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A New Village Square for Public Funds Investors

An online resource now being built out has the potential to become an important intellectual hub for public-sector investment practitioners. They need to articulate what they most want to find there.

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State and local government treasurers have their separate professional associations. The Government Finance Officers Association (GFOA) has its committee on treasury and investment management. There’s a corporate program for certified treasury professionals that awards credentials in that niche. But never before has there been a go-to online resource aspiring to provide ongoing intellectual leadership and a timely flow of fresh ideas and professional insights to both the public-sector professionals who handle government funds and their counterparts in the boutique private-sector money management industry that serves such jurisdictions. So it’s worth taking a peek at the relatively new Public Funds Investment Institute (PFII).

PFII is a nonprofit founded by Marty Margolis, the retired founder of one of the nation’s larger firms focused on public-sector money management. It’s characterized as his way to “give back” by establishing a neutral, noncommercial resource center for all the folks who have stumbled their way into the profession of managing megamillions or even billions of the nation’s $4 trillion of public funds.

There’s a logic to this idea, as nobody ever enters college with the life ambition to become a county treasurer, a municipal pension staffer or an outsourced public funds money manager. Generally the incumbents have found their way into such jobs by coincidence or default, with most of their training received on the job.

That haphazard career landscape first hit me in the late 1970s when I was attending a federally sponsored symposium on economic planning and industrial structure. Our readings included such works as John Kenneth Galbraith’s The New Industrial State and various articles about the separation of the ownership of corporate capital from its management, the ascendance of mammoth public pension funds and the growing girth of state and municipal cash balances. Public-sector investments, we came to realize, were quietly becoming a big business!

I decided to focus my early career on this emerging field, undertook a second master's degree in monetary economics while working as a city treasurer, and then studied for the chartered financial analyst exams to establish my technical credentials when that certification was still a rare distinction. With both theory and practice then under my belt, I wrote a well-received book on this subject, Investing Public Funds, that the GFOA published in 1985 when I was serving on staff there.

Since then, the sophistication of practitioners in this field has grown markedly, and much of my writing back then now seems rudimentary and antiquated in places, but there are some vestiges that endure as perennial subject matter: investment policies, portfolio construction, yield curve break-even analysis and risk management. For another decade, the GFOA published a monthly newsletter, Public Investor, but with the advent of Internet publishing that print periodical became obsolete. After my successor Corinne Larson left the GFOA staff, nobody really followed in our tracks to maintain a go-to place for governmental investment pros. So that’s part of the void PFII is now seeking to fill.

Its credo is clear and distinctive: To focus exclusively on the needs and interests of public funds investors, to foster a community, share best practices and stay up to date on the latest trends and developments in public funds investing.

Populating the Library

So far, the meat and potatoes of the institute’s online intellectual content is a weekly series of “Beyond the News” articles, mostly written by Margolis, on topics of interest primarily to public-sector cash managers and outsourced treasury portfolio teams. Recent subjects included the Fitch downgrade of U.S. debt, money market fund reforms, banks’ competitive landscape, a big technical change in the way variable interest rates are calculated, regulatory bank stress tests and potential portfolio risks. They are worth reading, but it will take some time for that library to populate sufficiently to become an unparalleled repository of professional insights. The website is designed to add “research and analysis” reports, but so far those entries are pretty limited. They need more content; it’s now in the chicken-and-egg stage.

Hopefully, the academic community will find this a suitable home for publishing pertinent professorial and grad student research, which would be a refreshing addition to the professional milieux. Connections with associations like the American Society for Public Administration (ASPA), with occasional items picked up in ASPA’s membership journal PA Times, would be beneficial to both the academics and the practitioners. The most important takeaway so far is that the institute will need to attract more content from other sources if it’s going to become the “village square” for public-sector investors and those preparing for such a career.

And if private-sector money managers can do so without blatant commercialism, PFII should be a good place for them to post timely, relevant articles and analyses that can be used by others. Establishing an editorial board might be a good way to assure a level playing field and promote public interest over marketeering.

Expansion Ambitions

Likewise, it remains to be seen if PFII’s ambition to expand beyond public-sector cash management topics to include pension fund investment strategies and procedures will be realized any time soon. For that to work, the staff members in county and municipal pension plans in particular need to step up and explain what they want and how information should be curated to be of value to them.

I know firsthand from discussions with several California county pension CIOs some years ago that they could visualize such a resource but lacked even a part-time curator to host and maintain such information. Maybe an informal steering committee can get the key players together and make something happen there. For starters, it would be a smart idea to begin with weekly updates of news and research in the field, similar to what the National Association of State Retirement Administrators does for its members.

So, the rating here is that PFII is a promising work in progress. It would be wonderful to point readers in this professional niche to an already built-out, fully functional answer to their prayers, but the fact of life here is that the end product depends just as much on them and their active involvement as it does on PFII’s hosts. Readers should use the website’s contact form as a suggestion box to tell the PFII folks what they would value the most and where they have opinions and intellectual content of their own to contribute. A village square sits as a lonely space unless and until the villagers come out and speak up.

Governing's opinion columns reflect the views of their authors and not necessarily those of Governing's editors or management.
Girard Miller is the finance columnist for Governing. He can be reached at
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