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A more innovative, flexible state investment policy could strengthen MN communities

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Now is the time to focus on achieving a “double bottom line” — to measure our investments by how well they do financially and socially.

After more than 30 years of running the Minnesota State Board of Investment, Howard Bicker reitired as its executive director. He did great work taking care of the state’s finances, upholding the fiduciary responsibilities of his office and helping to build the state’s assets. As we celebrate and thank him for his stewardship, we have a unique opportunity to think into the future about how Minnesota invests our financial resources to strengthen our state’s economy.

MinnPost/Steve Date
Vic Rosenthal

Now is the time to focus on achieving a “double bottom line” — to measure our investments by how well they do financially and socially. Let’s make sure our state is putting its money into banks that will give us the maximum on returns and that will invest its profits back into the community to support job creation, affordable housing and community stabilization.

Over the past five years, Minnesota has faced a serious home mortgage and credit crisis. Many families’ and communities’ wealth has been lost through foreclosures and divestments in certain long neglected neighborhoods and regions. At the same time, rental vacancies are at a low point, making it very difficult for displaced and other families to find affordable places to live. We hear many politicians talk about job creation but, in practice, there seems to be a lack of corresponding private investment and government funding to spur jobs that provide a living wage. This is an opportunity for Minnesota, through its investment policies, to attempt a more locally focused and balanced strategy that meets the needs of working Minnesotans and rewards good corporate citizenship.

The California model

Andrea Rubenstein

The State of California has adopted creative strategies for investment and has developed a collaborative approach with local businesses, pensioners, unions and communities to expand the investment focus of the state. For example, California worked closely with community banks and housing developers to invest in affordable housing and job creation. Following that model, Minnesota leaders, through state investment policies, should be taking advantage of every available and viable opportunity to attempt a similarly balanced strategy. Last year, Gov. Mark Dayton worked with the state board to reinvest $100 million dollars into community banks to increase job creation in multiple parts of the state. This is a great starting point for more creative investment strategies that both maximize investment returns while ensuring that funds are invested in job creation and community stabilization.

As the four constitutional officers, the State Board of Investment and its new executive director consider and determine future investment policy, now is the time for the state to consider these new approaches. They might want to look at what the City of Minneapolis just did with the passage of a Responsible Banking ordinance. The newly expanded ordinance will create greater transparency and allow the public a clearer view of how banks that handle public dollars operate in our community. Hennepin County also took at step toward greater transparency with new requirements in the information that banks must provide to the county when seeking to receive county funds through the Request for Proposals. The State of Minnesota can take similar steps forward.

Opportunities for creative approaches

Well-documented racial disparities persist in Minnesota in employment, education and housing, requiring new and creative approaches. Greater investments by the State Board through closer work with community banks have the capacity to increase investment in communities that have faced divestment in the past.

This is also an opportunity for the State Board to require more information from those financial institutions that already receive state investment money to increase the transparency of investment policy. The funds deposited in these institutions come from state taxpayers and worker pensions and responsible policy would be to increase accountability to make sure the state is meeting its goals for all of its residents.

Residents of Minnesota, led by faith-based organizations like Jewish Community Action, unions and other community organizations, must take part in the conversation about the future of the State Board of Investment and investment policies for the state. We have much to offer. We have the grass-roots knowledge and experience from our work in local communities to assist state leaders in taking action to create new approaches that can promote community stability, reduce disparities and increase racial equity.

Vic Rosenthal is the executive director of Jewish Community Action, St. Paul. Andrea Rubenstein is the board chair of JCA, Minneapolis.

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Comments (1)

  1. Submitted by Jerilyn Jackson on 10/24/2013 - 02:25 pm.

    Great article, Vic!

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