Good News Flows From State Treasurer's Office Throughout October

A new report in industry publication Pensions and Investments finds that Connecticut’s pension funds had the highest outperformance of investment benchmarks among the 68 public pension funds tracked by the publication in Fiscal Year 2023. Most public pension funds P&I tracked (38) did not meet their one-year benchmark return. A sizable portion (26) had returns greater than their benchmark, according to the publication.

“We have high expectations that our pension funds should be among the best performing in the nation. While this report shows our capacity to do just that, we are long-term investors and don’t measure success one individual year at a time,” said Connecticut State Treasurer Erick Russell. “The array of reforms to our investment strategy — including how we allocate assets, choose partners, and retain and recruit in-house talent — are already showing results and have us well-positioned to capitalize on this momentum in the coming years.”

Most of the public funds tracked by Pensions and Investments did not meet their one-year benchmark returns in FY23. Of the 26 that did, Connecticut’s pension funds were the only to exceed its benchmark by over 2%. The benchmark represents the actual return of the target long-term asset allocation across various investment types in the pension funds.

At a September meeting of the Investment Advisory Council, Treasurer Russell announced that Connecticut’s pension funds had achieved returns of 8.5% in FY23. The benchmark was 5.9%.

“Maximizing investment returns not only protects the retirement security of retired state workers and teachers, but it is also part of Connecticut’s larger strategy to strengthen state finances. Continued success will free up resources that can be used to support services for taxpayers, lower costs, and make critical long-term investments in our communities. In tandem with the budgetary reforms in recent years that have resulted in nearly $8 billion in additional contributions to the pension funds, we are also combatting the punishing legacy of debt that has lingered as an anchor around Connecticut’s economy for generations,” Russell added.

Also in recent days, Governor Ned Lamont, Treasurer Russell, and University of Connecticut President Radenka Maric announced that Fitch Ratings has upgraded the credit rating for the State of Connecticut’s UConn General Obligation (GO) bonds, part of the UConn 2000 program, from “A+” to “AA-.”

In its announcement, Fitch cited the success and impact of recent budgetary reforms and the state’s commitment to higher education, saying in part: “Strong legal protections [on the bonds] are buttressed by the constitutional state priority of higher education and the expectation of continued strong support of the UConn system.” Fitch demonstrated confidence in both UConn and the state’s capacity to fulfill their debt service obligations in the future, deeming the UConn GO Bonds and Connecticut’s GO Bonds as “substantially similar.” Consequently, Fitch has assigned identical ratings of “AA-“ to both programs, indicating a high level of creditworthiness and stability, state officials pointed out.

In addition, Treasurer Russell announced the results of a successful $1.2 billion transportation bond sale. New bonds sold will fund a variety of important transportation projects, including an initiative to combat wrong-way driving incidents, according to the Treasurer’s Office. Refinancing of existing bonds during the same sale resulted in $26 million in savings for taxpayers.

“The sale of these bonds will allow our state to begin critical transportation work that will keep our residents safer, create local jobs, and drive long-term economic growth,” said Treasurer Russell. “Investors continue to see opportunity in Connecticut and recognize our improved financial standing as a symbol of sustainable strength. The impact of our collaborative, bipartisan work to stabilize state finances in recent years is reflected in both the credit rating increase our transportation bonds received prior to this offering and the affordable borrowing costs we were able to secure at a time of high national interest rates, directly saving money for taxpayers.”