Capitol Alert Insider Edition

Insider Access - Exclusive content for the Insider Edition iPad and iPhone apps

Note: Capitol Alert Insider Edition stories are for the exlusive use of subscribers of the service. You can subscribe with your iPhone or iPad in the App Store.
April 13, 2014
Election 2014: Controller candidates Pérez, Yee and Swearengin talk CalSTRS, watchdog role and more

MC_Speaker_PEREZ_01.JPG(April 13 - By the Editorial Board)

The Bee's editorial board met with the three leading candidates seeking to replace termed-out state Controller John Chiang. State controllers sit on the boards of the California Teachers' Retirement System and California Public Employees' Retirement System, and have the authority to audit state and local spending.

We asked the candidates how they would approach audits, the CalSTRS unfunded liability of $80 billion-plus, and more.

John A. Pérez
California Assembly speaker - Democrat

Watchdog: This controller has done a good job at using the audit tool. He looked at the city of Bell, for example, and it put everyone else on notice. I would sit down with the auditors and ask, "Are you seeing patterns?" If we're getting all clean audit reports from one area, you might de-emphasize that area and look to other areas. I am a fan of performance-based audits.

CalSTRS: All three payers - the state, local school districts and teachers - have to make a greater contribution. The CalSTRS board cannot dictate. Nobody wants to have pay it. The default is a proportional increase from all three players. It will take multiple years to fully fund it. We have to start acting this year.

Chiang cut off legislators' pay in 2011 when he concluded they approved an unbalanced budget. Would Pérez have done the same?

I disagree with John on his interpretation of what power he had. I honestly do not believe that's the controller's role. We had to make very difficult decisions. We've spent less than we've taken with each budget that I've negotiated.

Betty Yee
California State Board of Equalization member - Democrat

Watchdog: There are claims that the last three budgets have been balanced. Have they really been? The Legislature is, frankly, in denial. The controller can be a much more independent and raise more questions.

CalSTRS: We have to address it, like now. It is never going to be an easy choice addressing the unfunded liability at the expense of other spending. But we have to make those choices. We have a relatively stable budget situation. Now is the time to address how to deal with that. I'm not one who believes how we invest will get out of the woods. It is going to require sacrifice. I want to see discussions that put all the options on the table: increasing retirement age, benefit levels, health care costs. Until all the options are on the table, I don't think there's enough transparency for the board to make a decision.

Yee was a financial advisor to Gov. Gray Davis in 1999 when he signed legislation vastly increasing public employee pension costs. What was Yee's role?

My take on it was that we could think about these enhancements as being great for employees, but the issue was our ability to sustain them. It created a lot more risk. We certainly raised these issues. Obviously, decisions were made that were beyond my pay grade. We raised the issues, but the governor had already made up his mind

Ashley Swearengin
Fresno mayor - Republican

Watchdog: I would bring to the table intellectual honesty and an approach to try to solve problems. I don't believe in gotchas, but I do believe in truth and shining a light where it needs to be shined. You can find solutions if you are willing to evaluate things from a 360-degree perspective

CalSTRS: The state has to find a way to accommodate and accelerate the payback. The state has to start paying it back, and take the leadership role. At that point, there can be discussions with the labor groups about their obligation. The state had to take the leadership role.

Swearengin supports high-speed rail while many other Republicans oppose it. Why?

I see the connection between high-speed and the economy. The economic gain is being able to connect our people and business in an hour and 20 minutes to LA or San Francisco. That is going to take four hours by car. Flying will cost $1,000 and take you three hours. When you look at what it would cost to move the same number of people by expanding runways or highways, it would be two and half times the cost