The legislature has proposed a constitutional amendment on investment of public funds. This amendment would allow public money held in a fund for long-term care services and supports to be invested by governments as authorized by state law, including investments in private stocks.
The title of a Washington Research Council analysis puts it even more clearly: ESJR 8212: A Constitutional Amendment to Treat Long-Term Care Funds the Same as Other, Similar State Funds The WRC points out,
ESJR 8212 would amend the state constitution to allow money in the new long-term care services and supports trust account to be invested in stocks. If approved by voters in November, this would put the new long-term care fund on the same investment footing as the state’s retirement funds, industrial insurance trust funds, and funds held in trust for the benefit of persons with developmental disabilities. Otherwise, the long-term care funds will earn lower rates of return over time.
The new long-term services and supports trust program is to be funded with a payroll tax, at a rate that will maintain actuarial solvency. The more the long-term services and supports trust account earns on the market, the less will need to be raised from taxpayers to maintain its solvency.
The measure received overwhelming bipartisan support, as a Seattle Times editorial endorsement states.
Investing the long-term care fund similarly is a commonsense idea approved by both legislative chambers with little opposition. In the House of Representatives only Rep. Frank Chopp, D-Seattle, voted against the bill that put the question to voters. In the Senate, Sens. Doug Ericksen, R-Whatcom County, Bob Hasegawa, D-Seattle, and Mike Padden, R-Spokane Valley, voted no.
The editorial continues,
As it does with other invested funds, the Washington State Investment Board would manage the investment of the long-term care fund to maximize returns without gambling public dollars. It is a transparent, accountable system that has helped make Washington’s one of the best-performing public pension funds in the country.
The amendment has the backing of a host of advocates for seniors, including AARP Washington, the Washington Association of Area Agencies on Aging, the Washington State Senior Citizens’ Lobby, the Washington Health Care Association and the regional branch of the Alzheimer’s Association. SEIU 775, the union that represents long-term care workers in Washington and Montana, is also backing the change.
In 2019, the Legislature passed 2SHB 1087. The bill created a long-term services and supports trust program. Under the program, a payroll tax will fund a new long-term care insurance benefit. The tax will be assessed on wages begin- ning Jan. 1, 2022 and benefits will be available beginning Jan. 1, 2025 (WRC 2019). Premiums will be deposited in the new long-term services and supports trust account. The tax rate will initially be 0.58 percent of wages, but it must be set “at the lowest amount necessary to maintain the actuarial solvency” of the trust account. Under the bill, “The revenue generated pursuant to this chapter shall be utilized to expand long-term care in the state.” Funds in the trust ac-count are to be invested by the Washington State Investment Board (WSIB), as allowed under the constitution.
There’s more in the report. The WRC concludes,
It is important for the state to be a responsible steward of public funds. To that end, the state must balance the need to keep funds safe while also providing funds the best opportunity for growth. For funds that are meant to provide long-term reserves for obligations that will occur far in the future, the balance weighs more heavily on the growth side. Indeed, the more such a fund earns on the market, the less needs to be raised from taxpayers to maintain its solvency.
We already trust the WSIB to invest retirement funds and industrial insurance funds in stocks. There’s no reason not to extend that trust to the investment of long-term care funds.
The ST editorial concludes,
Washington’s state-operated new long-term care insurance program will begin collecting the 0.58% payroll tax in January 2022, with claims for benefits beginning in 2025. It is a first-in-the-nation idea that should help buffer the effects of the coming “silver tsunami” as more baby boomers retire.
Eligible participants will be able to access up to $36,500, indexed to inflation, over a lifetime for the cost of nursing facilities, residential settings, personal caregiving and other supports or home modifications that can help them safely stay in their home. Under the act, family caregivers can be compensated for their time if they undergo some basic training – providing economic relief for the hundreds of thousands of Washingtonians who are caring for aging relatives.
This amendment will support the trust fund that will support Washington’s seniors. Voters should give it the green light.
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