- Hello and welcome to C Net's 2024

Primary Election coverage.

I'm Geoff Rushton of state college.com,

and today we're profiling the Race

for Pennsylvania Treasurer.

With me today is a Democratic candidate,

Erin McClelland. Aaron,

thanks for joining us.

- Absolutely. Thank you so

much for having me, Jeff.

- So Aaron, to start, can you

tell us a little bit about

your background and,

and why you're qualified to be treasurer?

- Sure, sure. So I grew up in

a great little working class

steel mill town in the outskirts

of Allegheny County, just

outside of Pittsburgh,

where we still have a,

a fully functioning steel

mill, if you can believe it.

And about 5,000 steel workers

in my house district alone.

And I come from four

generations of organized labor.

So that's just a little bit

about where I come from.

I have a master's degree in

industrial organizational

psychology, which is really the study of

how big systems behave, which

is really part of why I'm,

I get so fascinated with

government and it's functionality.

I, I spent a year training

on process improvement

with former US Treasury

Secretary Paul O'Neal.

After he left the treasury,

it was around 2003.

I did a lot of learning under him.

We were working with organizations

that were collaborating on

eliminating medical errors

and big hospital systems and,

and solving a lot of issues in that area.

I also started a small business.

It was the first and only

medical center for addiction

and mental health of

its kind in the state.

Raised about $2 million in

venture funding for that.

And that program was actually

featured twice in Industrial

Engineer Magazine for some

of the p pioneering efforts

we were using in treating the

human condition as, as a

whole concept as opposed

to just the addiction.

And I spent nine years

as a process improvement

consultant at Allegheny County

and got a real, real frontline look at

how pensions were managed

and at times mismanaged.

So as a somebody who's been

a public sector worker,

protecting those three pensions is

very, very important to me.

And that's something that I think we need

to work really hard on because

they're definitely under attack.

- Alright. You know,

some voters may not have

a clear understanding of

what certain row offices do.

Yeah. How would you explain

the most important duties

of the state treasurer?

- Sure. The biggest thing

is the treasurer manages

what we call the four funds.

So you have three pension

funds, your teacher's pension,

the state pension, and the

municipal workers pension.

And then you have the 5 29 accounts,

which are your college savings accounts,

the PA able accounts, which

are the savings accounts

for our disabled.

And in addition to that, other,

other funds that we manage,

for instance, the fund that holds all

of our medical marijuana income,

because that has to be

kept separate from the rest

of the money equates to

about $163 billion as

of the last asset report,

which was in December, I think,

December 15th that came out.

So that's one of the biggest

issues, is controlling where

that money goes, how it's invested,

and what values we're really

infusing into that treasury

with how we manage money.

In addition to that, the

treasurer writes the checks

and traditionally the, the treasury used

to be a little bit more of a watchdog.

The first woman that

that ran our state treasury

was a woman named Grace Sloan.

And she actually would withhold

checks when she felt either

the funding violated the

law was unconstitutional,

or there were issues with

government agencies and their performance.

She would hold back the check

and she constantly found

herself in court fighting

with the governor and she typically won.

So I, I always liked that

aspect of it, taking more

of a watchdog approach to

how that money's spent.

Really, when you look

at things like, say the,

the voucher bill that you're

seeing being proposed in the

state, it's the treasurer

that writes that.

So it's the last line of defense

before that money goes out the door.

So I take that responsibility

very seriously.

In addition to that, and

the treasurer oversees all

of our contracts, so they

do request for proposal.

And right now, when you get on the website

to look at different contracts,

it really doesn't classify

them in more detail.

And I would love to see

us start to expand that

so we can see whose union

and non-union, you know,

minority owned businesses,

women owned businesses,

size of the business to see

what are small and what are larger.

So that's another thing.

And then by extension,

because you are controlling

the contract oversight,

you're also controlling a lot

of the procurement process.

So when you look at

the state supply chain,

and we hear the word supply

chain nonstop these days

after the pandemic and all

these supply chain issues.

And we see a lot of reforms in

the federal government now on

what we can buy and

where not buying conflict mind materials,

not buying products from

the Shong province of China

where 1.2 million people

are enslaved labor camps.

