The State Worker

The number of state workers drawing their first pension checks in the first four months of this year is down nearly 8 percent from a year ago, according to the latest data from CalPERS.

The four-month retirement rate continues a trend set in 2011, when initial retirements for the calendar year fell 8 percent.

Last month, the number inaugural state retirees fell to 627, down 2.8 percent from April 2011.

CalPERS counts new retirement data from mid-month to mid-month. Owing to the rules that govern cost-of-living adjustments, more state workers retire at the end of the year than at any other time. Those retirements show up in the January figures.

By contrast, far fewer state workers elect to retire in February, March and April. Relatively small shifts in retirement patterns during those months can produce big swings in the year-over-year percentages.

A total 1,711 state and local government and school employees with a CalPERS pension headed for the exits in last month, up 11 percent from a year earlier. Since January, 9,776 CalPERS members have retired, down 6 percent compared with the same four-month period in 2011.

Click tabs at the bottom of the spreadsheet below to toggle between tables with retirement data for state worker and for all CalPERS members.

CalPERS announced today that it will host retirement planning events in Sacramento, Anaheim and Santa Clara this summer.

Representatives from CalPERS, the Social Security Administration, the state's Savings Plus Program, ScholarShare college savings program and several employee and retiree organizations will be on hand. The events also include workshops on health and retirement benefits, service credit, Social Security and other pertinent topics.

CalPERS members can register via "My Education" area of the my|CalPERS member website at my.calpers.ca.gov.

Here are the dates, times and locations:

Sacramento
Aug. 10 - 11
9 a.m. - 4 p.m.
Sacramento Convention Center
1400 J Street
Sacramento, CA 95817

Anaheim
Aug. 17 - 18
9 a.m. - 4 p.m.
Sheraton Park Hotel
1855 South Harbor Blvd.
Anaheim, CA 92802

Santa Clara
Aug. 30 (one day only)
9 a.m. - 4 p.m.
Santa Clara Marriott
2700 Mission College Blvd.
Santa Clara, CA 95054

PHOTO: Big Stock Photo / Sacramento Bee file

The City of Vernon failed to provide adequate documentation for its employees and improperly characterized some as working in safety classifications that receive more generous retirement benefits, according to a new report released by CalPERS this morning.

The incomes of about two dozen current, former and retired city workers could be affected, since the fund will make "adjustments to retirement benefits or reported compensation" as appropriate, CalPERS said in a press release issued this morning.

Vernon has been under scrutiny for quite some time. Assembly Speaker John A Pérez authored legislation last year to dissolve Vernon, saying it would address allegations of corruption in a city that is home to fewer than 100 residents but more than 1,000 businesses. Under his proposal, which failed, Vernon would become an unincorporated part of Los Angeles County.

The report caps CalPERS' year-long audit of Vernon's records covering July 1, 2002 through June 30, 2010.

Among the findings:

A new study says that CalPERS could have saved between $18 million and $54 million in 2008 health care costs if more of the fund's members warded off common diseases such as diabetes and hypertension with diet and exercise.

Talk show host and health advocate Dr. Mehmet Oz, SEIU Local 1000 President Yvonne Walker, Controller John Chiang and Treasurer Bill Lockyer will unveil the Urban Institute study and a new pilot program to promote wellness at a 1:30 p.m. press event at the California Museum.

Researchers looked at the health records of nearly 556,000 state employees and their dependents who are covered by one of nine CalPERS health plans.

Click here for a short item in today's Bee with more details about the study, which is posted below.

Potential Savings Through Prevention of Avoidable Chronic Illness Among CalPERS State Active Members

A bill scheduled for a committee hearing today would cap the compensation for two jobs at the California State Teachers' Retirement System at 150 percent of what the governor earns, but the new ceiling is twice what the positions currently earn.

Assembly Bill 1735, which is sponsored by CalSTRS, is in front of the Assembly Appropriations Committee. The measure expands the list of jobs for which the fund's board can set compensation to include chief operating officer and chief financial officer.

The fund says it needs the flexibility to compete for candidates outside of government. The bill caps what CalSTRS board could pay at one-and-a-half times the govenor's salary, currently about $174,000 per year.

"Given the new ceiling of $260,000 per annum, this bill allows CalSTRS to double existing salaries," an Appropriations staff analysis says. "The actual costs will depend on the compensation packages developed by the Teachers' Retirement Board."

CalSTRS says that paying more to get the most-skilled executives will save big bucks because it will be able to hire and hold better-qualified managers who make key business decisions.

The fund has said that it needs an infusion of money to meet its long-term pension obligations. In February, it reported assets of $152 billion, sustaining its pension fund for 856,000 public school teachers and their families in California's 1,600 school districts, county education offices and community college districts.

CalPERS new computer system is continuing to miscalculate some pension deductions, despite a modification that fund officials said had fixed the problem.

The issue came up Tuesday afternoon during a report to the fund's Pension and Health Benefits Committee by Donna Lum, Deputy Executive Officer for Customer Services and Support. Tuesday's Bee highlights some of the report, which you can read here.

CalPERS spokesman Brad Pacheco is checking on how many members are affected.

We've embedded a real-time transcript (which may not be an error-free verbatim record of the proceedings) at the end of this post and highlighted the exchange between Lum and board member J.J. Jelincic about the "unfixed" pension deduction problem:

We never get all of what we learn into a news story, but this blog can give users the data, the notes and the quotes from the notebook that informed what was published.

The CalPERS computer system story in today's Bee draws from an item on the agenda of the fund's Pension and Health Benefits Committee, which is meeting this morning.

Here's the report on the system. Click here to watch the committee session live online, starting at 9 a.m. or after the Finance and Administration Committee ends its hearing, whichever is later.
CalPERS Workload Inventory

The California State Teachers Retirement System said today that the gap between its promises to pensioners and its assets to pay them grew to $64.5 billion in fiscal 2011, up $8.5 billion from a year earlier.

The unfunded ratio grew from 29 percent to 31 percent despite the fund's investments turning a 22 percent profit for the year that ended on June 30, 2011.

CalSTRS Deputy CEO Ed Derman said during a conference call this morning that the fund would need to realize 10 percent returns for the next 30 years to climb out of the funding hole through investments alone.

Put another way, CalSTRS needs an annual infusion of money equal to about 13 percent of the annual wages earned by its 430,000 school-employee members. Actuaries said in a report due to the CalSTRS board on Thursday that losses carried over from the stock market collapse, a lowering of investment return assumptions and money allocated to a special benefits fund all contributed to the growth of the unfunded liability.

CalSTRS in February reported assets of $152 billion, sustaining its pension fund for 856,000 public school teachers and their families in California's 1,600 school districts, county offices of education and community college districts.

Over the weekend, CalPERS moved judges and legislators' retirement accounts into its glitch-plagued, $500 million-plus my|CalPERS computer system.

According to an internal e-mail that we've posted below, the shift affects about 5,000 CalPERS members, dependents and beneficiaries, a tiny fraction of the fund's 1.6 million members. It's the last -- and most powerful -- group to be switched into the new computer system.

CalPERS spokesman Brad Pacheco said that the fund years ago planned to bring judges and lawmakers into the system later than other members.

"The systems, program and benefits for these members are very different from State, School and PA members," Pacheco said in an e-mail. "These are completely separate funds, with dedicated staff. Our focus was on the integration of the 49 systems that supported the majority of our members knowing that the small, standalone legacy system that supported JRS/LRS could continue to operate."

CalPERS has a unit with "specialized knowledge in this area that members can contact if they have questions. This is not a change from the past, except now processing will be integrated into the larger my|CalPERS system," Pacheco said.

(By the way, voters ended pensions for those first elected to state offices in 1990 or after. CalPERS has statistics on judge and legislator pensions on its website. Click here and scroll down to pages 4 and 5 for more details.)

Here's the e-mail from Laura Enderton, CalPERS stakeholder relations manager:

By Dale Kasler
dkasler@sacbee.com

A New Jersey drug company agreed to pay $2.75 million to settle a state investigation stemming from its hiring of Alfred Villalobos, the figure at the center of the CalPERS bribery scandal.

Medco Health Solutions agreed to the settlement announced today by California Attorney General Kamala Harris. The company also agreed to "change internal procedures," the attorney general said.

CalPERS fired Medco last year after it was revealed that the company had paid Villalobos, a former CalPERS board member, more than $4 million to allegedly help the company secure a new drug contract with the big pension fund.

From The Bee's Dale Kasler:

CalPERS today moved toward reducing its investment forecast by a quarter percentage point, a move that would cost the state's general fund $167 million a year.

Click here to read more.

The recommendation goes to a vote of the full board on Wednesday.

Next week, CalPERS Board of Administration will consider lowering its investment return expectations from the current 7.75 percent to 7.25 percent.

If that happens, pension costs would increase for state and local governments -- and employees would have to pay significantly more for air time after Mar. 15.

CalPERS Pension and Health Benefits Committee will take up the issue on Tuesday. If it accepts Chief Actuary Alan Milligan's recommendation, "The cost for service credit purchases under the present value method is expected to increase between 5 percent and 13 percent when looking at the most common ages at which members currently buy service. Note that the actual increase for some members would be more."

CalPERS members who buy air time before the deadline will get the benefit of the higher rate of return assumption. So will members with a request for an official air time cost estimate submitted to the fund before Friday.

Members have 60 days to purchase air time after receiving a price quote from CalPERS.

"No one (with cost esitimates in the queue) needs to worry," CalPERS spokesman Brad Pacheco told us Friday afternoon. "Those (prices) will be honored."

The benefit costs thousands of dollars. If you're thinking about buying air time, we recommend you start with CalPERS' online service credit calculator before contacting the fund for an official estimate. Click here for more details about how to get a quick ballpark idea of what air time would cost you.

We've embedded the return assumption rate item below. Scroll down to "Impact on Member Calculations," for the discussion of service credit costs.

With just 400 to 450 words for our weekly State Worker column, some of what we learn each week never sees print. Column Extras give you the notes, the quotes and the observations that inform what's published.

Our State Worker column in today's Bee looks at how CalPERS is continuing to deal with nagging problems concerning its $500 million-plus computer system. This time the trouble touched about 4,200 retirees whose health insurance premiums were incorrectly withheld. Twice.

Here are some snippets of email correspondence this week between The State Worker and CalPERS spokesman Brad Pacheco that we've arranged in a Q&A format, and the text of a letter sent to affected members on Feb. 22 and Feb. 23 that explained the withholding mistakes and the fixes.

Fewer state employees took their pensions last year, reversing a four-year trend that had seen more workers going into retirement.

And if the first two months of this year are any indication, more state employees will hang on to their jobs longer this year.

According to statistics provided by CalPERS in the chart above, 10,671 state workers applied for service retirement in 2011, down nearly 8 percent from the year before.

For January and February of this year, just 2,703 state employees submitted their retirement papers, a 17 percent decline from the same period in 2011.

The data shows the number of state applications for service retirements, which CalPERS counts from mid-month to mid-month. More state workers retire during the January period, which includes applications from mid-December to the end of the month, because of the way the fund calculates when they can receive their first retiree cost-of-living adjustment.

The number of state workers entering retirement had been growing each year, fueled by the state's aging workforce demographics. No doubt that furloughs, threats of wages being withheld during budget impasses, concessionary contracts and other issues during former GOP Gov. Arnold Schwarzenegger's administration pushed some employees to retire earlier than they might have otherwise.

(Click the tabs at the bottom of the table for charts and information about combined state and local retirement applications to CalPERS.)

