WHEREAS:
The assets of state and local government pension plans, which are approaching $1 trillion, represent the deferred wages and future financial security of public employees; and
WHEREAS:
Although federal laws and regulations applicable to public pension funds require that the assets be used for the exclusive benefit of participants, federal laws do not impose minimum funding standards nor reporting and disclosure requirements. Public pension funds can become dangerously underfunded and not be required to report such underfunding to the participants or the public; and
WHEREAS:
A number of state and local governments have improperly used these assets to balance budgets or alleviate severe financial problems without regard to the interests of participants. Conversely, a few local jurisdictions have requested and received assistance from their pension funds in the form of short term loans at market rates of interest. These "arm's length" transactions were in the long term interest of participants, and protected the financial rating and reputation of the sponsoring employer; and
WHEREAS:
Public pension funds have often been used to finance hostile corporate takeovers, leveraged buy-outs and other merger and acquisition activities which result in a loss of jobs and a shrinking tax base, or investments in companies doing business in South Africa; and
WHEREAS:
Public funds can promote real economic development by actively searching for worthwhile projects passed over by traditional investors. Such projects are sometimes referred to as "economically targeted investments", and usually contribute directly to a geographic region's economic health. Groups of states have begun to develop joint investment programs so that investors can invest in such programs while maintaining the geographic diversity usually required of prudent investors; and
WHEREAS:
Public fund managers frequently ignore the interest of public employees in exercising, or failing to exercise, shareholder rights.
THEREFORE BE IT RESOLVED:
That AFSCME reaffirm its position that assets of public pension funds represent the deferred wages and future economic security of plan participants, belong to participants, and should be used for the exclusive benefit of participants; and
BE IT FURTHER RESOLVED:
That AFSCME reaffirm its longstanding position that pension funds should not be used in any way to bolster racism in South Africa. In spite of recent developments in South Africa, AFSCME will continue to oppose South African investments until the Congress of South African Trade Unions (COSATU) , the National Council of Trade Unions (NACTU), and other South African trade unions request that investment restrictions be abolished; and
BE IT FURTHER RESOLVED:
That AFSCME reaffirm its position to support adoption of federal laws that would impose "ERISA type" reporting and disclosure and fiduciary responsibility requirements on tax-qualified public plans; and
BE IT FURTHER RESOLVED:
That public funds not be invested in unproductive merger and acquisition activities. Public funds should search for "economically targeted investments" and similar investments which have an acceptable "risk-to-reward" ratio and which add to the economic vitality of the community. Along this line, public funds should give special consideration to those economically targeted investments which are offered by a treaty or compact of states so that geographic diversity can be achieved; and
BE IT FURTHER RESOLVED:
That public pension fund managers should participate in the ownership and governance of corporations by exercising their shareholder rights, particularly the voting of proxies, for the benefit of public employees; and
BE IT FINALLY RESOLVED:
That public funds should actively promote employer provided health care and pension benefits by investing only in those companies that provide such benefits. "Private placement" and construction loans should be made only to contractors or corporations that provide these benefits. Trustees and fund managers should insist that recipients of loans or equity investments follow certain community standards, particularly because employees without adequate health care coverage often qualify for Medicaid, or otherwise become a financial burden on the public employer itself.
SUBMITTED BY:
Dominic J. Badolato, President and Delegate
AFSCME Local 1303, Council 4
Connecticut