NAST's Wooden highlights new public finance diversity committee

National Association of State Treasurers President and Connecticut Treasurer Shawn Wooden highlighted his work to improve the public finance industry’s diversity through a new NAST committee on diversity, equity, and inclusion to build out a more diverse public work force..

In a keynote speech at The Bond Buyer’s National Outlook conference Tuesday, Wooden said he recently created the special committee after NAST found the public finance industry will soon face “significant workforce shortages” due to an anticipated wave of retirements.

Bill Morgan

Wooden said that will present the industry with an opportunity to diversify its workforce. Doing so will not only lead to a more diverse workforce, but it will also benefit the sector and society at large, he said.

The economic benefits are real, he said. Wooden noted a 2019 McKinsey study showed the costs of racial disparities in the United States and if these could be eliminated, the country’s gross domestic product could grow at a significantly higher rate.

NAST named Massachusetts Treasurer Deborah Goldberg as the chair and they are seeking another treasurer to be a co-chair. The NAST executive committee approved the new committee on Jan. 20.

Wooden said his state had some of the highest economic inequality of any state, adding that in 2021, Moody’s Investors Service said the state’s income, wealth, and racial inequality adversely impacted the state’s credit.

As a corollary to NAST's diversity committee, Wooden alsoreiterated the importance of his introduction of “baby bonds” to provide long-term aid to babies born to the state’s poor families. Connecticut and Washington, D.C., have led the way with the concept and a slew of other states are considering such legislation. Congressional and public finance leaders including Wooden and Sen. Cory Booker of New Jersey, are pushing for a federal baby bond law to help narrow the racial wealth divide.

To improve racial equity, narrow Connecticut’s gap between rich and poor, and to promote economic growth, the state introduced the nation’s first baby bonds in July, Wooden said.

“It’s an investment in families, community, and our overall economy,” he said.

The program creates a trust for children whose births are covered by Medicaid, the federal program providing medical coverage to the poor. When the beneficiaries reach ages between 18 and 30 and complete a financial education requirement, they can gain access to the funds. The funds are to be used for higher education, home ownership in Connecticut, investing in starting a business in Connecticut, or in retirement savings.

The roughly $3,200 allocated at birth is expected to grow to about $11,000 per person after 18 years and to higher sums if distributed further out.

The state government approved issuing $50 million a year over 12 years.

The baby bonds are investments in the long-term future of Connecticut, Wooden said.
Wooden said baby bonds were examples of “social” bonds. His state issued the first social bonds, totaling $520 million in two series, in May 2021 and issued an additional $300 million of social bonds offered in December.

Along with talking about his state’s social bonds in general and baby bonds in particular, Wooden touted the steps he’s taken to improve its financial health. He said he had prioritized restructuring the teachers’ pension funds, increasing rainy day funds, and paying down pension fund contributions on an accelerated basis.

All three major ratings agencies upgraded the state in 2021.

He said analysts are predicting a $1.5 billion state General Fund surplus for fiscal 2022.