Since there's no clearinghouse for exit interviews and no survey of why more state workers are sticking around, it's tough to say why fewer employees retired last year. What do you think?

Controller John Chiang today urged the state to scrape up at least a little extra cash to pay down state retiree health and dental benefit costs, which his latest commissioned report pegs at $62.1 billion over 30 years.

The figure, a snapshot of the unfunded health obligations on June 30,2011, represents a 5 percent increase over $59.9 billion identified a year earlier. Actuaries with Gabriel Roeder Smith & Co. had expected an even higher number, but CalPERS' push to trim health costs through a variety of programs, fewer and less expensive claims and lower-than-anticipated use of services have trimmed expenses.

For the most part, the state is covering those costs year to year, paying retiree health bills as they come up. A more prudent course, Chiang said, is to treat the long-term benefit expenses like the state treats pensions: set aside money now, invest it and then use the returns on investments to defray future retiree medical and dental costs.

"Even slight amounts set aside will help lessen the impact on future generations, and ensure that we fulfill our responsibilities to the state workforce and our taxpayers," Chiang said in a press release.

Gov. Jerry Brown's proposal to put future state and local government employees into hybrid retirement plans won't significantly cut the state's pension costs and could cost some employers more than their current defined benefit plans, the California Public Employees' Retirement System said in an analysis released Tuesday afternoon.

"For school employers, cost savings are expected to be 2 percent of payroll, while local public agencies will vary but are expected to be greater than the State overall," CalPERS staff analysis concluded, while employers' cost for safety workers' pensions would increase.

The fund confirmed that the governor's plan would lower benefits for new workers and shift more risk from employers to employees. Brown and other pension reformers have argued that both need to happen.

The report, requested by the Conference Committee on Public Employee Pensions, didn't consider administrative costs to manage a hybrid plan or to possibly close current defined benefit plans. It used two hypothetical retiring employees to illustrate how a hybrid plan would work:

As directed by the Committee staff, the hypothetical member is someone hired at age 32 that will eventually retire at age 67 for miscellaneous members and hired at age 27 that retires at age 57 for safety members.

Brown's goal is for a hybrid system that combines retirement income streams aiming to total 75 percent of an employee's income averaged over his or her final three work years. For miscellaneous workers, Brown's proposal envisions 25 percent coming from a 401(k)-type savings account, 25 percent from a defined benefit and 25 percent from Social Security.

Safety workers who don't pay into Social Security would receive 50 percent from a defined benefit. Hybrid pensions for the California Peace Officer Fire Fighter group would cost the state 2.1 percent more, CalPERS concluded.

Some links for those who want to dive into the deep end of the public-pension debate pool:

The CalPERS hybrid cost analysis
Hybrid Actuarial Analysis 2. 2012.docx
Summary of Gov. Jerry Brown's 12-point pension reform plan
Bill language of Brown's 12-point pension reform plan

PHOTO: CalPERS headquarters. Sacramento Bee photo.

View more videos at: http://nbcbayarea.com.

Thanks to Blog User J for flagging this story for The State Worker.

Gov. Jerry Brown's plan to put future state and local government employees into hybrid pension plans and push back the full retirement age for new hires would hit low-paid workers the hardest, according to a recent academic analysis.

Researcher Nari Rhee of the pro-labor UC Berkeley Center for Labor Research and Education concludes that while Brown's suggested package of changes to public retirement systems contains "several sensible proposals," the pension design and age threshold changes "may impose a disproportionately large burden on low-wage workers."

From reporter Charles Piller's story in today's Bee:

Duane Wiles, recently fired by the California Department of Transportation for fabricating bridge tests, has been allowed to resign instead.

This marks the second time Wiles has been "unfired" by Caltrans. The first was in 1998 for incompetence, insubordination, dishonesty and other problems, but the agency was overruled by the State Personnel Board.

This week's settlement agreement with Caltrans prevents a public airing of Wiles' admitted fraud and errors, and removes a public forum for examining whether agency higher-ups responsibly addressed the problem.

Here's the stipulated settlement agreement signed by Wiles, his attorney and Caltrans representatives.
Duane Wiles Settlement Agreement with Caltrans

We can never get everything we learn into a news story. "From the notebook" posts give you some of the extra details behind the news.

Our story in today's Bee examines various factors that have contributed to a management shortage at Cal Fire, particularly the dwindling number of assistant chiefs and the revival of department pay differentials this month intended to correct the problem.

To understand the last 10 years of wage history at Cal Fire, we looked at ...

The Legislative Analyst's June 2, 2006, evaluation of the contract with Bargaining Unit 8, California Department of Forestry Firefighters.

The Sept. 18, 2001, Assembly Floor analysis of AB 649, the bill that included the 2001 Unit 8 contract. (The LAO didn't run labor contract analyses until a 2005 law required them.)

We also looked at revised Pay Differential 369, below, which lays out the details of the recruiting and retention differential revived for Cal Fire assistant chiefs and others in the same Chief Officer series. Of note: The differentials count toward pension calculations, but the "PERSability" is phased in over two years.
Cal Fire Recruitment and Retention Differentials

From The Bee's Dale Kasler:

CalPERS said today it earned a 1.11 percent investment return on 2011, a fraction of the gains from the year before.

The results were announced at a board meeting in Monterey by CalPERS' chief investment officer, Joseph Dear.

Click here to read the rest of Dale's breaking news report.

Barron's, a publication that focuses on investments, criticizes CalPERS' strategy in a recent editorial: "In 2008 and 2009, Calpers met the panic with panic. Because its newer private-equity and real-estate deals required cash infusions, the funds had severe liquidity problems. The system sold stocks as the market declined, partly to try to dodge the downturn in equities and partly to meet its obligations."

The piece rehashes some of CalPERS' best-known failings and concludes that public pension funds "aren't managed by people who have the taxpayers' interests at heart. Most managers are beholden to public- employee unions; some are themselves public employees more interested in their benefits than their costs. ... Boards have taken far more risk, tolerated lower contributions, and given more generous promises than what the residual owners of the funds--taxpayers--would have permitted."

Click here for the Barron's editorial by Thomas G. Dolan.

What do you think? Is Barron's on target?

While there's no shortage of coffee and lunch locales around the Capitol, many state buildings are home to additional dining options. This post is part of a weekly series of mini-reviews of some of those spots for downtown denizens looking to try something new.

The spot: The Plaza Café, located on the ground floor of CalPERS' Lincoln Plaza North at Q and 3rd streets, is about a half-mile walk from the Capitol. It features patio seating with a waterfall (left) and a large, multi-level indoor eating area (below at right). Come at peak breakfast or lunch hours, and be prepared to wait in line for the grill. My gastric brothers-in-arms for my recent visit, CalPERS board member J.J. Jelincic and Jim Zamora, SEIU Local 1000 spokesman, both mentioned that Plaza Café draws customers from several buildings nearby including the Board of Equalization HQ, the Crocker Art Museum and the state Department of Social Services. The business is open for breakfast (6:45 a.m. to 10: a.m.), lunch (11 a.m. to 1:30 p.m.) and snacks (1 to 3 p.m.). Street parking can be a hassle, especially during the three days in the middle of the month that the fund's board meets in an auditorium just a few steps from the cafeteria. Nearby meters charge 25 cents per 12 minutes. The parking garage across the street runs $2.50 per hour, according to CalPERS' website.

The grub: There must a reason that Plaza Café is taking business from other state cafeterias. Maybe it's the locally harvested and organic produce touted on a blackboard at the cafeteria's entrance. Could it be the $5.99 artisan sandwiches? The regularly rotated "global flavors" like the Japanese teriyaki rice bowl ($6.59)? Maybe it's the Bayou wraps with jerk chicken or pork tenderloin with mashed sweet potatoes, red beans, rice, slaw and pineapple salsa ($6.99)? Or it could be the made-to-order pasta, tacos and salads that all run between $6.59 and $6.99. And I haven't even mentioned the grill that was serving a veggie banh mi -- a Vietnamese sandwich -- plus the usual burger-and-fries fare. Safe to say that this is easily the most diverse menu offered by any state cafeteria reviewed by The Dish.

On our plates: I ordered a veggie calzone. Jim sampled the goat cheese with roasted plums and herbs on crostoni (right). J.J. went for the grilled cheese and short ribs sandwich with curly fries (left).

The bill: The food and two soft drinks (Jim didn't buy a coke) plus tax came to $22.45. Note to the Fair Political Practices Commission: J.J. paid for his meal.

The good: This isn't your dad's old state government chow line. Plaza Café's atmosphere is open and bright, and the food's degree of sophistication is surprising. I heard that the soups are terrific, especially the butternut, corn and coconut chowder. Regulars also raved about the blueberry pancakes with ricotta cheese often offered for breakfast. Our lunches received high marks, too, for the most part. J.J. said the meat in his sandwich was "awesome," tender and tasty. His fries were done to his liking, with a nice exterior crunch and a warm, chewy center. Jim said the plum crostoni had a nice blend of the sweet fruit and the garlicky cheese. My calzone was enormous, nearly covering my 9-inch paper plate.

The bad: J.J. wished the bread on his grilled sandwich had been a little crispier. Jim wanted some crunch on his crostoni, too. He suspected that even though the bread bore panini grill marks from its preparation, that it was softened by the cheese and refrigeration. My calzone was an unadventurous mountain of crust packed with ricotta, asparagus and spinach and an unsatisfying smudge of bland tomato sauce.

Grade: 4.5 sporks out of 5.

Have you been to CalPERS Plaza Café? Share your experiences in the comments field below. Share your experiences in the comments field below. And check out our recent reviews of Griselda's World Café, Gold Rush Grille, Side Bar Café, Cafe 744, Capitol Coffee and Dave's Deli (closing at the end of this month, we hear).

Putting "Stanford," "study" and "pensions" in a headline guarantees an online traffic surge. An April 2010 post, "Stanford study: Public pensions a half-trillion dollars short," ranked as the 15th most-viewed State Worker blog item among the 1,000 we posted that year.

This year's follow-up to that report by Stanford University professor Joe Nation ranked even higher -- and if the subsequent fallout from the report is an indication, rankled public-pension supporters even more.

Here's the Dec. 13 post on the latest Stanford study, "Stanford study pegs California pensions' shortfall at $500 billion."

With just 400 to 450 words for our weekly State Worker column, some of what we learn each week never sees print. Column Extras give you the notes, the quotes and the observations that inform what's published.

Our weekly column today looks at the latest developments with the new my|CalPERS computer system and how the change from the old systems has affected the fund's call center.

The report is informed by our attendance at Wednesday's Board of Administration meeting, interviews before and after, earlier reporting and a few documents:

Welcome to the fifth and final entry (for now) of "Dialing for CalPERS," the ongoing (and highly unscientific) series that spot checks how long the fund's Interactive Voice Response system says callers must wait to speak with a real person.

CalPERS said it tweaked the system this morning and indeed it did. The voice recording starts by warning that peak call hours are between 9 a.m. and 11 a.m.: "You may experience a shorter wait time by calling before or after these hours." Good move.

We headed into member services to apply for retirement, since more state workers retire in December than any other month. We asked for a representative and encountered the system's other new feature: an estimated range of time on hold. In this case, it was between 33 minutes and 45 minutes.

We also understand that the fund has made changes to allow more callers to get a call back rather than remain on hold. The fund is still adjusting that program, officials said at today's CalPERS board meeting.

Kudos to CalPERS for making changes to the system that will, hopefully, reduce stress levels for callers and call center employees alike.

