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Philadelphia Pension to Divest Private Prison Stocks

Board votes to liquidate $1.2 million worth of stock in three private prison companies.

By Michael Katz

The Philadelphia Board of Pensions and Retirement has voted to withdraw its investments in for-profit prison companies.

The board said it made the decision based on documented instances of human rights violations, and dangerous and unhealthy living conditions in private or contracted prison facilities. It said data shows there were 126,000 inmates housed in approximately 130 private prisons operating in 30 states where federal investigators found far higher rates of security and safety incidents.

Executive Director Francis Bielli said the board voted 6-1 in favor of liquidating the $1.2 million worth of stock it holds in the GEO Group, CoreCivic, and G4S, reported The Philadelphia Inquirer. Over the next several months, the funds will be shifted over to other investments.  

Florida-based GEO Group specializes in privatized corrections, detention, and mental health treatment, and maintains facilities in North America, the UK, Australia, and South Africa. The company’s US Corrections and Detention division oversees approximately 75,500 beds in 70 correctional and detention facilities, and provides services for the Federal Bureau of Prisons, the US Marshals Service, and US Immigration and Customs Enforcement, as well as eight state correctional clients and various county and city jurisdictions.

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Nashville-based CoreCivic, formerly the Corrections Corporation of America, owns and manages private prisons and detention centers, as well as operates prisons on a concession basis.  It claims to be the fifth-largest corrections system in the US, and has prisons, jails, detention centers, and residential re-entry centers in 20 states.

Meanwhile, UK-based G4S has faced several allegations in recent years for its “shoddy service” in prisons, detention centers, and at the 2012 Olympic Games in London, according to the UK’s Daily Mail.

According to a 2016 study by the Justice Department’s Office of Inspector General, “contract prisons incurred more safety and security incidents per capita than comparable [Federal Bureau of Prisons] institutions.” It said that as of the end of 2015, contract prisons housed approximately 22,660 federal inmates, or about 12% Bureau of Prisons’ total inmate population at the time. It also said that contract prisons had higher rates of assaults, both by inmates on other inmates and by inmates on staff.

“This decision is about doing what is right and just,” said Councilwoman Blondell Reynolds Brown.  “I am proud that the board has taken this tangible step to ensure that the city will no longer invest its pension dollars into an industry with an exhaustive track record of civil rights abuses.”

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Home > News > Newsmakers > Illinois TRS Earns 12.6% in FY2017
Newsmakers

Illinois TRS Earns 12.6% in FY2017

However, unfunded status grows as fund continues ‘treading water.’

By Michael Katz

The Teachers’ Retirement System (TRS) of the State of Illinois has reported a 12.6% rate of return, net of fees, for the fiscal year ended June 30, exceeding the system’s investment benchmark of 11.4%.

The return brought the TRS’s asset total to $49.4 billion. Gross of fees, the TRS return for Fiscal Year 2017 was 13.3%, while the total investment income, net of fees, was $5.5 billion. The 30-year investment return for TRS currently is 8.1%, net of fees, which exceeds the system’s long-term investment goal of 7%.

Within the overall investment portfolio, the equity portfolio performed the best, recording a 19.8% return, net of fees, Dave Urbanek, TRS’ director of communications told CIO. The equity portfolio consists of domestic equity, which returned 20%; international equity, which returned 22%; and private equity, which returned 17.4%.

Although TRS’ funded status improved slightly during the year to 40.2% from 39.8%, the unfunded liability increased to $73.4 billion, from $71.4 billion at the end of Fiscal Year 2016.

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Urbanek said the funded status improved because of the portfolio’s investments had a good year, but attributed the increase in the unfunded liability to the state of Illinois not giving TRS its full funding contribution.

“For both FY 2018 and the upcoming FY 2019, the state contribution is or will be $2.9 billion short of a ‘full funding’ amount,” said Urbanek. He also pointed out that the increase in the funded status from fiscal year 2016 to 2017 was very small, which means the total investment income of $5.5 billion in 2017 more than cancelled out the dollar amount increase in the unfunded liability.

“Nonetheless,” said Urbanek, “it means we’re treading water financially and still only have $0.40 for every dollar we should have in assets to pay off the system’s long-term obligations.”

The system’s three-, five-, and 10-year returns were 6.1%, 9.9%, and 5.4%, respectively, compared to its benchmark, which returned 6.1%, 9.3%, and 5.3% over the past three, five, and 10 years, respectively.

TRS Executive Director Dick Ingram in a statement that the net-of-fees 30-year rate-of-return of 8.1% is the most important number in the system’s fiscal year 2017 investment data. TRS’ investments have earned positive returns in eight of the past 10 years, with the two years of negative returns realized during the worldwide financial crisis of 2008 and 2009.

The TRS is the 27th-largest public pension system in the US, and serves 412,500 members.

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