Center & Representative Nunes Call for Pension Fund Protection

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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.

Center Supports Town of Narragansett Single-tier Property Tax Plan

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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)

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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)

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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.

NE-JOIrace-0716

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).

RINEUS-JOI-2005-0716

RINEUS-unemployment-2005-0716

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.
Printable report and national ranking table.

Jobs & Opportunity Index (JOI), May 2016: A Down Month in a Stagnant Trend

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With Rhode Island losing both employment and labor force, in May, the state slipped to 36th in the nation for unemployment. On the broader Jobs & Opportunity (JOI) ranking, Rhode Island’s rank remained unchanged at 48 among states, despite lower scores on the two subfactors for which new data was available (five of its 13 datapoints).

On the three monthly employment datapoints, the decreases were signficant, especially using the originally reported, unrevised numbers for the prior month. Rhode Islanders reporting that they are working dropped by 533, while those working or looking for work dropped by 359. Meanwhile, the number of jobs based the state fell 2,400. The two welfare-related datapoints, were mixed (partly because they have different lags in terms of reporting months). Reliance on Medicaid increased by 2,281 people, while reliance on SNAP (food stamps) fell by 208.

The first chart shows the six New England states in the national race. All six experienced a loss of points on the JOI score, but Maine managed to move up to 21st place, as Oklahoma slipped. Connecticut held at 34, as did Vermont, at 20. New Hampshire kept its place at the lead of the nation, although Wyoming gained slightly, and Massachusetts is stuck at 37.

NE-JOIrace-0516

Overall, the gap between Rhode Island’s JOI score and the New England average grew in April (see the second chart). When it comes to the unemployment rate, Rhode Island lost ground within New England but gained nationally (third chart), illustrating the problem with using that common metric as an indicator of economic health.

RINEUS-JOI-2005-0516

RINEUS-unemployment-2005-0516

Results for the three underlying JOI factors were:

  • Job Outlook Factor (measuring optimism adequate work is available): RI remained at 43rd.
  • Freedom Factor (measuring the level of work against reliance on welfare programs): RI still ranks 39th, although with a lower score.
  • Prosperity Factor (measuring the financial motivation of income versus taxes): RI still ranks 46th, because no underlying data has been updated.

[Click here for a printable PDF.]

STATEMENT on Proposed 2017 RI Budget

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STATEMENT: FOR IMMEDIATE RELEASE 
June 8, 2016

RI Families Once Again Left Out of State Budget

Multiple Special Interest & Corporate Welfare Programs Outweigh Few Relief Provisions
Lawmakers Adopt Center’s Recommendation to increase EITC in lieu of Minimum Wage hike

Providence, RI — With nothing bold to address the massive structural budget deficits, its dismal business climate, or the state’s 48th ranking on the RI Center for Freedom & Prosperity‘s Jobs & Opportunity Index, Rhode Island lawmakers are once again advancing a special interest laden agenda that offers little relief or hope for new opportunities for the average Rhode Island family.

“What does the average family have to cheer about in this budget? The few provisions that offer minor relief to some are overwhelmingly outweighed by the massive special interest and corporate welfare spending that will continue drag-down our state economy,” commented Mike Stenhouse, CEO for the Center. “Only when the total relief package is bigger than new spending can we claim that Rhode Island is heading in the right direction.”

While recognizing the reductions in retiree income taxes, the corporate minimum tax, and trucker registration and beach parking fees, the Center notes that these cuts are themselves narrowly targeted and are more than offset by the increases in corporate welfare, new Uber and marijuana taxes, pre-K funding, and new special-interest bond initiatives.

The Center maintains that major broad-based tax reforms are required to jump-start the Ocean State’s stagnant economy and jobs market.

Also according to the Center, the continued funding of the unethical legislative and community grant programs, despite the mirage of reform, can only be seen a perpetuation of a corrupt, status quo insider culture.

As help to low-income workers, the Center praises lawmakers for adoptng the Center’s March 2016 recommendation to hold the minimum wage steady and, instead, increase the Earned-Income-Tax-Credit (EITC), which rewards work without risking job losses.

Statement on RI Dep’t of Education Transgender Guidelines

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Click link to read RIDE Transgender students guidance 6-7-16

June 6, 2016

Official Statement from the Center:

“While professing to protect students from bullying and to respect all students, the RI Department of Education (RIDE), via its June 2016 “guidance” document on transgender students, itself appears to have been bullied by the federal government; seeks to bully local school districts into conformity; and openly flaunts its disrespect of of other students.

In perpetuating a disturbing trend of ‘government by political correctness’, RIDE has succumbed to federal pressure and has adopted a one-size-fits-all position that may not be compatible with the morals held by many public school families. There may never be a more obvious reason to empower parents with additional choices to escape an increasingly politicized government school system that does not respect their personal values.

The repeated emphasis in the document on laws dealing with “discrimination” can only be seen as a heavy-handed threat to local school districts by elitist bureaucrats who believe they know what’s in our family’s best interests.

The open and blatant disrespect (page-9, paragraph-2) for the comfort level of the majority of students, in favor of the comfort of a tiny minority of students, along with the disdain for the rights of parents and the sanctity of the family (page-7, paragraph-2), is particularly alarming.

The Center maintains that no statewide or federal dictate can possibly satisfy the varying sentiments among Rhode Island’s diverse array of local communities.”

Jobs & Opportunity Index (JOI), April 2016: Slight Improvement, but Slipping Versus Neighbors

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Click Here For The .PDF
 (See the full list of state rankings!)

Although the narrow official unemployment rate that Rhode Island politicians prefer to tout puts the state at 35th in the nation, up from 36th, the broader Jobs & Opportunity (JOI) ranking of Rhode Island remained unchanged at 48 among states. With eight of its 13 datapoints’ being updated, including quarterly alternate measures of unemployment, the index did see improvement on the Job Opportunity factor for April, largely because of a reduction of the number of Rhode Islanders at the edges of the labor force, including long-term unemployed, marginally attached, and involuntary part-time.

However, with employment in the Ocean State largely stagnant for the past year, this result may very well be an indicator of the final exit of people who’ve decided that they just can’t make RI work for them. Improvements in the two welfare metrics that were updated, Medicaid and SNAP, could also be otherwise positive developments indicating a trend that is arguably negative. (Note that these metrics lag by three and two months, respectively.)

As one would expect from an index with so many values, changes from month to month are not dramatic, as seen in the first chart, which shows the six New England states in the national race. Even so, Connecticut slipped a rank, to 34, and Vermont advanced one, to 20. New Hampshire held its place at the lead of the nation; Maine kept 22nd; and Massachusetts remained at 37.

NE-JOIrace-0416

Overall, the gap between Rhode Island’s JOI score and the New England average grew in April (see the second chart). That result contrasts with the unemployment rate, with which Rhode Island gained ground within New England (third chart), illustrating the problem with using that common metric as an indicator of economic health.

RINEUS-JOI-2005-0416

RINEUS-unemployment-2005-0416

Results for the three underlying JOI factors were:

  • The Job Outlook Factor (measuring people’s optimism that adequate work is available): RI moved up five steps to 43rd.
  • The Freedom Factor (measuring the level of work against reliance on welfare programs): RI still ranks 39th, with reductions in welfare rolls being canceled out by lost jobs based in the state.
  • The Prosperity Factor (measuring the financial motivation of income versus taxes): RI still ranks 46th, because no underlying data has been updated.

[Click here for a printable PDF.]