IMAGE: www.photobucket.com

It's Day 4 of "Dialing for CalPERS," the ongoing and highly unscientific series that spot checks how long the fund's Interactive Voice Response system says callers must wait to speak with a real person.

Hold time for a 4:10 p.m call today to the disability benefits unit, according to the automated system: 29 minutes.

We've been talking to CalPERS about the situation. Officials there say that the IVR's estimates often overstate caller hold times. Here's an explanation and a tip on when are the best time and worst times to call in:

California Common Sense has posted an adjunct "data transparency portal" supplementing this morning's Stanford study that estimates California's three biggest pension funds are carrying up to $485 billion in unfunded liabilities.

The CCS website allows users to parse the Stanford data by pension fund and by various metrics, including the one captured below that compares unfunded liabilities to general fund spending (excluding K-12 education and Health and Human Services).

This link opens the CCS website.

This is Day 3 of "Dialing for CalPERS," a regular (and highly unscientific) feature that reports how long the fund's Interactive Voice Response system tells us we have to wait to speak to a representative when we call in.

We also received an email from CalPERS spokesman Brad Pacheco that explains how the wait estimates that callers hear on the phone are longer than hold times they actually experience.

Welcome to Day 2 of "Dialing for CalPERS," a regular (and highly unscientific) feature that reports how long the fund's Interactive Voice Response system tells us we have to wait to speak to a representative when we call in.

We called CalPERS today at 10:13 a.m. and worked our way through the automated phone system to the death benefits unit to get a claim status. Estimated hold time: 1 hour, 15 minutes.

Curious to see if the hold time was the same if we were seeking other information, we called back and navigated to retiree health benefits, specifically long-term care. The phone system suggested we check a specific website, call a different number for information or speak to a CalPERS representative. Hold time for that: 1 hour, 23 minutes.

CalPERS has said it's working on getting the telephone hold times down and has statistics that indicate that actual telephone wait times on average have been about 30 minutes. Fund spokesman Brad Pacheco is working on getting new figures, which we'll share here. Click here for more background. Next week we'll start a chart to track the results from our daily spot checks.

IMAGE: photobucket.com

CalPERS: Inside the Strategy
An interview with CalPERS Chief Investment Officer, Joe Dear, who discusses the European financial crisis and its impact on the U.S. and the retirement fund's strategy. (CNBC)

We're unveiling "Dialing for CalPERS," a regular (and highly unscientific) feature that will report how long the fund's call-routing Interactive Voice Response system tells us we have to wait to speak to a representative when we call in.

Today we navigated the system to the retiree death benefits at 10:30 a.m. The IVR voice on the other end of the line said we'd have to wait 1 hour and 33 minutes to speak to a representative.

CalPERS is continuing to experience "unusually long" wait times when members call in, the fund's recording says, a by-product of a transition to its 3-month-old, half-billion-dollar computer system. The State Worker has heard from dozens of disgruntled government employees and retirees with tales of phone waits of up to 2 hours or more when they're trying to get information or straighten out errors. (Click here for a recent report on the CalPERS computer system.)

Fund spokesman Brad Pacheco said in a Nov. 29 email that the fund has been fine-tuning the telephone system and offered these statistics:

During the 10 weeks since we launched my|CalPERS, 34 members out of the 98,000 calls answered waited more than 2 hours.

During the last 2 weeks, 3 members out of the over 17,000 calls answered waited more than 2 hours. Our average wait time for members over the past two weeks has been 27 minutes.

We'll post CalPERS' lastest numbers when they become available and we'll continue our own little spot checks. Don't be surprised if on-hold times are up, since December is a heavy month for the fund's call center because so many employees retire at the end of the year.

IMAGE: photobucket.com

With just 400 to 450 words for our weekly State Worker column, most of what we learn each week never sees print. Column Extras give you some of the notes, the quotes and the observations that inform what's published.

Our State Worker column this week looks at the recent hearing held by the Legislature's newly created Conference Committee on Public Employee Pensions. Here are some CalPERS references that were the source of numbers in the column.

Here's CalPERS' preliminary analysis of Brown's pension reform plan.

This link opens a fact sheet on CalPERS pension statistics and trends through fiscal 2010-11, including a table of employee pension contribution percentages.

Gov. Jerry Brown has appointed a lawyer and a former deputy state treasurer, both Democrats, to the California State Teachers' Retirement System board.

David Siders has details here at our sister blog, Capitol Alert.

We never get all of what we learn into a news story, but this blog can give users the data, the notes and the quotes from the notebook that informed what was published.

Our story today reports on CalPERS' problems with its new computer system, dubbed my/CalPERS, and its implementation, the Pension System Resumption Project. Since the system's startup in September, the fund has been slower to process death benefits claims for some members. The delayed payments have prompted some health insurance providers to take some members off their rolls for failing to pay their premiums -- which must be deducted from the death benefit payments).

CalPERS says it's giving the matter top priority and that no one is in danger of losing their medical coverage because of the computer problems.

Want to dig deeper? Here are some of the documents that informed the story:

The transcript of the CalPERS Board of Administration meeting on Oct. 19. The my/CalPERS discussion starts on page 48.

The transcript of the Nov. 16 CalPERS Board of Administration meeting. Scroll down to page 53 for my/CalPERS talk.

An Oct. 31 performance report on the transition from CalPERS' old patchwork computer system to the new one. We thought one of the metrics on page 2 was particularly interesting: "CalPERS reputation may be damaged if Judges and Legislators functionality is not properly implemented."

IMAGE: www.freeclipart.com

Watch Modesto for an indication of the public's mood about public pension "reform." Residents of the Central Valley city on Tuesday consider three ballot measures that sound a lot like retirement changes proposed by Gov. Jerry Brown and others rolled out last week by the California Pension Reform group.

Measures Q, R and S, written by city councilman and mayoral candidate Brad Hawn, are non-binding advisory measures, but they would gauge the direction that that residents in the Stanislaus County seat think their officials should take labor negotiations.

Measure Q asks whether the city should transition from traditional defined benefit pensions for employees to defined contribution plans common in the private sector. Measure R asks whether the city should jettison the single-year salary factor for pension calculations in favor of a three-year salary average. Measure S asks voters to weigh in on increasing the minimum retirement age, which for most city employees is 55. Police officers and firefighters can start drawing pensions at age 50.

Click here for the measures' ballot language. Click here for the Stanislaus County sample ballot. Analyses and statements for and against Q, R and S start on PDF page 36.

Labor has launched local ads against the measures, including the one above that criticizes pushing back the retirement age for police.

Hat tip to Blog User S for alerting us to the union ad.

Earlier this week we asked you to send in questions for State Controller John Chiang, who visited the The Bee Capitol Bureau on Wednesday.

We had a chance to ask a question submitted by retired state worker Terry Sutherland , who asked if Chiang thought term limits for elected CalPERS board members would be an effective reform.

Chiang first reflected on what legislative term limits have done to state governance, then focused on establishing them for CalPERS:

The Califonia Public Employees' Retirement System is live Tweeting its Educational Forum for employers at the Long Beach Convention Center.

CalPERS spokesman Brad Pacheco says that about 600 employer representatives attending the event, which started today and runs through Wednesday. Follow events on Twitter at #CalPERSEdf.

Speaking of CalPERS and the Internet, the fund has scheduled a Nov. 10 "Planning Your Retirement Webinar" that starts at 9 a.m. and ends a 11 a.m. Topics the online session will cover include:

Our Sunday story about the increased interest in CalPERS' additional retirement service credit and its impact on CalPERS member services unit didn't mention one way you can speed up the cost estimate process for everyone: Use one of the fund's online calculators.

The California's state and local public employee retirement systems had $470 billion in cash and investment holdings in 2009, down 27 percent from $643 billion in 2008, according to new statistics released by the U.S. Census Bureau.

Nationwide, state and local government retirement systems saw their cash and investments lose a collective $726 billion, falling to $2.5 trillion in 2009. The 23 percent drop in 2009 followed a $177 billion loss for the funds in 2008.

The data come from the Local Public Employee Retirement Systems Survey, which takes an annual snapshot of the financial activity and membership information of the nation's state and local public employee retirement systems. The figures include funds' revenues, expenditures and investment holdings nationally and broken out by state and local government categories.

A recent technology upgrade and a possible pension policy change has backed up the workload at CalPERS.

The fund went offline for a little more than two weeks last month to switch computer systems, which temporarily shut down processing retirement and reinstatement applications and processing member enrollment into health and dental plans.

That wasn't a surprise. Fund officials anticipated the Sept. 2 to Sept. 18 shutdown would impact its member services and put out the word.

At the same time, CalPERS has been hit with a flood of service credit pricing requests. Gov. Jerry Brown's anticipated plan to ax "airtime" purchases has prompted the surge in inquiries, we hear.

Fewer state workers are taking their first pension check this year than last, the latest CalPERS service retirement data show, although the number of new retirees remains well above 2009 levels.

As the graph above illustrates, 817 employees filed papers in September down nearly 15 percent from the 957 who applied in during the same month last year. The number of state workers who applied for retirement has fallen five months in a row when compared with the same period in 2010.

Some 8,454 state workers have entered retirement in 2011, off more than 11 percent from the 9,533 who retired during the first nine months of 2010.

Still, the number of employees retiring from state service is up 18 percent compared with two years ago when 7,143 state workers took their first pension checks from January to September. A total of 9,400 state workers retired in 2009.

Across all of CalPERS, 24,506 state and local employees have retired this year, down 7 percent from the first three quarters of last year.

The CalPERS data reflects the number of service retirement applications submitted from mid-month to mid-month, so the latest figures include the second half of August and the first half of September. Click here to download the data tables.

What's in a name? A state retiree organization hopes it's bigger membership.

CSEA Retirees Inc. is not only changing its name to California State Retirees, but it's redefining its mission to include state retirees from all departments and agencies, not just CSEA-represented bargaining units.

California State Retirees is launching its new branding campaign Friday at 10 a.m. with a news conference at the Robert Carlson Auditorium, 400 P St., Sacramento. Listed speakers include Assemblyman Roger Dickinson, D-Sacramento, and the organization's president, Roger Marxen.

The group now counts some 31,000 members, most of them from SEIU Local 1000, the California State University Employees Union and the Association of California State Supervisors. Officials now want to make clear that anyone who has retired from state government may become a member.

The name change was made official when the group filed legal papers with the secretary of state. Conference delegates approved the change in August.

Learn more about the organization at www.californiastateretirees.org.

By Dale Kasler
dkasler@sacbee.com

CalSTRS today suspended its home loan program, temporarily cutting off a vehicle that's funded $5.9 billion worth of mortgages since its inception in 1984.

The California State Teachers' Retirement System said potential borrowers must have their applications submitted, and their interest rates locked in, by Friday.

Spokesman Ricardo Duran said the program is being suspended because Bank of America, which runs the program, is selling the unit that operates that business. Although it's CalSTRS' money that's being loaned out, "we don't have the staffing power to run the program by ourselves," he said.

Since the program began, it has made more than 43,000 home loans.

The Fair Political Practices Commission signed off on fines for more than a dozen current and former CalPERS board members and employees today, closing the books on an investigation that started with 58 people connected to the mammoth pension fund.

The action today rubber stamped penalties already agreed to by 16 individuals who violated state law by failing to report meals, alcohol, clothing, sports and entertainment tickets and other gifts received from CalPERS investment partners since 2006.

The fines ranged from $3,600 against portfolio manager Shaun Greenwood to $200 for Sue Kane an adviser to CalPERS' board President Rob Feckner.

