APERS & Israel Bonds — What State Employees Should Know

What Arkansas state employees need to know about APERS pension investments in Israel Bonds.

What’s happening with YOUR pension

In May 2025, the Arkansas Public Employees Retirement System (APERS) Investment Subcommittee approved a resolution authorizing a $25–50 million purchase of State of Israel Bonds. Around the same period, a late-2024 internal memo from the State Treasurer’s senior investment manager recommended holding off on new Israel Bonds because major rating agencies had downgraded Israel’s credit.

That combination of a large, concentrated authorization and a prior caution flag raises straightforward questions about risk, return, and process for every APERS member.

New records obtained in February 2026 — including an 8,648-page APERS FOIA production — reveal exactly how Israel Bonds reached the APERS board. Jason Brady, the Auditor of State’s appointee, told fellow board members that “it had come to his attention” that Israel Bonds were available and cited the Treasury’s $55 million in holdings as justification. The board subsequently approved $25–50 million.

Despite that authorization, APERS purchased zero bonds for at least two months. On July 30, 2025, Executive Director Amy Fecher confirmed: “Still zero for APERS.” The next day, CIO Carlos Borromeo emailed Stephens Inc. asking them to forward his contact information to an Israel Bonds representative — meaning staff were still establishing the basic operational pathway for purchasing well after the board had voted. A bond statement received in November 2025 confirms that a purchase eventually occurred, though the exact amount has not been disclosed.

These are direct loans to the Israeli government that cannot be sold before maturity. Unlike most fixed-income investments, Israel Bonds have no secondary market — once APERS buys them, your pension fund is locked in until the bonds mature.

At the authorized level of $25–50 million, Israel Bonds would represent approximately 0.2–0.4% of APERS’s $11.92 billion portfolio. The question is not whether the allocation is large, but whether the decision followed the fiduciary process Arkansas law requires.

Why it matters

Arkansas law requires state retirement systems to invest and manage assets solely in the interest of members and beneficiaries, based only on “pecuniary factors” — those expected to materially affect risk or return. APERS policy mirrors this duty and incorporates the prudent-investor rule, emphasizing care, skill, diversification, liquidity, and documented due diligence.

The question for APERS is not political: it is whether a sizable, relatively illiquid Israel Bonds position is the best available option on risk-return and liquidity, compared with other fixed-income choices that meet the same credit and duration needs.

Here’s what the record shows:

  • The authorization was fast-tracked. In May 2025, the APERS Investment Subcommittee unanimously advanced a $25–50 million Israel Bonds resolution, with the authorization later referenced in the September 10, 2025 Board packet.
  • Sales representatives — not financial analysts — initiated the process. Israel Bonds sales representatives met in April 2025 with APERS, ATRS, the State Treasurer, and the State Auditor. A thank-you email to APERS staff praised their “kind hospitality” and pitched follow-up meetings, while a separate email to the APERS director used the $20 million Treasury purchase as sales leverage. Within weeks, the Treasury bought $20 million more and both pension funds approved large Israel Bonds allocations.
  • The Treasurer’s own staff recommended against it. A late-2024 internal Treasury memo advised holding off on new Israel Bonds because major rating agencies had downgraded Israel’s credit, signaling higher risk.
  • Non-financial motivations were stated on the record. At the Investment Subcommittee meeting, Deputy State Auditor Jason Brady referenced ties to former Governor Mike Huckabee (then U.S. Ambassador to Israel) and called Israel “the United States’ most trusted and dependable ally in a volatile region.” These are not pecuniary factors.
  • APERS chose no external oversight. CIO Carlos Borromeo stated: “APERS intent is to purchase the bonds directly. Staff opinion is that there is not a need to incur management fees.” This means APERS has no independent investment manager reviewing its Israel Bonds position — unlike ATRS, which hired Reams Asset Management. The absence of external oversight makes the lack of independent credit analysis even more concerning.
  • The Stephens Inc. connection. When APERS staff finally moved to establish contact with Israel Bonds in July 2025, the CIO routed the request through Seth Middleton at Stephens Inc. — APERS’s investment consultant. It remains unclear whether Stephens provided any independent assessment of the investment.
  • Press analysis raises questions. Reporting has noted that Israel Bonds often offer lower yields and less liquidity than many higher-rated alternatives, and explicitly asked: “So why Israeli bonds?” — underscoring the need for a clear financial rationale.