These are things that the

treasure has the option

of weighing in on, getting

vendor lists to all

of our municipalities so they

know what are good places

to buy these things that keep

our workers' values in mind.

So those are just some of the base ideas

of what a treasurer does.

I think there's a lot more

opportunity with the job,

but that's what it has

traditionally looked like.

- You mentioned something

I wanted to ask you about.

You, you've talked about

rebuilding the supply chain. Yeah.

As treasurer, you know, can

you expand on a little more on

how you would go about doing

that in, in this position?

- Yeah, so what we're seeing, and,

and I saw this actually in my backyard.

We had a local municipality

get in inflation reduction act

money and used it

to put solar panels on a local

municipal building, which is great.

We're all for that. Unfortunately,

they didn't build in any

of the restrictions on where

we buy the solar panels.

Were not anywhere near made at the,

the level in the

United States that we

would need them to be.

There's no solar panel

that's fully made here yet,

but at least doing something

along the lines of keeping part

of the materials made here,

that was not done at all.

There was no background looked into that

because there was no

resource to say, okay,

we got this money now

here's how you spend it.

Also, in that case,

those solar panels were put

on by non-union workers.

So that was also a concern

when we do the, like the Solar

for Schools bill, there was no

PLA in that bill to make sure

that the work was done on a certain level

and using qualified contractors, you know,

responsible contracting ordinances.

Really basic things that

demonstrate our value

for working people and

how we elevate standards

more than other countries.

So as a treasurer, I think

that the responsibilities,

when you know that

federal money's coming in,

then you have an obligation

to say, all right,

these are vendors that we've

already vetted for you.

Make sure when you do it, you

do it with this kind of PLA

and we can make, make recommendations

to the legislature when

they're passing these things.

I think that supply chain reform

and trade is, is, it's a new thing.

Again, we're bringing that idea back.

We haven't done real trade policy,

which has been dissipating

since we went into a trade

deficit in 1971.

So we've have to reinvent

what that looks like

for the 21st century.

And I think as treasurer,

it's a passion that I have

and I'd love to take that on

and support our

municipalities as they're

spending that money.

So they're doing it according

to our standards. Right.

- You've also talked about public banking.

How would that work? And you know who,

who would benefit from that?

- Yeah, so obviously

after the pandemic, we know that the Bank

of North Dakota was able

as, as the state is,

the nation's only public bank

was able to do a lot more

with Cares Act money be

because they're already

set up to function as a,

as a mechanism that delivers

money to the people.

So there's been a lot of

conversation about that. Yeah.

In 2021, I did a deep dive in some

of the feasibility studies

and what it would take,

including one in Philadelphia.

Since then, we have seen a number

of cities put public banks in place.

We haven't seen one

done at the state level.

I think it's a fascinating conversation

because we do have so much money

that comes into our municipalities.

So if you look at just our

class one townships alone,

you're looking at $1.6 billion.

Now what we do know is the two big

to fail corporate banking

system doesn't really serve

municipal banking the way they need.

It's, it's a burden actually

for commercial banks

because they have to

keep more of that money

because it's public money

and they can't lend it all

out like they normally would

with your deposits or mine.

So it's a little bit more of a burden

and they don't actually like it.

I think that we could do better banking

for our municipalities, lower

interest rates on their loans,

looking at how we manage the

Penn best money that way.

And when you're just looking

at Class one townships,

then you start bringing

in cities and boroughs

and you're looking at a lot of capital

that we could really do a lot of good with

and then possibly look at

a lending program later on

once it stabilizes.

It's a heavy lift and

it's a long conversation,

but I think it's worth being at the table.

We see state treasurers all

over the country having this

conversation and seeing if

this is a viable option.

I'm not sure if it is or not,

but I think the conversation

is worth having.

- What efforts would you want to undertake

to protect the pensions of

public service employees?

- Well, the biggest

issue I have is, in 2003,

the Bush administration did

a lot of deregulation on

what you could do with any

fiduciary responsibility account

that that was workers'

retirement, for instance, it used

to be illegal to put money in commodities

because they're not really supply

and demand oriented stocks.

They're all based on speculators.

And by the way, at the

time, he also deregulated

what it was, what was required

to be an oil speculator.

So they literally, the,

the whole commodities market

really in the interest

of controlling the oil

prices and oil supply.

