Legislators are trying to figure out why a constitutional amendment involving long-term care funds failed - Insurance News | InsuranceNewsNet

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November 6, 2020 Newswires
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Legislators are trying to figure out why a constitutional amendment involving long-term care funds failed

Spokesman-Review (Spokane, WA)

Nov. 6--OLYMPIA -- A constitutional amendment that would have allowed public money set aside for long-term care to be invested in private stocks has failed, and legislators can't decide why.

About 53% of voters rejected the amendment, Engrossed Senate Joint Resolution 8212, which only passed in three counties: King, Whatcom and Jefferson.

Sen. Mark Schoesler, R-Ritzville, said he was surprised with the outcome as the resolution passed in the Legislature almost unanimously last session, with only three opposed in the Senate and one opposed in the House.

"I think there was a lack of communication to voters over the intent and what it actually does," said Schoesler, who co-sponsored the bill.

Schoesler said he talked to one voter who realized after voting that he should've voted in favor but didn't realize at the time what the amendment meant.

The Washington Constitution prohibits investing most public money into private companies, though there are several exemptions, such as public pension or retirement funds, industrial insurance trust funds and funds that benefit people with developmental disabilities.

A Constitutional amendment, which is ultimately decided by voters, is required to allow any public funds to be invested in private stocks. In 2019, the Legislature passed a law that provided long-term care insurance, funded by a payroll deduction for Washington employees beginning in 2022. The deduction is based on 0.58% of their wages.

The premiums are deposited into a new Long-Term Services and Support Trust Account.

Beginning in 2025, a Washington resident who needs assistance for three or more daily activities, such as eating or bathing, can receive benefits in units of $100 each. The beneficiary can receive as much as $36,500 in a lifetime.

The idea of the constitutional amendment was to allow money in that trust account to be invested in private stocks, which would likely generate more return, Washington State Investment Board spokesman Chris Phillips told the Spokesman-Review in September.

The state investment board does not take a position on a program policy, but did release this statement:

"If the current resolution fails (as early results appear to show), state law will limit the investment plan to cash vehicles, federal, state and local government bonds, certificates of deposit, and secondary market commercial paper and corporate notes."

The money could also be diverted into the general fund, Schoesler said, but protecting it in the Constitution could prevent that.

Sen. Mike Padden, R-Spokane Valley, helped write the argument against the resolution in the state voters' guide. He argued the stock market is too risky for public money.

"We live in very uncertain times," Padden wrote in an email after the results. "The market has fluctuated a lot this year and a lot of people did not want to risk investing taxpayers' money into the stock market."

Michael Baumgartner, Spokane County treasurer and former state senator, wasn't surprised by the outcome, pointing to a similar measure that failed in 2012 that would have allowed state universities to invest certain public funds in private stock, as specified by the Legislature. About 56% of voters rejected Senate Joint Resolution 8223. It only passed in King county.

"Like a lot of complex measures that go to the ballot, when there's uncertainty about what it might mean, voters tend to vote no," Baumgartner said.

Schoesler said he isn't clear what the Legislature will do now that the amendment has failed.

"We're still waiting to see the overall outcome of the election," he said. "There's too many uncertainties."

------

Laurel Demkovich's reporting for The Spokesman-Review is funded in part by Report for America and by members of the Spokane community. This story can be republished by other organizations for free under a Creative Commons license. For more information on this, please contact our newspaper's managing editor.

___

(c)2020 The Spokesman-Review (Spokane, Wash.)

Visit The Spokesman-Review (Spokane, Wash.) at www.spokesman.com

Distributed by Tribune Content Agency, LLC.

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