Ron Elmer – Candidate for State Treasurer (D)
Thoughts on Six Key Issues
The single biggest impact the State Treasurer can have on North Carolina is by increasing the investment returns within the $75 Billion North Carolina Retirement System pension fund. Increasing returns can reduce the burden placed on state tax payers and still secure the rightful benefits earned by our faithful public servants.
Our state’s $75 Billion pension fund has performed in the bottom 22% among public pensions under 3-years of guidance by the current State Treasurer. Our Treasurer has responded by dialing up the risk in the pension fund by moving money out of low-risk bonds and into high-risk, high-cost hedge funds, private equity funds, and has even begun speculation in commodities. However, the poor performance is largely due to the $300 Million in costs of out-sourcing the management of the pension, mostly to investment managers outside our state.
The annual underperformance of our state’s pension fund, relative to the average public pension fund is 1.2% per year. That might not sound like much, but that translates into $900 million each year. To put that into perspective, the annual corporate tax receipts for the entire state amounts to $850 million. If we can just stop the bleeding within the state pension fund, our state will have many more tax reduction and spending options in its never-ending battle to boost our economy and create jobs for our citizens.
By merely achieving “average” pension returns, our State Treasurer can add almost a billion dollars to state coffers each year without raising a single tax or cutting anyone’s budget. Neither the Governor, nor the State Legislature can accomplish that – but a better State Treasurer can.
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Having taught finance at Strayer University and NC State University, financial literacy is near and dear to my heart. I have written personal finance books that are purposely short to help the average employee navigate their employer’s 401(k) plan and another on how to roll an old 401(k) into a low-cost IRA upon leaving an employer.
• Many foreclosures and personal bankruptcies are caused by predatory sales practices by rogue employees at certain lenders that encourage and enable our citizens to live beyond their means.
• A basic class in personal finance should be required for all high school seniors, in order to help our citizens avoid such problems.
• We could measure the effectiveness of such a program by tracking the number of foreclosures and personal bankruptcies in the state over time.
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I believe “The Affordable Healthcare Act” will go down in history as the greatest jobs bill in the history of our nation. Millions of people toil in jobs they hate. Many dream of striking out on their own and starting their own business. The single biggest impediment for folks that would like to quit their job and start their own business is the price and access of quality healthcare for themselves and their family. Once we take the “worry” of access to quality healthcare off the table, millions of Americans will tell their employers to “Take this job and shove it!” Not only will millions of new small businesses be created, but millions of vacant jobs will then need to be filled.
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Nobody enjoys a two-hour commute to work. Some folks might want a job two hours away, but it’s not practical. But, with better infrastructure a two-hour commute can become 30 minutes. Thus, a good infrastructure can expand individual opportunities and result in better matching of employees to jobs. Mobility of America’s workforce has been one of our greatest strengths relative to other nations. A solid, modern infrastructure can make North Carolina attractive when recruiting corporate operations centers.
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We should not allow offshore drilling in North Carolina. The risks are far too high. The recent devastation of the Louisiana Gulf Coast should be a siren of how devastating one error can be to a coastal economy. Likewise, the recent events in Japan should also be a warning for how permanently devastating one error or unforeseen event can be when nuclear radiation is involved. Fracking should not be immediately dismissed as an option in North Carolina, but should be studied further before moving forward. Decisions to frack or not to frack should be made at the local level. Clearly, we should look toward solar and wind energy for long-term, low-risk solutions.
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North Carolina needs leaders that promote transparency and do not answer to special interest groups, but instead make decisions that are best for the citizens that elect them. This can only start by eliminating pay-to-play politics imbedded in our current campaign finance structure. The public campaign finance program in place for our judicial system and certain Council of State offices needs to be expanded to candidates for all public offices. We have a public campaign finance program to prohibit insurance firms and their executives from exerting undue influence in the election of our State Insurance Commissioner. That is a good start, but this needs to be expanded further.
For example, it should be no surprise that investment managers and bond underwriting attorneys seeking business or doing business with our State Treasurer line up to make overly generous campaign contributions. While we would like to think our elected officials would decline such offers, our current State Treasurer has dozens of reciprocal relationships – handing lucrative State contracts with one hand, while accepting large campaign contributions with the other. In 2008, our State Treasurer accepted campaign contributions of almost $800,000 from outside our state. During this election, the latest campaign finance reports show our State Treasurer has raised more money out of state than in state and more from New York City than Charlotte. Thus, individuals outside our state have exerted significant influence in deciding who North Carolina elects for State Treasurer.
This deplorable practice has also lead to reduced government transparency.
For example, our State Treasurer used to publish a list of the fees paid to external investment managers. That list, showing whose pockets were lined with $220 million of state pensioner money, has not been published since 2009. That figure is estimated to be closer to $300 million today. However, a list of attorney fees paid for lucrative services such as underwriting bond deals and contracts for performing due diligence on the 240 external investment managers has never been published. Our State Treasurer’s campaign finance records show hundreds (yes, hundreds) of attorneys writing large checks to Treasurer Cowell’s campaign fund. Certain firms listed as the attorneys in prospectuses for government bond issues have more than a dozen employees that have written large checks to Treasurer Cowell’s campaign fund. Quid pro quo, pay-to-play, you scratch my back and I’ll scratch yours – call it what you want, it is alive and well in North Carolina.
I have pledged not to take a dime from any individual doing business or seeking to do business with the State Treasurer’s Office. This puts me at a million dollar disadvantage. I would not want to be State Treasurer if I had to sell my soul to get there. Unfortunately, that is the only way to get there under our current campaign finance structure.
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