H 7252Public Finance

Public Finance - State Investment Commission

This bill creates a state initiative to hire more women and minority-owned firms to manage state pension funds.

Held for study

Population
Affected

Introduced Jan 21, 2026Committee House Finance

Plain-English Summary

This bill requires the Rhode Island State Investment Commission to create a "Capital Access Initiative" by January 1, 2027. The purpose of this initiative is to hire more investment managers from underrepresented backgrounds—specifically minorities and women—to help manage the state's pension fund assets. The bill sets a goal that at least 10% of the investment managers for the fund should come from this program. However, the bill specifies that these hiring decisions must still follow sound financial rules and protect the state's money. The General Treasurer must report on the program's progress annually starting in 2028.

For younger readers

The state has a large savings account called a pension fund that pays people who have retired from their jobs. Right now, the people hired to manage this money often come from the same types of backgrounds. This new law tells the state to create a plan to hire more diverse people, like women and people from different racial backgrounds, to manage this money. The goal is to make sure different kinds of people get a fair chance to do this important job, as long as they are good at it and keep the money safe.

Who & Where It Applies

Impacted groups

Investment ManagersMinority Business OwnersWomen Business OwnersState PensionersState Investment Commission

Impacted communities

All

Constitutional & Fiscal Check

This bill creates a specific goal for hiring based on race and gender ("minorities or women"). While it frames this as a "goal" rather than a quota and creates a fiduciary exception, it triggers "strict scrutiny" under the Equal Protection Clause. Following the Supreme Court's decision in *SFFA v. Harvard*, government policies that explicitly prefer groups based on race are legally vulnerable unless the state can prove they are remedying specific past discrimination rather than seeking general diversity.

Estimated cost

Amount unknown

Estimated revenue

None

Bill Analysis

Both viewpoints

For Progressives

Promotes economic justice by actively directing state contracts toward minority and women-owned firms, helping to close the wealth gap and support marginalized communities.
Challenges systemic barriers in the financial industry by requiring the state to review and remove arbitrary restrictions that have historically excluded underrepresented managers.
Diversifies the stewardship of public assets, ensuring that the management of state funds reflects the diversity of the population it serves.
The requirement to adhere to "fiduciary prudence" could be utilized as a loophole by the commission to maintain the status quo and avoid hiring diverse managers.
The goal of ten percent participation may be viewed as too low or unambitious given the demographics of the state and the need for substantial equity reform.
Continues the reliance on private investment managers for public funds rather than exploring public banking options or direct community investment models.

For Conservatives

Explicitly mandates that all decisions must remain consistent with sound investment policy and fiduciary prudence, ensuring financial returns are prioritized over social goals.
Encourages the removal of artificial barriers to entry, potentially increasing competition among investment managers which could lower fees or improve performance through free market principles.
Establishes a target goal rather than a strict, binding quota, allowing the commission to avoid hiring underqualified managers if they do not meet financial standards.
Mandates Diversity, Equity, and Inclusion (DEI) policies in state finance, prioritizing identity politics over pure merit in the selection of investment managers.
Risks the financial security of state pensioners by pressuring the state to hire managers based on race or gender rather than track record alone.
Discriminates against established firms that are not minority-owned, potentially disqualifying or disadvantaging candidates based on the race or sex of the owners rather than performance.

Votes

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Full Bill Text

Changes to existing Rhode Island law · 34 additions

It is enacted by the General Assembly as follows:

SECTION 1. Chapter 35-10 of the General Laws entitled "State Investment Commission" is hereby amended by adding thereto the following section: 35-10-16. Capital access initiative.

(a) On or before January 1, 2027, the commission shall adopt a policy to create and implement a capital access initiative intended to engage traditionally disadvantaged investment managers with underrepresented backgrounds to the greatest extent feasible, consistent with sound investment policy and fiduciary prudence. This policy shall include quantifiable goals for the ongoing development and expansion of the capital access initiative, particularly as it relates to increasing the participation of a broader range of investment managers in the stewardship of state pension fund assets.

(b) Through the capital access initiative, the commission and the office of the general treasurer shall take affirmative steps to remove any barriers to the equal participation of underrepresented investment managers so long as such participation is consistent with sound investment policy and fiduciary prudence. Such affirmative steps shall include, but not be limited to, evaluating whether current investment policies impose quantitative or qualitative restrictions such as requirements for a minimum track record length or assets under management, or whether they overlook unique investment strategies and perspectives that could enhance pension fund performance.

(c) It shall be the goal of the commission that not less than ten percent (10%) of investment managers managing the state pension fund shall be qualified through the capital access initiative.

(d) Beginning in fiscal year 2028, the general treasurer shall prepare a report detailing its progress toward achieving the policies and goals outlined in this section to the commission for its approval within six (6) months of the end of the fiscal year. Upon approval by the commission, the general treasurer shall transmit the report to the speaker of the house of representatives, the president of the senate and the chairpersons of the house and senate finance committees. Such report shall include documentation related to all participants in the capital access initiative.

(e) Participation in the capital access initiative shall be limited to underrepresented investment managers. For purposes of this section, an “underrepresented investment manager” shall include, but is not limited to, a qualified investment adviser that is:

(1) At least fifty-one percent (51%) owned by one or more minorities or women or, in the case of a publicly owned business, at least fifty-one percent (51%) of the stock which is owned by one or more minorities or women; and/or

(2) Whose management and daily business operations are controlled by one or more such individuals.

(f) For the purposes of this section, the term “minority” shall have the same meaning as in § 37-14.1-3.

SECTION 2. This act shall take effect upon passage.