Posts Tagged ‘treasurer’

State Officials, Lawmakers Reject Claim That Transfer Of Funds To Scholarship Program Was Improper

By Sean Whaley | 4:21 pm July 28th, 2011

CARSON CITY – State officials and lawmakers are rejecting the suggestion that they acted improperly last year when fees generated from several college savings programs were shifted to shore up the cash-strapped Gov. Guinn Millennium Scholarship for academically eligible Nevada high school graduates.

But one former lawmaker, who voted for the transfer, acknowledges he remains concerned about the decision.

The Legislature’s Interim Finance Committee voted in July 2010 to transfer $4.2 million in fees from the college savings programs to the Millennium Scholarship to ensure eligible college students would get full reimbursement for classes they took last year.

The College Savings Board had previously voted to use the money for other purposes, including support for the Nevada Prepaid Tuition program, a separate fund managed by the Treasurer’s Office for Nevada families to save for college within the Nevada System of Higher Education.

The transfer was unanimously approved by the 21 members of the IFC after lawmakers were told the fees to be used to shore up the scholarship fund would not affect participants or their investments in the separately managed college savings programs. The fees are paid by families investing in the various college savings plans to brokers, who in turn remit a portion of those fees to the state Treasurer’s Office.

Just over 471,000 college savings accounts, most of them from out-of-state residents, have been opened in the four programs offered through the state Treasurer’s Office as of March 31, 2011. Just over 7,000 Nevadans are enrolled in the programs and they do not pay any fees for participating.

The Nevada Policy Research Institute, a conservative Nevada think tank, on Wednesday published an article by Steve Miller suggesting that the shift of funds was illegal and that Nevadans participating in the Prepaid Tuition program may now have grounds to sue the College Savings Board because of the IFC vote.

Miller, vice president for policy at NPRI, cited a “nationally experienced securities attorney,” who was consulted on a confidential basis for the conclusions in his article.

“Because the Prepaid Tuition program was damaged by the IFC action — made financially weaker than it otherwise would have been — investors in the program would have legal standing against the program, said the attorney, who was consulted on a confidential basis,” he said in his article.

The Treasurer’s Office rejected the notion that the Prepaid Tuition program was harmed by the IFC action.

In a press release issued Thursday, state Treasurer Kate Marshall said the Prepaid Tuition program is funded at 108 percent.

“The program is solid, as demonstrated by the dramatic increase in the funded status and a 15 percent increase in new contracts totaling 594 in 2011,” she said.

Nevada State Treasurer Kate Marshall

Steve George, chief of staff for Marshall, said the article did not indicate that the IFC vote to transfer the funds was unanimous. The College Savings Board did not object to the transfer at its August meeting following the IFC vote either, he said.

“Treasurer Marshall and this office had worked for months to try and come up with some solution that might work to keep the Millennium going forward to the next legislative session,” he said. “That was accomplished by that move, and that’s why I made the comment that this is something that works for the Millennium, and it also does not harm college savings and prepaid.”

Even with the $4.2 million transfer to the Millennium Scholarship, the College Savings Board has transferred nearly $1.56 million over the two past fiscal years to the Prepaid Tuition Program, George said.

Sen. Mo Denis, D-Las Vegas, said he believes the article unfairly singled out Senate Majority Leader Steven Horsford, D-Las Vegas, for criticism. Horsford was co-chairman of the IFC at the time. The IFC is composed of the Legislature’s two money committees.

“I believe that we were making the best decision based on the information that was available to us and our legal counsel,” he said. “And so I think we all did it together and we did something that we thought was appropriate that we could do and legal counsel said we could do it.”

The transfer was needed to ensure kids received their Millennium Scholarships, Denis said.

Minutes of the July 21 special IFC meeting show that lawmakers were told the shift of funds was legal by Chief Legislative Counsel Brenda Erdoes.

Sen. Joe Hardy, R-Boulder City, said he believes the transfer was both lawful and appropriate.

“I think that not only was it legal, but it kept students, who anticipated getting tuition money, in college,” he said.

But Hardy said he does not take issue with a watchdog group keeping an eye on the activities of the Legislature.

The allegation that lawmakers may have acted improperly has political implications.

Horsford is rumored to be considering a run for Congress in a seat as yet undefined due to a legal dispute over the required redistricting process.

Senate Majority Leader Steven Horsford, D-Las Vegas.

Horsford declined to comment on the NPRI article.

Marshall, a Democrat, is also running for congress in a special election in the vacant 2nd Congressional District against former state Sen. Mark Amodei, R-Carson City.

Miller also quotes former long-time state Sen. Bill Raggio, R-Reno, as questioning the appropriateness of the transfer, but does not point out that Raggio “reluctantly” voted for the shift.

Raggio said the article accurately describe his concerns, which remain even with the advice from legal counsel. Funds held in trust should be used for the purposes specified, he said.

“Lawyers can differ, and even though Brenda said so at the time, there is always a question,” Raggio said. “And I wouldn’t be surprised if someone did challenge it.”

Miller said today he focused on Horsford in the article because the lawmaker was the point man pushing for the transfer. The unanimous IFC vote wasn’t included because lawmakers often rubber stamp such requests, he said.

Miller said he decided to run the story based on the one attorney’s comments because of the individual’s credibility. As a result of the article Miller said he has received a comment from one Nevada attorney about the potential for challenging the shift of funds.

The Millennium Scholarship is named for the late Gov. Kenny Guinn, who created the program in 1999 with legislative approval.

