California Treasurer talks bonds, housing and lieutenant governor bid

Transcription:

Transcripts are generated using a combination of speech recognition software and human transcribers, and may contain errors. Please check the corresponding audio for the authoritative record.

Transcripts are generated using a combination of speech recognition software and human transcribers, and may contain errors. Please check the corresponding audio for the authoritative record.

Michael Scarchilli (00:04):
Hi everyone, and welcome to The Bond Buyer podcast, your go-to source for insights into the municipal finance landscape. I’m Mike Scarchilli, editor-in-chief of The Bond Buyer, and today we’re diving into an enlightening conversation with California Treasurer Fiona Ma and John Sheldon, the State’s Deputy Treasurer for Public Finance. In this episode, Bond Buyer senior reporter Keeley Webster, sits down with Treasurer Ma and Deputy Treasurer Sheldon to explore the transformative initiatives shaping California’s public finance strategies. They discuss the state’s groundbreaking efforts to diversify the municipal bond market, tackle housing shortages, and manage one of the largest investment portfolios in the country. Plus, they provide an insider’s look at how California navigates the complexities of the bond market while balancing pressing infrastructure and policy needs. This is a must listen for anyone who wants to understand how California is leading the way in public finance, innovation and equity. Let’s get started.

Keeley Webster (01:05):
Today I have with me to term California Treasurer Fiona Ma and John Sheldon, Deputy Treasurer for Public Finance. Welcome. Thank you both.

(01:16):

Thank you. Thank you all. We have a wide ranging discussion plan that will hit on some of Ma’s priorities as treasurer and if elected, what she would like to achieve as lieutenant Governor. Some of Ma’s accomplishments as treasurer have included further broadening the pool of bankers by breaking bond sales into smaller pieces. So minority and women owned banks could be the lead manager on deals. She also has encouraged larger banks to not only include women and minorities on their banking teams, but to have them run as lead manager. Could you describe for our listeners your thinking on those efforts?

Treasurer Ma (01:50):
Yeah, well, as a woman and a minority myself coming up the corporate ladder, whether it was at Ernst and Young, and then later on the San Francisco Board of Supervisors, the State Assembly, state Board of Equalization, and now Treasurer, I understand how difficult it is for women and people of color to sometimes break in or get that break or be included in a deal because they weren’t previously included in many deals that syndicates have had in the past. And so that’s kind of what I bring to the table is really just to make sure that all the deals and companies that come and meet with us, it looks like California. My office looks like California. I believe that diversity is a strength, and when we have more people at the table giving their different opinions, we were all raised and brought up with different values and strengths that really, really does bring about a better team or a better deal just having that diversity. So that’s kind of one of my hallmarks. I think in any job that I’ve had, I really do try to hire a diverse workforce and this enables better outreach to different communities and also being a little bit more inclusive.

Keeley Webster (03:34):
So how many people do you manage? In the Treasurer’s office?

Treasurer Ma (03:40):
We have about 500 full-time staff members. And interestingly for the last, I don’t know, four decades, we really haven’t expanded the number of employees at the treasurer’s office. So we really do run lean and mean at the office as the banker, we take in $3.7 trillion. My short-term portfolio is anywhere from 150 to a high of 250 billion. I generate $20 million a day, and I also oversee all the bonds issue, all the bonds for the state of California, the uc and CSU systems and in addition, 15 other boards, commissions and authorities that funds and finances, affordable housing, hospitals, children’s hospitals, public transportation schools, higher ed, small businesses, green energy advanced manufacturing, and I have four savings programs, and that’s only under the treasurer’s office. And we haven’t expanded from 500 people for the last four decades, so kudos to my staff.

Keeley Webster (04:54):
So if you could expand, what area would you expand and where would you hire?

Treasurer Ma (05:02):
I think we’re doing pretty good right now. We are, even though we’re lean and mean, everybody is very serious about the job. Everybody takes pride in their work and there’s no one really sitting around waiting for work to come to their desk or taking excess vacations or not wanting to come to work. They don’t have anything to do. So I think we’re at the right point right now.

Keeley Webster (05:29):
So what other changes have you made related specifically to the state’s bond business over your six year tenure?

