DeSantis and the GOP's "anti-woke" crusade includes pension investment friendly to the environment.
Public pensions like our Teacher Retirement System (TRS) are funded mainly from three sources.
The state of Illinois frequently and consistently over the decades has paid in less than their actuarial and statutorial requirement.
Members, such as classroom teachers, pay into the fund through a 9% payroll deduction.
And the members of the TRS board of trustees, made up of members elected by annuitants (us) and political appointees, make investments through hired portfolio managers.
As you can see, the ONLY reliable revenue source to our teacher pension fund is the member contribution.
Us.
Our pension’s dependence on Wall Street returns is a definite design flaw.
Pension investment management is not the most transparent of operations. There are reports of hidden fees and less than complete honesty in reporting returns, even to the boards of trustees.
Adding to the problem is that as state legislatures, including Illinois, have fallen short in meeting their obligations, the trustees have moved to more riskier - what are known as “alternative” investment srategies - in order to increase market returns.
In Illinois I estimate that 25% of our pension investments are in risky alternatives.
In response, there is a movement pushing for greater transparency, less investment in risky and socially irresponsible private equity, and for environmentally responsible investing.
The movement is known as ESG, Environmental, social, and governance investing. It refers to a set of standards that socially conscious investors use to screen investments.
Naturally, Republicans and some Democrats with close ties to Wall Street have attacked ESG as “woke.”
In Florida, public pensions are only overseen by DeSantis and two other Republicans.
At issue is a new bill empowering the Florida State Board of Administration — which is run by DeSantis and two other Republican officials — to move an additional $18 billion of the state’s pension fund out of traditional stocks and bonds and into hedge funds, private equity, venture capital, and real estate firms. Such “alternative investment” firms often charge high fees and deliver weak returns — while many of their executives make big political campaign donations. The legislation passed even as other states’ pension funds are considering pulling back on such investments in the face of potential losses.
The GOP-controlled legislature sent the bill to the governor’s desk on Tuesday, shortly after DeSantis reportedly met with Republican financier Steve Schwarzman, whose private equity firm already manages — and reaps fees off — more than $800 million of Florida pension money.
That includes a new $150 million tranche that Florida officials delivered to a Blackstone green-energy fund one day before DeSantis signed a bill to block state pension money from going to companies that prioritize environmental considerations in their investments.
Nobody should be fooled by DeSantis’ attack on woke. It’s just a cover for his favors to his private equity buddies like Schwarzman.