Happily, a Stroke of Sanity in California
[guest post by JVW]
I saw an interesting little tidbit over at the good ol’ Dog Trainer from a story that was actually published last week:
The president of the board of administration of CalPERS, the state’s largest public employee pension fund, lost her bid for reelection to a Corona police officer, the agency announced Thursday after tallying votes from members cast over the last two months.
Priya Mathur, who has served on the board of the California Public Employees’ Retirement System since 2003, will be replaced by Jason Perez, a police sergeant who serves as president of the Corona Police Officers Assn. Mathur was selected in January as president of the CalPERS board, and her defeat marks the second shake-up of the pension fund’s leadership in less than a year.
Perez focused his campaign squarely on Mathur’s record representing public agency workers and on what he argues is a record by the pension fund of being overly focused on the political implications of its investments.
“In the past, it’s been used more as a political action committee than a retirement fund,” Perez said in an interview Thursday. “I think the public agency [employees] are just sick of the shenanigans.”
CalPERS for some time has been run as yet another adjunct of left-wing Democrat policy, using its huge investment powers (valued at almost $357 billion) to reward allies while shunning those who are not riding in first class aboard the social justice train. In past years the organization’s board — which consists of six members elected by CalPERS members, four ex officio members drawn from the fetid state bureaucracy, and three members appointed by the governor (two) and legislative leaders (one) — has decided to meddle in corporate governance and foreign policy, which is certainly their prerogative. But when given a foot, progressives demand a yard, and it was only a matter of time before the wokedy-wokest activists started pushing for a ban on investments in fossil fuels and other bugaboos of the activist left, most notably guns.
And that’s what pressed Sgt. Perez to run and cast out Ms. Mathur. According to the Dog Trainer:
Perez focused his campaign squarely on Mathur’s record representing public agency workers and on what he argues is a record by the pension fund of being overly focused on the political implications of its investments.
“In the past, it’s been used more as a political action committee than a retirement fund,” Perez said in an interview Thursday. “I think the public agency [employees] are just sick of the shenanigans.”
As such, Perez could bring a decidedly different approach to the pension governance board. In March, he lashed out at state Treasurer John Chiang, who sits on the CalPERS board, during a debate over whether the fund should embrace Chiang’s request to divest from certain gun retailers.
“This is nothing more than a political ploy,” Perez said during public comment. “It has nothing to do with CalPERS and its fiduciary responsibility to invest, to maximize returns.”
The board ultimately declined to accept Chiang’s proposal.
In a state like California where virtue signaling is as ubiquitous as air kisses and bro-hugs, this is pretty significant. A public board that skews heavily to the left has decided that they aren’t willing to endanger their own financial well-being in order to placate the capricious political posturing of the haut monde of the Golden State. Score one, but only one, for sensibility. It’s nice to win one every once in a while here in the Avocado Republic.
– JVW
CalPERS requires something like 8% annual return on its investments just to be able to handle the promised pension payments, so they don’t have a lot of latitude to forego a logical investment just because it doesn’t meet with their social justice agenda.
JVW (42615e) — 10/11/2018 @ 12:34 pmCalPERS used to be considered the gold standard for responsible institutional money-managers — responsible as viewed by its beneficiaries, meaning focused on prudence in service of long-term stability and return on investment.
Maintaining that ROI over many years is a hard enough task on its own. If you start trying to serve other constituencies, your actual beneficiaries are going to suffer for it.
Beldar (fa637a) — 10/11/2018 @ 12:46 pmI encourage Sgt. Perez to steal freely from The Princess Bride in speaking to Mr. Chiang: “‘Fiduciary’ — you keep saying that word. I do not think that word means what you think it means.”
Beldar (fa637a) — 10/11/2018 @ 12:49 pmThis nexus of government and pension/financial management is kind of troubling. For instance, if California Dems are discussing more subsidies for so-called “green” companies, CalPERS would be wise to invest in those companies since they are getting propped up by the taxpayer. And that opens up a whole lot of conflicts of interest, including bailouts for failing companies with heavy CalPERS investment and other favor-trading that can be done very quietly and without a lot lot of formal coordination that would attract public notice.
JVW (42615e) — 10/11/2018 @ 12:56 pmNever would’ve thought it possible here in Cali… a state where wrong is right, bad is good, etc….
Colonel Haiku (1fcc64) — 10/11/2018 @ 12:57 pmOT: nk, I left you a comment regarding oboes on the post where you confessed to an interest therein, in case you’re no longer following those comments.
Beldar (fa637a) — 10/11/2018 @ 1:01 pmSo we should expect CalPERS to push the whole stack in on Tesla? “That Musk is a son-of-a-b!tch but he’s our son-of-a-b!tch”?
