May 11, 2019

START THE VP BUZZ:

Rhode Island's Governor Uses Her VC Chops to Boost the Economy:  Gina Raimondo, who co-founded a venture capital firm, is spreading prosperity through fiscal responsibility, investment in education, and business development. (Matthew A. Winkler, May 1, 2019, Bloomberg)

Not only is she the first gubernatorial winner of a majority in more than a decade (52.6 percent), she's the first woman to be reelected to the position as well as the first Democrat elected to lead the Ocean State since 1991. The Harvard-educated economist and Rhodes scholar is effectively writing a turnaround case study in how a state government with little going its way can become something of a benchmark. Her three-pronged strategy: create fiscal stability, invest in education and infrastructure, and recruit companies--relentlessly.

That last part comes naturally. Raimondo co-founded the venture capital firm Point Judith Capital in 2001, the only Rhode Island firm then devoted to financing new businesses. She stepped into politics in 2010 by successfully running for general treasurer after widening deficits resulted in budget cuts that threatened to shutter hundreds of local libraries, including the one favored by her two children and another where her grandfather learned English as a 14-year-old Italian immigrant. "We were headed in the wrong direction," she says.

As her first order of business, Raimondo confronted labor unions that supported her own Democratic Party about their pension debt--fraught politics, to be sure. Their pensions, she told them, wouldn't survive their unfunded $7 billion liability, the second-highest in the country on a per capita basis. She said they could settle for either "a quarter of a loaf or none." The unions still refused to budge.

Amid that standoff, Raimondo announced her candidacy for governor. In a heated three-way race, voters lifted her to the statehouse with 40 percent of the vote. Soon after her election, she solved Rhode Island's pension crisis--without having to raise taxes--when the two sides reached a settlement in state Supreme Court. "Gina Raimondo led Rhode Island to enact the boldest pension reform of any state in recent years," wrote Josh Barro in the Washington Examiner in 2012.

As governor, Raimondo immediately set out to improve the state's education system. "The policymaker in me, the economist in me, the businessperson in me knows it's a no-brainer to invest in education," she says. To reverse a brain drain, her initial budget relieved graduates from any Rhode Island-based college or university of their student loans--as long as they agreed to live and work in the state for four years in jobs related to science, technology, engineering, and mathematics (STEM). The Providence Journal rated the so-called Wavemaker Fellowship "a promise kept." A year later, her government guaranteed two years of free college or community college to every in-state student, tripling the community college graduation rate. More recently, Raimondo's "CS4RI" initiative makes Rhode Island the first state poised to bring computer science into every public school. To help pay for these programs, revenue from taxes increased 17.3 percent over the past four years.

Yet the single best investment for long-term economic prosperity are her 4-year-old constituents, says Raimondo, who cites the Brooking Institution's April 2017 report, The Current State of Scientific Knowledge on Pre-Kindergarten Effects, when discussing the importance early learning plays in shaping brain development. "You shouldn't have to be rich or lucky to get your kid into school," adds Raimondo, who's tripled the number of pre-K classes in the state and also guaranteed that every child can attend all-day kindergarten. Rhode Island allocates $14,889 per student, or 138.3 percent of the U.S. average and the ninth-highest figure in the nation.

Posted by at May 11, 2019 5:22 PM

  

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