Youngkin administration asks Virginia’s public colleges and universities to ensure investments are apolitical

RICHMOND, Va. (WRIC) – Republican Gov. Glenn Youngkin’s administration sent leaders of Virginia’s public colleges and universities a letter asking them to make sure their school’s investments are free of “social, political, or ideological interests.”

Virginia’s Secretary of Education Aimee R. Guidera and Secretary of Finance Stephen E. Cummings sent the letter – obtained by 8News and first reported by Cardinal News — to the state’s Council of Presidents on July 9.

Guidera and Cummings pointed to recent calls for schools to divest assets with links to Israel from pro-Palestinian protesters on college campuses. Protesters against Israel’s ongoing war effort in Gaza after the Oct. 7 attack by Hamas have called for such changes at Virginia colleges and universities and others in the country.

This was one of the top demands from student protesters at Virginia Commonwealth University, where a protest on campus led to clashes between police and protesters , the use of chemical irritants and forceful arrests.

“As colleges and universities across the country face charges to divest investments associated with politically charged objectives absent fiscal evaluation, we want to ensure your commitment to invest in a manner that prioritizes risk-adjusted investment returns independent of social, political, or ideological interests,” they wrote.

While some schools have said they will consider such efforts and reached deals with student protesters , Virginia’s public colleges and universities have not, and experts have argued that these efforts would be difficult and not lead to the results protesters seek.

Virginia’s public higher education institutions have endowments – donated funds or assets – and foundations to raise money that they can use to fund their goals.

In the letter, the secretaries asked the college and university presidents to work together to make sure “our institutions, endowments, and foundations invest their assets in a reasonable and objective manner that serves the best interests of the Commonwealth, your institution, your students, and the beneficiaries of your investment funds.”

Guidera and Cummings also asked the council members to review the investment policy of the Virginia Retirement System, which manages funds for state employees.

The secretaries of education and finance touted the VRS’s policy in the letter as an “excellent and proximate example” of the “prudent investor rule,” which requires a fiduciary to make decisions in the best interests of a trust’s beneficiaries and invest as a “prudent and reasonable person” would invest their own assets.

“This preserves beneficiaries’ returns on investments and ensures investment decisions are made solely on pecuniary factors and absent political activism,” the letter reads.

Under the Virginia state code and constitution, per the letter, the VRS must follow the prudent investor rule, analyzing economic factors and assessing risk to meet its fiduciary duty to “more than 820,000 state employee members, retirees, and beneficiaries.”

“This does not include reviewing investments through a ‘social screen’ and does not consider information such as social, environmental, political, or climate factors that do not directly relate to aligning the investment with the aims of the VRS Trust Fund and its beneficiaries,” the letter reads.

The letter, which the secretaries wrote was a follow-up to a March discussion between Youngkin and the council, lays out concerns from the administration on divestment mandates.

Among their concerns, the secretaries wrote that such mandates are “extremely problematic to implement” and could cause relative losses, lead to increased fees and lost investment opportunities.

Guidera and Cummings called on the school leaders to report to the administration by Aug. 15 whether their institutions, its foundations, endowments and outside investment managers “have any mandate or flexibility to consider investment decisions” based on non-financial factors.

“If so, please describe how non-pecuniary factors are considered when making investment decisions with specific detail and examples, and provide the investment policies that permit such action,” the letter reads. “Additionally, please indicate how investment policies at your institution deviate from those of VRS. We would also like to understand how proxy votes are decided upon and whether your institutions follow a Board-aligned voting methodology, and if not, the reasons why.”

8News reached out to Youngkin’s office seeking details about the governor’s effort. Christian Martinez, Youngkin’s press secretary, shared a statement, that read, in part:

“As higher education institutions in Virginia and across the nation face calls to alter investment practices based on political, social, or ideological agendas, the Governor called on our public colleges and universities to bring scrutiny and transparency to their endowment and foundation investment practices and to apply widely accepted investment principles currently used by other Commonwealth agencies.”

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