# Pecuniary Frame and Act 498 (ATRS) Arkansas Act 498 of 2023 imposed on state retirement system fiduciaries a "pecuniary" standard for investment decisions, requiring that investment choices be based on financial-return considerations and not on environmental, social, or governance criteria except where those factors bear on financial return. The standard is enshrined in ATRS's own Investment Policy at Board Policy 4 Section D.3: "Each party serving in a fiduciary capacity for the trust shall discharge his or her duties solely in the pecuniary interest of the participants and beneficiaries and in compliance with Arkansas Code § 24-2-801 et seq. A fiduciary's evaluation of an investment, or evaluation or exercise of any right appurtenant to an investment, shall take into account only pecuniary factors." In the staff email batch the language of the pecuniary standard is invoked in a single high-leverage sentence: Mark White's 5/22/2025 Board preview email recommendation. The sentence: "From a pecuniary standpoint, it appears to me these bonds are a worthy investment." Three observations on this framing. First, the assessment is delivered by the executive director rather than cited from a pecuniary analysis prepared by an independent fiduciary advisor or credit analyst. White presents his own conclusion. Second, the assessment is delivered in the same paragraph that names "Our Board colleague, State Auditor Dennis Milligan" as the requester, embedding the pecuniary judgment within a political framing. Third, the assessment precedes the 5/28/2025 Reams analysis (the only quantitative price reference in the batch from a financial professional), although it follows White's 5/8/2025 instruction to Graves that Aon "will not be making a formal recommendation" while providing characteristics, performance, and risk profile information. The structure of the recommendation in the same Board preview paragraph: pecuniary judgment by White, ladder structure ($50 million over 5 years, $10 million per year), funding mechanism to be reviewed (whether part of Aon's quarterly fixed income report or separate). The pecuniary statement is the load-bearing claim; the rest is implementation. The materials in this batch do not contain a memo, opinion, or analysis from White, Aon, the ATRS general counsel Jennifer Liwo, or any third party explaining how the pecuniary standard was applied to the Israel Bonds decision. The "memo for the packet" White committed to writing in his 5/8/2025 directive is not in this batch. It is presumably part of the BoardDocuments PDF transmitted to Jennifer Lenow on 6/4/2025 and would be a priority follow-up FOIA target. This concept connects to [[independent-credit-analysis-gap]] in that the pecuniary framing functions as the rhetorical placeholder for the credit analysis that the batch shows was not performed by an independent party. The phrasing "it appears to me" and "worthy investment" carries the weight of an Act 498 compliance assertion. ## The Investment Policy enshrinement BP4 Section D.3 makes the pecuniary standard a binding policy provision rather than only a statutory standard. The policy text is identical in operative wording to the Act 498 statutory language: "only pecuniary factors." This means the pecuniary standard binds ATRS fiduciaries through two parallel mechanisms: (1) the statute, applicable by force of law to all Arkansas state retirement system fiduciaries; and (2) the Investment Policy, applicable as an internal governance document. A trustee or executive who violated the pecuniary standard in a material investment decision would simultaneously be in violation of state statute and of the System's own policy. The 7/3/25 supplemental FOIA production confirmed that the 6/2/2025 amendment to BP4 did not modify Section D.3; the amendment is confined to Section T proxy voting. The Section D.3 pecuniary standard governing the Resolution 2025-22 action is therefore the same standard in both the pre-amendment and post-amendment policy text. See [[bp4-amended-same-day-as-vote]]. The 6/2/2025 BP4 amendment's new Section T subsections 3, 4, and 5 each reiterate the pecuniary requirement at the level of the Executive Director's direct proxy votes, the independent proxy vote management service's recommendations, and any delegated investment manager's votes respectively. The Act 498 pecuniary requirement is therefore woven into the new Section T at three operating points. The pecuniary standard's substantive applicability to direct investment decisions (Section D.3 and Section A.5) is unaffected; the substantive applicability to proxy voting (new Section T) is reinforced and made operationally specific. ## The non-pecuniary framing in the SFOF and Garrity case The 11/4/2024 SFOF