2019-20 Legislative Standing Committees Taking Shape

Majority Leader Scott Fitzgerald and Assembly Speaker Robin Vos have announced the Republican members of the Senate and Assembly Committees for the 2019-20 session.

The Democratic appointments have not been made yet.  If your legislator has been appointed to one of these committees, consider reaching out to congratulate them and to share WEMTA's legislative priorities. 

Senate Committee on Education

Senator Luther Olsen, Chair

Sen. Alberta Darling, Vice-Chair

Sen. Steve Nass, member

Sen. Dale Kooyenga, member

Sen. Kathy Bernier, member

Senate Committee on Universities, Technical Colleges, Children & Families

Senator Dale Kooyenga, Chair

Sen. Steve Nass, Vice-Chair

Sen. Albert Darling, member

Sen. Luther Olsen, member

Assembly Committee on Education

Rep. Jeremy Thiesfeldt, Chair

Rep. Joel Kitchens, Vice-Chair

Rep. John Jagler

Rep.-elect Robert Wittke

Rep. Jessie Rodriguez

Rep. Ron Tusler

Rep. Jeff Mursau

Rep. Romaine Quinn

Rep.-elect Timothy Ramthun

Rep. Chuck Wichgers

Assembly Committee on College and Universities

Rep. Dave Murphy, Chair

Rep. Travis Tranel, Vice-Chair

Rep.-elect Robert Wittke

Rep. Romaine Quinn

Rep. Rob Summerfield

Rep. Warren Petryk

Rep. Joan Ballweg

Rep. Scott Krug

Rep. Rob Stafsholt

Rep. Cindi Duchow

Assembly, Senate Legislative Committees Announced

Assembly Speaker Robin Vos (R-Rochester) and Senate Majority Leader Scott Fitzgerald (R-Juneau) have announced the 2019-20 legislative standing committees and their chairs. Committees are the first stop for all bills introduced in the Senate and Assembly. They are tasked with holding public hearings and voting to advance bills to the full Legislature. 

Senator Luther Olsen (R-Ripon) will continue to chair the Senate Committee on Education, and Representative Jeremy Thiesfeldt (R-Fond du Lac) will continue to chair the Assembly Committee on Education. 

Full Senate Committee Listing can be seen here. 

Full Assembly Committee Listing can be seen here. 

Sen. Olsen

Sen. Thiesfeldt 

Gov. Walker Signs Extraordinary Session Bills Into Law

Governor Walker signed the three extraordinary session bills passed by the legislature into law today. While Walker had previously said he was considering possible vetoes, he signed all of the bills into law as passed by the Legislature.

This includes a change to the way discretionary settlement funds are handled. Currently, the Attorney General has discretion over how to use these dollars, but the legislation requires all funds to be deposited into the general fund. WEMTA believes these funds should be deposited into the Common School Fund based on the Wisconsin State Constitution, which requires all fines, forfeitures and unspecified grants to the state to be deposited into the Fund.

The bills also limit early voting to two weeks, create new legislative oversight processes, place limits on the Attorney General’s ability to withdraw the state from lawsuits, and put the new work and cost-sharing requirements for childless adults on BadgerCare into law. 

You can read a summary of all the bills, here: http://docs.legis.wisconsin.gov/misc/lfb/bill_summaries/2017_19/0002_december_2018_extraordinary_session_bills_as_passed_by_the_legislature_12_6_18.pdf 

Gov.-elect Evers Survey, Listening Sessions on Budget Priorities

Governor-elect Evers is holding budget listening sessions across Wisconsin over the next 7 days to get ideas from Wisconsinites about policies they would like to see funded. One of Evers first acts as Governor will be introducing a state budget, likely in February of 2019.

It is critical that Evers and his team hear from members of WEMTA about the importance of the Common School Fund, the need for educational technology funding, and school staffing.

If you can't make a listening session, you can take a survey online: https://docs.google.com/forms/d/e/1FAIpQLScHfkoflPcl76h5m8KKaIJ7oxYjdYpne2Dpt2YUikwfp21S2g/viewform

You must register in order to attend the in-person listening sessions. 

Dec. 17 in Superior: 4:30 p.m. to 6 p.m. at Superior Middle School, 3626                            Hammond Ave. Register at http://bit.ly/WIBudgetSuperior

Dec. 18 in La Crosse: Noon to 1:30 p.m. at American Legion Post 52, 711 6th St. South. Register at https://bit.ly/2EamsSE .

Dec. 19 in Milwaukee: 4:30 to 6 p.m. at United Way of Greater Milwaukee, 200 West Pleasant St. Register at https://bit.ly/2B3PoJ6

Attend a Budget Listening Session with Gov-elect Evers

Governor-elect Evers is holding budget listening sessions across Wisconsin over the next eight days to get ideas from Wisconsinites about policies they would like to see funded. One of Evers first acts as Governor will be introducing a state budget, likely in February of 2019.

It is critical that Evers and his team hear from members of WEMTA about the importance of the Common School Fund, the need for educational technology funding, and school staffing.

Anyone interested in attending the sessions may register online at the links for each stop of the tour. The sessions are:

Tuesday (December 11) in Green Bay: 4:30 to 6 p.m. in the Phoenix Room at the University of Wisconsin-Green Bay Union. Register at https://bit.ly/2SCUh30. 