Gov. Brian Sandoval recommended adding $10 million in general funds to the scholarship in the 2011 legislative session, which was approved. The scholarship is now believed to be financially whole through at least 2015. It was originally intended to be fully supported by money from a tobacco company settlement, but those funds have declined annually due to lower smoking rates.

Audio clips:

Treasurer’s Office Chief of Staff Steve George says the vote by the IFC kept the scholarship program whole without harming the college savings or prepaid tuition programs:

072811George1 :23 savings and prepaid.”

George says the Prepaid Tuition Program is financially sound:

072811George2 :27 to go forward.”

Sen. Mo Denis says lawmakers made a unanimous decision based on the best information available:

072811Denis1 :20 could do it.”

Sen. Joe Hardy says the vote was legal and kept kids in college:

072811Hardy1 :19 stay in college.”

Hardy says he has no problem with watchdog groups keeping an eye on lawmaker activities, however:

072811Hardy2 :17 doing what’s right.”

Former Sen. Bill Raggio says he would not be surprised if someone does challenge the transfer:

072811Raggio1 :12 did challenge it.”

NPRI’s Steve Miller says he focused on Horsford in the article because the lawmaker was the point man pushing for the transfer:

072811Miller1 :32 some political power.”



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.”

Nevada State Treasurer Completes Bond Sale At Low Interest Rate

By Nevada News Bureau Staff | 12:28 pm December 9th, 2010

CARSON CITY – State Treasurer Kate Marshall announced today that despite the current volatile treasury market, her office has successfully completed the sale of five series of general obligation bonds totaling $161.3 million at an average interest cost of 3.6 percent, one of the lowest interest rates the state has ever received.

“We have been working diligently to find funding to assist the Governor’s Office and the Department of Administration with meeting capital improvement project needs they have identified,” Marshall said. “I am happy to report that this important sale will provide about $52 million in funding for such projects, with the determination of how that money will be used now in the hands of the Department of Administration.”

Marshall praised her staff and the three firms managing the sale – Barclays Capital, Merrill Lynch, and Morgan Stanley – for their efforts and teamwork in making the sale a success.

The bonds were sold in two main blocks. The first two series of bonds totaling $142.1 million were sold to refinance bonds issued previously for the state’s capital improvement program. The proceeds will provide $23.1 million for new projects this fiscal year and free up an additional $29 million for fiscal year 2012.

The last three series of bonds totaling $19.2 million are providing funding for the state’s Clean Water and Safe Drinking Water Revolving Fund, used to fund local governments’ water and sewer projects throughout the state, as well as to refund bonds previously issued under that program.

The bond sales come a week after the country’s three major rating agencies maintained the state’s strong AA bond rating.

All three rating agencies – Moody’s Investors Service, Standard & Poor’s and Fitch – said the high rating reflects the state’s conservative financial practices, modest level of state debt, and strong financial leadership.

“The high ratings we were able to achieve in spite of the economic hardships facing the state over the past two years played a substantial role in our ability to sell the bonds this week amidst a heavy supply of new municipal bonds and inflationary concerns in the bond market,” Marshall said. “With yields likely to rise in the future due to the potential end of the Build America Bonds program by year-end and the current tone of the bond market, we were pleased to be able to effectively market these bonds to the investor community at this time.”

Nevada Retains High Credit Rating from All Three Major Rating Agencies

By Nevada News Bureau Staff | 4:33 pm December 2nd, 2010

CARSON CITY – Nevada State Treasurer Kate Marshall announced today that the state has maintained its high credit rating after discussions last month with each of the three major rating agencies.

Fitch Ratings and Standard and Poor’s rated Nevada’s credit worthiness at AA+ and Moody’s Investment Services at Aa1. The ratings are measures of the state’s general credit worthiness and are used by both institutional and retail investors in deciding whether to buy the state’s debt. The ratings also determine the cost at which the state’s bonds trade with a high credit rating resulting in reduced costs on the debt issues.

“AA” ratings are judged to be of high quality and are subject to very low credit risk. “AAA” is the highest rating possible, with “CC” being the lowest. 

“These ratings reflect the prudent actions taken by the state to meet its financial obligations in spite of the severe economic downturn Nevada has experienced over the past two years,” Marshall said.

The rating agencies cited the strong financial management and conservative debt position of the state as reasons for maintaining its high credit rating despite the economic weakness the state has experienced the last several years.

In its rating rationale, Moody’s Investment Services cited “conservative management that reacts quickly during periods of weakness and has responded with budget solutions quickly during the current downturn.” The state’s debt reserve was also emphasized as a strong component of the continued high rating, with the Treasurer’s Office maintaining a debt reserve prefunding of almost an entire year’s debt service, well above the recommended best practice model of at least six months.

Senior Deputy State Treasurer Mark Mathers said Moody’s did revise its outlook for the state to negative, which indicates a possible ratings change in the intermediate term, but that the change is not expected to have an effect on its bond sales. The change in outlook is the least significant of three actions a rating agency can take, he said.

Rating agencies review each state’s fiscal solvency at least once a year. The agencies look primarily at the economic conditions facing a state in the public and private sector. The state of Nevada benefits from having a balanced budget requirement as part of its Constitution; however, how the budget is met plays a major role in a credit agency’s rating.

“The state of Nevada has not used financial schemes or borrowed money to meet its statutory obligation,” Marshall said. “The rating agencies will be watching intently to see how our continuing budget struggles are met during the 2011 legislative session.”

Dem Mailer Attacks GOP Candidate for State Treasurer

By Elizabeth Crum | 8:20 pm October 31st, 2010

This rather nasty mailer from the state Democratic party was received at some Nevada households this weekend, two days before the elections in a race the latest Mason-Dixon poll says is tied 39-39 percent:

Here is a close up of the text:


You can read our e-interview with Steve Martin on the front page here.

