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Experts Look at SLO’s Investment and Forecasts

By Camas Frank ~

While world leaders, including U.S. President Barack Obama, looked to the United Nations Conference on Climate Change, or COP 21, held in Paris Nov. 30- Dec. 12, to come up with legally binding solutions to sustain industry and clean redevelopment, the Central Coast Economic Forecast and City of SLO’s own hired economic analysts came up with their own predictions.

During a Nov. 6 expo at the Alex Madonna Expo Center feature speakers: Seth Mattison, founder of Insight Labs; Chris Thornberg, founding principal of Beacon Economics; and Jordan Levine, director of economic research at Beacon Economics painted a rosy picture for 2016.

In fact, the combined analysis of Thornberg and Levine amounted to a clarion call to inaction, i.e. “not to worry,” as the economy is on the rise with falling unemployment and cheap energy boosted by the rise of hydraulic fracturing or “fracking” as a natural gas extraction method.

Their combined inattention to detail while discussing market trends and the widely acknowledged student debt crisis prompted at least one local economist to walk out of the presentation in disgust.

Although the terms in which he expressed it would invoke this reporter’s terms of anonymity.

Thornburg said, “We don’t have to worry about the next two years,” and to paraphrase, that student debt crisis is no big deal since it’s not a wonder if 60,000 people with psychology degrees and $150,000 in debt can’t find a job, “Do we need them?” he asked rhetorically, “No.”

By contrast, on Nov. 19, the City of SLO held its own Investment Oversight Committee Meeting. Held quarterly, the meeting is open to the public but the committee chairs themselves have had an exuberant share of turnover lately.

Mayor Jan Marx was absent from the previous meeting and needed to be caught up to speed. Likewise, new Assistant City Manager, Derek Johnson, recently moved over from the Community Development Department, needed to have an underling fill in for his position on the committee while he took on the mantle of Interim Finance Director.

In the three months since the last meeting, former Finance Director, Wayne Padilla’s seat was vacated when he moved to the Central Valley.

The previous investment advisor from PFM Asset Management, LLC, had also recently left that company. He was replaced at the most recent meeting by PFM Directors, Sarah Meacham and Monique Spyke, who each assured City management of a continuity of service going forward, although Spyke will soon go on maternity leave.

Their review of the City’s Quarterly Investment Report on Portfolio Performance was preceded by some analysis of the macro-scale economic indicators.

Among the items of interest that affect SLO’s portfolio — the advisors explained to the well known fact that unemployment rates drop on almost scheduled increments as the long term unemployed drop out of the labor force, seeking early retirement, disability insurance, or simply stop looking while they pursue fields without paychecks attached.

In addition, previous administrations have made it a policy to release unemployment figures that discount the long-term unemployed from federal statistics.

Although the City’s fund managers did not directly take up the student debt crisis, they did mention that an unrealized figure within the unemployment statistic is the large number of American workers who have taken up jobs with requirements lower than their skill levels, because they are not yet willing to abandon full employment.

Meanwhile, the City of SLO, reflecting policy that was first brought up at previous IOC meetings, has adopted a socially responsible investment policy.

That includes a divestment, backed by Mayor Marx, in Chevron and other corporate stocks, although the point was made by a member of public that oil, and firearms are not the only dangerous companies to municipal objectives.

The City still maintains “corporate notes” with Walmart, and Proctor & Gamble. Those ties were called onto question by a member of the public who wondered aloud, “what use was a social responsibility policy,” if it still allowed companies that exploited workers or partake in animal testing?

The PFM managers, for their part, explained that in the 9 months their company has managed SLO’s local assets, the market has been quite tumultuous with an interest rate change from The Federal Reserve expected after the first of the year. In fact, to stabilize revenue projections for the City’s investments, they stayed out of the market almost entirely through the turmoil.

As far as the SLO City News has been able to determine, City Manager Katie Lichtig is the only member of City staff to have sat through both presentations, although other senior members of management were on hand during the Central Coast Forecast.

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Justin Stoner

Justin is a journalist of more than 20 years. He specializes in digital technology and social media strategy. He enjoys using photography and video production as storytelling tools.