Wednesday (December 12) in Wausau: Noon to 1:30 p.m. at the Wausau Labor Temple, 318 S. Third Ave. Register at https://bit.ly/2UrKkqC. 

Dec. 18 in La Crosse: Noon to 1:30 p.m. at American Legion Post 52, 711 6th St. South. Register at https://bit.ly/2EamsSE.

Dec. 19 in Milwaukee: 4:30 to 6 p.m. at United Way of Greater Milwaukee, 200 West Pleasant St. Register at https://bit.ly/2B3PoJ6.

Ask Governor Walker to Veto Changes to Discretionary Settlement Funds

WEMTA is greatly concerned by changes to the deposit of discretionary settlement funds contained in one of the special session bills passed this week (Senate Bill 884/Assembly Bill 1070). The bill requires all discretionary settlement funds to be deposited into the general fund rather than giving them to the Attorney General who can choose how the funds are spent. WEMTA believes the state constitution is clear—discretionary funds belong in the Common School Fund.

Contact Governor Walker and ask that he veto changes to settlement funds contained in Senate Bill 884/Assembly Bill 1070. Tell him that these funds belong in the Common School Fund.

Email. govgeneral@wisconsin.gov.

Phone: (608) 266-1212.

Talking Points You can Use:

·         The state constitution requires that the Common School Fund receive “all moneys and the clear proceeds of” fines, forfeitures, escheats and unspecified grants paid to the state. Settlement funds are no different than forfeitures and belong in the Common School Fund, not the general fund.

·         Senate Bill 884/Assembly Bill 1070 further diverts these funds from the Common School Fund by placing them in the general fund. Please veto this change.

Legislative Council Study Committee on Common School Fund Concludes its Work

The Legislative Council Study Committee on the Investment and Use of the School Trust Funds met for the last time today. They spent the entire meeting debating proposed legislation. 

The Committee  decided against introducing a constitutional amendment that would have modified the investment strategy of and distributions from the Common School Fund. Many of the public members of the Committee were concerned by potential unintended consequences of the draft constitutional amendment. Ultimately, they chose to make a recommendation to re-evaluate the investment of BCPL funds once information about the results of their new investment strategy is available.

The Committee will prepare a final report, which will be presented to the Joint Legislative Council Committee when the Legislature re-convenes in 2019. 

Here is a summary of their final recommendation and the draft bills they voted in favor of introducing. 

Recommendation for Further Study:  The Committee decided to make the following recommendation in their final report.

“The Study Committee on the Investment and Use of the School Trust Funds:

•  Appreciates the importance of the school trust funds to fund beneficiaries
•  Supports the goal of ensuring intergenerational equity through increasing the returns on the funds
•  Recognizes the value of recent legislative changes relating to the investment of the funds
• Acknowledges that implementation of these changes is ongoing
• Recommends that the Legislature further study issues relating to the investment of the funds, in consultation with beneficiary groups, once information on the results of the changes becomes available for study.”

Allowing SWIB to Use the Prudent Investor Standard if BCPL Contracts with Them for Investment Services: The Committee voted to introduce legislation allowing SWIB to invest the Common School Fund using the prudent investor standard  if BCPL chooses to contract with them for some investment services. BCPL has the ability to delegate some investment authority to SWIB under current law.   BCPL gained the ability to use prudent investor standard in 2015 but the current statutory language related to BCPL’s ability to delegate to SWIB was not updated to reflect the prudent investor standard legislation. WEMTA is comfortable with the current draft of this bill because it does not mandate that Common School Fund dollars be transferred to SWIB.   

Promissory Notes:  The Committee voted to introduce legislation allowing banks to lend to municipalities for terms of up to 20 years (they are currently limited to 10 year terms). This bill was drafted due to concerns raised by the banking community that BCPL had an unfair advantage over private banks because they could make loans to municipalities for longer terms than banks.

Study Committee on BCPL, CSF Drafting Constitutional Amendment

The Legislative Council Study Committee on the Investment and Use of the School Trust Funds met November 14 to decide on draft legislation, including a resolution to amend the state constitution to modify the investment requirements of the Common School Fund.  They will meet for a final time on December 6 to vote on whether or not they want to introduce any of the draft bills next session.

They have asked for five bill drafts to be prepared:

1.  A constitutional amendment related to the investment of the Common School Fund (CSF). Members of the Committee would like to allow BCPL to dip into the principal of the fund to make payments to school libraries. Currently, BCPL only makes payments to school libraries using the income from the Fund as directed by the constitution.  Others would like to see school libraries get a set percentage of CSF income every year with BCPL allowed to invest the remaining income. Currently, libraries receive all of the income from the CSF.

2. Statutory changes to put some of BCPL's current CSF investment strategies into state law (i.e. the smoothing account they created a few years ago).

3. Giving the State of Wisconsin Investment Board (SWIB) the same authority to invest the CSF that BCPL gained in 2015 after the Legislature approved a bill allowing them use the prudent investor standard.

4. Eliminating the ability of municipalities to pass BCPL loan funds on to private developers.

5.  Allowing banks to lend to municipalities for longer terms.


BCPL testified to the Committee that they were given increased investment authority by the Legislature less than three years ago and are currently in the process of implementing a new investment strategy. They requested that the Committee give the current investment strategy a few years to fully take effect and then evaluate it to see how it's working. BCPL said the timing is not right to make a constitutional change.  They warned the Committee that other states have made changes to their trust funds with the goal of getting higher returns that have resulted in significant losses to the funds. Idaho adopted a new policy that led to a $342 million loss for their fund. BCPL said they have been cautious in their investment approach to avoid major losses like this. They told the Committee that every state that has a trust fund like ours looks different because every state has different needs, different beneficiaries and a different mix of assets.

