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Missouri pension board votes to divest funds from China

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The board overseeing Missouri’s largest state employee pension fund voted Tuesday to sell most of its investments in Chinese-owned companies, reversing a decision it made last month.The divestment by the Missouri State Employees Retirement Fund will take place over the next 12 months, with an allowance to stretch that to 36 months to avoid financial losses as investments are sold.In a special meeting called at the urging of Gov. Mike Parson, the 11-member MOSERS Board of Trustees voted 9-2 in favor of the motion by state Treasurer Vivek Malek to sell the stocks and other investments. Only former MOSERS Executive Director Gary Findlay, elected to the board to represent retirees, and state Sen. John Rizzo, one of four legislators on the board, opposed the motion.Rizzo accused Malek of playing politics with state investments to boost his chances in the 2024 Republican primary for his office. Malek took office in January and faces at least two well-funded opponents next year.“I don’t think I’m a fiduciary, being a good steward of this pension fund, by voting to divest ourselves from China for no reason other than somebody needs a mail piece to run on the campaign,” Rizzo said.Malek denied that he was opposed to Chinese investments for political reasons.“I believe that decision should be divest from China because of the level of risk that is contrary to the interests of our time,” Malek said.Malek argued that economic problems in China, along with its aggressive posture toward Taiwan and friendship with Russia, are all good reasons for divesting. The board voted in March 2022, just days after the invasion of Ukraine, to sell its assets with Russia ties. At the time, the value of those investments had been reduced to where they were essentially worthless.There have been two other times the board has used divestment as a political statement.In 2007, at the urging of then-state Treasurer Sarah Steelman, the MOSERS board voted to divest from investments in companies doing business with Iran and other countries identified by the State Department as state sponsors of terrorism.And in June 1987, a new state law targeting the racist apartheid regime in South Africa required all pension and other public funds to divest from South African banks, companies with business locations, franchises or license agreements in South Africa and any other business with 5% or greater ownership by a South African firm.During the board’s debate, Rizzo noted that when the current investments are sold, the money could be put into Apple, General Motors or other companies doing extensive business in China.Asked after the meeting why his motion wasn’t as broad as the divestment from South Africa, Malek said they are two very different situations.“South Africa was a moral issue,” Malek said. “Now we are dealing with an economic issue.”Doing business with China has become a political sore spot in the past few years. It was one of the first issues raised in the 2022 Republican Senate primary in Missouri and this year, the Missouri House passed a bill to limit the sale of farmland to investors from China and a handful of other countries. The bill died in the state Senate.Three bills to limit or bar foreign ownership of farmland have been filed in the Senate for the upcoming session and one has been filed in the House.The MOSERS board defeated Malek’s attempt to divest from China during its regular quarterly meeting in November. In an interview after that vote, Malek said the total invested in China is about $200 million.Those funds are spread among three types of investments – stock in publicly traded companies, ownership interest in closely held companies and shares of funds that invest in a variety of stocks and securities.Selling the publicly traded stocks will mean a loss of about $1.3 million, the board was told by chief investment officer T.J. Carlson.Getting out of the funds that invest widely in “emerging markets” around the world will be more difficult. Missouri has about $1.1 billion in five separate funds and Carlson told the board that the sale of shares in two funds would bring MOSERS a profit but it would lose money on the other three.State Rep. Dirk Deaton, R-Noel, one of two House members on the board, added language allowing up to 36 months to sell the investments to avoid a loss.Deaton has filed a bill to force all state pension funds to sell investments in companies controlled by the People’s Republic of China or the Chinese Communist Party. The legislation also sets forth a divestment plan for any affected investment but does so in a way as to limit any losses for the pension system or taxpayers.Deaton said he’d like to just sell the investments but that doesn’t make economic sense.“In the legislature, if we so choose, we can make moral judgments considering things like geopolitical concerns, diplomatic things, human rights considerations, as well as economic factors, but the bar is obviously much higher in this room,” Deaton said.The other House member on the board, Rep. Don Mayhew, R-Crocker, said his only concern was whether the MOSERS fund was sound.“My vote is only in the interest of what is, in my opinion, best for the membership and what gets us to the goal of being fully funded,” Mayhew said.MOSERS provides pensions to most of the state government workforce. It is supported by contributions from the state treasury, employee payroll deductions and investment income. Actuaries measure the health of the fund by testing whether the current assets, with a fixed growth rate, is enough to cover all current and future liabilities.Despite increasing contributions from the state, including an extraordinary $500 million transfer in July 2022, the fund has lost ground over the past two decades.In 2001, analysts found MOSERS was 97% funded, with investment returns assumed to be 8.5%. The state contributed 12.3% of covered payroll to MOSERS.At the end of fiscal 2020, the system was 61% funded, with an assumed rate of return of 6.95%. The contribution rate was 22.88%.As of June 30, according to the latest annual report, the fund had $8.7 billion, enough to cover only 57.6% of its long-term liabilities. For the coming fiscal year, MOSERS is asking lawmakers to budget for a contribution rate of 28.75%.Before Tuesday’s vote, Findlay wrote a letter to Parson asking him to cancel his call for the special meeting. It smacks of political interference in investments, Findlay wrote.“I believe,” he wrote, “that decisions regarding whether or not to invest in securities, not precluded from consideration by federal mandate, should be left to the internal and external investment professionals the board employs.”This story was originally published by the Missouri Independent.

