Posts Tagged ‘Permanent School Fund’

State Treasurer’s Office Moves Forward With New Nevada Capital Investment Program

By Nevada News Bureau Staff | 2:04 pm January 25th, 2012

CARSON CITY – Treasurer Kate Marshall announced today that a request for proposals for a manger to oversee a new investment program using up to $50 million from the state Permanent School Fund has been issued by the Nevada Capital Investment Corporation (NCIC) Board of Directors.

Submissions for the Request for Proposal must be received by the state Treasurer’s Office by March 9. A committee will then review the submissions and provide the NCIC board its recommendations as to the top candidates. The NCIC will select the top vendor.

Nevada State Treasurer Kate Marshall.

The fund manager will be responsible for the development of an investment plan for approval by the board, selection of private equity funds that will invest in Nevada businesses, for providing mentoring and networking opportunities for Nevada entrepreneurs, and for developing a collaborative partnership between Nevada System of Higher Education institutions, investors, and private industry.

“Based on the tremendous interest we have received from the private sector, we expect to receive dozens of submissions to our RFP, which will provide the board with the opportunity and the ability to select a professional firm that will seek investments in businesses located in Nevada, looking to expand in Nevada, or in businesses wishing to relocate in Nevada,” Marshall said.  “In accordance with SB 75, the fund manager’s primary and fiduciary investment responsibility is to generate a positive return; however, because of its statutory-mandated focus on Nevada, an ancillary benefit will be increased economic development and employment in Nevada.”

Sponsored by Marshall during the 2011 legislative session, Senate Bill 75 created the state’s first in-state private equity investment fund. The goal of this fund is to capitalize on investment opportunities in Nevada in order to increase funding for Nevada’s K-12 schools.

SB 75 created the NCIC, a nonprofit corporation overseen by a seven member board, including appointees by the governor and the Legislature. Under SB 75, up to $50 million from the state’s Permanent School Fund may be invested in private equity. The Permanent School Fund is comprised of non-tax dollars. Earnings from the fund go to Nevada’s K-12 schools.

Nevada Capital Investment Corporation Board Appointed, Will Meet For First Time Tuesday

By Sean Whaley | 3:50 pm October 7th, 2011

CARSON CITYState Treasurer Kate Marshall today announced the appointees to the board of the Nevada Capital Investment Corporation (NCIC), a new group charged with overseeing the investment of school funds to improve returns while promoting economic development statewide.

Gov. Brian Sandoval appointed Jim DeVolld, former president and CEO of the First Independent Bank of Nevada; Senate Majority Leader Steven Horsford appointed Jerrie Merritt, senior vice president of the Bank of Nevada; Senate Minority Leader Mike McGinness appointed Chris Howard, Northstar Investors principal and the director of entrepreneurial initiative at the University of Nevada, Reno; Assembly Speaker John Oceguera appointed David Goldwater of David Goldwater Consulting; Assembly Minority Leader Pete Goicoechea appointed James York, president and CEO of Valley Bank of Nevada; and Nevada System of Higher Education Chancellor Dan Klaich appointed Robert Lind, managing director for Berkshire Bridge Capital LLC.

Marshall will serve as the chairwoman of the nonprofit board, which will meet for the first time Tuesday. The board was created as the result of the passage of Senate Bill 75 during the 2011 legislative session.

Nevada State Treasurer Kate Marshall.

“We are extremely excited about beginning Nevada’s first ever private equity investment fund with such an esteemed group of appointees at the helm,” Marshall said. “We will set as aggressive a timeline as possible so the state can begin to see the benefits of Senate Bill 75 for our schools and for economic development moving forward in Nevada.”

The primary goal of the board will be to increase the rate of return on the money in the state’s Permanent School Fund. But it will also work to promote job creation and economic development by investing the money in business development. The new law allows the board to invest up to $50 million from the trust fund in the economic development efforts.

The Permanent School Fund was previously invested only in U.S. government securities that generated a return of less than 1 percent. The new law allows the investment of non-tax dollars in the fund in new businesses in Nevada, in existing businesses that are expanding, or in businesses which agree to relocate to this state.

In hearings on the bill sought by Marshall’s office, it was noted that 11 other states already had the authority to invest their funds in more diverse ways.

The Permanent School Fund is a trust fund made up of federal funds provided to the state for decades from such sources as the sale of federal lands and court fees. It is a trust fund worth about $300 million that can’t be spent, only invested.

