PA Rainy Day Fund gets a reshuffle, new investment strategy

28 November 2023- Treasurer Stacy Garrity today announced that the Pennsylvania Treasury Department has created a new investment pool dedicated exclusively to the Rainy Day Fund. The new pool is designed to create greater investment returns while maintaining necessary liquidity.

“The General Assembly has done an outstanding job of adding to Pennsylvania’s Rainy Day Fund over the past three years. Now, with $6.1 billion saved for the future, it makes good sense to implement a new investment strategy. Creating this stand-alone investment pool allows us to build an even stronger financial foundation for our Commonwealth.”
 Pennsylvania State Treasurer, Stacy Garrity

In January 2021, the Rainy Day Fund balance was $240 million, which was only enough to operate the state for about two days. Since then, three major deposits have bolstered Pennsylvania’s reserves: $2.6 billion in September 2021$2.1 billion in September 2022, and $900 million in November 2023. Assets now total more than $6.1 billion – enough to keep the state running for more than 48 days, above the national median of 44.5 days.

The new pool will invest in Treasury’s Consolidated Cash Pool, U.S. Treasury and federal agency securities, investment-grade corporate bonds and other fixed-income securities, all with maturities of less than three years.

Prior to this change, the Rainy Day Fund was invested in Treasury’s Liquid Asset Pool (formerly known as the Short-Term Investment Pool), which is much like a money market fund with investments limited to short-duration fixed-income assets like certificates of deposit, commercial paper, and other highly liquid instruments.

The strength of the Commonwealth’s reserves contributed to Moody’s recent Rating Action which upgraded the outlook for Pennsylvania from stable to positive, while maintaining Pennsylvania’s Aa3 rating.