Treasurer Ma (05:38):
Yeah, so like you said in your introduction, we really have relooked at the different underwriters that we appoint. Obviously we have a competitive sale bond offering, and then we do place these underwriters in the larger deals, like 2 billion to $3 billion and up for our bond sales. And even when we sell veterans bonds, for example, for our CalVet home loan program, we try to incorporate all of the veteran owned firms. So Academy Securities for example, is all veteran owned and they have been the lead for our CalVet bonds because we believe that we should be walking the walk, right? If we’re going to be selling veterans bonds, we should be utilizing more veterans. And when it comes to other bonds that we have issued, whether they’re just general obligation or public works, regular general obligation bonds, we do try to spread out the work so that everybody feels they have skin in the game, that they’re not going to give up on California, that they’re going to continue to be interested in selling our product, servicing us to the extent their banks. We just want to make sure that we have more offerings. Obviously more people at the table creates more competition, which creates better rates for us. So we just try to make sure that we are more inclusive and touch base with everyone and give everybody that opportunity to get some work from our office.

Keeley Webster (07:29):
So one of the things that you did when you first took office in order to make that possible and to make it possible for some of the smaller banks who don’t have the same sites assets as some of the bulge bracket was that you broke the deals into smaller pieces. How is that working out and have you had to modify that at all, in some cases, go to the market with bigger amounts?

Treasurer Ma (08:01):
No, I mean, yes, when you break down some of these bond offerings, it does allow the smaller firms to be able to step up to that next level because one of the concerns is if a firm is going to issue 3 billion in bonds that if for some reason the market turns that day, they aren’t able to sell them, that they’re going to hold them in their inventory, and that really does cost money for the company. Luckily, I do believe that California bonds have been very strong and oversubscribed, and so these firms have not had to keep a lot of these bonds in their inventory, but that could happen given volatile market conditions like we’ve seen. So that’s obviously always a concern. And then we can always double them up instead of just having one firm on the left, one firm on the right, we could put two firms on the left, two firms on the right, which also gives more opportunities and spreads out the risk amongst more companies.

Keeley Webster (09:08):
So the state is coming to the end of its fall bond slate. Could you and John share how that appears to be shaping up? Have you achieved the pricing you anticipated generally on new money deals and the savings you had hoped for on the refundings?

Treasurer Ma (09:22):
Yeah, so I’m going to turn it over to John since he’s the more of an expert in this area and oversees all of our bond sales. So John,

Deputy Treasurer Sheldon (09:32):
Thanks, treasurer. Yeah, Keeley, sure. We’ve actually reached the end of our bond sales at this point. Now we finished up our last sale just last month. We closed it actually right before the election, but this past grouping of sales involved, let’s see, 1, 2, 3, 4, 5, 6, so seven sales in a very compressed period of time between August and October. And it ranged from a small sale of $80 million, relatively small, that is for the Department of Veterans Affairs to our largest sale of the year, which was 2.6 billion of geo bonds back in August. We had a mix of competitive sales and negotiated sales trying to, as the treasurer said, offer opportunity to a lot of different firms to not only participate in the negotiated sales, but also compete in the competitive arena as well. To your question as to how they went, we had, even in what has been a fairly volatile market in the fall, we had really, really great results pretty much through every sale.

(10:44):

I don’t think there was one that stood out as a very difficult sale. Part of that is obviously due to the market and investor’s interest in the state. Part of that probably is a little bit of luck just hitting the market at the right times. We did move a couple dates around to try to take advantage of market conditions. We also accelerated a couple transactions from a two day order period to a one day order period, which was beneficial to the state. And I think to the treasurer’s point earlier, in terms of managing our sales and managing the debt program itself, we’ve taken great advantage of the opportunity to refund bonds that have hit their current funding date. And over the course of just this fall set of sales, I think we saved over $500 million for taxpayers in the state of California. Pretty much every sale was either close to subscribed at the end of the order period or oversubscribed, and very few adjustments. In fact, most of the adjustments that we saw in this false state of sales were to the state’s benefit. So all in all, a really positive sit out season.

Keeley Webster (11:56):
So when you move from a two day to a one day, is retail still included that in that, or are you guys seeing less interest from retail investors?

