Full Legal Name: Janet Raye Cowell
Name as it Appears on the Ballot: Janet Cowell
Office Sought/District: State Treasurer
Date of Birth: July 19 1968
Campaign Web Site: cowellfortreasurer.com
Occupation & Employer: State Treasurer: Employed by the People of North Carolina
Years lived in North Carolina: 15
1. What do you see as the most important issues facing the Treasurer's office? If elected, what are your top three priorities in addressing those issues?
The most important issues facing the Treasurer's office are: First, protecting the public employee pension system. Doing so includes making prudent, risk-adjusted investments and advocating for a secure retirement for both public employees and all citizens of our state. Second, reforming the State Health Plan so that it provides a good level of services while controlling costs and, third, maintaining the state's AAA bond rating.
My top priorities in addressing these issues are to work proactively with the General Assembly and all governing boards such as the trustees for the pension system and the Investment Advisory Committee to secure needed statutory investment flexibility. Next, would be to work with the state health plan board to rationalize the design of the plan and develop more data-driven decision making processes. Last, I would work with both state and local governments to advise them on debt issuance, tax policy and any other best practices or policy issues that impact the state's bond rating and overall fiscal stability.
2. What in your record as a public official or other experience demonstrates your ability to be effective on the issues you've identified? Please be as specific as possible in relating past accomplishments to current goals.
After graduating from the University of Pennsylvania and the Wharton School of business I began my career working as a securities analyst with HSBC and Lehman Brothers I also worked with SJF Ventures, a community development private equity firm. As Treasurer I recruited a new chief investment officer and expanded the investment team.
I served as a state senator from 2005 to 2009. I am familiar with the workings of the General Assembly and have relationships that have facilitated the successful passage of legislation I have proposed. I have worked equally well with the Democrat controlled General Assembly in 2009 and the Republican controlled General Assembly in 2011 to secure increased investment flexibility. During 2011 I also secured full funding for the pension system during a year characterized by severe budget cuts.
As Treasurer I assembled a "Future of Retirement Study Commission" composed of diverse citizens drawn from both the public and private sectors and including two legislators. This commission put forth a set of recommendations on retirement policy to the General Assembly. I also chair the "Investments and Pension Committee" for the National Association of State Treasurers.
During the 2010 legislative session I worked with the General Assembly to take on the day-to-day administration of the State Health Plan. This transfer included, at my suggestion, the creation of a new governance model consisting of a fiduciary board composed of active members of the plan, retired members and experts such as doctors, health care attorneys and statisticians. I chair this board and vote only in case of ties. This board is currently meeting and engaged in a strategic planning process that will help determine the future shape of the plan.
In order to help create jobs and grow our state's economy I created the $230 million Innovation Fund to support and invest in businesses with significant operations in the state while earning a solid rate of return for the pension fund. I firmly believe that North Carolina is a great investment and as we look globally for opportunities to achieve a high rate of return for our pensioners, we need to be diligent in looking into the possibilities that are in our own backyard. The business "accelerator" which is a component of the Innovation Fund allocates up to $35 million designed to generate returns for the pension fund while supporting early-stage life sciences firms in North Carolina.
3. How do you define yourself politically, and how does your political philosophy show itself in your past achievements and present campaign platform?
I define myself politically as someone who strives to find practical solutions to problems. I am willing to work with anyone who comes to me in good faith and with a desire to better the lives of citizens in our State. On social issues I am a progressive. On fiscal matters I believe it is important to control public debt while finding the means to provide essential government services in a rapidly expanding state. I believe that it is possible for government to do this and still live within its means.
I believe that this philosophy is well attested to by my relationship to the General Assembly. During my time in office I have had a very successful record of bringing forward and having the General Assembly pass a number of important pieces of legislation. These legislative initiatives ranged from changes in investment policy to enacting important consumer protections. This happened both during the time when the General Assembly was controlled by Democrats and in the time since Republicans have taken over. I have worked closely with rank and file members and leadership on both sides of the isle. This is something I am proud of and which, I think, demonstrates that a bi-partisan approach to solving problems is possible even in this time of extreme political polarization.