APERS leadership has stated that the Israel Bonds investment “follows all applicable state statutes and will result in a good outcome for the members and retirees of APERS.” If that’s true, a transparent, side-by-side financial analysis is the surest way to confirm it — and members have every right to see one.

For the full timeline, source quotes, and legal analysis, see our evidence page.

What you can do

1. Write to the APERS Board

Email the Board to request a pause and independent financial review before any bonds are purchased. Use or personalize the letter below.

Email: APERS@arkansas.gov

Letter template — APERS trustees

Subject line: Public employees request pause and independent analysis on Israel Bonds

Dear APERS Trustees,

As Arkansas public employees and APERS members, we ask that every investment decision remain strictly fiduciary. State law requires trustees to act “solely in the interest of the members and benefit recipients,” and that evaluations be based only on pecuniary factors — those with a material effect on risk or return. That standard — prudence, loyalty, and process — exists to protect our pensions from politics and keep choices focused on risk, return, liquidity, and long-term security. It also reflects the prudent-investor rule requiring care, skill, diversification, and diligence appropriate to the fund’s objectives.

In May–June 2025, the APERS Investment Subcommittee and then the full board approved a $25–50 million Israel Bonds authorization. The Auditor of State’s appointee to the board introduced the investment by citing Treasury holdings — not independent financial analysis. Around the same period, an internal Treasury memo (late 2024) advised holding off on new Israel Bonds due to credit-rating downgrades, and public comments by some officials framed the bonds in political terms. We raise these points only to underscore why process and a strictly pecuniary analysis matter here. We recognize that APERS has stated the investment complies with statutes and will result in a good outcome for members; a transparent side-by-side comparison is the surest way to confirm that.

Our request is Arkansas-first and straightforward. Before any execution, please:

  1. Obtain, publish, and circulate to members an independent staff/consultant analysis comparing expected risk, return, liquidity, and viable alternatives — well before any action.
  2. Clarify the proposal’s origin and document how it complies with APERS’s pecuniary-only standard and established manager-driven process.
  3. Invite robust member input on the record and reflect it in the meeting materials.

Thank you for safeguarding Arkansas public employees’ retirements through prudent process and strictly financial analysis.

Sincerely, [Your name, role / agency, and city]

2. Attend the next APERS Board meeting

Public comment is your right as a pension fund member.

  • Location: APERS Office, 124 W. Capitol Ave., Little Rock
  • Contact: Executive Director’s office at APERS@arkansas.gov to confirm public-comment logistics
  • Written comment: Email APERS@arkansas.gov with a subject line referencing the board meeting date
  • Upcoming 2026 dates: March 11 and June 10 (9:00 a.m.) — check apers.org for updates

60-second public comment script: “Good morning, my name is [Name], and I’m an Arkansas public employee and APERS member. In May 2025, your Investment Subcommittee approved a resolution to invest $25–50 million in Israel Bonds. Around the same time, the State Treasurer’s investment staff issued a memo recommending that Arkansas hold off on new Israel Bonds because major rating agencies had downgraded Israel’s credit. As members, we are simply asking you to slow down and put fiduciary standards first. Please pause any transaction, commission and publish a clear comparison of risk, return, and liquidity with other fixed-income options, and explain how any decision meets Arkansas’s pecuniary-only and prudent-investor standards before committing our retirement fund to this position.”

3. Share with your coworkers

Talk to other state employees about what’s happening with your pension. Share this page directly — the more members who speak up, the harder it is to ignore.