Schwarzenegger STRS up a hornets nest

Four big squares marked “vacant” sat alongside photos of remaining board members on the California State Teachers Retirement System (CalSTRS) web site this week. It seems the squares’ former occupants (two Republicans and two Democrats) had the nerve to vote against Gov. Arnold Schwarzenegger’s proposal to privatize pensions of all new state workers, including teachers, into a 401(k)-type system starting in 2007, and his proposal to shift onto local school districts the state’s contribution to the pension system.

Mark Battey, Jim Gray, Gloria Hom and Miguel Pulido were appointed last April by the governor. They were about to go before a state Senate committee for their confirmation hearings. But on Feb. 3 they voted with a 10-2 majority on the 12-member board that opposed privatization, and an 11-1 majority that rejected the state’s canceling its pension contribution. A fifth Schwarzenegger appointee supported the proposals.

CalSTRS is the third largest public pension fund in the country, with a $125 billion current market value. It provides retirement, disability and survivor benefits to California’s public school teachers from kindergarten through community college. Its board includes three representatives of current educators and five representatives appointed by the governor. Four elected state officials serve ex-officio.

CalSTRS “is in excellent shape,” said Fred Glass, communications director for the California Federation of Teachers, in a telephone interview. The system is secure, its board is a good public oversight body, and STRS “has been achieving good returns on its investments,” he said.

Not only would the proposed changes “place the future of teachers’ golden years in jeopardy,” Glass said, it would also be very difficult for school districts to take over the state’s pension contributions, because districts have been cutting their budgets to the bone for years.

“What Governor Schwarzenegger says is that, like George Bush, he wants to give future retirees more choices,” Glass said. But, he added, the governor is really picking up on the far-right’s concept of “starving the monster” — reducing government until it is no longer effective.

Californians “can let their legislators know the governor’s plans for pensions, and for California education overall, are not good for students, for teachers, for the future of public education or for the people of California,” Glass said.

After the four board members were dismissed, ex-board member Jim Gray told the San Francisco Chronicle, “I’ve never had a governor’s office tell me, ‘If you don’t do exactly what I’m saying publicly, I don’t want you around.’” Gray, a Republican from the southern California community of Indian Wells, had served as a trustee of the California state university system under Republican governors George Deukmejian and Pete Wilson.

At a Feb. 2 press conference, State Treasurer Phil Angelides, an ex-officio STRS board member, pointed to another motivation — the role STRS and the state workers’ pension system, PERS, have played in promoting corporate accountability. “Public pension funds have taken a leading role in restoring honesty, integrity and openness to our nation’s financial markets after corporate scandals shook the very foundations of our financial institutions, damaged our economy, and harmed millions of Americans,” Angelides said. “Now Governor Schwarzenegger wants to break these powerful voices of corporate reform into literally millions of pieces, cutting people loose to fend for themselves in the marketplace.”

Schwarzenegger’s proposals on teachers’ pensions are part of a broader package of cuts to education and other public programs he has made while rejecting proposals for new taxes. Other education proposals include basing teachers’ employment and pay on “merit,” and promoting charter schools. The governor has reneged on a promise to restore the $2 billion mandated for education under voter-approved Prop. 98 which was “borrowed” by the administration last year. He is also seeking further cuts in education funding.

mbechtel@pww.org