We’re more than halfway through 2021, and I thought it’d be a good time to catch you up on the latest at Oregon State Treasury. Here’s a quick recap of what our Treasury team has been working on:

Approval of Treasury’s 2021-23 Budget. The Oregon Legislature wrapped up at the end of June. One of Treasury’s goals during the session was approval of our 2021-23 budget, which will help further our efforts to strengthen our resiliency and ability to serve people and governments across the state. First and foremost, the approved budget will support us moving into our new resilient building, currently under construction in Salem, in March 2022. You can read about that building, and its ability to withstand a Cascadia earthquake, here.

It will also support modernization efforts across the agency, giving us the personnel and tools we need to ensure we’re able to deliver strong, secure financial services to the state now and following emergencies and other disruptions. This includes support for our in-house investment services and legal and compliance efforts. Bringing more of our investment operations in-house is saving millions of dollars every month – savings that can then be invested to earn money for state and retirement investments.

Other big takeaways from the legislative session include:

• Wildfire Recovery: Last fall, I co-chaired the Governor’s Wildfire Economic Council. The Council recommended a number of important investments to help fire-affected communities rebuild their infrastructure and economy. The Legislature approved many of these recommendations, and I’m hopeful that additional investments come during the 2022 legislative session. Oregon still has a lot of work to do to get people back into their own homes, but we took some important steps forward this spring.
• Stronger Student Loan Protections: This year, I strongly supported passage of a bill to curb abusive lending and aggressive collections practices and protect the rights of borrowers of student loans. I’m thrilled this bill passed and was signed by the Governor and am hopeful the new protections are beneficial to student loan borrowers across the state.

Transfer of Unclaimed Property & Estates Administration Programs. These two programs are part of Treasury as of July 1. The move, initiated by legislation passed in 2019, was made possible by a lot of behind-the-scenes work to have all public-facing components up and running immediately so that people using the program did not experience any interruptions or hiccups. The move was a success – more details here – and we encourage you to search our database to see if the state is holding money that belongs to you at unclaimed.oregon.gov.

Investment of the Oregon Public Employees Retirement Fund. Our investment team continues to look for ways to maximize earnings of public employees’ retirement funds. So far for the year, OPERF is navigating a financial environment still very much affected by COVID. Two big themes have emerged this year from my discussions with Oregonians across the state: why isn’t the fund doing as well as the market overall? And why is the fund invested in fossil fuels?

For the first question, OPERF is globally diversified. We’ve built a fund that is – to continue the theme from above – resilient. It’s designed to perform well in good markets and minimize losses in down markets. If OPERF were only invested in the stock market, you could expect our returns to be similar to the stock market returns you hear on the news at night. But a portfolio invested only in stocks is way too risky a move to make with people’s retirements. Instead, OPERF is invested in stocks, bonds, private companies, real estate, and other asset classes. This diversified makeup helps us to deliver returns required to meet the Public Employees Retirement System’s obligations while reducing overall portfolio risk. OPERF suffered mightily after the Great Recession in 2007; our current portfolio makeup was developed to reduce those kinds of losses in the future while still earning interest for retirees.

For the second question, our approximately $120 billion portfolio is invested in just about everything, including companies that produce and use fossil fuels. The foundation of our investment strategy is performance. As required by state law, all of our investment decisions are based solely on the returns we can deliver to PERS beneficiaries. This is our fiduciary responsibility from which we cannot stray. What we can say is this: when pairing back our investments in fossil fuels is the right investment decision for performance reasons, that’s the route we have taken. Over time, the percentage of our investments in fossil fuel industries has come down, and our investments in green energy and technologies have gone up, as performance-related opportunities have driven our decision-making. We anticipate this will continue to evolve as the energy sector continues to transition to less carbon-intensive industries. In the meantime, we continue to be a vocal and active shareholder pushing for strong corporate governance and environmental and social responsibility.

Helping Oregonians to save. Last but definitely not least, earlier this year, we hit a big milestone: $100 million saved as part of the OregonSaves retirement program for people across the state to build a more secure future. Just a few months later, participants in the program are up to $125 million saved through our first-in-the-nation program. This is huge. This is key to the financial peace of mind for tens of thousands of Oregonians. Retirement shouldn’t be scary or impossible for people who work hard all their lives. OregonSaves gives people an easy tool to take control of their future and save for tomorrow. We’re thrilled and honored to be able to help.

Thanks for following along and letting us know what you think of our work.

Sincerely,
Tobias Read
Oregon State Treasurer