Municipal Bonds Maintain Strong Bipartisan Support
Municipal Bonds Maintain Strong Bipartisan Support
WASHINGTON – House Ways and Means Committee Chairman Kevin Brady said Monday night that “there’s very strong bipartisan support for preserving” the tax exemption for municipal bonds and that he expects to have a tax reform bill on President Trump’s desk before the end of the year.
“I don’t want to get ahead of our committee’s work and product that we’ll all see very soon,” Brady, R-Texas, said at the annual meeting of the Securities Industry and Financial Markets Association here when asked about the specifics of the expected tax reform bill.
Senior administration officials speaking on background told reporters last month that the tax exemption for municipal bonds will be preserved. But none of the so-called Big Six Republican leaders in the House and Senate and top administration officials who are negotiating the framework of the bill have confirmed it on the record.
Brady’s comment, made during a question and answer session at the SIFMA conference in a downtown Washington hotel, is the closest any of them has come to providing a public reassurance.
WASHINGTON — Demand for municipal bonds is expected to increase and credit spreads get lower in the future because most regional members of the Federal Home Loan Bank system have begun accepting municipal bond issues as collateral.
That was the message Thursday during a webinar sponsored by the National Association of State Treasurers for issuers, investors, municipal advisors, bond attorneys and underwriters.
Mark Pascarella, the webinar moderator and director of debt management for the Indiana Finance Authority, said the takeaway is that higher demand is possible for municipal issuers.
“As an issuer, I have to recognize that there might be some changes I make to an official statement to make the issuance Federal Home Loan Bank eligible,’’ Pascarella said. “There’s some work we’re going to have to do on our end.’’
The payoff, he said, will include an erosion of the liquidity premium.
The Federal Housing Finance Agency has given regulatory approval over the last couple of years for the 10 of the nation’s 11 regionals to include municipal issues as allowable collateral….
WASHINGTON, D.C. – The National Association of State Treasurers (NAST) today announced it has appointed Shaun Snyder as executive director. Snyder will join the 41-year-old association on October 16, 2017.
NAST President and Oklahoma State Treasurer Ken Miller said, “After a nationwide search, I am pleased to welcome Shaun to our bipartisan association. His strong leadership abilities and proven track record will serve NAST well as we continue to expand our impact to better serve our citizens.”
The NAST Executive Committee chose Snyder following an intensive nationwide search. His job responsibilities will include managing and overseeing all association activities, including membership services, government affairs, corporate partnerships, media outreach and conference planning. He will also direct the staff, operations, and initiatives at the association.
“State treasurers are on the frontline of solving some of our country’s toughest fiscal challenges—from financing much needed infrastructure projects to helping individuals save for the rising cost of college or retirement,” said Snyder. “NAST plays a crucial role in helping state treasurers address these issues by developing best practices and promoting sound fiscal policies, so I look forward to joining this bipartisan association to build on this goal.”
Currently, Snyder serves as the Chief Operating Officer for the American Psychiatric Association, where he is responsible for working with each of the organization’s departments to ensure the association meets strategic objectives in an efficient and effective manner. Prior to joining the American Psychiatric Association, Snyder served in the same role for the Department of Health of the District of Columbia, and has served as Special Assistant to the General Counsel of the U.S. Department of Housing and Urban Development.
Snyder was born in California and spent his childhood in a number of states, including California, Wisconsin, Massachusetts, and Maryland. He received his undergraduate degree in Government and Politics from the University of Maryland, his law degree from the Georgetown University Law Center, and his MBA from The George Washington University. He is licensed to practice law in Maryland and the District of Columbia.
TOPEKA — A federal judge issued a ruling in support of longstanding claims the state of Kansas should take possession of about $150 million in unredeemed, matured U.S. Savings Bonds to improve prospects of identifying the rightful owner, officials said Friday.
Off and on for more than 15 years, Kansas officials have argued the U.S. Department of Treasury should work with the state to identify and return proceeds from matured bonds bought by people with last known addresses in the state. Kansas’ legal counsel asserted the state owned the bonds, despite not possessing the bond certificates issued decades ago by the Treasury Department.
U.S. Court of Federal Claims Judge Elaine Kaplan’s ruling Tuesday affirmed Kansas’ position on ownership of the so-called “absent” bonds, but stopped short of declaring Kansas could redeem the bonds.
Based on a lawsuit filed in 2015 and endorsed by a handful of other states, Kaplan found the treasury department in breach of contract for refusing to recognize Kansas’ ownership of the bonds.