So now you can put commodities into,

or I'm sorry, pensions

into pretty much anything.

Just because you can does

not mean that you should.

So I wanna go back to a

little more of the standards

that we had that kept our

pensions stable for decades.

You know, we've seen a huge pension

crisis in public sector workers.

Now, part of that is the

legislature not putting the annual

required contribution in for years.

And I'm gonna put a, a lot

of pressure on the state

to start listing the

money that they still owe.

The pension system, you know, we see

that in the federal government

with social security

where we know the government

has borrowed from the people

and they put IOUs in there,

but we don't see them

on the treasury report.

That's why Paul O'Neill got fired.

I wanna see that at the

state level. That's an IOU.

You owe those workers. I

want that on our budget.

I want it shown as a liability,

and eventually I'd like that

money paid back to the workers.

- Would you like to see the

state get involved in offering

any kind of retirement

savings program to people

who don't have access to a

pension or 401k otherwise?

- Oh, absolutely. And I

actually have a plan for that.

But I, one of the biggest things

is I am absolutely against

the Keystone Saves program,

which both my Democratic

and Republican opponents have supported.

She has publicly supported it.

My Democratic opponent voted

for it in the legislature.

This is a saving scam.

It is a self-directed

IRA, which the Securities

and Exchange Commission came out

with a fraud alert on it

saying, don't do this.

And it's highly susceptible to fraud.

Second of all, this program

would be mandated on every small

business in this state that doesn't

currently have a retirement.

And on top of that,

they would be pitching

this high risk product

that is not stable, which,

by the way, is not regulated

by ERISA protections in

the federal government.

Now, that's basic retirement oversight.

The legislation actually

says this program would not

be subject to those rules.

And in California, this

program is now in court

as they're debating who

they would sue when people

start getting ripped off.

I don't think that's the type

of thing we should be forcing

on bartenders and baristas.

But I do encourage savings,

and I think there's a lot

of better products that we could do.

We need to give workers an option.

We would want to work with

stable financial institutions.

We aren't a bank yet. If

we could, we could do that.

But as just a state entity, I

would rather work with good,

stable financial institutions

to do a good product

where the worker would have

an option to communicate

with the investor.

Right now what's happening

with this program is they can't even

contact the fund manager.

They have no idea what

this money's going into.

So I think I, I call

that program the George W. Bush

Great Recession starter kit.

I think it's a train wreck.

It's a travesty that,

that anybody in either party

would put this forward,

and I wanna make it make sure

that it never sees the light of day.

I also wanna make sure that

we're not following the same

trends we saw back in the late nineties

and two thousands where both

parties were just deregulating

doing unbelievably irresponsible

financial policy, which led

to the 2008 collapse.

A lot of that stuff has not been

undone, that's still out there.

So I think our treasurer needs

to be in this society in this day

and age, a watchdog

for exactly what's

happening on Wall Street

and how they're looking to take

advantage of working people.

And this product is exact, that's exactly

what this is, right?

- The treasurer has the

power to direct investments

for a very significant amount of money.

What kind of factors would guide

your decision making in, in

where those investments go?

- Sure. Well, first of all,

there is this new phenomenon

where we use pension dollars

and public coffers to fight foreign wars

and make political

statements on foreign policy.

I think that's completely

inappropriate and irresponsible.

I'm the only person in

this race who came out

and said, we should not

be using pension money

to invest in Israeli bonds

or any foreign holding.

We don't have national security briefings

to know what's going on there.

What I do know is last March,

because of what was happening in Israel

and what they were doing

in their judicial system,

there was, there was some, some

reforms that they were doing

that the people were not supporting.

You saw a nationwide workforce

strike in their public sector

workforce that went on

throughout the summer

where the hospital workers walked out.

So you have massive

destabilization in that region due

to their own domestic strife.

So it really wasn't surprising to anybody

who was following it

that there was an attack

because they were distracted,

they weren't paying attention

to what was going on.

Well, as soon as that happened,

the destabilization plus the attack led

to the rating agencies to put

their credit under review.

Now see, that's a warning sign

for me to pour our money out.

Our treasurer put more money in

and rah rah rah, let's fight wars.

