Washington State Treasurer Duane Davidson announced this week a reduction to the state’s treasury service fee. The move is aimed at crediting more earnings from investments to each recipient fund.
This is the second time in less than a year that the Treasurer lowered the fee, now reducing it to another all-time low.
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Responding to the economic impacts of COVID-19, state agencies are tapping into their budgets to make purchases of equipment necessary for dealing with the pandemic. These purchases range from laptop computers for mobile teleworking to personal protective equipment (PPE) like masks and gloves.
According to the Treasurer’s office, combining the two fee reductions translates to an estimated additional $13 million in available cash for agency budgets.
We were fortunate that conditions aligned which allowed us the opportunity to cut rates yet again. Under present circumstances the rate reduction will provide participating governments and funds additional resources to carry out their primary mission and be better positioned to cope with COVID-19,” Treasurer Davidson said.
The legislature authorized the state treasurer to charge a maximum of 1% of the average daily cash balances from earnings generated under his investment authority.
The fee was initially set at 0.5% in 1991, but during the Great Recession which began in December of 2007, the fee was reduced to 0.32% to free up additional cash in budgets.
In July 2019, Treasurer Davidson reduced the fee to 0.25%, which was the agency’s first move aimed at allowing more money to be deposited to each recipient fund.
After that, the Treasury fee was reduced again down to 0.20% – an all-time low – to credit more of the state treasurer’s earnings from investments to each recipient fund.
The savings agencies will see from the fee reduction is going to go a long way to getting us through this difficult situation. There is a serious need for additional resources, and this is one way my office can help,” Treasurer Davidson said.
The Treasurer’s office said that proceeds earned from the service fee are used by the Office of the State Treasurer to pay for investment expertise, staff and general business operations. The fee can only be increased or decreased under the direct authorization of the state treasurer.
Lowering the fee even further, should the right economic conditions, is an option that will be kept open according to Treasuer Davidson.
We will continue to monitor economic developments with the hope that we will be able to allocate additional amounts in the future.”
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