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Poll: Support for Missouri abortion rights amendment growing

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A proposed constitutional amendment legalizing abortion in Missouri received support from more than half of respondents in a new poll from St. Louis University and YouGov.That’s a boost from a poll earlier this year, which could mean what’s known as Amendment 3 is in a solid position to pass in November.SLU/YouGov’s poll of 900 likely Missouri voters from Aug. 8-16 found that 52% of respondents would vote for Amendment 3, which would place constitutional protections for abortion up to fetal viability. Thirty-four percent would vote against the measure, while 14% aren’t sure.By comparison, the SLU/YouGov poll from February found that 44% of voters would back the abortion legalization amendment.St. Louis University political science professor Steven Rogers said 32% of Republicans and 53% of independents would vote for the amendment. That’s in addition to nearly 80% of Democratic respondents who would approve the measure. In the previous poll, 24% of Republicans supported the amendment.Rogers noted that neither Amendment 3 nor a separate ballot item raising the state’s minimum wage is helping Democratic candidates. GOP contenders for U.S. Senate, governor, lieutenant governor, treasurer and secretary of state all hold comfortable leads.“We are seeing this kind of crossover voting, a little bit, where there are voters who are basically saying, ‘I am going to the polls and I’m going to support a Republican candidate, but I’m also going to go to the polls and then I’m also going to try to expand abortion access and then raise the minimum wage,’” Rogers said.Republican gubernatorial nominee Mike Kehoe has a 51%-41% lead over Democrat Crystal Quade. And U.S. Sen. Josh Hawley is leading Democrat Lucas Kunce by 53% to 42%. Some GOP candidates for attorney general, secretary of state and treasurer have even larger leads over their Democratic rivals.

Brian Munoz

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St. Louis Public RadioHundreds of demonstrators pack into a parking lot at Planned Parenthood of St. Louis and Southwest Missouri on June 24, 2022, during a demonstration following the Supreme Court’s reversal of a case that guaranteed the constitutional right to an abortion.

One of the biggest challenges for foes of Amendment 3 could be financial.Typically, Missouri ballot initiatives with well-funded and well-organized campaigns have a better chance of passing — especially if the opposition is underfunded and disorganized. Since the end of July, the campaign committee formed to pass Amendment 3 received more than $3 million in donations of $5,000 or more.That money could be used for television advertisements to improve the proposal’s standing further, Rogers said, as well as point out that Missouri’s current abortion ban doesn’t allow the procedure in the case of rape or incest.“Meanwhile, the anti side won’t have those resources to kind of try to make that counter argument as strongly, and they don’t have public opinion as strongly on their side,” Rogers said.There is precedent of a well-funded initiative almost failing due to opposition from socially conservative voters.In 2006, a measure providing constitutional protections for embryonic stem cell research nearly failed — even though a campaign committee aimed at passing it had a commanding financial advantage.Former state Sen. Bob Onder was part of the opposition campaign to that measure. He said earlier this month it is possible to create a similar dynamic in 2024 against Amendment 3, if social conservatives who oppose abortion rights can band together.“This is not about reproductive rights or care for miscarriages or IVF or anything else,” said Onder, the GOP nominee for Missouri’s 3rd Congressional District seat. “Missourians will learn that out-of-state special interests and dark money from out of state is lying to them and they will reject this amendment.”Quade said earlier this month that Missourians of all political ideologies are ready to roll back the state’s abortion ban.“Regardless of political party, we hear from folks who are tired of politicians being in their doctor’s offices,” Quade said. “They want politicians to mind their own business. So this is going to excite folks all across the political spectrum.”