4. The Independent's mission is to help build a just community in the Triangle and North Carolina. Please point to a specific position in your platform that would, if achieved, help further that goal.
I have increased the money under management by minority owned firms and women money managers from 3% to 6%. As a Department, we purchase much in the way of goods and services. Under my leadership I have worked to improve the number of minority and women-owned firms receiving these contracts.
Inside the Department, I established a leadership program that rewards and recognizes emergent leaders with a special emphasis on minorities and women. This program provides opportunities for professional development and networking. We are also collaborating with the UNC School of Law Board Diversity Initiative to help learn how to better ensure broader participation by women and minority individuals on department boards and governing bodies.
On another front, I have used our voting power on corporate boards to increase transparency and accountability. To cite one example, we joined with other investors to force change in the board of directors at Massey Energy after the disastrous explosion that took the lives of 29 miners.
5. Identify and explain one principled stand you would be willing to take if elected that you suspect might cost you some popularity points with voters.
During my first three years in office this has occurred on a few occasions. Two come readily to mind. The first was my opposition to the method of finance proposed to complete the I-485 project near Charlotte. Even though this project was favored by Charlotte area residents and their representatives in Raleigh, I felt that the method of financing proposed entailed a loosening of the tight debt management practices that have served North Carolina so well.
The second was my willingness to take on responsibility for the State Health Plan. No other agency of State government was willing to do so. I was told that taking it on was a mistake, that no-one could do anything about rising costs and that it would have "political consequences." I felt, however, that as a public official someone needed to step up and take responsibility for the plan. Yes, there would be challenges and difficult choices in doing so but as a public official I feel it is our duty to take on challenges when they present themselves.
6. If these issues haven't been addressed above, would you please comment on:
a. State investment policies: How should they be changed, if at all, from the practices under the current Treasurer?
First, it should be noted that despite the strong economic downturn of the last few years our State's public employee pension system is 95% funded and ranks as one of the top 6 strongest public pension funds in the country. It is ranked in the top quartile of returns among similarly sized funds in the bottom quartile for risk.
However, as we move into the near future it is my view that the pension fund will – to an extent - need to move to reduce our dependence on fixed income investments (bonds). Indications are that the near term economic environment will not favor this class of investment and being too heavily invested in bonds will make it very difficult to achieve our goal of a 7.25% rate of return. Our portfolio has long been characterized by a large fixed income component amounting to close to 40%. This has helped the portfolio perform well over the past several decades and particularly during some of the recent downturns in the public equities markets. However, interest rates have nowhere to go but up and fixed income assets to not perform well in a high interest rate environment. I will need additional statutory flexibility from the General Assembly to accomplish this.
Additionally, over the last three years I have worked to globalize and diversify our assets in order to reduce risk to the portfolio. I have also significantly reduced the amount we pay in fees to outside the managers and have used our power as shareholders to hold Corporations to higher standards of transparency and accountability. I will continue to work to achieve all these goals if re-elected.
b. State spending: Will you attempt, as Treasurer, to influence the pace and composition of state spending? If so, how?
Throughout my first term of office I have been an advocate for revenue reform. The North Carolina revenue system is geared toward a 1930's manufacturing economy. As many have noted, this results in a roller-coaster ride for both state and local government revenue every time there is an economic downturn. We must modernize the state's revenue system by restructuring it for the economy of the 21st century. We can broaden the tax base to include more of the services that define our current economy and still lower the overall tax rates. These changes would help to ensure a more stable revenue stream for that state which is needed for vital services like education.
c. State borrowing: What policy changes will you recommend on bond issues and other forms of state and local debt?
I have maintained the State's AAA bond rating by guarding against proposals and legislation that would negatively impact it. I chair the State's Debt Affordability Committee which advises the Governor and General Assembly on state debt matters. We are only one of seven states to have a AAA rating from all three ratings agencies. Through our State and Local Government Finance Division, my office has worked to help local governments maintain sound fiscal policies and maintain adequate reserve fund balances. As a result of these and other policies, North Carolina has more AAA rated local units of government than any other state in the nation.
