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Jobs & Opportunity Index (JOI), November 2016: A Quiet Entry to the Holiday Season

The final Jobs & Opportunity Index (JOI) report from the RI Center for Freedom & Prosperity to be released in 2016 brings little change, leaving until next year information about how factors such as the problematic Unified Health Infrastructure Project (UHIP) will affect Rhode Island’s position nationally.

Of the 13 datapoints used for the index, only five were newly updated for the November report. Employment was down 365 from the previously recorded number, while labor force fell a substantial 1,758, although RI-based jobs increased by 300. (Note that these are calculated with pre-revision data for the prior month.) Medicaid enrollment decreased by 1,369 from August to September and SNAP by 667. The enrollment numbers for Rhode Island’s welfare programs will be a key variable to watch as 2016 data is completed early in the next year. Assuming UHIP doesn’t undermine data reporting to the federal government, the question will be whether increased information finds more current enrollees ineligible than connecting all of the program brings more people to benefits.

The first chart shows Rhode Island locked in the last position in New England on JOI. Although New England experienced a mix of improved and declining JOI scores, no states changed position in the national ranking. New Hampshire remained 1st in the nation, with Maine a distant second, at 20th. Vermont was right behind, at 21st. Connecticut narrowly held its 34th position, with Massachusetts next, at 35th.

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The second chart shows the gap between Rhode Island and New England as well as the United States, with the Ocean State’s lag worsening slightly in both cases. Rhode Island kept pace with New England for the gap on the unemployment rate but lost ground against the national average (third chart).

rineus-joi-2005-1116 rineus-unemployment-2005-1116

Results for the three underlying JOI factors were:

  • Job Outlook Factor (measuring optimism that adequate work is available): RI remained at 39th.
  • Freedom Factor (measuring the level of work against reliance on welfare programs): RI remained at 39th.
  • Prosperity Factor (measuring the financial motivation of income versus taxes): RI remained at 47th.
Pension Dollars

National Study Blasts Politicization of RI Pension Portfolio Management; Center renews Call for Pension Fund Protection Act

FOR IMMEDIATE RELEASE: December 15, 2016

Special Interest Politics Should Never be Investment Criteria

Providence, RI — A national report released yesterday by the American Legislative Exchange Council (ALEC) – Keeping The Promise: Getting Politics Out of Pensions – dedicated an entire chapter (p.27) to highlighting a “politically-driven decision to divest from a high performing hedge-fund” by then Treasurer Gina Raimondo. With this incident and others in mind, the Rhode Island Center for Freedom & Prosperity renews its call for legislative action that would end the cronyism and overt politics that has caused instability to the retirement-security of public employees and that has exposed taxpayers to further risk. The mismanagement and politicization of Rhode Island’s public employee pension fund have resulted in sub-standard portfolio returns.

“Enough of the political correctness and insider cronyism. We call on lawmakers to act now to ensure that sound fiscal guidelines are adhered to,” reiterated Mike Stenhouse, CEO for the Center. “The dismal performance of the state pension fund, under General Treasurers Raimondo and Magaziner, could have been minimized if sound investment practices were followed. Some kind of pension-fund protection act is clearly in order.”

Initial research shows that a number of other states have implemented, or are currently considering, provisions that require specific fiduciary guidelines to making pension fund investment decisions. A Pew Charitable Trusts report to the Committee on Alabama Public Pensions indicates that the National Association of State Retirement Administrators (NASRA) has suggested that pension fund trustees should adhere to “a robust fiduciary standard” in the execution of their duties. NASRA supports the action of setting strong fiduciary standards into law so that the paramount goal of investment strategies should be the financial security of pension assets.

In recent years, conversely, Rhode Island policy has put retirees and taxpayers at increased exposure, because political correctness appears to have been the primary motivation for making certain investment decisions:

  • Treasurer Raimondo announced a divestment strategy in 2013 from high performing “gun” related investments … for political reasons. (In a similar move the City of Providence divested from eight fossil fuel companies.)
  • As highlighted in the ALEC report, Treasurer Raimondo divested in 2014 from the states highest performing hedge fund, Dan Loeb’s Third Point LLC … caving to political pressure from teachers unions
  • Instead, Treasurer Raimondo invested in other high-fee hedge funds … some of which were associated with her former investment company
  • Treasurer Magaziner announced in early 2016 that state’s proxy votes would be used to influence investment vendors to diversify their boards … to meet an arbitrary politically-correct standard
  • Treasurer Magaziner announced last month a “back to basics” investment strategy to divest of most hedge fund investments … bowing to political pressure from third-party critics

“Each of these fiscally-irresponsible decisions has led to deteriorating performance of the pension fund. There’s little reason to trust that Treasurer Magaziner’s new back to basics strategy will not continue be overly-politicized,” added Mike Riley, Chairman of the Center, and an investment and pension expert. “It is obvious now that the General Assembly must act to ensure proper fiscal due-diligence is conducted, devoid of political correctness considerations.”