No, you know, that's what

the federal government's for.

That's what the Department of

Defense based budget is for.

If you wanna get that money

through Congress, go ahead.

We shouldn't be doing that for workers.

And unfortunately, their credit was

for the first time

downgraded early this year,

as was the credit of five of their banks.

This is highly unstable. They are, yes.

They're given a good yield because they're

taking on a ton of debt.

And the other concern I

have is how they're insuring

that debt, which last

I checked was about 80%

with credit default swaps.

So, you know, 2008 called,

and they want their financial ideas back

- More broadly, the treasurer,

as you mentioned, overseas,

more than $150 billion in state funds.

How would you ensure transparency

and accountability for how

your offices is managing that?

- Sure, and, and that's really important.

And here's the first thing we use.

We are, politicians say the

word transparency all the time.

What they really mean is

transparency. When it's convenient.

The issue with transparency is,

and it is only truly a value

that is baked into your

constitution if you use it

when it is inconvenient.

If you look at our current asset report,

it's all this great flowery

stuff about how everything is

so wonderful and

everything's doing so well.

Well, where's the

opportunities for improvement?

Where's the report on

things that didn't go well?

We ask that of our

corporations all the time,

but when we put out an asset

report for our state treasury,

it simply just says that

everything is phenomenal.

And I don't buy that. You know,

and everybody makes mistakes,

and you have to come forward

and say, okay, this didn't go well.

This is how we're gonna fix it.

I think a big part of why

people don't trust government is

because we are in a political climate

where everybody is afraid

to say, yeah, you know,

that didn't work out well, but here's

what we learned from it.

You can't learn and adapt as a system

and get better, be better

tomorrow than you were yesterday

if you don't accept your mistakes and,

and really learn from them and

show, this is what we found.

Like we don't have any learning from

what past state treasurers did

because they never share that learning.

And I think that that, that's tough.

It's hard to be a true, honest broker,

but that's really, really

an important aspect

of character for this job.

And that's a big part of

what I wanna do is talk

about what's working,

but you know, what else isn't working.

So yeah, transparency is a

really, really big thing.

But unless you see somebody

do it when it's inconvenient,

you're not really testing

how much they truly value it.

Okay.

- This is a little off the monetary path,

but the current treasurer banned TikTok

from her staff's devices.

Sure. And there's a state

senate bill that proposes doing

that for all state owned

devices and, and networks.

Do you support or oppose such a policy?

- I, I, I probably would not

have social media outlets

on any state phone.

You know, this is, this

is something paid for

by the taxpayers, so you

probably shouldn't be doing that

unless, you know you

have a specific person

that's on a laptop doing stuff

on behalf of the treasury.

So I don't see why we should have

social media on state phones.

However, I, I'm not supporting

a public ban of any kind on,

you know, a universal one that

that's a free speech issue.

And, you know, we can say

some of the same things about

what happened with Facebook

and all the CrowdStrike

stuff in the 2016 election.

I mean, that, that went nuts.

So this is sort of the

world that we live in.

And I don't know how much,

like going after one outlet

or another is going to be helpful.

However, I, I do, I do

support the idea of Jeff.

Jeff ya is a huge donor, or

I'm sorry, investor in TikTok

and the less money he makes,

the better for the Democratic party.

So I'm all for that.

- Can the Treasury do more to return or

or deliver unclaimed

property to its owners?

- So Abso absolutely.

There's always room for

improvement in any system

where you have a gap on the cycle time.

And that's what, that's

supply chain, right?

So you get money from a bank

that somebody has forgotten about

or an insurance check that

they didn't cash, right?

That comes in. The question is,

and this is what I would do

using the process improvement

strategies I've learned

and used in government in

the past, the goal is to get

that money the minute we know

that it exists, to get it

to the person as fast as possible.

The idea is to get it there

immediately in real time.

Now what I would do is I

would start with, okay,

what money's been sitting

there a really long time?

The stuff that's been there

the longest start there,

work backwards and slowly.

And what you do is, let's

say the cycle time on this

particular check was 10 years.

Okay, let's get that out the door

and then let's keep shrinking it

and shrinking it, shrinking

it until we get something

that is almost immediate.

That's the idea with any supply

chain, getting it as close

to real time as possible.

