State Raises Investment Stakes


Treasurer Ted Wheeler Outlines New Vision for Economic Opportunity at Bend Forum

Oregon State Treasurer Ted Wheeler stopped by the region recently to address the monthly Bend Chamber-hosted Town Hall Forum and updated business and civic leaders on an innovative new vision for catalyzing economic growth, as well as expanding on a number of other hot-button issues under his department’s auspices.

Wheeler, who oversees more than $70 billion in assets including the Oregon Public Employees Retirement Fund, highlighted the more significant role the state is seeking to play in job creation by making its disparate economic development efforts “more flexible and coordinated” through the Oregon Investment Act, which lawmakers recently passed with bipartisan support.

Drafted by the Treasurer in consultation with legislators, business development officials and Oregon employers after Governor Kitzhaber called for initiatives to help bootstrap Oregon out of its economic doldrums, the Act is also aimed at leveraging public funds to attract investment from the private sector.

“We want Oregon to be able to compete on the world stage, and win,” said Wheeler. “We have strategic opportunities because of our location, our resources and our strong workforce – but opportunities do not become strategic advantages unless you invest in them.”

Prior to tabling legislative recommendations, the team spent time learning strategies from other states and countries, then went on the road to gather input on what businesses in Oregon needed to expand and hire.

The consistent response was that companies could not get access to the capital required to grow, and that state-sponsored programs were scattered across agencies, difficult to navigate, and often overly rigid.

The resultant House Bill 4040 ended up winning almost unanimous approval in the truncated 2012 session and initially serves as enabling legislation to create a new “Oregon Growth Board’ to design a fresh blueprint for allocating state economic development funds, and to make policy recommendations to set the stage for more substantive changes.

The Governor recently nominated representatives from across the state to sit on the seven-person board, with a remit of establishing priorities, promoting flexibility, achieving coordination – including the possibility of consolidating some of the state’s economic development resource dollars into one fund – and gaining the leverage that comes from attracting new private sector dollars into the Oregon economy.


Another element is an envisioned Oregon Growth Fund, anticipated as a way for Oregon individuals and foundations to also invest into state-wide opportunities.

Wheeler said that the Investment Act will increase business investment in Oregon by combining public and private resources, including redirecting and amplifying Lottery dollars into chosen sectors and ventures.

The goals include increasing the flow of out-of-state capital into Oregon, providing more financing for in-state ventures, improving the availability of loans for established businesses that are ready to expand, and enhancing Oregon’s business climate for starting companies and growing jobs.

Wheeler told the Bend forum: “We realize that not all our programs have been connected strategically previously and are taking steps to address that issue.

“People around the state have also relayed opinions that we should act more like private business. If, in the private sector, you have a targeted business opportunity, you may take it to the Chief Executive Officer, but you have to be opportunistic as the corporate environment evolves.

“Also, when you run a business you want to see a tangible outcome for your investment. We need to report back regarding the effectiveness of public dollars targeted for economic development, especially in terms of whether jobs are created, and are providing for accountability that previously could have been perceived as lacking.

“We listened to how we could be more effective from a state perspective and appreciate the feedback.

“Part of the aim of the Investment Act is to provide coordination of currently fragmented public funds available for economic development and provide a more centralized situation so tools can be leveraged and we can change the way dollars are utilized, as well as offering more flexibility, which is patently needed.

“This is not about welfare for businesses or CEO’s; it is about partnership and also taking public resources and leveraging a significant level of private sector investment.

“For example, locally, Bend Venture Conference representatives said that some potential partners in Southern California weren’t familiar with the area. If we, on a state level, were to partner on initiatives on a proportionate basis, maybe it would encourage more private sector involvement and promote investment credibility.”


Another potential fruitful avenue being pursued via the Act is what is tentatively being billed as the “West Coast Infrastructure Exchange”, which could involve bundling a mix of local and state infrastructure projects into some form of security sold to private and institutional investors.

Wheeler added: “This could be a way to tackle both our pressing infrastructure issues and provide for investment opportunities.

“Larger investors may not even be interested in $25-$30 million projects; but if we could pool programs we may be able to break the logjam.

“Central Oregon, for one, is working to improve foundational support to enhance economic development potential, and we could look at providing support systems. There are many potential investment opportunities regarding infrastructure on the West Coast.”

To spur these efforts, Treasurer Wheeler’s department recently secured a $250,000 grant from the Rockefeller Foundation to study ways to creatively finance public infrastructure projects, and is actively working in conjunction with officials in Washington and California to come up with innovative financing mechanisms, which could include tapping into private capital.


In a wide-ranging exchange during the Bend Chamber-organized event, Wheeler also touched on higher education issues, including the question of college access and affordability and the soaring level of student debt in the state.

