WHEREAS:

The assets of state and local government pension plans, which approximate $800 billion, represent the deferred wages and future financial security of public employees; and

WHEREAS:

Federal laws and regulations applicable to public pension funds require that assets of such funds be used for the exclusive benefit of participants, and that pension fund trustees have the duty of undivided loyalty to the participants; and

WHEREAS:

Public pension funds too frequently ignore the interests of public employees in making investment decisions. In fact, some public pension funds have been among the most aggressive investors in leveraged takeovers, many of which caused extensive layoffs, disrupted communities, and eroded the tax base; and

WHEREAS:

Pension funds have too frequently invested large amounts of capital in the stocks and bonds of corporations doing business in South Africa and have thus unwittingly contributed to financially bolstering its racist regime; and

WHEREAS:

Investments of state and local government pension funds have often been used to help finance corporate mergers, acquisitions, hostile takeovers, and junk-bond leveraged buy-outs, which often result in the loss of jobs and a shrinking tax base. These shortsighted investment decisions are not necessarily in the long-term interest of the participants; they may routinely made by fund managers over whom pension plan members have little or no control; and

WHEREAS:

Public pension funds managers often ignore the interest of public employees in exercising shareholder rights. Many fund managers fail to vote at annual and special shareholder meetings altogether while others oppose measures important to labor interests, such as improved workplace conditions and economic security; and

WHEREAS:

Individual states and compacts of states have begun to develop public pension fund investment programs for the purpose of promoting the economic growth of the state and its citizens; and

WHEREAS:

Pension funds can promote economic development by actively searching for worthwhile projects passed over by traditional investors. Investing in such projects is sometimes referred to as "economically targeted investments."

THEREFORE BE IT RESOLVED:

AFSCME reaffirms its position that the assets of public pension funds represent the deferred wages and future economic security of plan participants, and as such, belong to the plan participants and should be used for the exclusive benefit of the plan participants. Within this framework, we believe there is considerable latitude for plan investments that contribute to the economic health and vitality a of state or local government and its citizens and meet other laudable policy objectives. Also, within this framework, we believe such funds should not be used to finance unproductive merger and takeover activities, especially those which result in loss of jobs and undermine local communities; and

BE IT FURTHER RESOLVED:

That AFSCME reaffirm its longstanding position that pension funds should not be used, in any way, to financially bolster the racist regime in South Africa. All pension plans should develop and implement a plan to divest themselves of the stocks and bonds of companies doing business in South Africa; and

BE IT FURTHER RESOLVED:

That AFSCME will promote the establishment and growth of such investment opportunities by the following methods:

1. Support legislation which discourages hostile takeovers, junk-bond leveraged buy-outs and similar corporate transactions;
2. Support legislation which requires or promotes union or plan participant representation on the boards of trustees and investment boards of public plans;
3. Conduct seminars, workshops and conferences for public employee representatives serving on trustee and investment boards, and for unionist involved in pension plan decisions;
4. Support the AFL-CI0 in its effort to have the U.S. government establish a national investment program that would provide federal oversight, and a federally guaranteed (no risk) fair market rate of return on voluntary investments by public pension funds and other nonprofit, institutional investors. Such a program would be used to promote and protect investments in projects designed to improve local economic conditions, such as venture capital investments, and economically viable projects which benefit the communities in which the plan participants work and live, such as affordable housing, improved public infrastructure and greater environmental protections. In addition to federal guarantees, such investments projects could include federal, state and/or local government interest rate subsidies to further improve their economic viability as a secure and competitive investment. To minimize risk to the taxpayers, to protect beneficiaries, and to assure accountability, such a program should have, as a guiding principle, the involvement of those most affected and that project guarantees and other assistance will be available only where there are appropriate mechanisms to provide for state and local government participation, community involvement, and labor and management representation. Such a program would create, by definition and federal regulations,, investment opportunities which are for the exclusive benefit of plan participants; and

BE IT FURTHER RESOLVED:

Public pension plans should participate in the ownership and governance of corporations through the active exercise of their shareholders rights, including the voting of proxies; and

BE IT FINALLY RESOLVED:

That the International shall render assistance to councils and unaffiliated locals that wish to promote the establishment of a statewide program similar to the proposed federal program.

SUBMITTED BY:

International Executive Board