CDIAC-Luncheon & Preconference Keynote

Transcription:

Robert Barry (00:05):

The portfolio averaging over 200 billion serves as the agent for sale for all state bonds and trustee of billions of dollars of state indebtedness. Her leadership has brought fresh policy and billions of dollars to bear on some of our state's toughest problems in housing, healthcare, retirement, security, education, access, and small business development. As our chairperson, she has been a champion for CDIAC and our mission, particularly our work in public finance education. Please join me in welcoming the 34th treasurer of the State of California. Fiona Ma,

Fiona Ma (00:45):

Thank you all. It is great to see everyone in person again. I heard that you had very technical sessions this morning. Learned a lot about lots of things, standing room only. So just thank all of you for coming out and showing up. Before I make some remarks, can I take a little survey? Okay. How many of you go into the office five days a week? Are you required to go five days a week or you just go, you have a lot of work? Okay. How many of you're required by your boss? Four days a week. Okay, how about three days a week?

(01:34)

Two days a week? Okay. Well, alright, so it seems like the state is a little bit behind with the two days a week, but what can you say? Right? The governor declared two days a week, and so we're kind of waiting right to see if he changes it. But anyway, thank you. And I know it's been really hard probably for all of you, us to recruit people to come and work because some people want to work remotely a hundred percent of the time, which is not really possible in our business, especially handling money and the type of transactions that we do. First off, I'd like to thank Robert Barry for his leadership and really moving CDIAC forward on many, many levels, whether it's better transparency, more webinars, and in particular working on the elect ed modules. Have any of you had a chance to watch any of those elect ed modules?

(02:37)

There's seven of them out. It's really intended for elected officials because a lot of your members that get elected, they don't have a finance degree and they just want to trust someone. And then when you tell them there's not enough money, they don't like that answer, so you should direct them to these videos. They've done seven out of eight modules. They're very short. Some of them are as short as maybe 20 minutes, but I am trying to tell the elected officials that this is actually good for them because it's their fiduciary responsibility. If something happens, not all of you in the room who are managing the money per se, but the elected officials, that is their ultimate responsibility. Their name is on the door, so they should educate themselves more. So you'll see me socializing that and trying to get the elected officials to really look at it and we're trying to make it perhaps like a certificate program.

(03:42)

If they do all of it, they could do it at their own pace. We're going to maybe have some test questions in between and then we can give a certificate to them so that they feel incentivized to listen to them, but they're very educational. It may be easy for all of you, but difficult for some of us who didn't grow up in this Muni world. I also want to thank Juan Fernandez. He started about what, over a year ago, almost a year, almost a year. Many of Juan from his prior life at JP Morgan. But before that he started out his professional career in government at the state treasurer's office. So we're very happy that he has come back and he manages the cash management investments and our bonds as well as CDIAC and others. I also want to recognize Sheila, Tobias Daniels, Sheila and Christina, her deputy.

(04:46)

She oversees the California Pollution Finance Control Authority, CPCFA. And people say, well, pollution is such an old word. I have been trying to change the name of CPCFA as well as CAETFA, which is the California Alternative Energy Transportation, Finance Authority Finance Authority. It's a mouthful for me as well. And so hopefully we're going to change them to something that is a little shorter and easier to remember. But essentially those two agencies oversee all of our green clean sustainable programs. We got a billion dollars from the federal government to increase our loan loss reserves and loan loss guarantee programs essentially for small businesses. Those businesses that are having a hard time accessing traditional capital can participate with one of our lenders. And if they don't pay it back, then the state is on the hook to pay it back. So it's a great program.

(05:57)

People don't know about it, don't believe in it, but everybody is always asking for, I need money, I need a line of credit. So again, CPCFA oversees that as well as our Go Green financing program. So if anybody's trying to save energy by retrofitting their home, their office, or their multi-story buildings go green Financing is also a low cost financing option and helping to save money for the state. Christian Daley is also here. He's in the back. He's on my external affairs team, so you may see him if I am not able to go to a meeting. And then Carolyn Abbu chara Carolyn in here, there's Carolyn. So she heads up our California Hospital Health Facility Health Facilities Finance Authority, CHFFA, as well as our California Education Finance Authority. See, it's much easier when it's only four letters for me. So CHFFA and CEFA, basically CEFA funds, the private higher educational institutions like Stanford, Santa Clara, the Claremont Colleges and the likes, and then CHFFA, the Hospital Association Finance Authority runs all of our hospital bond programs, our children's hospital bonds, and most recently our distressed hospital low interest loan program, right?

