CalPERS, an organization that once unapologetically promoted higher public pension benefits, is evolving.
After decades of high- flying investment returns and the will to use the political clout that went with being the nation's largest public pension fund, Cal-PERS' rhetoric has come back to earth a bit.
The latest evidence of a more ... humble? ... CalPERS surfaced last week. After the fund's board listened to an analysis of a pension overhaul measure now on Gov. Jerry Brown's desk, CEO Anne Stausboll issued a statement:
"The long, arduous and often contentious journey of public pension reform reached a major milestone today," Stausboll said, adding that the measure "moves us forward to having a stronger and more affordable retirement system."
It was an admission that pensions must change. CalPERS used to deny it. In fact, 13 years ago the fund promoted legislation that hiked the very benefits that the new law will roll back for future employees.
In 1999, the fund's asset portfolio was flush, its confidence in its investing acumen high. So when a bill to boost retirement benefits surfaced, CalPERS published a brochure with a promise: "NO INCREASE OVER CURRENT EMPLOYER CONTRIBUTIONS IS NEEDED FOR THESE BENEFIT IMPROVEMENTS."
Lawmakers overwhelmingly passed Senate Bill 400 with only seven no votes.
For a while CalPERS was so prosperous that it let employers skip payments some years.
Then the 2008 market crash revealed that even CalPERS can't defy gravity. It logged multibillion-dollar losses and, even after a nearly 21 percent gain two years ago, lowered its investment assumptions and hiked what employers and by extension, taxpayers have to pay to cover those promised benefits.
CalPERS also suffered through an embarrassing influence-peddling scandal and a multimillion-dollar computer system debacle. To its credit, CalPERS commissioned the report that exposed the scandal. It's still cleaning up the IT mess.
All of that tarnished CalPERS' image and sparked change. The fund now publishes online cost reports for employers all 3,000 of them. It's reworking its investments. It posts travel costs and economic interest statements filed by fund leaders and investment staff.
CalPERS still has its critics, including Joe Nation, a Stanford public policy professor who thinks the pension fund's investment assumptions are far too optimistic. The former Democratic state lawmaker's studies have been invoked by ardent pension reformers, including former Gov. Arnold Schwarzenegger.
CalPERS has lambasted his work, but last month Nation was a panelist at a pension forum the fund hosted.
He thanked officials for inviting him, "and for trying to build a big tent here because, frankly, that hasn't happened in the past."
Editor's Note: This column has been updated from print and online versions to correct the reference to the CalPERS computer debacle from "multibillion" to "multimillion." Corrected at 9:37 a.m. on Sept. 6, 2012.