PUBLIC PENSIONS: State Treasurer Wants Funds to Divest From Tobacco Stocks
State Treasurer Phil Angelides last week called on the $110 billion California State Teacher Retirement System (CSTRS) pension fund to divest from all tobacco stocks, arguing that public pension funds should "make solid investments and do it in a context of products that are good for society, that build society," the Los Angeles Times reports. Angelides also vowed not to invest in tobacco any of the $33 billion he manages as treasurer, and said he may urge the California Public Employee Retirement System (CALPers), the nation's largest pension fund, to take similar action. In a letter to CSTRS Board of Trustees Chair Emma Zink, Angelides asked the board -- of which he is member -- to consider the issue at an upcoming meeting, writing that "the nature of the product is now affecting long-term prospects. ... This is a financial discussion, but it is clearly being driven by the rejection of the product in American society." Angelides likely will face strong opposition from another trustee, state Controller Kathleen Connell, who said the board already decided the issue in 1998, when it voted to keep its tobacco holdings, valued currently at $323 million. "We have a fiduciary responsibility. This is a very slippery road when we make decisions on issues other than rate of return," she said. A spokesperson for State Schools Superintendent Delaine Eastin indicated that she is "favorably inclined to divesting," noting, "It's not a very good place for teachers to have their money invested, given the checkered history of tobacco." According to Doug Cogan, director of tobacco information services for the Investor Responsibility Research Center, only six other state pension funds have pursued such action. "Given the size of the (California teacher's) fund, it certainly would generate attention nationwide," he said (Morain, Los Angeles Times, 12/24). In response to Angelides' challenge, Philip Morris Companies, the world's largest tobacco firm, noted that its stock was one of the most widely held by professional money managers, adding, "Public pension fund managers have a fiduciary responsibility to manage their portfolios to produce the best financial returns for their beneficiaries, the public employees" (Freudenheim, New York Times, 12/25).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.