California Treasurer Ma talks policy, bonds and her run for Lt. Governor



Keeley Webster (00:03):
Hello, I am Keeley Webster here with another Bond Buyer podcast. Today I will be providing some insight into California Treasurer Ma’s run for Lieutenant Governor ahead of our broadcast of a fireside chat she did with Wells Fargo director Julia Kim at the California Public Finance Conference.

Ma announced in June, she’s running for Lieutenant Governor in 2026, the two term treasurer who has served in the California State Assembly and on San Francisco’s board of supervisors said campaign finances were the deciding factor in her decision to run for the state’s second highest position rather than the top spot. When Gov. Gavin Newsom terms out, Ma says she hasn’t amassed enough of a war chest to wage a viable campaign for governor. During an interview at the conference, Ma said, the buy-in to run for governor is $30 million, ticking off the names of people who have spent tens of millions on campaigns in California only to lose. 

Rick Caruso spent $104 million running for Los Angeles Mayor and he was defeated by Mayor Karen Bass. Meg Whitman, the former eBay CEO, a Republican, spent more than $170 million on her 2010 gubernatorial campaign and lost to former governor, Jerry Brown. The crowded field of people who have announced a run for governor also includes many of my friends, Ma said. Lieutenant Governor Eleni Kounalakis; Rob Bonta, the state’s attorney general; Tony Thurman, state school superintendent; former state controller Betty Yee and former Los Angeles Mayor Antonio Villaraigosa have all announced a run for governor. Ma was also enthusiastic about what serving as lieutenant governor would entail. She noted the lieutenant governor works with the state’s massive university systems, Cal State and the University of California system and also the community colleges. It would also enable her to continue her work tackling the state’s affordable housing and homelessness issues, and continue former Ambassador (and current lieutenant governor) Kounalakis’s role on international trade. 

Ma has been California’s 34th state treasurer since 2019, and is a certified public accountant. She would be the state’s first elected Asian-American lieutenant governor and the second woman elected to the position. With more than two decades of experience in public office.

“I am uniquely qualified to be California’s second highest ranking elected official where I will continue to be a powerful advocate for improving our state’s housing, supply environment, education systems, and the economy,” Ma said when she announced the run.

Ma sat down with Julia Kim, a Wells Fargo director for a fireside chat where she discussed her efforts to bank the cannabis industry, the state’s rescue program for struggling hospitals and environmental programs. 

And without further ado, we have Kim’s interview with Ma. 

Julia Kim (02:51):
Good afternoon and welcome to the 2023 California Bond Buyer Conference. My name is Julia Kim and I’m a director at Wells Fargo Securities. I am thrilled and honored to be here today to kick off this conference with our esteemed state treasurer, the Honorable Fiona Ma, Treasurer. Ma is now entering the midpoint of her second term, and over the past five years, she has seen the issuance of over $65 billion of bonds, including the California Health Facilities Financing Authorities inaugural No place Like Home Bonds, which were recognized for the prestigious 2020 Bond Buyer Deal of the Year award. 

Fiona, welcome and thank you so much for engaging once again with the municipal finance community. I think it’s fair to say that as a collective group, we are all grateful for your leadership, involvement and energy over the years. We know you have a very long list of achievements as our treasurer, but can you talk about your journey to becoming our state treasurer? 

Fiona Ma (04:04):
Thank you. Thank you, Julia, for doing this. Many of you have seen me give a speech at the podium. I’m not really the most comfortable doing that. I like to speak off the cuff and fireside chats I think are a little bit more interesting. So let’s see how this goes. But I never thought I would be in elected office. I started out as an accountant. Actually, here’s an interesting story. I always say my parents said that I was good at math and that’s why they decided I should be an accountant. And my pen pal from London when I was 10 years old, found these letters that I wrote when I was 10 and it said, I like math. Isn’t that funny? 

Julia Kim (04:53):
I love it. 

Fiona Ma (04:54):
I always say, my parents said that I like math, but I honestly, I liked math, I guess. So they decided I should be an accountant and I went to the Rochester Institute of Technology in New York because they had a CPA focused curriculum with two paid internships, which I did in the Manhattan office of Ernst & Whinney in the trust and estates department. They offered me a job after, but by this time my parents moved to San Francisco and I interviewed again, decided to stay with Ernst and Whinney in the real estate tax group, stayed five years, then decided to quit and start my own practice at the age of 28 years old, became the president of the Asian Business Association representing women and minority businesses in contracting opportunities. And one thing led to another and I started to understand that politics is important. The people that are at the table are deciding where the money goes, the policy, and I had a couple of mentors that really encouraged us to get more involved, sit on a commission and then run for office. So that was 25 years ago. And clearly it is something that I love to do. 

