N.M. teachers’ retirement still tied up with prison phone company

The board that invests the pension fund for New Mexico teachers promised last year not to fund private prisons anymore. The head of its governing board at the time said he was “committed to making sure the board acts in ways that honor basic human rights.”

But critics say the pension fund still has millions of dollars invested in a related, exploitive industry: prison phone calls. The investment raises questions about whether the board has done enough to honor their promise.

Harvest Mode

The New Mexico Educational Retirement Board, with a staff of about 70 people, oversees $13 billion in investments that help pay retirement benefits to teachers in the state.

Board records show the fund invested $30 million in Platinum Equity in 2007. Platinum Equity has come under scrutiny after it bought Securus Technologies for $1.6 billion in 2017, the Los Angeles Times reported.

Securus is one of the two main prison telecommunications companies in the country. Its existence is the result of numerous mergers involving more than 30 smaller companies since 1984, according to a report from the Prison Policy Initiative.

As of November 2018, a 15-minute in-state phone call cost someone incarcerated in a New Mexico prison $1.20, according to the report. Rates are often higher in jails and can go up by as much as $1 for every 15 minutes here in the state, the report acknowledges. 

While that rate is capped by government regulators and may seem affordable, the report found that Platinum and its few remaining competitors obey those caps while making huge amounts of money by also charging “fees” for other “services” related to the calls.

These fees can be charged for things like opening an account, having an account, funding an account, closing an account, getting a refund or receiving a paper bill, the report states.

They also found that Securus “goes out of its way to make it hard for family members to create and fund accounts in an efficient manner.”

“Rather than encourage families to create pre-paid accounts — or to add funds to a depleted account — Securus instead steers people to pay for each call individually,” they wrote. “By emotionally manipulating family members into paying for single calls rather than creating accounts, the companies drive up fee revenue.”

Harvest Mode

When the retirement board invested in Platinum, it did not yet own Securus. But quarterly investment reports from 2012 to 2020 published by the board show that it has maintained that investment, years after activists started publicly campaigning against Securus.

Similar reports for the first two quarters of 2021 are not yet available, said Rick Scroggins, interim executive director for the board. Scroggins referred all questions to Bob Jacksha, the board’s chief investment officer.

Jacksha confirmed that the investment is still in place but pointed out that Platinum has invested part of the board’s $30 million in other companies.

He added that Platinum then turned around and sold some of those companies for a profit and returned some of the money from those sales to the pension fund.

“But yes, we’re still an investor in the fund,” Jacksha said. “It is in what’s called harvest mode: They’re selling companies. It’s likely to be wound up in the near future.”

Typically, private equity companies like Platinum work by raising money from investors during time-limited “rounds” of fundraising.

Pension funds are a huge target for investment firms like Platinum because they have billions of dollars to invest, said Szu-Han Ho, a professor at the University of New Mexico and a member of an art collective called Fronteristxs, which helped to pressure the board to divest from private prisons.

Jacksha said that the board only invested in a single round of Platinum funding back in 2007, and never invested in any subsequent rounds, including the round of funding where Platinum acquired Securus.

Jacksha, who has worked for the board since 2007, said they moved their money away from Platinum not because of Securus, but because they hired a different private equity consultant, and when they went back out looking for investments in 2010 or 2011, Platinum no longer seemed like a good one. He said they’re not concerned about Securus. “We’re not an ongoing investor with Platinum,” Jacksha said.

Divestment 2020

Once an investor signs a contract with an investment firm, he said, they do not have any choice about how the firm spends the money.

“Essentially you sign that contract and you’re tied to this company for 10 years, maybe less,” Jacksha said. “My whole point being you want to screen it on the front end. And that’s what we do.”

The screening Jacksha is referring to is the divestment policy the board passed in 2020 after pressure from activists, which excludes companies that own or operate prisons from its investment portfolios.

The board passed the policy after an 18-month-long campaign by activists and educators who would rather not see their retirement funds associated with prison companies, who also often run ICE detention facilities as they do here in New Mexico.

The campaign, called Prison Divest New Mexico, mobilized teachers’ unions and wrote hundreds of letters to the board and attended their meetings. The coalition includes the Santa Fe Dreamers Project, Teachers Against Child Detention, Bend the Arc Jewish Action, Fronteristxs and Worth Rises.

Members of the coalition that pressured the board to come up with the policy acknowledge that the board’s hands are somewhat tied but said they still should not be invested in prison companies.

“Basically, you’re kind of locked in once you join as an investor,” Ho said. “Once you join the fund, you don’t really have any say what the investment is unless you say from the outset, ‘No, I refuse to invest in prison stocks or prison companies.’”

In an emailed statement on Aug. 30, Worth Rises Executive Director Bianca Tylek acknowledged that the board invested in Platinum during its “Fund II” round of funding, before Platinum acquired Securus later through its “Fund III” round.

“That said, I don’t think that takes them off the hook,” Tylek said. “It’s not just about owning that one particular fund, it’s about not doing business with Platinum Equity.”

In a written statement, Prison Divest NM asked the board to dump their investment with Platinum.

“We, as educators and staff, believe that our pension funds should be divested from all companies that profit from prisons. Period,” Prison Divest NM said. “This includes private equity funds like Platinum Equity and companies like Securus. Whether it’s $2.5 million or $30 million, the point is that we are against investments in the prison industrial complex. Financial instruments like private equity funds and derivatives make it hard for regular people to know what our retirement funds are invested in, whose pockets they are lining, and at whose expense. We ask NMERB to divest completely from the prison industrial complex, whether it’s in private equity, real estate investment trusts, stocks, or anywhere else. We ask NMERB to commit to not buying any new prison assets, to shift to Socially Responsible Investing, and to practice greater transparency with its members.”