North Carolina must maintain its tradition of centralized debt management and control. I have tried to steer a middle road between attacks on any ability to incur debt and attempts to loosen controls over debt. Right now it seems there is sentiment to repeal some types of state statutory debt authority. Ultimately, I think this would hurt the State's bond rating by reducing flexibility.
As treasurer I have consistently advocated against short term fixes to solve our state's budget problems such as putting off debt payments or depleting the state's rainy day fund. I have urged local municipalities to be thoughtful about how they use federal stimulus money and I have consistently supported a more reliable tax structure aimed at stabilizing North Carolina's finances and maintaining the state's competitiveness.
7. To what extent, if any, should the Treasurer's policies on pension fund investments be geared to strengthening the North Carolina economy and/or addressing specific North Carolina issues?
As sole fiduciary over the pension fund, it is very clear that any investment decision has to be made to benefit pension beneficiaries. Still, it is allowable for a fiduciary, when choosing between two prudent investments, to choose the investment that has collateral benefits. This could be investing with a minority or women-owned firm or investing with an in-state money manager.
My efforts to increase funds managed by women and minorities while also exercising my fiduciary duty were outlined in question 4 above. And, as noted in question 2 I also initiated the Innovation Fund -- a $232 million slice of the private equity pension portfolio which invests in companies and private equity funds that have a nexus with North Carolina. The returns on these investments are the same market risk-adjusted returns that we expect for every other private equity investment. We do hope for collateral benefits in terms of leveraging other private equity dollars and increasing the number of jobs in the state. Given NC's strong universities and competitive industries such as financial services, technology and life sciences, I believe that investing in NC is a prudent fiduciary investment that will benefit pensioners.
8. Should public employees have the right to bargain collectively in North Carolina?
9. In light of the number of foreclosures and other economic hardships in North Carolina, what is the state government's role in its citizens' financial literacy? What can the treasurer's office do to increase that literacy and how would you measure the results?
Since the state offers a number of financial products to its employees, at a bare minimum it has a responsibility to make sure these are quality products offered at a good price and that performance is monitored. Sound communication and transparency should exist around these programs.
As Treasurer I have worked hard to improve communications with state employees around their defined benefit program, improve oversight of supplemental retirement offerings – including cleaning up the 403b plans offered to teachers in schools – and I am starting the process of improving state health plan literacy. During the first 100 days after oversight of the plan came to my office I hosted a state-wide listening tour with state employees and hosted a public health plan policy summit.
I believe that financial literacy should be a part of the core curriculum for all students K-12 and as a member of the State Board of Education I was able to have financial literacy incorporated into the K-12 curriculum. As a member of the Community College Board I was and remain very concerned about student debt. I partnered with the President of the Community Colleges and the College Foundation of NC to create "Advanced Money Management for Community College Students" -- an online tool that can assist college students in making wise decisions about their borrowing to support their education
In terms of measuring results, metrics are specifically created for each of these initiatives. For example, with community colleges we can measure student debt default rates at schools that have adopted our educational tools. For retirement we can measure elements of retirement readiness such as the average amount of 401-k balances, the percentage of employees participating in supplemental retirement programs and other similar indicators.
10. As member of the Council of State, you would have input on the issue of the death penalty. Do you feel qualified to vote on such issues? If so, how would you vote on the execution protocol and other death penalty matters that may come before the Council? And is the Council of State an appropriate body to deliberate these issues? Do you think the Racial Justice Act should stand? Why or why not?
The law that requires the Governor and Council of State to approve any changes in the state's execution procedure was written in 1909. In the intervening 103 years much has changed in North Carolina regarding the prosecution of crime and the delivery of justice. As a body having its roots in the colonial era the Council of State has a number of unique responsibilities but approving execution protocols should not be one of them. That responsibility appropriately belongs to the Department of Public Safety acting within the parameters established by the General Assembly. I think it would be a good idea to review the role of the Council of State in this area given that the statutes dictating our involvement go back so far.
The veto of Senate Bill 9 should be sustained. When the death penalty is imposed, the citizens of the state should be confident that racial bias was not a factor.