The Senate Committee on State Affairs convened on May 8, 2025, to discuss House Bill 34, a proposed measure aimed at safeguarding Texas pension funds from investments in companies linked to nations deemed threats to U.S. national security, specifically China, Iran, North Korea, and Russia. The bill seeks to prohibit state investment entities from engaging with these companies and allows the governor, in consultation with security agencies, to identify additional countries of concern as threats evolve.

During the meeting, committee members highlighted the financial risks associated with current investments in these nations. Notably, it was reported that the Texas Permanent School Fund suffered a loss of $250 million following Russia's invasion of Ukraine, underscoring the tangible consequences of such investments. Proponents of the bill argued that the exposure to Chinese investments, often funneled through opaque financial structures, poses significant risks not only to financial stability but also to national security.

Kelly Curie, a witness testifying in favor of the bill, emphasized the importance of preventing state pension funds from inadvertently supporting adversarial military efforts. He cited his experience in federal government efforts to divest from Chinese equities, noting that many states have substantial investments in these markets, which could lead to severe financial repercussions in the event of geopolitical conflicts.

Michael Lucci, another supporter, echoed these sentiments, warning that investments in China could violate fiduciary duties due to the lack of transparency in Chinese financial reporting. He pointed out that many state pension funds are heavily weighted in Chinese equities, which could lead to significant losses if tensions escalate.

The committee decided to hold the bill pending further improvements, indicating a commitment to refining the legislation before moving forward. The discussions reflect a growing trend among states to reassess their investment strategies in light of national security concerns, with Texas positioning itself as a leader in this initiative. The outcome of this bill could set a precedent for how state pension funds manage investments in relation to geopolitical risks.