horizon that may impact the state's finances?
Deborah Goldberg: (
So we have a terrific economist that is included in our pension fund work and we were discussing this very issue last week. Clearly we have a volatile market. Clearly there are concerns about rising interest rates. Clearly there are concerns that those interest rates could cause a recession. Our portfolio has performed as designed. We sustained less of a loss than many other investors, but as a state, I think one of the things that we have to continue to do is move ahead carefully, continue fiscal discipline. Our Rainy Day Fund is, as I mentioned earlier, in a very good place. And we also look out for the economic stability and security of our residents. So for example, my office offers free resources to constituents, providing them with tools and knowledge they all need to achieve economic security. I encourage people if you're listening, check out
Deborah Goldberg: (
And we push these things out. I'll share with you that last week I just happened to put a post on one of my Facebook pages about not only preparing for paying for college or post-secondary education, but looking at that website because there's information on so many issues about how do you manage your financial life. And we had a huge response to that. So looking ahead, I really encourage people to be utilizing the tools and always be preparing, whether in volatile times or not. As a state, we are looking ahead and waiting for the state auditors report, which is due in September on the impact of Chapter 62F, which is that law that says when we reach a certain level of tax collections, we actually need to give our citizens a rebate. So it's only been triggered once and it looks like it could be happening this year. And I think that will be very helpful to Mass. households in terms of their expenses over the winter, particularly our seniors and residents in our gateway cities. So as a state, we will need to continue to monitor and be prepared to offer assistance to others. While at the same time, I believe that we have the fiscal discipline and the pieces in place to continue for the long run running the state in the right ways financially.
Chip Barnett: (
Do you have any last thoughts today for our listeners?
Deborah Goldberg: (
Last thoughts? There's a lot of uncertainty in our political world and in foreign affairs. And what's going on throughout this country and overseas. As individuals, I think it's even more important to be educating one's self and using the resources that for example my office offers to women, to seniors, to high school students, to really understand how to take care of oneself, how to empower oneself with the knowledge and skills that you need to ride what can can be sometimes a rocky road. Good preparation can really help in the long run. And that's why I've always emphasized the need for a strong Rainy Day fund for our state. But that's true for families. And even at times of inflation, or you have a reduced amount of income, planning for those events, understanding those events, not taking on too much debt, trying to balance one's financial world, are the best strategies for making it through.
Deborah Goldberg: (
And it's something I try to teach my own children and I even do for myself. And so that's the approach I take and I hope that we can continue to provide the outstanding tools that we do have to those within our reach. And that's also one of the reasons why I am so involved in the
Chip Barnett: (
Treasure Goldberg, thank you very much for being here with us today.
Deborah Goldberg: (
Thank you for having me and I look forward to the next time we can talk again.
Chip Barnett: (
Thanks to my colleague, Thomas Nocera and to the listeners of this latest Bond Buyer podcast. Special, thanks to Kellie Malone, who did the audio production for this episode. And don't forget to rate us, review us and subscribe at www.bondbuyer.com/subscribe. For the Bond Buyer, I'm Chip Barnett. And thanks again for listening.