And that's something that I

have been highly trained in

and experienced in, and I'm the

only one in the race that has.

So yes, I would apply those aspects

and that process to our

Unclaimed properties program.

And I also wanna point

out, I know everybody likes

to talk about this because it's fun.

You're giving people money that

they didn't know they lost.

Of course. We wanna talk

about that in politics,

what I think people need

to consider is deep down,

I don't think there's a lot

of incentive for the treasurer

to give that money back

because the state makes

money on investing it.

So I always question when somebody's like,

I'm doing this on unclaimed properties.

Are you really?

- The treasury also

manages low interest loans

for agricultural operations

and an investment poll for municipalities

- Pen invest. Yeah.

- Are there any ways that you feel these

programs can be improved?

- You know what, I haven't

looked at them aggressively in

how they operate and really,

especially Penn Vest,

that's a conversation I'm starting

to have with municipalities.

They like the program as

it sits, they really do.

But I would love to sit down

and talk to them more

about how that looks.

There's, there's only so much

you can do from the outside.

Once you go in

and you actually have the

job, then you can really start

to look at how those things operate.

But again, getting away from

a corporate banking

structure and doing more

and more in at the state

level, I'm always for that.

And I would love to see so

much more of our banking move

that way, especially

because of the cybersecurity issues

that our municipalities are really

experiencing that are very serious.

- Do you think the Treasury could do more

to support the state's college

and career education savings program?

- The 5 29 accounts that,

that's another popular one to talk about.

Right now, our 5 29

accounts are one of only two

gold rated 5 29 accounts in the country.

And that really is a testament

to a number of treasures

that have helped build it to that.

In addition to that, we have

the Keystone Scholars Program,

which automatically

gives every newborn baby,

every newly adopted child

that goes into the

system a hundred dollars.

So it's really great and that,

and that's actually

paid for by the profits

of the Treasury's investments.

I think in addition to

that, now we've seen a lot

of reforms in the federal

government of what you can do with it.

Traditionally, people

have been like, well,

I don't really know if

I wanna go to college.

Or, you know, what happens if

my child doesn't go to college

and we put all this money in there?

Well, now there's all kinds

of options that you have

for rolling it over 4 0 1

Ks IRAs, they've expanded

what you can use the money for.

So I think that as treasurer, one

of the things I would

wanna do is make sure

that people understand you do have options

if college isn't what you're looking for.

And you know, it's all kinds of post,

you know, high school education.

So there's more opportunity

there to let people know why

that program is valuable. Alright,

- We're down to about

our last minute here,

so I'll give you this opportunity

to share anything else you

would like to with the voters.

- Yeah, I, I would say

that my top issue day

one is cybersecurity.

The National Association of

State Treasurers has said that

because every treasury has

their own cybersecurity program

that is gonna fall on the

treasurer to some extent.

We just saw the Municipal Water Authority

of Aliquippa hacked by Iran,

and that was actually due

to a default password they were using.

That was 1 1, 1 1. We saw the Washington.

Yeah, that's, that's

where we're starting from.

The Washington County County

government was shut down

for weeks due to a ransomware attack,

which cost them I think $350,000.

Chester lost $400,000

in a phishing scheme.

I believe this is the

definition of the fear.

Urgency of now. And I plan

to get out of the office

and get into these municipalities

so we can support them.

And we have over 2,500

municipalities in this state.

They are desperately in need of help.

There was just an article this week,

they're getting money from

the federal government.

They need more. They didn't,

they need information,

they need instruction.

They need a statewide alert system.

When something happens overseas

and we know that we

become target number one.

So there's a lot of work

that needs to be done there

and it is very serious.

We can't have our

municipalities being bankrupted

by foreign entities.

- Well, thank you so much

for joining us today, Aaron.

- Alright. Thank you for

your time. I appreciate it.

- We've been talking with Erin McClelland,

a democratic candidate for

Pennsylvania Treasurer.

All candidates in this

race have been invited

to take part in A CNA interview.

Election day is Tuesday, April 23rd,

and you can also vote by mail.

For more information, contact

the Center County Office

of Elections or visit

cent county votes.gov.

I'm Jeff Rushton of state college.com.

Thanks for joining us and

please be sure to vote.