State Treasurer’s Investments Initiative
We live in an extraordinary moment in California history. We enjoy the unparalleled bounty of the most economically vibrant state in the richest nation on earth. Scarcely a week passes without new reports of prosperity,unemployment at new lows, personal income at new highs and state revenue registering dramatic increases.
But that is not the whole story. Despite all its successes, California has the greatest gap between rich and poor of all but four states. The poorest 20% of Californians suffered an income drop of 10%, to just over $12,000 per year, in the 1990s. One in five California children live in poverty.
We must engage in a new discussion of how to enlarge economic opportunity for the California communities struggling in our midst. We must consider how the financial capital of both the public and private sectors can be deployed to meet the “double bottom line” of prudent investment and broadened economic opportunity.
The state of California, through its $300 billion-plus pension and investment funds, is integrally woven into the fabric of the global capital markets. Indeed, over the past decade, the state’s pension funds have invested billions of dollars in overseas emerging markets. Now is the time to examine how our investment portfolio can be smartly invested to create opportunity and hope in California’s undercapitalized communities,our own emerging markets.
Toward this goal, the Treasurer’s Office in May launched a new initiative. The “Double Bottom Line: Investing in California’s Emerging Markets” directs more than $8 billion in investment capital to spur economic growth and development in California’s at-risk communities. Some of the specific initiatives include a call for the state’s pension funds to establish an initial goal of investing more than $5 billion in California’s emerging markets (only 2% of pension assets); more state deposits in community banks; and funding for affordable homes. These investments will boost our state’s economic prosperity while providing competitive returns for our pension and investment portfolios.
The full engagement of the public and private sectors in pursuing “Double Bottom Line” investment policies holds great possibilities. The risks of ignoring new paths of investment policy will be an uncertain future marked by economic and social divisions. The returns of investing prudently to close the gap between the “two Californias” will be an economy of sustained strength and a social fabric bound together in common purpose.
Philip Angelides
California State Treasurer