With just 400 to 450 words for our weekly State Worker column, most of what we learn each week never sees print. Column Extras give you some of the notes, the quotes and the observations that inform what's published.

Our column in today's fiber/cyber Sacramento Bee takes a longer look at the results of the recent gift-reporting investigation of CalPERS staff and administrators, both former and current. We noted that Fair Political Practices Commission investigators determined that half of the 58 individuals investigated did nothing wrong and seven received warning letters and nothing more.

Here are the names of 25 of the 29 individuals who received no punishment or warning letter from the FPPC, according to a list provided by CalPERS and researched by The Bee. The FFPC says that 29 cases were dropped because the individuals were blameless, so we're short four names. We'll amend this post when we get them.

Current staff and board members
Amit Aggarwal
Judy Alexander
Eric Baggesen
Derek Bergquist
Eric Busay
Dave Carmany
Diego Carrillo
Craig Dandurand
Joseph Dear
Jane Delfendahl
George Diehr (board)
Al Grijalva
Derek Hayamizu
Ken Huettl
J.J. Jelincic (board)
Lynn Keay
Henry Lam
Farouk Majeed
Randy Pottle
Michael Riffle
Brian Russell
Eric Schlendker
Dan Tanner

Former staff
Fred Buenrostro
Mary Cotrill

A sweeping measure that would curb pensions for current government employees, retirees and future hires has been given approval to collect signatures to qualify it for a statewide vote.

The "Pension Solvency Act" would take effect immediately upon voter approval and apply to all California public pension systems. The provisions include:

With just 400 to 450 words for our weekly State Worker column, most of what we learn each week never sees print. Column Extras give you some of the notes, the quotes and the observations that inform what's published.

Our column in today's Bee looks at the final chapter of the Fair Political Practices Commission's investigation into gift reporting lapses at CalPERS.

Bottom line: The investigation turned up paperwork gaps and 16 people have agreed to pay fines totaling about $20,000 for failing to disclose some freebies they received from companies doing business with CalPERS.

In an unusual move, FPPC Chief of Enforcement Gary Winuk, wrote a memo to commissioners about the investigation in advance of the Sept. 22 hearing set to consider the 16 stipulated settlements reached. He concluded that there were several factors working in CalPERS favor, including the employees' and board members' cooperation, confusion between an in-house reporting mandate and what the law requires and CalPERS' "strict no-gifts rule for staff and ethics training programs that go beyond the requirements of state law."
CalPERS investigation memo by FFPC Enforcement Chief Gary Winuk

The board of the California Public Employees' Retirement System publicly reprimanded one of its own this afternoon for failing to adhere to its standards of conduct.

A week after the State Personnel Board upheld a sexual harassment reprimand against him, John Joseph Jelincic Jr. was censured by his colleagues and stripped of some board responsibilities.

Jelincic was excused from the brief meeting called specifically to punish him. CalPERS President Rob Feckner read a letter on Jelincic's behalf that said he wouldn't make any comment due to "the current legal status" of the case.

The board then voted 8-0 to suspend Jelincic for six months from his chairmanship of the CalPERS investments policy subcommittee and his vice chairmanship of the health benefits committee. The group also curtailed his board-related travel until Mar. 1.

This afternoon's action was consistent with the punishment given to board member Priya Sara Mathur last year after she repeatedly failed to file personal and campaign financial disclosure forms required by law.

Jelincic, who is employed in CalPERS investment office, was reprimanded by CalPERS after three women in his department complained that he leered at them and spoke to them inappropriately before and after assuming his seat on the board in January 2010. Jelincic has said that some events didn't happen and that others where misinterpreted.

The board took its action against him in his capacity as a board member, not as a CalPERS employee.

A week after upholding a sexual harassment reprimand that CalPERS issued to one of its board members, the State Personnel Board has released the ruling issued by the administrative law judge who agreed with the fund's action.

Joseph John Jelincic Jr. had appealed CalPERS' action against him, which led to a July hearing and Judge Teri L. Block's subsequent decision that Jelincic's challenge was without merit. (Click here for more background on the case.)

SPB wouldn't release Block's ruling until its five-member board could take it up at its Sept. 6 meeting and then deliver it to CalPERS and Jelincic.

Reached by phone this afternoon, Jelincic said that he had reviewed the judge's ruling: "Clearly, the administrative law judge bought all the state's arguments and rejected all of mine."

CalPERS said after the SPB upheld the reprimand that it "has a zero tolerance policy for harassment of any kind. We are committed to ensuring that our employees have a work environment that is professional, safe, and free from harassment."

More than a dozen staff and board members of the California Public Employees' Retirement System face fines ranging from a few hundred dollars to $3,600 for failing to report gifts, according to an agenda posted on the Fair Political Practices Commission's website today.

The cases cover 16 individuals who failed to report gifts that included meals, bottles of wine, clothing, a kayak trip, a round of golf and Rose Bowl tickets.

The FPPC launched its investigation in May. Investigators combed through records of more than four dozen former and current board members and employees going back to 2006. The fines on the FPPC's website are stipulated agreements that the commission will consider making final at its Sept. 22 meeting.

CalPERS President Rob Feckner is named for failing to report five meals bought for him in 2007 and 2008 with a combined value of $277.39. He has agreed to pay a $400 fine.

FPPC staff suggested that Shaun Greenwood, a CalPERS portfolio manager, receive the largest fine, $3,600 for 18 counts of failure to report gifts he received between 2006 and 2009. The value of the meals, musical performances, whiskey, clothing, and other items from various financial firms: $2,700.

State law requires state government employees report gifts worth more than $50 from a single entity in a year. The law also caps the total value of gifts allowed in a year from a single source at $420. CalPERS, which has been embroiled in an influence-peddling scandal involving former executives and board members, currently forbids its employees from accepting gifts.

The Legislature last week passed Senate Bill 439, that bans employees and board members of CalPERS and its cousin fund, the California State Teachers' Retirement System, from accepting gifts totaling more than $50 per year from a single source. Gov. Jerry Brown has until Oct. 9 to sign it into law.

The CalPERS Board of Administration has announced it will publicly discipline one of its members at a special session on Wednesday afternoon.

The agenda item (embedded below) was added this afternoon. It doesn't name the board member. We have e-mailed CalPERS and left a message with its press relations department to see if we can get more details.

CalPERS' special session announcement comes just a week after at-large board member J.J. Jelincic lost his bid to overturn a reprimand he received for sexually harassing CalPERS coworkers while he was working in the fund's investments office.

Jelincic contended the complaints that led to the action against him were either founded on misunderstandings or orchestrated by a CalPERS management that was uncomfortable with his dual role as board member and employee. He appealed the reprimand to the State Personnel Board and lost.

Jelincic no longer works as a CalPERS investment officer. On July 1, the fund released him to work full time on board business. He couldn't be reached for comment this afternoon.
CalPERS notice of disciplinary action

New CalPERS data shows that state worker retirements in August dropped by more than a quarter compared to a year ago. It's the fourth month in a row that the number of state government employees drawing their first pension checks has fallen when compared with 2010.

Some 662 state workers filed their service retirement papers, down 28 percent from August 2010. For the calendar year to date, CalPERS has processed applications for 7,637 state government employees this year, 11 percent fewer than the 8,576 who retired during the first eight months of last year.

The CalPERS data track new service retirement applications from mid-month to mid-month. The January spike includes state workers who retired at the end of December, many prompted by pension cost-of-living-adjustment rules that delay a retiree's initial COLA until the first May after he or she has been retired a full calendar year. The July spike includes employees who hold off on retiring until the June 30 fiscal year-end. Click here to view the data represented in the table above.

A Republican-authored measure that changes CalPERS' reporting requirements to the Legislature is on its way to Gov. Jerry Brown's desk.

AB 1247, tweaks fund reporting requirements that were enacted as part of the 2010-11 budget package. The changes include limiting the report's scope to state employee pension plans and eliminating a requirement that the state treasurer publicly assess the reasonableness of CalPERS' contribution rate calculations.

Assemblyman Nathan Fletcher, R-San Diego, wrote the bill. It cleared the Legislature without a single dissenting vote. Fletcher is running for San Diego mayor next year.

IMAGE: Assemblyman Nathan Fletcher / www.asm.ca.gov

We've heard back from Michael Lee Madsen Sr., a political activist who has received the secretary of state's permission to collect signatures for a pension fund investment initiative.

Here's the email we sent Wednesday followed by the unedited reply we received from Madsen on Thursday. We're publishing it with Madsen's permission:

State Auditor Elaine Howle has placed funding the California State Teachers' Retirement System on a growing list of "high risk" issues facing state government. CalSTRS joins a fiscal and political gallery of tough problems that include the state's budget, managing the state's workforce and maintaining California's infrastructure.

Bee colleague Dale Kasler has more in this report. You can read the audit below. Click here to see a summary of California's high-risk issues and departments.
The California State Auditor's Updated Assessment of High‑Risk Issues the State and Select State Agencies ...

The proponent of a ballot measure requiring public pensions in California to invest most of their assets in California firms can begin collecting the signatures from 807,615 registered voters to qualify the measure for the November 2012 election.

The proposal would require the state's public sector pension systems to maintain at least 85 percent of their investments in California-based businesses. The goal is to boost economic activity in the state.

The Legislative Analyst's Office said the measure wouldn't accomplish that goal and would probably hurt funds' investment returns.

Cal Watchdog has reported that Michael Lee Madsen, Sr., who submitted the initiative, is a North Highlands activist who lists his activities as "writing scripts and petitions." We've emailed him for a response to the LAO criticisms and to find out whether he has money to collect signatures by the Jan. 12, 2012, deadline. We'll let you know if we hear back.

Here's the attorney general's title and summary of the measure:

State workers will identify with this: More and more cities, counties and school districts in California are lowering retirement benefits to new hires and offering financial incentives for long-time employees to leave, according to a report discussed during CalPERS' board meeting this morning.

Still, nearly four dozen contracts increased benefits during fiscal years 2009-10 and 2010-11, although "(m)any agencies are currently seeking advice on potential cost saving measures to help them find financial relief from the market downturn and budgetary concerns," the report to the fund's Benefits and Program Administration Committee says.

Michael Bilbrey has won a seat on the CalPERS Board of Administration by nearly 40,000 votes, according to preliminary results released late today by the pension system.

Bilbrey faced Richard Ross in a special runoff election to fill a vacancy on the 13-member board. The Secretary of State's Office must still certify the results.

A CalPERS press release said Bilbrey received 117,034 votes, 60 percent, and Ross received 78,718 votes, 40 percent.

Bilbrey takes over the at-large seat that Kurato Shimada resigned from last August. His term expires Jan. 15, 2014.

For more on the first round of voting, read an earlier post on The State Worker.

UPDATED at 2:30 p.m. to include comments from DPA

The chief executives of CalPERS and CalSTRS along with Controller John Chiang and Treasurer Bill Lockyer are asking the Brown administration to overhaul the state's travel meal reimbursement rates to help accommodate for trips to expensive locales.

In a letter sent Tuesday to Department of Personnel Administration Director Ronald Yank, four officials -- Chiang, Lockyer, Anne Stausboll of CalPERS and Jack Ehnes of CalSTRS -- requested that DPA "consider conforming" the state rates with federal rates because the pension systems have grown concerned that its employees are bearing significant out-of-pocket business costs.

The state's current reimbursement rates came into question earlier this year after Chiang sponsored legislation that would bar the pension systems' board members and officials from accepting gifts totaling more than $50 from a single contractor in one year. Chiang expressed concerns with meal tabs being "picked up by those seeking multimillion dollar deals" with the systems.