Deputy Treasurer Sheldon (12:07):
Oh no, absolutely. We love our retail investors and have for years in California, especially under treasury Ma’s administration. So when we accelerate a transaction, it’s usually at the end of, or we cut short a little bit the actual retail order period, but we still give retail investors priority on the bonds when we get to final allocations. And honestly, with individual retail investors, I don’t think we’ve ever really not filled their orders with professional retail investors, which look a little bit more like institutional orders. If we’re oversubscribed, then obviously some of those professional retail orders get cut back a little bit. But we do our best to be very fair in the allocation process with our lead managers and make sure investors get a good share of what they’ve asked for.

Keeley Webster (13:07):
So the state has AA ratings prior to the runup in interest rates in last year’s deficit, the state was trading as a AAA credit, but s and p revised its outlook from positive to stable, and Moody’s assigned a negative outlook earlier this year. Has that affected your ability to sell debt at all? Have you guys been field more questions from investors related to those things?

Deputy Treasurer Sheldon (13:35):
Yeah, so the short answer is no. Those rating outlook modifications have not really dented investor demand for the state’s bonds. We were fortunate to be some of the most liquid bonds in the markets that really hasn’t changed. The Moody’s outlook change was I think a little bit over a year ago now. So that one will need to be decided upon one way or the other relatively soon. And I think from a perspective of s and p, we’re always arguing for higher ratings and we’ll continue to argue for higher ratings. We think we’re extremely credit worthy bond and one of the most credit worthy bonds out there in the markets in all of the different categories of issuance that we use. And so to answer your question briefly though, we have not seen really any impact from any of those rating modifications.

Keeley Webster (14:37):
So with the changes in the market that you spoke of earlier, are there certain maturities that seem to be more popular than others? Was there anything you had to change relative to the volume you expected to push out the door or on which maturities you offered as you rolled out the fall slate?

Deputy Treasurer Sheldon (14:58):
Yeah, we didn’t have to make any major changes during the sales season except for a couple of dates specifically on the veterans program. We moved the date, I think by a day or two, if I recall right, that’s a little while ago. So you’re testing my memory as far as the structure of the transaction across the maturity perspective. We look at that pretty carefully going into each sale, and we do think a lot about trying to size our structuring to the stronger pockets of demand in the market. Fortunately for us, we saw really pretty good demand across the board every now and then. We had maybe a touch of weakness in a couple years in the mid range of the maturity schedule, but nothing that made a huge difference. The other nice thing about our debt program is we’re pretty flexible in the ability to move paramount among maturity dates when necessary. So if we have a very oversubscribed few maturities and a couple undersubscribed, very often we’re able to move a little bit of that debt that we wanted to sell in certain maturities into some of the maturities that have been very oversubscribed. That’s just a benefit of being a very large issuer with the ability to structure our transactions on a long-term horizon and not just necessarily one or not stick to one exact structure. Each particular sale, we’re able to kind of view it in with longer term perspective.

Keeley Webster (16:46):
So it’s a massive portfolio that you guys are managing. And can you talk a little bit about the way that California usually issues debt is kind of one after the other in the fall, and then there’s a break and then the governor introduces the budget and then you guys do another pretty large spring slate. Can you explain the thinking behind that? And also, are you guys already gearing up and kind of reviewing potential refundings and or do you wait until lawmakers start to roll out their plans to figure out where you guys are going to have to issue debt to support programs?

Deputy Treasurer Sheldon (17:32):
Well,

Treasurer Ma (17:32):
I can jump in and

Deputy Treasurer Sheldon (17:33):
Then I was going to say, why don’t you start off? Yeah, okay.

Treasurer Ma (17:36):
Yeah. So part of issuing the debt is that we have to prepare the appendix A, letting the investors know everything that we possibly know that could come up or pending litigation issues, things like that. So that’s why we have to issue at those certain times because in November, the governor is preparing his January budget. He usually releases it on January 10th, and then there is another revise in May. So we normally issue our spring sale sometime between January and May 10th when he issues his may revise. And then the legislature and the governor pass a budget by June 30th. And since 2010 when the voters voted that if the legislature and the governor did not pass a budget on time, the legisl legislators pay would be docked every day for the late budget, and it is permanent, so it’s not like they’re going to get the money back at some time.

(18:50):

So that has really helped to get our budget finalized in time over the past, since it passed in 2010, I think we were late in 2011, and ever since then, we had a couple of days that were docked, our pay was docked. And then since then, the legislature has always gotten their budget to the governor on time for his signature. So it’s kind of worked, but yes, and then so they passed the budget on June 30th, and then we go out to market again before they start revising all of their estimates for the next fiscal year. So that’s kind of why the timing is the way it is in the spring and in the fall.