Attorney General Brad Schimel, who is the current chair of the BCPL, sent a memo to the Committee urging them to be cautious when it comes to amending the state constitution. "I believe that BCPL should be given more time to transition its investment portfolio before considering significant changes to statutes or the constitution," wrote Schimel.

Two New BCPL Commissioners Elected

Democrat Tony Evers was declared the winner of the Governor’s race at about 1:30 a.m. It is the closest Wisconsin Governor’s race in nearly 50 years. At the time the race was called, Evers led Governor Walker by roughly 25,800 votes and that margin increased to 30,849 once all precincts reported. Walker conceded the race to Evers earlier this afternoon. 

The Board of Commissioners of Public Lands, which oversees the Common School Fund, will get two new Commissioners after Sarah Godlewski (D) won the race for State Treasurer and Josh Kaul (D) won the race for Attorney General. Doug La Follette (D) won re-election and will continue to serve on the Board. 

U.S. Senator Tammy Baldwin’s race against State Senator Leah Vukmir was called in shocking speed, with ABC News projecting her as the winner almost as soon as polls closed.

Republicans successfully defended their strong majorities in the State Senate and State Assembly.

Governor-elect Evers and the New State Legislature will be sworn-in in early January 2019.

Here are the highlights:

Governor: Tony Evers (D) upsets Gov. Walker (R).

U.S. Senate: Tammy Baldwin (D) fended off a challenge from Leah Vukmir (R)

Attorney General: Josh Kaul (D) defeated incumbent Brad Schimel (R).  

Secretary of State: Doug La Follette (D) will continue his 40-year career as Secretary of State.

State Treasurer: Sarah Godlewski (D) is the next State Treasurer.

State Senate: Republicans have increased their majority by one seat after State Rep. Andre Jacque (R-De Pere) won his re-match against Sen. Caleb Frostman (D-Sturgeon Bay). They will start the next session with a 19-14 majority.

State Assembly: Republicans appear to have held on to their 64-35 majority in the State Assembly, though there is one race that has not been called. Democrats may flip one seat in AD  14 where State Treasurer Matt Adamczyk (R) leads Democrat Robin Vining by just 21 votes in a Republican seat.

Congressional Delegation: Bryan Steil (R)  will replace his former boss House Speaker Paul Ryan in Wisconsin’s 1st Congressional District after defeating Democrat Randy Bryce. All Congressional Delegation incumbents won re-election.

Governor

One of the most closely watched gubernatorial elections in the county came down to the wire. Tony Evers was declared the winner at about 1:30 a.m. beating Walker, 50%-48%. The margin of victory was just outside the window for a recount, and Walker concede the race to Evers on Wednesday afternoon.

Walker started warning supporters after the Spring Election in April that Wisconsin was at risk of a Blue Wave.

The two men were locked in a virtual tie in polling released by the Marquette University Law School throughout the race. The last MU Law Poll before the election had Walker and Evers in a dead tie, each with 47% support among likely voters. National polling consistently showed Evers leading Walker. Many national forecasting firms moved the race from “Leans Republican” to “toss-up” over the course of the campaign, and some outlets like Sabato’s Crystal Ball and FiveThirtyEight changed their ratings to “Leans Democratic” in the days before the election.

U.S. Senate

U.S. Senator Tammy Baldwin defeated State Senator Leah Vukmir to win one of the nation’s most expensive U.S. Senate races with a solid, 57%-43%, victory. More than $47 million was spent on this race, which heavily focused on health care.  Polling released throughout the election cycle consistently showed Baldwin with a sizeable lead over Vukmir. The final Marquette Law School poll released before the election had Baldwin garnering 54% support among likely voters.

Vukmir, who has served in the Wisconsin State Legislature for the past 16 years, had to give up her State Senate seat to challenge Baldwin and will not be returning to the Legislature in January. State Representative Dale Kooyenga (R-Brookfield) won the race to fill her seat.

Attorney General

Democrat Josh Kaul was declared the winner over incumbent Brad Schimel in the early morning hours with a margin of 50%-49%.  Schimel led Kaul in every Marquette Law School Poll released during the election cycle, but the race began to tighten in recent weeks. Kaul led Schimel in fundraising but struggled with poor name recognition throughout the race.  

State Treasurer

Democrat Sarah Godlewski beat Republican Travis Hartwig, 51%-47%, to become the next Wisconsin State Treasurer just seven months after Wisconsinites overwhelmingly voted to keep the Office. Both candidates made restoring financial oversight duties to the office a central part of their campaigns. Godlewski, who was heavily involved in the campaign to keep the office, has also proposed using it to help Wisconsinites refinance their student loans. Current State Treasurer Matt Adamczyk, a strong proponent of eliminating the office, chose not to run for re-election and ran for a State Assembly seat instead. Adamczyk was leading his Democratic opponent in AD 14 by just 21 votes as of this writing, but the race has yet to be called.  

