There are calls to cut Minnesota's financial ties to Israel by moving pension accounts and other investments that benefit its economy. On Wednesday, protestors met at the state capitol to call on the State Board of Investment to do so. They echoed a wider movement known as BDS for “boycott, divest, sanctions.”
The Jewish Community Resource Council also gathered at the capitol yesterday to voice opposition to this idea. The investments in question are about 116 million dollars — or .14 percent of the state's portfolio — according to Gov. Tim Walz's office.
The governor is on the investment board along with other top state officials, including Attorney General Keith Ellison, Secretary of State Steve Simon and State Auditor Julie Blaha. Auditor Blaha joined MPR News host Cathy Wurzer to talk about it.
Use the audio player above to listen to the full conversation.
We attempt to make transcripts for Minnesota Now available the next business day after a broadcast. When ready they will appear here.
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The investments in question are about $116 million or 0.14% of the state's portfolio. That's according to Minnesota Governor Tim Walz's office. The governor is on the Investment Board along with other top state officials, including Attorney General Keith Ellison, Secretary of State Steve Simon, and State Auditor Julie Blaha who is on the line. Welcome Auditor Blaha.
JULIE BLAHA: Good afternoon, Cathy. Thanks for having me.
CATHY WURZER: As I mentioned, the board got a lot of attention from supporters and opponents of divesting from Israel yesterday. What did you make of some of the arguments you heard?
JULIE BLAHA: Well, I think this is a really good time for us to talk about what this fund is for. In Minnesota, our State Board of Investment manages really essential retirement funds. We've got retired teachers, firefighters, snowplow drivers. They rely on this fund to buy groceries, fill prescriptions, keep the heat on. So it's really important that we protect this fund so that we can keep our promises to our public employees who've earned pensions.
CATHY WURZER: How much control does the board have over where these investments go?
JULIE BLAHA: Well, our focus really is based on risk. And I'm a fiduciary. That means I have a legal requirement to protect this fund and to make sure that we are looking at all the risks, material that could affect it. And so our role really is focused on that.
And one of my concerns always is when somebody wants to use a fund or any other revenue source for something it wasn't designed for. This fund was designed to keep our promises. It wasn't necessarily designed for influencing foreign policy. It wasn't designed to necessarily change people's behavior. It was designed to keep promises that are really important in Minnesota.
CATHY WURZER: Yes but I'm thinking about-- gosh, was it the 80s when the State Board looked at divesting its holdings in South Africa because of apartheid? The state legislature passed laws directing the board to divest in Russia and Iran. So the fund has been used in the past politically.
JULIE BLAHA: Well, I would suggest that those were really based on risk. One of the things that, as I was talking to people who were around when we made the decisions around apartheid, it really was ultimately a risk-based decision. We had a place where it was too risky to invest in South Africa. When the Ukraine war started, that was a very clear risk to our investments to be in Russia at that time.
So when it really comes down to it, we need to look at risk, those of us on the Board of Investment. Now if somebody wants to do something else with this fund, they need to be really careful because they have to keep the equation in balance basically. So if you're going to use this fund for something else, you better be able to back up if it shorts the fund in a way you can't keep your promises.
If the legislature would want to say you divest from something, they need to guarantee that they will fill any gaps in the fund that could cause. Now in the executive branch, I don't have a way to backfill a hole like that. So I really need to keep my focus on what risks affect this fund and not use it for anything else other than keeping those promises to our retirees.
CATHY WURZER: I was watching the meeting yesterday. And I believe there was a retired nurse who got up and said, look, I'm not happy with the situation between Israel and Hamas. And I don't want my pension money going to support Israel. So if a state employee, retired state employee has those feelings, can they do anything about that?
JULIE BLAHA: Well, I think your best option really is to do it in other ways. Again, we talk about this fund. We really need to use this fund for what it was designed for. And so I can understand. We get calls for divestment across the board. We get calls for divestment from all fossil fuels, calls for divestment from a number of different countries. And when it comes right down to it, our focus has to stay on risk.
Now a lot of times, those can sometimes cross over. For instance, we focus on climate risk. And so we have to be very careful about where we're investing because climate change is affecting the markets. We know that, when boards have more diversity, they on average perform better than boards that don't. So there are a lot of times when some of our political goals can cross over with financial goals. But again, there's a reason why I have that legal responsibility. I have to hold the line and really focus on risk, otherwise this fund just won't be there when our retirees need it.
CATHY WURZER: There were of course people upset. And they were at the meeting and were vocal as you know. I'm wondering, and I didn't see what the board planned to do. Will the board move any state investments in response to the war?
JULIE BLAHA: Well, here's the thing. War, of course, is a risk, so we are definitely monitoring things. We don't generally do things kind of all or nothing. We don't want to have all in, all out. Our investments are far more nuanced than that. One of the reasons we're one of the top performing funds in the country is because we are looking at things on a case by case basis. And we're really measuring those risks and opportunities really carefully. So yes, are we looking at war as a potential risk? Absolutely. Are we going to make a blanket statement, an all or nothing kind of statement? Absolutely not.
CATHY WURZER: Do you know when there's a timeline set to make a final decision on this?
JULIE BLAHA: Well, again, these are ongoing decisions that we're making every single day. So it's not like we're going to have a hard line decision on this. We continue to monitor. So as decisions come in, we look at it in every decision. So we're not going to be saying, today, we're doing all of this or all of that. It's got to be ongoing. It's got to be case by case. It's got to be really nuanced if we're going to be good, long-term investors. And that retired snowplow driver is going to have that pension they earned.
CATHY WURZER: So it sounds like a no at this point to move those investments.
JULIE BLAHA: Well, no. Exactly. We're not looking at a taking a hard line on any of that right now. We are, again, as always, considering all the risks.
CATHY WURZER: State Auditor, Julie Blaha, thank you so much.
JULIE BLAHA: Thank you.
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