“The court concludes that the (federal) government’s arguments lack merit, and that the undisputed facts entitle Kansas to summary judgment with respect to its ownership of the absent bonds,” she said in the ruling.
However, the judge noted further court action was necessary because “it is neither necessary nor appropriate for the court to determine at this stage in the proceedings whether Kansas is entitled to redeem the bonds.” In other words, the latest twist in the case only allowed Kansas to secure from the treasury department information necessary to make a request to redeem the bonds…
South Carolina’s Future Scholar 529 College Savings Plan reached a major program milestone by exceeding $3 billion in total assets under management.
June 2017 also marked the best June sales month in the 15-year history of the plan.
“We have worked to make Future Scholar one of the best college savings plans in the nation, and exceeding $3 billion in total assets reflects that effort,” State Treasurer Curtis Loftis said. His office administers the program.
“This milestone also demonstrates that more parents than ever understand the importance of investing for their child’s college education, and they are choosing Future Scholar to reach those college investing goals,” he said.
This year Future Scholar is celebrating its 15-year anniversary. Among the growth highlights:
• Total number of accounts has increased from 9,800 to over 134,000.
• Average account size has risen from $8,233 to $20,222.
• Contributions into the plan from South Carolinians have increased 28 percent over the previous year.
Residents of The T&D Region have taken advantage of the savings plan.
As of June 30, 2017:
• Orangeburg County has $8,488,080 in assets in 543 accounts.
• Calhoun County has $2,321,167 in assets in 99 accounts.
• Bamberg County has $1,608,972 in assets in 61 accounts.
As Congress and the administration continue to work to overhaul the nation’s broken tax code, Senate Finance Committee Chairman Orrin Hatch (R-Utah) today called on tax stakeholders to provide ideas, proposals, and feedback on how to improve the American tax system.
After years of committee hearings, public statements, working groups, and conceptual exercises, Congress is poised to make significant steps toward comprehensive tax reform,” Hatch said in a letter. “Members from both parties have acknowledged the shortcomings of our current tax system and the need for meaningful reforms to encourage economic growth and alleviate many of the burdens imposed on hardworking taxpayers…As we work to achieve those goals, it is essential that Congress has the best possible advice and insight from experts and stakeholders.
NAST has submitted a comment letter to the chairman with the “strong recommendation that Congress maintain the current tax treatment for municipal bonds,” stressing that changes could “inhibit the ability of state and local governments to continue leading in development of and investment in critical infrastructure throughout our country.”
Three quarters of all public infrastructure projects in the United States are built by the states and local governmental entities. Tax-exempt municipal bonds are the primary tool that state and local governments use to finance highways, bridges, transit systems, airports, water and wastewater systems, schools, higher education facilities, and other public infrastructure.
CSPN has submitted a comment letter as well where they strongly encourage him “to consider the importance of post-secondary education to our economy.”
These recommendations include retaining the current federal tax exemption afforded to earnings on 529 accounts and prioritizing tax policies to support saving for college. In addition to adopting current and past legislative initiatives to make saving in a 529 plans even more attractive to moderate income families and remove some of the current disincentives to college savings. These proposals are reflected in legislation introduced by Senators Richard Burr (R-NC) and Bob Casey (D-PA) and in the House of Representatives by Reps. Lynn Jenkins (R-KS) and Ron Kind (D-WI).
SEC Summary and Background:
The Securities and Exchange Commission (“Commission” or “SEC”) has published proposed amendments to the Municipal Securities Disclosure Rule (Rule 15c2-12) under the Securities Exchange Act of 1934 (“Exchange Act”) that would amend the list of event notices that a broker, dealer, or municipal securities dealer (collectively, “dealers”) acting as an underwriter in a primary offering of municipal securities must reasonably determine that an issuer or an obligated person has undertaken, in a written agreement or contract for the benefit of holders of the municipal securities, to provide to the Municipal Securities Rulemaking Board (“MSRB”).
GALENA – Kansas Treasurer Jake LaTurner is launching his tour of Kansas’ 105 counties to promote many of the programs and services administered by the Treasurer’s Office. The tour will be starting in LaTurner’s hometown of Galena in Cherokee County on Monday, June 12. Treasurer LaTurner and his staff will be in Galena at the Galena City Hall in the Community Room from noon to 1:30 p.m.
