The more than yearlong legislative effort to force state pension funds to divest from international firms doing business in Iran and Sudan may have cleared a major hurdle in Harrisburg, but more obstacles stand in the way to the finish line.
On June 25, in a 185-15 vote, the House passed what's known as the Protecting Pennsylvania's Investments Act. Over the past year, several bills related to the issue have been introduced in both the House and Senate. One series took a broad approach, and two others focused more narrowly on Iran or Sudan.
Why is this latest bill different?
Because many believe that a crucial amendment to the investment act -- one that stipulated that it target both Sudan and Iran -- gives it the necessary ingredients to make it through both chambers and get sent to the governor's desk.
The investments act was sponsored by State Rep. Josh Shapiro (D-District 153). State Rep. Babette Josephs (D-District 182) introduced the key amendment and has lent her support. But while Shapiro expressed optimism that the bill could move through the Senate quickly, Josephs expected a tough fight to lay ahead because she said the pension-fund managers are not happy with the prospect of the legislature dictating their investment strategy.
"The managers don't want to be told what to do by us," said Josephs. "But when I talk to my fellow elected officials, I remind them that we are the policymakers."
The House also voted to include an attachment that would force the state, and therefore taxpayers, to make up the difference if divestment caused the pension funds' holdings to lose value. The bill also stated that the rules would remain in effect until Iran ceased sponsoring terrorist activities and Sudan halted violence against its own citizens.
The law would require the state pension funds to divest from any foreign companies that have $20 million or more of investments in the two rogue nations. It would affect the pension funds held by the Public School Employees Retirement System, the State Employees Retirement System, and the office of the State Treasurer.
A Broader Approach
Initially, Shapiro had advocated a broader approach -- one that would direct the pension funds to unload about $10 billion in holdings in companies that operate in the nations listed by the U.S. State Department as terrorist-sponsoring nations: Iran, Syria, Sudan, Cuba and North Korea. By following the State Department, Shapiro sought to inculcate the commonwealth against charges that it was making its own foreign policy.
But the joint Shapiro-Josephs bill takes Syria, North Korea and Cuba out of the equation.
Shapiro insisted that it wasn't much of a shift since Congress and the White House have, in the past year, begun to push the issue themselves. On Dec. 31, 2007, Bush signed into law the Sudan Accountability and Divestment Act, which afforded state and local governments the authority to divest from Sudan.
Congress has also debated a similar bill directed at Tehran -- which has received far more international investment than the other nations on the list -- but that has not passed both chambers yet.
Originally, Josephs stated that a bill pushing for too broad an overhaul would meet stiff resistance, and that the highest priority should have been Sudan, which the United States has said has conducted a genocide against its own people.
Her Sudan bill passed the House overwhelmingly last year, but so far has languished in the Senate. Shapiro's initial set of three bills had passed out of committee, but not the full House. Another bill introduced in the Senate in February by State Sen. Vince Fumo (D-District 1) that singled out Iran has not progressed much.
To help break the deadlock, Josephs decided to support a bill that included both Iran and Sudan, although she insisted that it wasn't a major turnaround. She said that she's always been in favor of Iran divestment, and pursued Sudan-only divestment as a tactical maneuver.