Secretary of State

Secretary of State Doug La Follette beat his Republican challenger Jay Schroeder, 52%-48%. La Follette has held the office for nearly 40 years and survived a primary challenge from Madison Alder Arvina Martin in August. Schroeder had previously said that he wanted to eliminate  the Office, but appears to have changed his position over the course of the campaign, arguing in recent weeks that he wanted the Office to be an “Election Watchdog.”

State Senate

Democrats had the momentum going into the general election after picking up two seats in special elections held in January and June. This left Republicans with a narrow, 18-15 majority. However, Republicans were able to defend all of their seats and pick up one additional seat in Senate District 1. The will have a 19-14 majority in the State Senate next session.

Senate District 1: State Senator Caleb Frostman (D-Sturgeon Bay) lost his re-match with State Representative Andre Jacque (R-De Pere). Jacque won, 54-46%, just five months after losing the special election to fill former State Senator Frank Lasee’s (R-De Pere) seat.

Senate District 5: State Representative Dale Kooyenga (R-Brookfield) defeated Democrat Julie Henszey in the race to fill the State Senate seat vacated by Leah Vukmir (R-Wauwatosa) who gave it up to run for U.S. Senate.

Senate District 17: State Senator Howard Marklein (R-Spring Green) beat Democrat Kriss Marion, 54%-46%,  in one of the most closely watched State Senate races of the night. Democrats heavily targeted this district after liberal Supreme Court Justice Rebecca Dallet carried it in the April Election.

Senate District 19: Senate President Roger Roth (R-Appleton) fended off a challenge from Democrat Lee Snodgrass in the other closely watched race of the night, 53%-47%.  Democrats also chose to target this district after it was carried by Dallet in April.

Senate District 23: State Representative Kathy Bernier (R-Chippewa Falls) beat Democrat Chris Kapsner, 59%-41%,  to fill the open seat vacated by retiring State Senator Terry Moulton (R-Chippewa Falls).

Senate District 25: State Senator Janet Bewley (D-Mason) won her race against James Bolen, 51%-49%. The  Republican State Leadership Committee ran an ad campaign targeting Bewley and attempting to brand the Northwest Democrat as a “Madison liberal.”

Senate District 31: Democrat Jeff Smith beat Republican Mel Pittman to fill the open State Senate Seat vacated by Kathleen Vinehout (D-Alma). Smith is a former Democratic State Assembly Representative.  Vinehout, who gave up the seat to run for governor, had held it for 12 years.

State Assembly

Assembly Republicans went into Election Day with a solid 64-35 majority and they appear to have  successfully defended it. There is still one race that has not yet been called, so Democrats could potentially flip one Republican seat. Democrats needed to pick up 15 seats to take the majority.

Assembly District 2:  Republican Shae Sortwell beat Democrat Mark Grams and two third-party candidates to fill the open Assembly seat vacated by Representative Andre Jacque (R-De Pere), who gave it up to run for State Senate. Sortwell is a veteran and former state legislative aid.

Assembly District 14: State Treasurer Matt Adamczyk currently leads Democrat Robin Vining by just 21 votes in the race to fill State Representative Dale Kooyenga’s (R-Brookfield) open seat. WisPolitics.com had rated this race as a toss-up.

Assembly District 23: State Representative Jim Ott (R-Mequon) won his race against Democrat Liz Sumner, 51%-49%. Sumner put up strong fundraising numbers during the campaign, and WisPolitics.com rated it as a toss-up.

Assembly District 28: Republican Gae Magnafici beat Democrat Kim Butler, 59%-41%, to fill the open seat vacated by Adam Jarchow (R-Balsam Lake). Magnafici worked as a registered nurse for 35 years, retiring in 2017. Jarchow gave up the seat to run in a special election for State Senate in January, which he lost.

Assembly District 38: Republican Barb Dittrich beat Democrat Melissa Winker to fill the open seat vacated by Joel Kleefisch (R-Oconomowoc). Dittrich has two children with special needs and was appointed to the Board of Directors of the Christian Council on Persons with Disabilities (now LIFT Disability Network). She also founded a nonprofit called Snappin’ Ministries, which provides faith-based support to parents of children with special needs.  

Assembly District 42: State Representative Jon Plumer (R-Lodi) won his re-match with Democrat Ann Groves Lloyd, 58%-42%. Plumer won the special election to fill this seat in June.

Assembly District 49: State Representative Travis Tranel (R-Cuba City) won his race against Democrat Mike Mooney, 59%-41%. Mooney outraised Tranel in early fundraising reports, which led to speculation that the seat could flip.

Assembly District 50: Republican Tony Kurtz beat Democrat Art Shrader, 55%-43%, to fill retiring State Representative Ed Brooks’ (R-Reedsburg) open seat. WisPolitics.com rated this race as a toss-up. Kurtz describes himself as a veteran and farmer.

Assembly District 51: State Representative Todd Novak (R-Dodgeville) won his race against Democrat Jeff Wright, 51%-49%.  Wright put up strong fundraising numbers early on in the campaign, leading WisPolitics.com to list it as a toss-up.

Assembly District 62: Republican Robert Wittke beat Democrat John Lehman, 55%-45%, to fill retiring State Representative Tom Weatherston’s (R-Caledonia) open seat.  Wittke is the Racine Unified School Board President.

Assembly District 68: Republican Jesse James beat Democrat Wendy Sue Johnson to fill State Representative Kathy Bernier’s (R-Chippewa Falls) open seat, 58%-42%. James is the Altoona Chief of Police. Bernier ran for State Senate and won.

