Looked at one way, the current CalPERS board election is a private contest, of interest only to government employees and retirees.
Yet, it matters more than many public elections for local and state offices. Decisions by the $333 billion pension fund’s board can swing local budgets and affect taxpayers across California.
Even so, the only people who get to vote are members of the California Public Employees’ Retirement System – and they have a clear choice.
In the other corner is David Miller, who vows to defend public employees and fight the “pension haters.” He’s a three-time loser, but this time he has endorsements and financial support from powerful public employee unions.
At a candidates’ forum Sept. 7, Miller bragged that he’s been part of labor for 25 years and helped start Californians for Retirement Security, a union coalition to protect pensions.
Flaherman, a visiting scholar at UC Berkeley, noted he was also a union member while a senior planner at BART, but mostly boasted of his knowledge of investment strategy. Miller, a state scientist union leader, tried to turn that around by criticizing him for making lots of money on Wall Street.
Endorsed by outspoken board member J.J. Jelincic, who decided not to seek re-election after eight years, Flaherman is running for that seat on a “reform” ticket with Margaret Brown, business services director at the Garden Grove Unified School District. At the forum, she minced no words, saying that the board has given away its power to the staff and that CEO Marcie Frost isn’t qualified.
Miller is joining forces with incumbent Michael Bilbrey, who also called out “enemies” of public employees at the forum.
Up for grabs are two seats that come with four-year terms that start Jan. 16. Nearly 1.4 million ballots went out Sept. 1. As of Friday, about 72,500 votes had been cast.
CalPERS says it’s trying to boost turnout by letting members vote by phone and online, as well as by mail. It seems to be working; more votes are in already than the 40,878 for two seats in 2014, and balloting doesn’t end until Oct. 2. But the total is less than the nearly 141,000 votes cast in the last at-large board election in 2013.
Even with the increased turnout, it’s a little disconcerting for the vast voting public to be on the sidelines, given what’s at stake. In case you’re wondering, it would take a constitutional change through a voter-approved initiative to change how the board is picked.
Of the 13 board members, six are elected by CalPERS members, and two are appointed by the governor and one by the Legislature. The other four are ex-officio members due to their state government positions, including state treasurer and controller, who are elected statewide.
CalPERS has more than 1.8 million members in its retirement system and it also handles health benefits for 1.4 million members and their families. But moves by the CalPERS board have a ripple effect on non-members across the state. For instance, when it projects the return on its investments, it also sets the contribution amounts from local governments. And that, in turn, determines how much taxpayers have to spend on CalPERS – and how much is available for other services and projects.
So in December when the CalPERS board voted to cut its long-term investment return prediction from 7.5 percent to 7 percent, it set off alarms in local governments. The League of California Cities urged its members to start setting aside money to cover the increased contributions. For Sacramento, the additional payments are expected to rise from $3.2 million in 2018-19 to $29.4 million in 2022-23.
In extreme cases, if agencies can’t pay their CalPERS bills, worker pensions can be cut. As they’re voting, CalPERS members are getting a reminder of that. Ten workers and retirees are on the hook if the board votes next week to end contracts with two tiny agencies, after booting two other agencies in recent months.
If you care most about protecting pensions right now, Miller may appear to be the best choice. And the political reality is that with all-important union backing, he’ll likely win.
The financial reality, however, is that everyone – retirees, employees, local governments and taxpayers – wins if CalPERS does really well on its investments. So if I had a vote, I’d cast it for Flaherman, whose broader experience could help the board make smarter, strategic choices.
But I don’t have a say – and neither do millions of other Californians, though we’re all affected by what the next CalPERS board member does.