The Treasurer and Receiver-General is an elected, constitutional officer of the Commonwealth. The Treasurer has direct jurisdiction over the Office of the Treasurer and the Emergency Finance Board. In addition, the Treasurer is the chairman of the State Lottery Commission, which is within the Office of the Treasurer. Although not under the direction of the Treasurer, the Massachusetts Cultural Council is also budgeted within the Office of the Treasurer.

The Treasurer's Office is responsible for a variety of critical financial functions, including: receiving and managing all monies paid to the Commonwealth; issuing and managing the state's long-term debt; issuing short-term debt and managing the Commonwealth's cash flow; paying retirees and investing the state's pension funds; and, in concert with the Comptroller's Office, processing and paying the Commonwealth's bills.

The State Board of Retirement administers the pension system for state employees and retirees. The Commonwealth's pension obligations include: retirement benefits for retired state employees and teachers; payments to municipalities for book-to-market losses incurred by municipalities that joined the Pension Reserves Investment Trust Fund; and retirement benefits for certain classes of non-contributory employees. In Fiscal Year 1997, the Commonwealth's two pension funds, the Massachusetts State Teachers and Employees Retirement Systems Trust (MASTERS) and the Pension Reserves Investment Trust (PRIT), were merged into one fund. This merger is expected to yield savings of approximately $15 million in the first year due to reduced management fees, and will also help reduce the pension fund's unfunded liability. In addition, in Fiscal Year 1998, the Teachers' Retirement Board, which administers the pension system for the Commonwealth's public school teachers, and the State Retirement Board, which administers the pension system for state employees, will be moved off-budget and will receive their funding from the investment income of the new merged pensions fund.

The State Lottery Commission was established to raise revenue to be distributed to cities and towns as unrestricted local aid. In Fiscal Year 1998, the Lottery distribution will increase by $55.5 million to a total of $539.7 million. This increase is a result of the agreement to eliminate the cap on the amount of Lottery revenue distributed to cities and towns, and additional revenue growth due to increased instant ticket sales and the implementation of the multi-jurisdictional lottery game. The Lottery's recommended appropriation in Fiscal Year 1998 includes additional funding for the replacement of lottery vendor signs and the partial restoration of the Lottery's advertising budget. In Fiscal Year 1998, the accounts for Keno, advertising, and health and welfare benefits will be consolidated into the Lottery's main administrative account.

The Massachusetts Cultural Council operates educational programs in the arts, sciences, and humanities; and provides financial support and technical assistance to local arts councils, cultural organizations, and individual artists. In Fiscal Year 1998, the Massachusetts Cultural Council will receive an additional $1 million to fund increases in three programs: the Cultural Economic Development Program, which generates significant returns for communities by supporting partnerships between cultural organizations and other private or public organizations; the Science in the Community Program, which fosters out-of-school science activities for youths in pre-Kindergarten through grade twelve with the primary audience being youth-at-risk, under-served groups including minorities, people with disabilities, rural and low income populations, girls, and scientifically talented youth; and the Education Partnership Initiative, which offers grants for multi-year collaborations between cultural organizations, schools and businesses to support activities that integrate the arts into the curriculum, as required by the Education Reform Act of 1993. The increased funding will also allow the Massachusetts Cultural Council, in conjunction with the Executive Office of Elders Affairs, to initiate a program to develop partnerships that promote cultural activities and services for elders.

In Fiscal Year 1998, the year the Commonwealth retires its last Fiscal Recovery Bond, debt service requirements are projected to decrease by 2%. This will result in a $26.2 million reduction from Fiscal Year 1997 appropriations.

Budget Recommendations

The amount recommended for Fiscal Year 1998 will enable the Treasurer and Receiver-General to achieve its missions as outlined above.