Washington Investment of State Funds Act, HJR 4202 (2001)

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Amendments
The Washington Investment of State Funds Amendment, also known as Washington HJR 4202, was on the November 6, 2001 ballot as a legislatively-referred constitutional amendment in Washington, where it was defeated. This amendment would have amended the Washington Constitution to permit the state legislature to determine which investments to allow the state to fund.

Election results

Washington HJR 4202 (2001)
ResultVotesPercentage
Defeatedd No761,76857.03%
Yes 573,878 42.97%

Election results via the Washington Secretary of State.[1]

Text of measure

The language appeared on the ballot as:[2]

The Legislature has proposed a constitutional amendment on the investment of state funds. This amendment would grant increased discretion to the Legislature in deciding how to invest state funds. Funds under the authority of the state investment board could be invested as determined by state statute.

Should this constitutional amendment be approved or rejected?[3]

Vote in legislature

Before being referred to the ballot, House Joint Resolution 4202 was passed by the Washington State Legislature by these votes:

Chamber Ayes Noes
House 94 0
Senate 45 2

Support

Arguments in favor

These arguments in support appeared in the official State of Washington Voter Guide:[4]

HJR 4202 PROVIDES A BETTER RETURN FOR TAXPAYERS

The State Investment Board is responsible for managing many trust funds, including funds for retirees, injured workers and persons with disabilities. State law allows 97% of this money to be invested in a way that gives taxpayers a higher rate of return – but the investment of 3% of this money is restricted. HJR 4202 will remove these restrictions, allowing the State Investment Board to seek greater security and a higher rate of return through diversification for all funds it invests.

HJR 4202 WILL SAVE TAXPAYER DOLLARS NOW AND IN THE FUTURE

Taxpayers deserve the highest rate of return possible. HJR 4202 will permit a wider variety of investments. These investments will be managed by investment professionals, who are bound by the highest fiduciary and investment standards. Higher investment earnings means more money is available and fewer tax dollars are needed.

VOTERS HAVE APPROVED SIMILAR CHANGES IN THE PAST – HJR 4202 FINISHES THE JOB

Voters have approved this type of change three times, helping retirees, injured workers and persons with disabilities. HJR 4202 completes the job. It simply applies the same standard to the remaining 3% of funds managed by the State Investment Board. This is a fair and common sense proposal.

Rebuttal of Statement Against

HJR 4202 has nothing to do with pension funds. It simply gives the state flexibility in the investment of 3% of its portfolio. The state already has this flexibility for 97% of the funds it manages.

The funds are invested safely by investment professionals. These professionals are held to strict ethical and fiduciary standards. They make investment decisions — they do not regulate companies.

Vote yes on HJR 4202 for safe and wise investments.[3]

Supporters

The following individuals signed the argument in support of HJR 4202 in the State of Washington's official voter guide:

  • Dan Evans, Governor (1965-77), U.S. Senator (1983-89);
  • Ralph Munro, Secretary of State (1981-2001);
  • Michael J. Murphy, State Treasurer;
  • Sid Snyder, State Senator, Majority Leader;
  • Helen Sommers, State Representative, Democratic Co-chair, House Appropriations Committee;
  • Barry Sehlin, State Representative, Republican Co-chair, House Appropriations Committee

Opposition

Arguments against

These arguments in opposition appeared in the official State of Washington Voter Guide:[5]

POSSIBILITY OF ETHICS VIOLATIONS

Currently, the investment board must ask you the taxpayers for their authority. Sometimes you have granted it, sometimes not. Voting no on HJR 4202 keeps you in the loop. More serious than increased risk to retirees is the possibility of ethics violations caused by allowing the state to both invest and regulate the same companies. The possibility for regulatory decisions affecting investment decisions or vice versa are considerable and any irregularities either real or supposed could undermine confidence in the entire system.

SECURITY SHOULD BE THE FIRST PRIORITY

$1.6 billion vanished in the Orange County bankruptcy of 1994, but Washington still holds the record of $2.25 billion in the WPPSS debacle. Looking at the above sentence, it looks like just numbers on a page, but in reality it represents the hopes and dreams of thousands, even millions, of citizens.

HJR 4202 could mean higher returns; it also means higher risk. Putting public billions into the NASDAQ made sense in March 2000. It makes no sense today. It is June, and the NASDAQ is down. That proves the point. But if it turns up before the election, such volatility only demonstrates risk. Risk is where the money is made...and lost. When dealing with someone else’s future, security should be the first priority.

HJR 4202 changes our Constitution. It allows increased risk and the possibility of ethics violation. If citizens want risk they can buy a lottery ticket. If they hope to retire they should vote no on HJR 4202.

Rebuttal of Statement For

Proponents of HJR 4202 tantalize voters with “Greater security and a higher rate of interest” as if these two factors moved together rather than in opposite directions. Promising increased security and earnings should be a red flag for any investor. Earnings are the price of risk bearing. Incurring greater risk potentially increases earnings. Greater security likely decreases earnings. You can’t have it both ways. Security must be the first concern. Vote no on HJR 4202.[3]

Opponents

The following individuals signed the argument in opposition of HJR 4202 in the State of Washington's official voter guide:

See also

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References