Florida teachers reacted viscerally to news that they’ve been paying into a retirement fund that invests in gun companies, including the maker of an assault rifle used to kill 17 Parkland high school students and educators last week.
They demanded Wednesday night that the state agency that manages the fund divest of those stocks immediately.
The state pension plan for Florida teachers held 41,129 shares in American Outdoor Brands Co., formerly known as Smith & Wesson, as of Dec. 31, Bloomberg reported Tuesday. The company manufactured the AR-15 used in the Marjory Stoneman Douglas High School shooting, according to local law enforcement.
Based on securities filings, the shares are valued at over half a million dollars, which includes $306,000 in unrealized profit — indicating the pension fund has held the stocks long enough to be considered a long-term investor. Like other individual holdings, this is a small portion of the fund’s $154 billion portfolio, which includes hundreds of investments. The pension fund is also invested in Sturm & Ruger Co., Vista Outdoor Inc. and Olin Corp., which make firearms or ammunition.
“I am sure that most of Florida’s public school employees are as sickened as I am to learn that the state has invested some of our pension fund holdings in the maker of the AR-15,” said association president Joanne McCall. “Surely there are better places for the state to invest its public employee retirement money than in companies that make products that harm our children.”
The stakes in the weapons makers, like those of other equities, each represent only a sliver of the multibillion dollar state retirement systems’ investments, according to a Bloomberg analysis. But the holdings have already become a hot-button issue in Florida, where the high school massacre has prompted educators and students to pressure public officials to prevent more school attacks.
McCall stressed that the teachers’ union is unable to divest from firearms industry stocks, or any others in their portfolio, on its own. “Unlike many states, the power to invest retirement funds belongs to political office holders,” she added.
The fund is managed by Governor Rick Scott and members of his cabinet. The Republican-controlled Florida legislature could also pass a bill calling for divestment. In 2016, legislation was passed to prevent state pension funds from being invested in companies that boycott Israel.
Scott, Florida Chief Financial Officer Jimmy Patronis and Attorney General Pam Bondi, all Republicans, didn’t immediately return requests for comment on the demand by teachers. On Tuesday, a spokeswoman for Scott said he has no role in individual investment decisions by the pension plan.
That same day, John Kuczwanski, a spokesman for the State Board of Administration, which administers the fund, said while “the SBA must act solely in the interest of the participants and beneficiaries,” that “as primarily passive investors, we essentially own the entire market.”
Teachers have moved to divest from firearms in the past. Following the Sandy Hook Elementary School shooting in Connecticut in 2012, where 20 children and 6 adults were gunned down, California’s teachers’ union, CalSTRS and the California Public Employees’ Retirement System sold off their stakes in Sturm Ruger and Smith & Wesson.
“Given the recent events in Florida, it would certainly not surprise me to see other state funds divest their investment holdings in the industry,” Rommel Dionisio, managing director of equity research at Aegis Capital Corp., said. “However, given there are so many other sources of investment capital available in the global financial markets, I have not seen meaningful long-term impact on the valuations of companies in the firearms industry from such divestment actions in the past.”