In order to protect the security and stability of state retirement funds, Riley suggests that legislation should include the following goals:

  1. Ensure that all investment decisions are made solely in the best interest of the beneficiaries
  2. Limit considerations for investment vehicles to measurable economic or fiscal factors only
  3. Ban other non-fiscal considerations, except in the most extreme instances (e.g., Iran-based companies)
  4. Ensure that investment fees and costs are reasonable in relation to the assets of the retirement system

The Center encourages lawmakers to honor the promise made to public employees and to support related pension-protection legislation in 2017.

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STATEMENT: RI & Department of Health Reality Check; Center Renews Call for Inspector General

FOR IMMEDIATE RELEASE: November 30, 2016

State Lawmakers Need to Face the Realities of a Trump Administration

Providence, RI– As it warned four years ago, when it advised against Medicaid expansion and the Unified Health Infrastructure Project (UHIP), the Rhode Island Center for Freedom & Prosperity again warns against the ‘business as usual approach’ on display this past week by state officials. The Center suggests that the Rhode Island Department of Health and Human Services (DHHS) and the state administration need a reality check with regard to the now epic UHIP computer systems disaster and the recent announcement of more funds planned to be sunk into expansion of the state’s Medicaid infrastructure.

“Newsflash: in seven weeks, Barack Obama will no longer be President. There is a shifting healthcare landscape and state officials need to recognize that unlimited federal support to continue these costly boondoggles is going to end,” suggested Mike Stenhouse, CEO for the Center. “At a time when the federal government will be making dramatic new course changes towards making private health insurance more accessible to more American families, our state, stubbornly, is doubling down on its plans to keep plowing ahead with the failed government-centric approach.”

The Center believes it is irresponsible to plan to spend hundreds of millions of dollars to expand our state’s Medicaid capacity at a time when the federal government and many other states will be moving in the opposite direction: towards reducing enrollment in the government’s public health insurance offering and, instead, towards increasing private health insurance enrollment through an aggressive offering of premium subsidies and/or tax credits. An even more poignant question is whether or not the new presidential administration and Congress will even re-authorize these funds?

The Center expresses further concern that the hundreds of millions of dollars of planned federal and state spending will do little to help working families and small businesses, who will be expected to pay for this spending, most of which go to enriching insider institutions that are part of the Medicaid system. “For every dollar we spend on this wayward path, that’s one less dollar we can proactively spend on education reform or tax cuts,” suggested Stenhouse.

As it has also maintained for years, the Center continues to warn that the real costs of UHIP have not yet fully materialized. The one-stop-shopping aspect of UHIP will purposely lead to increased enrollment in various government services – resulting in new costs that our state cannot afford and – because of the changing landscape – that the federal government may cut funding.

Based on these examples of government incompetence and the continued hemorrhaging of taxpayer money, the Center renews its call for government checks-and-balances via legislation that would create an Office of the Inspector General. The Center believes it is vital than an independent, non-partisan entity should keep watch over state spending in order to prevent the squandering of taxpayer money as has been seen with the UHIP and DMV (Department of Motor Vehicles) computer systems. Similarly, major spending projects in other state agencies, such as the multi-billion dollar RhodeWorks program to repair the state’s crumbling bridges and roads, must also be subject to close fiscal oversight of this kind.

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Center Releases Bright Today School Choice Video to Celebrate Milton Friedman Legacy Day

FOR IMMEDIATE RELEASE: July 29, 2016

NEW VIDEO: Parents Discuss Why School Choice Would Benefit Their Families as Part of Friedman Legacy Day Celebration

Bright Today Educational Scholarships Would Empower Parents to Choose the Best Educational Path for their Children

Providence, RI —  The RI Center for Freedom & Prosperity (Center) joined in the national celebration of the 10th annual Milton Friedman Legacy Day by releasing a new school choice video, featuring two Rhode Island families. Milton Friedman, regarded as the ‘father of school choice’ , would have been 104 years old today.

SCAs creator of and lead advocate for Educational Scholarship Accounts (ESA) in Rhode Island, the Center encourages families concerned about the lack of educational options available for them to learn more about its “Bright Today” ESA scholarship program, Bright Today legislation, which would empower all Ocean State families with new capacities to choose alternative public or private schools for their children, has not moved in the state’s General Assembly over the past two years.

