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Manager Insights

Rainy Day Reserves

Manager Insights White Paper Fixed Income
November 2019
Rainy Day Reserves

We explain the impact of the global financial crisis on rainy day reserve funds and why one size doesn’t fit all.  

Predicting a recession is next to impossible. Thus the importance for reserve funds. States can use surplus revenues to fund education, unemployment insurance and Medicaid initiatives in the event of a recession. However, determining when to build these reserves and how much to allocate to them is dependent on a number of factors, including each state’s revenue structure and financial flexibility.