Progressive Thinking

The Legislature’s Joint Audit Committee scheduled a public hearing on the Wisconsin Retirement System pension fund after recent audits revealed it's performance fell to 9th among ten comparable state pension plans.

MADISON - “GOOD NEWS” read the text with a short article about how our pension funds grew 8.5%. My friend forwarded the article with a cryptic note, “apparently the lies keep working.”

In what seems to me to be an effort to get ahead of a bad story, the agency responsible for investing almost $100 billion in pension funds – the largest single pot of money anywhere in state government - issued a press release touting an 8.5% increase in its core fund.

As radio commentator Paul Harvey used to say, here’s the rest of the story.

Yes, things are better in 2016. However, in 2015, the state pension funds lost money. An increase over a loss is good but not nearly as good as continual year-to-year growth. Especially when the fund is assumed to return over 7% a year!

Recently the nonpartisan Legislative Audit Bureau (LAB) released several audits related to the Wisconsin Retirement System (WRS). Among many findings, auditors reported 20-year returns fell from over 10% in 2006 to about 7% in 2015.

To understand how well Wisconsin is doing compared to other states, auditors contrasted performance in ten comparable state pension plans. Wisconsin’s performance ranked 9th of ten states in nearly every measure. Wisconsin’s core fund 5-year return was also considered 3rd most volatile of all of ten plans.

Wisconsin had a history of ranking well compared to other states. For example, in 2013, Wisconsin ranked 4th of nine states in 5-year returns.

The State of Wisconsin Investment Board (SWIB) oversees management of WRS and five other state insurance and trust funds. The governor appoints seven of the nine member board – 6 members directly and the governor-appointed secretary of administration.

In 2011, the governor and legislative majority gave SWIB authority to set its own budget and positions. No other state agency has this authority. Since 2011, the operating budget of SWIB grew by 78% and the number of positions grew by 48 or a 38% increase.

Some out-sourcing of fund management was brought back in-house. It is still unclear if this practice saved money.

Despite the fact the fund lost money in 2015, the board waived its own policy of not giving bonuses when the funds lost money. The board awarded bonuses of $1,100 to $468,300 to employees.

One of the reasons the funds lost money was poor performance in high-risk investments. Over the past few years, Wisconsin increased investment in risky financial devices like hedge funds and derivatives. These investments are among the speculative instruments that led to the financial crash in 2008.

Hedge funds, managed by an outside firm, cost the funds a staggering $57 million for a meager .6% return – about what you might get from a savings account. Auditors note that several other large public pensions eliminated the use of hedge fund investments.

Wisconsin also uses a risky strategy of borrowing to leverage assets. The use of debt to leverage assets lost money in all periods as of December 2015 including a negative 30% return in 2015. The leverage strategy contributed to the fund losses in 2015. Despite this, SWIB still has a goal of leveraging a staggering 20% of its funds.

Other audit findings raise questions about the structure and oversight the board provides the funds. Especially concerning is a finding that the board does not review final budget-to-actual expenses.

In addition, a recent audit of the Department of Employee Trust Funds, which manages the operations of the WRS, found a number of accounting errors, including mistakes in reporting over $90 million and bank reconciliations that were not done on a monthly basis for several months.

The state investment board oversees the retirement benefits of over 600,000 public employees and is now largely out from under legislative oversight. These recently released audits give us red flags about how things are going. Legislators have a responsibility to ask hard questions and insist on responses to protect the investments made by employees and retirees.

Republicans simply say “repeal and replace”, but simple solutions don’t work. One well established and widely supported federal health care system is available as a model for all, Medicare.

ALTOONA, WI - Republicans have simple answers to every question, simple solutions to every problem. Simple solutions that don’t work.

Health care is no exception. Republicans simply say “repeal and replace.” They’re talking about the Affordable Care Act, more popularly known as Obamacare.

They’ve got the repeal part down. Since the law was approved in 2010, Congressional Republicans have voted more than 60 times to repeal the Affordable Care Act. It’s the replace part that has them stumped. They offered no alternative in the past, and haven’t yet figured out what to put in its place.

It should be noted that all those votes were taken to repeal the law when GOP lawmakers weren’t actually in a position to make it happen. They were merely posturing. Now they are in control of both houses of Congress and will be working with a Republican president who says he’s committed to repealing and replacing Obamacare. There’s nothing standing in their way anymore. Except for the politically uncomfortable fact that only about a quarter of Americans want to see the law repealed. And that pesky business of coming up with something to replace it with.

