Colorado State Treasurer Cary Kennedy echoed a common reprise of sobering fiscal reality — but with hints of optimism — for the South Metro Denver Chamber of Commerce.

“It’s been an incredibly challenging time, as you can imagine,” the official said of her first three and a half years as Colorado’s top investment strategist. “As you all know, [this has been] one of the most volatile times in our nation’s history.”

According to the first-term Democrat seeking re-election, Colorado and the state treasury she oversees have fared better than most other states around the country.

“We’ve been able to maintain a balanced budget. We’ve been able to do that without borrowing,” she said. “We’ve just had our credit rating upheld as a state at a time other states are being downgraded. What that means is we’re able to attract investors.”

Kennedy discussed the state of Colorado’s finances with about 20 local business leaders on June 15 as part of a series of candidate forums being held at the chamber’s Centennial headquarters.

Despite its importance, the Colorado Treasury is an often overlooked area of state government, especially in an election year when races for governor and U.S. senator are making headlines.

Although the treasurer does not set policy per se, the position oversees a $6 billion investment portfolio, develops financing for infrastructure projects and administers Colorado’s unclaimed-property program, among other functions

According to Kennedy, some of her predecessors in the treasurer’s office have made investment decisions that were too risky considering the important functions served by state tax dollars.

“We pay the teachers. We pay the nurses and hospitals. We pay the folks on the road crews. There’s just a high fiduciary responsibility over making sure you’re not putting that money at risk,” she said.

Since taking office, Kennedy said she has imposed stricter investment standards — including the cutting out of derivative investments and eliminating a program that placed a third of Colorado’s investments on loan to one bank.

“When I came into Treasury in 2007, I certainly didn’t foresee how bad things were going to get. But I took steps in that year to reduce the risks we had,” she said.

According to Kennedy, her revamped investment decisions have paid off for Colorado through $177 million in 2009 investment earnings and more than $100 million in earnings so far this year.

“That’s money we could use to avoid deeper cuts in the budget, and that, in essence, is the role and responsibility of the state treasurer,” she said.

To bring greater transparency to such decisions, one of Kennedy’s first major actions as treasurer was to post Colorado’s investment portfolio on her office’s website. She has also included details of state expenditures.

“If you want to know how much Office Depot got in state tax dollars last year for office supplies, all you got to do is go into that search engine and type in ‘Office Depot.’ It’s complete transparency on how every penny of public tax money is used,” Kennedy said.

The incumbent treasurer has been involved in Colorado fiscal policy for 15 years. Before being elected, she worked in Gov. Roy Romer's budget office, served as a budget analyst for the state Department of Health Care Policy and Financing and was a policy director for then-House Speaker Andrew Romanoff.

In November, the Democrat will face the winner of an increasingly contentious Republican primary. Both of the remaining GOP candidates are Arapahoe County residents — investment banker J.J. Ament and real estate investor Walker Stapleton.

At a forum in March, the two Republicans were critical of Kennedy’s record. Ament charged the Democrat with being too tied to the policies of outgoing Democratic Gov. Bill Ritter.

Kennedy would not comment on either of her potential challengers.

“I don’t know who my opponent is yet. I don’t want to comment until we know who’s running against me,” she said.

Kennedy said party affiliation has little to do with the treasurer’s responsibilities. For example, she said the committees she has appointed have all been bipartisan.

“This is not a political office, nor should it be, Kennedy said. “Protecting Colorado taxpayers’ money … investment services and programs for the taxpayers of Colorado that make sure we can maintain liquidity and access to to the capital markets. … It’s absolutely not a partisan issue.”