Board approves higher Q1 book-return target after treasury reports record investment earnings

The State Board of Finance voted to raise its target rate of book-return value for the first quarter of fiscal 2025 to a range of 3.5%–3.6% for the July 1'Sept. 30 period, after hearing a presentation on portfolio performance from the Treasurer's investment team.

Stephen Kilgore, Director of Investment Accounting, reported that short-term investment revenue for the quarter totaled about $28,930,000 and that long-term ledger earnings contributed roughly $69,270,000 for the quarter; combined short- and long-term investment earnings were reported at roughly $98,000,000 for Q4 and about $369,000,000 for the fiscal year. The Treasurer's office stated the investment portfolio reached $11,600,000,000.

Robert Romanek, speaking for the investment managers, said fixed-income markets have rallied as inflation indicators and employment data suggested the Federal Reserve may begin easing policy. Citing an expected moderation of interest rates, Romanek recommended increasing the target book-return range from 3.4%–3.5% to 3.5%–3.6% for Q1. The acting chairman called for a motion; the motion was seconded and approved by voice vote.

The board also voted to adopt the Treasury investment report as presented. Officials noted that earnings were achieved largely because of higher yields amid rising interest rates and that the State Securities Reserve Fund and the catastrophic reserve received material contributions in the fiscal-year accounting presented to the board.

The action is procedural: the board set the internal target range for portfolio performance; no additional statutory change was made during the meeting. The board expects the adjusted target to guide portfolio positioning and reporting for the upcoming quarter.