The new board is charged with a variety of responsibilities, including contracting with a private industry fund manager who will be responsible for the development of an investment plan for approval by the board, selection of private equity firms that will invest in Nevada businesses, for providing mentoring and networking opportunities for Nevada entrepreneurs, and for developing a collaborative partnership between Nevada System of Higher Education institutions, investors, and private industry.

Marshall said Nevada is following the lead of most western states in allowing for a more diverse approach in vesting money from the school fund.

“Evidence shows that these balanced, diversified portfolios are realizing greater returns, which in Nevada’s case will ultimately result in more money for Nevada K-12 schools,” she said. “Further, by establishing a first of its kind fund in Nevada’s history, we’ve created a mechanism for providing private equity investments in Nevada that will help stimulate economic growth and employment, without risking tax dollars.”

Gov. Sandoval Signs Bill Aimed At Generating More Money For Schools By Investing In Economic Diversity

By Sean Whaley | 2:21 pm June 16th, 2011

CARSON CITY – A bill allowing the state Treasurer to invest up to $50 million in education trust funds to support economic diversification efforts and generate more money for public schools was signed into law today by Gov. Brian Sandoval.

Concerns had been expressed about the legality of Senate Bill 75 after it had been amended in the Senate, but Treasurer Kate Marshall said today the final version of the measure restored the original language.

“The passage of SB75 is going to result in more money for K through 12, so that we can invest the way most western states invest,” she said. “And also for the first time in the state’s history we’re going to have the ability to do private equity investments in Nevada; create jobs here.”

Treasurer Kate Marshall says SB75 will both create jobs and generate more money for public schools./Photo: Treasurer's Office

Marshall said businesses have already contacted the state because of the passage of the bill, expressing an interest in finding out more about it with an eye to possibly relocating here.

Chuck Alvey, president and CEO of the Economic Development Authority of Western Nevada (EDAWN), said several businesses in the developmental stage have inquired about the new program, which will take several months to get up and running.

The new law will provide an investment tool that other states have been using but that Nevada has not been able to offer to companies until now, he said. If a company in development can be brought to the state where it can grow from the ground up, it will more likely remain in the state and generate jobs for Nevadans, Alvey said.

“It’s a very important tool,” he said.

The bill was opposed by some Republicans over concerns about the constitutionality of the measure.

One of those was Sen. Greg Brower, R-Reno, a GOP candidate for the vacant Congressional District 2 seat. Marshall is a Democrat who is also running for the seat.

A big hurdle for the measure was the state constitutional prohibition on loaning state money to any company except a corporation formed for educational or charitable purposes. Supporters of the bill obtained a judicial determination that the proposed investments would be constitutional. But Brower and some other Republican lawmakers said the determination was insufficient to satisfy their concerns.

The new law will create a nonprofit public entity, the Nevada Capital Investment Corporation (NCIC), to be headed by a board that includes members appointed by the governor and legislative leadership based on their investment expertise. The state treasurer, whose duties include the investment of state money, would also be a member.

Marshall said the next step in the process will be to get the board appointed so the investment process can get under way.

The NCIC will hire professional private equity fund managers that will seek to partner with capital investment firms to invest in select companies and innovative start-up businesses that would assist in the state’s efforts to grow and diversify its economic base, leading to increased employment.

A Business Leadership Council comprised of business leaders and professional business development groups will also be created to provide strategic guidance and to mentor businesses which successfully compete for investment dollars.

The primary focus of the bill is to get a better rate of return for the $310 million Permanent School Fund, a trust fund made up of federal funds provided to the state for decades from such sources as the sale of federal lands and court fees. Only the interest can be spent by Nevada’s 17 school districts. About $8 million was generated for schools last year.

Marshall said the school fund is earning about 2.5 percent now. The private equity investments are expected to bring in between 4.3 percent and 7.5 percent, she said.

“The most important thing is to be fiscally prudent, to do your due diligence, to make sure you invest in companies that are going to provide you the kind of return and the kind of jobs and the kind of economic diversity we want here in Nevada while at the same time providing more money for K through 12,” Marshall said.

The new law also provides an opportunity for Nevada for the first time to be eligible for federal grant programs where debt support is made available for certain companies coming to the state, she said.

Audio clips:

Treasurer Kate Marshall says SB75 will bring in more money for public education and allow private equity investment:

061611Marshall1 :17 create jobs here.”

Marshall says the most important goal with the new authority is to be fiscally prudent:

061611Marshall2 :15 K through 12.”

Bill To Generate Money For Public Education, Create Jobs, Raises Legal Concerns

By Sean Whaley | 5:20 pm May 18th, 2011

CARSON CITY – A bill authorizing the state Treasurer to use up to $50 million in education funds to support economic diversification efforts and generate more money for public schools passed the Senate today despite questions about the constitutionality of the measure.