(07:31)

They're not grants, 0%, 0% loan interest, about $300 million to 18 distressed hospitals. And I think you're going to see more and more of this unless the federal government, the state government figures out how to better reimburse these hospitals during covid. A lot of people utilized the systems. They basically did away with most of the insurance requirements. Anyone who needed help would get help. The insurance systems now are trying to go back and reregister the people that are qualified for Medicare and Medi-Cal. And that means hundreds of thousands, millions maybe are going to be without health insurance again. So it's something that we're trying to raise the awareness for our elected officials and the public that don't wait until there's an emergency and you go to the hospital check to see if you still qualify. You still have insurance because these hospitals are really having a difficult time. They weren't able to do some of the specialty work, cosmetics and hip replacements, knee replacements, all the things that they're able to charge more for. They fell behind during the pandemic.

(08:54)

So besides the money part, the investments, the cash management and bonds, I also chair 16 boards and commissions and authorities, two of which I just mentioned here. Another one is CDLAC and TCAC, issuing the tax credits and the bonds to build affordable housing. Over the past four years, the first four years of my administration, we built a lot put of resources into new construction for extremely low and very low income individuals. And so you may see a lot of groundbreakings and ribbon cuttings for affordable housing apartments, which are beautifully done, highly subsidized by the government and investors and all of our banking partners, et cetera. But now because of higher interest rates, we are going back to act rehab. So acquisition and rehab, trying to retrofit some of our older buildings that have not received any attention essentially over the last four years. And so that has become a priority for us during this high interest type of accounts. I also have four savings programs. How many of you know the scholarship? 529 program.

(10:17)

So we are desperately looking for partners at the local government level, corporate corporations, nonprofits to partner with us to get this message out. I know this morning was all about savings, and that's what I preach all the time. Saving, saving savings. My parents saved for us, me, my brother, and my sister since we were born, they basically put a certain amount of money into dividend reinvestment stocks. And when we went to college, we all didn't have to incur high student loan debt and then the excess money we could use to start a business to go to graduate school or to buy a house. And I use my extra money to buy a two unit building here in San Francisco. And so I understand how building equity works and trying to encourage more home ownership is the way for people to get out of the cycles of poverty.

(11:17)

And one of the programs that the governor has replenished is the Dream for all program. It opened up earlier this year and it was closed in two weeks. Essentially it is free down payment assistance for anyone needing it, any first time home buyer. This was this past program, any first time home buyer, up to 20% the cost of the home. And we would recoup the money on the backend when the seller, the homeowner sold their property or refinanced for the second. And it was so popular, it opened and closed in two weeks. And what we found is that many people were like any of you, maybe some of you got a dream for all loan this second round, it'll open in the spring of next year. This second round will be eligible for any first time home buyer whose parents don't own a home. So we're really trying to, again, if your parents didn't own a home because they couldn't afford it, we're trying to give that next generation an opportunity to own their home.

(12:26)

And so that will be coming out again. The realtors are really excited about that program and that's why I think the program goes so quickly as they're all waiting for the program to be replenished. Since I'm talking about housing ADUs, any of you have an accessory dwelling unit in your backyard, kind of helps with the rent or maybe relatives, your kids. You don't want to live in your house or maybe later on you want to live in the house so your kids can stay in the unit and the kids can stay in the house. But that program is going to be replenished. There'll be up 20, that number's wrong, but it's going to be $40,000 grants. So that's free money. And that program should roll out at the end of the year. So if you all are thinking about putting an accessory dwelling unit in your backyard or as part of your home, please look out for those programs.

(13:24)

And both of those programs are under the California Housing and Finance Authority, Cal HFA. So stay tuned. You can go there to look if you're qualified and how to access it. So I talked a little bit about affordable housing. I talked about savings. I got off Q, about scholarship 529 because California does not offer a tax incentive for parents or grandparents, relatives that put money into a scholarship. 529 account. Many of your financial advisors will open an account in other states. So if you think you have a five two nine program, you call your financial advisor. It could be a Utah program, it could be a Virginia program, it could be a Colorado program. So we have been trying at the state level myself, trying to create a tax incentive, like $15,000 tax credit or whatever the governor is willing to give us, but just to really incentivize people.

(14:32)

Since now our salt taxes are limited, we are all still looking for ways to put aside some money and get a little benefit. And what better way than to help the next generation stay out of high student loan debt? The governor and the legislature also put over a billion dollars into child savings accounts. So this is free money every first through 12th grader on free and reduced lunch. They are eligible for $500 if they're homeless, another 500. And if they're a foster youth, another 500. So this could be $1,500 for any first through 12th grader. We estimate there's about 3.5 million kids who are eligible, yet only about a hundred thousand have signed up. And I think maybe people don't believe in free money.

