ALBANY, N.Y. - From California to New York, teacher and public-worker retirement funds are reconsidering their investments in gun makers and confronting an uncomfortable fact: Their pensions have supported the manufacture of deadly weapons, in some cases the same type of gun used in the Connecticut school shooting.
For years, the gun industry has been a reliable investment, attracting tens of millions of dollars from some of the nation's largest retirement funds. The firearms business has been strong, driven by relaxed laws for carrying concealed handguns and by buyers who feared that tighter gun restrictions were more likely under President Obama.
But after the bloodbath in Connecticut, the practice is under review in at least four states, including two of the most populous, California and New York.
In this Oct. 19, 2011 file photo, State Treasurer Bill Lockyer testifies before a joint committee legislative hearing at the Capitol in Sacramento, Calif. Lockyer on Tuesday, asked The California State Teachers' Retirement System and the California Public Employees' Retirement System, at a minimum, divest from any companies that manufacture guns that are illegal in the state. Lockyer, a Democrat, is a member of both pension boards and has a say in the funds' investment strategy.
Although the amount of money involved is relatively small compared with the size of the pension funds, it has raised questions about the social responsibilities of huge retirement systems that invest on behalf of millions of American workers.
"It's a bad investment to put money behind companies that put military-grade weapons on our streets and refuse to take responsibility for the outcome," said New York City Public Advocate Bill de Blasio. "We should not be giving capital to an industry that is responsible for the deaths of thousands of Americans each year ... it's our moral responsibility."
New York state Comptroller Thomas DiNapoli, who has sometimes wielded the state's $150.1 billion pension fund as a tool for change, is now reviewing nearly $12 million invested in firearms companies, which have seen their stocks plummet since the attack.
If they decide to dump the investments, the process is more complicated than merely liquidating stocks. Fund managers are required by law to invest in profitable companies, often without specific power to consider social or ethical concerns.
The California State Teachers' Retirement System announced Tuesday that it would review investments in the national and international firearms business.
That system had invested $600 million in the private equity firm Cerberus Capital Management, which on the same day put up for sale the gun maker known as Freedom Group International, manufacturer of the Bushmaster AR-15 military-style rifle, the weapon Adam Lanza used to kill 26 people at Sandy Hook Elementary School in Newtown, Conn.
The California retirement fund also owns shares of Sturm, Ruger & Co. and Smith & Wesson Holding Corp., two publicly traded gun manufacturers. Neither company responded to requests for comment Wednesday.
The New York State Teachers' Retirement System holds nearly $3.4 million in Sturm Ruger & Co. and nearly $3 million in Olin Corp, which manufacturers Winchester arms. That's out of total assets worth $38.1 billion. A spokesman for the teachers' fund said the investment is "passive" and included in an index of funds.
Other gun makers, such as Sig Sauer and Colt, are privately held and even though regular investors generally can't invest in private companies, pension funds often do.
In Pennsylvania, the teachers' pension fund reacted quickly, contacting Cerberus about the Freedom Group even before the equity firm announced it was selling the gun maker.