TOBACCO DIVESTITURE: Gains Momentum, Passes Committee
The state Assembly Committee on Public Employees, Retirement and Social Security approved a bill yesterday that would require CalPERS and the State Teachers' Retirement System to divest their holdings in tobacco companies. The Sacramento Bee reports that AB 1744 passed on a 5-2 vote, and faces an Appropriations Committee hearing next. The two pension funds have combined assets of about $210 billion, $1.4 billion of which is invested in tobacco companies. Bill sponsor Assemblyman Wally Knox (D-Los Angeles) called for the two systems "to reduce their tobacco holdings by one-third each year starting in 2000 and be rid of those investments by 2002." The Bee reports that a similar bill sponsored by state Sen. Tom Hayden (D-Los Angeles) will have its first Senate hearing in mid-April (Schnitt, 4/2).
S.F. Follows Suit
The San Francisco Chronicle reports that the "board that oversees San Francisco's $9 billion public employees' retirement fund" also voted to divest of its tobacco holdings. The 4-2 vote "to sell $16 million in three tobacco stocks held as part of a $1 billion stock index fund still leaves about $12 million" in tobacco holdings in three other funds. City Retirement Board members "said yesterday they will soon try to sell those shares" as well. Former Supervisor Angela Alioto, who first proposed selling the tobacco stocks in 1993, called it "hypocritical" that "[w]e're telling people they can't smoke, but we're investing in tobacco company stocks." San Francisco "joins Oakland and El Cerrito among Bay Area cities that have already acted. Alameda County, Berkeley and Richmond are considering similar moves," the Chronicle reports (Epstein, 4/2).
In CalPERS' Way
The Sacramento Bee reports that while Knox expected heavy tobacco company opposition to his CalPERS divestiture bill, he now finds himself facing unexpected opposition from CalPERS. Susan Myers, chief lobbyist for CalPERS, testified Wednesday "that the retirement system doesn't shape its investment approach based on social or political issues." Even so, Knox responded, the pending settlement in U.S. Congress makes tobacco investments a "risky business." Robert Aguallo, a top CalPERS executive, disagreed, saying that tobacco is still a prudent investment, and that experts say now is the time to buy (4/2).