During his four years as state treasurer, Republican Dan Schwartz was what might be described as a bull in a political china shop.
He irked politicians from both parties with his blunt statements about economic development projects and audacious policy goals — including an infamous three-page alternate state budget in 2015. He ran his unsuccessful, self-funded bid for governor on a platform that contemplated raising taxes on the gaming industry — a near taboo in Nevada.
“I did not want the people of this state to think … that this was the party of prejudice. And it was important for me to at least run on a platform that emphasized education instead of guns. It was important to run on a platform that was self-financing and not funded by casinos,” he said about the Republican primary, in which he lost handily to Attorney General Adam Laxalt. “I consider it a half million dollars well-spent.”
When he looks back on the style and substance of his time in office, he doesn’t have regrets, although he is disappointed that the Education Savings Account (ESA) program he heartily supported remains unfunded. Asked whether his approach may have hampered his attempts to accomplish loftier goals, he said he needed to push buttons to show skeptical power players that the treasurer’s office could be more than it had been in the past.
“It’s the cost of doing business,” he said. “They needed to know we’re not a compliance office.”
Schwartz pointed to a list of accomplishments he’s had during his time in office, which coincided with a booming economy. The size of the state’s general portfolio is up 50 percent, the average time to process an unclaimed property claim is one-fifth of what it was, and — with help from a cartoon tortoise named Sage — the number of 529 college savings plans in the state is up by about 200,000.
He had no interest in running again for treasurer this cycle. But he also said he’s not foreclosing a chance to run again for office — probably not governor but maybe Congress next time, he said.
For now, his team is working closely with Democratic incoming treasurer Zach Conine to ensure a smooth handoff.
“The office has sat down with Zach and we are about a smooth and formal transition,” said Schwartz’s Chief of Staff Grant Hewitt. “And we are about creating every opportunity for his ideas to be successful.”
Schwartz, who previously worked in finance, said one of his proudest accomplishments has been increasing annual investment returns from 0.43 percent when he came into office to 2.43 percent.
“Yes, the fed has played a role in that, but we’ve made important decisions along the way,” he said.
One of those decisions came after the office analyzed the state’s cash flow. With help from Republican Assemblyman and then-deputy treasurer Al Kramer, the office determined it had been overly conservative and could invest its money more aggressively while still paying its bills on time.
Rather than managing all of the state’s money in-house, Schwartz’s office now manages shorter-term investments internally and outsources longer-term investments to two different firms that have contrasting approaches. Schwartz said one manager is getting a return of about 3 percent and the other is getting a return of about 2.7 percent.
The state’s general portfolio, which was $1.86 billion four years ago, is now $2.75 billion.
The Local Government Investment Pool has also grown on his watch. Akin to a money market account for municipalities, the pool started out with $428 million at the beginning of his term and is now at $1.29 billion.
“The increased number is as much about the investment return as it is about trust in the office,” Hewitt said. “Local governments can choose not to participate in this pool concept but over the course of Treasurer Schwartz’s term, the number of assets in that account have continued to grow because local governments feel their money is better invested there than on their own.”
His hope for a future administration is that they’ll expand the types of investments available to the state, such as overseas bonds in countries with equally high credit ratings.
Schwartz pointed to initiatives he’s carried out involving the Silver State Opportunities Fund, which was created by lawmakers in 2011 and allows the state to invest a portion of the Permanent School Fund in hopes of getting higher returns. The pot of $50 million in capital is extended to “compelling businesses” in the state and also aims to spur economic development.
On Schwartz’s watch, $1 million of the fund was dedicated to microloans to small businesses that typically range from $1,000 to $7,000.
The treasurer’s office has partnered with ACCION, a nonprofit that runs microfinance programs across the globe and administers the Nevada program, picking the recipients. In the last year, the fund has issued 94 microloans.
The state is guaranteed a return of 3.06 percent on the microloans and ACCION assumes the risk of defaults. Schwartz is recommending that his successor double the amount of money provided to microloans.
Apart from that, the Silver State Opportunity Fund mainly supports large investments and at Schwartz’s suggestion, has focused its efforts on Nevada businesses rather than out-of-state entities. Schwartz had at one point sought to abolish the fund, but did not carry out that plan.
Hewitt said the fund has invested in 29 businesses and supports nearly 2,400 jobs.
During Schwartz’s term, the Nevada College Kick Start program — which launches college savings accounts for all kindergartners in the state and seeds them with $50 each — has become a statutory program instead of merely a pilot program.
One of the biggest challenges has been that parents can’t add money directly to the account and must open a separate account, meaning the money is inaccessible and forgotten to large numbers of families. That’s counter to the purpose of the program, which is based on the research that children are up to seven times more likely to go to college if they know someone is saving for them.
In the years following its inception in 2013 under former Treasurer Kate Marshall, the office and its college savings company partners have joined forces with an online portal called Vistashare.
Families must acknowledge the money is there or it will revert back to the state after their child finishes fourth grade. Previously, about 2 percent of accounts were claimed, but under Vistashare, more than 15 percent have been acknowledged, Hewitt said.
Schwartz tried to launch an incentive program that would give families $1,000 over five years if they started an account. But the program was rejected by lawmakers, and his attempts to implement incentives anyway earned him rebukes from legislators.