The state's meal and incidentals rates allow state workers to reclaim a maximum of up to $6 for breakfast, $11 for lunch and $18 for dinner. Though the same rates apply, rank-and-file employees technically negotiate them through union collective bargaining agreements.

Federal rates, which are set by the General Services Administration, range from $7 for breakfast to $36 for dinner, depending on the location of the meal.

"Rates are something worth looking at because while travel needs to be limited, they must be reasonably set to accommodate those doing the traveling," said Chiang spokesman Jacob Roper.

Department spokesman Lynelle Jolley said Yank is happy to meet with the officials as well as staff at the Department of Finance to discuss the proposal. She said that while Yank is sympathetic about the issue, consideration must be given to whether the state can afford rate changes at this time.

The officials wrote in their letter that the governor's travel restriction policy has "significantly reduced" their out-of-state travel spending, but they still send a limited number of staff members on frequent, long and last-minute trips.

The letter suggested that any increased costs be absorbed by existing department budgets.

"This will relieve staff of having to pay for legitimate business travel out of their own pockets," the officials wrote, "but in a manner which imposes a higher degree of fiscal discipline on the state departments and agencies which require and authorize the travel."

CalPERS board member J.J. Jelincic said that the state's rates force the pension fund's employees to either accept meals as gifts or pay hundreds of dollars out-of-pocket on some trips.

"If we ask staff to go do due diligence, we have to be willing to pay the freight," he said Wednesday. "Either they are going to pay reasonable reimbursement rates or due diligence will suffer."

Jelincic said in May that the state's rate "don't cut it in Manhattan, Boston, Chicago or San Francisco, to list just a few examples."

The personnel department's initial position, according to Jelincic, has been to support exploring changing the system for rank-and-file employees. But changing the rates for managers, who are not covered by collective bargaining, isn't supported because the department considers their regular pay to be high enough to bear the extra costs.

Letter to Ron Yank

The Fair Political Practices Commission has spared at least six current and former CalPERS officials from paying fines for failing to report gifts on official disclosure forms.

The FPPC opened an investigation earlier this year over allegations that 49 CalPERS board members and employees failed to accurately report gifts from lobbyists, contractors and other entities during the past five years. Six letters released last month are among the first results from the investigation. More findings are likely to be released over the next several weeks.

FPPC staff closes investigations by concluding there was no violation, advising an individual that he or she nearly committed a violation, issuing a warning that recognizes a violation was not worthy of a fine or asking the commission to approve a fine of up to $5,000 for each violation.

A proposed initiative that would require the state's public sector pension systems to maintain at least 85 percent of their investments in California-based businesses would weaken returns and fail to spur significant economic activity in the state, according to the Legislative Analyst's Office.

In a report released last week, Legislative Analyst Mac Taylor and state finance director Ana Matosantos wrote that the proposal "most likely" would cause investment returns to fall "because the measure would require a huge concentration of investments in one economic market--California--that is responsible for only about 3 percent of world economic output."

They added, "While this measure is intended to increase economic activity in California, it seems uncertain that it would result in such an increase over the long term."

Michael Lee Madsen, Sr. submitted the initiative at the end of June. The attorney general's office is expected to release a title and summary of the proposal, including the legislative analyst's fiscal commentary, in mid-August. Shortly after that, Madsen could begin the expensive process of collecting signatures to get his idea on the November 2012 ballot.

Madsen defines a "California-based business" as one with at least 70 percent of its workforce in California. The 85 percent investment requirement would kick in Jan. 1, 2016.

As of March 31, CalPERS invested about 9 percent of its $234 billion in assets in California-based companies. Companies elsewhere in the United States accounted for another 31 percent.

PHOTO CREDIT: CalPERS building in downtown Sacramento. (Sacramento Bee/ Jay Mather).

The number of state workers joining the CalPERS retirement roll was almost 40 percent lower in July 2011 compared to July 2010.

Nearly 1,800 workers filed for retirement last July, the largest spike in recent years in any month other than January. This year, 1,072 state employees filed for service retirement between June 16 and July 15.

CalPERS counts new retirement data from mid-month to mid-month, so many January retirees are people who retire just before the new calendar year and many July retirees are people who retire just before the new fiscal year.

Overall, the latest figures mean 6,975 former state workers have started collecting pensions through the first seven months of 2011. By this point last year, there were 7,660 new retirees on board. Across all of CalPERS, including local public sector workers, there have been more than 1,400 fewer retirements.

We reported on the June numbers yesterday. The full data table from CalPERS can be found here.

The chart below shows the overall increase in retirements among the state workforce in recent years as furloughs and other budget cutbacks merged with a large number of baby boomers beginning to hit retirement age.

About 9 percent fewer state workers applied for retirement this June than in June 2010, but the total number of new state retirees so far this year has slightly outpaced the figure from the first half of 2010.

According to CalPERS data, 810 state workers filed for retirement between May 16 and June 15, compared to 892 during the same period last year. Overall, a dozen more workers -- 5,903 -- started collecting pensions in the first half of 2011 than in 2010. The fund's new retirement numbers run from mid-month to mid-month.

State workers account for only about a third of CalPERS members, however. Across the entire system, a total of 14,420 public-sector workers filed for retirement during the first half of this year -- 185 fewer than in the first half of 2010.

The chart below shows the overall increase in retirements among the state workforce in recent years.

View the complete data table from CalPERS here.

Check back tomorrow for July numbers, which appear to be significantly down from a record high in 2010.

From The Bee's Dale Kasler :

California's two pension funds reported their biggest investment gains in years today as they continue to climb out of the hole caused by the market crash of 2008.

CalSTRS said it earned 23.1 percent, its highest in 25 years, in the fiscal year that ended June 30.

CalPERS did nearly as well, posting a 20.65 percent gain. That was its best in 14 years.

Click here for the rest of Dale's story.

IMAGE: www.freefoto.com

Michael Bilbrey and Richard H. Ross will face off at the CalPERS candidates forum scheduled for Wednesday from 6 p.m. to 8 p.m. in the CalPERS auditorium at 400 P St. in Sacramento.

PERSWatch is sponsoring the event, which will be moderated by the League of Women Voters of Sacramento County.

Bilbrey and Ross are in a runoff for one of the fund's at-large seats on the 13-member Board of Administration. Ballots went out to members on Thursday and must be postmarked or received by CalPERS no later than July 28 to be counted.

Click here for more info about the election.

IMAGE: www.freeclipart.com

A story in the New York Times quotes CalPERS board member Tony Oliveira and former fund chief actuary Ron Seeling on public employee pension enhancements approved more than a decade ago. The story also delves into the union's strategy a few years ago to bump up benefits for their members at the local level and the current debate over pension benefits.

No doubt that this story and its accompanying graphics will be grist for the pension debate mill. A few passages give a sense of the story's angle:

From today's Bee, in case you missed it:

Undaunted by allegations of fraud, CalPERS on Monday formally awarded a huge drug-benefit contract to CVS Caremark.

CalPERS chose Caremark even though the company is being sued by several former employees for allegedly defrauding the pension fund the last time it held the contract, nearly a decade ago.

Click here to check out the rest of the report by The Bee's Dale Kasler.

Fewer state workers applied for service retirement in May than a year ago, the latest CalPERS data shows, marking the third month this year that the rate has declined.

The numbers show that 822 state workers put in their paperwork between April 16 and May 15, down roughly 6 percent from the same period 2010.

So far, 5,093 state employees have entered retirement in 2011, compared to 4,999 who retired between January and May of 2010.

Although the year-over-year May and year-to-date numbers show slight change from 2010, they are still significantly higher than the same periods for 2007, 2008 and 2009, reflecting in miniature how the demographics of the aging workforce continue to impact the rate at which state workers are leaving.

For example, 3,192 state workers retired from January through May 2007 (which is as far back as the CalPERS data tracks) and just 7,778 retired that entire year.

And, as we noted in our State Worker column last week, Gov. Jerry Brown's February hiring freeze has slowed hiring significantly compared with the final months of Republican Arnold Schwarzenegger's administration.

(Of course, the state's use of retired annuitants and outside consultants isn't part of those figures. That's a topic for another day.)

Coincidentally, the rate at which all state and local CalPERS members retired increased a little over 7 percent in May to 2,007, as the data in the first table show. The state-only retirement figures are in the second table.

CalPERS' new retirement data run from mid-month to mid-month. The fund's active and inactive members include 1.1 million state, local and school employees. About a 31 percent of them are state workers. Another 500,000 or so retirees or their survivors receive a monthly allowance.
CalPERS service retirement applications January 2007 through May 2011

As we told you earlier this week, CalSTRS investment staff sent a letter to CalPERS investment staff encouraging them to hang in there amid a publicized scandal, a gifts probe and legislation that impacts the value of gifts that investment employees at either fund can accept and lengthens "revolving door" prohibitions should they leave for the private sector.

"These are difficult times," the June 1 letter says. "Defined benefit plans are under attack. Public employee pensions are in the spotlight and the financial markets are more volatile and challenging than ever before. Couple all of that with the burden of new rules and regulations, and it is apparent that it's getting harder and harder to simply do our jobs."

Here's the letter from CalSTRS to CalPERS. It was signed by nearly 70 CalSTRS investment staff. We've omitted those signatures as a security precaution:

PE Manager, a pension fund industry publication, has reported that CalSTRS investment staff has sent a "strongly worded" letter of support to their CalPERS counterparts, who have come under scrutiny by the Fair Political Practices Commission for gift reporting records discrepancies.

Many public pension investment employees have complained that they're being made scapegoats for real and imagined sins by their employers.

For instance, Controller John Chiang has proposed legislation that would cut the value of gifts that they can receive from $420 per person or business to $50. Another Chiang bill would set new limits on the funds' board members and employees after they sever ties with either organization.

There's the FPPC investigation. And there's the taint of an influence-peddling scandal that has damaged morale at CalPERS in particular.

Click here for the PE Manager piece.

The Fair Political Practices Commission and CalPERS Board of Administration President Rob Feckner have agreed that he failed to properly report two free meals that he received from fund partners, Feckner said in this Wednesday evening e-mail to The State Worker:

Just to give you the updated information I told you I would provide you. I have my final letter from the FPPC after clarifications and info sharing, the decision is that I now only have 2 infractions.

1 dinner with AEW, a partner in senior housing, in 2007
1 dinner with Goldman Sachs in 2008.

The others have been removed.

I have now signed the stipulation order and submitted payment for my $400 fine for 2 dinners in 5 years. I am putting this behind me and chalking it up to lessons learned.

The FPPC looked at Feckner's reporting records as part of a wider probe of gifts received by current and former CalPERS board members and employees. The investigation turned up 49 people with alleged violations, but it's not yet clear the degree of the infractions, since the commission hasn't released details of its investigation yet.

It's almost certain some of the allegations will dropped entirely or reduced. In Feckner's case, investigators thought he had failed to report four meals in five years. FPPC Executive Director Roman Porter declined to comment on the Feckner matter.

Michael Bilbrey and Richard Ross will face each other in a runoff for the CalPERS Board of Administration's Member-At-Large Position B seat, since they were the two top vote getters in a field of eight candidates for the position.

Bilbrey, first vice president of the California School Employees Association, received 46,032 votes -- 25.5 percent of the 180,474 ballots cast. Ross, who retired last year as a deputy director with the Gambling Control Commission, received 26,522 votes or 14,7 percent of ballots cast.

Bilbrey and Ross are vying for the seat formerly held by Kurato Shimada, who resigned last year.