Beldar (fa637a) — 10/11/2018 @ 1:03 pmCalPERS’ funds under management: $352.81B
Tesla market capitalization: $43.14B
So it would only be about 12% of their total stack of chips. They should go for it! If they take Tesla private, they can put Musk back in as CEO.
Beldar (fa637a) — 10/11/2018 @ 1:07 pmOn the other hand, CalPERS very recently voted its ~$64M in Tesla shares “‘against’ the incentive compensation proposal for Elon Musk over concerns with magnitude of pay and dilution.” So maybe they’re not big chums with Elon. Times are hard for him right now, pobrecito.
Beldar (fa637a) — 10/11/2018 @ 1:14 pmThis nexus of government and pension/financial management is kind of troubling.
GE had that tiger by the tail for a long time and now it has the market cap of Anna’s Linens (where fashion meets affordable)
happyfeet (28a91b) — 10/11/2018 @ 1:15 pm“…has decided to meddle in corporate governance and foreign policy, which is certainly their prerogative.”
Actually, I think they don’t have that option. Their only mandate is to serve the interests of their members.
Mike S (89ec89) — 10/11/2018 @ 1:20 pmThe fallacies of expected returns by the State of California dna other governmental entities who belong to CALPERS is the bigger scandal. It is repeated throughout governance in the USA.
Each government much estimate a level of asset returns to calculate the contribution it must make to fully fund their defined-benefit pension obligations. CALPERS contributions were wildly optimistic, saving the various pols from even more difficult choices in budgeting, and also screwing over countless employees.
One unspoken, and all-too real scheme of many governments, is to fail to make pension payments at all. It’s just marked down as a debt obligation to be made up at some future date. They never are. Under a quarterly defined-contribution plan, the cash simply has to be paid as we go. Pensioners would no longer be subject to the vagaries and whims of politicians.
If I were running for a legislative position, I would have a two-prong retirement plank and I would emphasize the heck out of it. 1) No more defined-benefit pensions. All employees would receive quarterly contributions to some type of IRA or 501 plan. 2) Under no circumstance shall the federal government nor its pension guarantee agency assume ANY state nor local pension obligations, not any part thereof.
This pension debt bomb is going to crush us.
Ed from SFV (6d42fa) — 10/11/2018 @ 2:39 pmIf I were running for a legislative position, I would have a two-prong retirement plank and I would emphasize the heck out of it. 1) No more defined-benefit pensions. All employees would receive quarterly contributions to some type of IRA or 501 plan. 2) Under no circumstance shall the federal government nor its pension guarantee agency assume ANY state nor local pension obligations, not any part thereof.
I agree heartily with both. And if I were President I would have fired a shot across the bow of the state of Illinois (and others, though I think Illinois is in the worst shape) and let them know that the federal government will indeed let them slide into bankruptcy and that the price of digging out of it is going to be very painful to all parties concerned, including stripping the state of self-governance for a significant period of time.
JVW (42615e) — 10/11/2018 @ 3:01 pmI know: We’ll call it “Re-Reconstruction”!
Beldar (fa637a) — 10/11/2018 @ 3:03 pm(And I completely agree with you, JVW!)
Beldar (fa637a) — 10/11/2018 @ 3:03 pmAnd with Ed. (I’m reading up, which I shouldn’t do, because it leads to string comments. Apologies.)
Beldar (fa637a) — 10/11/2018 @ 3:04 pmSo…nobody thought to name the fund “CaliPERS”?
tmm (3d89bc) — 10/11/2018 @ 7:16 pmSounds more like CalPurse.
Soronel Haetir (86a46e) — 10/11/2018 @ 8:07 pmActually I don’t make comments on every posts I visit. But I found this is something really interesting one. Thank you so much for sharing here. This is such a sweet blog! I found it while surfing around on Yahoo News. Do you have any suggestions on how to get listed in Yahoo News? I’ve been trying for a while but I never seem to get there! Appreciate it! Keep up the good work to get enough readers for your blog. [Spammy URL stripped from comment. – JVW]
annabailey (62dfb1) — 10/12/2018 @ 2:16 am@ annabailey (#20): Aww, how sweet! But I’ll bet you say that to
all your friendsall the blogs where you post generic spam with bogus links.(If, as I hope, our host or his co-bloggers/moderators agree that #20 is spam and choose therefore to delete it, they are welcome to delete this comment too, as it will no longer make sense.)
[Thanks Beldar. I’m leaving her comment up, but I stripped the URL from it. – JVW]
Beldar (fa637a) — 10/12/2018 @ 2:31 amStill, the structure has the politicians controlling the board 7-6.
Kevin M (d6cbf1) — 10/12/2018 @ 9:04 am