Policy Brief — Arkansas Pension Transparency for 2027

Policy brief for Arkansas legislators on $155 million in authorized pension fund Israel Bonds exposure and the case for transparency legislation in 2027.

Executive summary

Arkansas pension funds have authorized up to $155 million in Israel Bonds exposure — direct loans to the Israeli government — despite credit downgrades from major rating agencies, an internal Treasury memo recommending against new purchases, and the ATRS Board Chair’s dissent over process concerns. No independent credit analysis has been produced to justify these investments. This raises serious questions about fiduciary compliance under existing Arkansas law.

We are asking the General Assembly to strengthen pension transparency requirements so that Arkansans can be confident their retirement savings are managed based on financial merit — as the law already requires.

Key facts

Fact Detail
State Treasury holdings $55 million in Israel Bonds as of mid-2025, including $20M purchased since May 2025
ATRS authorization Up to $50 million (Resolution 2025-22, June 2, 2025)
APERS authorization $25–50 million (Investment Subcommittee, May 15, 2025; full board, June 11, 2025)
Credit downgrades All three major agencies (Moody’s, S&P, and Fitch) have downgraded Israel’s credit rating since 2024, citing economic instability and security risks
Internal staff advice A late-2024 Treasury investment memo recommended against new purchases due to credit downgrades
Board Chair dissent ATRS Board Chair Danny Knight cast the sole “no” vote, warning the process departed from ATRS’s normal manager-driven practice
Sales representative involvement Israel Bonds representatives met with all three agencies in April 2025; within weeks, new purchases and authorizations followed
Independent credit analysis None found in nearly 1,100 FOIA documents from four state agencies
Brady conduit confirmed Auditor’s appointee Jason Brady introduced Israel Bonds to APERS board citing Treasury’s $55M holdings; board approved $25–50M without independent analysis
APERS two-month purchase delay Board authorized in May–June 2025; “Still zero for APERS” confirmed July 30, 2025; staff still establishing contact July 31
Divergent management approaches APERS: direct purchase, no manager, no fees. ATRS: hired Reams Asset Management, formal guidelines established September 25, 2025
Total documents reviewed 1,098 across two FOIA rounds to four agencies

The fiduciary concern

Arkansas law is clear about how pension investments must be made:

  • Sole interest rule (Ark. Code Ann. § 24-2-614): Trustees must invest assets “solely in the interest of the members and benefit recipients of the trust.”
  • Pecuniary factors only (Act 411 of 2023): The Treasurer’s evaluation “shall be based only on pecuniary factors” — those with a material financial effect on risk or return.
  • Prudent investor standard (Ark. Code §§ 24-2-610–619): Trustees must manage assets with the care an experienced, prudent investor would use.

The pattern in the public record raises questions about whether these standards were met:

The idea originated through political channels. State Auditor Dennis Milligan, an ex officio trustee on both boards, arranged meetings between Israel Bonds sales representatives and state officials. In correspondence with the Auditor’s office, an Israel Bonds executive called Milligan “truly one of a kind” and expressed he was “forever grateful” for his support.

The conduit chain is now documented. New records confirm the specific mechanism. Jason Brady, appointed to the APERS board by Auditor Dennis Milligan, introduced Israel Bonds by telling the board “it had come to his attention” that the investment was available, and cited Treasury’s $55 million in holdings. The board approved $25–50 million following Brady’s presentation. The chain — Milligan as former Treasurer initiating Treasury purchases, then as Auditor placing his appointee on the APERS board to introduce the same investment — is documented across multiple independent FOIA responses.

Internal financial advice was overridden. The Treasurer’s senior investment manager recommended holding off, citing credit downgrades. The state purchased $20 million more anyway.

Public statements emphasized political symbolism. Governor Sanders stated that “Arkansas puts its money where its mouth is and is investing millions in Israeli bonds.” At the APERS committee meeting, Deputy Auditor Jason Brady referenced the U.S. Ambassador to Israel as “my and Amy’s former boss.” None of these are pecuniary factors.