(15:22)

When the governor gave back our Golden Gate stimulus fund, like everyone got $500, people didn't believe it. And then the second round, I guess people threw out the packet. They were like prepaid cards. And so people threw it out, didn't think it was free money. And so the governor clawed it back and now it's being used for other programs. But because we had such high surpluses during the two covid years, governors really invested a lot back into different programs to help alleviate childhood poverty especially and help families figure out how they can stay here in California. So that's for first through 12th graders. And then every newborn born after July 1st, 2022 is eligible for anywhere from 75 to $175. That is free money that's going to sit and grow for 18 years when the child goes to college or certified apprenticeship program. So anybody, and that is not income limited, so any newborn is eligible for this money.

(16:33)

And it's under Cal kids calkids.org. Another program savings program I have is our Cal Able program. People with disabilities before the age of 26 years old can now save up to $17,000 in that person's name without jeopardizing other health and safety benefits. The age of onset for disability is going to go up to 46 years old in two years, and that would cover an additional 1 million veterans who get hurt after 26 years old and they will now be able to save in their account. We also have a Cal Savers account. Cal Savers doesn't really apply to any of us because we're all covered under retirement savings plan at work. But for small businesses, this is a game changer. If you have one or more employee and you don't offer a retirement savings plan, you'll have to register your employees under our Cal Savers. We will manage that account and the employee will set aside a certain amount of money every month and then watch their money grow.

(17:41)

And so we call this set it and forget it. I don't know how many of you do this, but my paycheck, I donate to a couple of month profits. I put money here, I put money there. I just try to get it out of my paycheck. So then I'm saving, forcing myself to save. And I only have what I have in my bank account every month to spend. And so this is the same concept, similar to a Roth IRA, to encourage people to save for a rainy day for their medical expenses, for higher education. And then our newest program is our HOPE accounts. So any child who lost a parent or guardian due to covid or longtime foster youth, those who have been in the system for 18 months or more will be eligible for a certain amount of money and it could be $1,500. Casey O'Connor is the Executive Director.

(18:31)

They have been putting together the report, which will be submitted to the legislature at the beginning of next year. And once they approve it, we will be rolling out these HOPE accounts. And that is a bill thanks to Senator Nancy Skinner since she was hearing that a lot of people were losing parents or guardians due to covid and especially longtime foster youth. And then our latest program is our Cal accounts. There is a blue ribbon commission that is studying how to better serve those that are underbanked, not banked, that you probably all kind of heard that people, they don't want to go to a payday lender. They don't want to go to a pawn broker when they need money. But the banks charge fees. Some people can't open an account for one reason or another. And we did hire a new executive director, Cassandra Benedito, to be our Executive Director.

(19:32)

So we will be studying that and trying to figure out how to better serve more people here in the state of California that want to access our banking system. And then our latest, we are going to be creating more student and faculty housing on our UC, CSU and community college campuses. This is something that we have heard is a need from the different campuses. Some are maxed out because there's no housing. Some have to stay on a waiting list. It really makes the parents nervous that their kids don't have housing until maybe two weeks before they enroll or start their college process. And I think it would be a big game changer for community colleges. They typically have a lot of land. It's free tuition now for any first time college goer. And we're really encouraging parents to take advantage of community college. The child does well.

(20:33)

Some of them are a feeder school and they'll automatically be enrolled in a CSU or a UC system. So if your child doesn't really know what they want to do, encourage them to go to community college and hopefully we'll be able to provide more housing for them so that this is a better option. So these are just some of the things that we're working on. We're always looking for new creative ideas. I know we just met yesterday on the student loan debt. Is there a way for California to help those students that have high student loan debt? We know that it's a federal program, but if anyone has any good ideas, please let us know. And then today, there was an article about one city that is basically paying off the debt for their hospitals. I think they have like six hospitals. There's a lot of folks who have a lot of debt that they owe for their medical bills, and the city has stepped up and is actually paying off their debt so that they can move on with their life without having this black cloud over their head.

(21:45)

So we're just always trying to help our people. We are in the people business. A lot of us are in the private public partnership business. And so we need to figure out how we can work with the private sector better and restore confidence in government. What is happening at the federal level is not rosy right now. I mean, we don't have a speaker. What happens if there's an emergency, right? We have the debt ceiling looming. But here in California, because we are the fifth or fourth largest economy we have been doing, well even post pandemic, we surpassed Germany. And that is because of all of us, because of our diversity, our ingenuity, our can-do attitude. People who want to see California make it, we love it. We don't mind paying a little more for the sunshine tax, but we also have to make sure that we can all afford to live here.

(22:48)

And part of that is the attitude. A lot of our constituents are frustrated when they call us. Do they get a phone call back? Are you trying to help them? Are they facing roadblocks and barriers and higher taxes and fees and fines and notices? That's what I get on a daily basis. And so I do my best to try to put the pieces together, bring people together, get people to look at the substance of the transaction, and I think that goes a long way in trying to keep our constituents happy and restore the trust in government. So again, thank you all for all you do here in this golden state. I'm honored to be your treasurer and I hope you have a great conference today.