“Everybody agrees that educating our youth is a moral obligation and a vital basis for renewed economic growth. Yet very few in our political class have the courage to stand up to the special interests who want to maintain a government-run school monopoly,” commented Mike Stenhouse, CEO for the Center. “Just look at the kids in our new video and tell me how we can deny them a better opportunity to improve their chances to go to college, to build a career, and to succeed in life.”

The video, featured on the BrightToday.org website, includes commentary from Gertrude Jones, former President of the Providence School Board and Lifespan Vice President and diversity consultant, who is also an adjunct educational scholar to the Center.

Improving educational outcomes for Rhode Island students is a key component towards improving the state’s dismal 48th place national ranking on the Family Prosperity Index. The Ocean State Current, the Center’s blog and journalism website, also published today a related op-ed – Doing Better by RI’s Children – on the school choice issue.

Over recent year, the Center has partnered with the national Friedman Foundation for Educational Choice and with the local RI Families for School Choice to promote the ESA legislation

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Jobs & Opportunity Index (JOI), October 2016 Lagging on Long-Term Unemployment; Leading with Welfare

For the October Jobs & Opportunity Index (JOI) report from the RI Center for Freedom & Prosperity, our methodology changed slightly. All numbers in the Prosperity Factor (income over taxes) are now annualized.The change made no ranking difference for Rhode Island, which remains 48th, but Vermont did move back into third place in the New England race.

Of the 13 datapoints used for the index, nine are updated for the October report, including measures of long-term employment weakness, on which Rhode Island did poorly, compared with the rest of the country. Employment was up 292 from the previously recorded number, while labor force fell 188, and RI-based jobs increased by 2,200. (Note that these are calculated with pre-revision data for the prior month, but using our new methodology.) Medicaid enrollment increased by 3,183 and SNAP by 267, although TANF dropped by 98. Long-term unemployment was down 300 people and marginally attached workers 100, but the number of Rhode Islanders working part-time against their will remained exactly the same.

The first chart at right shows Rhode Island still hopelessly the last state in New England on JOI. New England experienced a mix of improved and declining JOI scores. New Hampshire remained 1st in the nation, and Maine held firm at 20th. Vermont moved up two slots, to 21st, on Maine’s heals. Connecticut moved in the other direction, falling to 34th in the country, while Massachusetts moved up two, to 35th.

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The second chart at right shows the gap between Rhode Island and New England as well as the United States, with the Ocean State gaining slightly on the U.S., but slipping against the region. However, Rhode Island’s gap worsened on the unemployment rate (third chart).

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Results for the three underlying JOI factors were:

  • Job Outlook Factor (measuring optimism that adequate work is available): RI fell from 36th to 39th.
  • Freedom Factor (measuring the level of work against reliance on welfare programs): RI remained at 39th.
  • Prosperity Factor (measuring the financial motivation of income versus taxes): RI remained at 47th by this factor.
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Jobs & Opportunity Index (JOI), September 2016: Rhode Island Slips on Income

Last month’s Jobs & Opportunity Index (JOI) report from the RI Center for Freedom & Prosperity noted that Rhode Island slipped back into 48th place in the nation because total taxes collected in the state increased. This month, Rhode Island remains 48th because Rhode Islanders’ personal income dropped, leaving us to pay more taxes with less income.

Of the 13 datapoints used for the index, six are updated for the September report. Employment was up 516 from the previously recorded number, labor force up 675, and RI-based jobs down 600. (Note that these are calculated with pre-revision data for the prior month.) Medicaid enrollment increased by 2,338, while SNAP decreased by 451. Personal income, including wages and various forms of investment income, dropped an annualized $589 million in the second quarter (resulting from a downward revision of first quarter data by the Bureau of Economic Analysis). All in all, the increases were smaller and the decreases larger than the month before.

As reflected in the first chart below, Rhode Island remains the last state in New England on JOI. Moreover, it was the only state in the region to experience a decrease in its JOI score. Although the other five states improved their scores, Vermont was the only one to change rankings from a national perspective (from 44th to 41st). New Hampshire remained 1st in the nation, and Maine stayed at 20th. Connecticut held 33rd in the country, with Massachusetts still close behind, at 35th.

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The second chart at right shows the gap between Rhode Island and New England as well as the United States, which expanded once again, this month. By contrast, Rhode Island’s gap shrunk on the unemployment rate (third chart), although minimally.

