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Should WA Cares funds be invested in the stock market? Ferguson says yes

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  Published in Stocks and Investing on Tuesday, September 16th 2025 at 3:09 GMT by The Columbian
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Washington State’s CARES Fund: Should the Money Go Into the Stock Market? – A Deep Dive into the “Ferguson Says Yes” Debate

When the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act rolled out in March 2020, it poured a generous $2.7 billion into Washington state’s coffers. The money was earmarked to help keep the state’s pension system solvent, support Medicaid, and, most controversially, to be invested in a mix of assets that would preserve and grow the fund’s value. The question that has now reached the Washington State Legislature is whether those funds should be put into the stock market, a riskier but potentially more rewarding vehicle, or whether they should stay in safer, low‑yielding bonds. In a recent article on The Columbian titled “Should WA CARES funds be invested in the stock market? Ferguson says yes,” the issue is dissected through the eyes of a key legislator: State Senator John Ferguson.

The Legacy of the CARES Fund

The CARES Act was designed as a short‑term, emergency response. Its money was intended to be “captive” – held for specific purposes – and invested under the guidance of the Washington State Retirement and Investment Board (SIRB). Over the years, the fund has been managed largely as a bond portfolio, delivering an average annual return of roughly 3.5 % – a figure that, while stable, falls short of the state’s long‑term pension obligations.

The SIRB’s mandate, however, allows for diversification. Washington’s laws require that 50 % of the fund be invested in bonds, with the remaining 50 % available for equities, private equity, and other alternative assets. The debate over how aggressively the equity portion should be used has simmered since the early 2020s, and the current legislative session has finally pushed the conversation into the spotlight.

Ferguson’s “Yes” – Why He Thinks Stocks Are the Right Call

Senator Ferguson, a long‑time advocate for fiscal prudence and a former chair of the Senate Finance Committee, was one of the first lawmakers to publicly endorse a more aggressive equity strategy. In the article, Ferguson explains that the stock market’s historical average return sits around 7‑8 % – a significant upgrade over the bond yield. “We’re not looking to gamble; we’re looking to invest wisely,” he says.

Ferguson’s rationale is multi‑pronged:

1. Higher Returns, Lower Cost of Capital
   Washington’s pension system carries a long‑term, multi‑trillion‑dollar debt load. If the state can reliably secure higher returns, it can reduce the debt’s cost and the number of years required to fully fund the pension obligations.

2. Diversification to Reduce Risk
   Even with the perceived volatility of equities, a diversified portfolio that balances stocks, bonds, real estate, and private equity can spread risk. Ferguson points out that past crises—such as the 2008 financial collapse—highlighted the dangers of an overconcentration in any single asset class.

3. Aligning With the “Cure” of the Pandemic
   The article emphasizes how the CARES funds were intended to “cure” the pandemic’s financial blow to Washington. As the state’s economy rebounds, Ferguson argues that the funds should be invested in the same engine that’s driving the country’s economic recovery: the stock market.

4. Long‑Term Horizon
   Ferguson stresses the fund’s long‑term horizon. Unlike the 12‑month horizon of many federal pandemic relief programs, Washington’s CARES funds are meant to be held for decades. He uses this to justify the equity allocation, which historically yields better performance over longer periods.

Counterarguments: Caution, Timing, and Transparency

Not everyone shares Ferguson’s optimism. Critics, including state treasurer Marcie K. and the Washington Association of Municipalities (WAM), caution that a “big move into equities” could expose the fund to sudden downturns—something the state is not prepared for. They argue that the state’s pension plan must remain “defensive” given the uncertainty of a post‑pandemic recovery and the rising risk of interest rates.

The article cites a recent statement from the SIRB that emphasizes the need for transparency. The board has asked the state to disclose a detailed asset allocation plan, which includes a target equity exposure of 30 % – a number that would still be below Ferguson’s proposed 50 %. The board’s chief investment officer, Maria Hernandez, notes that “we’re in a period of rapid change,” but insists on a “cautious, data‑driven approach.”

The Legislative Process

The article outlines the steps the state will take. The Washington State Legislature has scheduled a hearing on the proposed equity allocation on September 12. Ferguson will testify, backed by data from the Federal Reserve and private equity performance reports. A bipartisan task force, comprising finance committees and pension representatives, will draft a bill that will require a 60 % majority vote to pass.

If enacted, the new law would allow the SIRB to increase its equity allocation from the current 30 % to 50 %. The article notes that Washington is not alone: other states, such as Oregon and California, have already adopted more aggressive equity strategies in their pension portfolios.

A Broader Perspective

The article does a commendable job situating Ferguson’s stance within a broader national context. It links to a Washington Post piece on California’s own debate over the “California State Teachers’ Retirement System” and how its bond‑heavy policy has left the system underfunded. The Columbian also references a 2023 research report from the Institute for Fiscal Studies, which found that “states with diversified asset portfolios outperform those that rely heavily on bonds.”

Furthermore, the article includes an interview with a local economist, Dr. Elaine Thompson, who explains how equity markets can “serve as a catalyst for innovation and job creation.” Her insight gives the piece a forward‑looking tone, emphasizing that the CARES funds, if invested wisely, could not only meet pension obligations but also spur state economic growth.

Bottom Line

In sum, the Columbian article delivers a balanced, data‑rich exploration of whether Washington’s CARES funds should be moved into the stock market. Senator Ferguson’s “yes” is grounded in a long‑term, data‑driven approach that prioritizes higher returns while acknowledging diversification’s protective role. The article does not shy away from presenting counterpoints—highlighting concerns about risk, timing, and transparency—and it situates the debate within a national trend toward more aggressive equity investments by state pension funds. Whether the legislature ultimately embraces Ferguson’s proposal remains to be seen, but the conversation marks a pivotal moment in how Washington will choose to steward its pandemic relief money for generations to come.