Assembly District 88: State Representative John Macco (R-De Pere) won his race against Democrat Tom Sieber (D-Green Bay), 53%-47%.

Assembly District 90: Democrat Staush Gruszynski of Green Bay will fill retiring State Representative Eric Genrich’s (D-Green Bay) open Assembly seat. Staush was unopposed. Staush is a Brown County Board Supervisor.

Assembly District 91: Democrat Jodi Emerson  beat Republican Echo Reardon, 67%-33%, to fill State Representative Dana Wachs’ (D-Eau Claire) open seat. Emerson is an anti-human trafficking advocate. Wachs gave up his seat to run for Governor, but lost in the Democratic primary.

Assembly District 92: State Representative Treig Pronschinske (R-Mondovi) won his race against Democrat Rob Grover, 55%-45%. Pronschinske beat former Democratic State Representative Chris Danou in a surprise upset in 2016.  WisPolitics.com rated this race as a toss-up.

Assembly District 96: Republican Loren Oldenburg defeated Democrat Paul Buhr to fill retiring State Representative Lee Nerison’s (R-Westby) open seat, 52%-48%. WisPolitics.com rated this race as a toss-up.

U.S. House of Representatives

CD 1: Republican Bryan Steil will replace his former boss House Speaker Paul Ryan in Congress after defeating Democrat Randy Bryce, 55%-42%.  Steil earned the endorsements of Ryan and Bryce’s brother, who appeared in a campaign ad for a political action committee supporting Steil. Bryce first announced his candidacy with a viral video before Ryan said that he would not seek re-election. The video helped him garner significant national attention and fundraising support, but his past arrest record posed serious challenges to him throughout the campaign. Steil criticized Bryce for relying on out-of-state donations to fuel his campaign. Ryan held this seat since he was first elected to Congress in 1998.

CD 2: Congressman Mark Pocan (D) ran unopposed for this seat. This will be his third term in Congress.

CD 3:  Congressman Ron Kind (D)  beat his Republican challenger Steve Toft, 58%-42% . Kind was first elected to this seat in 1996.

CD 4: Congresswoman Gwen Moore (D) easily defeated her Republican challenger Tim Rogers, 75%-23%. Moore was first elected to this seat in 2004.

CD 5:  Congressman Jim Sensenbrenner (R) easily defeated his Democratic challenger Tom Palzewicz, 63%-37%.Sensenbrenner was first elected to this seat in 1978 and is the second most senior member of the U.S. House.

CD 6: Congressman Glenn Grothman (R) beat his Democratic challenger Dan Kohl, 56%-44%. Grothman, who hasn’t lost a race in his 24-year political career, called this one the toughest of his career. Kohl consistently led Grothman in fundraising, but it wasn’t enough to help him overcome the district’s strong conservative roots which has been in Republican control since the 1960s.  

CD 7: Congressman Sean Duffy (R) defeated his Democratic challenger Margaret Engebretson, 60%-39%. Duffy was first elected to this seat in 2010.

CD 8: First-term Congressman Mike Gallagher (R) easily won re-election in his race against Democratic challenger Beau Liegeois, 64%-36%.  

BCPL Candidates Answer WEMTA's Questions

The Offices of Attorney General, Secretary of State and State Treasurer are extremely important to the WEMTA because they serve on the Board of Commissioners of Public Lands (BCPL).One of the funds overseen by BCPL Commissioners is the Common School Fund (CSF).  

WEMTA surveyed every candidate for Attorney General, Secretary of State and State Treasurer ahead of the August 14 primary and again ahead of the November 6 general election about their positions on key BCPL and Common School Fund issues. Our general election questionnaire included one new question about the Legislative Council Study Committee on the Investment and Use of the School Trust Funds. 

Read their responses here.

And don't forget to vote on November 6!

BCPL, CSF Study Committee Gets Closer to Making Recommendations

The Legislative Council Study Committee on the Investment and Use of the School Trust Funds met on October 11 to discuss possible recommendations for legislation. 

Committee Chair Representative Katsma told the Committee that his goal is to figure out what tools they can give to BCPL to increase the return for school libraries. Many of the Committee members agreed with Representative Katsma's statement about maximizing returns for the Common School Fund and school libraries. Senator Taylor said she would like to get more money to schools libraries but doesn't want to effect the stability of the Common School Fund. She also said she wants to see time-frames and reporting requirements to ensure that all required deposits of fines and forfeitures are making it into the Common School Fund. Senator Stroebel said he is interested in moving the Common School Fund to the Endowment Model (note: this would require changing the state constitution).

Legislative Council staff told the Committee they have several options to change the investment strategy of the Common School Fund. They could introduce legislation to:

1.Codify some of things that BCPL is already doing in state statute. For example, BCPL crated a smoothing fund for the Common School Fund but that is not currently authorized in state statutes. 

2.Change the State Constitution to modify investment strategy of the Common School Fund.

3. Find a middle ground to make changes to the investment strategy without changing the Constitution. 

The Committee asked for BCPL to make a presentation at their next meeting on November 14 to answer some of their questions about their investment strategy and get their reaction to these options. 

The Committee reached consensus to draft legislation to allow banks to make loans to municipalities for longer than 10 year terms. 

