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A10039 Summary:

BILL NOA10039
 
SAME ASNo Same As
 
SPONSORO'Donnell
 
COSPNSR
 
MLTSPNSR
 
Amd 423, R & SS L; amd 508, Ed L
 
Relates to limitations on investments of public pension funds; prohibits investment and requires divestment of any stocks, debt or other securities of any company engaged in the manufacture of firearms or ammunition.
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A10039 Actions:

BILL NOA10039
 
03/08/2018referred to governmental employees
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A10039 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A10039
 
SPONSOR: O'Donnell
  TITLE OF BILL: An act to amend the retirement and social security law and the education law, in relation to limitations on investments of public pension funds   PURPOSE OR GENERAL IDEA OF BILL: To direct the State Comptroller to divest the New York Common Retirement Fund from companies engaged in the manufacturing of firearms and firearm ammunition.   SUMMARY OF SPECIFIC PROVISIONS: Section 1 amends Section 423 of the retirement and social security law by adding subsections 3(a), 3(b), and 3(c). Subsection 3(a) of Section 423 prohibits the State Comptroller from investing monies of the Common Retirement Fund in companies engaged in the manufacturing of firearms and firearm ammunition. Divestment from firearm companies must be completed within five years. Subsection 3(b) of Section 423 permits the Comptroller to cease divest- ment or reinvest in previously divested companies if he/she can demon- strate that as a direct result of such divestment the Fund has become or shall become: (i) equal to or less than 99.5 per cent; or (ii) 100 per cent less 50 basis points of the hypothetical value of all assets under management by, or on behalf of, the Fund assuming no divestment from any company had occurred. Subsection 3(c) of Section 423 requires the Comptroller to identify all companies subject to divestment in which the Fund has holdings within 60 days of the effective date, and to report annually on the progress of divestment. Section 2 amends Section 508 of the education law by adding new subdivi- sions 12(a), 12(b) and 12(c). Subdivision 12(a) of Section 508 prohibits the retirement board from investing monies of the New York State Teachers' Retirement System fund in companies engaged in the manufacturing of firearms and firearm ammu- nition. Divestment from firearm companies must be completed within five years. Subdivision 12(b) of Section 508 permits the retirement board to cease divestment or reinvest in previously divested companies if he/she can demonstrate that as a direct result of such divestment the Fund has become or shall become: (i) equal to or less than 99.5 per cent; or (ii) 100 per cent less 50 basis points of the hypothetical value of all assets under management by, or on behalf of, the Fund assuming no divestment from any company had occurred. Subdivision 12(c) of Section 508 requires the Attorney General to iden- tify all companies subject to divestment in which the Fund has holdings within 60 days of the effective date, and to report annually on the progress of divestment. Section 3 provides the effective date.   JUSTIFICATION: According to news reports, the New York State Teachers' Retirement System owns $1.3 million in Vista Outdoor and $2.6 million in Sturm Ruger-companies which sell pistols, revolvers, and semi-automatic assault rifles. Regardless of the amount, any investment in these compa- nies is wholly unacceptable. Columbine. Sandy Hook. Aurora. San Bernardino. Orlando. Las Vegas. Parkland. We are living in an era in which gun violence and the killing of innocent Americans have become commonplace. By investing in gun companies that sell lethal weapons manufactured to harm and kill humans, we are tacitly funding these companies and abrogating our responsibility to protect the lives of all New Yorkers. While Washington flounders in gridlock, we can-and must-lead the nation in seeking solutions to the gun violence epidemic. Divestment from gun companies will not stop senseless shootings; howev- er, it is a necessary step to stymie the unfettered rise of gun violence. We must direct the New York State Teachers' Retirement System to divest from manufacturers of firearms and ammunition. Simply put, our pensions for educators should not be invested in companies that manufacture the weapons employed to gun down their students. In the wake of proliferating tragedy, we must act now to affirm our commitment to saving lives from gun violence, and prevent the great state we proudly represent from supporting manufacturers of fatal weapons.   PRIOR LEGISLATIVE HISTORY: New bill.   FISCAL IMPLICATIONS: To be determined.   EFFECTIVE DATE: This act shall take effect immediately.
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A10039 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          10039
 
                   IN ASSEMBLY
 
                                      March 8, 2018
                                       ___________
 
        Introduced  by  M.  of  A.  O'DONNELL  --  read once and referred to the
          Committee on Governmental Employees
 
        AN ACT to amend the retirement and social security law and the education
          law, in relation to limitations on investments of public pension funds
 
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:

