The Role of Treasurer

Powers and Duties of the Pennsylvania State Treasurer

The position of State Treasurer is an independently elected office established under the Pennsylvania Constitution. Pursuant to the Administrative Code, the State Treasurer serves as chief executive of the Treasury Department. The powers and duties of the Treasurer and the Treasury Department are delineated for the most part in The Fiscal Code and generally involve the receipt and disbursement of funds by the Commonwealth, as well as the deposit, investment, and safekeeping of moneys and securities belonging to the Commonwealth. The department currently has a budget of nearly $60 million and a staff of about 520 employees.

The mission of the Pennsylvania Treasury Department is to protect taxpayers’ hard-earned money before it is spent and to ensure that state investments achieve competitive market returns and meet the highest fiduciary standards.
Investment and Custodial Functions

The Treasurer serves as statutory custodian of the funds of virtually all state agencies. Such funds total Capitol Buiding more than $105 billion. This total includes about $94 billion belonging to the State Employees’ Retirement System (SERS) and the Public School Employees’ Retirement System (PSERS), the investment of which is under the exclusive control of the SERS and PSERS trustees. As custodian, the Treasurer is responsible for monitoring and safeguarding money and securities, collecting dividends and interest, executing securities transactions, and handling daily settlements of trades. In addition to its custodial functions, the Treasury Department is directly responsible for investing and making deposits of moneys belonging to most state agencies, the largest exceptions being SERS, PSERS, and the State Workers Insurance Fund (SWIF). The Treasurer has broad authority to place these moneys in any investments, including equity securities and mutual funds, subject to standards that prudent persons would follow in the management of their own funds. The authority to invest in equities and mutual funds will, however, expire on December 31, 2008, unless extended by the General Assembly.

Much of the money invested at the direction of the Treasurer is placed in one of two large investment pools. One of these pools holds exclusively short-term U.S. government securities, prime-rated commercial paper, and repurchase agreements backed by U.S. government obligations. This provides a high level of liquidity for state agencies needing quick access to these funds. The other pool, in addition to providing liquidity by holding such short-term assets, also invests moneys accumulated beyond the ordinary cash needs of state agencies in equities and intermediate-term, fixed-income securities. Treasury also keeps deposits in nearly 100 financial institutions throughout Pennsylvania, including about a dozen banks that also function as “active depositories” where Treasury maintains accounts from which checks are issued to pay the Commonwealth’s bills.

In addition to managing investments and deposits for most state agencies, the Treasury Department also runs the INVEST program, which manages investments for local governments and nonprofit groups. INVEST offers two rated pools (daily and community) with short-term maturity as well as periodic custom investment opportunities for longer-term investment needs. As of January 9, 2008, the program had 772 participating shareholders with investments of more than $963 million.

Disbursement and Pre-Audit Functions

The Treasury Department is responsible for disbursing moneys to be paid out by Commonwealth agencies. The process for making payments begins with individual state agencies preparing requisitions that are submitted to Treasury. These requisitions are then audited by the Treasury Department in accordance with generally accepted auditing standards. Pursuant to this pre-audit authority and responsibility, Treasury conducts audits to assure that state agencies and departments are carrying out their responsibilities in compliance with applicable statutes, regulations, and management policies. The audits contain evaluations of management controls and identification of areas where improvements can be made in efficiency, economy, and effectiveness of operations. The areas covered by this work include vendor and grant contracting. Only after these requisitions have been audited, determined to be lawful and correct, and approved by the Treasury Department are payments then made.

Since January 2005, the Pennsylvania Treasury Department processed over 42 million payments totaling more than $114 billion.

Other Responsibilities of the State Treasurer

Under state law, the Commonwealth is responsible for the custody and control of abandoned and unclaimed property. The State Treasurer is responsible for returning that property to its rightful owners. Since January 2005, Treasury has returned nearly $305 million to over 225,000 owners.

The State Treasurer is the Chair of the Board of Finance and Revenue, which selects banks to serve as state depositories; sets interest rates paid on Commonwealth deposits; and hears and decides state tax appeals.

The Treasurer is also an ex-officio member of the following:

The treasurer powers and duties outlined above was listed on the Official Pennsylvania State Treasurer website. If you would like to view the document in its original form, please visit: http://www.patreasury.org/duties.htm