Keeley Webster (19:34):
So you referenced a little bit or alluded to the fact that were you actually in the legislature when that law took effect related to having your pay docked as a lawmaker if the budget wasn’t passed on time?

Treasurer Ma (19:49):
I definitely was, and it’s kind of interesting because John Chung at the time was the state controller and the question was posed to him whether the legislature passed a balanced budget and he said no. And so that started the clock in terms of, because we were so late in the game, I think the legislature a budget to the governor’s desk the last week. And obviously things take a while to get in print, so to speak, so that everybody knows what they’re voting on. And so then when the governor actually had all the documents in place in line, John Chung said it was not balanced and they had to go back to the drawing board. So I think we lost two or three days of pay. And it’s kind of a funny story because my husband and I got married on November 11th, 2011, and because John Chung that year, earlier that year declared that the budget was not balanced when we had our wedding, it was at a kind of a western themed wedding on a piece of property down in Half Moon Bay, and there was an opportunity to lock someone in the jail. And so Speaker Perez took the initiative to put John Chung in jail for the first 10 minutes at a certain amount were he was raising money for a nonprofit back then, and the only way John could get out was John had to pay to get out unless someone paid more to keep him in there. So I think John spent the first two hours of my wedding in jail. He could not get out. All the legislators were kind of doing the payback to him.

Keeley Webster (21:41):
So thanks for that. So now we’re going to go to a commercial break and we are back. So treasurer, I know the governor won’t introduce the budget until January, but the LAO recently came out with a report showing that revenues exceeded expectations in the current year budget by 7 billion, putting the state in pretty good shape heading into the budget season. Given that, do you think there could be less reliance on bonds when you set the spring slate?

Treasurer Ma (22:14):
It’s not so much reliance on bonds because many of these projects are long-term ongoing. So when they run out of money, then they let us know that they need more money and we should include them in the upcoming bond sale. What we really talk about bonds is when we don’t project that we’re going to have enough money in the budget and the governor will not sign bills that obviously cost new money, and the legislators want to continue or expand or start new programs, and then they want to propose different bonds to fund these projects. And so last year, I think there was like 50 billion worth of bond ideas on legislators desks, and they would come to us and ask us what do we feel is the right level or what we feel like the state could issue in terms of bonds and not affect our credit rating or other expenses that we would have to pay.

(23:19):

So that’s really when we get involved in terms of new bond issues. Now, this past November, the voters did vote for two new bonds, one for schools at $10 billion and another one for climate related projects. That’s another $10 billion. And I think the governor and our office last fiscal season, we estimated that perhaps 10 billion in new bond issuances would still be within our budget and it would be in our budget, and we would be able to kind of afford to place those budgets, those bonds out, but any more than that would probably start impacting our cash flow. So the voters voted for $20 billion, and so we’re going to have to pinch a little bit or hope that the market is good for our bond sales.

Keeley Webster (24:21):
So how much of that could you guys conceive it? Because usually doesn’t it take about six months to start rolling that or even more than that to start rolling it out because doesn’t a whole kind of infrastructure have to be set up and then have different programs apply for the money and that sort of thing, and then it’s approved, and then you guys, I mean, how quickly would any of that debt be going out the door? Anyway,

Treasurer Ma (24:49):
I’m going to turn that over to John because John has been on the backend of new issuances and new bond programs. So John, I

Deputy Treasurer Sheldon (25:00):
Sure. Yeah, no, it’s a good question. Keeley, I think you’re absolutely right. It takes a little bit for the different departments that are going to effectively utilize the money, spend the money, kind of get their capital plans in order they’ve been working on ’em. Obviously some of these measures will just continue an existing program. Other portions of the measures might be starting new programs, and those take maybe a little bit longer to get set up. But I think to your point, yeah, I think six months is a good estimate for getting set up and then a little bit longer to actually filter from the departments to the Department of Finance, which accumulates the different department’s needs and then sends them over to the treasurer with a request effectively to say, we need to borrow X billion dollars or x hundred million dollars this particular spring or fall, and then we execute from there. I would say overall, the two 10 billion, the new authorizations plus we have about 25 billion of existing authorization. You can kind of look at the new ones as probably going out the door anywhere from a minimum of probably five years, maybe out to even eight or 10 years over time. And it’s really highly driven by the demand for those capital funds

(26:22):
And also projects that

Keeley Webster (26:23):
Follow. This question is for either one of you, both the Biden and Trump administrations have been supportive of infrastructure spending. Are you anticipating that will continue when Trump takes office in? How have the programs through both administrations over about the last eight years affected California? How much has California benefited?