     1    Section  1.  Section 423 of the retirement and social security law, as
     2  amended by chapter 770 of the laws  of  1970,  is  amended  to  read  as
     3  follows:
     4    §  423.  Investments.    [a.]  1.  On  and after April first, nineteen
     5  hundred sixty-seven, the comptroller shall invest the  available  monies
     6  of  the common retirement fund in any investments and securities author-
     7  ized by law for each retirement system and shall hold  such  investments
     8  in his name as trustee of such fund, notwithstanding any other provision
     9  of  this  chapter.  Participating interests in such investments shall be
    10  credited to each retirement system in the manner and at the time  speci-
    11  fied  in  [paragraph] subdivision two of section four hundred twenty-two
    12  of this article.
    13    [b.] 2. (a) To assist in the management of the monies  of  the  common
    14  retirement  fund,  the  comptroller shall appoint an investment advisory
    15  committee consisting of not less than seven members who shall serve  for
    16  his  term of office. A vacancy occurring from any cause other than expi-
    17  ration of term shall be filled by the comptroller for the  remainder  of
    18  the term. Each member of the committee shall be experienced in the field
    19  of  investments  and shall have served, or shall be serving, as a senior
    20  officer or member of the board of an insurance company,  banking  corpo-
    21  ration  or  other  financial or investment organization authorized to do
    22  business in the state of New York. The committee shall advise the  comp-
    23  troller  on  investment  policies  relating  to the monies of the common
    24  retirement fund and shall review, from  time  to  time,  the  investment
    25  portfolio  of  the  fund  and make such recommendations as may be deemed
    26  necessary.
    27    (b) The comptroller shall appoint a separate mortgage advisory commit-
    28  tee, with the advice and consent of the investment  advisory  committee,
    29  to  review  proposed  mortgage and real estate investments by the common
    30  retirement fund. In making investments, as authorized by law, the  comp-
    31  troller  shall  be guided by policies established by each committee from
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD15013-01-8

        A. 10039                            2
 
     1  time to time; and, in the event the mortgage advisory  committee  disap-
     2  proves  a proposed mortgage or real estate investment, such shall not be
     3  made.
     4    (c)  No officer or employee of any state department or agency shall be
     5  eligible for  membership  on  either  committee.  Each  committee  shall
     6  convene  periodically  on  call  of  the  comptroller, or on call of the
     7  chairman. The members of each committee shall be entitled to  reimburse-
     8  ment  for  their  actual  and  necessary  expenses  but shall receive no
     9  compensation for their services.
    10    3. (a) Notwithstanding any provision of law to the contrary, the comp-
    11  troller shall not have the power to invest the available monies  of  the
    12  common  retirement  fund  in any stocks, debt or other securities of any
    13  corporation or company, or any subsidiary, affiliate or  parent  of  any
    14  corporation  or  company,  engaged  in  the  manufacture of firearms, as
    15  defined in section 265.00 of the penal law,  or  ammunition.  The  comp-
    16  troller shall, in accordance with sound investment criteria and consist-
    17  ent  with  his  or  her fiduciary obligations, divest any such stocks or
    18  other securities whether they are owned directly or held  through  sepa-
    19  rate  accounts  or  any  commingled  funds.  Divestment pursuant to this
    20  subdivision must be completed within five years of the effective date of
    21  this subdivision.
    22    (b) The comptroller shall be permitted to cease divesting from  compa-
    23  nies under paragraph (a) of this subdivision, reinvest in companies from
    24  which  it  divested under paragraph (a) of this subdivision, or continue
    25  to invest in companies from which it has not yet divested upon clear and
    26  convincing evidence showing that as a direct result of such  divestment,
    27  the  total  and aggregate value of all assets under management by, or on
    28  behalf of, the common retirement fund becomes or shall become: (i) equal
    29  to or less than ninety-nine and one-half percent; or  (ii)  one  hundred
    30  percent  less fifty basis points of the hypothetical value of all assets
    31  under management by, or on behalf of, the common retirement fund  assum-
    32  ing  no  divestment from any company had occurred under paragraph (a) of
    33  this subdivision. Cessation of divestment, reinvestment  or  any  subse-
    34  quent  ongoing  investment  authorized by this section shall be strictly
    35  limited to the minimum steps necessary  to  avoid  the  contingency  set
    36  forth in the preceding sentence. For any cessation of divestment, and in
    37  advance  of  such  cessation,  authorized by this subdivision, the comp-
    38  troller shall provide a written report  to  the  attorney  general,  the
    39  senate  standing committee on civil service and pensions, and the assem-
    40  bly standing committee on governmental employees, updated  semi-annually
    41  thereafter  as  applicable, setting forth the reasons and justification,
    42  supported by clear and convincing evidence, for its decisions  to  cease
    43  divestment,  to reinvest or to remain invested in firearm and ammunition
    44  manufacturing companies.
    45    (c) Within sixty days of the effective date of this  subdivision,  the
    46  comptroller  shall  facilitate the identification of firearm and ammuni-
    47  tion manufacturing companies from which the common  retirement  fund  is
    48  required  to  divest under paragraph (a) of this subdivision, and file a
    49  copy of this list with the attorney general, the senate standing commit-
    50  tee on civil service and pensions, and the assembly  standing  committee
    51  on  governmental  employees.  Annually thereafter, the public fund shall
    52  file a report with the attorney general, the senate  standing  committee
    53  on  civil  service  and pensions, and the assembly standing committee on
    54  governmental  employees  that  includes:  (i)  all   investments   sold,
    55  redeemed, divested or withdrawn in compliance with paragraph (a) of this
    56  subdivision;  and  (ii) all prohibited investments from which the common

