The State Board of Investment: Overview
Do you know what your retirement is funding? by t casey
What is the cost of retirement?
I am a school nurse for Minneapolis Public Schools. One of the most common reasons students come to the health office is because their stomach hurts, sometimes a somatic symptom of grief.
As I get to know some of them, they tell me their stomach hurts because they are remembering about how their parent died attempting to cross the colonial US Mexico border. Their stomach hurts because they miss home, because they had to flee their home in occupied east Jerusalem, Palestine because of a US-funded genocide. Their stomach hurts because they miss their parent who is in prison. Their stomach hurts because they are concerned about climate catastrophe and what that means for their future.
Everything I say to them feels hollow because I know I am complicit in their pain. My labor is being used to contribute to the corporations and governments that create the web of these oppressive systems that contribute to climate crisis, the prison industrial complex, a militarized border, and war around the globe.
If you are a teacher for or work in public or charter schools, are a state college or university employee, a state, city, or county government employee — you are complicit too. Anyone who pays into the Minnesota State Retirement System, the Teachers Retirement Association, or the Public Employees Retirement Association, we are investing in an unlivable future.
We have another opportunity to let them know how we feel about that on December 10th at 10am on zoom and in person.
What is the State Board of Investments?
Created in 1855, the State Board of Investments (SBI) is responsible for managing the state’s assets, mostly pension funds. They currently have control over how $149 billion generated by our labor is invested. For perspective, the entire US education department budget in 2023 received $84 billion.
The SBI Board is made up of the Governor, Attorney General, State Auditor, and Secretary of State. They are responsible for final decision making power over investment decisions, hiring the directors for the Investment Advisory Council, creating the investment policies, and maintaining records.
Protests around how the SBI invests the money from our labor have centered around the SBI Board, but there are many other people who hold power in how this money is invested.
The Investment Advisory Council (IAC) is made up of seventeen public, permanent, and retiree members who advise the SBI Board on investment decisions.
The SBI staff is forty seven people that are responsible for choosing and managing the specific investments. The staff make quarterly recommendations to the IAC quarterly, which then make recommendations to the Board.
The State Legislature, through its Legislative Commission on Pensions and Retirement, has power over the SBI's investment decisions. In 2022, the State Legislature passed a law directing the SBI to divest current holdings and refrain from future investments in Russia, Belarus, Iran, and Sudan. The Governor, and SBI Board Member, Tim Walz, signed it into law.
The SBI’s stated goal is to make sure that investments are “profitable to maintain the retirement system.” In other words, by investing in corporations and governments, the SBI helps those governments and corporations expand and make money. Those of us whose pension is invested in those entities share in their profits.
Retirement funded by genocide
Researchers from Minnesota Anti-War Committee have identified approximately $5.4 billion invested in entities complicit in and/or profiting from Israel’s apartheid regime and genocide of Palestinians.
Of that amount,
$105 million are in Israeli bonds, banks, and corporations; including $1.4 million invested into Elbit Systems, an Israeli weapons manufacturer that produces cluster bombs, white phosphorus munitions (which is banned by international human rights law), and surveillance technology used to oppress Palestinians in the West Bank. Elbit has also been contracted by U.S. Customs and Border Protection to build similar militarized surveillance equipment as part of the U.S.-Mexico border wall.
Over $711 million are invested in non-Israeli weapons manufacturers that sell to the Israeli occupation, such as 3M, Honeywell, General Dynamics, Lockheed Martin, Raytheon, Boeing, BAE Systems, and Northrop Grumman.
Over $725 million is invested in non-Israeli corporations, including Caterpillar, Hyundai, and Volvo which provide Israeli occupiers with heavy machinery used to demolish Palestinian homes and infrastructure, clearing the way for, and then assisting the construction of, illegal Israeli settlements.
Roughly $3.9 billion is invested in non-Israeli corporationsthat profit from the occupation and/or that operate within Israel’s apartheid state, ranging from surveillance technology to logistical support of apartheid law. Some examples include Airbnb, Alphabet/Google, Amazon, Chevron, Dell, Ford, General Motors, Hewlett Packard, IBM, Microsoft, Motorola, Siemens, Sony, Expedia, and Trip Advisor.
To persuade the SBI to divest from the Israeli government and corporations that profit from its occupation and genocide of Palestinians, dissenters have tried to use the SBI’s own stated purpose and goals around avoiding bad investments. This is because after over a year of protest, the SBI has shown they care more about money than morals.