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Democrat Mark Osmack makes his case for Missouri treasurer

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Mark Osmack has been out of the electoral fray for awhile, but he never completely abandoned his passion for Missouri politics.Osmack, a Valley Park native and U.S. Army veteran, previously ran for Missouri’s 2nd Congressional District seat and for state Senate. Now he’s the Democratic nominee for state treasurer after receiving a phone call from Missouri Democratic Party Chairman Russ Carnahan asking him to run.“There’s a lot of decision making and processing and evaluation that goes into it, which is something I am very passionate and interested in,” Osmack said this week on an episode of Politically Speaking.Osmack is squaring off against state Treasurer Vivek Malek, who was able to easily win a crowded GOP primary against several veteran lawmakers including House Budget Chairman Cody Smith and state Sen. Andrew Koenig.While Malek was able to attract big donations to his political action committee and pour his own money into the campaign, Osmack isn’t worried that he won’t be able to compete in November. Since Malek was appointed to his post, Osmack contends he hasn’t proven that he’s a formidable opponent in a general election.“His actions and his decision making so far in his roughly two year tenure in that office have been questionable,” Osmack said.Among other things, Osmack was critical of Malek for placing unclaimed property notices on video gaming machines which are usually found in gas stations or convenience stores. The legality of the machines has been questioned for some time.As Malek explained on his own episode of Politically Speaking, he wanted to make sure the unclaimed property program was as widely advertised as possible. But he acknowledged it was a mistake to put the decals close to the machines and ultimately decided to remove them.Osmack said: “This doesn’t even pass the common sense sniff test of, ‘Hey, should I put state stickers claiming you might have a billion dollars on a gambling machine that is not registered with the state of Missouri?’ If we’re gonna give kudos for him acknowledging the wrong thing, it never should have been done in the first place.”Osmack’s platform includes supporting programs providing school meals using Missouri agriculture products and making child care more accessible for the working class.He said the fact that Missouri has such a large surplus shows that it’s possible to create programs to make child care within reach for parents.“It is quite audacious for [Republicans] to brag about $8 billion, with a B, dollars in state surplus, while we offer next to no social services to include pre-K, daycare, or child care,” Osmack said.Here’s are some other topics Osmack discussed on the show:How he would handle managing the state’s pension systems and approving low-income housing tax credits. The state treasurer’s office is on boards overseeing both of those programs.Malek’s decision to cut off investments from Chinese companies. Osmack said that Missouri needs to be cautious about abandoning China as a business partner, especially since they’re a major consumer of the state’s agriculture products. “There’s a way to make this work where we are not supporting communist nations to the detriment of the United States or our allies, while also maintaining strong economic ties that benefit Missouri farmers,” he said.What it was like to witness the skirmish at the Missouri State Fair between U.S. Sen. Josh Hawley and Democratic challenger Lucas Kunce.Whether Kunce can get the support of influential groups like the Democratic Senatorial Campaign Committee, which often channels money and staff to states with competitive Senate elections.

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As Illinois receives praise for its cannabis equity efforts, stakeholders work on system’s flaws

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Medical marijuana patients can now purchase cannabis grown by small businesses as part of their allotment, Illinois’ top cannabis regulator said, but smaller, newly licensed cannabis growers are still seeking greater access to the state’s medical marijuana customers.Illinois legalized medicinal marijuana beginning in 2014, then legalized it for recreational use in 2020. While the 2020 law legalized cannabis use for any adult age 21 or older, it did not expand licensing for medical dispensaries.Patients can purchase marijuana as part of the medical cannabis program at dual-purpose dispensaries, which are licensed to serve both medical and recreational customers. But dual-purpose dispensaries are greatly outnumbered by dispensaries only licensed to sell recreationally, and there are no medical-only dispensaries in the state.As another part of the adult-use legalization law, lawmakers created a “craft grow” license category that was designed to give more opportunities to Illinoisans hoping to legally grow and sell marijuana. The smaller-scale grow operations were part of the 2020 law’s efforts to diversify the cannabis industry in Illinois.Prior to that, all cultivation centers in Illinois were large-scale operations dominated by large multi-state operators. The existing cultivators, mostly in operation since 2014, were allowed to grow recreational cannabis beginning in 2019.Until recently, dual-purpose dispensaries have been unsure as to whether craft-grown products, made by social equity licensees — those who have lived in a disproportionately impacted area or have been historically impacted by the war on drugs — can be sold medicinally as part of a patient’s medical allotment.Erin Johnson, the state’s cannabis regulation oversight officer, told Capitol News Illinois last month that her office has “been telling dispensaries, as they have been asking us” they can now sell craft-grown products to medical patients.“There was just a track and trace issue on our end, but never anything statutorily,” she said.

Dilpreet Raju

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Capitol News IllinoisThe graphic shows how cannabis grown in Illinois gets from cultivation centers to customers.

