The Phase 2 report is a companion to the Phase 1 report. The reports were prepared in response to state budgetary provisos directing a study of the feasibility of a state-created public cooperative bank (hereafter, Bank). This Bank would assist members manage cash and investments more efficiently and establish a sustainable funding source of ready capital for infrastructure and economic development.
In the Phase 1 report, the research team composed of Justin Marlowe, Evans professor of public policy, William Longbrake, Evans affiliate associate professor, Sharon Kioko, Evans associate professor of public administration, and Hugh Spitzer, UW law professor, outlined possible models for the Bank to serve Washington State agencies and governments. That report, published in December 2018, explored the constitutional and statutory framework, capitalization, funding, governance and financial and credit risk. The report also included responses from a user needs survey.
The Phase 2 report extended the preparatory research and analysis contained in the Phase 1 report. This report is divided into three parts. Part I provides a design framework for the Legislature to consider in drafting legislation to create a Bank. The design framework includes six questions: (1) which types of entities and projects should be eligible to participate in the Bank, (2) where would the Bank reside within state government, (3) who would regulate the Bank, (4) who should exercise oversight of the Bank’s programs and operations, (5) how could the Bank optimize its credit rating, and (6) what staffing resources and administrative expenses would the Bank require. This report also covers the Bank’s goals, membership structure, oversight and governance, and other operational details. It provides recommendations for how to optimize the Bank’s credit rating, how to staff and capitalize the Bank, and Bank programs covering borrowing, lending and investing. For some of the questions, there is a clear course of action that would require legislation and/or changes to existing statutes. For other questions, we were unable to discern a legislative preference or the technical or political feasibility of a particular option. In those instances, the report provided an assessment of each course of action.
Financial proformas covering ten years, and three scenarios, can be found in Part II of this report.
Part III of this report provides draft legislation to effectuate this business plan.