The normal investment process was bypassed. ATRS Board Chair Danny Knight warned that selecting a specific bond at a trustee’s request was “going outside of the scope of the way we usually do things.” ATRS typically relies on professional investment managers — not board members — to recommend specific securities.

The process divergence extends further: APERS chose to purchase Israel Bonds directly without any external manager, while ATRS hired Reams Asset Management and established a dedicated “Israeli Jubilee bond account” with written investment guidelines — but only four months after the board authorized the purchase. In neither case was independent credit analysis completed before authorization.

Israel Bonds: the financial profile

Unlike U.S. Treasury bonds and most fixed-income instruments available to pension funds, Israel Bonds have characteristics that require heightened due diligence:

  • No secondary market — they cannot be sold or traded before maturity, limiting a fund’s ability to rebalance or access liquidity
  • Declining credit quality — all three major agencies (Moody’s, S&P, and Fitch) have downgraded Israel’s rating since 2024, with negative outlooks citing ongoing military operations and economic uncertainty
  • Lower yields relative to risk — press analysis has noted that the bond market “brims with other offerings that have higher credit ratings and that are liquid,” asking “So why Israeli bonds?”
  • Concentrated sovereign exposure — Israel Bonds represent a direct, single-country government debt position

These are not inherently disqualifying characteristics, but they demand exactly the kind of independent, documented financial analysis that appears to be missing from the record.

The Pension Investment Transparency Act

We urge the Arkansas General Assembly to consider the Pension Investment Transparency Act for the 2027 session. This legislation is issuer-neutral — it does not single out any country. It establishes procedural standards for when pension boards invest in non-tradable, unrated sovereign debt instruments.

The five provisions

  1. Require independent credit analysis before any pension fund purchases unrated or non-tradable sovereign debt instruments. Our FOIA investigation found zero independent analyses across 1,098 documents from four agencies.

  2. Require that investment recommendations come from the fund’s own consultants, not from the issuer’s sales representatives. Israel Bonds representatives provided all investment materials with no independent third-party review.

  3. Mandate public disclosure of liquidity risk for any non-tradable instruments held in pension portfolios. Israel Bonds have no secondary market — pension funds that purchase them have no exit until maturity.

  4. Require board-level documentation of the financial rationale for any sovereign debt purchase, particularly instruments that lack a secondary market. At ATRS, Board Chair Danny Knight dissented, warning the process departed from standard practice.

  5. Extend the pecuniary-factors standard that Act 411 of 2023 applies to the Treasurer’s investment evaluations to pension board sovereign debt acquisitions. Act 411 currently covers only the Treasurer of State; pension boards like ATRS and APERS have no equivalent procedural requirement.

The committee pathway

This legislation would go through the Joint Committee on Public Retirement & Social Security Programs, which has legislative oversight of all public retirement systems in the state. Three of four Democratic seats on that committee are turning over due to term limits in November 2026, creating a window for early engagement with incoming members.

The symmetry argument

Arkansas already requires financial merit for selling investments — Act 710 prohibits politically motivated divestment. And Act 411 requires the Treasurer’s investment evaluations to be based only on pecuniary factors. But pension boards have no equivalent procedural standard for sovereign debt acquisitions. The same rigor should apply when committing members’ retirement funds to non-tradable sovereign debt.

The precedent: Arkansas’s own standard

Arkansas’s Act 710 establishes that investment decisions must be based on financial merit, not political motivation. This standard should apply equally in both directions.

If it is wrong to sell an investment for political reasons, it is equally wrong to buy one for political reasons. The principle is the same: pecuniary factors only. Our campaign is not asking for anything that Arkansas law does not already require — we are asking for it to be enforced consistently.

For the full timeline and detailed source documentation, see our evidence page. You can also browse the FOIA document archive directly.

Request a briefing

For detailed findings, source documents, and a full research briefing, contact us at divestforarfuture@proton.me.

We are available to meet with legislators and staff to discuss these findings in detail. All claims in this brief are backed by public records obtained through FOIA requests to four Arkansas state agencies.