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Although California can’t do much to block the Trump administration’s controversial immigration policies, opponents in the “Resistance State” keep finding ways to chip away at their foundations.

The latest: pushing the state and its Democratic leaders to cancel its business deals with, investments in, and campaign donations from private companies with federal immigration contracts:

• A group of K-12 teachers are urging their retirement system to divest from GEO Group, CoreCivic and General Dynamics.

• Some University of California students and workers are pressing the UC system to sever ties with General Dynamics Information Technology. The company helps the system administer a placement test for incoming first-year students.

• Politicians and the state Democratic Party are shedding donations from CoreCivic, operator of private prisons and detention facilities.

“I don’t think we should profit off of the lives of other people,” said Adrianna Betti, one of hundreds of teachers who are urging CalSTRS, the organization responsible for the pensions of California K-12 teachers, to divest from the private prison companies. “The concept that I’m going to retire off of this type of money—it bothers me immensely.”

Betti told a recent CalSTRS investment meeting that the organization needs to provide more transparency about its portfolio and realize they are making moral choices with their dollars.

“Nobody with a moral lens would have made this decision ever,” she said.

Amid public outcry last month, President Donald Trump backed off of his initial policy of separating undocumented parents from their children at the border. “So we’re keeping families together, and this will solve that problem,” he said. “At the same time, we are keeping a very powerful border, and it continues to be a zero-tolerance. We have zero tolerance for people that enter our country illegally.”

More than 1,800 children have been reunited with families after being separated at the border, but more than 700 still remain separated—and some of those may be in California.

The state—which Trump branded “out of control” in its immigration defiance—passed a trio of laws last year designed to make California a “sanctuary state” for undocumented immigrants who don’t commit serious crimes. Although the Trump administration sued to have the laws overturned, it has not yet been successful.

But the emotional family separations posed a particular frustration in Democrat-dominated California. Attorney General Xavier Becerra joined 17 other states in contesting the Trump administration’s “zero tolerance” policy last month, arguing in the complaint that family separation is causing severe trauma that state resources will be strained to address.

The federal government “does have the right to decide how to conduct immigration processes. They’ve done a very poor job obviously—very harshly,” Becerra said on KQED earlier this month. “We are more limited there in what we can do as far as allowing these kids to be free.”

One move the state could make: divestment. It’s a tactic that various activists have proposed against gun manufacturers, tobacco companies and fossil-fuel firms. Successes include the UC divestment effort in the 1980s against South Africa, which Nelson Mandela credited with helping bring an end to the racist apartheid regime.

CalSTRS said it is determining potential risk factors the private prison companies may post to pensions. At its meeting, investment committee chairman Harry Keiley said he’s asked the chief investment officer update the board on the issue by September.

CoreCivic said in a statement that none of its facilities provide housing for children who aren’t under the supervision of a parent, adding, “We also do not enforce immigration laws or policies or have any say whatsoever in an individual’s deportation or release.”

“We are proud that for over the past 30 years, we have assisted both Democrat and Republican administrations across the country as they address a myriad of public-policy challenges,” said the company spokeswoman Amanda Gilchrist. “CoreCivic has a strong commitment to caring for each person respectfully and humanely.”

Other educators are urging the UC system to sever ties with General Dynamics Information Technology. The University Council-AFT—the labor union that represents librarians, lecturers and other university faculty members—sent such a letter to UC president Janet Napolitano in June, who also received a similar letter from the Council of UC Faculty Associations, the umbrella organization that represents the different faculty associations at each campus.

The University of California Student Association, an organization that represents students across UC campuses, is also pressing the UC system to end its contract. “To work with a company actively taking part in the state sanctioned violence of separating families seeking asylum, and profiting from it is to be complicit in the inhumanity of their actions,” the association said in a letter to the president.

“This is still happening, and they’re not doing as much as they could,” said Stephanie Luna-Lopez, a third-year student at UC Berkeley and associate chief of community development for the Associated Students of the University of California, the student association for UC Berkeley. “We actually cannot do anything, because it’s out of our control.”

Napolitano contends that UC has contracted with the company for years; that it assured her they were providing case work for unaccompanied minors to facilitate reuniting families; and that breaking ties would be “detrimental” and “disruptive.” (Although she presided over significant numbers of deportations as head of Homeland Security in the Obama administration, Napolitano has denounced Trump’s separation policy.)