Treasurer Marshall did not respond to our interview request.

Drop your comments below.

Nevada State Treasurer, Opponent, Trade Jabs In Televised Debate

By Sean Whaley | 8:44 pm October 11th, 2010

Republican state treasurer candidate Steve Martin faced off against Democratic incumbent Kate Marshall in a debate Monday, with Martin continuing to criticize his opponent for failing to fully disclose details of a $50 million failed 2008 investment.

Marshall countered that she fully disclosed the loss with the September 2008 bankruptcy filing by Lehman Brothers and rejected any suggestion by Martin that she should have been aware of the impending failure of the firm that cost states and local governments $3 billion nationwide.

Martin took the opportunity during the debate on Jon Ralston’s Face To Face television program to correct the suggestion that he had lost money for his private clients with the Lehman Brothers collapse, a claim made by Marshall and her staff.

Martin said he was not providing investment advice at the time and so could not have lost his clients any money.

Marshall emphasized her leadership in her first term as treasurer and rejected Martin’s criticisms that she misled the Legislature about the financial status of the Millennium Scholarship program or mismanaged the office’s unclaimed property fund.

An audit of the unclaimed property fund did identify areas that needed to be fixed, but she said: “I think the first paragraph of the audit says it all, it says that our office has done a phenomenal job.”

Martin, a certified public accountant, also said he is better qualified to serve as treasurer given his financial background versus Marshall, who is an attorney.

Martin again emphasized the $50 million Lehman loss and the failure of Marshall to be up front about it.

“If they say they have transparency in the office, why did the report that was filed in 2009 make no mention of Lehman Brothers,” he asked. “Why in June of 2010 did the treasurer request an attorney general’s opinion that said we couldn’t talk about this at the Board of Finance meeting.”

Martin also asked why the next Board of Finance meeting was delayed until after the Nov. 2 general election.

Marshall countered by saying she disclosed the Lehman loss the day after the company filed for bankruptcy. The loss to the state may now be less than $50 million because Lehman Brothers is now profitable, she said.

“First off I think it is dishonorable to say that I should have known when my opponent admits his own clients lost money on Lehman’s, so I find that a disingenuous statement,” she said.

Martin said Marshall’s comment is in error.

“Well let’s correct the record right now,” he said. “None of my clients lost money in the stock market. Absolutely none. That is twice your office has accused me of having said that. It is absolutely incorrect.”

Audio clips:

GOP treasurer candidate Steve Martin says Marshall has not been open about the Lehman loss:

101110Martin1 :16 of Finance meeting.”

Marshall says Martin should not criticize her office on Lehman because  his clients lost money:

101110Marshall1 :10 a disingenuous statement.”

Martin says Marshall’s claim he lost his clients money is false:

101110Martin2 :17 is absolutely incorrect.”

Marshall says audit on unclaimed property says her office has done a great job:

101110Marshall2 :05 a phenomenal job.”

GOP State Treasurer Candidate, Treasurer’s Office Accuse Each Other Of Playing Politics

By Sean Whaley | 6:08 pm October 6th, 2010

CARSON CITY – Republican state treasurer candidate Steve Martin said today the Democratic incumbent is playing politics by delaying a discussion involving an unprecedented $50 million investment loss until after the Nov. 2 general election.

Martin, a member of the state Board of Finance which oversees the investment policies of Treasurer Kate Marshall’s office, said a meeting of the board scheduled for Oct. 12 has been cancelled and rescheduled for Nov. 9, a week after the election.

Martin said he anticipated the October meeting would include a discussion of potential changes to Nevada state law to clarify how to write off the $50 million Lehman Brothers loss, which occurred in September 2008 when the financial services firm filed for bankruptcy protection.

“Essentially there won’t be any more discussion at the board with regards to what was lost, how it was lost or the write off of the interest over 4.5 years (until after the election),” Martin said.

Martin, a certified public accountant from Las Vegas, is challenging Marshall, an attorney from Reno, for the treasurer’s job.

Steve George, chief of staff to Marshall, said Martin is the one playing politics by continuing to focus on an issue that has been publicly discussed and resolved. All of Martin’s questions have been answered but he continues to raise the Lehman Brothers matter for political gain, George said.

Martin said he believes politics are involved in the delay of the Finance Board meeting. The less said about the $50 million loss, the better for Marshall, he said.

The investment loss, some of which may yet be recouped, has resulted in lost interest income to 170 different state agency accounts and programs, from the cash-strapped Millennium Scholarship to the state self-funded health insurance plan, Martin said.

Martin said he continues to have questions about the plan to write off these interest income losses to the agencies and programs over a 4.5-year period. He also cited a September letter from Robin Reedy, chief of staff to Gov. Jim Gibbons, expressing the need for the treasurer’s office to provide more information about the write off.

It isn’t the first time Marshall has avoided a discussion of the loss, he said. In July the treasurer’s office got an attorney general’s legal opinion saying the issue was not within the purview of the Finance Board’s authority after Martin asked for a discussion of the issue.

“And I think it just shows a lack of transparency,” he said. “Frankly, trying to hide the fact that they lost the $50 million, the less said the better they are.”

George said Nevada’s Lehman loss was only a part of $3 billion in losses to states, counties and municipalities across the country when the firm filed for bankruptcy.

Marshall has said there was no warning ahead of time the firm would file for bankruptcy.

George said the October Finance Board meeting was cancelled after board members were queried and there were no items for discussion. Gov. Jim Gibbons is chairman of the board and sets the agenda, not the treasurer’s office, he said.

