With the vote tied 6-to-6 last week, CalPERS President Rob Feckner cast the tie-breaker that rejected term limits for top pension board posts, allowing him to run again and exposing a structural split between members backed by unions and the governor.
The board president and committee chairs would have been limited to four consecutive one-year terms beginning next Jan. 1. Prior service in the office would have been counted, and eligibility to run again restored after two years out of office.
As one of the most powerful state agencies, the 13-member CalPERS board sets annual pension rates that must be paid by state and local governments, while managing a huge pension fund (worth $278 billion last week) and the nation’s second largest purchaser of health care.
Most of the public debate last week was about term limits — refreshing leadership and giving board members an opportunity for growth, for example, versus reducing voter choice and avoiding the inexperience that led to lengthening legislative term limits.
But some said the underlying issues were the ambition of one board member, Henry Jones, to become president without a disruptive battle and union worry about giving governors an opening to control the board presidency.
Jones chairs the most powerful board committee, investments, and was re-elected vice president last month when Feckner was re-elected president, his 12th one-year term in the top board post.
Previous governors have clashed with the CalPERS board and public employee unions with a “raid” on pension funds, backing a candidate for the board presidency, and switching new hires from pensions to 401(k)-style retirement plans.
Gov. Brown has made unsuccessful proposals to add two “independent” board members ineligible for CalPERS pensions, speed up employer rate hikes needed to pay down pension debt, and give state workers a high-deductible retiree health plan to cut costs.
Public employee unions opposed the term limits proposal. The issue of current and retired employees retaining control of key CalPERS board posts surfaced in the CalPERS governance committee.
George Linn, president of the Retired Public Employees Association, told the committee the “chair of the organization” should always come from the six board members elected by current and former CalPERS members.
“That way we members always have a direct link to the president of the board,” Linn said.
Earlier, a CalPERS board member speaking in support of term limits, Richard Gillihan, Brown’s human resources director, told the committee a board member seeking a chairmanship is likely to have experience, such as serving as vice chair.
“The fact is some of us would never have a chance to get some of these positions if it were not for some forced opportunity to reconsider leadership,” said Gillihan.
Responding to Linn’s suggestion, Bill Slaton, a Brown appointee representing local elected officials, told the full board it’s a “bad idea” because the board should have “equal participants,” not “senior” and “junior” members.
“The concern about maintaining leadership by elected members I think is a false issue,” Slaton said, noting that term limits would not change the requirement that seven votes are needed to elect board presidents and chairs.
Six of the 13 CalPERS board members are elected by all or parts of active and retired employees, two appointed by the governor, one appointed by the Legislature, and four are officeholders: treasurer, controller, human resources, and personnel board.
Term limits moved out of the governance committee and deadlocked 6-to-6 at the full board with the support of two of the six board members elected by active and retired employees, Jones and J.J. Jelincic.
Jones made an unsuccessful motion at the full board to lengthen term limits to six years, an apparent bid to get the vote of board member Theresa Taylor. She had mentioned that four-year limits seemed short during the governance committee meeting.
Jelincic, often at odds with the leadership, is an on-leave CalPERS employee barred from some board discussions and decisions, particularly about executives who may later supervise him. The board censured him in 2011 for sexual harassment of co-workers.
CalPERS presidents and committee chairs customarily vote only to break a tie. When the governance committee deadlocked at 3-to-3, the chair, Slaton, cast the tiebreaker vote that sent the term limits proposal to the full board.
Voting “yes” were Jones, Jelincic, and Richard Costigan, the personnel board member. Voting “no” were Feckner, elected by school members, Michael Bilbrey, elected by all members, and Ron Lind, legislative appointee.
When the full board rejected term limits the following day, the president, Feckner, broke another tie vote.
Others voting “no” were Bilbrey, Lind, Priya Mathur, elected by local government members, Taylor, elected by state workers, Treasurer John Chiang, and Controller Betty Yee’s representative, Lynn Paquin.
Voting “yes” were Jones, Jelincic, Slaton, Costigan, Gillihan, and Dana Hollinger, a Brown appointee representing the insurance industry.
In an unusual departure from CalPERS custom, Sean Harrigan became CalPERS president in February 2003 by decisively defeating Willie Brown in an 8-to-4 vote by their fellow board members.
“As long as I’ve been on the board, the custom is an elected member serves as president,” Robert Carlson, who had served on the CalPERS board 31 years, told the San Francisco Chronicle four months before the vote.
Harrigan was not an elected member, serving instead in the personnel board seat since 1999. But he was a private-sector labor leader, regional director of the United Food and Commercial Workers union.
Brown was appointed by former Gov. Gray Davis, who supported his bid for the CalPERS presidency. He was mayor of San Francisco then, after gaining national fame while serving 14 years as speaker of the state Assembly.
Harrigan was ousted in December 2004 when the Personnel Board did not elect him to the CalPERS board. He said it was retaliation for shareholder drives to change behavior at companies like Disney, Safeway, and the New York Stock Exchange.
At the Capitol, some thought it might be payback from Brown for a rare defeat. In a 3-to-2 Personnel Board vote to drop Harrigan, two Republican members were joined by Maeley Tom, a top Democratic legislative aide during Brown’s speakership.
The ouster of Harrigan made Feckner acting CalPERS president. He had replaced Carlson as CalPERS vice president at the same time that Harrigan defeated Brown for president.