Citing social and fiscal responsibility, the Chicago Teachers’ Pension Fund is divesting its holdings in private prison companies that operate immigration detention centers.
The fund’s board voted unanimously Thursday to unwind about $548,000 invested in a fund with positions in two private prison companies, said Jay Rehak, president of the $10.8 billion pension fund.
Rehak said the move is a response, in part, to the Trump administration’s “zero tolerance” immigration policy, which took effect in May and resulted in the separation of more than 2,000 children from their parents at the Mexican border. President Donald Trump rescinded the family separation policy through an executive order following a widespread public backlash.
“You have these detention centers ripping children away from their parents for profit,” Rehak said Monday. “To make money on human misery, that’s not really what Chicago teachers are all about.”
The decision to divest follows a report earlier this month from the American Federation of Teachers identifying pension funds whose portfolios had exposure to private prison companies that provided services to immigration detention centers. The Chicago Teachers Union is an affiliate of the American Federation of Teachers.
Beyond humanitarian concerns, the report cites “legitimate risks” for public pension funds invested in private prison companies that may be vulnerable to political changes.
“Private prison operators are now officially on notice,” Randi Weingarten, president of the American Federation of Teachers, said in a news release. “Teachers and the trustees of their pension systems will question whether their retirement savings are invested in morally abhorrent detention centers that are both a stain on our nation and a risky financial bet.”
Using the report, the Chicago Teachers’ Pension Fund discovered that its Northern Trust Structure Small Cap account had about $200,000 invested in CoreCivic and about $348,000 in The Geo Group.
CoreCivic, formerly Corrections Corporation of America, is the nation’s largest private prison company and operates eight immigration detention centers, including family detention centers, according to the report.
The Geo Group, another private prison company, operates family detention centers.
The pension fund issued the order to sell its shares of both prison companies Friday and expects to be closed out of the positions by Wednesday.
In June 2017, the New York City Pension Funds became the first public pension system to fully divest from the private prison industry, liquidating about $48 million amid alleged human rights abuses and what it called Trump’s “draconian” immigration policies.
The Philadelphia Board of Pensions and Retirements and the Cincinnati City Council also voted last year to divest from private prison holdings, and similar measures are under consideration by the California State Teachers’ Retirement System.
The Chicago Teachers’ Pension Fund manages the assets of nearly 86,000 members.
Jesse Sharkey, vice president of the Chicago Teachers Union, issued a statement Friday in support of the fund’s decision to divest its prison company holdings.
“Our union members serve tens of thousands of immigrant students in our schools, and we’re committed to taking any and all steps to protect their families from disruption or repression,” Sharkey said.
It is the not the first time the pension fund has taken action to divest from companies in the wake of broader issues affecting students and the community.
For example, in 2013, fund trustees voted to sell all investments in companies that make assault weapons sold to the public in response to the shooting massacre at Sandy Hook Elementary School in Connecticut.
As a large institutional investor, Rehak said the pension fund has an obligation not just to profits, but to socially responsible causes. He said reallocating funds over such controversial issues has nonetheless proved to be fiscally sound in the past.
Rehak, who teaches English at Chicago’s Whitney M. Young Magnet High School, said the fund will take the money pulled from private prison companies and find a more socially responsible and equally profitable investment.
“As teachers, we’d much rather invest our money in better things,” Rehak said. “We’d rather build bridges than prisons.”
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August 20, 2018 at 05:21PM