Administration April 6, 2007

CalSTRS Opposes Broad Investment Bans

April 6, 2007 (PLANSPONSOR.com) - The board of the California State Teachers Retirement System (CalSTRS) voted to oppose legislation that would ban investments with companies that do business in Iran or terrorist states.
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The board warned that sweeping investment bans could hurt investment returns and cost the fund money, the Sacramento Bee reported. Anne Sheehan, board representative for state finance director Michael Genest, told the newspaper a broad Iran investment ban could wreak havoc in the fund’s $163.5 billion portfolio. “We’re talking about Coca-Cola, Microsoft. It is amazing what we would have to divest.”

While CalSTRS previously backed legislation calling for divestment of Sudan-linked investments (See CalSTRS Supports Sudan Divestment Bill ), two measures introduced this year calling for California’s large public pension funds to shed holdings in investments linked to Iran and terrorist states would force the systems to sell off billions of dollars in investments. CalSTRS chief investment officer Christopher J. Ailman, noting that most of the system’s portfolio is held in multinational corporations, said in the news report it would be “impossible to find alternative investments.”

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Activist groups often turn to CalSTRS and the California Public Employees Retirement System (CalPERS) to make a stand against certain companies or countries, as they are the nation’s largest and most influential public retirement systems. The Bee noted that the funds have only agreed to divest in rare instances – to protest apartheid in South Africa and make a stand against smoking. Both funds supported divestment of Sudan-linked investments (See CalPERS Votes to Bar Sudan-related Investments).

As for the two measures currently in the legislature, CalSTRS plans to oppose the bills unless they are amended to include the fund’s legal and investment standards.

Compliance April 5, 2007

Ex-Army Soldier Loses USERRA Holiday Pay Battle

April 5, 2007 (PLANSPONSOR.com) - A federal Bureau of Prisons employee who has been waging his own legal battle over whether the U.S. government owes him holiday pay during his active military service has lost another round in front of a federal appellate court.
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The U.S. Court of Appeals for the Federal Circuit, in an unsigned opinion, rebuffed arguments by Matthew Tully that he should be paid for the holidays during his military leave because the government compensated workers on jury duty and those appearing as court witnesses for holidays.

However, Circuit Judges William Curtis Bryson and Richard Linn and U.S. District Judge Sue L. Robinson of the U.S. District Court for the District of Delaware ruled that the Uniformed Services Employment and Reemployment Rights Act (USERRA) only entitles military service members to the same benefits as the employer already gives for nonmilitary leave of similar length and circumstances.

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Tully, who represented himself before the appellate court, has been seeking pay for 27 holidays which took place while he was on leave without pay as a soldier in the U.S. Army. He was on active service from October 9, 1995, to April 9, 1998.

He initially lost the argument in his presentation to the Merit Systems Protection Board (MSPB) and then, in the latest ruling, before the appellate court which upheld the MSPB.  

Wrote the appellate court: “Accepting (Tully’s) position would mean that the benefits provided in connection with any absence from work, no matter how different in character from the service member’s absence, must be provided for all absences attributable to uniformed service. Presumably, that interpretation would mean, for example, that because the agency pays the salaries of employees who are absent to serve as jurors, it would be required to pay Mr. Tully his full salary for the entire term of his active service in the Army. But Mr. Tully has not shown that if he had taken a leave of absence from the agency for two and a half years for reasons other than military service the (Bureau of Prisons) would have paid his salary for that entire period. To assure equal but not preferential treatment, the benefits sought by a service member must be compared with the benefits associated with absences similar to the service member’s. “

The ruling in Tully v. Justice Dep’t, Fed. Cir., No. 2007-3004, 3/21/07, is  here . 

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