The State Worker

Chronicling civil-service life for California state workers

April 20, 2011
Fund employees say bill legitimizes 'indentured servitude'

There's been a bit of a buzz at CalPERS and CalSTRS the last few weeks over Assembly Bill 873, which would set new limits on the funds' board members and employees after they sever ties with either organization.

In a petition and letter to SEIU Local 1000 President Yvonne Walker last month, CalSTRS employees asked the union to intervene. They called the measure an employee morale killer that legitimizes "indentured servitude" and will make it harder to recruit sharp investment managers. And, the petition says, that will carry untold costs to the funds in lower returns on investments.

CalPERS employees are gathering signatures on a similar petition.

Controller John Chiang is sponsoring the bill as way to shut the revolving door that exposed CalPERS to ethical -- and quite possibly criminal -- breaches detailed in the Steptoe Report that CalPERS commissioned and then released earlier this year.

Specifically, the measure would:

  • Extend from two years to four years the ban on state employer lobbying on CalPERS and CalSTRS board members, executives, senior investment officers, general counsels, and senior managers in the health benefits and investment divisions.
  • Prohibit for two years designated CalPERS and CalSTRS board members and senior staff from helping a new employer on any contracts with CalPERS or CalSTRS if they had contract dealings valued above $10 million with their new employer in the two years prior to their separation.
  • Ban for 10 years former board members and designated fund staff from accepting compensation as a placement agent for providing services in connection with CalPERS or CalSTRS.

The fund staff opposing the measure say that it punishes the very employees who can help bring abuses to light. From talking with sources, The State Worker's best guess is that the bill could impact post-fund careers of a combined 300 to 400 board members and staff at the two agencies.

Chiang is an ex officio member of both CalPERS and CalSTRS. His spokesman, Jacob Roper, said Tuesday afternoon that the controller's office met with staff and board members at both agencies and that the bill has their support.

Our best guess after talking to sources at both funds is that between 300 and 400 people would be affected by the measure should it become law.

As of this morning, there was no online legislative analysis of the bill authored by Assemblyman Warren Furutani, D-Gardena, but here's an AB 873 fact sheet sent to The State Worker by Roper:

Assembly Bill 873 Fact Sheet

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About The State Worker

Jon Ortiz The Author

Jon Ortiz launched The State Worker blog and a companion column in 2008 to cover state government from the perspective of California government employees. Every day he filters the news through a single question: "What does this mean for state workers?" Join Ortiz for updates and debate on state pay, benefits, pensions, contracts and jobs. Contact him at (916) 321-1043 and at


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