Senate Bill 955, a bill allowing public pension funds to prioritize investments in California infrastructure projects over out-of-state projects, passed on a unanimous, bipartisan vote in the Senate’s Public Employment and Retirement Committee today.
Senator Fran Pavley (D-Agoura Hills) said, “California has 10.9% unemployment and critical unmet infrastructure needs. In these difficult times, it is important for the legislature to ensure that our public retirement systems prioritize California investments that will create jobs and help revitalize our state’s economy.”
The California Public Employees Retirement System (CalPERS) recently announced $800 million in dedicated funds to invest in infrastructure projects that will provide a steady return for members of the fund, as well as help to finance much needed updates to our nation’s aging infrastructure. CalPERS has targeted 80% of the current fund for projects within the United States, 20% of which will be in California. Additionally, CalSTRS has a $500 million in dedicated funds for global infrastructure investment. Senator Pavley’s bill seeks to maximize potential employment and economic benefits from these funds for Californians.
Policies vary substantially from state to state with some public employee pension systems having statutory guidelines to stimulate in-state economic growth while others have policies set by the Governor or the board of the pension funds. New York City Employees Retirement System’s (NYCERS), and Massachusetts Pension Reserves Investment Management (MassPRIM) have policies established by their boards that encourage some in-state investment.
There are also several examples of states using their public pension funds to stimulate the state economy. Florida explicitly redirected $1.95 billion to directly invest in the Florida Economy, Washington, Michigan, and Indiana also directed their public pension funds to invest specific amounts in-state to aid their ailing economies.
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