Momentous decisions were made last week

Decisions were made last week which have set the course for Rhode Island’s future. Here’s a few of them that will have ramifications.
• The reappointment of Deborah Gist—It might not be the three years she was seeking for the renewal of her contract, but the Commissioner secured a two year extension despite a well-organized opposition to her re-appointment among teachers’ unions. Disingenuous arguments about how she “disses” educators and only has a one-pony trick for evaluation of students’ achievements and teacher competencies failed to derail her. Yet, efforts to retreat to the past  status quo led by such myopic leaders as Patrick Crowley of the National Education Association (NEA) are still a threat to the education of children. Governor Lincoln Chafee is to be congratulated for his courage in supporting her. Eva Mancuso and the other six members who voted for her retention deserve kudos also. Ms. Gist deserves praise for hanging in there—she is a hot commodity that any school district would be lucky to land, and she has proven that she can take the heat in the kitchen.
• Gina Raimondo—The state treasurer is in the crosshairs of the unions for her temerity in promoting pension reform. The sad part of the effort to torpedo her reelection or potential run for governor is that her detractors should actually be thanking her for saving their pensions. The most recent salvo against her is the proposed hiring of Ted Siedle, a Forbes blogger, by the local affiliate of AFSCME.  Mr. Siedle, an outspoken critic of hedge funds, has also criticized Ms. Raimondo’s investment in this vehicle and the fees associated with it. The union wants him to do an in-depth investigation to ferret out the fees paid to the hedge-fund managers (typically more expensive than fees associated with regular funds.)
The funds are called “hedge” for a reason, namely, to diversify investments  and “hedge one’s bet” so the monies are not in the same  pot. While the treasurer’s idea to diversify is a good one, the market probably is going to be stronger and yield better results with traditional investments. Even if she retrenches some of the capital in the hedge funds it will look like she is correcting her past mistake. Nonetheless, she should do so if market indicators lean in the direction of more typical investments. Ms. Raimondo needs to launch an education campaign as to why she used the hedge funds in the first place—particularly as Mr. Siedle et al will soon begin hammering her for weak returns. As seasoned investors know, diversity is the mantra of financial planners since the market isn’t always predictable.
• The Rhode Island GOP—The debate on “to pay or not to pay” the bondholders of 38 Studios continues on Smith Hill. As Senator Dawson Hodgson states, “We have a fiduciary obligation to our citizens to oppose gratuitous transfers of public wealth to private hands.” The Governor, with a political sleight of hand, is seeking $2.5 million in the budget just to take care of immediate payoffs as opposed to the whole amount. Breaking the payments off into chunks will probably result in payment at least for the present, as the lawsuits unfold.


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