Treasurer Ma (26:44):
I am hoping that President Trump will continue the aggressive infrastructure spending a lot of our roads and bridges and tunnels. Critical infrastructure obviously needs to be maintained and updated and upgraded, and the longer you don’t pay attention to an asset like your house, everything starts breaking down, right? Your roof and your deck and your driveway and the floors. So infrastructure I think is critically important. The United States and other California for example, we have a lot more in terms of infrastructure needs than we have resources. And so these bonds are really critical in terms of maintaining and upgrading our critical infrastructure. So I hope that he will continue the program. I know that President Biden has allocated a lot, not only to infrastructure, but also to different green energy causes like hydrogen. We won a big award through our Arches program and other type of Department of Environment programs, just trying to make sure our air is clean, our waterways are clean, and we’re doing the best to make sure that constituents lives are as healthy as it can be.

Keeley Webster (28:18):
Okay, so now let’s turn to private activity bonds. The state of California for several years has been hitting the ceiling on what the federal government will allow it to issue relative to PABs. There has been heady competition between funding projects like Bright Lines, Vegas to Los Angeles Rail program funding housing, and smaller ESG entrepreneurial projects. So how is the state currently fairing in that regard?

Treasurer Ma (28:45):
Yeah, well thanks to Governor Gavin Newsom who’s given us an extra $500 million in state low income housing tax credits. That has really helped jumpstart many of the applications that have been sitting on the shelf for many years. However, that was because of that extra state locum housing tax credits, they must be matched with our bonds. And so for the first time in decades, our private activity bonds have been super, super competitive, and that has created, I think, more efficiency and effectiveness in terms of how we issue these scarce resources. Now we have been pushing at the federal level to reduce the bond allocation from 50% to 25%, which would make more bonds available, obviously be able to fund more housing applications, but that we still are kind of fighting that fight. And then there are other states that don’t use their P allocation every year, and it’d be great if we could put it back in a pool and we can all bid so that we could use more of it. We do have more green energy needs. We could be issuing more bonds for different private projects. And of course, housing, housing, housing. I mean we are still short million plus housing units, and without this tax credit and bonds, we would not be able to build affordable housing, which is becoming more and more desirable because the costs have been going up so high in California.

Keeley Webster (30:36):
So you also made some changes to the housing departments you oversee to speed up the availability of money available for housing. Could you discuss what you did there? Sure.

Treasurer Ma (30:46):
Yeah. So before I got elected to state treasurer in 2018, I did go around and talk to as many people who utilize these programs and said, Hey, in a perfect world, what would you say you would like to see from the treasurer’s office? They said, number one, don’t change all of the regulations. Number one, because many of these projects, it takes five years before they can put together their capital stack to even come to our office. And if we’re going to be changing all the rules in midstream, many of these projects may not qualify because they’re working under the old rules. So that was number one. Number two, they said, please align the language in the regulations. Even though my TAC tax credit allocation committee and my bond allocation committee, they both sit on the same floor. They weren’t talking to each other. It was like two hands doing opposite things.

(31:46):

So they said it would be great if we had one executive director so that they can make sure that everything is aligned, not only the regulation, but the timing of issuing the bonds and the tax credits. They were going out at different dates and just slowing everything down and then just making things more transparent, making sure that our minutes were up in a timely manner. Our agendas weren’t going out in a timely manner. And the ability now post covid for people to zoom in has really been helpful because a lot of times we have a hundred people on our Zoom call meetings, which I prefer to see. I was really dismayed when I started and I would have these important meetings allocating millions of dollars, and there’d be nobody in the room, but my staff and I would say, how come nobody cares about what’s going on?