CalPERS manages the retirement benefits for some 1.6 million California state, regional and local government workers, retirees and their families. The 13-member board sets the broad vision for the fund, including rates it charges employers and how it allocates some $236 billion in assets.

The fund will mail runoff ballots to members on June 30. Returned ballots must be postmarked by July 28  to be counted.

This morning The State Worker learned that PEHub blogger Jonathan Marino on Monday reported some inside details about the Fair Political Practices Commission investigation into possible gift reporting violations by CalPERS staff and board members.

You can click here to read the piece, which gives details of a meeting between fund CEO Anne Stausboll and CalPERS staff:

Last Wednesday, pension fund CEO Anne Stausboll addressed more than 200 CalPERS investment staff employees in a closed session meeting. At that meeting, between 50 and 60 staffers at varying levels of the CalPERS investment team were told they faced warnings and possible fines of $200 to more than $20,000, two sources with knowledge of the meeting said.

We asked CalPERS spokesman Brad Pacheco about the report. He disputed two points in the piece that came from unnamed sources:

- Anne didn't meet with 200 people. It was less than 100.

- It's not "nearly everyone who does investments." We have 230 investment staff, more than 100 of those are credentialed investment professionals. The FPPC listed 49, some of which were Board members.

The state Fair Political Practices Commission is investigating more than four dozen CalPERS board members and employees over allegations that they failed to accurately report gifts.

The 49 names on a list obtained by The Bee from the FPPC include CalPERS Board Chairman Rob Feckner and board members George Diehr and J.J. Jelincic. Chief Investment Officer Joe Dear is named, as is former CEO Fred Buenrostro. Buenrostro has been named separately in an ongoing investigation of influence peddling at the fund that is unconnected to the FPPC matter.

FPPC Executive Director Roman Porter confirmed that the commission is investigating and the employees and board members involved. CalPERS has cooperated fully and without subpeona, he said. In keeping with the commission's policy, Porter provided no other information.

CalPERS CEO Anne Stausboll said in a statement that, "CalPERS has been fully cooperating with the FPPC on this investigation over the last several months. These matters are still pending and our staff involved have due process rights."

Here's the full list of those named in the investigation:

The California Public Employees' Retirement System has launched an online form to request public records from the fund.

We wondered if the new feature was a response to a boost in info requests to the fund or in anticipation of a coming tide of inquiries as the public pension debate heats up.

Nope. "It's just an attempt for increased efficiency and make (the information) more readily available, said CalPERS spokesman Wayne Davis.

The fund also publishes travel expense reports of board members and key staff on its website. Click here to see the Form 700 statements of economic interest that board members and their designees file.

CalPERS board member Henry Jones will continue as the fund's retiree representative now that the May 13 deadline for nominations to the seat he occupies passed and no one has challenged him. The board declared Jones the unofficial winner on Wednesday. His next term runs from January 16, 2012, through January 15, 2016.

Retirees elected Jones to CalPERS' Board of Administration in 2007, nine years after he retired from the Los Angeles Unified School District as its chief financial officer. He holds a bachelor's degree in business administration and finance from CSU Los Angeles.

PHOTO: Henry Jones / courtesy CalPERS

The Bee's Dale Kasler is reporting that CalPERS has announced the state's annual payment to the fund will fall by about $170 million next year. The big reason: higher out-of-pocket payments by employees into the fund required by bargained labor agreements.

Click here for Dale's story.

CalPERS says a report issued last week that questions the sustainability of defined-benefit public pensions is "flawed" and that various fixes it considers are either inequitable or illegal.

The fund is firing back at "Comparing Public and Private Employee Compensation and Retirement Benefits in California," commissioned by the California Foundation for Fiscal Responsibility, a pension-change advocacy organization based in Citrus Heights.

The study by Capitol Matrix Consulting, a firm co-founded by former state Finance Department Director Mike Genest, says that California's state and local government employees' pay is roughly equal to counterparts' salaries in the private sector, but pension and health benefits push public workers' total compensation costs about 10 percent higher.

It considers several options proposed by the foundation to close that gap, such as eliminating health benefits for spouses and dependents of retirees when a retiree turns 65 .

CalPERS says the report makes flawed assumptions, uses flawed methods, lacks specifics and takes a race-to-the-bottom, anti-pension posture. The fund's reply is embedded below and was just posted on the CalPERS Responds website.
CalPERS' Key Observations of CFFR Study

CalPERS will begin metal detection and x-ray screening of visitors and their personal items during next week's three-day board meeting at the fund's Sacramento headquarters, according to an emailed memo issued Monday:

Increasing security measures during Board meetings is an important part of enhancing security at Lincoln Plaza. Visitor screening is a standard practice at other public meetings such as the Sacramento City Council, San Francisco Board of Supervisors and Los Angeles City Council and implementing these new security measures for Board meetings is also consistent with the recommendations made by our security consultant.

CalPERS also is contracting with the California Highway Patrol for board meeting security.

The memo, which you can read here, notes that the fund has been giving more attention to facility security for the last year. Fund spokesman Brad Pacheco told The State Worker that the new measures will cost about $150,000 per year, plus a bit more to install cameras in the auditorium where the board holds meetings.

"It's important in today's environment that we take these extra precautionary steps to protect our employees and visitors to our meetings," Pacheco said.

PHOTO: CalPERS Sacramento headquarters. File photo / Sacramento Bee

State Controller John Chiang's office contacted The State Worker on Monday with a rebuttal to a statement we published last week by CalPERS board member J.J. Jelincic stating his opposition to Senate Bill 439, which would lower limits on gifts to CalPERS and CalSTRS board members and employees to $50.

Jelincic had prepared the remarks but didn't get to read them at last week's Senate Committee on Elections and Constitutional Ethics hearing. He believes that the measure would force employees to pay for business meals out of pocket, since state per diem isn't enough to cover those expenses and CalPERS' partners or potential partners wouldn't be allowed to pick up the tab.

The measure was put on the committee's consent calendar and moved to the Senate Appropriations Committee on a 5-0 vote without testimony for or against it.

Appropriations is supposed to take up the measure on Monday.

Chiang, who sponsored the legislation, is an ex-officio member of both the CalPERS and CalSTRS boards. Here's his response to Jelincic's criticisms:

California's state and local government employees' pay is roughly equal to counterparts' salaries in the private sector, but pension and health benefits push public workers' total compensation costs about 10 percent higher, a new report says.

The two-part study, commissioned by the California Foundation for Fiscal Responsibility , also cautions that public pension obligations threaten to crowd out money for public services. The foundation, headed by long-time pension change advocate Marcia Fritz, has proposed several pension cost-cutting ideas including a cap on pension payouts, higher employee contributions and higher retiree health premiums. The proposals would affect both current workers and future hires.

The study by Sacramento-based Capitol Matrix Consulting estimates the impact of those proposals on various employees based on length of service and whether they are safety or miscellaneous workers. Nearly every scenario envisions deep cuts to employee benefits and employer costs.

Steve Maviglio, spokesman for union coalition Californians for Secure Retirement, blasted the report, its authors and the foundation. "The report is a political document that relies on outdated and skewed data that provides an inaccurate view of retirement benefits for public employees," he said this morning in an e-mail.

CalPERS CEO Anne Stausboll issued a statement this afternoon that said the fund is reviewing the report, but "what we have seen reported raises significant policy and legal questions. We will closely examine the research, methodology and implications through the lens of our role to provide retirement security and health benefits for our members and their families."

As we mentioned in our profile on Sundayof CalPERS' board member J.J. Jelincic, the former garbage man with a master's degree doesn't like Senate Bill 439. The measure, officially supported by the fund's board, cuts the value of gifts that fund employees can receive from the current $420 annually to $50.

Jelincic abstained when every other board member voted in support of the bill. He says he opposes it -- at least in its current form -- because it would force fund employees traveling on business to open their own wallets to pay for meals, since the state per diem isn't enough to cover breakfasts, lunches or dinners in, say, New York.

He took vacation time Tuesday, intending to testify before the Senate Elections and Constitutional Amendments Committee, but the measure was put on the consent calendar and no testimony was taken.

The State Worker asked Jelincic what he would have said. In response, he e-mailed his prepared remarks. With his permission we're posting them here, unedited:

The California Public Employees' Retirement System wants to sign up retired members to help it build support for defined-benefit public pensions via the fund's new "ambassador program," which launches in a little more than three weeks.

The idea, according to this California State Employees Association website announcement, is to "identify individual stakeholders and build relationships to support the mutual goal of maintaining retirement security in California."

CalPERS is hosting the inaugrual ambassadors' meeting on May 26 from 1:30 p.m. to 4 p.m. at CalPERS headquarters, Lincoln Plaza North 1170.

Rachel Pitts, spokeswoman for the Retired Public Employees Association , said today that fund CEO Anne Stausboll will address the ambassadors' meeting, communications experts will talk about how to discuss pension policy and that CalPERS actuaries will make a presentation about the fund's finances.

The goal, Pitts said, is to get at least 30 people to attend the kickoff meeting.

On a related note, your humble blogger spent a few hours today with RPEA members as they lobbied lawmakers at the Capitol. (That's where we heard about the ambassador's program.) We're planning to write more about the experience for our Thursday State Worker column.

We never can get everything we learn into a news story. "From the notebook" posts give you some of the extra details behind the news.

Our profile of CalPERS Board of Adminstration member J.J. Jelincic in today's cyber and fiber Bee mentions that as of July 1 he will be released from his job as a CalPERS investment officer to attend to board business full time.

CalPERS rules require that "elected Board members obtain the approval from the Board for the percentage of time the Board member will spend fulfilling his or her duties in the next fiscal year" before they can spend their normal work time on fund business and have their employer reimbursed, an April 12 memo to the board notes.

Four members filled out forms that estimate the percent of their normal work time will be spent on fund business: Jelincic, Priya Mathur, George Diehr and Rob Feckner. The board's Benefits and Program Administration Committee approved all four requests during its April meeting.

Members whose wages are reimbursed have to submit quarterly reports that show how the time was used for CalPERS business before the fund will pay back their employers. You can read the policy in excruciating detail by clicking here. Or not.

Here are the forms filled out by the four board members for next year:

With voting for one of CalPERS' member-at-large seats in full swing, the fund has posted statements and You Tube video from the eight candidates for the position. Click here to see the list of candidates and links to their statements.

CalPERS also has published a candidate statement booklet that details the election process.

Ballots went out to members on April 21 and must be postmarked or received by CalPERS by May 20. Counting will start the morning of May 23. If no one receives majority support, the fund will hold a runoff election between the two candidates with the most votes.

Peel away the legalese, and a 62-page lawsuit in Sacramento comes down to this accusation: Prison Receiver J. Clark Kelso -- with help from a federal judge, the state court administrative system and CalPERS -- is spiking his state pension with his federal salary.

Daniel E. Francis v. CalPERS contends that Kelso's employment agreement illegally washes his pay through the state Administrative Office of the Courts so that the money can be factored into his CalPERS pension. Kelso has said the arrangement, while unusual, is above board and legal.

Francis is a retired state worker and therefore a CalPERS member.

The Bee reported last year that when federal judge Thelton Henderson appointed Kelso to take over the state prison system's medical program in 2008, the California Prison Healthcare Receivership Corporation, the non-profit business arm of the receiver, and the AOC agreed to put Kelso on the AOC payroll.

Technically, Kelso is on loan to the federal court. The receivership corporation reimburses the AOC for Kelso's pay and benefits. Ultimately, the state pays the receivership's costs.

