Public Employee Press


DC 37 Budget and Pension news
Public pensions dump private prisons

"For years, we have been working to support and protect the pensions of hard-working New Yorkers by investing in areas that are both financially and ethically sound - criteria that investments in private prisons no longer meet."
— Public Advocate Letitia James

By GREGORY N. HEIRES

New York City has become the first municipality in the nation whose public pension system has divested from private prisons.

The divestment comes as President Donald Trump plans to use private prisons to warehouse immigrants facing deportation. Trump received $500,000 in campaign contributions from the two largest for-profit prison companies in the industry, GEO Group and CoreCivic.

"Divesting is simply the right thing to do - financially and morally," said city Comptroller Scott Stringer when he announced the divestiture at a news conference on June 8.

The city's five public employee pension systems voted to divest from the industry in mid-May. Since then, the Comptroller's Office and the pension funds have sold $48 million in stocks and bonds of three private prisons companies, GEO Group, CoreCivic (formerly Corrections Corp. of American) and G4S.

"For years we have been working to support and protect the pensions of hard-working New Yorkers by investing in areas that are both financially and ethically sound-criteria that investments in private prisons no longer meet," Public Advocate Letitia James, a trustee of the New York City Employees' Retirement System, said at the press conference.

"Today, we are following through on our fiduciary responsibility and our values by divesting from an industry that hurts our city and our country."

In September 2016, the trustees of the city's five pension systems voted to do a study of the private prisons, following reports of widespread health and safety violations and human rights abuses by the industry.

An analysis by the Office of the Comptroller and outside consultants found inherent risk in investment in for-profit prisons.

The study concluded that the track record of private prisons - reports of poor conditions, high rates of violence, understaffing and other human rights abuses - can damage the reputation of the industry, leading to stock price declines and lower returns.

Lawsuits resulting from the human rights abuse also make private prisons risky investments. The investments are unstable because prison industry profits depend upon political decisions. Furthermore, regulatory burdens can reduce the bottom line of for-profit prisons.

Accompanying Stringer at the news conference, DC 37 Executive Director Henry Garrido, a NYCERS trustee, noted the divestment follows the decision of NYCERS's trustees to divest from hedge funds in 2016 because of their concern about risk and excessive administrative fees. As an immigrant, Garrido said he was appalled by the reports of poor medical care of inmates. During fiscal year 2017 at least eight immigrant detainees have died.

One facility allegedly went without a full-time doctor for a month. In 2012, a corrections officer was killed during a riot that broke out because of poor medical treatment and food.

In 2015, 126,000 inmates were confined in 130 private prisons in 30 states. As many as 65 percent of immigrants detained by the Immigration and Customs Enforcement (ICE) are held in private prisons.

In addition to private prisons, the city has divested from companies and index funds that derive 20 percent or more of their revenue from investments in for-profit prisons.