If the new Congress and the new inhabitants of the White House are bound and determined to repeal and replace Obamacare, then do it right. Do it in a way that makes health care more accessible and affordable. Do it in a way that makes the health care system less bureaucratic and brings down administrative overhead costs. Here’s how. Repeal the law, then roll the existing Medicare and Medicaid programs into one and call it Americare. Make every American eligible for it. No one would be forced to enroll. If you want to continue to buy private insurance, you should be free to do so. But Americare would be there for everyone who wants it.

Two federal programs and their accompanying bureaucracies as well as the federal infrastructure devoted to administering the Affordable Care Act and its insurance exchanges would be brought under a single roof, making the federal health care system more streamlined and efficient. Medicare provides a sturdy foundation upon which to build Americare. Medicare is well established and widely supported by the seniors it serves, so popular that one of the signs most commonly seen at Tea Party rallies carried the message “Keep Government Out of My Medicare” or some variation on that theme.

Any program that has earned that kind of loyalty from Tea Partyers and is so highly valued by the nation’s elderly should be made available to Americans of all ages. All Americans should be allowed to benefit from the fact that Medicare does a far better job of controlling costs and is much more administratively efficient than the rest of the U.S. health care system.

Our country is ranked at or near the bottom in the developed world in the efficiency and effectiveness of health care. We spend more and get less. We can do better. Way better.

Out with Obamacare. In with Americare.

The Authentic Real-world Curriculum & Technology-infused Classroom (ARCTIC) at Northstar Middle School in Eau Claire provides an innovative way to teach sixth graders and allows students to prepare for the 21st century workforce in a reimagined classroom.

EAU CLAIRE, WI - Two six-graders recently showed me around their classrooms. Desks were not in straight rows. Students were not waiting their turn with raised hands. I looked around the room. There actually were no desks at all, but tables and different types of chairs.

One student was actually writing on a table with a red marker. I must have looked aghast. The table was designed to be written on, teacher Ali McMahon told me. “We use the table as a way to think out complex ideas,” she said. With a white board tabletop everyone sees the ideas and adds to them.

I recently visited Northstar Middle School in Eau Claire.

My first contact with students and teacher at the school was in the hallway. They were sitting on the floor with a globe and a basketball.

“Our basketball is an awfully small sun,” the teacher told me.

The lesson was about the solar system. The students in a darkened classroom were a-buzz with activity, learning by doing with lights, with balls and with IPads.

The excitement in the room was palpable. Students were eager to share what they learned. How they saw the full moon the night before and, using a light and a Styrofoam ball, showed me the phases of the moon. “Imagine me as the earth,” one youngster joked.

The Northstar students are known as the Polars – their mascot is the polar bear. Therefore, it was only fitting the teacher and the students are part of the ARCTIC Zone.

ARCTIC (Authentic Real-world Curriculum & Technology-Infused Classroom) is part of an inventive approach to education in the Eau Claire School District.

The approach, Principal Timothy Skutley explained to me, is an innovative way to teach sixth graders. Originating with the school board’s Learning Environments and Partnerships Committee (LEAP) and begun this fall, the ARCTIC Zone breaks down barriers for learning. Math, science and reading comprehension might all be learned in the same lesson.

The “soft” skills – collaboration, self-motivation, problem solving, critical thinking, creativity, communication – are learned in an environment where students set goals, learn at their own pace, and work with others to achieve.

Students stay on track with many different methods of assessment built into their school day. For example, “must-dos” are tasks that must be accomplished. Short assessments follow on-line “lessons”. Each student keeps track of his or her progress in an on-line system.

“We seek to balance innovation and accountability,” Dr. Mary Ann Hardebeck, Eau Claire’s Superintendent, explained.

Innovation is happening in more than just the ARCTIC zone. I visited the Career and Technical Education Lab. What was called “shop” in my school days has evolved into a laboratory of discovery. Students were learning physics, applied mathematics, materials science and engineering all at the same time. Best yet, they were working with their hands to create something new. I had heard about a 3-D printer. Now I saw two in action.

Students and teachers, school leaders and community members are reimagining public education. And they are bringing legislators along to see what a reimagined, reengineered learning environment looks like.

Lawmakers were invited by Mike Haynes of CESA 10 to view Most Likely to Succeed a documentary encouraging innovation in education.

Our education system is a product of history. Much of what us “oldsters” learned came about in an effort to train 20th-century workers for 20th-century jobs.

However, the world has changed. “Just Google it” has become part of our vernacular when we need to search for answers to questions. Technology dominates much of our activities.

What a 21st century world needs is people who can think critically, evaluate and communicate, who can work together to create something new. We need outside-the-box doers to tackle increasingly complex problems and to be intrinsically motivated to persist in problem solving. And we need life-long learners who view education as fun and worthwhile.

I’m enthusiastic about reimagining education. Rep. Kathy Bernier and I are planning to bring Most Likely to Succeed to the Capitol to view with our legislative colleagues.