(32:40):

And it was just because it was just so hard to get to Sacramento and sit there all day, right? It’s kind of a luxury. So now that people can zoom on, I think there’s better transparency, better accountability. Everybody knows what’s going on. There is not one developer who can try to game the system. Everything is very, very public. And I think you talk to any of the affordable housing developers that develop in other states, I think they will tell you that California now clearly is the best out of all the states. There’s certainty, there’s clarity, there’s transparency, and they really know that once they get that award that they’re ready to go to the bank, so to speak.

Keeley Webster (33:30):
So let’s talk about some of the other goals and priorities you have been implementing during your time as treasurer. Could you talk to us about Savers and the state’s version of Baby Bonds, which I know you’ve been instrumental in?

Treasurer Ma (33:42):
Yes. So Savers was a program that started that I inherited when I started in 2018, and it was really Kevin Leon Bill, as well as John Chong was very supportive as well as others. And this offers a retirement savings plan to any employee who has not offered a retirement plan at their workplace. When we first passed the legislation, it was intended for five or more employees, and then it got confusing because people said, well, what if I have less than five, or sometimes I have part-time people. And so now we ran a second bill that said, any employee employer that has one or more employee must register with Cal Savers. And surprisingly, we had no votes. The governor signed it, everybody was on board, because this program really is working. This model is similar to a Roth IRA. It is a post-tax, but it is a model where you set it and you forget it.

(34:47):

So when a company first uploads their roster to our program, the default is 5% of that person’s pay and they take it out usually monthly, and then that accumulates in their account and that stays with their account to that person. Employee’s name, no matter whether they leave the company, they move out of state, they retire, that money is really theirs. And when we have gone back and done press conferences with some of these companies, some of these employees were really surprised that they had this money, they forgot about it. I mean, who really gets a paper payroll statement anymore? So you’re looking at where all of your expenses go, the money goes into your bank account, and when you run out of money, that’s when you hope you get paid again. So this model is really, really working. Similarly, Cal kids, during our surplus years, the governor and the legislature allocated $2 billion for more child savings accounts in the concept of K through, I’m sorry, it’s first through 12th graders on free and reduced lunch.

(36:08):

They’re eligible for $500 in their account if they’re homeless in another 500. And if there are foster youth, it’s another 500. We have really been pushing trying to get this money out because it is free money in these children’s names, and we just need the parents and the guardians to come and claim it. I think what we’ve been very, very aggressive trying to partner with different localities, different nonprofits, different agencies that give out all sorts of different programs, but it’s still been very hard trying to give out this free money. Our newest program is our Hope Accounts, which some states call baby bonds, but we call it HOPE accounts. And this money will be for any child who lost a parent or guardian due to covid and or in the foster youth system for 18 months or more. And so we will be able to probably allocate $4,000 in these child savings accounts so that they can use that for higher education or certified apprenticeship programs. And we’re always looking for ways to make savings more enticing. So thinking about what we can do if these children have extra money in their account, can they use it for a down payment on their home? For example, we hear a lot of parents that say, well, why should I save? I don’t know if I’m going to college. Well, you’re going to save because maybe you want to buy a home someday. So that may be an extra incentive for parents and guardians to save.

Keeley Webster (37:50):
So what are some of the big items that NAS is working on that are priorities of yours that you’d like to see them move forward on?

Treasurer Ma (38:01):
Well, I’ll have John talk about some of the ones related to our bonds, but clearly allowing us to build more affordable housing. Some of these programs do depend on federal voucher programs, and we would love to see that increased. Anything that can help more people get out of poverty, get off the streets is what we’re focused on. So I’m really focused on homelessness. And then one of the priorities many years ago was allowing banking access to cannabis companies. We did pass a resolution, I don’t know, six years ago at NAST that said, yes, for those states that passed cannabis legalization, they should have access to banking. Many states have had access to banking, but we really do think that banking should be provided, should be accessible to these cannabis companies. There’s still many of them dealing in cash.

Keeley Webster (39:05):
So are you anticipating hitting that pretty hard next year? It seems like a lot of efforts like that got derailed a little bit by Covid and then inflation. Is that something that’s in your top 10 now?

Treasurer Ma (39:21):
Oh yeah. I mean, these are issues that we’ve been working on and how to make it easier, number one, to do business in California and how do we encourage people to come to California, invest in California and stay in California? Right? Part of it is housing, housing, housing. Housing is critical for California.

