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.
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