Educators push New Mexico retirement board to divest from private prisons

LAS CRUCES - Efforts to persuade trustees of the New Mexico Educational Retirement Board to drop investments in private prison companies may pay off at Friday's board meeting. 

A growing coalition of organizations including the Santa Fe Dreamers Project, Teachers Against Child Detention, teachers' unions and two local school boards among others, have lobbied for the ERB to divest from stock in the Florida-based GEO Group and Tennessee-based CoreCivic, the latter formerly known as the Corrections Corporation of America. 

The matter will be taken up by the ERB's investment committee at its public meeting online Thursday at 1 p.m., and then by the trustees on Friday at 9 a.m. The meeting notices with links for public attendance, as well as the agendas, can be viewed online at http://www.nmerb.org.

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Pushing back against private prisons

CoreCivic and GEO Group both operate county jails, state prisons and detention facilities for U.S. Immigration and Customs Enforcement in New Mexico and nationwide.

Another private company, the Management and Training Corporation, operates the Otero County Prison Facility and the adjacent Otero County Processing Center, an ICE detention facility, in Chaparral. 

As of Aug. 7, the ERB reported holdings of 24,600 shares of CoreCivic valued at $215,004, and 25,100 shares of GEO Group worth $267,817.

That accounts for $483,000 out of a $13 billion fund. 

Las Cruces educator Mary Parr Sanchez, who serves as president of NEA-New Mexico, said the union voted to add its voice to the divestment movement last year.

"One of the major reasons was the separation of families at the border right here, just south of Las Cruces," Parr Sanchez said.

It was also the year her city confronted a humanitarian crisis as the U.S. Border Patrol began releasing hundreds of asylum applicants from the southern border into the city every day for nearly six months, dropping off 17,231 people in Las Cruces alone, because its own facilities were overcrowded. 

Additionally, Parr-Sanchez cited mass imprisonment in the United States and said, "We do not want to support these privateers who profit off of warehousing human beings."

The Dreamers Project argues that private, for-profit prison companies are inclined to cut costs at the expense of the safety and well-being of inmates, while also lobbying for criminal justice policies that boost imprisoned populations — and their revenue. 

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Is divestment a slippery slope?

ERB Executive Director Jan Goodwin, who is not a voting board member, has raised red flags about divestment, arguing in an interview with the Santa Fe Reporter earlier this month that the pension fund would be harmed by divestment and that excluding the two stocks would require extra work by fund managers. 

However, on Tuesday ERB's chief investment officer, Bob Jacksha, wrote in an email, "There would be a minimal increase (of) staff time on an ongoing basis if the two companies are divested from ERB’s investment portfolio."

Goodwin did not speculate on how trustees might vote or what the consequences would be.

"Because there are many options that the board could do, including taking no action, it’s impossible for me to say what the consequences of all those options are," she wrote.

The companies' stocks are part of the Standard and Poor's 400 Index, one of many funds held in the ERB's portfolio. 

ERB chairwoman Mary Lou Cameron, a retired educator from Deming, said that in her 20 years on the ERB board, this is the second time she recalled a moral issue leading to a divestment proposal. The first was the Sudan divestment movement over a decade ago, in response to systematic killings in the Darfur region widely labeled as genocide.

While the two companies represent a tiny portion of the total fund, Parr-Sanchez said educators recognized a tension between their fiduciary responsibility to make sure the pension supports educators' retirement versus "investing in things we find reprehensible." 

Cameron, who added the issue to Friday morning's agenda, said she had mixed feelings on the issue.

"Being an educator for 42 and a half years, I have strong feelings about how children should be treated," Cameron said, but added: "What’s next and how do we address it? Because pretty soon you could start tearing up everything we have. Think of the number of things that we could be asked to divest in. How do we keep making sure the money’s there?"

Johann Klaassen, chief investment officer for Horizons Sustainable Financial Services in Santa Fe, said that over the long term "socially responsible" funds that screen investments by moral criteria tend to perform on par with non-screened funds over the long term.

"On a short time period the differences can be very large, but on a longer time period the differences are very small," he said in an interview Tuesday.

'Maybe the board should listen'

Moreover, Klaassen said that CoreCivic and GEO Group stocks had both demonstrated long-term performance problems beyond their recent setbacks. 

Among their recent woes, both companies reported net income losses to investors last week while holding billions in long-term debt. The companies have also seen available credit dry up as major financial institutions turn away from the industry or simply decline new financing to them.

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The companies have lost revenue as populations at their facilities decline, while they have also been plagued by reports of COVID-19 outbreaks in their facilities. 

Federal inmates at CoreCivic's Cibola County Correctional Center in Milan staged a protest last week over COVID-19 protocols and medical treatment at the facility. The state Department of Health has confirmed 313 positive cases of the disease there. 

The state's largest outbreak behind bars is at the Otero County Prison Facility, with a combined 752 positive cases of COVID-19 among state and federal detainees plus 159 at the Otero County Processing Center, both managed by MTC. 

Asked whether there was a danger of a "slippery slope" leading to expansive demands to divest from more companies or entire industries, Klaassen — whose firm is part of the coalition advocating divestment — argued the slope might be neither steep nor slippery.

"This request is very specific," Klaassen said. "It names two companies and it explains precisely why these two companies are problematic. If there’s another organization that can come forward and say, 'Hey, we want to take these three companies out of the ERB’s portfolio,' then maybe the board should listen to those arguments.”

Algernon D'Ammassa can be reached at 575-541-5451, adammassa@lcsun-news.com or @AlgernonWrites on Twitter.