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Results for the three underlying JOI factors were:

  • Job Outlook Factor (measuring optimism that adequate work is available): RI remained stuck in 36th place.
  • Freedom Factor (measuring the level of work against reliance on welfare programs): RI remained at 39th.
  • Prosperity Factor (measuring the financial motivation of income versus taxes): RI dropped one place, behind Ohio, to 45th.
pension-transparency

Center & Representative Nunes Call for Pension Fund Protection

FOR IMMEDIATE RELEASE: October 17, 2016
Political Correctness Should be Banned as Investment Criteria 

Providence, RI — The RI Center for Freedom & Prosperity recommends legislative action to end to the cronyism and overt politics that has caused instability to the retirement-security of public employees and that has exposed taxpayers to further risk. The mismanagement of Rhode Island’s public employee pension fund reached new lows last month when the State announced it was changing its strategy yet again, this time to divest of its “hedge fund” investments.

“Enough of the political correctness and insider cronyism. We call on lawmakers to act now to ensure that sound fiscal guidelines are adhered to,” suggested Mike Stenhouse, CEO for the Center. “The mismanagement and dismal performance of the state pension fund, under General Treasurers Raimondo and Magaziner, could have been avoided if sound investment practices were followed.”

Representative Jared Nunes (D-Dist. 25, Coventry West Warwick) has already expressed interest in submitting related legislation: “In order to protect retirees and taxpayers, it is vital that sound investment strategies are undertaken. Some kind of pension-fund protection act is clearly in order.”

Initial research indicates that a number of states have implemented, or are currently considering, provisions that require specific fiduciary guidelines to making pension fund investment decisions. A Pew Charitable Trusts report to the Committee on Alabama Public Pensions indicates that National Association of State Retirement Administrators (NASRA), suggests that pension fund trustees should adhere to “a robust fiduciary standard” in the execution of their duties, and supports the action of setting strong fiduciary standards into law so that the paramount goal of investment strategies should be the financial security of pension assets.

In recent years, conversely, Rhode Island policy has put retirees and taxpayers at increased exposure, because political correctness appears to have been the primary motivation of making certain investment decisions:

  • Treasurer Raimondo announced a divestment strategy in 2013 from high performing “gun” related investments … for political reasons. (In a similar move the City of Providence divested from eight fossil fuel companies.)
  • Treasurer Raimondo divested in 2014 from the states highest performing hedge fund, Dan Loeb’s Third Point LLC … caving to political pressure from teachers unions
  • Instead Treasurer Raimondo invested in other high-fee hedge funds … some of which were associated with her former investment company
  • Treasurer Magaziner announced in early 2016 that state’s proxy votes would be used to influence investment vendors to diversify their boards … to meet an arbitrary politically-correct standard
  • Treasurer Magaziner announced last month a “back to basics” investment strategy to divest of most hedge fund investments … bowing to political pressure from third-party critics
“Each of these fiscally-irresponsible decisions has led to deteriorating performance of the pension fund. There’s little reason to trust that Treasurer Magaziner’s new back to basics strategy will not continue be overly-politicized,” added Mike Riley, Chairman of the Center, and an investment and pension expert. “It is obvious now that the General Assembly must act to ensure proper fiscal due-diligence is conducted, devoid of political correctness considerations.”

In order to protect the security and stability of state retirement funds, Riley suggests that legislation should include the following goals:

  1. Ensure that all investment decisions are made solely in the best interest of the beneficiaries.
  2. Limit considerations for investment vehicles to measurable economic or fiscal factors only
  3. Ban other non-fiscal considerations, except in the most extreme instances (ie, Iran based companies)
  4. Ensure that investment fees and costs are reasonable in relation to the assets of the retirement system
The Center encourages incumbents and candidates for the General Assembly, prior to the upcoming elections, to make a pledge to voters and retirees to support related legislation in 2017.
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Center Supports Town of Narragansett Single-tier Property Tax Plan

FOR IMMEDIATE RELEASE: October 14, 2016

Narragansett’s Proposed Single-tier Tax Rate a Good First Step

Providence, RI — The RI Center for Freedom and Prosperity supports the proposed single-tier tax rate plan that will be decided at the Narragansett Town Council meeting on Monday, October 17.

The Center applauds the Town’s goal to create one of the best local business climates … in a state that has the worst overall business climate in the nation. The bi-partisan plan would significantly lower the commercial tax rate and slightly raise the residential rate to equal levels.

“If town families are to achieve a better quality of life, it is essential that more and better businesses, that create more and better jobs, have a better business climate in which they can thrive,” said Mike Stenhouse, CEO for the Center. “The positive benefits of this plan clearly outweigh the arguments against it.”

