Legislation would force candidates for California pension boards to report campaign donations

Disclosure considered for Calif. pension boards

SACRAMENTO, Calif. — California lawmakers on Monday voted to require that anyone running for election to the boards of California’s two massive pension funds disclose their campaign contributions.

The move comes at a time when pension funds are under scrutiny for improper influence of board members and executives.

In part, the bill was intended to show whether any financial-services companies that want to do business with the California Public Employees Retirement System, the nation’s largest public pension fund, are trying to influence the candidates. It passed the Assembly on a 69-1 vote and will go back to the Senate.

Pension officials in California and New York have been under scrutiny for their use of so-called placement agents, the middle men who help steer business to private investment firms. One former CalPERS board member, Alfred Villalobos, is being sued by the California attorney general’s office, which is investigating whether he awarded kickbacks to pension fund officials who steered investments to his clients.

The bill, SB1007, would require board members of CalPERS and the California State Teachers’ Retirement System to follow rules similar to those governing candidates running in other elections.

“It’s really important to have transparency in the governance of our pension plans right now,” said Jacob Roper, a spokesman for the bill’s sponsor, state Controller John Chiang. “This is about making sure that everyone is accountable.”

Board members at CalSTRS have no campaign-reporting requirements from the state, although the board initiated its own campaign finance reporting rules in 2006, spokesman Ricardo Duran said.

The rules governing candidates for the CalPERS board are limited to one filing before the election and one filing afterward.

Under the bill, candidates would have to disclose any contribution of $5,000 or more within 10 days of receiving it and any contribution of $1,000 or more within 24 hours during the period immediately before an election.

“Those individuals should have the same reporting requirements as legislators because they are trusted with the public’s money,” said Assemblyman Ed Hernandez, D-Baldwin Park, a former chairman of the committee overseeing public employee retirement issues.

Six of CalPERS’ 13 board members are elected to four-year terms in vote-by-mail elections by CalPERS members. Some are elected by all active and retired CalPERS members, while others are elected by just retirees or other subgroups. The remaining CalPERS board members are appointed by the governor or are state officials who are required to serve on the board. The CalPERS board voted to support the legislation in March.

Four of the 12 members of the CalSTRS board are elected. The teachers’ retirement system also supports the bill.

CalPERS provides retirement and health benefits to more than 1.6 million public employees, retirees and family members. The fund was valued at $200 billion as of June 30.

The CalSTRS portfolio was valued at $129.7 billion on June 30. That retirement system serves about 848,000 members.