Treasurer Stacy Garrity’s decision to invest more Pa. money in Israel Bonds draws protest, Democratic opposition

Pennsylvania’s investment in Israel goes back 30 years. The state Treasury also invests in other countries’ bonds, though only as part of index funds — portfolios of stocks and bonds. Israel Bonds are the only foreign-backed security the commonwealth has purchased independently.

The Treasury’s Israel Bond holding was its single largest foreign investment even before Garrity’s new $20 million. The investment now totals $56 million.

“[Pennsylvania treasurers] do have a set of political priorities that, in theory, [are] brought before the voters,” said Mike Connolly, who served as a spokesperson to former Treasurer Joe Torsella. “The treasurer, I believe, is in a unique position in that they have a lot more autonomy and power than treasurers normally do.”

However, Connolly said that the treasurer has generally stayed out of foreign policy. He said he hadn’t “heard of anything quite as striking” as Garrity’s decision to tie an investment to a political statement.

“[State treasurers] generally make … moves in terms of trying to get in the news for unclaimed property and things like that,” he said.

Garrity, who defeated Torsella in 2020, ran on a platform of returning unclaimed property to taxpayers and increasing transparency.

Since taking office, Garrity has not shied away from taking stands on flagship Republican policies, such as opposing the Regional Greenhouse Gas Initiative — an interstate program to reduce carbon emissions — and supporting Texas Gov. Greg Abbott’s standoff at the border.

She is a supporter of former President Donald Trump, recently endorsing him, and speaking at a January 2021 rally in Harrisburg organized to encourage state lawmakers to decertify the results of the 2020 election.

Garrity is also a member of the State Financial Officers Foundation, which has encouraged treasurers “to use their power to promote oil and gas interests and to stymie [President Joe] Biden’s climate agenda,” the New York Times reported.

In an interview, Garrity said investment decisions go through a “rigorous vetting process” and follow the prudent investor rule — “which requires the Treasurer to exercise a degree of judgment and care that experienced investors would employ,” according to her office.

“Geopolitical concerns are one of the factors that we look at when we’re deciding what to invest in,” she said.

In 2022, she voluntarily divested about $3 million in Russian holdings when the country invaded Ukraine; the state legislature later passed a law that required the Treasury to do so. That same year, Garrity also sold off nearly all of the Treasury’s $394 million investments in Chinese-associated securities due to “geopolitical risks” and “human rights violations.”

Pennsylvania legally bars the Treasury from investing (and forces it to offload existing investments) in a few areas — namely, in “scrutinized companies” that have business in Iran or Sudan, along with the similar 2022 requirement for companies that are subject to U.S. sanctions or are based in Belarus or Russia.

In response to critics, Garrity noted the long history of both Democratic and Republican treasurers investing in Israel Bonds and said it is considered a safe holding.

“They pay on time, 100% of the time, and they have been since the ‘90s. So they have a perfect record,” Garrity said. “The team thoroughly vets every decision that we make. It’s not like I’m doing this in a vacuum as a state treasurer.”

Garrity has no Republican primary challenger. Democrats will decide between Bizzarro and McClelland during the April 23 primary election, and the winner will face Garrity for the general election in November.

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