Senate Bill 75, amended twice before the vote, passed 12-9 with 10 Democrats and two Republicans in support. It will now be considered by the Assembly.

The bill is being sought by state Treasurer Kate Marshall.

It would create a first-for-the-state private equity fund to allow for investment in both existing Nevada companies and companies seeking to locate to the state that are in such industries as cyber security, alternative energy and health care.

The intent is to assist in diversifying Nevada’s economy while generating a better return on the invested monies from the state’s Permanent School Fund.

A big hurdle for the measure is the state constitutional prohibition on loaning state money to any company except a corporation formed for educational or charitable purposes. Supporters of the bill have a judicial determination that the proposed investments would be constitutional. Some Republican lawmakers say the determination is insufficient to satisfy their concerns.

The bill also has some political overtones. Marshall is a Democrat who has announced her intention to run for the open Congressional District 2 seat in the September special election. State Sen. Greg Brower, who voted against the measure today, is a Republican who has also announced his intention to seek the seat.

The constitutional question proved troubling for some lawmakers during a debate before today’s vote.

Sen. Michael Roberson, R-Las Vegas, said he wanted to see either an attorney general’s opinion or one from the legal counsel of the Legislature answering the constitutional question before he could support the measure.

“It’s one thing to ask a judge to sign an order,” said Roberson, an attorney. “It’s another thing to have the imprimatur of the attorney general’s office saying yes, we believe as a matter of law, this is our opinion, that it is constitutional.”

Brower, R-Reno, also an attorney, had similar concerns.

“I sat on the committee that heard this bill and was impressed by some of the ideas brought forward that were behind this bill, and considered it with great interest in terms of it being, as you might call it, an outside-the-box approach to this issue,” he said.

But, Brower said: “We haven’t been able to get a good, clean bill of health on this bill in terms of its constitutionality.”

Until the issue is clarified, the Legislature should not pass a bill that may not be constitutional, he said.

Sen. Ben Kieckhefer, R-Reno, said waiting for the Nevada Supreme Court to rule on whether each bill passed by the Legislature is constitutional would unduly hamper the legislative process. He said he would rely on the district court determination.

Sen. Joe Hardy, R-Boulder City, said the bill has the potential to help create desperately needed jobs in Nevada. There is time while the bill is being considered in the Assembly to resolve the constitutional question, he said.

The bill had already been amended by Sen. Barbara Cegavske, R-Las Vegas, who successfully put the authority of the investment process in the hands of the Commission on Economic Development. Even so, Cegavske said her concerns with the overall bill, including the constitutionality question, caused her to vote against the measure.

Kieckhefer and Hardy voted for the bill. Sen. John Lee, D-North Las Vegas, was the only Democrat opposing the measure.

The bill as originally introduced would create a nonprofit public entity, the Nevada Capital Investment Corporation, to be headed by a board that includes members appointed by the governor and legislative leadership based on their investment expertise. The state treasurer, whose duties include the investment of state money, would also be a member.

The NCIC would hire professional private equity fund managers that would seek to partner with capital investment firms to invest in select companies and innovative start-up businesses that would assist in the state’s efforts to grow and diversify its economic base, leading to increased employment.

Steve George, chief of staff to Marshall, said the office remains supportive of the intent of the bill. But he suggested the Cegavske amendment, by changing the focus of the bill from improving the investment return for public school funds to one solely looking at economic development, could actually make it unconstitutional.

The primary focus originally was to get a better rate of return on the Permanent School Fund, a trust fund made up of federal funds provided to the state for decades from such sources as the sale of federal lands and court fees, George said. It is a trust fund that can’t be spent, only invested.

Eleven other states, excluding Nevada and Colorado, can invest their funds in more diverse ways, George said. Nevada has earned 4 percent on its investments over the past five years with the current limitation, while three other states have earned in excess of 5 percent, according to information provided by the Treasurer’s Office to Gov. Brian Sandoval. Oklahoma has earned 6.22 percent over the past five years.

“With no focus on return, we don’t think it will pass the constitutional requirement,” George said.

Audio clips:

Sen. Michael Roberson says his constitutional concerns with the bill remain unanswered:

051811Roberson :12 that it’s constitutional.”

Sen. Greg Brower says he has the same concerns despite the outside-the-box thinking in the bill:

051811Brower :17 to this issue.”

Sen. Ben Kieckhefer says he will rely on the opinion of the district court:

051811Kieckhefer :23 on his opinion.”