He said he is working on a plan to “overhaul” the Oregon Opportunity Grant – a need-based aid resource for college students – including taking advantage of the debt capacity of the state that could be matched with private donations, to dedicate more public monies to the program.

He also said he will help advocate for the purchase of buildings in Bend to boost the base of the Oregon State University-Cascades and aspirations for a true four-year institution.

In answer to an audience question regarding how to marry a “bricks and mortar” university with the exponentially increasing ability to take courses online, Wheeler observed: “There is a new paradigm in online higher education, when, for example, a professor can teach thousands of students across the globe at relatively minimal cost, and I see using web based technology as part of the solution to reduce cost growth.

“There are some courses that are perfect to be held online – you don’t need a class that holds 800 people to teach a course, you need a web server.

“That’s an obvious extension of where we are headed with university teaching including web based tutorials and office hours. Part of the cost reduction is determining what is appropriate to move online and move it.

“I would like to see the funding be freed up for science, research labs, engineering facilities and the like. The more hands-on activities need expensive and complex equipment.

“I would like to see facilities where young people learn to work in groups. Technology and math will be directly involved in the economic vitality of the future.”

In answer to a concern over whether the State Land Board was doing anything “innovative” to create jobs or stimulate more income generation, Wheeler, who sits on the board, referenced the fact that it was first created in the 1850’s and “things have evolved and changed” in the intervening period.

He added: “We need to take into account the economic consequences and polices we develop on the board.


“What we are doing for the economy can be illustrated by the Elliot State Forest Management Plan. This plan took years to develop, but we increased the amount of board feet the forest is allowed to yield without impacting other areas.

“We were just smarter in how we were protecting the forest and addressed questions on habitat for spotted owls, salmon, and so on.

“In Oregon, when we actively and thoughtfully manage a forest, we win. The Federal Forest has a different philosophy of hands off, which can be something of a ruinous policy.

“I also got the Land Board out of Salem, because it’s ridiculous to make decisions in Salem when they impact people around the state. Now we have a moving Land Board around the state and people have the opportunity to address their particular issues.”


On the thorny issue of how to provide more revenue to boost numbers of teachers and schooldays, and whether PERS obligations were approaching unsustainable levels, Wheeler responded: “There are a lot of complex issues from revenue restructuring; we have a completely dysfunctional revenue structure.

“As employers you should be concerned about how the system is too volatile and we need to have a robust rainy day fund.

“Those who evaluate our credit rating are worried about the kicker combined with the lack of the ability to save in good times for the bad. If we aren’t saving it, we get into boom and bust cycles, and in those bust cycles is when we see teachers being laid off.

“Let me also give you a different spin on PERS which you may not often hear or read about – all the discussion has been on the cost side of PERS, yet some seventy per cent of the pension plan funding comes from investment return.

“What we don’t get through investment returns has been made up through taxes. You see those taxes in the form of PERS rates charged to municipal governments and school districts. PERS rates will go up to painful levels. So, what do you do to maintain outsized returns?

“Historically, the Oregon Treasury and Investment Council has been operating quietly and off in the distance and getting outsized returns. At the height of the recession, we went from $61 billion down to $41 billion.

“Today, that fund is back up to $58 billion and Oregon was just recognized as being one of the better pension funds.

“We need to be able to hire expertise to manage this $72 billion global portfolio. We should also have more public understanding and transparency in what we are doing. Our last Chief Investment Officer was hired away by an agency offering three times the salary and three times the staff!

“Part of my job is to push back against anything that could undercut our ability to get good returns in our portfolio, because it will impact schools, county governments, public safety, and the fiscal stability of the state.

“If we start to slide in investment performance, we will have a major repercussion for the state fiscal responsibility.”

The Oregon State Treasury protects public assets and strives to save Oregonians money through its investment, banking, and debt-management functions. State investment policies are overseen by the Oregon Investment Council.

The State Treasury also promotes public outreach and education to help Oregonians access strategies to save money, invest for college and make informed financial choices.

Wheeler is Oregon’s 28th State Treasurer. He earned his undergraduate degree in Economics from Stanford, an MBA from Columbia University and a Masters in Public Policy from the John F. Kennedy School of Government at Harvard University.

Prior to being appointed and then elected to office in 2010, he also worked extensively in the financial services industry, including senior management posts with Bank of America and Copper Mountain Trust.

A fifth-generation Oregonian and Lincoln High School graduate, his family has deep roots in the state. The town of Wheeler, located on Nehalem Bay on the Oregon coast, is named after his great-grandfather.


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Founded in 1994 by the late Pamela Hulse Andrews, Cascade Business News (CBN) became Central Oregon’s premier business publication. •

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