Missouri Treasurer Asks Retirement Systems to Ban Political Donations

State Treasurer Vivek Malek is calling on state pension systems to adopt policies that prevent pension assets from being used for political contributions. (Rudy Keller/Missouri Independent)

Every public pension plan in Missouri must adopt a policy prohibiting political contributions from pension funds, state Treasurer Vivek Malek wrote in a letter sent Monday to system managers.

In the letter, Malek wrote that contributions from funds set up to pay sheriffs’ and prosecutors’ pensions would be made this fall to a campaign committee promoting adoption of amendment 6 were “deeply disturbing.”

Using money contributed by taxpayers and employees for political purposes rather than for market investments does not help the funds pay current and future benefits, Malek wrote.

“In fact, these expenditures recklessly put system resources at risk and undermine public confidence,” Malek wrote.

Letter sent 90 state and local pension fundscomes just days after the 11-member Missouri Retirement System Board of Trustees voted to ban the use pension funds for political contributions.

Malek is a trustee of MOSERS by virtue of his office. The policy change was presented to the board of directors by MOSERS staff following Malek’s request.

During the meeting, Malek said the pension system should focus on maximizing the return on investment in benefits.

“All public employee retirement systems in Missouri, including MOSERS, must not expend any funds to support or oppose ballot measures or the election of candidates for public office,” Malek said. “MOSERS’ refusal to engage in such activities maintains the trust of those we serve and strengthens our commitment to focusing solely on our fiduciary responsibilities.”

State Rep. Dirk Deaton, a Noel Republican who also sits on the MOSERS board of directors, said last week he intends to file a bill to ban political contributions from public pension funds.

Amendment 6defeated by 61% of voters against, would have imposed criminal fees to fund pensions for sheriffs and prosecutors. On Oct. 2, the Missouri Sheriffs’ Retirement System contributed $30,000 to the campaign, followed by $50,000 from the Prosecutors and District Attorneys’ Retirement System on Oct. 8.

The fees that financed the two pension systems were declared unconstitutional in 2021. To shore up its fiscal position, state lawmakers this year allocated $5 million in general revenue to the sheriff’s fund.

The various pension funds for state and local government employees and the University of Missouri have net assets of about $100 billion, and some of them, if any significant portion were used for policy, could provide much more than any other potential donor. That’s why strict policies are needed, Malek said.

“Recent spending by public pension funds to directly support ballot measures merits serious consideration of the appropriate use of these funds and a thoughtful response that will protect the mission of our public pension systems,” the letter said.

Following MOSERS’ actions, The Independent sent inquiries to the five pension systems authorized by state law. The sheriff’s and prosecutor’s systems did not respond to emails seeking comment on MOSERS’ actions.

The three largest are for public school teachers and staff; for employees of local government bodies; and for officials at the Missouri Department of Transportation and the Missouri State Highway Patrol — all of whom say longstanding policy and state law already prohibit the use of pension funds for political donations.

As of June 30, MOSERS had net assets of $8.9 billion. latest annual report. It provides benefits to the largest number of former government employees, but it is not the richest pension fund created under state law.

That distinction belongs to the system that provides benefits to former school district teachers and employees, known as PSRS/PEERS, which had $55 billion in assets as of June 30, 2023.

“PSRS/PEERS has long had a board policy that prohibits the use of systems funds for political purposes,” said Executive Director Dearld Snyder. “The Systems have never and will never use the Systems funds to make donations to political campaigns or ballot initiatives.”

The local government system, known as LAGERS, has approximately $11 billion in assets.

“LAGERS has a long-standing practice of not using system assets for political purposes,” spokeswoman Elizabeth Althoff wrote in an email.

The Missouri Department of Transportation and Missouri State Highway Patrol Employees’ Retirement System has assets of $3.7 billion. Known as MPERS, it is maintained as a separate system because it is primarily funded through fuel taxes and vehicle fees, just like the agencies it serves.

MPERS does not have a specific policy to reflect MOSERS’ actions and is unlikely to consider one, foundation director Scott Simon wrote in an email.

“What we do have are governing bylaws, which provide that all fund assets are held for the benefit of members and held in trust for the purposes set forth in our governing bylaws,” Simon wrote. “Nowhere in these laws does it authorize the use of assets for political purposes (i.e. candidates, ballot initiatives, etc.).”