PersWatch

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Watch the Board

"The members of the retirement board of a public pension or retirement system shall discharge their duties with respect to the system solely in the interest of, and for the exclusive purposes of providing benefits to, participants and their beneficiaries, minimizing employer contributions thereto, and defraying reasonable expenses of administering the system. A retirement board's duty to its participants and their beneficiaries shall take precedence over any other duty." (California Constitution, Article XVI, section 17(b))

Take Action Now in August 2008!

CalPERS amendments to AB 2940 (De Leon bill to have CalPERS administer private sector IRAs) put the System at risk. The bill not only contains a permanent exemption from the Administrative Procedure Act, which removes our ability to influence rulemaking, but also contains a permanent exemption from competitive bidding. We cannot support the permanent sacrifice of good governance for political expediency... even for such a good cause.

One scandal involving a CalPERS board member accepting campaign contributions or gifts from a sole-source contractor could renew the attempts to dismantle CalPERS. Please e-mail Andrea Ambriz (Andrea.Ambriz@asm.ca.gov) in Assemblymember De Leon's office and Maureen Ortiz (Maureen.Ortiz@sen.ca.gov), staff assigned in Appropriations by Senator Torlakson to analyze the bill. My discussions with the author's staff lead me to believe he is willing to make amendments if CalPERS Board asks for them.

Copy the directly elected CalPERS board members: rob_feckner@calpers.ca.gov, Priya_Mathur@CalPERS.CA.GOV, bbillions@webtv.net, kuratojean@sbcglobal.net, George_Diehr@CalPERS.CA.GOV and henry_Jones@calpers.ca.gov. They need to know of our concerns.

Suggested e-mail: Don't sacrifice good governance. Don't put our pension system at risk. Please amend the bill to provide only temporary exemptions to contracting and rulemaking laws. See attached letter from PERSWatch. (Download a copy of the PERSWatch letter to your computer and then attach it to your e-mail.)

CalPERS Board members are required to minimize employer contributions but the Board's highest duty is to its participants and beneficiearies. The PersWatch coalition works to improve the benefits of CalPERS members...better health insurance at lower cost; increased retirement formulas; and improved services.

PersWatch will use the Internet to keep members up to date on the issues and to actively lobby other Board members for improvements. Please join our efforts by adding your name to our growing mailing list. We'll ask you to help develop position papers, campaign and once elected we'll send you 3-4 form e-mails a year on the most fundamental issues at CalPERS.

By spending a total of approximately 40 minutes each year working on CalPERS issues, you can help ensure the Board works in your best interests. The recent increase in retirement benefits demonstrates that involvement by members adds value and results in positive change. There are still many more areas which need further improvement.

CalPERS, the nation's largest public pension fund with an investment portfolio of $250 billion, is credited with creating a revolution in corporate governance by making the CEOs and boards of corporations more accountable to their shareholders. Yet, the CalPERS Board tried to adopt regulations sharply limiting disclosures to members in future elections. A Sacramento Bee editorial called the policy self-serving, anti-democratic, chilling and wrong, warning that they "risk creation of a permanent board: unaccountable, untouchable and isolated from the people who elect it." (see CalPERS muzzles critics: Ballot rules protect board, keep others in the dark, Sacramento Bee editorial, 5/24/99 )

With the help of union and CalPERS activists, we were able to defeat this draconian measure and instead won real reforms, like more informative candidate statements and a runoff process so that no candidate would ever hold office again by winning less than 6% of the vote. More recently, PERSWatch.net has been working to avoid the need for a runoff in future elections by instituting "Instant Runoff Voting," which would allow voters to rank candidates in order of preference. This could save CalPERS up to $1 million dollars by avoiding the costs of a second election.

Examples of issues raised by the PersWatch coalition:

Stop the Board's illegal activities. Partial Victory.
The California Supreme Court upheld a ruling that CalPERS violated several laws in raising the pay of board members and affirmed that CalPERS rules must be promulgated through the legally required process specified in the Administrative Procedure Act. The Board continues to need reminding that it must follow the law.
Abolish mandatory Tier 2. Who can live on $650/month? VICTORY!
Give backs. Remember the $1 billion lawsuit? The Board essentially returned it, by reducing employer contributions based on the assumption that state employee wages would grow by 3.75%, even when private sector wages were growing at rate of 4.9%. We will continue to fight for gain sharing, never give backs.
Board approved a $100 million closed session deal which provided a $750,000 "placement fee" to former Board member, Al Villalobos. The deal was structured so that Hicks Muse (a partnership) could profit by $40 million a year, even if CalPERS loses money. PersWatch editor, Jim McRitchie, got the closed door minutes released. He testified before the Board and State Senate, calling for stronger laws and regulations. VICTORY!
For years members of the Board accepted gifts, such as entertainment, travel, and dinners from those doing business with CalPERS. The Sacramento Bee, L.A. Times, and Pensions&Investments joined PersWatch in calling for measures to end apparent conflicts of interest on the CalPERS Board. The Board passed window dressing rules to require further reporting. Jim McRitchie's efforts led to a determination by OAL that the rules had been adopted illegally. Unfortunately, rather than legally adopting reporting rules or prohibitions, the Board chose to revert to state law, which they interpret as allowing the flood of gifts to continue. PERSWatch will continue to fight to make gifts from contractors illegal. CalSTRS adopted fairly stringent rules. So should CalPERS.
Election fraud. During the 1998 election, an incumbent was given the opportunity to submit a new candidate statement in order to specifically respond to McRitchie's statement. The protest panel, appointed by the CalPERS attorney who allowed the election rule violations in the first place, found that although her decision was "ill-advised," the "technical violation" was "unlikely to be deemed significant by more than a handful of voters, even assuming candidate statements were widely read." We fought for reforms to make elections fair and in late 2000 the Board finally relented. A new election process was to be used starting in 2002. There was to be a runoff if no candidate wins a majority of the vote (no more 5.5% winners). PARTIAL VICTORY!

PERSWatch will work to:

Put Members First!!
Keep CalPERS financially sound
Lower insurance premiums and the cost of health care
Improve benefits, services and delivery
Institute gain-sharing of surpluses for active members and retirees
Reduce expensive contracting out
Increase COLAs and pension protection funding
Enhance health benefits by lowering the cost to members and including alternative medicine
Ban contractor gifts and campaign contributions to board members
Move dental, Savings Plus and other programs from DPA to CalPERS
Institute ombudsperson to help members work though red tape and to review improprieties
Provide an initiative process so that members can enact policies when the Board refuses to act
Make CalPERS internet site interactive so that members can express their concerns to each other as well as the Board and staff.

Let's discuss the issues. E-mail jm@perswatch.net.

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