S.4277 (LaValle)

---

The Business Council strongly opposes this legislation which would prohibit investments by the
state's $100 billion Common Retirement Fund in the “stocks, securities or other obligations” of
any company engaged in the offshore outsourcing of jobs, and requires the fund to divest any
current investments in such companies “in a fiscally prudent manner.”

At least, that's what the intent of the bill seems to be. The bill defines outsourcing as “to seek
resources outside the United States to save more [sic] and/or to exploit the skills of another
entity.” Since the meaning of this legislative language is unclear at best, its difficult to say
exactly who would be affected by this proposal. However, the sponsor's memo in support of this
bill provides a more recognized definition of outsourcing (work done for a company by a company
or people other than the original company's employees), and states that the legislative intent is to
prohibit investments in businesses that out-source jobs overseas.

Obviously, this bill would have a major impact on the investment options available to the Common
Retirement Fund (CRF), and would adversely affect many Business Council members by making
their securities off-limits for CRF investments. For example, one analysis shows that this bill
would preclude the state retirement fund from investing in at least 23 of the 30 stocks tracked in
the Dow Jones Industrial Average.

This is simply bad policy for the CRF, and contrary to the interests of state pensioners and the
state and national economy. Many U.S. and New York businesses engage in international trade,
and this trade involves both the selling of goods and services to, and the buying of goods and
services from, foreign businesses. U.S. businesses and consumers benefit significantly from
having access to foreign markets for U.S. produced goods and services, and having access to
those goods and services that can be produced more efficiently overseas.

This legislation is a flawed attempt to respond to concerns about the impact of foreign competition
on the U.S. and state economy. First, it will adversely affect the retirement fund and certain
businesses, it will do nothing to alter international trade patterns. Second, it ignores the far more
direct approach of actually improving our competitiveness, by addressing key cost-of-doing
business factors such as workers comp, taxes, group health insurance, energy and others, which
can be directly impacted by state legislative policy.

For these reasons, The Business Council opposes approval of S.4277.

This legislation will be included as one of the scoring measurements of The Business Council's
“Vote for Jobs Index 2005". This is The Business Council's annual assessment of legislators'
actions on key issues of concern to the state's business community