Political conflict about control of KPERS’ investment portfolio roils Kansas Senate

Chamber initially rejects House-Senate deal, later approves it on revote

by Tim Carpenter, Kansas Reflector
April 6, 2023

TOPEKA — The Kansas Senate had to vote twice Thursday before accepting a compromise bill advancing prohibitions on state investments and contracts linked to environmental and social causes and deleting a proposed ban on state pension investment in countries viewed as U.S. adversaries.

When the deal negotiated by House and Senate members came up for a vote in the Senate, several Republicans objected to removal of provisions forcing the Kansas Public Employees Retirement System to unload $567 million invested in China, Hong Kong and other international funds. The thinned version of House Bill 2100 was defeated 18-20 by the Senate, with Democrats joining conservative Republicans in the majority.

After taking a break, the Senate voted 27-12 to accept the deal. The House has yet to vote on the conference committee agreement.

Sen. Alicia Straub, an Ellinwood Republican who switched from “pass” to “yes” on the bill, said she was deeply disturbed the Senate didn’t hold out for the international investment piece.

“Hopefully,” Straub said in a halting voice, “our grandfathers who fought for our freedoms aren’t disappointed in us.”

Swift abandonment of $567 million invested by KPERS in objectionable countries would cost the $24.9 billion retirement trust fund an estimated $92.8 million, said Emporia GOP Sen. Jeff Longbine, chairman of the Senate Financial Institutions and Insurance Committee.

He supported the version of the bill negotiated by the House and Senate, but some of his Republican colleagues discounted financial implications of disinvestment on KPERS’ bottom line.

GOP Sen. Mark Steffen, a physician from the Hutchinson area, said information shared by Longbine about financial consequences to KPERS were “paper numbers” that “don’t hold water.”

“I disagree with them,” Steffen said. “You sell out, you reinvest it somewhere and you’re back in the game. Those are paper, pretend numbers is all they are.”

Parker Republican Sen. Caryn Tyson, who maintained Senate negotiators lost a game of chicken with the House, argued preservation of national security in terms of investment strategies at KPERS could be worth a $92 million loss. The pension system serves teachers, judges, legislators and other public employees in Kansas. It holds an unfunded long-term liability of more than $9 billion.

“I cannot accept that we continue investing in these countries,” said Tyson, who was especially vexed about Russian and China. “Why would we keep our KPERS money in these foreign countries?”

Sen. Mike Thompson, a Shawnee Republican and lead negotiator for the Senate on the bill, said he supported the international investment views of Tyson, Steffen and others.

Thompson said his priority with this bill was preservation of restrictions on KPERS investments and state agency contracts to undercut influence of investment managers loyal to principles of ESG, or environmental, social and governance objectives often touted by left-leaning organizations and companies.

Some ESG advocates discourage investments in industries tied to fossil fuels, agriculture, firearms, forestry and mining.

Thompson said House negotiators didn’t object to making KPERS and state agencies stick to fiduciary responsibilities rather than wade into ESG. House members made clear they wouldn’t budge on the international portfolio overhaul at KPERS.

“What we would like to do and what is possible are two different things,” Thompson said.

Kansas Reflector is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Kansas Reflector maintains editorial independence. Contact Editor Sherman Smith for questions: info@kansasreflector.com. Follow Kansas Reflector on Facebook and Twitter.

Derek Nester
Derek Nesterhttp://www.sunflowerstateradio.com
Derek Nester was born and raised in Blue Rapids and graduated from Valley Heights High School in 2000. He attended Cowley College in Arkansas City and Johnson County Community College in Overland Park studying Journalism & Media Communications. In 2002 Derek joined Taylor Communications, Inc. in Salina, Kansas working in digital media for 550 AM KFRM and 100.9 FM KCLY. Following that stop, he joined Dierking Communications, Inc. stations KNDY AM & FM as a board operator and fill-in sports play-by-play announcer. Starting in 2005 Derek joined the Kansas City Chiefs Radio Network as a Studio Coordinator at 101 The Fox in Kansas City, a role he would serve for 15 years culminating in the Super Bowl LIV Championship game broadcast. In 2020 he moved to Audacy, formerly known as Entercom Communications, Inc. and 106.5 The Wolf and 610 Sports Radio, the new flagship stations of the Kansas City Chiefs Radio Network, the largest radio network in the NFL. Through all of this, Derek continues to serve as the Digital Media Director for Sunflower State Radio, the digital and social media operations of Dierking Communications, Inc. and the 6 radio stations it owns and operates across Kansas.


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