No notice has been posted, but Johnson’s verbal guidance comes almost two years after the first craft grow business went online in Illinois.It allows roughly 150,000 medical patients, who dispensary owners say are the most consistent purchasers of marijuana, to buy products made by social equity businesses without paying recreational taxes. However — even as more dispensaries open — the number available to medical patients has not increased since 2018, something the Cannabis Regulation Oversight Office “desperately” wants to see changed. Johnson said Illinois is a limited license state, meaning “there are caps on everything” to help control the relatively new market.Berwyn Thompkins, who operates two cannabis businesses, said the rules limited options for patients and small businesses.“It’s about access,” Thompkins said. “Why wouldn’t we want all the patients — which the (adult-use) program was initially built around — why wouldn’t we want them to have access? They should have access to any dispensary.”Customers with a medical marijuana card pay a 1% tax on all marijuana products, whereas recreational customers pay retail taxes between roughly 20 and 40% on a given cannabis product, when accounting for local taxes.While Illinois has received praise for its equity-focused cannabis law, including through an independent study that showed more people of color own cannabis licenses than in any other state, some industry operators say they’ve experienced many unnecessary hurdles getting their businesses up and running.The state, in fact, announced last month that it had opened its 100th social equity dispensary.But Steve Olson, purchasing manager at a pair of dispensaries (including one dual-purpose dispensary) near Rockford, said small specialty license holders have been left in the lurch since the first craft grower opened in October 2022.“You would think that this would be something they’re (the government) trying to help out these social equity companies with, but they’re putting handcuffs on them in so many different spots,” he said. “One of them being this medical thing.”Olson said he contacted state agencies, including the Department of Financial and Professional Regulation, months ago about whether craft products can be sold to medical patients at their retail tax rate, but only heard one response: “They all say it was an oversight.”This potentially hurt social equity companies because they sell wholesale to dispensaries and may have been missing out on a consistent customer base through those medical dispensaries.Olson said the state’s attempts to provide licensees with a path to a successful business over the years, such as with corrective lotteries that granted more social equity licenses, have come up short.“It’s like they almost set up the social equity thing to fail so the big guys could come in and swoop up all these licenses,” Olson said. “I hate to feel like that but, if you look at it, it’s pretty black and white.”Olson said craft companies benefit from any type of retail sale.“If we sell it to medical patients or not, it’s a matter of, ‘Are we collecting the proper taxes?’ That’s all it is,” he said.State revenue from cannabis taxes, licensing costs and other fees goes into the Cannabis Regulation Fund, which is used to fund a host of programs, including cannabis offense expungement, the general revenue fund, and the R3 campaign aiming to uplift disinvested communities.For fiscal year 2024, nearly $256 million was paid out from Cannabis Regulation Fund for related initiatives, which includes almost $89 million transferred to the state’s general revenue fund and more than $20 million distributed to local governments, according to the Illinois Department of Revenue.Medical access still limitedThe state’s 55 medical dispensaries that predate the 2020 legalization law, mostly owned by publicly traded multistate operators that had been operating in Illinois since 2014 under the state’s medical marijuana program, were automatically granted a right to licenses to sell recreationally in January 2020. That gave them a dual-purpose license that no new entrants into the market can receive under current law.Since expanding their clientele in 2020, Illinois dispensaries have sold more than $6 billion worth of cannabis products through recreational transactions alone.Nearly two-thirds of dispensaries licensed to sell to medical patients are in the northeast counties of Cook, DuPage, Kane, Lake and Will. Dual-purpose dispensaries only represent about 20 percent of the state’s dispensaries.While the state began offering recreational dispensary licenses since the adult-use legalization law passed, it has not granted a new medical dispensary license since 2018. That has allowed the established players to continue to corner the market on the state’s nearly 150,000 medical marijuana patients.But social equity licensees and advocates say there are more ways to level the playing field, including expanding access to medical sales.Johnson, who became the state’s top cannabis regulator in late 2022, expressed hope for movement during the fall veto session on House Bill 2911, which would expand medical access to all Illinois dispensaries.“We would like every single dispensary in Illinois to be able to serve medical patients,” Johnson said. “It’s something that medical patients have been asking for, for years.”Johnson said the bill would benefit patients and small businesses.“It’s something we desperately want to happen as a state system, because we want to make sure that medical patients are able to easily access what they need,” she said. “We also think it’s good for our social equity dispensaries, as they’re opening, to be able to serve medical patients.”Rep. Bob Morgan, D-Deerfield, who was the first statewide project coordinator for Illinois’ medical cannabis program prior to joining the legislature, wrote in an email to Capitol News Illinois that the state needs to be doing more for its patients.“Illinois is failing the state’s 150,000 medical cannabis patients with debilitating conditions. Too many are still denied the patient protections they deserve, including access to their medicine,” Morgan wrote, adding he would continue to work with stakeholders on further legislation.Capitol News Illinois is a nonprofit, nonpartisan news service covering state government. It is distributed to hundreds of newspapers, radio and TV stations statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation, along with major contributions from the Illinois Broadcasters Foundation and Southern Illinois Editorial Association.

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