California’s two biggest public pension funds are sitting on more than $2.7 billion in investments tied to federal immigration enforcement, and the money trail is kicking up serious dust in Sacramento. A sizable slice is parked in surveillance and defense firms, including a hefty combined stake in Palantir, that critics say plug directly into deportation machinery. The portfolio choices are now at the center of a growing fight over whether the state’s loudly advertised values line up with how it grows retirement checks.
Stand.earth report tallies billions in ICE-linked firms
Advocacy group Stand.earth found that the California State Teachers’ Retirement System (CalSTRS) and CalPERS together hold more than $2.7 billion in companies that contract with Immigration and Customs Enforcement or the Department of Homeland Security, according to Stand.earth. The analysis highlights positions in Palantir alongside weapons and telecom contractors such as General Dynamics, L3Harris, AT&T and CACI. Stand.earth also flags lending and financing ties between major U.S. banks and many of the same companies.
Palantir tops the list of controversial holdings
The single biggest holdings are in Palantir. CalPERS has about $734 million in the data analytics company, while CalSTRS holds roughly $625 million, based on institutional filings reported by the Los Angeles Times. The analysis relied on quarterly U.S. Securities and Exchange Commission disclosures through December 2025. For critics, that concentration in a firm that sells government surveillance tools is the clearest collision point between California’s sanctuary posture and how public retirement money is deployed.
Federal contracts tie software to deportation work
Palantir’s federal footprint helps explain the blowback. WIRED detailed a blanket Department of Homeland Security purchasing agreement that could total $1 billion and documented a nearly $30 million contract to build an immigration-tracking system. WIRED reported that the purchasing vehicle streamlines how DHS agencies buy Palantir software, including tools used by ICE and Customs and Border Protection. On the pension side of the ledger, CalPERS manages roughly half a trillion dollars in assets and recently reported a preliminary 11.6% return for the 2024–25 fiscal year, according to CalPERS, which stresses that protecting members’ benefits is its core duty.
Teachers and lawmakers demand pension answers
Teacher activists who have been urging CalSTRS to exit surveillance and weapons firms say these bets clash with what they teach in the classroom and with California’s sanctuary stance. As the Los Angeles Times reported, Assemblymember Lena Gonzalez called the holdings “extremely concerning” and pressed for more transparency and accountability from the funds. The Times also pointed to Stand.earth’s finding that banks have provided billions of dollars in financing to many of the same contractors. Campaigners with CalSTRS Divest argue the boards should spell out stronger ethical guardrails and commit to quicker timelines for engagement or divestment.
What comes next
Trustees at CalPERS and CalSTRS are again juggling a familiar tension. Officials say their fiduciary responsibility is to secure retiree benefits, while activists insist that moral and community impacts must carry more weight in investment policy. Both funds publicly emphasize environmental, social and governance criteria and long-term risk management as part of how they vet holdings, according to CalSTRS. Expect activists to pack upcoming board meetings and lawmakers to float new disclosure rules or policy changes aimed at bringing public portfolios closer in line with California’s stated values.
