Stemerman proposes public-private formula to revive state economy

By Scott Benjamin

WESTPORT – Republican gubernatorial contender David Stemerman says to be a successful hedge fund manager “you have to have the ability to see opportunities where others cannot.”

“That’s because the financial markets are among the most competitive on earth,” said Stemerman, 49, of Greenwich, who after nearly a decade closed his hedge fund, Conatus Capital Management, last December so he could make a bid to become Connecticut’s 89^th governor. The Wall Street Journal reported last September that the company had a value of $1.6 billion.

He is taking a hedge fund manager’s approach in assembling a platform that indicates that if Connecticut wants to solve its decade-long fiscal crisis it will have to take a radical turn to the private sector to revise underfunded state employee health care and pension benefits, build roads, modernize rails, airports and offer more real-world experience for students from kindergarten through graduate school.

It will likely draw the ire of the state employees bargaining units, the Connecticut Education Association, the American Association of University Professors and the state Department of Transportation.

However, Stemerman insists that there is no other way forward in the only state in New England that hasn’t recaptured all the jobs lost in the 2008 recession.

He said he can still vividly recall how during his childhood, former President Ronald Reagan, wearing a crisp suit, said, “We can do better. We can lower taxes and regulations and end the Cold War after every president since Harry Truman had said the goal was to just contain Russia.”

“Reagan said, ‘I want to win,’ “ said Stemerman. “That’s real leadership.”

Last September when he announced his candidacy he initially put $1.8 million forward. That is a big investment, but not Linda McMahon money. McMahon of Greenwich, now the director of the federal Small Business Administration, spent nearly $100 million of her own money during two unsuccessful races for the U.S. Senate.

However, unlike McMahon, who spent months hobnobbing at the Republican Town Committee clam bakes and lobster fests, Stemerman indicated in an interview that he is just getting to know the convention delegates. He only participated in the last two of the five debates held over the recent months.

It appears that he may not get at least the 15 percent of the delegates at the GOP state convention May 11-12 at the Foxwoods casino and resort in Ledyard to automatically qualify for the primary and will instead have to collect petition signatures to get on the August 14 ballot. He said he is well-positioned to accomplish that.

Regarding his platform, Stemerman says Connecticut should enact a private-public partnership to construct the $100 billion in infrastructure improvements outlined in a 2015 ad-hoc committee report.

“I do not trust the Connecticut Department of Transportation,” he said. “The national average to build roads is $180,000 per mile and in Connecticut the cost is $425,000 per mile.”

Texas established a similar program about seven years ago under then-Gov. Rick Perry, who is now the U.S. Secretary of Energy. However, the toll revenues go to the contractor and not the state treasury.

Additionally, Stemerman said the state should re-vitalize Eugene Bradley International Airport in Windsor Locks and extend the runway at Jack Tweed Airport in New Haven-East Haven through private investments in the same way that improvements are being made at Fiorello La Guardia in New York City.

CT Hearst business columnist Dan Haar recently endorsed accessing adjacent neighborhood property to lengthen the runway at Tweed so that it could accept more commercial traffic.

Stemerman also said that “private sector expertise” could build bridges, re-electrify rails and update tracks to get the commute from New Haven to Grand Central down to 60 minutes.

“It would be a game-changer,” said Stemerman, who has a bachelor's degree from Yale University and a law degree and master's in Business from Harvard.

Regarding the states’ long-term liabilities, Stemerman wants to have a conversation with the leadership and rank and file of the state employee collective bargaining units on how to address a system in which funding for health care benefits is at 1 to 2 percent, pensions are at less than 30 percent for state employees and teachers pensions are at just 52 percent.

“We will all need to understand that state employees were given promises that can’t be kept and were made with money that we do not have,” he said.

Stemerman has called for reaching an agreement through a mix of inducements and lump sum payments, but hasn’t specified a cost.

He said under his plan the future state employee benefits would be placed in an independent locked trust that would invest the assets responsibly.

Dan Livingston, an attorney for the state employee collective bargaining units, told CT Mirror that Stemerman’s proposal is wrong on legal, moral and economic grounds.

On education, Stemerman supports school choice.

“Parents should have a voice and choose which school their children should attend in their school district,” he said.

However, Danbury Mayor Mark Boughton, a former high school Social Studies teacher and a leading candidate for the Republican gubernatorial nomination, has said, “Whenever anybody tries to break the mold, the Connecticut Education Association has to step in and say, ‘We can’t have this.’ “

Boughton has supported Gov. Dannel Malloy’s (D-Stamford) increase in public funding for charter school seats.

Stemerman insisted that the current state education “standards are too low” and “accountability is non-existent” in the kindergarten through 12^th grade schools.

However, Connecticut has posted the scores on the standardized tests for a generation and even groups the districts into comparable demographics. Under Malloy’s reform package, veteran teachers are now evaluated more frequently.

Regarding higher education, Stemerman said that per capita Connecticut ranks only 27^th in STEM (science, technology, engineering and math) degrees, the ones in greatest demand.

The recent Commission on Fiscal Stability and Economic Competitiveness report recommended building a STEM campus in a major city. Stemerman said he is willing to consider that option or adding facilities at existing campuses.

He also wants to offer opportunities for students starting in ninth grade to do cooperative education work experiences.

“You learn real-world skills,” Stemerman said, noting that physicians have two years of training in the field before they’re certified.

“If it’s good enough for doctors why shouldn’t it be good enough for our high school and college students,” he explained.

Stemerman said he wants to expand Connecticut’s public higher education system beyond the UConn campuses and the 17 schools in the Board of Regents.

“Non-profits and for-profits have provided a model to provide training at a lower cost with a self-sustaining business model,” said Stemerman, who insisted that the soaring college student loan debt will not be sustainable over time.

Within the Board of Regents, he wants to expand the online division at Charter Oak College, an idea that met stiff resistance from faculty when then-Board of Regents President Gregory Gray proposed it nearly five years ago.

“Online learning is a wonderful tool that can help us reach our goals,” Stemerman said. “Charter Oak is the most cost-effective way of delivering them.”

In addition to Stemerman and Boughton, the GOP field includes New Britain Mayor Erin Stewart, Shelton Mayor Mark Lauretti, former Secretary of the State nominee Peter Lumaj of Fairfield, former congressional candidate Steve Obsitnik of Westport, former UBS executive Bob Stefanowski of Madison, former U.S. Comptroller General David Walker of Bridgeport, state Rep. Prasad Srinivasan of Glastonbury, Stamford Chief Financial Officer Mike Handler – who lives in New Canaan - and former Trumbull First Selectman Tim Herbst.

Malloy is not seeking a third term. The Democratic field includes former Secretary of the State Susan Bysiewicz of Middletown, former AmeriCares executive Guy Smith of Greenwich, Bridgeport Mayor Joe Ganim, former West Hartford Mayor Jonathan Harris, former Veterans Affairs Commissioner Sean Connolly of Hebron and former U.S. Senate nominee Ned Lamont of Greenwich.