George provided a copy of a July 2010 letter sent to Reedy that he says shows that every question raised by Martin about the issue has already been answered. The issue was also fully discussed at the Finance Board’s July 12, 2009 meeting, he said.

Martin did not join the board until later.

“The Board of Finance has been involved in this from the beginning,” George said.

George also noted that both legislative fiscal staff and the state budget director were made aware of the plan to write off the loss over 4.5 years.

“Steve Martin seems to want to keep pushing this issue, funny enough close to election time that he keeps pushing this issue, which is a nonissue,” he said.

Martin has claimed that Marshall should have known about the Lehman collapse before hand, but has acknowledged his own clients lost money in the 2008 financial meltdown, George said.

“So I’m a little surprised his clients lost money if he had all the answers,” George said

Audio clips:

State treasurer candidate Steve Martin says any further discussion of the $50 million Lehman loss has been put off until after the election:

100610Martin1 :10 a half years.”

Martin says the less said about the loss by the treasurer, the better for her:

100610Martin2 :10 better they are.”

Steve George, chief of staff for Marshall, says all of Martin’s questions have been answered:

100610George1 :09 is a nonissue.”

George says Martin lost money for his clients in the 2008 financial meltdown:

100610George2 :12 all the answers.”

Nevada Treasurer’s Office Announces Fee Reduction For College Savings Program

By Nevada News Bureau Staff | 3:26 pm September 28th, 2010

CARSON CITY – Nevada Treasurer Kate Marshall announced today that one of the major college savings plans programs administered by her office has agreed to cut its fees to account owners by more than 40 percent.

The Vanguard 529 College Savings Plan, one of the state’s direct-sold plans, is slicing its fees for age-based options from 44 basis points (0.44 percent) to 25 basis points (0.25 percent) starting Oct. 15. Expenses on the plan’s 19 other individual portfolios are also being reduced.  The Vanguard 529 Plan is now one of the lowest priced college savings plans available.

The fee reduction is expected to result in a savings to The Vanguard 529 College Savings Plan account owners of about $8.5 million annually.

“This is great news for families working hard to save for their children’s future college education costs, as the significant lowering of fees for Vanguard 529 College Savings Plan account owners will assist families in saving for a better tomorrow for their children,” Marshall said.

It is the fourth college savings plan fee reduction announced by the Treasurer’s Office in the past 18 months.

Vanguard Chairman and CEO Bill McNabb said: “Low costs are among the largest contributors to a portfolio’s long-term success. We’re pleased to help lower costs for Vanguard 529 College Savings Plan investors.”

The Vanguard 529 College Savings Plan has assets of over $4.5 billion dollars, with some 170,000 account owners nationwide, including 2,300 Nevada families.

State Treasurer’s Office Announces New College Savings Plan

By Nevada News Bureau Staff | 2:10 pm September 16th, 2010

CARSON CITY – Nevada parents along with their counterparts across the country will soon have a new option to save for their children’s college education.

Nevada State Treasurer Kate Marshall announced today the state has entered into a contract with Putnam Investments as a program manager to provide a new “adviser sold” plan through the college savings programs.

Putnam was selected from among 12 firms that responded to a request for proposals. The five-year contract with Putnam can be extended for a second five years. The company’s offerings through the 529 college savings plans will be detailed when the contract begins Oct. 1.

Marshall said that with an adviser sold plan, parents work with an investor to reach their college savings goals. Nevada also currently offers “direct sold” plans that do not include the services of a financial adviser.

Under the contract, Nevada parents who decide to invest with Putnam will pay no annual fees. Participants in other states will have to pay annual fees. There is a separate management fee involved for all participants for the Putnam adviser sold plans. Those fees will be clearly disclosed when the offerings are made available next month.

“This will again be a nationwide offering putting education in reach both for Nevadans and people across the country who want to try to save for college for their children,” Marshall said.

The College Savings Board of Nevada chose Putnam for its innovation, its nationwide footprint and for what the company could bring to the table for Nevada families and families nationwide, she said.

Robert Reynolds, president and chief executive officer of Putnam Investments, said the college savings plans are the most efficient and cost effective way to save for a college education.

Close to 36 million families nationwide have children in the home under age 18, he said.

“So there is a tremendous need for 529,” he said.

Reynolds said the college savings market right now nationwide is worth $125 billion, and should expand to $200 billion within four years.

Marshall said the contract makes the Putnam college savings plan exclusive to the state of Nevada. The state will collect fees for having Putnam offering its plan through Nevada, she said. The state expects to earn between $1 million to $2 million a year in fees once the plan becomes well established.

Marshall said the Putnam plan is expected to grow to $2 billion in assets within five years.

Putnam has spent more than a decade serving the 529 college savings market through advisors in a partnership with the state of Ohio.

Marshall and Reynolds indicated they expect the advisor-sold plan to place a heavy emphasis on advisor and investor understanding of savings needs and to provide innovative investment strategies and tools to help bridge to more successful outcomes.

The state of Nevada, through the Treasurer’s Office, currently offers several 529 college savings plans, including the Upromise College Fund 529 Plan, Vanguard 529 College Savings Plan and the USAA College Savings Plan.

Over 16,000 Nevada families are now participating in one of the four college savings plans now offered by the state. More than 400,000 families in other states are also participating in the plans.


Audio clips:

State Treasurer Kate Marshall says new college savings offering will benefit Nevada parents:

091610Marshall1 :23 to have here.”

Marshall says she wants more parents to save for college:

091610Marshall2 :12 your child’s debt.”

Putnam President Robert Reynolds says there is a tremendous need for college savings plans:

091610Reynolds1 :20 for college education.”

