California’s Sanctuary Status Clashes With Billions in ICE Contractor Investments

California positions itself as a sanctuary state, limiting cooperation with federal immigration enforcement to protect its residents. However, a recent analysis reveals a stark contradiction: the state’s two largest public pension funds have funneled more than $2.7 billion into companies that contract with Immigration and Customs Enforcement (ICE) and the Department of Homeland Security (DHS).

The Financial Breakdown: CalPERS and CalSTRS

The analysis, conducted by the nonprofit research group Stand.earth, highlights a significant disconnect between the state’s public policy and its financial portfolio. The two megafunds involved are CalPERS, the statewide fund for public employees, and CalSTRS, which manages pensions for public school teachers.

According to data drawn from U.S. Securities and Exchange Commission filings as of December 2025, CalPERS has invested $1.6 billion and CalSTRS has invested $1.1 billion in firms collaborating with federal immigration agencies.

Major Contractors and the Role of AI

The investments aren’t spread evenly across the sector; they are concentrated in a handful of tech, defense, and telecommunications giants. The most prominent recipient is the tech firm Palantir, which provides AI-powered systems used to track individuals for deportation. Palantir recently renewed a contract with the Department of Homeland Security valued at $1 billion.

The specific investment figures for Palantir are:

• CalPERS: $734 million
• CalSTRS: $625 million

Beyond Palantir, the pension funds have invested in weapons manufacturers General Dynamics and L3Harris, as well as telecommunications companies AT&T and CACI.

The Ethical Conflict: Sanctuary Values vs. Financial Gain

The findings have sparked outrage among activists and public employees. Richard Brooks, who leads financial sector research at Stand.earth, argues that there’s an egregious contradiction when teachers in a sanctuary state witness the government breaking up students’ families while their own retirement funds grow from the exceptionally companies enabling those actions.

Brooks emphasizes that there should be a direct alignment between where public money is invested and the values embraced by the people of California, stating that it’s troubling for pension funds to “turn a blind eye” to the reality of how these savings are used.

The Official Response

When questioned about these investments, CalPERS has maintained a guarded stance. James Scully, a spokesman for CalPERS, noted that the fund typically doesn’t comment on specific investments. However, he stated that the fund does take environmental, social, and governance (ESG) issues into account, adding, “When an issue arises, we look at it, gather the facts, and seek solutions.”

Summary of Investments by Fund

As scrutiny grows, the pressure on California’s largest pension funds to reconcile their investment strategies with the state’s sanctuary policies is likely to increase, potentially leading to a shift in how ESG criteria are applied to immigration enforcement contractors.