Earlier this month, the Department of Justice announced that it would not renew contracts with private prisons, which currently house more than 22,000 inmates. The move, while comparatively small when taken in the context of the entire private prison and immigration detention population, immediately sent shock waves through the once-burgeoning industry. Two of the largest private prison stocks plunged by more than 40 percent. As a result, as the Gotham Gazette points out in a feature today, New York City’s pension funds took a hit as well.
New York City’s five pension funds have around $20 million invested in the GEO Group and CCA, the two major players in the private prison industry. When the stocks tumbled, Gotham Gazette estimates that the funds themselves lost $8 million. Small potatoes for a cumulative $160 billion fund, but a development that begs the question — why is New York City contributing any money at all towards an industry that many of its politicians (and probably a lot of its residents) find completely abhorrent?
For the past twenty years, New York has let private prison operators call the city home. GEO Group operates the Queens Detention Facility, a site that houses individuals detained by the U.S. Marshals and that has been plagued by human rights abuses since it opened in 1997 when it was originally used by ICE. Back in 2011, while still public advocate, now-mayor Bill de Blasio called on the federal government to end its contract with GEO Group, but to no avail.
On Monday, the Department of Homeland Security announced that it would review its “current policy and practices concerning the use of private immigration detention and evaluate whether this practice should be eliminated.” But instead of waiting for DHS to strike a death blow with a negative review (unlikely given that private prisons make up 62% of beds, making it, for the moment at least, indispensable to the government), New York City could make a common-sense move to hurt the profitability of these prisons. The city could withdraw its money entirely, like New York state did with its own pension funds last year.
In October, state comptroller Thomas DiNapoli put GEO Group and Corrections Corp of America on its “restricted list for active management,” meaning that the guardians of the state’s retirement funds couldn’t “actively” put any money towards these companies. That doesn’t mean the state’s money couldn’t passively go towards private prisons, through indirectly managed index funds, but the withdrawal of direct investment was a strong message to the world all the same.
When it comes to the city, the onus for cutting ties with private prisons falls squarely on the shoulders of comptroller Scott Stringer, who’s tasked with the responsibility for managing the city’s pension funds. Unlike DiNapoli, Stringer can’t unilaterally pull out of active investment, because he’s only one of several trustees on each fund. But as the most prominent trustee, Stringer could use both political and moral pressure to make the other trustees follow suit.
Stringer didn’t immediately request for comment from the Voice, but his spokesman told the Gotham Gazette that “The private prison industry’s continued failures in safety and security, as well as the legal and reputational risks inherent in the enterprise, compel us as fiduciaries to carefully consider whether holding these types of assets is prudent and in the best interest of City workers and retirees.”
That’s a far cry from saying he’s going to do anything about it. But while Stringer explores the possibility of eliminating active investment, another option could be made available to halt the city’s long-standing passive investment. Last year, at the Paris climate talks, state comptroller DiNapoli invested parts of the state’s Common Retirement Fund in a new investment fund that prioritized companies with small carbon footprints. Given the ethical implications of imprisoning people for profit, the same could be done for funds that will leave out the private prison industry. With possible investments as large as New York City’s pension funds, and private prison stocks becoming worse bets every day, there’s no real reason why this can’t happen. It just needs a voice as loud as Stringer’s to demand it.