General Dynamics Information Technology has worked with the Office of Refugee Resettlement since 2000, providing casework support for the Department of Health and Human Services. It says it has no role in the family separation policy, but facilitates reunifications.

Democratic legislators and the Democratic Party have, since Jan. 1, 2017, collected some $250,000 from private-prison companies that incarcerate undocumented immigrants. Now they’re distancing themselves.

Assembly Speaker Anthony Rendon tweeted last month that he would donate campaign money received from CoreCivic to the Anti-Recidivism Coalition, which works with formerly incarcerated people to reform the justice system.

After CALmatters noted that Lt. Gov. Gavin Newsom received private prison money in his campaign for governor, an aide said Newsom donated $5,000 to the National Domestic Workers Alliance’s Families Belong Together project, which protests Trump’s immigration policies.

The California Democratic Party has also announced it will no longer accept contributions from organizations that run private prisons or other incarceration services.

“The private-prison system represents so much of what is wrong with our criminal justice system,” said CDP chair Eric C. Bauman in a statement. “Accepting donations from companies that profit from the systemic injustices and suffering that results from them is incompatible with the values and platform of our party.”

CALmatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.

Published in Politics

California’s public schools have enjoyed a remarkable restoration of funding since the bone-deep cuts they endured during the recession—but many are now facing a grave financial threat as they struggle to protect pensions crucial for teachers’ retirement.

Over the next three years, schools may need to use well more than half of all the new money they’re projected to receive to cover their growing pension obligations, leaving little extra for classrooms, state Department of Finance and Legislative Analyst’s Office estimates show. This is true even though the California State Teachers’ Retirement System just beat its investment goals for the second straight year.

Some districts are predicting deficits, and many districts are bracing for what’s to come by cutting programs, reducing staff or drawing down their reserves—even though per-pupil funding is at its highest level in three decades, and voters recently extended a tax hike on the rich to help pay for schools.

At the same time, some districts are grappling with how to simultaneously afford raises for teachers who have threatened to strike. The situation could become even bleaker if California’s economy doesn’t keep growing.

If there’s another recession—which economists say is increasingly likely, given the record length of the expansion under way now—the higher pension payments scheduled could push some districts deeper into the red, Legislative Analyst’s Office data indicates.

“Many districts’ budgets would be upside down with expenses growing faster than revenues,” said Michael Fine, CEO of the Fiscal Crisis and Management Assistance Team, the state agency responsible for overseeing schools with financial problems.

School systems that saved money over the last few years will be able to use it to buy time, Fine said, but those reserves “won’t eliminate the impact or make that problem go away.” Tackling it will likely require new sources of revenue or an array of cuts.

“Building maintenance could suffer; grounds care could suffer; class size could suffer; instructional coaches could suffer; athletic programs could suffer; technology could suffer; intervention programs could suffer,” Fine said.

The problems stem from the state Legislature’s reticence to mandate steeper payments into the California State Teachers’ Retirement System. The system was badly underfunded and careening toward collapse four years ago when school districts, teachers and the state all agreed to pay more to reduce its unfunded liability, which now stands at $107 billion

Districts took on the greatest share of those new costs, agreeing to increase payments from 8 percent of their payroll in 2013 to 19 percent by 2020.

No matter how burdensome the larger and larger pension payments may be, actuaries say they’re necessary to protect teachers’ hard-earned retirement and prevent the system from running out of money. Teachers don’t get Social Security, and unlike firefighters or police officers, most retirees earn modest pensions of about $55,000 a year.

The Brown administration has directed an additional $20 billion to the state’s public schools since 2013 and says districts have had plenty of time to plan for the pension payments ahead. But many school leaders and advocates want the state to invest even more, especially since California still ranks near the bottom in per-pupil spending compared to other states.

“Knowing that these liabilities were growing, we provided districts with the resources they needed to plan accordingly,” said H.D. Palmer, a spokesman for the state Department of Finance.

Meanwhile, the state’s largest teachers union is downplaying the problem and encouraging its members to bargain for raises. California’s teachers may be among the nation’s most generously paid, but they say the money doesn’t go very far, because the state’s cost of living is so high.

School officials are left with a Gordian knot of politically charged problems, forced to make escalating payments into the pension fund while trying to elevate disadvantaged students’ sagging classroom performance, which remains among the country’s worst despite the state’s big investment in their learning through a policy championed by Brown.

“We need to graduate more kids and close academic achievement gaps, but we can’t move the needle when costs are rising like this,” said Dennis Meyers, executive director of the California School Boards Association, who stressed that his group is not seeking to reduce teachers’ retirement benefits.