        A. 10039                            3
 
     1  retirement fund has not yet divested under paragraph (a) of this  subdi-
     2  vision.
     3    §  2.  Section  508  of  the  education law is amended by adding a new
     4  subdivision 12 to read as follows:
     5    12. (a) Notwithstanding any provision of  law  to  the  contrary,  the
     6  retirement board shall not have the power to invest the available moneys
     7  belonging  to the retirement system in any stocks, debt or other securi-
     8  ties of any corporation or company,  or  any  subsidiary,  affiliate  or
     9  parent  of  any  corporation  or  company, engaged in the manufacture of
    10  firearms, as defined in section 265.00 of the penal law, or  ammunition.
    11  The retirement board shall, in accordance with sound investment criteria
    12  and consistent with its fiduciary obligations, divest any such stocks or
    13  other  securities  whether they are owned directly or held through sepa-
    14  rate accounts or any  commingled  funds.  Divestment  pursuant  to  this
    15  subdivision must be completed within five years of the effective date of
    16  this subdivision.
    17    (b)  The  retirement  board shall be permitted to cease divesting from
    18  companies under paragraph (a) of this subdivision, reinvest in companies
    19  from which it divested under  paragraph  (a)  of  this  subdivision,  or
    20  continue  to invest in companies from which it has not yet divested upon
    21  clear and convincing evidence showing that as a direct  result  of  such
    22  divestment, the total and aggregate value of all assets under management
    23  by,  or  on behalf of, the several funds created by this article becomes
    24  or shall become: (i) equal to or  less  than  ninety-nine  and  one-half
    25  percent;  or  (ii)  one  hundred  percent less fifty basis points of the
    26  hypothetical value of all assets under management by, or on  behalf  of,
    27  the  several  funds  created by this article assuming no divestment from
    28  any company had occurred under paragraph (a) of this subdivision. Cessa-
    29  tion of divestment, reinvestment or any  subsequent  ongoing  investment
    30  authorized  by  this  section  shall  be strictly limited to the minimum
    31  steps necessary to avoid the contingency  set  forth  in  the  preceding
    32  sentence. For any cessation of divestment, and in advance of such cessa-
    33  tion, authorized by this subdivision, the retirement board shall provide
    34  a  written report to the attorney general, the senate standing committee
    35  on civil service and pensions, and the assembly  standing  committee  on
    36  governmental  employees, updated semi-annually thereafter as applicable,
    37  setting forth the reasons and  justification,  supported  by  clear  and
    38  convincing  evidence, for its decisions to cease divestment, to reinvest
    39  or to remain invested in firearm and ammunition manufacturing companies.
    40    (c) Within sixty days of the effective date of this  subdivision,  the
    41  attorney  general  shall  facilitate  the  identification of firearm and
    42  ammunition manufacturing companies from which the several funds  created
    43  by  this  article  are  required  to  divest under paragraph (a) of this
    44  subdivision, and file a copy of this list with the retirement board, the
    45  attorney general, the senate standing committee  on  civil  service  and
    46  pensions, and the assembly standing committee on governmental employees.
    47  Annually  thereafter,  the  several  funds created by this article shall
    48  file a report with the  retirement  board,  the  attorney  general,  the
    49  senate  standing committee on civil service and pensions, and the assem-
    50  bly standing committee on governmental employees that includes: (i)  all
    51  investments  sold,  redeemed,  divested  or withdrawn in compliance with
    52  paragraph (a) of this subdivision; and (ii) all  prohibited  investments
    53  from  which  the common retirement fund has not yet divested under para-
    54  graph (a) of this subdivision.
    55    § 3. This act shall take effect immediately.
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