Kelso has worked in various capacities for the state, so he was in CalPERS before taking the receiver job. In an interview with The Bee last year, he was open about his AOC employment agreement and his desire to remain in CalPERS while working as a federal court appointee. He said that the arrangement was legally vetted and doesn't break any laws.

At least one former state employee who was already working for the nonprofit when Kelso came onboard, Linda Buzzini, tried and failed to get her pay retroactively applied to her CalPERS retirement.

The plaintiff wants the court to revoke Kelso's CalPERS membership as an employee of the AOC.

Here's the court filing:

CalPERS Board of Administration hopefuls will square off tonight at 6 p.m. to debate issues, answer questions and make their individual cases for election to the fund's guiding body.

The "CalPERS Candidates' Forum" will convene in the CalPERS Auditorium in Lincoln Plaza North, 400 P Street in Sacramento. It will be moderated by the League of Women Voters of Sacramento County and sponsored by PERSWatch.

All eight candidates have confirmed that they'll attend, CalPERS has said.

The fund mailed out ballots on April 21. Members have until May 19 to vote and return them. The count will commence May 23. If no one receives a majority of the votes, the fund will conduct a runoff election between the top two candidates.

This April 14 post has more details about the candidates and a link to various election resources.

The Assembly Public Employees, Retirement and Social Security Committee is scheduled to hear testimony at 11 a.m. today on Assembly Bill 873, a measure sponsored by Controller John Chiang that sets new limits on a relative handful of CalPERS and CalSTRS employees who leave state service for other jobs in the private sector.

You can listen to the hearing here. Scroll down to the PERS committee agenda and click "Listen to the hearing." This recent blog post provides background and links to the bill, which potentially impacts a total of about 120 employees and board members at the two funds.

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:

We get questions all the time from blog users about CalPERS: How many employees are members? How much does CalPERS pay out in benefits? What's the split between state and local governments in CalPERS? How many different retirement formulas apply to retirement benefits?

You can find those answers and much more via the fund's "Facts at a Glance" page, which has links to a half-dozen fact sheets about CalPERS. The sheets are regularly updated, although some of the information is nearly two years old.

While we're addressing this, here are a few numbers:

Candidates vying for an open seat on the CalPERS Board of Administration will meet on April 26 at 6 p.m. to debate issues, answer questions and make their case for election.

The "CalPERS Candidates' Forum," moderated by the League of Women Voters of Sacramento County and sponsored by PERSWatch, will convene in the CalPERS Auditorium in Lincoln Plaza North, 400 P Street in Sacramento.

All eight candidates have confirmed that they'll attend, CalPERS says.

Ballots to members will go out April 21. They must be postmarked by May 19 to be included in the count that starts May 23. If no one receives a majority of the votes, the fund will conduct a runoff election between the top two candidates.

CalPERS' website has a section with more info about the candidates (listed below) and the election process.

In an open letter released today, CalPERS Chief Executive Officer Anne Stausboll says she's sorry that recent revelations of alleged wrongdoings by high-ranking former fund officials has put a cloud over the organization's integrity.

"Still, I believe, as does our Board, that the public airing of this sorry episode is an integral part of moving forward, and I commit that CalPERS will continue to face these issues and squarely take meaningful action to ensure that they do not happen again," Stausboll says in the letter published on CalPERS' website.

CalPERS' former CEO, three former board members, a former investment officer have been tied to a bribery scandal revolving around "placement agent" Alfred Villalobos, also a former board member.

The fund commissioned an investigation and then made the findings public. Philip Khinda, the lawyer who looked into the scandal, held back some of his information at the request of law enforcement agencies that may soon press criminal charges.

Pensions & Investments, a leading financial publication that closely follows CalPERS, featured an article on Thursday that said the fund is getting a grip on scandals that have embarrassed the organization.

A couple of paragraphs from the P&I piece that comments on the investigation CalPERS commissioned and the board's reaction to it:

CalPERS trustees deserve praise for coming to grips with the dimensions of the problem, dealing with weaknesses, and strengthening structures.

The review doesn't close the case or end the need for further reforms. The pending criminal cases, and investigations by the Securities and Exchange Commission and others, could produce revelations of more abuses that CalPERS trustees will have to address.

But this review helps CalPERS get on track to overseeing the investment of its assets with proper fiduciary care.

So what do you think?

Retired state worker Michael Desrys, a former Caltrans employee, has sued three former CalPERS officials and drug-benefits provider Medco, alleging that a deal cut between the defendants led to members paying "excessive amounts of money for their medications purchased through Medco." As Bee colleague Dale Kasler reports in this story, Desrys is seeking class-action status for the case.

Revelations by a CalPERS investigator last week led the fund's board to decide it will take its prescription drug business elsewhere.

Several folks who read Dale's story e-mailed requests that we post the Desrys complaint. Here it is:
Desrys v. Medco, et. al

The State Worker has received a copy of the in-house e-mail from CalPERS CEO Anne Stausboll that comments on corruption allegations detailed in a commissioned report that the fund released late Monday. We're reprinting it here:

From: CEO Mailbox
Sent: Monday, March 14, 2011 6:04 PM
To: Exchange Users, HQ; Exchange Users, Regional Offices
Subject: Placement Agent Report

Good evening,

At 6 pm today (Monday), the CalPERS Board of Administration released the report conducted by outside experts on the activities of placement agents. The Board will be discussing this report in open session tomorrow. A full copy of the report can be found at http://www.calpers.ca.gov/index.jsp?bc=/about/board-cal-agenda/agendas/full/home.xml

The delivery of this report represents the culmination of months of hard work by our staff and the Board. We have asked some very difficult questions during this period, and we have faced what seemed to be insurmountable challenges. However, the mission that our organization was founded on nearly 80 years ago, along with our core values, has kept us laser focused to get to this day.

Although it is difficult to learn of the apparent misconduct of some of the former officials, the issuance of this report is a turning point for our organization. This day serves as a reminder about how far we have come to strengthen our accountability, ethics and transparency. We have already taken numerous remedial actions, and we are continuing to learn from the situation and make the changes necessary to restore trust and confidence in the system.

CalPERS is a special place for all of us and those we serve. I am proud to be part of this organization and have the utmost confidence in staff's dedication to our members.

Sincerely,
Anne

Anne Stausboll | Chief Executive Officer | CalPERS Executive Office

A CalPERS committee has recommended the fund continue assuming its investments will return 7.75 percent, The Bee's Dale Kasler reports. Lowering the rate would cost employers in the system kick in more money and, as we reported here, would increase the cost of "air time" for individual members.

Click here for the story. Here's the fund's press release.

Editor's note, 11:04 a.m.: A previous version of this post contained a link to the CalPERS report that some users reported was broken. We have replaced the link.

In this morning's Bee:

The bribery scandal at CalPERS likely cost the pension fund tens of millions of dollars in inflated fees, a lawyer hired by CalPERS to investigate the case said Monday.

Washington lawyer Philip Khinda, in a report to the California Public Employees' Retirement System board, said former "placement agent" Alfred Villalobos corrupted top pension fund officials, notably former Chief Executive Fred Buenrostro, to steer investments to his clients.

Khinda named four other CalPERS officials close to Villalobos: former board members Charles Valdes, Kurato Shimada and the late Robert Carlson, and former investment officer Leon Shahinian.

Click here for Dale Kasler's story. Here's CalPERS' press release about the report. This link opens a CalPERS' Q&A about it. This link opens a copy of the report.

The Bee's Dale Kasler has reports in this story that CalPERS Board of Administration will consider lowering its investment return expectations from the current 7.75 percent to 7.5 percent. As Dale notes, the change could have significant implications for what the state pays into the fund if the fund's Board of Administration adopts the new rate at its meeting next week.

But there's another impact -- this one for some individual CalPERS members -- in the staff report to the fund's Benefits and Program Administration Committee, which meets on Tuesday:

For service credit purchases under the "present value" method, the use of the new discount rate will apply to all applications postmarked on or after March 17, 2011.

So what does that mean? Higher "air time" costs for members. Here's what the staff analysis concludes:

Note that lowering the discount rate to 7.5% will result in an increase in cost for members to purchase service. The cost for service credit purchases under the present value method is expected to increase between 2% and 5%.

Click here to read the full CalPERS staff report.

Last month's Little Hoover Commission report suggests pension reforms that would end up costing the state more money in the long run -- and that's if they're even legal, the chief executive of California's biggest teachers' pension fund said in a Wednesday letter to the commission.

"(I)mplementing the recommendations made in the report - even if it were possible to do - would likely weaken,rather than strengthen, retirement security for California's public educators," Jack Ehnes, CEO of the California State Teachers' Retirement System, said in a letter sent to Little Hoover Chairman Daniel Hancock. "Given the importance of this issue to literally millions of Californians, it is time to move past the political rhetoric and focus on solutions that are truly responsive to the problems."

The rate at which state workers filed their retirement papers between Jan. 15 and Feb. 15 rose 10 percent compared to the same period last year, according CalPERS' figures (see the table above), marking the fourth month in a row that more employees retired than the same period a year earlier.

More broadly, the retirement data shows that the rate of year-over-year monthly applications has increased in 29 of 38 times since January 2008.

The trend reflects the demographics of the state's aging workforce and, at least to some degree, the impact of furloughs, recent increases in what many employees pay toward their pensions and other factors that have made working for the state less attractive to long-time state workers.

Gov. Jerry Brown has removed a California State Teachers' Retirement System board appointee who helped author a controversial study that criticized the state's largest public pension funds.

Brown's predecessor, Arnold Schwarzenegger, appointed Cameron Percy to the CalSTRS board on Dec. 30. As a graduate student at Stanford, Percy was part of a team that wrote, "Going For Broke: Reforming California's Public Employee Pension Systems." Schwarzenegger often referenced the report's highly disputed claim that California's Big Three pension systems -- including CalSTRS -- faced a collective $500 billion in unfunded liabilities. (Click here for an earlier post about Percy's appointment to CalSTRS.)

Brown revoked Percy's appointment last Friday along with that of another Schwarzenegger pick for CalSTRS, Steven Kram. Kram is chief executive officer of Los Angeles-based Content Partners LLC. He also served as chief operating officer for the William Morris Agency from 1988 to 2005.

Bee colleague Dale Kasler, who covers state pension funds, this morning asked Brown spokesman Evan Westrup why the governor revoked the appointments. The answer: "These appointees served at the pleasure of the governor and their services were no longer required."

Another Schwarzenegger appointee who publicly criticized the state's public pensions, David Crane, hasn't been removed from the University of California Board of Regents. Crane was the face of the Schwarzenegger administration's push for pension rollbacks and often blasted the UC pension system, CalSTRS and CalPERS for their accounting practices and investment assumptions.

Patricia K. Macht, the long-time public face of CalPERS, announced Thursday that she is retiring from the fund at the end of June.

Macht, a former journalist who is married to Bee deputy city editor Maury Macht, started with CalPERS in 1995 as its public affairs chief and developed the fund's internal and external communications programs. She was promoted to assistant executive officer in 2002.

CalPERS created a deputy-level position, director of external affairs, and promoted Macht into it in July 2009. The post paid $136,553 last year on a base of $116,743, according to state payroll records.

In a letter to staff this afternoon announcing Macht's departure, fund CEO Anne Stausboll wrote:

Pat has built one of the best communication programs in State government, backed by a talented team of communication professionals. She has led her team with the highest of standards in ethics, openness and integrity, and this has made CalPERS a professional and trusted source of information.

PHOTO: Patricia Macht / www.calpers.ca.gov

Nearly 12,000 state workers drew their first pension checks last year, up 23 percent from 2009, according to the latest retirement application data from CalPERS (click on the table above to enlarge it).