newsletter to Dennis Milligan documents the non-pecuniary framing that the pecuniary standard exists to exclude. Pennsylvania Treasurer Stacy Garrity's stated rationale for her $20 million Israel Bonds investment of 10/12/2023 was: "to show our support at a time when the people of Israel are facing horrific terrorism." The SFOF newsletter packaged this political-solidarity rationale with a financial gloss ("pay above-market returns and they've never defaulted") in adjacent sentences, presenting them as simultaneously valid. The opposing Pennsylvania candidate Erin McClelland's framing identified the issue: "Garrity politicized the state's investments with foreign policy considerations." See [[sfof-state-financial-officer-network]]. The pecuniary standard at Ark. Code § 24-2-805(b) and BP4 Section D.3 prohibits ATRS fiduciaries from making investment decisions based on the kind of political-solidarity factor that Garrity articulated. If an Arkansas fiduciary made the Israel Bonds decision on a "show our support" basis, the decision would not satisfy the pecuniary standard regardless of whether the bonds also had favorable financial characteristics. The Mark White 5/22/2025 Board preview language ("From a pecuniary standpoint, it appears to me these bonds are a worthy investment") functions to assert that the decision is pecuniary, but the assertion does not by itself establish that the decision was actually made on pecuniary grounds. The SFOF newsletter that reached Milligan two weeks after his office initiated the Arkansas outreach packaged the political and pecuniary rationales together as the model framing. Whether and to what extent this packaged framing influenced the actual Arkansas decision is not knowable from the documentary record alone, but the framing was placed in the relevant decision-maker's inbox at the relevant time. ## Evidence > [!evidence] Mark White Board preview, Emails3.pdf p.28, 5/22/2025 > "From a pecuniary standpoint, it appears to me these bonds are a worthy investment. If the Board decides to pursue this, based on my conversations with Aon, my recommendation would be an investment of up to $50 million spread over 5 years, with up to $10 million per year." > [!evidence] Mark White to Rod Graves, Emails3.pdf p.6, 5/8/2025 > "I will do a memo for the packet that outlines our recommendation, and then we can attach whatever the consultants/managers provide, and also see what information the underwriter can give us to provide the Board." > [!evidence] Mark White to Rod Graves, Emails3.pdf p.6, 5/8/2025 > "I know they will not be making a formal recommendation, but I would like to have some information from them as to the characteristics, performance, and risk profile of these bonds, and to the extent they will do so, some assurance that this is a worthwhile investment." ## Tensions This concept page is the documentary surface for one open tension: - [[T041 - Act 498 Pecuniary Standard Compliance for Israel Bonds]] — does the Arkansas state Israel Bonds purchase pattern satisfy the Act 498 pecuniary standard, or do the purchases sit outside the pecuniary standard. Statement A reads White's 5/22/2025 "pecuniary standpoint" assertion plus the substantive financial characteristics (A-/Baa1 investment-grade ratings, 130 bp yield premium, no-default history) as satisfying the standard; Statement B reads the documented non-pecuniary decisional rationale (Christian-Zionist solidarity framing, SFOF Garrity "to show our support" model, Dortch "political statement" Treasury framing) plus the absent independent credit-analysis predicate as placing the purchases outside the pecuniary standard. Status: open. The tension is the documentary predicate for a legal question (Act 498 compliance) the wiki does not resolve. ## Cross-References [[mark-white]] author of the pecuniary statement [[independent-credit-analysis-gap]] companion concept page on the absent independent credit work [[westrock-procedural-asymmetry]] companion concept page on the contemporaneous Westrock procedural framing [[atrs-investment-policy-bp4]] concept page on Board Policy 4 in detail [[bp4-amended-same-day-as-vote]] concept page on the 6/2/2025 amendment [[atrs-resolution-2025-22]] concept page on the action [[board-colleague-conflict]] concept page on the political framing alongside the pecuniary statement [[trustee-fiduciary-and-conflict-rules]] concept page on the parallel Code of Conduct provisions [[sfof-state-financial-officer-network]] companion concept page on the SFOF "to show our support" framing [[stacy-garrity]] [[oj-oleka]] [[sfof]] entities involved in the documented non-pecuniary framing [[atrs-foia-r1-staff-emails]] [[atrs-board-rules-r1]] [[auditor-foia-r1-milligan]] [[atrs-bot-packets-7-3-25]] source pages