“We simply need more revenue, and we’re out here waving the white flag, looking for relief.”

Each of California’s school districts is bound to tackle these challenges differently, so CALmatters visited three of them whose circumstances are emblematic of what others across the state are experiencing. During those visits, we spoke with the people working to solve the problem.

Fremont Unified devotes a greater share of its budget to salary than any other district in the state—69 percent. (The three Coachella Valley school districts devote either 55 or 56 percent. See the percentage devoted to salaries at each of California’s school districts here.) So when the largest pension payments are phased in, Fremont will be hit especially hard. That means the district’s budget could face cuts even as enrollment in the Bay Area school system grows.

Sacramento City Unified knew that larger pension payments were coming and saved money to prepare for them. Then the local teachers union criticized the district for hoarding cash and threatened to strike. Now the contested funds are being used to finance a raise that teachers say is long overdue—and that the county superintendent believes the district can’t afford.

In Los Angeles, growing demand for charter schools and a dwindling birth rate has led to declining enrollment in the district’s own schools, which means pension payments will rise even as the district’s state funding shrinks. School officials recently predicted that a quarter-billion-dollar budget deficit was just two years away.


Raul Parungao’s distinctive grin and his cheery demeanor belie his concern about Fremont Unified’s finances.

Situated between Oakland and San Jose in the pricey Bay Area, the school system pays its employees more than most. That makes it a desirable place to work, but also means it will be hit especially hard when the largest payments required under Brown’s pension plan are phased in.

“There’s this sense in the community that we’re flush with cash, but I try to remind people about the other half of the story,” said Parungao, the district’s chief business officer.

Even though revenue is rising because enrollment is growing, the district must hire and pay more employees to serve them. And over the next three years, while Fremont predicts its revenue will grow by $26 million, a 7 percent bump, it also expects its employee pension and health care costs to climb by $14 million, a 23 percent surge.

“Here’s the bottom line: the extra revenue we expect to get from the state won’t be enough to keep pace with our pension contributions,” Parungao said. “The problem hasn’t exploded big yet, but it will. It’s only a matter of time. I haven’t met another chief business official who isn’t concerned about this.”

Meanwhile, Fremont’s teachers just won a small raise after months of protracted negotiations.

The current pay scale is competitive, with veterans making $114,000 a year, but leaders of the local union say about half of the teachers still don’t make enough to live in the district and must commute from up to an hour away.

But no matter how tough it may be for the district to afford this 1 percent pay hike, teachers deserve one, said Victoria Birbeck, the union’s president

“The series of small raises we’ve received haven’t covered cost of living,” she said. “Besides, the district has known about the governor’s plan for a few years now. There should have been better planning.”

Parungao said planning isn’t the problem. The district stretched to offer teachers a raise last year and even had to shift its budget by millions of dollars to accommodate that 2 percent increase, which came after a 13 percent bump over the prior three years. Plans to upgrade students’ textbooks and computers were postponed, and class size for kindergarten, first- and second-grade students increased slightly.

Given the district’s rising pension and other fixed costs, the new agreement’s $7 million price tag will be tough to accommodate. Still, Michele Berke, one of the district’s board members, acknowledged that for many teachers, $1 spent on pensions isn’t as good as $1 spent on salary.

“As we negotiate with the union, STRS is the elephant in the room,” she said in an interview before the deal was finalized, referring to the acronym for the California State Teachers’ Retirement System. “We’re paying toward your future, but those payments don’t help put food on the dinner table.”

Sacramento Mayor Darrell Steinberg only worked with a few key players one weekend last fall when he helped broker a deal to avert a citywide teacher strike, and former school board president Jay Hansen was one of them.

Hansen had tried for months to negotiate the terms of a pay increase for the city’s 3,000 teachers, but the district and leaders of the local teachers union were far apart, and neither side would budge. An acrimonious relationship between the two camps was partly to blame for the impasse.

“It’s like the Hatfields and the McCoys,” Hansen said. “No one remembers why they can’t get along.”

At issue during the talks was the $81 million sitting in Sacramento City Unified’s savings account, a sum the district had built up over several years with spoils from California’s booming economy.

The union said the money should go toward class-size reduction and raises for teachers that would make the district a more attractive place to work. Sacramento educators are paid less than their peers in nearby districts, but they also receive more generous lifetime health benefits, records show. The district said it had saved the money to help cover rising pension and employee health care costs in the lean budget years ahead.

