Want to get attention? Threaten a lawsuit.
The California Public Employees' Retirement System last week barely avoided one after a last-minute compromise with the state engineers union over a new and controversial investment policy.
The Professional Engineers in California Government were ticked that the $234 billion fund wants to put money into things like highways and bridges that could be designed by private engineers instead of their folks.
CalPERS lost big in the stock market last year and sees public-private partnerships, or "PPPs," as a new way to make a few bucks. It wants to put about 3 percent of its assets into those kinds of investments, about $7 billion based on the fund's value right now.
Last week the engineers threatened to sue CalPERS for failing its legal duty to act solely in the interest of fund members. It threw out the "O" word: outsourcing. It reasoned that putting money into public-private infrastructure projects would be like shipping state engineering jobs to China, just closer to home.
"CalPERS shouldn't use its members' retirement contributions against them," said Bruce Blanning, the union's executive director.
That argument didn't square with the American Council of Engineering Companies of California which represents 1,200 private firms doing $3 billion to $5 billion of business each year in the state.
"Like (state engineers) have some kind of inalienable right to expect all of these jobs without having to earn that right as engineers and land surveyors in the private sector do every day," council Executive Director Paul Meyer said in an e-mail to the State Worker blog.
California needs to spend at least $500 billion on its roads, bridges and other infrastructure. The union and the engineers council may tussle over whether using public or private employees would be cheaper, but no one denies there's plenty to do.
So CalPERS and the state engineers made a deal: The fund can invest in PPPs but the projects can't do more than nick public jobs. Agreement in hand, the union last Thursday withdrew its lawsuit threat. On Monday, CalPERS' board added PPPs to its investment list.
By now you're probably hollering, "There go the unions again! Protecting their own!"
True enough, but that's what unions do. The greater sin lies with CalPERS. A spokeswoman called the deal "hopefully, a win-win," but the fund has now pitted the job interest of 13,000 state engineers against the investment interest of the 1.5 million members and their families who get CalPERS benefits.
The deal also adds more expense to those investments, says pension fund expert Susan Mangiero, because they'll have to be scrutinized for their impact on public jobs. And CalPERS could still end up in court. Blanning said the engineering council is thinking about its own lawsuit.
That, no doubt, will get CalPERS' attention.
Call The Bee's Jon Ortiz, (916) 321-1043. Read his blog, The State Worker, at www.sacbee.com/blogs.
About Comments
Reader comments on Sacbee.com are the opinions of the writer, not The Sacramento Bee. If you see an objectionable comment, click the "report abuse" button below it. We will delete comments containing inappropriate links, obscenities, hate speech, and personal attacks. Flagrant or repeat violators will be banned. See more about comments here.