Wisconsin needs a vision of what a reimagined education system might look like and how we might take steps to achieve it. Let’s begin such a discussion.

Judges weigh in on Supreme Court recural rules, judicial raises, ALEC bill to protect special interests, and GOP efforts to repeal state’s mining moratorium.

MADISON - The corruption in the Wisconsin court system has gotten so bad that 54 former judges this week wrote the Wisconsin Supreme Court, urging the justices to change their permissive rule on recusal. Here’s what they said:

Dozens of retired judges ask Wisconsin Supreme Court for new campaign donor recusal rules

Ironically, the major political players in Wisconsin’s business community, having spent millions of dollars to elect conservative judges, now want you, the Wisconsin taxpayer, to give them a big raise. Talk about chutzpah! And remember, these bigwigs oppose raising the minimum wage for working people.

Here’s what we wrote on this:

Big money groups back pay raise for judges

Wisconsin GOP lawmakers, in hoc to these same bigwigs, have just proposed a new bill that would make it even more difficult to regulate businesses in Wisconsin. This bill is – surprise, surprise! – modeled after one by the American Legislative Exchange Council:

GOP lawmakers offer ALEC bill to protect special interests from regulations

And Senator Tom Tiffany, one of big business’s best friends in the legislature, is proposing a bill to lift the mining moratorium in Wisconsin:

GOP lawmaker wants to repeal state’s mining moratorium

Those in power in Wisconsin are moving fast to reward their campaign contributors and impose their ideology, which says, “Everything private is good, and everything public is bad.” And in Washington, Trump may do to the country what Walker has done to Wisconsin. (Walker has actually urged him to do exactly that!)

So for believers in democracy and clean government, like you and I, this is a trying time.

But I remain hopeful because I know history is not static, and I see so many good people, right here in Wisconsin, doing so much good work behind the scenes and in the streets.

Best,

Matt Rothschild
Executive Director
This e-mail address is being protected from spambots. You need JavaScript enabled to view it

*****

P.S. Tomorrow I’ll be going to the Rally for Immigrant and Refugee Rights in Milwaukee, starting at 11:00 a.m. at 1027 S. 5th St. If you’re near there, I hope you can make it.

As the Governor begins his seventh year and delivers his rosy State of the State, the majority of Wisconsin believes we are on the wrong track.

MADISON – Six years ago, Gov. Walker spoke before an audience in the Assembly chamber and made a lot of promises. He said Wisconsin would lead the economic recovery. He said we would stop kicking the can down the road on funding transportation. He said we can’t rely on short term fixes, and we can’t borrow excessively anymore.

Yet here we are, as the Governor begins his seventh year and delivers the State of the State, we have a $700 million budget deficit, an economy that is lagging significantly behind the rest of the nation, the 3rd worst roads and the most diminished middle class in the nation.

The primary driver for a better workforce would be supporting our world-class education system. K-12, technical colleges and the UW system are the pride of our state—despite relentless attacks and budget cuts administered by Gov. Walker and the Republican legislature. We need quality education and bold, vibrant worker training.

It’s clear education is not a priority when the tech schools have lost $203 million in state aid, last session alone the UW system was gutted by a quarter of a billion dollars, and k-12 schools have lost $1 billion in state aid since 2011. The governor also discussed college affordability, how he froze tuition without properly funding the university, and yet there is no relief for the skyrocketing student loan debt most Wisconsin students graduate with, despite other states allowing for refinancing of debt, including Minnesota.

If we want to fill jobs and have skilled workers, funding education, worker training and making higher education accessible for all is the most basic thing we can do, and Democrats have drafted bills to take exactly those steps.

The governor indicated he will continue to kick the can down the pothole-filled road with no sustainable, long-term plan to fund transportation in sight. Instead, we continue to put more money on the credit card, delay projects that drive up costs, all the while commuters are paying the cost of deteriorating roads. Wisconsin drivers are now paying $6 billion a year due to congestion-related delays, crashes and vehicle repairs.

Of course, with our roads and bridges suffering alongside our state’s middle class, the governor does have one solution—get rid of prevailing wage. The Fiscal Bureau has already said this wouldn’t save us money, and it would punish our road and bridge construction workers who are completing each mile of roadwork 43% more cost-effectively than the national average.

The governor has bragged about his tax policies, while neglecting to mention that his cuts have largely benefitted the wealthy of our state. Not to mention, many local schools have had to pass referendums to make up for state aid shortfall—this unfairly places the tax burden on the backs of Wisconsin families and small businesses who are struggling to make ends meet.

Democrats in the Assembly will continue to put forward bold ideas that have been proven effective in order to fund our schools, fix our roads and rebuild the middle class. This is why the majority of Wisconsin believes we are on the wrong track. They deserve better.