In the end, Steinberg helped craft an agreement that gives Sacramento teachers an 11 percent raise over three years. But just a few weeks after Steinberg announced the deal during a celebratory news conference on the steps of City Hall, Sacramento County Superintendent Dave Gordon delivered some bad news: The district can’t afford it.

“Based on the review of the public disclosure and the multi-year projections provided by the district, our office has concerns over the district’s ability to afford this compensation package and maintain ongoing fiscal solvency,” Gordon wrote in a December letter to the district.

The district’s own budget offers proof of Gordon’s concerns.

Over the next three years, the school system anticipates its revenue will grow by $6 million, a 1 percent increase, while its pension and health care costs grow by more than $18 million, an 11 percent increase. A popular summer program for struggling students has already been eliminated to save money

A second letter Gordon sent in January further underscores his concerns. He called the district’s plan to use one-time money to help cover the cost of the new contract a “poor business practice” that “only perpetuates the district’s ongoing structural deficit.”

“The pension contributions are putting a strain on everyone’s budgets,” Gordon said in an interview.

Even though Hansen had been the union’s adversary during months of stalled contract talks, he defended the district’s decision to offer teachers a raise, calling it “the right thing to do” despite the school system’s escalating pension and health care costs. “We did it anyway,” he added.

Steinberg echoed Hansen’s perspective.

“A strike would have been calamitous for everybody,” he said. And Sacramento isn’t the only place in California where teachers are thinking about a show of force: At least half a dozen other local unions fighting for higher wages have held labor actions in recent months.

In an interview with CALmatters that union leaders cut short after refusing to answer some questions, Executive Director John Borsos rejected any suggestion that the district won’t be able to afford the contract it recently signed or that it ever claimed to have needed the money stockpiled in its savings account to cover rising pension costs.

“They have more than enough to cover the pension increases,” Borsos said. “And they didn’t make that argument at the bargaining table.”


Gov. Jerry Brown promised his 2014 funding plan would shore up California’s teacher-pension system, but at least one young Los Angeles teacher, Josh Brown, says he’s not counting on it. The Oliver Wendell Holmes Middle School special educator is so worried about the system’s solvency that he has an alternative retirement plan: using a portion of his salary to invest in the stock market.

“I’m a fifth-year teacher. I’m 30 years old, and I’m paying into a pension system that may or may not be around when I retire,” he said. “If I were 65 years old and retiring soon, I would feel differently. Right now, I feel frustrated and worried.”

The largest payments required under the plan will be tough for many districts to manage, but they’re going to be especially vexing for large urban districts like Los Angeles Unified, which lost 100,000 students in the last decade and expects to shed more. (Here's the toll of that under-enrollment, school by school.) That’s a problem, because California’s schools are funded on a per-pupil basis, and fewer students means less money.

In Los Angeles, the swift enrollment decline is due to a dwindling birthrate and growing demand for charter schools, which are publicly funded but independently run, meaning their budgets are separate from that of the district.

Over the next three years, the district anticipates its employee pension and health-care costs will climb $90 million, a 5 percent increase, while its revenue dips about $270 million, a 4 percent decline. The result is a $258 million budget deficit in 2020 that the district can no longer paper over, push off or ignore.

“We’re going to have to tighten our belts to save our schools,” said Nick Melvoin, a board member whose stark views on district finances have been criticized by skeptical local union leaders and fellow board members. “We’re in a death spiral.”

The district plans to tackle the deficit with a one-time $105 million bailout from the state and central-office staff reductions. But observers says officials will soon need to consider some painful measures it has so far been able to avoid, like boosting high school class sizes or closing schools with dwindling numbers of students.

At least 55 schools across the district are under-enrolled by a quarter, and 10 of those are half-empty, a CALmatters analysis of building capacity and enrollment data shows.

“Our costs are rising, and as a result, there are hard choices and trade-offs to make each time we look at the budget,” said Scott Price, the district’s chief financial officer.

Parent Paul Robak fears that if the district doesn’t tackle its budget problems soon, it could be taken over by the state. At a recent board meeting, he urged the members to reject a health-care spending plan that would further squeeze the budget. The members listened and thanked him for testifying before approving the agreement.

“It’s as if the board members are prancing down the lane and covering their ears, pretending nothing’s wrong,” said Robak, who has been active on the district’s parent councils for a decade. “Everyone will lose if we fail to act.”

