State Treasurer Reduces Service Fee Freeing More Funds for Agencies
OLYMPIA, WA – In a bold move, Washington Treasurer Duane Davidson reduced the state’s treasury service fee, which will credit 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.
Many state agencies are responding to COVID-19 and are digging deep in their budgets to make purchases of necessary equipment such as laptop computers for mobile teleworking and personal protective equipment (PPE) like masks and gloves. 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 gave the state treasurer authorization to charge a maximum of 1% of the average daily cash balances from earnings generated under his investment authority. While the fee was initially set at 0.5% back in 1991, during the Great Recession which began in December of 2007, the fee was reduced to 0.32% to free up additional cash in budgets and give agencies more flexibility.
In July 2019, Treasurer Davidson reduced the fee to 0.25%, the first move to allow more money to be deposited to each recipient fund. Recently, the Treasury fee was reduced again down to 0.20% resulting in additional cash available for the programs the legislature establishes within each 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.
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.
Treasurer Davidson stated that he would consider lowering the fee even further if the right economic conditions occur that could support such action.
“We will continue to monitor economic developments with the hope that we will be able to allocate additional amounts in the future,” Treasurer Davidson said.
