Montgomery County Taxpayers League

The Voice of Taxpayers of Montgomery County, Maryland

Divestiture by Retirement Funds : Testimony by MCTL President Joan Fidler

Testimony by MCTL President Joan Fidler before the County Council on Bill 44-16

Retirement – Fossil Fuels Investment – Restrictions

December 6, 2016

Good evening, Mr. President and members of the County Council – I am Joan Fidler, president of the Montgomery County Taxpayers League and I am here to testify against Bill 44-16, Retirement – Fossil Fuels Investment – Restrictions.

I would like to state at the outset that I am fully aware of the effects of climate change. I worked for 21 years at the US Environmental Protection Agency, the last 11 as a member of the Senior Executive Service. I was head of the Office of Bilateral Affairs where we worked with the rest of the world on climate-related issues.

So while we are sympathetic to your passion for climate issues, we cannot support confounding that passion with fiduciary responsibilities.

The $4 billion Employees Retirement System and Consolidated Retiree Health Benefits Trust funds are managed prudently and are faring very well – in fact, far better and are run more efficiently than similar funds at the state level.

But this bill allows symbolism to determine investment decisions. We believe that more important than symbolism is a fiduciary responsibility to maximize earnings for the 20,000 current and 30,000 future beneficiaries whose financial security relies on these funds.

The notion to divest from certain fossil fuel companies is a heartfelt impulse but has little bearing on prudent investment principles. Purity of moral principle would dictate that we drastically move away from fossil fuel companies that currently heat and light our buildings, that fuel our transportation, that run our computers. Purity of moral principle would dictate that we never invest in Coca Cola and Pepsi Cola and their sugar-laden drinks, or in Volkswagen that played fast and loose with emissions reporting, or in Wells Fargo that willfully cheated its customers. Where will it end?

The Standard of Care requires the Board to act “only in the best interest of the participants and their beneficiaries”. To which I would like to add the best interests of the taxpayers of the county – who funded both the ERS and the Retiree Health Benefits Trust to the tune of $200 million just this year alone. Are we now going to let each new idea of social condemnation narrow the investment portfolio? Will you increase the taxpayer burden if divestment decisions result in lower returns?

Though sympathetic to your impulse, the Taxpayers League cannot support this bill which puts us on a slippery and dangerous slope that would allow investment decisions to be driven by political considerations. I don’t need to remind you that Gardez bien is the motto of the county. Enough said.

Thank you.

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