Millennium Scholarship Recipients Could Get Shortchanged In Upcoming School Year

By Sean Whaley | 1:57 pm June 24th, 2010

(Updated at 6:57 p.m. on Thursday, June 24.)

CARSON CITY – Nevada high school graduates intending to rely on the Millennium Scholarship to attend college in state this fall could find themselves with more out-of-pocket expenses because of a $4.2 million projected shortfall in the program.

The shortfall is the result of money from a tobacco legal settlement that funds the scholarship coming in at a lower level than previously projected. The annual payments from tobacco companies are made each April. The 2010 payment was 10 percent less than projected due primarily to lower smoking rates.

Lawmakers were told today that if the scholarship revenues are inadequate to pay the full amount due each student, the payment would be reduced by a percentage based on the amount of money available.

If a shortfall in funding materializes as expected, students will likely see only a percentage of their scholarship paid in the fall semester because of cash flow issues, said Chief Deputy State Treasurer Mark Winebarger. Because the annual tobacco payment will be made in April 2011, students should get their full scholarship payments in the spring semester, he said.

After the meeting, Winebarger estimated that without any changes to the program, eligible students will receive only 65 percent of their scholarship amounts in the fall 2010 semester.

The Legislature’s Interim Finance Committee today delayed a vote on a transfer of $200,000 from a separate college savings program to prop up the scholarship. The infusion would be far short of what is needed to erase the shortfall.

Senate Majority Leader Steven Horsford, D-Las Vegas, said the Millennium shortfall will be taken up at a future meeting of the committee. More evaluation of the issue is needed, he said.

In addition to the tobacco settlement funds, the scholarship has been funded with revenues from the state’s Unclaimed Property Fund managed by the treasurer’s office. That revenue source was diverted by lawmakers to help fill a hole in the general fund budget after getting reassurances that the scholarship would remain solvent until 2014.

More recent projections on the anticipated size of the annual tobacco settlement payments show instead there will be a shortfall in the upcoming fiscal year, however.

Several other funding options to fill the shortfall were discussed by state officials but determined not to be legally viable. A proposal to use $2.6 million available in a separate college savings trust fund was also discussed but not uniformly supported by lawmakers.

Sen. Bob Coffin, D-Las Vegas, argued against taking any money from the college savings trust fund to subsidize the scholarship. He said the shortfall is the result of actions by the Legislature to balance the general fund budget.

“If there is a shortfall we did it,” Coffin said.

The program, named for former Gov. Kenny Guinn, costs about $25 million per fiscal year, with that amount projected to rise to $26 million in fiscal year 2012. About 21,000 students are using the scholarship, with 60,000 students participating since its inception in 2000.

The scholarship ranges from $40 to $80 per college credit hour depending on the college attended. The scholarship limit is $10,000. Students must qualify by earning a high enough grade point average in high school. Students must also maintain a minimum GPA while in college to continue receiving the scholarship.

audio clips:

Sen. Bob Coffin on legislative decision to take money from scholarship fund:

062310Coffin1 :15 taken that money.”

Coffin says it was bad policy to take money from the scholarship fund

062310Coffin2 :20 rather than later.”

GOP Treasurer Candidate Seeks Answers On Plan To Address Lost Interest Income From $50 Million Investment Loss

By Sean Whaley | 2:40 pm June 23rd, 2010

CARSON CITY – Nevada state Treasurer candidate Steve Martin is questioning the method Treasurer Kate Marshall is using to account for the loss of interest income from a failed $50 million investment with the now bankrupt Lehman Brothers.

Martin is also questioning whether Marshall has the authority to write off the interest loss to agencies and programs over a period of four and a half years.

Martin, the Republican candidate for state treasurer and a certified public accountant, is a former state controller and current member of the Nevada State Board of Finance, which oversees and approves the activities of the treasurer’s office. In a letter dated June 22, Martin asked Gov. Jim Gibbons, chairman of the Finance Board, to call a special meeting to discuss his concerns.

Martin said he discussed the issue with the Gibbons administration on Tuesday and expects that a special meeting will be called.

“I want to get to the bottom of it and give them a chance to explain what exactly they are doing,” he said. “There is a lot of confusion.”

Marshall’s decision to write off the investment loss, “would make an arbitrary adjustment to the budget approved by the governor and the Legislature for each of the years in question,” Martin said.

“It would also seem that this procedure would allocate a revenue source to the various agencies where funds do not actually exist,” he said.

Marshall took issue with Martin’s letter, saying her office budget, including the amortization plan, was approved by the Legislature. The Board of Finance, including Martin, has also approved the plan each time the quarterly investment reports, which include the interest distribution and amortization data, are reviewed and accepted, she said.

The state controller’s office also signed off, Marshall said. Controller Kim Wallin is a member of the Finance Board.

“We cannot do this in a vacuum,” Marshall said. “For a board member to want to rehash, revisit and reanalyze previous board actions to try to manufacture a crisis I think suggests a very poor temperament for someone who is involved in the financial management of the state.”

Marshall, a Democrat, is running for a second term.

Steve George, chief of staff for the treasurer’s office, said Nevada was not alone in the Lehman Brothers collapse. More than $3 billion was lost to states and municipalities as a result of the bankruptcy. These other government entities were surveyed to determine the best way to address the situation, which was the amortization process now being used by Nevada, he said.

Martin said Marshall’s decision to compensate for the loss over a period of years was made prior to his appointment to the Board of Finance in November of 2009.

Martin said it is not clear to him which agencies and programs are being affected by the investment loss.

