ALBUQUERQUE – Policies that guide pension investments for New Mexico teachers and other educational retirees would have to change if the Educational Retirement Board wants to divest in private prison companies or other individual stocks it disapproves of for social reasons, legal and fiscal experts said Friday.
Questions about socially responsible investments dominated Friday’s meeting as teacher unions and immigrant activists have been pressuring the board to stop investing in Florida-based GEO Group and Tennessee-based CoreCivic, two companies that run lockups in New Mexico.
Mary Lou Cameron, longtime board chairwoman and a retired educator from Deming, said she would have preferred to vote Friday to get rid of the prison stock but acknowledged that the board needs to “do it in the right way” and avoid running afoul of the constitutional mandates and statutory requirements that guide investment of the multibillion-dollar pension fund.
“Our fiduciary responsibility is to follow our rules, which are made to protect our funds for our retirement and we cannot do a wrong to make a right but we can continue to fight,” she said before voicing her concerns about the detention of children and others.
The board ordered the staff members to research the issue over the coming months and craft language that would give members the opportunity to divest in certain funds going forward.
Previously, active management of the pension fund allowed for managers to make decisions regarding specific stocks. Officials said the lack of value and underperformance prompted the board years ago to move toward what is known as passive management, relying for example on the S&P to curate the stocks that make up the major index funds.
CoreCivic and GEO Group operate county jails and detention facilities for U.S. Immigration and Customs Enforcement in New Mexico and elsewhere. The companies’ stocks have been part of the S&P 400, one of the many funds that are part of the retirement board’s portfolio.
The S&P recently opted to remove CoreCivic from the index, a change that will take affect Monday, meaning pension funds will no longer be tied to that company.
As for GEO Group, the pension fund owns less than a fraction of 1% of the company through its stock holdings, said Bob Jacksha, the retirement board’s chief investment officer.
“If we divest, I just pose the question how much difference will that make. I think the real answer here is not at the individual company level. It is at the federal policy level on how we handle immigration. It is a political issue,” he said.
Financial advisers also cautioned the board from taking on the role of being a portfolio manager by making decisions on individual stocks. They pointed out language in the state constitution as well as state statutes that call for the board to be loyal to the interests of the fund’s beneficiaries and to be prudent in their decision-making.