Over the past several years, the state of Nevada found itself in a position no investor, public or private, wants to be in — locked in a stagnant investment fund that was losing money to inflation.
But the underperformance of the Nevada Permanent School Fund has since triggered a round of public investment innovation in the Silver State that is solving three of the state’s most vexing problems at once — increasing revenue from public investments, expanding funding for K-12 education and injecting much-needed private capital into Nevada companies.
The new investment strategy, championed by Nevada Treasurer Kate Marshall, is an example of how states across the nation are thinking outside of the box by not only increasing investment in high-return private equity funds, but also voting to keep their investment close to home, where it will finance the growth of their own state’s economy.
Nevada’s Permanent School Fund, which was invested almost primarily in government bonds, is now becoming a diversified and balanced portfolio that increases returns by adding in a mix of private equity investment and co-investment. That change was spearheaded by Marshall and her knowledgeable staff (including investment experts such as Deputy Chief Treasurer Mark Mathers) who supported state Senate Bill 75 that passed in the 2011 Legislature.
This new public investment model for Nevada seeks to create a cycle of economic growth that lifts the economy, the education system and the state’s tax base into an upward spiral of compounding investment returns.
Nevada’s modernization of its school fund investment strategy paves the way for more investment in education, the foundation of future economic growth, while also investing in the state’s current economic engines — Nevada-based companies that need capital to grow.
The investment also is attracting welcome attention to Northern Nevada’s business climate. Nevada’s partnership with world-class financial institutions such as Hamilton Lane and Providence Equity Partners is exposing Northern Nevada’s business community to world-class funding institutions.