Julia Kim (06:14):
And thank you so much for doing such a great job. I know my parents thought I had two career paths, one to be a doctor or marry a doctor, and I did neither of those. But I also love math and I know many of us in this room are very curious about the current state budget and its commitment to infrastructure, housing, climate and education. As you think about the future of California, what does that look like to you? 

Fiona Ma (06:42):
Yeah, so leadership starts at the top here in California. Some of you remember Arnold Schwarzenegger when he was governor, right? Everything was big and bold and everything seemed to be like a movie set with him. And then Gov. Jerry Brown got elected and Jerry went into save mode. He was more like cheap and miserly and didn’t want to spend money on new computer systems, but thanks to him, he managed to set aside a healthy rainy day reserve fund, which we still have today. And this governor, Gavin Newsom, has continued to put money into that rainy day reserve fund. It’s about $38 billion today. But he also has set big goals, right? To have every vehicle, passenger vehicle, sold in California by 2035 to be all electric with similar goals for the bigger vehicles, the trucks and the trains and the ships. And so it really depends on who the governor is and then also the Legislature. 

There are 120 members of the legislature. They all have their priorities and their goals, and if they can get their bill to the governor’s desk in the nine-month period, then that also becomes law. I think for us, California is leading in the green and clean economy space. Many car manufacturers, batteries, whether it’s lithium or hydrogen, folks are coming to California, which is great for us, for our economy, for jobs, for just being California. And then there’s another way that we lead or people decide in California where our direction is going to be. And that is through the state initiative process. So either the legislature can put an initiative on the ballot with two thirds of the vote or sponsors have to go out and get signature gatherers. So those are the people in front of your Safeway or your BART station asking you to sign up to put the initiative on. So for the last 20 years, California has passed the stem cell initiative. So we have put, I think $6 billion into stem cell research and technology. And because of that, we’re the only state, the only country that has invested that much in that area. So we have attracted the leading scientists and doctors and researchers here to California. So I think how the voters vote, what the governor decides as well as the legislature is where we’re going to go. But clearly it’s in the climate change space is probably what we’re best known for. 

Julia Kim (09:45):
And in your role, you’ve had a chance to attend NAST and other events with other state treasurers and representatives. What are some of the trends that you’ve been hearing about in other states? 

Fiona Ma (09:56):
Yeah, so the National Association of State Treasurers. How many of you have been to a conference? Or been to my karaoke reception afterwards, we are a bipartisan group. And so during COVID-19, we worked very hard on advising the treasury as well as other folks at the IRS and other agencies on rolling out the money, the COVID relief money, and then what some of the guidelines should be around the usage of this money. So we did that on a bipartisan basis. I think all of our states like to use our tax and private debt, we all have limits, we all want to make it easier, putting more money into our CalSavers fund that Sheila Tobias Daniel is running for our office, trying to help more small businesses. For example, some things that we don’t agree on, include cannabis banking. I have been a leader in trying to bank the cannabis industry. 

We all know you can’t audit cash. And the way we used to audit our cannabis retail companies is we would sit in the parking lot, pick a couple days of the month, and count how many people came into the store, set a dollar amount per person and extrapolate, and then send them a bill. That is not the most efficient way to tax a business. And so being able to bank the industry, and there were disagreements, because some members in other states, they don’t like cannabis, they haven’t passed cannabis laws. And so when we don’t agree, which is very rare, that was one of the big issues. We had to whittle down what we wanted to say that we supported as NAST. That was probably the most controversial issue in the last four years.

Julia Kim (12:04):
Since your first day in office in January, 2019, a lot of significant events have occurred. And even during the height of the COVID-19 pandemic, we often saw you and your team out on the road visiting communities, helping small businesses, advocating for the people of California. What would you say have been the highs and lows of being state treasurer? 

Fiona Ma (12:28):
Well, clearly when the governor passes an executive order or the stay at home order, it was on my birthday, March 4th, 2020, so I remember that day very clearly. And then what does that mean? This government really wasn’t prepared to work from home. Every time anybody talked about it, there was always kind of a reluctance to do it, how difficult it would be, what needed to happen, and all of a sudden everyone had to stay home. So I think that was the hardest adjustment. My office, the cash management folks did come into the office every day because we didn’t want to put our information on laptops, for example. So that was a struggle. Having a hundred people come in five days a week while everybody else was home, number one created a little bit of a disparity. And then after a while, morale became an issue. And now some people still don’t want to come back to work. 

They want to work a hundred percent from home. And so that is something that we are struggling with right now. The state has a two-day mandatory workday, and some people would like to go to three days, but then if we mandate three days, we may lose people to other agencies that only require two days or some that still are allowing people to work from home. So I think that’s kind of been the difficult part. And then also trying to get the PPE equipment. We were all fighting, we’re all bidding. There was that sense of urgency that we need to get as much masks and gloves as possible. And so that created a lot of tension because of the speed at which they want to get the money out to these folks. Some of them were never vendors, so they were never really vetted with our agency before. 