Martin said from the minutes of a Finance Board meeting in July 2009, it appears as if Marshall decided to go forward with her response to the Lehman Brothers loss on her own. There is no evidence the board ever took action to approve her plan, he said.

The minutes of the July 2009 meeting include a comment from Marshall that spreading out the loss to the agencies over a period of years was proposed so all of the lost income did not have to come out of their budgets at one time.

At the meeting Gibbons asked for an explanation of the 4.5-year time frame.

Mark Winebarger, chief deputy state treasurer, said the office did not want to drag out the process but also didn’t want to unduly impact the fiscal year 2010 and 2011 budgets that were already approved. He said the proposal was discussed with the Legislature’s fiscal staff and that it was deemed acceptable.

The state lost the money in its securities lending portfolio when Lehman Brothers collapsed in September 2008. The treasurer’s office is attempting to recoup some of the loss through bankruptcy court proceedings.

George said there is the potential to recover a portion of the loss which would then lessen the impact on the affected programs and agencies.

audio clips:

Martin questions Marshall’s action on Lehman failure:

062310Martin1 :28 education trust fund.”

Martin says Marshall does not have authority to take action:

062310Martin2 :22 we’re talking about.”

State GOP Complaint Against Treasurer Marshall Dismissed By Ethics Panel

By Nevada News Bureau Staff | 11:39 am June 16th, 2010

CARSON CITY – A two-member panel of the state Ethics Commission has decided there is insufficient cause to move forward with a complaint that state Treasurer Kate Marshall used her office to benefit her re-election bid.

The Nevada State Republican Party filed the complaint in April, saying Marshall had inappropriately included her official office telephone number as a point of contact for her campaign. Marshall, a Democrat, is running for a second term.

But Caren Jenkins, executive director of the commission, said a review of the complaint Thursday by two commission members, one Republican and one Democrat, found no cause to move it forward for a full hearing.

The panel determined that Marshall’s state office phone number was included on a contact list for candidates prepared by the secretary of state’s office, not by Marshall herself, she said.

A similar complaint filed against Secretary of State Ross Miller was also rejected by an Ethics Commission panel last month.

Steve Martin, a Las Vegas Republican and former state controller running against Marshall, said he was disappointed the complaint was dismissed out of hand without a hearing. But the decision was not a surprise since a previous panel reached the same decision in Miller’s case, he said.

Marshall was also criticized by the Martin campaign for lending her voice to radio ads promoting a children’s contest involving a college savings program managed by her office, but the issue was not part of the ethics complaint.

Gary Gray, campaign consultant to Marshall said the decision was a vindication for his client and her record of accomplishment, success, and integrity. He criticized Martin, who lost his race for controller in 2006, for making a “bogus” ethics complaint.

Martin did not file the complaint, however. Acting state party Chairwoman Sherry Dilley filed the complaints against Marshall and Miller.

Lt. Gov. Krolicki says Nevada Missed Out on Chance to Protect Tobacco Settlement Funds

By Sean Whaley | 4:46 pm May 6th, 2010

CARSON CITY – Lt. Gov. Brian Krolicki says it is now clear the Nevada Legislature should have “securitized” the money the state was scheduled to receive as part of a settlement with the tobacco companies a decade ago to protect it from the current reality of lower than expected annual payments.

Securitization essentially would have sold off the future value of the annual tobacco payments projected to come to the state over 25 years to investors, projected at $1.2 billion, for a lesser upfront value, allowing the state to receive and invest about $500 million.

Krolicki, asked this week about the failed securitization effort in response to the current financial problems facing the Millennium Scholarship program, said the evidence is in.

“It is no longer opinion, it is reality,” he said. “After the passage of a decade, we now know the answer to the question. We should have securitized.”

Tobacco settlement revenue predictions a decade ago suggested the state would get nearly $52 million this year, but the state actually received just under $42 million, Krolicki said.

“We’re getting very roughly a 20 percent haircut from where we thought we would be 10 years ago,” he said.

Krolicki, who served as Nevada State Treasurer for two terms when the master settlement agreement with the tobacco companies was signed by Nevada and 45 other states, proposed the securitization concept to the 2001 Legislature. Using the process would have protected the money from the vagaries of the tobacco industry and the annual payment estimates that have now proven to be overly optimistic, he said.

The securitization effort, and another attempt in 2003, both failed to win legislative support.

Assembly Speaker Barbara Buckley, D-Las Vegas, who voiced concerns about the proposal in 2001, disagrees with Krolicki’s assessment that securitization was the right move.

“Securitization would have in my opinion caused us to run out of money a long time ago,” she said. “With securitization you get pennies on the dollar. It would have probably been used up the first time we were hit with a financial crisis.”

Securitization was essentially a bet that the tobacco companies were going to go out of business and so would have stopped sending annual payments to Nevada under the master settlement agreement negotiated more than a decade ago, Buckley said.

“That didn’t happen,” she said. “People are still smoking.”

Krolicki maintains that using securitization would have protected Nevada from the reality that payments from the tobacco companies are declining because people are smoking less.

From Fiscal Year 2001 through 2010, the state has received $416.1 million in tobacco settlement funds, according to information provided by the Treasurer’s Office. Projections used by Krolicki in 2001 showed the state anticipated receiving $469.1 million or nearly 13 percent more during the same period.

In part because of declining cigarette consumption, Nevada’s payment this year was about $5 million less than what the Treasurer’s Office had projected and has affected the solvency of the scholarship program.

Krolicki’s securitization proposal, contained in Senate Bill 488, passed the Senate by an 18-3 vote in 2001 but never emerged from the Assembly Judiciary Committee for a vote.  Minutes from the committee hearings show there were concerns about the idea of giving up $1.2 billion worth of tobacco payments over 25 years in exchange for an estimated $500 million.