“Politics got in the way. Personality got in the way. And a good idea got stymied,” Hewitt said.
A $200 incentive for families who open up a companion savings account helped spur parents to open 600 more accounts. So the office is encouraging incoming treasurer Zach Conine to restart the incentives.
Following more tension with the Legislature, lawmakers drastically reduced the marketing budget for the treasurer’s college savings program from more than $1 million to $176,000. Funded not by taxpayer money but by account service fees, the outreach budget funded commercials and an ad campaign centered on a cartoon character named Sage the College Savings Tortoise.
Conine has been noncommittal about keeping the backpack-wearing tortoise as the office’s mascot, saying he instead wants “navigators” who guide families through the process of enrolling in college savings.
The treasurer’s office is requesting a bill in the next session that would raise the cap on college savings marketing and outreach. It has also begun the process of evaluating where it can most effectively market its program.
Rather than simply sponsoring booths at events, the office wants to dig deeper into community partnerships. The office is studying how to “find places like Zach talks about where community leaders and people they trust are also invested in the cause,” Hewitt said.
Schwartz said he thinks that’s a good idea, but also doesn’t want to diminish the impact of Sage. At community events, kids would gravitate toward the mascot they saw on baseball cards they received at school or throwing out the first pitch at the Reno Aces game and it would open the door for treasurer’s office staffers to start a conversation with the adults about college savings. Hewitt says one college savings company partner openly doubted the power of the mascot but has recently become convinced of its efficacy.
“Kids love Sage, and they bring their parents. It’s that simple,” Schwartz said.
Promoting college savings has been a learning curve for staff. Hewitt said they initially approached the program by telling parents about the ever-growing, total cost of college. The numbers are staggering — experts estimate that if college cost inflation doesn’t slow down, the sticker price for a four-year public school in 18 years could be more than $200,000.
They’ve since changed the message to “every little bit counts” and noting that every dollar saved now is $1.75 off student loan debt down the road.
“I discovered very quickly that if you tell people how much it will cost in 10 years, it freezes them. They say I can’t save that much, so I don’t save at all,” Hewitt said. “Sage sometimes helps calm those nerves.”
Stadium and tax abatements
Schwartz has been an outspoken critic of Nevada’s economic development strategy, which features a system of tax incentives to spur businesses.
In 2016, he staged a virtual standoff with supporters of Faraday Future, the electric car company backed by Chinese billionaire Jia Yueting, threatening not to issue bonds for the planned factory in North Las Vegas amid concerns about Faraday’s viability. History eventually proved Schwartz right, with Faraday pulling out of the project in spite of incentives approved at a special session of the Legislature.
Schwartz said he thinks money used for tax abatements would be better used to improve infrastructure; one of his campaign promises was to build a high-speed train between Reno and Las Vegas. He also wants to “ease the regulatory process, take away red tape.”
Other than that, he said, Nevada’s lack of personal and corporate income taxes is selling itself, and the state should not be allergic to raising taxes to a reasonable degree if it determines it needs to do so in order to invest in itself.
He’s remained a critic of the plan to use $750 million in hotel tax revenue to support a stadium for the Raiders. While the taxpayer money is solid, contributions from the Bank of America, the NFL and the team itself are all IOUs, he says.
“I continue to warn all Nevadans about the shaky deal rising along I-15 in Las Vegas: the Raiders Stadium is a $2 billion project floating on a sea of debt,” he wrote in a recap of his term. “I love football but not a poorly-financed and unrealistic venture. Hold onto your wallets, Nevadans!”
He predicts the stadium will be short of the money it needs.
“The money isn’t there,” he said. And as for the taxpayer funds: “When that money runs out what happens?”
Future of the Republican Party
Schwartz, who previously served as the finance director of the Nevada Republican Party and remains close with its chairman Michael McDonald, has a simple analysis of what happened in the election.
“What worked for Trump elsewhere didn’t work here,” he said, noting that some Republican statewide candidates who were less closely linked to the president performed better or even won in the election. “Every time Trump came here it decreased the Republican votes.”
He thinks Nevada Republicans spent too much time talking about sanctuary cities and “protecting Nevada” rather than putting out a proactive message about growing Nevada. Democratic governor-elect Steve Sisolak, Schwartz said, was a strong “retail politician” who engaged more with voters and the press than Laxalt did.
“We could have won if we had a good candidate as a Republican,” Schwartz said, pointing to Gov. Brian Sandoval and former Rep. Joe Heck’s strong but ultimately unsuccessful Senate bid in 2016. “I think this was a choice between a candidate who went out and talked with people, who had a track record of backing education, backing [Medicaid] … and someone who reluctantly talked about education, who was opposed to [Medicaid], who didn’t seem to read the statistics that 30 percent of the population here is Latino.”
Schwartz believes he lost so decisively in the primary because Republican voters were so convinced Laxalt could win, even though Laxalt ended up losing by four percentage points in the general. Although he’s disappointed that his party fell short in almost all major Nevada races this cycle, he said that’s an opening for those remaining to redefine what it means to be a Republican.
“I don’t see how we can exist … our message has to change and we can’t write off 30 percent of the population. We can’t ignore the massacre in Las Vegas,” he said. “This is the party of Abraham Lincoln and Teddy Roosevelt and Dwight Eisenhower. It’s a great party. What we’ve done is we’ve deviated from those principles.”