Currently, commercial properties pay up to 150 percent higher than the residential, leaving Narragansett as the only Washington County locality with a split rate.

Not only would a lower commercial rate spur local economic activity, but the single-tiered rate would eliminate the practice of pitting businesses against residential property owners when future tax policy is considered. The concept of tax policy that treats everyone the same, is a fundamental precept of American governance.

The slight increase in residential rates could be directly offset by taking advantage of a discussed “homestead exemption” for year-round, owner-occupied properties; this exemption has already received enabling approval from the General Assembly, and is in the works to be reviewed and decided upon in future Town Council sessions. Further, if the town does realize growth in the commercial business community, this could lead to reduced overall tax rates for everyone.

The plan would be even stronger, according to the Center, if the commercial rate would be lowered to the existing residential rate. This could be accomplished without raising the residential rate by cutting town spending by a few percentage points.
Additional commentary on Narragansett’s single-tier tax plan can be found on The Ocean State Current, the journalism and blog website for the Center.

Media Alert: RI Falls Back to 48th in August JOBS & OPPORTUNITY INDEX (JOI)

FOR IMMEDIATE RELEASE: September 23, 2016
Drop in August “Prosperity” Drags RI Back to 48th on national Jobs & Opportunity Index

Providence, RI — Due to an increase in the ratio of tax dollars paid as compared with personal earnings, the Ocean State dropped back to 48th place in the August Jobs & Opportunity Index (JOI), a multi-data metric developed by the RI Center for Freedom & Prosperity. 

Based on the release of new state and local tax collection data from the U.S. Census, Rhode Island lost ground on the national JOI metric, remaining – as it has for years – in the bottom five among all states. JOI is a broader and more accurate measure of employment and well-being than the traditionally cited and highly narrow unemployment rate, which has fluctuated more dramatically in recent years for Rhode Island, but which is not an accurate barometer of economic prosperity.

“Political leaders want us to believe that conditions are improving for families and businesses, but JOI shows this just isn’t true,” commented Research Director for the Center, Justin Katz.  “Based on August data, our Ocean State remains worst in New England for each of the three JOI factors that measure employment, income, and independence. Lawmakers must adopt broad-based reforms that can make Rhode Island a state where all Rhode Islanders, not just government and targeted special interests, can truly prosper.”

The Ocean State’s second-quarter increase in taxes collected over the first quarter compared with New York’s decrease made the difference by decreasing its “Prosperity” factor, leading Rhode Island to lose ground against the U.S. and New England averages.

Supporting the conclusions from the JOI metric, Rhode Island also ranks 48th in the Family Prosperity Index, the broadest national measure of family well-being.

For the JOI homepage, click here.

For a description of JOI and its three sub-factors, click here.

Jobs & Opportunity Index (JOI), July 2016: Ocean State Up a Step (For Now)

The notable development with the July Jobs & Opportunity Index (JOI) is that Rhode Island edged past New York to claim the rank of 47 out of 50 states in the nation. Eight of 13 datapoints were new this month. The Ocean State even managed to narrow its gap with the New England and U.S. averages slightly. Although, the state remained in last place in the region by a significant margin.

All updated metrics improved for Rhode Island. Employment was up 1,428 from the previously recorded number, labor force up 1,721, and RI-based jobs up 2,500. (Note that employment numbers are subject to heavy revision.) Medicaid enrollment decreased by 2,129, while TANF decreased by 805. Also updated, this month, were the alternative measures of unemployment calculated by the Bureau of Labor Statistics, now covering the second quarter of 2016. Long-term unemployment was down 1,200, marginally attached Rhode Islanders down 700, and people involuntarily part-time employed (rather than full time) decreased 2,400.

The first chart shows the six New England states in the national race. Rhode Island was the only state to see an increase in actual overall JOI score, although New Hampshire did advance to 3rd place in the country, as North Dakota slipped. Connecticut fell three spaces, to 36th, but Maine, Vermont, and Massachusetts held their spots at 17th, 19th, and 37th, respectively.

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The second chart shows the gap between Rhode Island and New England and the United States. By contrast, Rhode Island’s gap increased on unemployment rate, holding steady while the New England and U.S. rates dropped a little (third chart).

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Results for the three underlying JOI factors were:

  • Job Outlook Factor (measuring optimism that adequate work is available): RI moved forward five slots to 38th place.
  • Freedom Factor (measuring the level of work against reliance on welfare programs): RI remained at 39th.
  • Prosperity Factor (measuring the financial motivation of income versus taxes): RI still ranks 46th, with no data points updated.