As portfolio manager of AllianceBernstein’s municipal impact strategy, we will not be participating in Chicago Public School’s $550 million issue of municipal bonds pricing this week.
Our impact philosophy focuses solely on investing in historically under-resourced and excluded communities helping to directly reduce disparities in the built environment between those that “have” and those that “have not.”
In 2017 and the beginning of 2018, we had invested in CPS and were proud to do so. Over 60% of enrollment qualified for free and reduced-price meals and 90% were Black, Indigenous, People of Color (BIPOC) and graduation rates were on a definitive upward trajectory.
In mid-2018 an expose entitled “Betrayed” was published by the Chicago Tribune chronicling years of systemic physical and sexual assault throughout Chicago Public Schools. Given our foundation in impact investing principles and the material financial risk posed by lax safety precautions, we could not justify maintaining our position in a system that showed an inability and seeming lack of urgency in protecting students from sexual harassment and abuse.
It was abundantly clear, that CPS did not have the vetting, reporting, administrative, and operational guardrails in place to keep children safe. Our impact strategy divested of its holdings.
Unfortunately, steps taken immediately following the story failed to improve the safety of children. In September 2019, the Tribune reported: “Chicago Public Schools entered into a legally binding agreement with the U.S. Department of Education’s Office for Civil Rights and pledged extensive reforms in its handling of abuse and assault cases.”
In fact, according to Assistant Secretary of Civil Right, Kenneth Marcus, “This is an extraordinary and appalling case. It is one of the worst that we have seen in the elementary, secondary school context,” the paper quoted him at the time.
COVID-19 and stay-at-home orders have exacerbated the threat of harm to kids. According to Amanda Kubista-Owen, a social worker at the Mayo Clinic, "People that were experiencing abuse previous to COVID-19 now it seems like those situations have increased and become more dangerous. We're seeing that not only with domestic violence, but childhood sexual assault ….”
As CPS prepares to open, it is critical that measures that contribute to the safety and security of children be solidly in place.
We have established a specific inquiry around the detection, protection, and advocacy of children in youth serving organizations. And we expect each issuer to address that inquiry before we agree to participate in any bond offering.
Education is a cornerstone of municipal finance and its positive contribution to society is obvious and sacrosanct. However, we, as investors and members of the community, must demand that children learn in environments that are physically and emotionally safe. That schools have policies in place and enforcement of those same policies that protect children from harm. Our municipal impact strategy will continue to refrain from investing in school districts that are not actively, urgently and aggressively acting to identify and thwart violence against students.
