CalSTRS, facing protests from schoolteachers, ruled out a quick sale Thursday of its investment in the manufacturer of the rifle used to massacre 26 students and teachers at a Connecticut elementary school in 2012.
Officials with the teachers’ pension fund acknowledged the protests at a CalSTRS board meeting and said they’re committed to unloading the investment. But the sale probably won’t happen “at the speed that some of us would like,” said CalSTRS board Chairman Harry Keiley.
His comments came as the California Federation of Teachers staged a two-part protest at CalSTRS’ West Sacramento headquarters over its continued $375 million investment in Cerberus Capital Management. The New York private equity firm owns Freedom Group, whose assault rifle was used in the Sandy Hook Elementary School shootings in 2012.
First, the federation staged a “teach-in” outside the headquarters, complete with an oversized “report card” scolding CalSTRS Chief Investment Officer Christopher Ailman for the pension fund’s investment in Cerberus. Ailman attended the protest but didn’t comment, other than to tell The Sacramento Bee: “I want to hear what they have to say. They’re my members.”
Later in the day, Jeff Freitas, secretary-treasurer of the federation, spoke to the CalSTRS governing board and delivered petitions demanding an immediate sale of the Cerberus holdings. “Even if we took a loss (on the sale), it would be the right thing to do,” he told the board members.
Families of Sandy Hook victims weighed in as well. A letter from seven families was read aloud at the CalSTRS board meeting. And David Wheeler, the father of a boy who died in the shooting, told The Bee that CalSTRS must “find a way to do it as quickly as possible.”
But Keiley, a teacher in the Santa Monica-Malibu school district, defended Ailman and the pension fund’s deliberate approach. “We’ll continue to do everything we possibly can to get to the resolution we would all like to get to,” Keiley said.
The delay has frustrated the California State Teachers’ Retirement System. Soon after the Sandy Hook shooting, CalSTRS made a policy decision to sell investments in manufacturers of firearms that are illegal in California. It quickly sold shares in two publicly traded gunmakers for a total of $3 million.
Cerberus has been another matter. The New York firm, for its part, has tried and so far failed to sell Freedom Group. Meanwhile, CalSTRS says it can’t force Cerberus to unload the gunmaker. Nor can CalSTRS simply walk away from its Cerberus holdings.
Spokesman Michael Sicilia said the pension fund is hamstrung by legal restrictions in its investment agreement with Cerberus, details of which he wouldn’t disclose. CalSTRS also has to honor its legal responsibility to maximize profits and minimize losses for the $190 billion pension fund.
Those arguments didn’t sway Wheeler, whose son Benjamin was 6 when he died at Sandy Hook.
“I’m not a finance professional,” he said in a phone interview. “I just know there is a higher moral and ethical state here.”
Back in West Sacramento, teachers said they were appalled that their retirement dollars were invested in the maker of firearms used at Sandy Hook and elsewhere.
“It’s our money,” said Doug Orr, a professor at City College of San Francisco, saying divestment would ratchet up pressure on gunmakers. “The way you get their attention is through money. ... We need to take the money away.”
Not every teacher believes CalSTRS should be pressured into an immediate sale. “I have full confidence in the staff here,” said Maggie Ellis, an Elk Grove schoolteacher and chair of the retirement committee at the California Teachers Association. “We will be out of firearms; there’s a commitment to do that.” The CTA represents about 325,000 teachers, or nearly three times as many as the teachers federation.
Ellis compared the situation to CalSTRS’ decision to sell its tobacco stocks in 2000. “It took time, but we did do it,” said Ellis, who attended the West Sacramento protest.
The protest included the screening of a 4-minute documentary in which schoolteachers complained about the CalSTRS investment in Cerberus.
A simultaneous protest took place outside Cerberus’ Los Angeles office.
Cerberus declined comment Thursday.