Seth Magaziner

Treasurer

Statewide, RI

Seth Magaziner was elected to the office of Rhode Island General Treasurer in November of 2014, and is committed to promoting economic growth and expanding opportunity through honest, effective leadership.

 As Treasurer, Seth launched the BankLocal program, which has helped hundreds of Rhode Island small businesses get access to the capital they need to grow and expand, by moving millions of dollars of the state’s cash to local community banks and credit unions. He also was a driving force behind Rhode Island's once in a generation statewide school construction initiative and the establishment of the Rhode Island Infrastructure Bank. Seth made Rhode Island a leader in financial transparency with the launch of his Transparent Treasury initiative, that allows citizens to easily access information about where their public dollars are invested. 

Seth was born in Bristol, Rhode Island, and started his career as a public school teacher, and later as an investment professional. He serves on the board of Crossroads RI, Rhode Island's largest nonprofit provider of services to the homeless. Seth and his wife Julia live in Providence.

Pro-Growth Progressive Ideas Shared

Problem

Over 90% of companies in Rhode Island are small businesses, employing much of the private sector workforce. Entrepreneurs need access to affordable capital to launch and expand businesses, and the consolidation of the national banking industry has made it increasingly difficult for small-scale businesses to find lenders who are responsive to their needs. At the same time, the remaining local community banks and credit unions that are most likely to offer flexible financing arrangements to small businesses are often capital constrained. Challenges obtaining access to capital have historically been particularly acute for women and minority owned businesses, with a recent national NMSDC survey finding that half of minority owned businesses have been unable to obtain financing to grow their operations over the past four years.

Solution

BankLocal moves state cash deposits to local community banks and credit unions as an incentive for small business lending, using some of the $500 million to $1 billion in state cash on hand at any point during the year. Participating lending institutions are eligible to receive a cash deposit equal to the amount of each small business loan the institution makes, up to $250,000. Loans must be made to businesses within the state of Rhode Island, to companies with 100 employees or less. Loans to women or minority owned businesses, or to businesses founded by first-time entrepreneurs, are eligible for a 2-to-1 match. Deposits are “sticky”, with the state pledging to keep the deposits at the lending institutions for the duration of the matched loans.


Problem

Rhode Island’s energy costs are among the highest nationally because the state is a net energy importer and not a significant producer of fossil fuels or hydropower. Rhode Island’s publicly owned building stock also tends to be old and energy inefficient. Addressing this situation also provides an opportunity to respond to the fact that the state has recovered slowly from the recession, with particularly high unemployment in the building and construction trades.

While utilities and other private sector actors often offer financing for partial energy retrofits, these programs often require short payback periods which make only small improvements (new lightbulbs, etc) economically viable. For bigger projects, like envelope-level upgrades to large buildings, municipalities usually have to rely on traditional bonding, which can be expensive and cumbersome, particularly for financially distressed communities with low credit ratings. 

Solution

The Efficient Buildings Fund (EBF) is a revolving loan fund that provides low cost financing for municipally-owned alternative energy instillations and energy retrofits of municipal buildings. EBF addresses a financing gap that municipalities face when investing in major energy efficiency and renewable energy projects, putting tradesmen and women to work on projects that help municipalities save money on energy costs while also reducing their carbon footprints. The EBF provides flexible, long-term financing that allows large retrofit projects to be cash-flow positive to municipalities so they can start saving money right away. Capitalized in part from federal stimulus funds and proceeds from the Regional Greenhouse Gas Initiative, the EBF provides long-term loans to municipalities at a discounted rate to what they could receive from the bond market.


Problem

Every child deserves to attend a school that is warm, safe, dry and equipped for 21st century learning, but aging public school buildings are holding students back. An audit found over 50,000 deficiencies across 306 schools. These deficiencies, which would cost $2.2 billion to repair, range from threats to health and safety, to programmatic deficiencies such as a lack of adequate science labs that speak directly to the ability of the state to prepare students to be successful in the modern economy. Prior to our intervention, the total needs of RI’s school buildings was projected to grow to $2.9 over ten years, , meaning that the cost of repairing schools would have increased an average of $70 million per year in the absence of new action.

Solution

We addressed three challenges: 1. current investment was insufficient to keep up with building deterioration; 2. most of the existing state budget allocation was used for municipal debt service on completed projects, meaning the state was subsidizing borrowing costs of lower-rated communities; and 3. standards failed to ensure building upkeep. The solution invests more resources, more efficiently, with new guardrails including stronger maintenance requirements. The state will provide $500 million in matching grants to school districts, to incentivize improvements and reduce municipal borrowing costs. The state will offer districts extra matching funding for projects affecting student outcomes (i.e. STEAM, safety, early childhood education).


Problem

Too often, public pension investments are opaque and confusing to the public. A review of public pension websites nationally reveals that it is often very difficult for the public to access basic information on how pension investments are performing, which fund managers public funds are invested in, and what fees and expenses are being paid out of the system. Sometimes such disclosure is prohibited by the contracts between pension systems and the fund managers they employ. The public has a right to know how their funds are being managed, and stronger scrutiny of public investments will fuel an informed public dialogue on how performance can be improved. 

Solution

Rhode Island Treasurer Seth Magaziner launched the “Transparent Treasury” initiative, combining tough new disclosure standards for fund managers with a new online portal, making key investment information easy for all to access. Transparent Treasury is a commitment to publicly disclose investment allocations, performance, fees and expenses in aggregate and individually for every fund manager that the state pension system invests in. Going forward, Rhode Island will only invest with fund managers that agree to publicly disclose performance quarterly, and fees and expenses annually.