Most interesting!
calgov2002:
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Posted on 02/05/2003 6:11:45 AM PST by Stand Watch Listen
As Governor Gray Davis begins his 2nd term, he faces a host of problems. One in particular that is likely to be among his greatest challenges - yet to date has received limited attention -- is reform of the California Public Employees' Retirement System (CalPERS).
CalPERS is the nation's largest pension fund. In keeping with what Smart Money described as "the nation's most formidable force in shareholder activism," it has a reputation of being an international corporate governance watchdog, using its weighty economic clout to impose its will on large and small companies alike.
Yet due to the Davis administration's inattentiveness during his last term, CalPERS retirees may be the ones needing a watchdog - to oversee the governance of the pension fund.
Cronyism and ethical shenanigans are just the beginning of the problems with CalPERS. Senior executives, including its CEO, investment committee chairman, deputy executive officer, general counsel, two chief investment officers and various subordinates (since 2000), are running away from the pension fund like scalded dogs in the wake of stunning
losses.
How stunning are the losses? $40 billion at last count (the fund has dropped from a peak of $176 billion to $135.5 billion) in the last three years. In the most recent fiscal year that ended June 30th, the fund posted a nearly 6 percent loss. And unless some reforms occur soon, the hemorrhaging will continue.
How did things get so bad so quickly? Well it seems that the leadership of CalPERS came to believe that its role as an "international" leader for "change" took priority over every day pedestrian matters like keeping up with the books and seeing to it that retirees got a decent return on their investments. Consider, according to the Washington Post, the fund's managers knew - but did nothing about - Enron Corporation Chief Financial Officer Andrew Fastow's self- dealing partnerships.
CalPERS also lost some $850 million from WorldCom's bankruptcy. When the stock fell below $10, rather than divest according to a generally accepted pension fund management rule, they continued holding shares up to complete insolvency at WorldCom. Amazingly, CalPERS never even placed the company on its vaunted corporate governance watch list.
Further, a recent Associated Press report revealed that five board members personally owned stock in firms held by the pension fund. This practice, which gives these investors the ability to profit from advanced knowledge of the fund's investments decisions, is banned in states like Kansas and Colorado.
While its investment performance tanked, the liberal New York Times reported that the board pushed to a greater and greater extent social and political criteria for investments that had more to do with the political leanings of the trustees than any plan for a larger return. Worse, the board was indifferent to actions that potentially would constitute a conflict of interest.
Still, cronyism is perhaps the largest-and most disturbing- cloud hovering over CalPERS. According to Business Week magazine, board members Philip Angelides and Kathleen Connell, not to mention Governor Davis, received campaign contributions from LA billionaire Ronald Burkle. You guessed it, $760 million has now been invested by CalPERS in Burkle's Yucaipa Company.
A Bloomberg News report indicated that in the spring of last year, the board directed that $100 million be invested in Premier Pacific Vineyards. Coincidentally the co-CEO of Premier Pacific happened to be a major fundraiser for Governor Grey Davis - who under California law appoints three members to the CalPERS board.
So to recap: power brokers at CalPERS during this troubled time have included Kathleen Connell, Phil Angelides and Gray Davis. Oh, and did I fail to mention that the one and only Willie Brown is also on the CalPERS Board? Some pretty sly foxes have been guarding this henhouse, to be sure.
Proving that hypocrisy may be the sincerest form of flattery, the claims that the CalPERS fund have lodged against companies they've target have started to look strikingly like the very actions that the fund itself has engaged in. Being accused of having a "rubber stamp board," engaging in conflicts of interests, and practicing "closed circuit cronyism" are just some of the charges levied against the board from a growing chorus.
In what can be viewed as a sign of good faith, CalPERS did agree recently to disclose how the pension fund's private investments were performing - but only after the San Jose Mercury News filed a lawsuit. Perhaps a few more lawsuits are in order.
Governor Davis should make clear, serious reform of the way CalPERS does business a top oriority for his second term. Current and future retirees deserve nothing less.
(Horace Cooper is a senior fellow at the Centre for New Black Leadership)
Centre for New Black Leadership
Not.
Wonder if it was these same hypocrites that were decrying the Oracle contract last year?
Most interesting!
calgov2002:
|
calgov2002: for old calgov2002 articles. calgov2002: for new calgov2002 articles. Other Bump Lists at: Free Republic Bump List Register |
Like education, the power crisis, and the budget deficit were top priorities.
As a state employee with my only retirement in CalPERS, I think we should definitely do something about this.
16:42 EST Wednesday
CalPERS OKs rate hikes for long-term care In a move intended to ensure continued stability of its long-term care program, the California Public Employees' Retirement System has approved premium increases beginning in April 2003.
The fee hikes are needed to avert a projected $215 million deficit in the long-term care fund caused by an investment earnings shortfall in the slumping equities market, CalPERS said in a news release.
Approved rate increases ranging from 6 percent to 30 percent had been recommended by program staff, outside consultants and a constituents' advisory group. The new rates will go into effect April 1, 2003, for new policies and on Sept. 1, 2003, for 170,000-plus current members.
The overall 17.4 percent increase includes 11.4 percent to eliminate the projected deficit and a surplus of 6 percent to guard against unforeseen financial developments. The current average premium is $100 per month.
Premium increases for individuals will vary depending on the plan and the age of the member when the policy was issued. Details on how the change will affect individual coverage will be sent to members at least 60 days before it takes effect.
Each member will have the option of accepting their rate increase and maintaining their current coverage or maintaining their current premium cost by decreasing their current coverage amounts.
CalPERS, headquartered in Sacramento, is the nation's largest public pension fund, managing assets of $128 billion. The system provides retirement and health benefits to 1.3 million state and local public employees and their families.
See what the Waspman posted at #13!
Haven't we always been told by the liburals that "America is the richest nation on Earth," and CalPers is the richest pension therein???
What really cracks me up is the claim that the CalPers Long Term Care Coverage Program makes in it's sales literature that their premiums are "20% lower on average, than similar commercial insurance because we are a non-profit organization."
This is simply not a true statement form any point of view!!! All of their coverage starts right off with a $12,000 Deductible.
From there it just gets worse in that it only provides half the coverage in one's home as it does in a Skilled Nursing Facility (Nursing Home) and then has a 33% higher hurdle to even qualify for Nursing Home benefits should they become necessary!
It's a pathetic plan, yet it's one of the first to require these horrific rate increases. Someone has made multi-millions of profits from setting up this "non-profit" program that pokes fun at superior commercial contracts of true insurance which is actually regulated by another state agency on top of that!
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