“I wish we would have done it,” Krolicki said. “If we had locked in the amount of money we thought we would receive, the programs funded with the money would still be very viable.”

The market has fluctuated since 2001 but the money today would be largely intact, he said.

A number of states went the securitization route with their tobacco funds a decade ago, including North Dakota, Alaska, Alabama and South Carolina. The value of the settlement money at the time had a higher credit rating than Nevada-backed bonds, he said. Today their status is junk and the securitization opportunity has been lost, Krolicki said.

Buckley said states that used securitization for their tobacco funds have long since spent the money.

Nevada is still receiving its annual payments, she said.

The issue isn’t securitization but the fact that the College Savings Plans board did not transfer $2 million to the scholarship in March as lawmakers anticipated, Buckley said. In addition, the scholarship is a victim of its own success with many students taking advantage of it, particularly during this economic downturn, she said.

The scholarship is provided to Nevada high school graduates who must earn a minimum GPA and who go on to college in state.

The Legislature in 1999 agreed to use 40 percent of the settlement funds for the scholarship program proposed by then-Gov. Kenny Guinn. The remainder goes to public health related programs except for a small amount that goes to the Nevada Attorney General’s office.

Buckley also noted that some Assembly Republicans, along with Krolicki, proposed securitizing the Unclaimed Property Fund managed by the state Treasurer’s Office as a way to help balance the budget in the special session held earlier this year.

Lawmakers chose not to move forward on the proposal after current Treasurer Kate Marshall said such a move could hurt the state’s credit rating.

Buckley, who will not be returning to the Legislature next year, said she believes the scholarship program should and will be continued. A temporary solution is needed to fund it through 2011, giving the Legislature time next year to consider ways to fit the program within the available funds, she said.

Giving the scholarship only to those in financial need is one likely topic for that discussion, Buckley said.

Krolicki, who is running for re-election as lieutenant governor, said he supports continuation of the scholarship. As chairman of the Commission on Economic Development in his current position, the scholarship is clearly helping generate the educated workforce Nevada needs for its economic development efforts, he said.

But he did criticize Marshall’s office for failing to properly project tobacco revenues for lawmakers so they could make informed judgments to maintain the program.

Lawmakers would not have eliminated transfers to the scholarship from the Unclaimed Property Fund, or transferred money out of the scholarship fund itself, if there was any suggestion doing so would have rendered it insolvent, Krolicki said.

Lawmakers approved taking $32.8 million in total from the scholarship at a special session earlier this year to help solve a more than $800 million shortfall in the state’s general fund budget.

“People need to take responsibility for their actions and projections,” Krolicki said.

Marshall said today the missed tobacco payment projection was a first for her office and has come at a time of unprecedented economic crisis.

Marshall reported to lawmakers this week the scholarship needs about $4.2 million to say solvent through next fiscal year. She has presented three alternatives to keep the program going that lawmakers will consider in June.

“During our global financial crisis there have been a lot of firsts,” she said. “Part of my job in a financial crisis is to find financial solutions I can present to the Legislature so they have options. I have provided leadership and I am proud of my record.”

In a letter to lawmakers sent Monday, the Treasurer’s Office said the record shows Marshall expressed concerns to lawmakers that the decision to use $32.8 million destined for the program to balance the general fund budget could put it at risk. Information was posted on the office website to keep parents and students informed as well.

Marshall also said the annual tobacco payment came in April, several weeks after the Legislature had made its decisions regarding the scholarship funding.

In a fact sheet posted on the treasurer’s website, the reason for the lower than expected tobacco payment received in April is because national tobacco sales were down about 9 percent.

“However, there is no present information that would clearly indicate that the lower-than-projected amount was an anomaly or a pattern for future payment amounts,” the fact sheet says.

Charges, Countercharges Fly Between Martin and Marshall in Race for State Treasurer

By Sean Whaley | 8:08 am May 1st, 2010

CARSON CITY – Nevada GOP state treasurer candidate Steve Martin and Democrat incumbent Treasurer Kate Marshall engaged in a war of words this week over her management of the office for which she is seeking a second term.

Martin, a former state controller, initiated the exchange on Tuesday with a release criticizing Marshall on several issues including putting the Millennium Scholarship program at risk and running commercials for the Nevada College Savings Plans featuring her name and voice in an election year. She was also criticized for using her state office for her re-election efforts.

Martin said Marshall has shown failed leadership stemming from her “improper stewardship of the public’s money.”

Martin said Marshall has not been upfront about the deteriorating fiscal health of the Millennium Scholarship fund, suggesting it could have a $3.4 million shortfall by June 2011. He also said Marshall has not kept lawmakers and the public informed of the status of the fund.

On Thursday, the Marshall campaign issued a lengthy point-by-point rebuttal on the Millennium Scholarship issue, calling Martin’s criticisms false and distorted misrepresentations. The response also accuses Martin of violating the code of fair campaign practices which he signed March 3. The code prohibits malicious and unfounded accusations.

The Marshall campaign said it was the Legislature’s decision to take nearly $28 million in funding from the Millennium Scholarship program over three years to balance the state budget that has put it at risk. The response also says Marshall warned the governor and lawmakers about what taking the funds would do to the program, and that she has continued to communicate with them and the public on the status of the scholarship program.

Marshall has been open and honest with the governor, Legislature and Nevadans and has “repeatedly advised against under-funding and removing funds from the Millennium Scholarship,” the response from her campaign said.

“Steve Martin has misrepresented, distorted and falsified information through malicious and unfounded accusations,” the response said.