The Committee discussed possibly capping the amount or size of Trust Fund Loans BCPL can make, indexing their interest rates and requiring a pre-payment penalty on the loans. Senator Stroebel raised concerns about BCPL making pass-through loans. He said that BCPL can’t lend to an individual but that municipalities are getting loans and then using them to benefit a specific company or private developers.  The Committee did not reach consensus on these items yet. 

The Committee also heard from several presenters.

Chris Anton, Manager of Investments, Idaho Endowment Fund Investment Board, talked about Idaho's decision to amend their constitutions to facilitate investment of their trust funds. Anton said that prior to undertaking endowment reform, their trust funds were invested entirely in fixed income. As a result of their reforms, Idaho created both a land board and an investment board to help manage their trust funds. They adopted investment principles and goals and then amended their constitution. One of their goals is to provide consistent and sustainable distribution to beneficiaries. Unlike Wisconsin, Idaho have eight beneficiaries: public schools, several universities, two hospitals, a penitentiary fund, the school for the deaf and blind and a capital building fund.   Today their fund is invested in 66% equity, 26% fixed income and 8% real estate. Anton acknowledged that in years when the market is flat, they don't have much earnings but they do have a reserve fund. Idaho does not make loans to local governments but they do have a credit enhancement program for school districts who take out loans. 


Michael Wagner, Assistant Deputy Secretary, Department of Revenue (DOR) talked about DOR's role in administering the unclaimed property fund, which provides revenue to the Common School Fund. The unclaimed property program was transferred from the State Treasurer's Office to DOR in 2013. Wagner said DOR's annual projected payment to the CSF is between $26 million-$30 million over the next few years. DOR said that in recent years, the vast majority of matches for unclaimed property have been the result of incoming new unclaimed property. Senator Stroebel asked Wagner if other states have limitations on how long they can hold on to unclaimed property. DOR said that some states do have a statute of limitations on unclaimed property, so after 10-20 years if no one claims it it goes to their version of BCPL. 

Susan Gary, Orlando J. and Marian H. Hollis Professor of Law, University of Oregon walked the Committee through changes to investment strategies for trust funds and the prudent investor standard. Gary said the concept of the prudent investor has evolved over time. She said that early on, it was very focused on conservative investments. Fiduciary investors started to feel constrained by this standard, so they adopted the Uniform Prudent Investor Act, which allowed fiduciaries to consider factors carefully and make the best decision for a particular fund. Later on, the Uniform Prudent Management of Institutional Funds Act (UPMIFA) was adopted to allow for total return investing. UPMIFA directs the charity to spend from an endowment fund the amount determined to be “prudent for the uses, benefits, purposes, and duration for which the endowment fund is established.” Gary told the Committee that while these rules help set fiduciary standards, any type of state law or guidance document would trump them. She said that in Wisconsin our rules are in the constitution so that supersedes the Uniform Prudent Investor Act. Senator Taylor asked Gary if she thinks it's acceptable for a fund to use a more conservative approach to make sure it is able to deliver proceeds to its beneficiaries. Gary said that she thinks it’s reasonable to make a determination based on risk and how conservative that should be on one side or the other. She said that the important thing is to look at the fundamental purposes of the fund, and the policy needs to be good for the people who depend on the distributions.

Mark Ready, Professor and Chair, Department of Finance, Investments, and Banking, University of Wisconsin-Madison told the Committee about his role in consulting with BCPL on their investment policy. Ready said that when you set an investment policy, you think about the risk tolerance of the beneficiary. He said in Wisconsin, Libraries have a high dependence on this source of funding. A cut in this source of funding would be painful, so that is why it’s conservative strategy. Ready said that the perspective is that if it is difficult and painful for the beneficiary of the fund to take a big hit, the allocation should go much more heavily toward fixed income investments. He told the Committee if they want to move toward a more risky investment strategy, the beneficiaries better be able to handle a 12% drop in the portfolio. 

The Committee will meet again on November 14.

Study Committee on BCPL, CSF Meeting Today at 10!

The Legislative Council Study Committee on the Investment and Use of the School Trust Funds is meeting today from 10 a.m. to 4 p.m.

They will be discussing possible legislative options, which are outlined in this memo: https://docs.legis.wisconsin.gov/misc/lc/study/2018/1788/030_october_11_2018_meeting_10_00_a_m_room_411_south_state_capitol/001_oct4memo_trust

You can watch it live on Wisconsin Eye: http://www.wiseye.org/Live 

State Agencies Release Budget Requests

State agencies released their 2019-21 budget requests on Monday. These requests help inform the Governor’s development of their budget bill, which will be introduced in January or February of 2019.

Educational Communications Board (ECB)

ECB’s full request can be seen here: https://doa.wi.gov/budget/SBO/2019-21%20225%20ECB%20Budget%20Request.pdf

Media Lab: Most notably, they are requesting  $500,000 of state GPR funding in Fiscal Year 2020 and 2021 to reinstate funding for  Wisconsin-based K-12 educational media production. State funding was eliminated for this programming in the 2015-17 state budget.

“Wisconsin’s students need and deserve equitable access to effective and engaging educational media, particularly in curriculum areas specific to Wisconsin,” writes ECB in their request.

Public Instruction (DPI)

DPI’s full request can be seen here: https://doa.wi.gov/budget/SBO/2019-21%20255%20DPI%20Budget%20Request.pdf

As you have likely read, DPI is requesting a $1.4 billion increase for schools.