And so I always say, we always put these checks and balances in place because of emergencies. When the emergency happens, you need to continue to follow those checks and balances. And so that was also a stressful time. But the highs is we received 27 billion from the federal government over COVID. So we had a lot of money to give out, even though people were struggling, small businesses, nonprofits, performing arts restaurants, they were struggling, but at least there was something that we could do to assist them. And so I think that kind of kept us going during the dark times. 

Julia Kim (15:10):
And during the CDIAC keynote that you spoke at, you mentioned the 16 boards that you are chair of. When you reflect back on these last five years, which of those programs or other programs are you most proud of? 

Fiona Ma (15:28):
Well, I’m proud of all of our programs. They’re like all of my kids. You don’t want to play favorites with anyone. And I’ve got great directors that oversee all of those programs. So I’m very, very lucky at this time that they are professional, they have experience, they know what they need to do, and I really pushed them to think outside the box. We’ve had a lot of different issues come down. Like most recently, the Distressed Hospital zero interest loan program that Carolyn Abub Chara is heading for us and we kind of fight now to administer it. The governor has similar boards that do similar work that we do. And I take pride that our people are really like the nuts and bolts, the money people, the people that know how to really put these programs together. And so we really fight to have our office involved in a lot of these. 

And so the governor’s office kind of was the lead initially, and then now they turned over the distribution of funds and the competition to our California Hospital Facilities Finance Authority. So I think everyone is special. Everybody is doing a lot. They want to do more versus less and they want to be more creative. My California School Finance Authority, for example, typically just administers the charter schools, so the building construction renovations for charter schools. 

And, we issued our first community college bond at the Santa Rosa Community College to build 362 student housing units there. And nobody really wanted to do that at community colleges because of the nature of the students. And so I was really proud that we were the first to do it, we want to do more of it. And now the governor is giving us money to build more student housing and faculty housing on UC, CSU and community colleges. Thanks to Assemblymember McCarty, for his leadership. So sometimes we can try to get out in front and sometimes we follow some of the bill authors who have good ideas. 

Julia Kim (18:00):
Wonderful. One of the distinguishing factors about you is that you are the first Asian woman and the first woman CPA to serve as state treasurer. And as such, you were awarded the Frida Johnson Award, recognizing you as an industry trailblazer, leader, innovator, and mentor. What are some of the ways that you’ve been able to encourage and motivate young talent and your team? 

Fiona Ma (18:25):
Yeah, first off, they gave me the award my first year that I just got elected. And I said, I haven’t even proven myself. I mean, maybe you should have given it to me my last year. But, I was very, very honored to be awarded the Frida Johnson Award. 

I have had over a thousand interns go through my offices over the last 20 years, and I think that’s the best time to get them. A lot of the parents want their kids to put something on their resume. So they call me and they say, can my child come in as an intern? I say, sure, have ’em come intern. And that’s really the first time that they understand what we do in government. Our job is to serve, to help, to be that safety net when the private sector is not there for them. And then many of them go back to their junior high or high school and run for a student body position. 

And that makes me so proud that they feel like they can be a leader and they are able to contribute to their school and to society. So I think number one, we should take more interns, give them that first opportunity to see whether they like something. Your company, banks, governments, and then we have student intern positions where we actually pay students who are going to college. And so that’s a good way to bring young people in to see if they’re a good fit and a good match. And then later on, be a mentor. People always ask me, oh, how do I do this? Or if I’m interested and I say, okay, keep in touch with me. The best way is to shadow me. So join me at different events and then see how and what I do. So I think there’s a number of ways. And then once they join us, obviously they want to have a certain amount of freedom in terms of creativity. We were talking about this with you. They always say, well, why do you do it like that? And then what do you say? Because it’s always been like that. 

Julia Kim (20:42):
Yes. And it’s just trying to think of new and innovative ways to approach the same concept. 

Fiona Ma (20:48):
And these young people need to be convinced they don’t want to just follow the leader anymore. And that is also a little bit interesting. And for people in government, we don’t do this for the money, even though people, when we poll Pew, researchers did a poll and they say, well, what do you think about your elected officials? And they say, oh, they just are doing it for the money. Okay, I am the banker of the fourth largest economy. Last year we handled $3.7 trillion. I get paid $170,000, take out 40% in taxes, and you can figure out what my net is. I don’t do this for the money. And people in government should not be doing this for the money. It really is about public service, about serving the public and working 10 or 20 years so that we have a nice retirement, we have medical benefits. That’s the trade-off of working in government. I think when some people start working for me, they always compare themselves to their friends who are in tech. How come they get paid six figures? Well, you can go and work in the tech sector then, but this is government. So I think that’s one of the struggles that we have. 

