Kansas Pension Fund Weighs Divestment Of Russian Assets

But it is unclear where the decision to divest would come from. A top legislator said the pension fund's board of trustees would likely be tasked with making the final call, whereas a KPERS official said the move would likely need to come from the Legislature.

A spokesperson for KPERS said the investment in Russian securities, which totals $35.9 million, accounts for 0.14% of the portfolio's $25.2 billion in assets.

The investments are all publicly traded stocks in KPERS' international equity portfolio, spokesperson Kristen Basso said in an email. The agency was tracking the issue to ensure they are in compliance with sanctions levied by the federal government against Russian banks and state-owned enterprises, she added.

"We are closely monitoring the situation, and will take action as appropriate to protect the interests of our members and their beneficiaries," Basso said.

Russia's invasion of Ukraine has resulted in widespread international outcry and sanctions from the U.S. have tightened pressure on the Russian economy and President Vladimir Putin and his allies. The sanctions have also directly pushed pension funds in other states to consider ending their investments in Russian-backed companies.

Colorado, for instance, currently has over $7 million invested in a Russian state-owned bank sanctioned by the U.S. Treasury Department.

The decision to divest comes in a broader suite of actions ordered by Gov. Jared Polis, including a pause on any state contracts with Russian firms and the move to withdraw Colorado from the coverage area of the Russian consulate in Houston.

In a statement, Gov. Laura Kelly didn't make specific mention of actions her administration was planning but said, "Kansas has much in common with Ukraine," and stressed the state stood in solidarity with the country.

"We have been, and continue to be, reviewing continuity of operations plans to ensure we remain vigilant in the event of cyber security attacks on Kansas," Kelly said. "In addition, we'll continue to monitor the developments in Ukraine closely and work to protect Kansans from any potential international economic impacts."

Officials in Rhode Island, meanwhile, announced Monday they would divest from Russian stocks and bonds in a bid to stand with Ukraine.

Unclear if Kansas will join states in divesting from Russian assets

The Legislature has gotten involved in similar issues in Kansas in the past.

In the late-2000s, for instance, the pension fund was required to divest from companies doing business in Sudan, which was in the midst of a brutal series of human rights abuses in the country's Darfur region. Roughly $15 million in assets were ultimately affected, according to a report from the pension fund submitted to legislators.

Legislation introduced in 2011 would have required KPERS divest from companies operating in Iran, though that effort was eventually unsuccessful.

But Rep. Steven Johnson, R-Assaria, chair of the House Insurance and Pensions Committee, said divestment was not a simple procedure and he noted he was reluctant to see the Legislature get involved.

While a move to divest was worth considering, Johnson said, there were also hurdles that would make it difficult to unwind in a timely manner.

That means Kansas might still be trying to divest from their Russian investments, even after the war in Ukraine has ended. And given the limited scope of the state's investments in the country, the move would ultimately prove to be mostly symbolic.

"What we can do certainly matters, how Kansans investments are invested certainly matters," Johnson said. "And I don't wish to downplay that. But those key roles do fall to the members of the KPERS board."

But Jim Zakoura, an Overland Park attorney who chairs KPERS' board of trustees, said the Legislature would likely need to initiate the push for divestment.

Zakoura added he was confident the fund's diversification, as well as the relatively paltry level of investments in Russian assets, would mean KPERS wouldn't be overly impacted one way or another.

"We'll certainly continue to monitor that and we will certainly follow whatever direction that the legislation provides," Zakoura said. "But outside of that, we will really focus ... the absolute protection of the funds for which we are stewards and fiduciaries and to invest for their highest return consistent with safety."

Ukrainian officials called Monday for a cease-fire in the war, as representatives from the two countries met for the first time since the invasion was launched last Wednesday. Russia's economy has taken a beating due to the international sanctions, with the country's currency in freefall in recent days.

Andrew Bahl is a senior statehouse reporter for the Topeka Capital-Journal. He can be reached at [email protected] or by phone at 443-979-6100.