HANDS OFF, SCOOTER: Wisconsin Investment Board Rejects Gov. Scott Walker’s Ridiculous Request to Borrow $200M from State Pension Fund
Wisconsin Governor Scott Walker is asking government workers to bet part of their retirements on a plan to subsidize new businesses in the state. That’s right. Walker is asking something of workers whom he treats like dirt.
The requested funds would go to the quasi-public Wisconsin Economic Development Corporation (WEDC) of which Walker is the chairman of the Board of Directors. The WEDC has faced major problems in the past — generally stemming from their own incompetence — including “losing track” of $56 million in taxpayer funds that were part of a loan portfolio. The WEDC faces an uncertain future and yet with no record of accountability CEO Reed Hall has recommended that the state give the WEDC $200 million.
The agency in charge of the workers pensions, the State of Wisconsin Investment Board (SWIB), declined the request and said,
“The challenge for SWIB is to make sure that any new programs it engages in, such as economic development, does not have any adverse effect on its management of WRS assets,” the agency responded.
Any “investment opportunity” must meet SWIB’s “established due diligence and investment requirements.”
“However, use of WRS trust fund monies to fund economic development initiatives does not meet our fiduciary duty,” the agency added.
With these words, SWIB politely informed Gov. Walker that his WEDC is a bad investment. Vicki Hearing, communications director at SWIB, added,
We have to invest based on what’s best for trust fund. We make the best investment choices based on the risk that is allowable for the trust fund. If a fund is not about earning an investment return, then it would not meet our fiduciary duty. Earnings will not be their primary goal.”
Further evidence that SWIB sees WEDC as a bad investment lies in the fact that the board does not have problems with investing its money locally. According to the Wisconsin Reporter,
Despite its aversion to the WEDC proposal, SWIB has invested pension funds locally. The organization’s “Investing in Wisconsin 2012” report notes:
“Over the past 12 years, SWIB has allocated a total of $305 million to its Wisconsin Private Equity Portfolio. This represents 20 percent of SWIB’s total venture capital commitments. From July 2012 until June 2017, SWIB projects new Wisconsin private equity investments will range from $25 million to $50 million.”
Hearing, the SWIB spokesperson, said $25 to $50 million is just a guideline and that SWIB could invest more in venture capital at any time. The investment board just hasn’t “seen the good investment opportunities,” Hearing said.
Wisconsin Democrats see the loan beg as a last ditch effort by Gov. Walker to make good on his failed promise to create 250,000 jobs. They view the move as a “Tea Party Raid” and an irresponsible attempt to fix a broken entity, the WEDC. According to Democratic Party of Wisconsin Chair Mike Tate,
“Putting a Tea Party crony and campaign donor in charge of your jobs agency is irresponsible. To have that crony try to raid $200 million from funds that ARE managed prudently and wisely is plainly outrageous. The new revelations show the desperate acts of a desperate governor who fears that he will be judged by his own promise to create 250,000 private-sector jobs in his first term.”