State Superintendent Tony Evers writes in a cover letter that DPI’s budget request responds to challenges raised by citizens and school throughout the state by:  “ending the decade-long freeze on special education funding; prioritizing student mental health; restoring and expanding crucial student supports; and reforming our broken school finance system.”

Specifically, DPI proposes:

• A $600 million investment in special education, increasing the reimbursement rate from 25% to 60%, while expanding funding for English learners and rural schools;
• Nearly $64 million more for student mental health funding;
• Funding for full-day 4K, funding for afterschool programs, and initiatives targeted to Wisconsin’s largest urban school districts;
• Reforming the school finance system. DPI says this will guarantee a minimum amount of state general education aid for each student of $3,000.  The plan also includes indexing the revenue limit adjustment to inflation and eliminates the School Level Tax Credit and First Dollar Credit and folds them into the state general equalization aid formula (a full description of the plan can be found on page 13 of the budget request)
• Two-thirds state funding for schools.

Library and educational technology items include:

Personal Electronic Computing Device Grants: DPI continues funding of the one-to-one device program created by the last state budget. Their request provides $9.1 million in each year of the biennium.

School Library Aids (estimate): DPI estimates that school libraries will receive $37 million in aid each year. This is an estimate of the Common School Fund distributions.

Public Library System Aid: DPI requests an additional $2.5 million in funding for public libraries in the first year of the biennium and an additional $4 million in the second year of the biennium. According to DPI, this is being done in part to maintain a one-time funding increase of $1.5 million received by public libraries in the last state budget biennium that is set to expire. DPI writes in its budget request that: “The present level of funding jeopardizes the current status of full participation by all libraries in the state. If public libraries do not participate, access to public library service by non-residents is reduced or eliminated.” The Wisconsin Library Association has said that they would use the additional funds “to address workforce development, technology infrastructure, and promotion of lifelong learning.”

Library Service Contracts: DPI requests increased funding of $133,200 in the first year of the biennium and $168,100 in the second year of the biennium to fully fund the library service contracts. The contracts are currently held by:  the Milwaukee Public Library (MPL), the University of Wisconsin-Madison (UW-Madison), the Wisconsin Talking Book and Braille Library (WTBBL), and the Cooperative Children’s Book Center (CCBC).

BadgerLink and Newsline for the Blind: DPI requests an increase of $345,800 in the second year of the biennium to fund BadgerLink contracts and Newsline for the Blind.

Wisconsin Reading Corps: DPI requests an increase of $700,000 in each year of the biennium for the Wisconsin Reading Corps. The program provides one-on-one literacy tutoring for students. Funding for the program is currently set to expire on June 20,2019. DPI is requesting that the program continue.

Board of Commissioners of Public Lands (BCPL)

BCPL’s full budget request can be read here: https://doa.wi.gov/budget/SBO/2019-21%20507%20BCPL%20Budget%20Request.pdf

BCPL submitted a cost-to-continue budget to fund current agency operations. They say that the BCPL is  currently “managing more trust assets than at any time in agency history.” This includes the Common School Fund.

CSF, BCPL Study Committee Discusses Possible Recommendations

The Legislative Council Study Committee on Investment and Use of the School Trust Funds met again on September 5. You can watch the video of the meeting here. 

They heard from an investment expert from the CommonFund Institute, the State of Wisconsin Investment Board, the Wisconsin Bankers Association, a local government economic development panel, a municipal advisor from Ehlers, Inc. and the University of Wisconsin System. A summary of their testimony can be found below. 

At the end of the meeting, the Committee spent time talking about what types of recommendations they would like to make for legislation. Most Committee members seemed interested in looking at ways to increase the earnings of the Common School Fund. Senator Stroebel (R-Saukville) expressed interest in aligning the Common School Fund with the endowment model and transferring it to SWIB. In terms of the BCPL Trust Fund Loan Program, members expressed interest in adding a requirement to the BCPL Loan Application that municipalities need to talk to the private sector before getting a loan from BCPL. Kim Bannigan, who is a public member on the Committee, raised concerns that the BCPL has been receiving fewer deposits from fines and forfeitures in recent years and asked if there was a way to strengthen reporting around that process.

At the end of the September 5 meeting, the Committee decided they wanted to have a memo prepared by the Legislative Council attorneys outlining their options related to:

•   Fines and forfeitures revenue going into the Common School Fund and what could be done to ensure that BCPL is receiving all the deposits it’s supposed to receive.
  ·        Changes to the BCPL Trust Fund Loan Program.
  ·        Options for facilitating the transfer/investment delegation of funds to SWIB from BCPL (changing state statute to expand SWIB’s investment authority for investing the Common School Fund)
  ·         Changes related to Common School Fund investment strategy.
  ·         Facilitating lending to municipalities by community banks (possibly examining, simplifying state regulations). 

    The Committee’s next scheduled meeting is on October 11 in the State Capitol.

