As educators, we stress the importance of critical thinking to our students, regardless of subject area or grade level. A recent CT Viewpoints commentary (“Guns and poses,” Dec. 14) offers an opportunity for a lesson in “critical questions” about public pensions and State Treasurer Sean Wooden’s proposed “Responsible Gun Policy.”
We should first ask how his new approach addresses the lessons from the past.
Years of willful neglect and mismanagement by both political parties have made the financial instability of Connecticut’s Teacher Retirement System (TRS) a threat to our state’s financial well-being. Estimates put the price tag for this recklessness at $3.4 billion in a little over a decade.
Unlike many critics who have shouted from the sidelines, Treasurer Wooden is stepping up to offer real solutions, working tirelessly to minimize risks while maximizing returns on teachers’ pension investments. Educators know his work firsthand because we have a seat at the Investment Advisory Council (IAC), which reviews and provides input on the treasurer’s investment decisions.
We should then ask how the treasurer’s plan empowers good governance.
As a fiduciary the treasurer is entrusted to act in good faith and in trust of our pension assets. He is further empowered by Connecticut’s legislative branch with the authority to consider social, economic and environmental aspects of investments as part of state law. Pensions are long-term investments; the bottom-line matters, but so do the associated risks and costs. The reality is that claims of any “overreach” in fiduciary responsibility to us as educators — the fund beneficiaries — are patently false.
We must finally ask if the treasurer’s plan makes economic and financial sense for both the state and retirees.
Terms like “risk management” — analyzing and mitigating investment uncertainty — and “moral hazard” — engaging in dicey behavior by someone immune to its consequences — are important concerns. It is prudent for the treasurer to have addressed them in developing the plan.
Businesses and corporations are increasingly managing their risks and distancing themselves from moral hazards when it comes to civilian firearms investments. Retailers like Dick’s Sporting Goods and Walmart are pulling assault weapons from their shelves. Citibank has stopped financing companies that sell guns based on common-sense factors, like background checks and adult age requirements.
For too long, moral hazard has been the norm of the firearm industry, but that could all change. A recent U.S. Supreme Court decision allows the families of Sandy Hook massacre victims to hold Remington firearms accountable. Their action may open the flood gates to more lawsuits from victims of gun violence — a major financial and legal risk for investors to consider.
The treasurer’s divestment approach relies on the largest independent global provider of market indexes to identify the companies directly involved in the manufacturing of civilian guns and ammunition. That means $30 million of our pension funds that fully or partially touch the civilian firearms industry will be reallocated to similar securities with less risk.
The plan shows that divestment represents a very small part of the treasurer’s overall approach. He wants us to lead the nation in innovating smart gun technology and have the flexibility to make those types of investment decisions. The gun policy is mostly about the banking business and our desire to provide incentives for financial institutions to work with Connecticut and others in being a part of the solution.
Critics might try to paint the gun policy with a broad brush to include the state’s defense industry in order to score political points. Anyone who actually did their homework and read the report knows better.
Extra credit should also be awarded for recognizing opponents of the treasurer’s plan for falsely claiming to look out for teachers or their beneficiaries. Worse, their deceit ignores how gun violence impacts our lives. Time and time again, we’ve seen our classrooms turned into crime scenes.
This issue isn’t political – it’s personal to our students, gun violence survivors, teachers and our families who rely on stable pensions. Treasurer Wooden has shown that it is also personal to him by stepping up with new solutions for an unacceptable status quo. We applaud him for his plan.
Jan Hochadel is president of AFT Connecticut, which includes over 90 local unions representing 30,000 women and men in public service and the private sector throughout the state.