Board member Kelly Gonez also acknowledged the district’s budget woes and the pressure of rising pension and health care costs, but said officials should be trying to ease the pain by finding new sources of revenue, not by making cuts. All but one other board member declined to comment.

Even as a fiscal crisis looms, Los Angeles teachers are negotiating for a raise.

“Everyone who works in the district comes to work with an expectation they’re going to be treated fairly. They need to be treated fairly,” Austin Beutner, a former investment banker and the district’s new superintendent, told the Los Angeles Times. “How we strike that balance remains to be seen.”

United Teachers Los Angeles President Alex Caputo-Pearl declined CALmatters’ request for an interview. However, at a Pepperdine University event held before the state bailout was announced, he pledged to keep pushing for more money and predicted that the state would come through.

“If we take it off the table,” Caputo-Pearl said, “then we are acknowledging that the public district system is going to go off a fiscal cliff, which (is something) I’m not willing to acknowledge.”


Flooded with calls from anxious school officials, Sen. Anthony Portantino of La Cañada Flintridge and several other Democrats pushed earlier this year for a fix that would boost districts’ funding by $1 billion a year. In the end, Portantino convinced Brown to include about half as much in the state budget he signed a few weeks ago.

He insisted that the money be “flexible,” meaning districts may use it to cover rising pension costs or for anything else. But California’s schools are still underfunded compared to other states, and to better fulfill their responsibility to students and taxpayers, that must change, he said.

“In a few months, we’ll have a new governor with a new set of priorities,” Portantino said. “Is there more to do? Absolutely.”

CalSTRS’ first official report on the impact of districts’ growing pension obligations is due to the Legislature in the middle of next year, when school budgets will likely be squeezed the most.

In the meantime, Fine hopes a recession doesn’t strike soon and that districts can manage their budgets without needing to make cuts or send out pink slips. He was a deputy superintendent in Riverside during the Great Recession and remembers how painful it was to carry out round after round of layoffs.

“We lost one of the best counselors and some very bright teachers. I had to layoff someone who years earlier had taught my young children how to swim,” Fine said. “I remember their faces.”

CALmatters.org is a nonprofit, nonpartisan media venture explaining California policies and politics.

Published in Local Issues

SAN FRANCISCO (Reuters)—The California Public Employees’ Retirement System should maintain its investments in the controversial Dakota Access oil pipeline project in order to exert influence over the companies involved, staff for the largest U.S. public pension fund said on Monday, Feb. 6.

Proposed state legislation would require CalPERS, a $300 billion fund, to divest from companies involved in the building and financing of the 1,168-mile-long underground pipeline project, which would affect an estimated $4 billion in CalPERS holdings, according to staff.

CalPERS staff said that while divesting stocks of companies involved in the project may reduce stakeholder perception that the fund’s investments contribute to climate change, the move would limit CalPERS ability to change corporate behavior through engagement.

“There is considerable evidence that divesting is an ineffective strategy for achieving social or political goals, since the consequence is generally a mere transfer of ownership of divested assets from one investor to another,” staff said in its recommendation, which was published on its website.

In order to comply with the legislation, CalPERS would have to sell off shares in the pipeline builder Dakota Access LLC and Energy Transfer Partners. In addition, the bill calls for divesting from the banks financing the $3.78 billion project. Those banks include Bank of America, Wells Fargo, JPMorgan Chase and Citibank.

The pipeline would carry crude from Stanley, N.D., to Pakota, Ill. It has been the target of intense protests by those concerned that a spill could contaminate water supplies underneath Native American tribal lands. The CalPERS Investment Committee will meet on Feb. 13 in Sacramento to discuss the bill.

President Donald Trump has signaled his support for the project, which faced setbacks under the Obama administration. In December, the government under Obama requested a full environmental review by the Army Corp of Engineers.

The U.S. Army secretary could make a decision on the final permit needed to complete the pipeline as soon as Friday, the government’s lawyer told a Washington, D.C., court on Monday.

CalPERS is a frequent target of divestment campaigns. In the past, it has pulled cash out of tobacco and firearm companies as well as investments in countries including Iran, Sudan and South Africa on political grounds.
The legislation, proposed by Assemblymember Ash Kalra of San Jose, also calls on California State Teachers’ Retirement System (CalSTRS) to divest from the pipeline project.

A spokesperson for CalSTRS said the $188 billion fund has not yet taken a position on the legislation.

(Reporting by Rory Carroll; Editing by Daniel Bases and Cynthia Osterman)

Published in Politics