Voters in Five States Take Up Pension Investment
Issues
November 10, 2008 (PLANSPONSOR.com) - Spooked by
dramatic declines in the stock market and the prospect of
injecting more risk into state investment practices, voters
in five states voted down an assortment of state
constitutional amendments related to investment practices in
the November 4 election.
Voters in Louisiana, Montana, South Carolina, South
Dakota, and Utah voiced their opinions on topics ranging
from a ban on short-selling (South Dakota) to allowing
state school funds to invest in the stock market
(Utah).
Here is a list of the five states which addressed
constitutional amendments on investment-related issues
for pension funds, and how the voters decided November
4.
voters decided against allowing state and local
governments to invest in the stock market with money from
public-employee retirement health care and life insurance
funds. Amendment No. 7 lost 56% to 44% after it was
passed in both the Louisiana House and Senate. The
amendment would have allowed state and local governments
to invest post-employment benefit money, other than
pensions, in equities.
South Carolina
With about 80% of precincts reporting, South
Carolina voters rejected two constitutional amendments
which would have allowed both state and local pension
funds to invest in stocks to fund health-related
benefits.
Voters rejected Amendment 2 which sought to allow
state pension funds to invest in stocks to pay for future
retirees' health care and other benefits. The state
retirement system is invested in stocks, domestic and
international.
The amendments were
put on the ballot to comply with new federal regulations
requiring governments to have sufficient funds to pay the
benefits of all employees at one time, even if the state
workers are years away from retiring.
Earlier, some local governments in South Carolina had
warned they might have to raise taxes or cut spending to
comply with the new law.
A second amendment sought permission for city and
county governments to invest post-employment benefits in
new ways. This amendment applied to local governments,
while Amendment 2 applies to state government.
A local newspaper report said that "national
financial woes and the Wall Street bailout are likely to
have some voters nervous about investing state funds in
stocks." The voters apparently agreed.
South Dakota
South Dakota
voters voted against eliminating short-selling and a
clause that would have prevented investors from taking
more than three business days to deliver stock they had
sold.
The measure was defeated 57% to 43%.
While one local newspaper said "there's no agreement on
what this measure actually does," it was advanced by
the state's attorney general.
Critics contended the attorney general had
misinterpreted the proposal. A local paper said the ban
was not needed since federal agencies can control
short-selling, so the entire measure was unnecessary.
The paper's editorial board recommended voting against
the measure.