WASHINGTON — The largest public pension fund in the United States is divesting from the two major for-profit prison companies running migrant detention facilities for the federal government, the California Faculty Association announced following a meeting with the California Public Employees Retirement System (CalPERS) on Friday.
The move by CalPERS is part of a larger trend by pension funds and businesses that have pulled their financial backing from GEO Group and CoreCivic, two publicly traded companies that run the most Immigration and Customs Enforcement detention facilities.
In November, the California State Teachers' Retirement System (CalSTRS) divested $13.7 million. Finance institutions such as Bank of America and Wells Fargo have also cut their financing to private prison companies, which run federal prisons for those incarcerated in the American justice system, in addition to immigration detention centers under contracts with ICE.
It was in large part their role in detaining families at facilities in Dilley and Karnes, Texas, run by Core Civic and GEO Group respectively, that led pension fund members to start a campaign for divestment.
"California public employees took a stand and made their voices heard after learning that their retirement savings were propping up the very companies that have played a critical role in the migrant abuse crisis, as well as mass incarceration, and the school-to-prison pipeline," said Emily Claire Goldman, founder and director of the ESG Transparency Initiative, whose Educators for Migrant Justice campaign was behind pushing CalPERS to divest.
Megan White, a spokesperson for CalPERS, said the pension fund sold its shares in the two companies as an investment decision, not because of a push by activists.
"Ben Meng, our CIO, told the Board in January when he started that he would conduct a comprehensive review of our investments and investment strategy," said White. "That included a review of benchmarks and indices, as well as an analysis of investments and strategies. Ben's key focus is on risk mitigation; his goal is to assess what is adding value to the fund, consistent with CalPERS' investment beliefs, and helping CalPERS achieve its 7 percent target return."
In total, CalPERS is pulling $10.8 million out of CoreCivic and GEO Group stocks. Goldman said the amount may not be a huge financial hit to the companies — both companies have market caps above $1.9 billion — but she said she expects it to have a domino effect by sending a message to other investors.
A statement from the California Faculty Association following the meeting with CalPERS on Friday said, "Our union was not going to stand by and watch our pension dollars support these terrible corporations, and we're pleased to see that CalPERS investment analysts have come to the conclusion."
Amanda Gilchrist, a spokeswoman for Core Civic, noted that CalPERS has said it is simply making an investment decision rather than a calculated divestment.
"CoreCivic plays a valued but limited role in America's immigration system, which we have done for every administration — Democrat and Republican — for more than 30 years. While we know this is a highly charged, emotional issue for many people, much of the information about our company being shared by special interest groups is wrong and politically motivated, resulting in some investors reaching misguided conclusions about what we do," Gilchrist said.
"The fact is our sole job is to help the government solve problems in ways it could not do alone — to help manage unprecedented humanitarian crises, dramatically improve the standard of care for vulnerable people, and meet other critical needs efficiently and innovatively."
A GEO Group spokesperson said, "The divestment efforts against our company are based on a false narrative and a deliberate mischaracterization of our role as a long-standing government services provider. We have been a trusted service provider to the federal government for over three decades, under Democratic and Republican administrations, and in that time, we have never played a role in setting policy, nor have we ever advocated for or against immigration enforcement policies."
The Obama administration called for the phasing out of for-profit company contracts by the federal Bureau of Prisons, and considered doing so for ICE facilities, but the Trump administration reversed course.
In an August 2016 letter to the acting director of BOP, then-Deputy Attorney General Sally Yates said the education was needed because private prisons, as opposed to those run by the federal government, "simply do not provide the same level of correctional services, programs and resources; they do not save substantially on costs, and as noted in a recent report by the Department's Office of Inspector General, they do not maintain the same level of safety and security."
Others have criticized for-profit prisons for being financially incentivized to keep populations high, both for immigrants and prisoners. In September, the American Civil Liberties Union released a report detailing allegations of abuse and neglect inside a GEO Group facility for ICE detainees in Aurora, Colorado, that it blamed for two deaths in 2017 and 2012. In response to the report, an ICE spokeswoman said the facility was "humane, clean and professionally run."