What does the Illinois Treasurer do?
State Treasurer Michael Frerichs speaks at the Illinois State Fair in 2019. He spoke to Capitol News Illinois for a podcast interview this week. (Capitol News Illinois file photo)
An interview with State Treasurer Michael Frerichs
By JERRY NOWICKI
Capitol News Illinois
SPRINGFIELD – What role does the treasurer play in state government?
It depends on the state, but in Illinois, the treasurer’s role differs greatly from the state comptroller, who handles the check-writing as the state’s chief fiscal officer.
The treasurer, on the other hand, serves as the chief investment and banking officer in Illinois. According to the Illinois Constitution, “The Treasurer, in accordance with law, shall be responsible for the safekeeping and investment of monies and securities deposited with him, and for their disbursement upon order of the Comptroller.”
The current treasurer is Michael Frerichs, who first was elected in 2014 as a Champaign Democrat, defeating Republican Tom Cross by less than 0.5 percent of the vote. He gained reelection in 2018 by nearly 20 percent of the vote.
In a podcast interview with Capitol News Illinois, Frerichs explained his role in state government.
“I'm in charge of investing the state’s money. And that right now is somewhere around $17 billion,” he said. “We also help local units of government and smaller units of government invest in a pooled fund. And that's about $7 billion right now. And then we also help families save for themselves, whether that be for college expenses, or for their retirement through a few different programs.”
While the treasurer does the investing, where he can put the money is largely regulated by state law as written by the Illinois General Assembly.
“So in general, the General Assembly does not like risk,” Frerichs said. “They don't want me investing in the stock market, they don't want me investing in gold or baseball cards, they want things that carry little risk, and also maintain liquidity.”
Frerichs issued a news release recently noting he was the first treasurer since Republican Judy Baar Topinka, who held the office from 1994 to 2007, to earn more than $1 billion in investment earnings on state funds. That was largely due to the fact that Frerichs, like Topinka, served more than one term, unlike all of the other state treasurers since 1977.
The treasurer noted he has pursued changes in the General Assembly allowing him to invest in secure public sector bonds, such as those issued by school districts. He also lobbied for a change allowing the office to invest in highly rated corporate bonds, such as those issued by Caterpillar, Deere & Co. and Pfizer.
Frerichs also noted the difference between the state’s roughly $42 billion General Revenue Fund and the hundreds of other state funds which produce most of the capital that he is charged with investing.
The budget negotiations covered by the media each year are largely centered on the General Revenue Fund, which goes to things like schools, pensions and state agencies. That fund contains the money that lawmakers have the most discretion to spend, and it’s also the fund with a $5.7 billion backlog of unpaid bills.
But there are many other funds the state oversees, many of which are statutorily assigned for spending in certain areas.
“But in effect, it's like we have over 700 different checking accounts,” Frerichs said. “And those different accounts are used for specific purposes. So (the public) often are confused when they hear the state has billions of dollars in unpaid bills. And yet, I'm investing about $15-$17 billion. Most of that money grows in other accounts outside of the General Revenue Fund.”
The other funds, Frerichs said, often have dedicated purposes that prevent them from being used for regular state government operations, unless the General Assembly passes legislation to “sweep” those funds or to borrow from them.
Frerichs discussed the state’s investments, his office’s efforts to return unclaimed property to Illinoisans, a program he oversees that helps people save for retirement, and whether he plans to run for reelection in 2022 for the latest edition of CapitolCast, a regular podcast of Capitol News Illinois.
Listen to the full interview here.
Capitol News Illinois is a nonprofit, nonpartisan news service covering state government and distributed to more than 400 newspapers statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.