Members of the Joint Appropriations Committee and the Select Committee on Capital Finance meet in Buffalo on Sept. 19. Lawmakers want to take Wyoming’s investments out of the hands of financiers who collect tens of millions of dollars in fees and bring management of those funds in house. (Andrew Graham/WyoFile)

Lawmakers who met in Buffalo on Sept. 19 are angling to bring management of Wyoming’s investments in-house — cutting out the contracted financiers who collect tens of millions of dollars in fees managing those funds.

To do so successfully, Wyoming will have to lure investment analysts from the finance industry to state government. As such, lawmakers might have to set aside their traditional disdain for high government employee salaries.

Officials in the State Treasurer’s office told lawmakers on the Joint Appropriations Committee and the Select Committee on Capital Finance that doing so will pay big dividends in cost savings and build a reservoir of expertise in managing Wyoming’s investments, which are an increasingly relied-upon revenue source for the state.

But to compete for employees with a notoriously lucrative segment of the private sector, the state will have to offer compensation packages that include performance-based bonuses modeled on those offered by investment firms, experts told lawmakers. In Buffalo, lawmakers appeared open to the idea but weren’t without skepticism.

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House Appropriations Chairman Bob Nicholas (R-Cheyenne) supported the idea but said it would be a battle with state bureaucracy to create unique compensation for investment advisors.

“That’s just the nature of working with government,” he said. “Those are bridges we’re going to have to cross.” He also wanted to avoid a “trickle-down effect” that would change the compensation of employees in other departments, he said.

But ultimately, the juice appears worth the squeeze. Every percentage point saved in management fees is equal to millions of dollars, Patrick Fleming, the Chief Investment Officer at the Wyoming State Treasurer’s office told lawmakers.

All eyes on Wyoming’s stocks and bonds

Since declines in the fossil fuel industry led to a drop in state revenues, lawmakers have begun to view Wyoming’s investments accounts and the capital gains they earn as an increasingly important revenue source. The fees the state pays investment managers — $59 million this year, according to Fleming — cut into that revenue potential.

Fleming, 58, is a Cheyenne native who spent his investment career working in the financial capitals of the world for some of the biggest names in finance before returning to run the state’s portfolio in 2015. He was optimistic that Wyoming wouldn’t need to offer the monstrous salaries of Wall Street to get good talent, he said. Instead, the state should aim to recruit people who want to work in finance but maybe don’t want the pace of life in London, Manhattan or Hong Kong. The state should aim for native sons and UW graduates, he said.

“I’m not saying that you pay them New York salaries,” he told WyoFile, “but you don’t have to.”

Fleming also said bonus packages mean the state isn’t paying managers until they’ve successfully earned far more money than they’ll be paid by growing investment earnings.

“It’s money you wouldn’t have anyways,” he said. “So it’s a no-risk scenario.”

Data recently compiled by the Legislative Service Office at the request of Senate Appropriations Committee Chairman Bruce Burns (R-Sheridan) shows the impact investment gains have had on state coffers over the last decade. It is substantial.

Since 2004, earnings on the state’s largest investment fund — the Permanent Wyoming Mineral Trust Fund — have dumped more than $3 billion into the state’s chief spending account, the General Fund. That’s merely the amount provided for under state statutes governing how much investment dividends go to spending and how much go back into growing the trust fund. During good investment years, when earnings surpass the statutorily set spending policies and the PWMTF meets its own growth obligations, additional cash becomes available for spending as well.

LSO’s data shows that since ’04 the investments have surpassed those spending policies six times, contributing more than $589 million in extra cash. Historically, lawmakers have often saved those windfalls for use in large expensive building projects like the reconstruction of the state capitol.

What percentage of investment returns should be used to pay the state’s bills and what portion should be earmarked for reinvestment remains a point of contention in the Legislature. Turning more investment earnings into budgeting money comes at the cost of padding investment funds against potential market downturns, State Treasurer Mark Gordon has repetitively warned.

Click here for a feature story on last session’s finance debates

But while lawmakers split on those policy questions, there is widespread support for eliminating the out-of-state managers whose fees come out of investment earnings.

After mineral industry taxes, investment earnings are among the state’s three largest General Fund revenue streams, said Sen. Drew Perkins (R-Casper). “This only gets bigger,” he said, “and at some point it may overcome minerals.”

Senate President Eli Bebout (R-Riverton) has indicated he sees Perkins as his successor. If so, the Casper Republican would lead a young and increasingly conservative Senate. Perkins believes lawmakers will see good reason to create a compensation package competitive enough to lure analysts and investors into government employment.

“It’s the one source of increasing revenue that you have that you don’t have to tax anybody for,” Perkins said.   

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Andrew Graham

Andrew Graham is reporting for WyoFile from Laramie. He covers state government, energy and the economy. Reach him at 443-848-8756 or at, follow him @AndrewGraham88

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  1. I have a feeling Curt Meier is not the investment genius we are looking for.

    Ironically, one of the greatest investors of all time ran for a completely different office in the primary election.

  2. Once again, Mr. Graham has made a topic with which I might not otherwise engage… engaging! Also clear, contextualized, vivid, meaningful, useful, and inspiring. Great journalism in a nutshell. Thank you, Mr. Graham and WyoFile.