Oregon PERS Gambles on Venture Capital with Kids Emergency Fund Assets


On November 14, 2007 Nigel Jaquiss of The Willamette week, pictured above on left, wrote a story titled “Gambling with Kids Future.” Jaquiss recently won the Pulitzer Prize for investigative journalism, a remarkable achievement for a local weekly publication. Pictured on right are Ron Schmitz, PERS Chief Investment Officer, and Jay Fewel, Portfolio Manager. Schmitz and Fewel have ridden the private equity wave to solid returns with big investments in KKR and TPG, among others, even though these investments are mostly illiquid and are valued by the private equity firms themselves. Publications like Plan Sponsor that heavily pander to hedge and private equity funds and, well, obscene fees, didn’t miss the opportunity.

What makes the venture capital investments unsusual is that Venture Capital, which account for 25 percent of the emergency fund, can be illiquid for long periods of time.

Oregon indeed does need to plan more carefully with respect to education, not only investment strategies yet also a more stable funding base given that the source of this “emergency fund’s” assets is lottery proceeds.

While Oregon parents are increasingly concerned about kids becoming addicted to dangerous drugs, their drug of choice for funding thier children’s basic education is lottery proceeds. Oregon is one of a couple states with no sales tax. Parish & Company supports the creation of a schools specific sales tax provided such proceeds go directly to schools, including higher education.

In Oregon this debate over the lottery and related casino gambling is now controlled by lobbyists representing Indian casino interests, most notably Len Bergstein on the Democratic side.