AFT report shows public pension funds with most shares in private prison companies

Via Pensions & Investments |Rob Kozlowski

CalPERS, New York State Teachers’ Retirement System and Ohio Public Employees Retirement System lead the list of U.S. public pension funds that own shares of the two highest-profile private-prison operating companies, CoreCivic and GEO Group, according to a report from the American Federation of Teachers.

The report, part of the organization’s “Ranking Asset Managers” series, shows that according to recent 13F filings that the $351.1 billion California Public Employees’ Retirement System, Sacramento, had about 315,000 shares of CoreCivic and 254,000 shares of GEO Group as of Sept. 30, representing about $7 million and $6 million in assets, respectively. The $111.1 billion New York State Teachers’ Retirement System, Albany, follows with about $6 million and $4 million invested in their respective shares and the $101.4 billion Ohio Public Employees Retirement System, Columbus, with $5 million and $2 million, respectively.

The report, which provides fiduciary arguments for divesting from the companies, said CoreCivic and the GEO Group “rely on incarcerating people to turn a profit and, therefore, have an incentive to forgo spending to ensure the health and safety of those incarcerated in order to increase payouts to shareholders and executives,” claiming there are “clear financial, headline and regulatory risks associated with investing in these companies.”

The report does note that a number of U.S. public pension funds have recently voted to divest from these two companies, led by the $214.9 billion California State Teachers’ Retirement System, West Sacramento. CalSTRS’ board voted in November to divest its investments in the two private prison operating companies and sold both investments at the end of last year. The $70.9 billion New Jersey Pension Fund, Trenton, sold its $1.3 million stake in GEO Group in August.

“These divestment efforts are misguided and based on a deliberate mischaracterization of our role as a long-standing service provider to the government, and ignore the fact that our company plays absolutely no role in passing, setting, or advocating for or against criminal justice or immigration laws and policies,” said Pablo E. Paez, GEO Group spokesman, in a statement.

Amanda Gilchrist, spokeswoman for CoreCivic, forwarded a letter from managing directors Cameron Hopewell, investor relations, and Steve Owen, public affairs, to AFT following an August 2018 report recommending private prison divestiture: “Given that we don’t provide any services now that we didn’t provide under the Obama administration, and that we were never contacted beforehand by the AFT, this report would appear to be driven by political motivations rather than a genuine desire to be in open dialogue about this very challenging issue for our country. While we fully respect the AFT’s right to voice its opinion on this matter, we also believe that facts rather than political posturing should inform the discussion.”

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