Multiple credit rating agencies have “downgraded” Israel’s credit scores. According to capitalists assessing the government’s credit, the downgrade was due to significant additional military spending, destruction of infrastructure, and damage to economic activity and investment because Israel is continuing to prioritize its land theft, genocide and terror in Palestine, Lebanon, Yemen, and Syria. They point to 46,000 mostly small businesses in Israel that have closed since the start of the war as justification.
Activists are leveraging these credit score downgrades to argue that Israel is a “bad investment," and therefore investments in Israel diminish the returns that people relying on the SBI for their pensions receive.
I find myself wondering: if investing in Israel is a poor financial decision, what does the SBI's unwavering investment signal? Perhaps the SBI's investment is precisely what they claim to oppose: a symbolic gesture of political support for an ally of U.S. empire.
While investing in Israel's occupation might be seen as increasingly risky, the vast majority of this $5.4 billion is invested in U.S.-based companies that have set themselves up to profit from genocide. Is the SBI staying the course because it still sees genocide as a “good investment”?
“Strictly there to maximize”
In an interview on MPR, State Auditor Julie Blaha, one of the four SBI members, was asked how much control the SBI has over where investments go. Blaha deflected in her response:
“Well, our focus really is based on risk. And I'm a fiduciary. That means I have a legal requirement to protect this fund and to make sure that we are looking at all the risks, material that could affect it. And so our role really is focused on that…”
“This fund was designed to keep our promises. It wasn't necessarily designed for influencing foreign policy. It wasn't designed to necessarily change people's behavior. It was designed to keep promises that are really important in Minnesota.”
On July 23, 1986, in response to the divestment campaign to end apartheid in South Africa, Minnesota's then-State Auditor Arne Carlson was quoted in the Star Tribune saying something very similar: "You are strictly there to maximize." A year later, another Tribune article described Carlson's assertion that "the state's $9 billion in pension fund investments should not be subject to social action policies."
Since the movement to divest from apartheid South Africa, the SBI has been framing its pursuit of profit “maximization” as a form of care that allows ESPs, teachers, snow plow drivers, firefighters, and others to retire comfortably. It frames political divestment as contradictory to Minnesotans' right to rest after years of labor, which evokes a fear of scarcity and contributes to people thinking there is no alternative.
What the SBI never addresses is the economic impact—the power—that a $149 billion pension portfolio has.
Many researchers focused on the economic impact of pensions have arrived at similar conclusions. Our pensions have significant impacts—not only on our ability to rest after providing a public service, but also on state and federal economies and the corporations benefiting from our loans to them.
Why don’t we have a say?
The encouragement to not use this $149 billion portfolio of our money for "social action policies” is mimicked in how retirement is explained to the public.
A video from the Teacher’s Retirement Association called "Your Pension Plan" features a cartoon of a white man sitting under an umbrella on a northern Minnesota lake. A voice states, "Your money is professionally managed by the Minnesota State Board of Investment so you don’t have to worry about investment details!...While we take care of your pension, you can focus on your life and envision your future lifestyle.”
What are they saying to us with this imagery?
Don’t worry about where this money is going—aren’t you too tired to care?
You don’t get a choice, anyway (unlike most non-public pensioners, who do get a choice in how money is invested).
You, too, can get a piece of the settler-colonial imperialist pie.
“I have to hold the line and really focus on risk, otherwise this fund just won't be there when our retirees need it.” — Julie Blaha
What kind of future are we investing in? Is it the future retirees need?
The SBI is not listening to the hundreds of people attended meetings to make the case that investing in genocide is antithetical to their values as nurses, educators, and public servants. The SBI has further removed the community's ability to participate in the process by making its meeting on December 10th online, with only written comments accepted. (Update: as of the day this article was posted, they switched the meeting to hybrid, so people can attend in person and online.)
People deserve to rest after years of working, and to be taken care of with dignity. But we must not accept the SBI's exploitation of us and the communities we say we care for.
What can we do?
Talk with as many people as you can about this issue.
Sign the Anti-War Committee’s petition for divestment.
Go to the December 10 online and in-person SBI meeting, and submit a public comment prior to the meeting. Let’s pack the room, in person and virtually!
Stay tuned for future articles where we will review the historic SBI vote to divest from apartheid South Africa and explore what the SBI could invest in instead of the genocidal practices of Israel.
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