• CommonFund Institute Executive Director Cathleen Rittereiser discussed best practices of endowment investing and the concept of intergenerational equity. The CommonFund Institute primarily serves non-profits. She explained the “endowment model” to the Committee, which she said consists of equity bias (stocks, ownership of assets), liquidity premium (the extra return that an investor receives for providing capital to the market) and diversification (the idea of designing a portfolio with a mix of asset classes). She told the Committee the goal is to earn Alpha, which is defined as the return you earn over market returns. She said you need to promote Alpha because you need to preserve capital and grow it over time, so that you have even more to distribute to your beneficiaries. When Representative Katsma (R-Oostburg) asked her about the Common School Fund’s spend rate, she said it was low compared to colleges and non-profits but that it didn’t mean it wasn’t meeting its needs. Senator Stroebel (R-Saukville) asked her if she felt SWIB and BCPL were following the endowment model of investing, and she said she did not feel like BCPL was following the endowment model and that she would recommend they remove the constraint on fixed income. Legislative Council Attorney Zach Ramirez reminded the Committee after this line of questioning that there are constitutional restraints on how the Common School Fund can be invested. He said that in the endowment model, the trustees can spend from their principal but that the Common School Fund is prohibited from spending from its principal. 

• The State of Wisconsin Investment Board (SWIB) Interim Director Rochelle Klaskin gave the Committee an overview about SWIB’s investments. Representative Vruwink (D-Milton) asked her if SWIB could manage the Common School Fund better than BCPL. She told him that every fund is different and that when SWIB starts investing for a fund, they look at its constraints and goals and then set an investment strategy. She cautioned against comparing SWIB’s Core Fund returns to BCPL’s returns because it is not an apples-to-apples comparison. She also told Representative Vruwink, that SWIB can’t guarantee any return because they “live and die” by the market cycle. When asked if SWIB would be interested in taking over the BCPL Trust Fund Loan Program if they were given the authority to invest the BCPL’s fund, she said that they don’t have the infrastructure to administer the loan program. When asked if SWIB would internally or externally manage BCPL’s funds if they were transferred to them, she said they would likely have them be managed externally.

•   Wisconsin Bankers Association (WBA) lobbyist John Turke testified with one of his members, Jeff Gruetzmacher. Turke said that WBA was one of the groups that requested the study committee. He told the Committee that banks want to make the loans BCPL is making now and that his Association believes that the state should be a “lender of last resort.” He told the Committee that people seeking loans from the state should have to “seek a solution from the private sector first.” He said that many times, the private sector is not even consulted for bids on public projects because people are going straight to BCPL. Gruetzmacher told the committee that “it doesn’t seem right” that BCPL is in direct competition with private industry and private banks. He said that their rates were actually better than BCPL’s. When asked about what local banks are doing to promote their municipal lending programs, Gruetzmacher acknowledged that most of it is through word-of-mouth and that they don't really formally market it. 

• ·         A local government economic development panel that included representatives from the Town of Scott and the City of West Allis testified about the impact of the BCPL Trust Fund Loan program on their communities. Individuals from the Town of Scott said that as a small town they don’t have the staff or support to go to the bonding market. They said that BCPL is an easy application and lending option that banks can’t deliver. Patrick Schloss said that the Trust Fund Loan program is one of the few tools that both small and large communities have to finance projects quickly, efficiently and cost-effectively. He gave an example of West Allis using a BCPL loan to fix a flooded site in their city which then led to a $43 million development that was funded by a private entity. Representative Katsma asked if they ever go to local banks and borrow from them. The officials from Town of Scott said they borrow from banks too, generally for shorter loans. Patrick Schloss said they either use the bond market or BCPL. He also said that banks have lending limits that impact how many projects they fund in a given community. 

•          Phil Cosson, Senior Municipal Advisor/Director, of Ehlers, Inc. Ehlers is an independent municipal advisory firm that works exclusively with municipalities and school districts. He told the Committee they strongly believe in the BCPL and their loan program and that it’s an important tool in Wisconsin. Ehlers is required to look at and present all available options to their clients. He said that in Wisconsin, there are very few options for the issuance of debt compared to other states. He said that they do develop relationships with local banks and, when appropriate, they look at other programs like BCPL and loan programs like the rural development loans and programs run by DNR and DOA. The goal is to make sure the municipality is receiving the best deal possible for taxpayers. They look at cost, risk and the structure of existing debt. He said the BCPL program fills a gap that would be more challenging for a bank or the general market to fill, especially for economic development projects because of its flexibility and ability to re-structure. He said that private activity debt isn’t necessarily a good fit for local banks, but BCPL can accommodate it. He said that small communities often can’t access financing in the bond market and that local banks want to do shorter loan terms that don’t always work for the project that municipality wants to do. He told the Committee that local banks are not shut out of the process and that every local bank in a community is given the opportunity to bid on competitive bond sales. He said they also work with local banks at the discretion and direction of the local government. Representative Katsma asked Cosson if he observed that there were less opportunities for municipalities to borrow money in the recession of 2008. Cosson told him that after the recession access to capital was an issue and it became very difficult to secure financing and that the BCPL loan program provided a real option in those difficult times.
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• ·    Officials from the University of Wisconsin System testified about the Normal School Fund ($495,000 distribution in 2017-18), Agricultural Fund ($10,600 distribution in 2017-18) and University Fund ($7,266 distribution in 2017-18), which are administered by BCPL. These funds benefit the Nelson Institute at UW-Madison, environmental programs at UW-Stevens Point, the Sustainable Management Degree Program at UW-Extension, the UW Merit Scholarships and programs for the benefit of agricultural and the mechanic arts. Senator Taylor (D-Milwaukee) asked why almost all of the funding was going to UW-Stevens Point for the environmental programs. The UW Officials said the programs run by UW-Stevens Point benefit people across the state, including the K-12 Environmental Education Leadership program.