Keeley Webster (39:44):
What would be your key initiatives if you’re elected Lieutenant Governor?

Treasurer Ma (39:48):
So the lieutenant Governor, first and foremost, must be willing and able to serve as governor if the governor is not in town or incapacitated. So that’s kind of first and foremost, similar to the vice president. Secondly, the lieutenant governor sits on the uc regions, the California State University Board of Trustees, as well as the community college Board. Also on coastal Commission, the state lands and under the constitution or the job duties, they are supposed to. Lieutenant Governor’s also supposed to be in charge of the California Economic Development Council. This governor delegated all of the international responsibilities to our Lieutenant Governor Alaki. She was the ambassador of Hungary, and so very well versed in international issues. So she’s been doing a lot of the international delegation visits, both inbound and outbound. So that’s kind of the main jobs and duties of the Lieutenant Governor. For us at the Treasurer’s office, we’ve already been working with U-C-C-S-U and community college boards on more housing.

(41:06):

We built our first student housing on the Santa Rosa Community College. It was a 362 unit property, very, very well received. It has really transformed that campus. And I do believe with our 119 community college campuses, there are similar opportunities to build more student and faculty housing. Many young people are choosing to perhaps stay at home or to go to a program that specializes in something that they’re interested in, perhaps AI or cybersecurity or researching certain cancers. And certain community colleges are just more nimble and able to hire the instructors and be able to offer that two year degree program. So we do see a lot of young people moving around to community colleges, but they’re still living in their cars or couch surfing. And so I think one of the priorities is building more housing on community college sites. Secondly, the California state universities, there’s about 23 of them, and they are not funded under Prop 98, like community colleges.

(42:20):

They also don’t have the same donor base alumni network, the ability to enter into public private partnerships like venture capital partnerships with the private sector. And so I really want to see how I can improve the California state universities not only creating housing on their campuses, allowing them to do or potentially doing more public-private partnerships similar to the ucs, but internationally, I just got back from Vietnam last week, and I was surprised how many states have a presence in Vietnam and other countries. I think it’s about 22 states that have international presence. California, we used to have trade offices, and during the great recession, they all got shut. They never got open. So when you’re talking about California being the fifth largest economy where I believe a lot of people want to come here to California, we don’t even have that type of international presence.

(43:29):

So could we assign the CSUs 23 of them, one to each company country that we want to do business with, arguing business with, and really start having that presence? Those student exchanges, first off, working with other companies perhaps that are there. For example, in Vietnam at the Saigon Tech Park, Arizona State had a presence there. So they had their logo and they had students working from Arizona State at that program and vice versa, and they got in through their partner Google. And so if we kind of work with many of the companies who are headquartered here in California, many of the tech companies, they are all over the world working in all different countries. So can we do more with some of our private sector companies with our CSUs, do more of those partnerships, especially international exchanges.

Keeley Webster (44:36):
So I saw that you’re heading off to the Cow Palace this weekend for the 40th great Dickens Christmas Fair. I hope you and John both have a wonderful holiday season. Thanks to both of you for joining us today. This is Keeley Webster. Until next time.

Michael Scarchilli (44:53):
We hope you enjoyed this episode of The Bond Buyer Podcast, a huge thank you to California Treasurer Fiona Ma and Deputy Treasurer John Sheldon for sharing their insights into the state’s public finance strategies. Here are three key takeaways from today’s conversation. One, Treasurer Ma detailed her efforts to break bond sales into smaller portions, creating opportunities for minority and women owned firms to lead deals. This approach has enhanced diversity and competition in the municipal bond market benefiting both issuers and investors. Two, Deputy Treasurer Sheldon highlighted California’s proactive measures including timing bond sales to favorable market conditions and utilizing flexible debt structures. These strategies have allowed the state to secure over $500 million in savings for taxpayers during the fall bond slate alone. And three, from leveraging private activity bonds for housing to pushing for federal reforms, the Treasurer’s Office is working to address California’s housing crisis and infrastructure demands. Treasurer Ma emphasized the critical role of public finance in driving equitable development and maintaining California’s economic leadership. Thanks again for listening to The Bond Buyer Podcast. Be sure to subscribe on your favorite podcast platform. Rate us and explore more content at www.bondbuyer.com. Until next time, I’m Mike Scarchilli, signing off.