Iowa regent: Universities ‘won’t revise their investment choices for political reasons’

IOWA CITY — Interspersed with their chants opposing tuition and fee increases during last week’s Board of Regents meeting, protesting graduate students demanded their universities divest from companies tied to Israel — echoing a refrain heard from campus protesters nationally in recent weeks and months.

“Disclose, divest,” one UI protester shouted, prompting a return chant from the rest of his group, “We will not stop, we will not rest.”

“We must end all partnerships with Israeli universities and companies that profit from this genocide,” UI graduate student Clara Reynen told regents during the public comment portion of their Wednesday meeting, criticizing university partnerships with Bar-Ilan University in Tel Aviv, the Jerusalem Academy of Music and Dance, and arms manufacturers like Lockheed Martin and Collins Aerospace as running “in direct opposition to the university's mission statement and core values.”

“I implore you one last time, cut ties with Israel,” Reynen said.

But regent David Barker at the meeting said the board and its universities don’t and won’t “revise their investment choices for political reasons.”

“The investment objective of the Iowa Board of Regents is simple,” Barker said. “It is to maximize financial returns subject only to the constraints of keeping financial risks at acceptable levels while following state and federal laws.”

To the question of whether the board and its universities have investments directly or indirectly supporting Israel and any companies profiting from the Israel-Hamas war, board spokesman Josh Lehman said, the regent investment portfolios consist of mutual funds, index funds, and others that contain “many different individual securities or fund of funds.”

“We cannot readily determine if the individual securities within these externally managed funds are Israeli companies or do business with Israel,” he said.

‘We will not refrain’

During last week’s meeting, Marquette Associates Inc. — the board’s investment adviser — gave an investment and cash management report for the quarter that ended March 31 showing the regent university diversified portfolios includes hundreds of millions in non-U.S. equity.

The University of Iowa, for example, reports nearly $62 million in non-U.S. equity with the “MSCI All Country World Index.” That index covers about 85 percent of the global equity opportunity outside the United States — and includes developed markets in countries like France, Germany, Italy and Isreal.

The board last week also approved adding Aristotle Pacific Bank Loan Fund to its long-term endowment pool, diversified intermediate pool, and operating portfolio. In a recent Aristotle Funds report, its disclosures included MSCI.

“With regard to the current calls to divest from companies doing business with Israel, we will not refrain from investing, directly or indirectly, in companies because of their relationship with Israel — as long as those investments are allowed by state and federal law and meet our criteria for risk and return,” Barker said, stressing, “Our fiduciary duty is to the people of Iowa, whose taxes and tuition support our universities.”

Citing state code and board policy, Barker said regents are charged with collecting “the highest rate of interest, consistent with safety, obtainable on daily balances in the hands of the treasurer of each institution.” And the goal of the board’s investment policy “is to provide for the financial health of the institutions.”

“We are not given flexibility to play politics with funds that we manage,” Barker said.

One section of Iowa Code does bar the regents from “investing in certain companies doing business in the Sudan and Iran or who boycott Israel.” The law requires the board to scrutinize the business activities of companies doing business with Sudan and Iran or boycotting Israel in four areas: military equipment, mineral extraction activities, oil-related activities, and power production activities.

If a company is deemed out of compliance with this law, or doesn’t respond to a request for information in 90 days, they’re placed on the regents’ “prohibited investment list” — which is updated quarterly and disclosed publicly.

When asked whether those laws are political in nature, Barker said, “State and federal governments do political things, as they should. That is what democracy is all about.”

“The investment committee of the Board of Regents, however, has a simple mission of maximizing financial returns subject only to the constraints of keeping financial risks at acceptable levels while following state and federal law,” he said.

‘Used for no other purpose’

The UI grad student calls for disclosure and divestment from Israel-supporting companies follows months of nationwide protests on college campuses — many of which amassed thousands in encampments and turned riotous or violent, in some cases.

Their concern stems from brutal fighting in Gaza — more than eight months after an Oct. 7 attack on Israel by Hamas fighters that killed 1,200-some people and had 250 taken hostage, according to Israeli counts. In its counteroffensive, Israel has killed more than 37,000 Palestinians, according to Palestinian health ministry figures.

Although most of the campus protests — including those that canceled commencement ceremonies in the spring — have dissipated with the onset of summer, some warn they could return when the next academic year begins in the fall.

“That likelihood only increases if the war between Israel and Hamas is still ongoing,” according to a May 31 report from Inside Higher Ed. “This time, however, colleges will have the benefit of summer break to prepare and plan for the next wave of student protests.”

UI protests remained contained and peaceful. And one attempt at an encampment was shut down in under an hour.

But last week during the regents meeting — while others were shouting “shame” at the regents — UI alumnus Emma Denney criticized the board’s handling of those protest efforts.

“Over the last year, this board — as a largely unelected and unchecked arm of our state government — has moved to crush dissent and protest at the University of Iowa and across Iowa state universities, doubling down on the violence perpetrated by those same institutions through their relationships with weapons manufacturers like Lockheed Martin and Collins Aerospace,” Denney said. “This board and the universities it overseas are openly complicit in the ongoing genocide in Palestine, and as we heard earlier today, seem comfortable or even happy with the blood on their hands.”

Denney was referencing Barker’s statement about the mounting pressure on universities to alter their investment strategies. In that statement, Barker quoted former UI President James Freedman — who served as the campus’ 16th president from 1982 to 1987 and was at the helm in 1985 when nearly 350 demonstrators — including 135 students — were arrested after staging an overnight sit-in on campus as part of nationwide protests of apartheid in South Africa.

According to Barker, Freedman said at that time, “Important principles preclude the university from divesting as requested. These resources were entrusted to the university specifically to help it achieve academic objectives and can be used for no other purpose.”

Vanessa Miller covers higher education for The Gazette.

Comments: (319) 339-3158; vanessa.miller@thegazette.com