“My goal as the State Treasurer is to help Kansans plan and prepare for the future,” said LaTurner. “I’m really excited to be launching my 105 county tour in my hometown of Galena. Throughout the tour we will be promoting four very important and rewarding missions at the Treasurer’s Office: Returning unclaimed property to its rightful owners, helping Kansans save for higher education, empowering individuals living with a disability and their loved ones to save for disability related expenses, and increasing the financial knowledge of all Kansans. I look forward to offering the most vital functions of the Treasurer’s Office directly to Kansans in their hometowns.”
The State Treasurer’s Office is currently safeguarding $350 million in unclaimed property and is charged with returning it to its rightful owners and heirs. Unclaimed property includes inactive savings and checking accounts, uncashed checks, stock shares and bonds, dividend checks, insurance proceeds, mineral royalties and utility deposits. Kansans who can’t make it to the event may call the State Treasurer’s Office at 1-800-432-0386 or log onto www.KansasCash.com to search for unclaimed property. There is no cost to search and claim your rightful property.
Along with assisting Kansans in their search for unclaimed property, Treasurer LaTurner and staff will be talking to Kansans about how the Office can help Kansans plan and save for the future. The Treasurer’s Office administers the Learning Quest 529 Education Savings Accounts, which helps Kansans save for the students in their lives. The funds are invested and then can be utilized for higher education expenses.
Treasurer LaTurner and his staff will also be helping people living with a disability save for their future by signing eligible Kansans up for the brand new ABLE accounts. The Kansas ABLE checking accounts help make paying for qualified expenses safe and easy, and they continue to empower individuals with disabilities to gain financial independence and save the money they earn.
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April has been designated Financial Literacy Month to focus on increasing the public’s comprehension of basic monetary concepts. Many banking institutions and credit union offer financial wellness seminars. Additionally, university extension offices may provide financial literacy classes. By doing a little research, people can find many free resources available to improve their understanding of how to best use, as well as save, their money.
For the 529 industry, progress has been made in educating the public about the abundant advantages of these college savings plans and it must continue.
While student loan debt nationally has risen to $1.3 trillion, there has also been a marked increase over the past ten years in saving for college which indicates a measure of thoughtful financial literacy. According to the Sallie Mae report, “How America Saves For College 2016,” 57 percent of parents are now saving for their children’s future college costs, up 9 percent from 2015. Additionally, the average savings amount now stands at $16,380, an increase from $10,040 in 2015. The report also found that families who use 529 college savings plans have saved more than other college savers. A takeaway from the report is people are learning about the added tax benefits and values of 529 college savings plans and are using them.
There is still more for the public to understand about 529 plans, including one that many people don’t recognize – that 529 accounts aren’t just for children. If an adult would like to head back to college to finish their degree, hone their professional skills, or start a new career path, then they should consider opening a 529 college savings account for their own college expenses and tax benefits.
Traditionally, 529s have been used to fund children’s future college costs; however, there are no age restrictions on who can use these college savings accounts and no time limits on when the account must be used. Furthermore, 529 plans were created to be used at any federally accredited educational institution, which includes two-year, four-year, graduate, professional or post-secondary degree programs. For working adults who want to continue their college education to advance their career, they should check with their human resource department to see if tuition reimbursement is a part of the employee benefits. This benefit combined with 529 savings could significantly reduce higher education costs.
All the tax advantages associated with a child’s 529 account would also apply to an adult’s account. The 529 college savings plan will grow with tax-free earnings on contributions. Withdrawals from 529 plans are also tax free, provided the funds are used for qualified higher education expenses, which includes many large costs like tuition, mandatory fees, and computers. Some states also allow deductions to state taxable income based on contributions made to 529 plans.
An additional benefit to 529 plans: If there is money left over in a child’s plan, the account owner can transfer the remaining funds to the parent’s account. No tax penalties will be accessed with the transfer as long as the new beneficiary is a family member, which the parent is. By rolling over these 529 plan assets, the account owner can use the money already set aside for college expenses for their own continuing education.
People want to understand their finances and make informed fiscal decisions. As they learn more about the multiple benefits of 529 accounts, the use of these college savings plans will continue to grow.
About the author:
Tim Gorrell is the executive director of Ohio Tuition Trust Authority. For more than 25 years, Ohio Tuition Trust Authority has sponsored and administered CollegeAdvantage, Ohio’s 529 College Savings Program. CollegeAdvantage now oversees more than 635,000 accounts and over $9.92 billion in assets. Visit CollegeAdvantage.com or call 1-800-AFFORD-IT (233-6734) to learn more.
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