The Los Angeles School Board voted Monday to withdraw district investments from companies that have ties to South Africa.
The board targeted companies that are cited by a Washington-based securities research firm as doing business with South Africa. School district funds will also be withdrawn from firms that sell Krugerrands and from financial institutions that make loans to the South African government.
The district has about $200 million in funds available for investment.
Additionally, under the new board policy, the district will withdraw all investments in financial institutions that make loans to corporations with South African business connections in the next budget year.
“I think it behooves an educational institution not to profit on human misery,” said board member Jackie Goldberg, one of the authors of the proposal that denounced the strict racial segregation policies of the South African government.
“Use of school funds should be consistent with the principles and goals of this school district,” co-author Alan Gershman added. “I don’t think anyone could say that the actions of the South African government are consistent with the principles and goals of this school district.”
Five board members voted in favor of the proposal. Roberta Weintraub, a conservative who represents the East San Fernando Valley, abstained from voting. David Armor, another Valley conservative, was absent from the meeting.
Weintraub said she could not vote in favor of the motion because the county counsel has yet to rule on the personal responsibility of public officials in the event divestiture investment policies lose money or produce lower profits than traditional investment strategies.
“I can’t jeopardize my personal life if I can’t get some assurance that we won’t be held personally responsible,” Weintraub explained. “If it was just me, it would be one thing. But it’s not just me.”
The district deposits its money into the county treasury. The funds are invested for the district by the county treasurer until the district needs them to meet its obligations, Robert Booker, district controller, said.
To implement its new policy, the board has asked the treasurer to separate district money from the county investment pool so that school funds can be placed with so-called South Africa-free companies.
The separate pool could be used by other school districts and public agencies that might wish to follow the district’s divestiture policy.
Richard Dixon, county treasurer, said an alternative pool could be established and estimated that it would cost $50,000 a year to administer it. The cost would be split among all agencies that wanted their funds separated from the main county investment pool.
The agencies would also have to comply with one definition of a “South Africa-free investment.” To Dixon, this means not owning any stocks or bonds of companies that appear on the list issued by the Investor Responsibility Research Center of Washington.
Before he starts another investment pool, Dixon said, he wants the county counsel to determine if a separate pool is legal. In addition, he has asked the Board of Supervisors to approve the South Africa-free investment pool concept.