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Taking Pot Shots at CalPERS

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The headline to Daniel Borenstein’s recent Contra Costa Times column didn’t leave much to the imagination: “CalPERS planning to gut a key cost-control provision of new pension law.” Pairing CalPERS – the nation’s largest public employee retirement fund – with pension-reform sabotage promised red meat for conservatives who share the columnist’s disdain for unions. Borenstein didn’t let them down.

“By administrative fiat,” he wrote, “the California Public Employees’ Retirement System has undermined a key anti-spiking provision of the new state pension law that Gov. Jerry Brown signed last summer.” Not true, responded CalPERS, which claims Borenstein’s political biases led him to completely misrepresent its actions.

After sounding the alarm, Borenstein accused the government-run CalPERS of attempting to “fatten” pensions for new public employees while “eroding” the billions in tax dollar savings that the new law, crafted by Brown, was intended to create.

At the heart of Borenstein’s accusation is an interpretation of the law, made by the fund’s  “labor-dominated board,” to factor in pay premiums that some employees receive in addition to their base pay rates. This was too much for Borenstein, who charged CalPERS with defying the letter of the law for new hires and of operating “in a parallel universe.” If Borenstein were a banker, he’d be telling us that our savings accounts should only earn a fixed interest based on predetermined monthly deposits – regardless of whatever additional funds we may contribute.

His column dripped with sarcasm, mocking the idea that police officers should be paid extra for taking training classes or taking on DUI-monitoring duties. Then came this sly call to arms:

“But, absent a protest from the governor or key legislators, or a lawsuit, it seems unlikely that CalPERS will reverse course.” Yoo-hoo! Anyone out there ready to protest this outrage or file a lawsuit?

Borenstein got his response soon enough – from CalPERS. A statement issued by the fund the next day (a Saturday) accused him of allowing his ideology to get the better of his judgment – and to trump the facts:

“What he neglects to tell readers – a fact which CalPERS explicitly shared with him during multiple attempts to try to help him get the facts straight, which he nevertheless failed to do – is that during the legislative process, CalPERS worked with the legislative committee consultants to answer their questions and enable them to write the bill according to their intent.”

Borenstein is no fool when it comes to understanding the intricacies of government and finance, but CalPERS convincingly called him out for disregarding the facts surrounding the fund’s interpretation. That public service workers must  be compensated for their labor isn’t a concept that should strike Californians as strange or extravagant.  It is the definition of fair play and cannot be washed away by rhetoric.

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