A CalPERS board member running for re-election, George Diehr, has listed the CalPERS headquarters address in Sacramento and a CalPERS-funded home telephone as a contact on a campaign brochure and website.
His critics say it’s a violation of state law that prohibits the use of public resources for political campaigns.
Diehr, preferring not to list his home address, said he thought the CalPERS address was acceptable because he had used it in filing documents, drawing no objections.
“I don’t even have a telephone or office at the university,” said Diehr, a business professor at California State University, San Marcos.
CalPERS pays for a home phone and fax line for Diehr and has done the same for some other board members, said Brad Pacheco, a CalPERS spokesman.
Pacheco said Diehr has asked for his phone bills to repay CalPERS for any campaign phone calls. Until recently, the CalPERS headquarters address was listed as a contact on Diehr’s campaign website.
The powerful 13-member board of the California Public Employees Retirement System controls investments currently worth about $213 billion and sets annual payments to the pension fund from the state and more than 1,500 local government agencies.
Diehr is the CalPERS board vice president and chairman of the investment committee, which includes all of the board members and draws the most interest from the financial industry and the media.
First elected in 2002, Diehr was re-elected in 2006 and is expected to win a third four-year term. His challenger, Inderjit Kallirai, received 17 percent of the vote while trying to unseat another board member last fall.
Mail ballots must be postmarked by Friday, Oct. 1. Diehr and Kallirai spoke earlier this month at a candidates forum, held in the board room of the California State Teachers Retirement System so a video could be posted on the Internet.
(Unlike CalPERS, the CalSTRS board room has video cameras. The CalSTRS board meetings are televised live to staff within the new building, but only the audio is streamed live over the Internet. Video recordings of the board meetings are available at the CalSTRS building.
(CalPERS board meetings are only recorded by a court reporter-style typist and transcripts are available. Many local government agencies not only stream live video of meetings, but also archive the meeting videos for Internet viewing at any time.)
A violation of the prohibition against using public resources for political campaigns (Government Code section 8314), whether intentional or negligent, is punishable by a penalty of up to $1,000 for each day of the violation.
Warnings about mixing campaigns and state facilities are issued at the Capitol. Guidelines from Gov. Arnold Schwarzenegger’s legal secretary in 2006 “to avoid even the appearance of illegal conduct“ mention, among other things, phones and offices.
Whether Diehr’s contact information is a violation is not clear. The state Fair Political Practices Commission said it’s an issue for the district attorney or attorney general, which did not respond to a request for comment.
The use of public resources for a political campaign also became an issue when Diehr ran for re-election to the CalPERS board four years ago.
Diehr appeared and campaigned, handing out a brochure, during a meeting sponsored by the Service Employees International Union Local 1000 in a state Department of Education conference room.
In a legal opinion requested on behalf of a campaign opponent, James McRitchie, the Legislative Counsel said the use of a state building by SEIU was authorized under a bargaining agreement with the state.
“We also conclude, however, that the use of that state facility for campaign purposes during such a meeting, by a member of the Public Employees Retirement System Board of Administration seeking re-election to that board, constituted a violation of Section 8314 of the Government Code,” said the Legislative Counsel.
Part of the argument in the legal opinion is that the use of the state facilities by a candidate at no charge is a campaign “contribution,” unless the same discount is given to members of the public in the regular course of business.
A key provision in Government Code section 8314: “It is unlawful for any elected state or local officer, including any state or local appointee, employee, or consultant, to use or permit others to use public resources for a campaign activity, or personal or other purposes which are not authorized by law.”
Six of the 13 CalPERS board members are elected by pension system members. Four are officeholders: the state treasurer, controller and representatives of the personnel board and department. Two are appointed by the governor and one by the Legislature.
In general, board elections are expensive for CalPERS, campaigns are mainly funded by labor unions, and turnout is low.
Two board members up for re-election this year, board president Rob Feckner and Priya Mathur, are unopposed and have been informally declared winners. Mathur drew no opponent despite a quirky but well-publicized problem.
She was censured by the CalPERS board last May after being fined three times in the last four years, a total of $13,000, for repeatedly failing to file personal and campaign financial disclosures with the Fair Political Practices Commission.
The board disciplined Mathur with a six-month suspension of her travel privileges and chairmanship of the health benefits committee. In an apology, Mathur said she had been “very careful to avoid situations” that must be reported on a disclosure form.
Last fall, an open board seat triggered a hotly contested race won in a runoff by J.J. Jelincic, who defeated Cathy Hackett.
The American Federation of State, County and Municipal Employees, AFL-CIO, spent $229,832 in support of Jelincic. Hackett received $141,076 from the Service Employees International Union.
A board seat abruptly opened with the resignation announced Aug. 31 of Kurato Shimada, 73, to “focus on personal matters.” He was re-elected last fall, handily defeating Kallirai, and was beginning a four-year term.
The Sacramento Bee recently had reported that Shimada told a court that, between two stints on the board, he received more than $40,000 for helping Al Villalobos pitch an investment deal to CalPERS.
Villalobos, a former CalPERS board member, received more than $50 million in “placement agent” fees for helping private equity firms get CalPERS investments. He and Fred Buenrostro face bribery-related charges in a state lawsuit filed in May.
Buenrostro, a former CalPERS board member, later became CalPERS chief executive officer. Another former board member, Charles Valdes, refused to answer questions from the attorney general in the bribery suit, the Bee reported last month.
The Shimada board seat will be filled in a special election. The elections last fall cost CalPERS $3.1 million. Only 15.7 percent of the eligible members voted, continuing a two-decade slide in turnout.
Voter turnout for elections to the CalSTRS board has been even lower. After legislation allowed three of the 12 board seats to be elected by members, voter turnout was 10.14 percent in the first election in 2003.
Voter turnout in the second election for four-year terms in 2007 was 8.73 percent of 388,417 eligible voters. A bill allowing retired CalSTRS members to elect a board member currently appointed by the governor, AB 1862, was vetoed last week.
The structure of public pension boards may be an emerging issue.
At a hearing of the watchdog Little Hoover Commission last week an actuary said he advises his local government clients to seek more representation on the CalPERS board.
John Bartel, president of Bartel Associates, said local government employers currently have one member, appointed by the governor, on a board dominated by representatives of state and local government workers.
Bartel said he thinks control of the CalPERS board “rests with the bargaining groups, and the bargaining groups generally have a different agenda.” Presumably, he meant that employers want to control costs, while employees push for more benefits.
San Jose Mayor Chuck Reed told the Hoover commission there was concern about conflicts of interest on the city’s two pension boards, made up of employee and retiree representatives and city council members and officials.
In February, Reed said, the council approved a plan to put outside financial experts on the board “and ensure a majority of the board are independent members.”
Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the San Diego Union-Tribune. More stories are at https://calpensions.com/ Posted 27 Sep 10