Martin’s campaign team on Friday pointed to a discussion at the Legislature’s Interim Finance Committee on Thursday as evidence lawmakers have not been fully informed as to the health of the scholarship fund.

At the meeting, Assemblywoman Heidi Gansert, R-Reno, and Senate Majority Leader Steven Horsford, D-Las Vegas, both said they believed the scholarship was to be funded through 2014 through an infusion of $4 million from the College Savings Plans account over two years based on Marshall’s testimony during the special session that ended March 1.

The five-member College Savings Plans board rejected the idea of transferring $2 million to the fund, however, approving only a $200,000 transfer to keep it funded through the 2011 fiscal year.

“If legislators were properly informed, as Treasurer Marshall’s campaign claims, then why at yesterday’s IFC meeting did a bipartisan group of legislators seem to state otherwise?” Martin’s campaign team asked. “This is just another item in the growing list of scenarios where Kate Marshall and her team are literally and figuratively writing checks they can’t cash.”

Marshall’s office has already responded to the radio ad issue, saying the expenditure of non-taxpayer money to promote a contest to school children publicizing the College Savings Programs managed by her office is appropriate and was approved by the board.

Martin said the $12,000 worth of ads are running on radio stations and programs aimed at voters, not children.

“How many ten year olds listen to KOMP Rock or Sunday morning talk radio sports programs on KBAD?” asked Martin. “These ads are targeted to parents who are voters, and for Marshall to claim otherwise undermines even basic credibility.”

“The give away will award $529 to just six children, so she is spending more on the advertising than the actual prizes,” said Martin.

Marshall’s office has also discounted a Nevada State Republican Party ethics complaint over the alleged use of her official office for her campaign, saying the issue was the result of an error in posting information by the secretary of state’s office.

Lawmakers Question State Treasurer’s Office Over Financial Health of Millennium Scholarship Fund

By Sean Whaley | 1:45 pm April 29th, 2010

CARSON CITY – When the Legislature adjourned its special session to balance the budget on March 1, lawmakers went home believing they had ensured the financial viability of the Millennium Scholarship program through 2014.

But the program, hit by declining tobacco settlement revenues and the diversion of financial support to help fill a more than $800 million budget shortfall, remains in jeopardy.

The Legislature’s Interim Finance Committee was told today the proposal to use $2 million per year over two years from the College Savings Programs managed by the state treasurer’s office to shore up the scholarship was not approved by the College Savings Programs Board.

Instead, the five-member board approved $200,000 in support for the scholarship program, enough to keep it running only through fiscal year 2011.

Some lawmakers said they were under the impression from Nevada State Treasurer Kate Marshall at the special session that the $4 million would be transferred to the fund. It is legally permissible to transfer funds from the College Savings Programs, which are paid for by families investing in the plans, to the scholarship, which is funded through various state revenues including tobacco settlement funds.

“I can tell you that it was represented during the special session that we were going to have that money transferred and that’s why many of us agreed because we thought the Millennium Scholarship would be solvent, that it was represented by the treasurer’s office that there was the ability to move the money and that it would be solvent,” said Assemblywoman Heidi Gansert, R-Reno.

Senate Majority Leader Steven Horsford, D-Las Vegas, agreed with Gansert that it was represented to lawmakers the money would be transferred to keep the scholarship solvent through 2014.

“That was our expectation and I am sorry the board did not agree with that approach,” he said.

Horsford asked the treasurer’s office to keep lawmakers informed on the financial projections for the scholarship fund so they can be prepared to take action.

“We need to know now where the shortfalls may be so that we can start formulating options for next session,” he said.

Steve George, chief of staff to Marshall, said the college savings board was “vehemently” opposed to the transfer because of concerns about the scholarship’s future. Approving the $200,000 ensures that students receiving the scholarship will get the money next year, he said.

The Legislature in the 2011 session will have to address the future of the scholarship program, George said.

“When it was brought up there was a lot of heated discussion about it and they just weren’t going to go down that path,” he said.

Marshall, who has been criticized by her Republican opponent on the issue, is one of five members of the board, and it was made clear to lawmakers that the full board would have to approve the $2 million transfer, George said.

Minutes of the March 18 meeting of the board show that Marshall said the college savings plan fund could afford to make the $2 million transfer.

Steve Martin, the GOP treasurer candidate and a Las Vegas certified public accountant, criticized Marshall for what he said was her failure to apprise lawmakers of the true financial status of the scholarship program.

Martin said in a campaign statement the scholarship fund is in far greater financial jeopardy than Marshall told lawmakers at the special session. Martin is also a former state controller.

It appears the Millennium Scholarship is approximately $1.6 million short of funding and could be $3.4 million short of projections by June, 2011, he said.

According to Martin, the reason for the shortfall comes from the fact that the tobacco settlement that funds most of the scholarship saw its annual April payment to Nevada come in 10 percent less than projected. If the April 2011 payment is approximately the same as this year, a $3.4 million shortfall will occur before June 2011, he said.

“Why are these true potential deficits finding the light of day only after the special session?” Martin asked.

“Had this shortage been openly and publicly highlighted by Marshall the Legislature may have acted differently,” he said.

The Gov. Guinn Millennium Scholarship program was proposed by former Gov. Kenny Guinn and approved by the 1999 Legislature.

The scholarship, which ranges from $40 to $80 per college credit hour depending on the college attended, is available only to students attending one of the campuses of the Nevada System of Higher Education. The scholarship limit is $10,000.

Students must qualify by earning a high enough grade point average in high school. Students must also maintain a minimum GPA while in college to continue receiving the scholarship.