Julia Kim (22:10):
Yes, and certainly after the pandemic priorities change whether you were young or older, and that certainly made for people wanting a better work-life balance. And again, bringing the idea of how many days do you work from home and in the office. So as this is your second term as treasurer, what are some of the skills and qualifications that you’re looking for in our next treasurer? 

Fiona Ma (22:38):
Well, I’m a pretty hands-on treasurer, so I chair a lot of my boards and commissions, especially during COVID. So in order to keep everything moving, I would come to my office with my tech team and everybody else could zoom in to make sure that we had quorum and we could continue to issue bonds or make sure that affordable housing, they’re still able to get the tax credits and the bonds, et cetera. So I am looking for a treasurer who is going to be more hands-on who is going to care about the office and the responsibilities. I think the treasurer’s office is one of the most important positions in government, but we don’t get a lot of credit. And so to the extent that someone understands and they’re going to take this job seriously, that’s the person I’m going to back.

Julia Kim (23:34):
I think we all feel that way as well in this room. So I think we have time for a couple of questions from the audience. Is there anyone that would like to ask the treasurer a question? 

Julia Kim (23:51):
All right. Well, I think that means you’ve covered it very well. 

Fiona Ma (23:54):
There’s one in the back. It just takes a little while. 

Audience Member 1 (24:03):
We all love LAIF and our LAIF returns. When will we get to increase our balances there? 

Fiona Ma (24:11):
Is that a LAIF question? 

Audience Member 1 (24:13):
When will we be able to increase our deposits in LAIF? 

Fiona Ma (24:17):
It never fails. It never fails. Okay, Juan. Juan, where’s Juan? Juan Fernandez. There you go, Juan. 

Juan Fernandez (24:31):
So I don’t know when we’re going to be able to increase the LAIF deposit maximum amount, but happy to talk to you about that after this session with the state, there are significant risks to increasing the LA maximum deposit as one of the great things about LAIF is that you can call us by 10 o’clock and the same day you have your cash. Okay? So happy to talk to you about some of those things, but we also need to make sure that we are protecting the PMI account. So we’d love to have a discussion with you and see how we can achieve that. Okay? Okay. 

Fiona Ma (25:10):
Yeah. And when I got elected five years ago, that was the question, why can’t we increase? I think it was $50 million to $75 million, and we said, okay, we’re going to do it to $75 million. And now folks want it to be a hundred. I don’t think we’re at a hundred right now, but the concern is if everybody starts taking out the money at the same time, look what happened at Silicon Valley Bank. And so we are bankers, and so we’re a little bit more risk adverse. We have to think about the future and what’s going on. But before COVID, I was working with a number of you, you volunteered to work with us and to try to figure out some guardrails that if we increase the amount you invest with us, there has to be some guardrails for you all to be able to withdraw it. We can’t have everybody taking all their money out on the same day, for example. So we should probably continue that stakeholder working group. 

Any additional questions? Yes. 
So at this point, you have a lot of tethers to the federal government, whether it’s ARPA, the next round of IIJA and being hopeful about IJA. How do you see California using those federal funds? Are you hopeful that they’re going to be used in a very specific way? Do you think that instead… 

Fiona Ma (26:43):

Julia Kim (26:44):
California’s good on its own? 

Fiona Ma (26:46):
No, we definitely want the federal funds. Two days ago, it was announced that the Department of Energy was going to give one of our hydrogen hubs certain amount of money. We competed against other different states. And so we’re very, very happy that the federal government, number one, is making us compete. That brings people together, that increases, sharpens our knives, so to speak, so that we can think better, bigger, and outside the box. And I think we are good at that. When you put us up for a competition because of Silicon Valley, because of the ingenuity that we have and the diversity that we have here in California, we do win Department of Energy grants. For example, one of the former heads of the Department of Energy now has expanded to California, opening up a big factory here to have one-stop shop, integrated battery manufacturing production, the cells as well as ready to insert into the vehicles. I don’t know how you call that, but that’s the first time. And because of his relationships with the Department of Energy and our governor’s executive orders, people are now coming out here with those same relationships. And this is the people business. Why do you do business with who you do business with? Well, long term relationships, trust, and it’s the same thing in government as well. So to the extent that we’re attracting the best and the brightest, we’re going to continue to get money from the federal government. 

Julia Kim (28:32):
Any last questions? All right, well, before we wrap up, what is next in your journey after state Treasurer? 

Fiona Ma (28:45):
Well, California, we all have term limits pretty much here. And so my term will be up in 2026, and I will be running for lieutenant governor in 2026. God willing. So this is not the last of me. 

Julia Kim (29:02):
Well, thank you again State Treasurer Fiona Ma and The Bond Buyer. Up next, we will hear from an expert panel on the State of the Union. So we hope everyone enjoys the conference. Thank you.

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