A board led by Gov. Mark Dayton on Wednesday reaffirmed a practice of including Israeli government-issued bonds in the state's investment portfolio, despite long-standing objections from social justice activists.

The Minnesota State Board of Investment is responsible for managing the state's various retirement funds, trust funds and cash accounts, a total of some $80 billion at the end of 2014. Since 1993, the state has regularly purchased Israeli bonds as a small part of that portfolio. That has led to protests by a group called Minnesota Break the Bonds Campaign, which argues proceeds from those bond sales have provided revenue to what it calls the Israeli government's oppression of Palestinian people.

"The state of Minnesota is enabling the state of Israel to continue its occupation of the West Bank and other occupied territories against the wishes of people who live there," said James Abourezk, a former U.S. senator from South Dakota who has become a national spokesman for efforts to pressure divesting of Israeli bonds.

Activists pressing the issue in Minnesota enlisted Abourezk as their spokesman at Wednesday's meeting of the State Investment Board, which includes Dayton, its chairman, Attorney General Lori Swanson, State Auditor Rebecca Otto and Secretary of State Steve Simon.

About 50 Break the Bonds activists sat quietly at the meeting, many holding signs that read "Divest" or "Why Fund Occupation?"

Steve Hunegs, executive director of the Jewish Community Relations Council of Minnesota, defended purchase of Israeli bonds by the state.

"Israel has an unblemished record of meeting its bond obligations," Hunegs said. He encouraged the board to consider also making investments in Palestinian business.

"Investment in Israel and Palestine is necessary to the two-state solution," Hunegs said.

The board has heard the activists' complaints over a series of meetings in recent years, and on Wednesday moved to address the concerns of protesters — but not in the way they wanted. Dayton proposed a resolution stating the board would continue to invest in Israeli bonds as long as its executive director determines those bonds retain a competitive rate of return, and are otherwise consistent with sound investment practices.

Dayton reminded the audience that, as state auditor in 1993, he voted to initially approve the Israeli bond purchases.

He said he's sensitive to human rights concerns surrounding Israel, and also noted after the meeting that he was not pleased by the speech earlier this week by Israeli Prime Minister Benjamin Netanyahu to a joint session of Congress.

But Dayton also nodded to what he called a bond between Israel and the U.S. That relationship "is essential to peace in the Middle East and the world," he said. "I have no qualms about continuing this investment."

Swanson said she would consider it inappropriate, given that Israeli bonds are viewed as being in good standing by investment-rating groups, for state officials to make a political statement by divesting the bonds.

"These decisions have to be based on fiduciary responsibility, not political considerations," Swanson said. She, Simon and Dayton backed the governor's resolution; Otto voted against it, saying she didn't think it was necessary to even make a resolution on the matter.

"This is not the place," Otto said. "We can't solve the world's issues here."

Patrick Condon • 651-925-5049