Kizer Asks Universities, Pension Funds to Sell Off Tobacco Stock

State Health Director Kenneth W. Kizer has asked California’s universities and major pension funds to sell off stock in tobacco companies, becoming the first state health official in the country to publicly advocate divestiture.

The move is seen as an attempt by Kizer to widen the state’s ambitious anti-smoking campaign by increasing the financial pressure on cigarette makers.

Kizer’s stance was hailed Wednesday by anti-smoking activists nationally. But others questioned whether getting rid of tobacco investments would have any influence on the numbers of Americans who smoke.

Kizer could not be reached for comment Wednesday. But in letters to the Public Employees’ Retirement System and the State Teachers’ Retirement System, Kizer wrote that he finds it “somewhat ironic” that in the midst of the largest anti-smoking effort in the state’s history, these retirement plans have $525 million invested in companies that produce harmful tobacco products.

Kizer also wrote to the University of California, Stanford University and USC. Their collective holdings of tobacco stocks are relatively small, about $21 million, according to officials from the universities.

The state’s anti-smoking campaign is a $150-million effort to alert Californians to the health consequences of smoking and discourage tobacco use. The money comes from the Proposition 99 state tax on tobacco products, approved by voters in 1988.

The U.S. Centers for Disease Control (CDC) attributes one out of every six deaths in the United States to smoking-related diseases. Other estimates put the number of smokers in the United States at 55 million.

Kizer asked the universities and retirement funds to “carefully consider whether continued investment in (tobacco) companies is consistent with other state policies discouraging the use of tobacco products.”

He concluded his letters by encouraging the institutions to “divest . . . tobacco company investments in the interest of promoting the health of California.”

Spokesmen for Stanford, the UC system and USC said they were reviewing Kizer’s letter. Stanford and USC plan to bring the proposal up for discussion by their investment committees later this year.

A UC official, however, disputed Kizer’s assertion that the university’s $16-billion retirement and pension fund has “sizable” holdings in tobacco companies. Spokesman Rick Malespina said the university holds $50 million worth of bonds from the Philip Morris Cos.--the makers of Marlboro, Virginia Slims and other cigarette brands--but owns no tobacco company stock.

Harvard University and the City University of New York were the first educational institutions in the country to sell off tobacco investments as a statement against smoking, according to the Boston-based Tobacco Divestiture Project. Project director Brad Krevor said Wednesday that Kizer’s action is a major boost to what he described as a growing national movement. In particular, Krevor saluted Kizer’s targeting of the state pension systems, since such funds nationally have enormous economic clout.

California’s State Teachers’ Retirement System, for example, holds $222.5 million in Philip Morris stock, giving it a major shareholder position in the company. At $30 billion, it is also the largest teachers retirement fund in the country.

But James D. Mosman, chief executive officer of the fund, said he is not sure its managers will go along with Kizer’s wishes. The only time it has responded to a divestiture request is when the California Legislature ordered it to sell off holdings in companies doing business within South Africa--a protest against that country’s racist apartheid laws.

“If we sell, someone else just buys the stock so all it does is shift ownership from one part of the economy to another,” Mosman said. “In general, we think we can better serve the public interest by watching the management of these companies and commenting (on issues such as cigarette sales) when we feel it necessary.”

Philip Morris had profits of $3.5 billion in 1990, up 20% from the year before. A spokesman for the company was not available for comment Wednesday, but company Vice President George Knox has been quoted as saying: “I wish them luck in finding investments that have been as good as ours.”

Several prominent public health experts, however, were in Kizer’s corner.

Ronald Davis, director of the U.S. Centers for Disease Control’s office on smoking and health, said Kizer was to be commended.

Dr. Lester Breslow, a professor of public health at UCLA who held Kizer’s job in the mid-1960s, said he strongly supports the divestiture idea.

“America has plenty of companies in which to invest without participating in the nation’s largest and most devastating drug enterprise--nicotine addiction,” Breslow said.