The jump in the rate of employees leaving state service was likely due to a mix of factors: Furloughs that cut take-home pay by nearly 15 percent made working less profitable than retirement for some state employees. The state's civil service is weighted toward baby boomers, many of them now reaching retirement age.

More people, 2,744, retired in January of this year, the most of any single month tracked by CalPERS going back to 2007. Although that was not quite a 4 percent year-over-year bump, it was significant because the increase was on top of a large base number - 2,647 retirements in January 2010.

Up to a quarter of retiring state employees time their exits for the end of the year, which spikes the number of first-time pensioners each January. CalPERS rules delay initial pension cost-of-living adjustments until the May following a retiree's first full calendar year away from service.

On his way out the door, Gov. Arnold Schwarzenegger issued a controversial pardon and a high-profile thumb-in-your-eye appointment to the UC Board of Regents. But have you heard about Cameron Percy?

Schwarzenegger appointed Percy to a spot on the CalSTRS board (compensation: $100 per diem) in December, as Gov. Jerry Brown's website notes. At 26, Percy has a graduate degree from Stanford and business experience with a couple of companies.

As a Stanford grad student, Percy helped author "Going For Broke: Reforming California's Public Employee Pension Systems," which Schwarzenegger and Co. referenced as a source for the oft-cited and highly disputed calculation that California's Big Three pension systems faced a collective $500 billion in unfunded liabilities.

CalSTRS' piece of that, according to the year-old study: $156.7 billion. Fund officials have said that's an overestimation.

(The fund says it had $146.4 billion in assets the end of 2010. Figures posted on its website show that its funding level was 78 percent as of June 30, 2009, but STRS has made investment gains since then. Generally, 80 percent funding is considered the threshold for healthy public pension systems -- although that rule of thumb, like most things about public pensions, has been a topic of debate.)

The Senate has a year to confirm Percy's appointment. We called Senate President Pro Tem Darrell Steinberg's office and asked when the Rules Committee might take it up. Spokesman Nathan Barankin said there's no firm date yet: "But governors make their own decisions about appointments. Anyone can be yanked with the stroke of a pen."

IMAGE: www.freefoto.com

The Legislative Analyst's Office has taken a look a pension bill that was key to last year's budget deal and concluded that it was well-intentioned but flawed.

Senate Bill 867, authored by Republican Dennis Hollingsworth and backed by Gov. Arnold Schwarzenegger, established several new public reporting requirements and, most significantly, told CalPERS to make estimates of its unfunded liabilities based on the so-called "zero-risk rate."

The LAO concluded that the bill has "serious drafting problems" that make it needlessly alarmist or unworkable:

As part of its efforts to encourage scrutiny of CalPERS' investment return assumptions, SB 867 requires CalPERS to calculate pension liabilities in its reports to the Legislature and others using "a discount rate equal to the rate of the 10-year United States Treasury (UST) Note as of 30 days before the date of the report." This means that instead of calculating liabilities using CalPERS' annual assumed investment return (currently 7.75 percent), this report would require liability reporting assuming a much lower discount rate. As of January 21, 2010, the 10-year UST yield is 3.4 percent. Using such a lower discount rate would result in CalPERS calculating a much higher amount of liabilities and, therefore, future state and local costs, compared to standard public pension reporting methods.

CalPERS has released the list of candidates running for the member-at-large seat on the fund's Board of Administration. The election will fill the seat left vacant by Kurato Shimada's resignation last summer. The term runs through Jan. 15, 2014.

CalPERS will send out member ballots on April 21 with a May 19 deadline to return them.

Click here to see the candidate list.

CalPERS says it's partnering with the University of California San Francisco to study health complications that could be avoided with better care. CalPERS says in this announcement that so-called "potentially avoidable complications" account for nearly 25 percent of U.S. private sector health care costs.

The one-year pilot program starts this month with university researchers examining chronic conditions, surgeries and acute medical events involving CalPERS members in the PERSCare, PERS Choice and PERS Select health plans.

The goal is to figure out how to cut down on avoidable health complications, which will drive down costs and improve the well-being of those who need medical care.

Click here for a September CalPERS Health Benefits Committee agenda item that analyzes the pilot program's advantages and disadvantages. CalPERS staff supported the project.

Editor's note, 12:35 p.m.: An earlier version of this post said that CalPERS is accepting loan applications until Friday. The fund has since decided to push back the date by one week.

We knew that CalPERS is getting out of the member home mortgage business. Now we can report that the deadline for applying for a loan and locking in the rate is Dec. 24.

That wasn't clear on Monday when the fund issued this press release. It referred to CalPERS deciding to end its member home loan program, but it didn't say exactly when the fund would stop accepting loan applications.

So we asked. CalPERS spokesman Wayne Davis said in an e-mail today that the fund will "honor registered loan applications with a locked-in rate through Dec. 24."

The Member Home Loan Program started 29 years ago and offers conventional loans at market rates.

CalPERS members have taken out more than 136,000 loans worth more than $22.7 billion over that time. Demand for the program has fallen off, however. Through the first nine months of this year 2,283 loans have been originated through the program, Davis said.

PHOTO: Sacramento Bee file

CalPERS Special Review: Selected Recommendations

As reported by Bee colleague Dale Kasler, CalPERS took some public shots this week from an independent counsel who investigated the fund for more than a year.

Dale wrote in this story that Washington, D.C. attorney Philip Kinda recommended "a broad array of reforms for the nation's largest public pension fund. Khinda's proposals range from a ban on gifts to board members to a restructuring of how CalPERS doles out the millions of dollars in fees it pays its investment partners."

We thought that State Worker blog users would like to read the Kinda report, so we've posted the nine-page document above. Pay particular attention to item No. 7, which implies that the fund had no choice but to leave Leon Shahinian on the payroll for four months after a lawsuit filed by Attorney General Jerry Brown alleged the senior investment officer had taken bribes.

Richard Costigan III, a former deputy chief of staff and legislative affairs secretary for Gov. Arnold Schwarzenegger, will take the State Personnel Board seat on CalPERS' Board of Administration next month.

SPB elected Costigan to replace its current representative, Patricia Clarey. 

Costigan is senior drector of state and government affairs for the national law and consulting firm of Manatt, Phelps & Phillips. Click here for his bio. Here's the Thursday all-staff e-mail from CalPERS CEO Anne Stausboll that announces Costigan's selection to the board:

CalPERS has scheduled a special election to fill the seat held by Kurato Shimada before his resignation in late August. The term runs through Jan. 15, 2014.

Candidates have until Jan. 6 to submit candidate statement forms. CalPERS will send out member ballots on April 21 with a May 19 deadline to return them.

Active members employed by a CalPERS-covered agency or retirees can run for the member-at-large seat on the board. Click here for the rules.

IMAGE: www.freeclipart.com

CalPERS investment committee will examine its member home loan program again next week, with staff recommending the full board ax the program. Given the hassle of administering the program, the small number of members who use it and the growing number of failed loans, it's a bad deal for CalPERS, according to this November assessment.

The Bee's Dale Kasler reported that the board was set to vote on the program last month but backed off after President Rob Feckner said CalPERS' members should be better informed before any decision is made.

The fund held a meeting on Dec. 3 for "employee groups and key stakeholders," according to this report by Affiliate Investments Program Division Chief Geraldine Jimenez. That followed a mass e-mail sent on Nov. 19 to employers that laid out the situation and invited questions.

The investment committee will hear about the feedback from those outreach efforts next Monday. If the board follows the staff recommendation, the fund will stop accepting new loan applications right away but mortgages already in the pipeline would be completed.

PHOTO: CalPERS headquarters in Sacramento / Sacramento Bee file.

CalPERS' September decision to immediately hike the cost of Additional Retirement Service Credit has prompted a Sacramento-based pension advisor -- and former fund employee -- to ask whether CalPERS staff benefited from inside information about the policy change.

Jim Niehaus of California Public Pension Advisors wasn't surprised by the decision to increase so-called "airtime" costs. After all, he worked at CalPERS from 1984 to 2000, then went to the Judicial Council as a retirement specialist for the Administrative Office of the Courts before retiring in 2009. As a pension consultant, he watches CalPERS closely.

But the board's decision to immediately implement the airtime increases in September instead of waiting until, say, Jan. 1, surprised Niehaus. Furthermore, he wondered if CalPERS employees benefited from advance knowledge of the policy change. CalPERS says that it handled the airtime price hike in accordance with state law and that the decision to immediately launch the change was made shortly before it actually happened.

In this Oct. 11 letter to CalPERS, Niehaus raised the fairness issue:

CalPERS is making several changes to its member health plans, according to this Wednesday press release:

Beginning in 2011, CalPERS will eliminate lifetime and annual dollar limits for speech therapy, physical therapy and occupational therapy. Those benefits will be converted to 24 visits per year, based on medical necessity. The cost impact of making these changes is less than one-tenth of a percent for each area, in large part due to CalPERS long-standing commitment to prevention and wellness as an integral part of health care. Lifetime limits for hospice care for PERS Choice, PERSCare, and PERS Select plans will be removed.

CalPERS will also eliminate co-payments for certain commercial and Medicare health plan preventive services beginning in 2011. Increases in Medicare Part B payments to providers will pay for Medicare initial and annual preventive services and wellness visits according to federal guidelines.

The fund also is making changes to some preventive and wellness services to comply with federal health care law that goes into effect in January.

Click here to read the CalPERS release.

Editor's note: A previous version of this report said that the actual expense claims of CalPERS officials will be posted online. The fund's post the information but not the claims themselves.

CalPERS announced this morning that it's going to post travel expenses and statements of economic interests submitted by board members and key staff beginning Jan. 1.

"This action will help ensure that our business is conducted in an open, impartial and fair way," CalPERS Board President Rob Feckner said in this press release.

Given CalPERS' rough PR patch -- scandals involving former board members and former employees, devastating investment losses and attacks on its actuarial assumptions -- will the new policy help the fund polish its scuffed-up image? Take our poll:

With the Oct. 8 deadline for CalPERS health program open enrollment nearing, it's worth noting that federal law now says that qualifying adult children of workers covered by medical insurance can be carried on their parents' plan until age 26.

Until now, the cut off for dependent coverage was 23, earlier if they married. The Patient Protection and Affordable Care Act extends that another three years and ends the marriage disqualification. However, as this paragraph from CalPERS' open enrollment press release explains, qualifying dependents who lost coverage or will soon lose it must be added back to their parent's plan to be covered next year:

(Federal health care reform) extended the coverage of adult children from age 23 to age 26. CalPERS health plan participants' adult children lost, or will lose, coverage by reaching age 23 by November 30, or due to marriage. Those members must take action during Open Enrollment to resume coverage for those dependents up to age 26 and coverage will resume effective January 1, 2011. Dependents dropped from coverage will not be automatically added back to the health plan. Coverage for any dependent turning age 23 December 1, or after, will automatically be continued.

This change isn't limited to CalPERS members -- it applies to all health insurance plans -- and there are some strings attached. (For example, you can't currently add a 23- to 26-year-old dependent if he or she works for an employer that offers health insurance.)

Click here for our earlier post with links to more details about CalPERS' open enrollment. The press release referenced above also has CalPERS' contact info for anyone who needs open enrollment guidance.

IMAGE: www.freeditigalphotos.net / jscreationzs

State workers would pay thousands of dollars more to purchase service credits under a policy change that CalPERS leaders will consider next week.

The fund's Board of Administration is looking at immediately raising the cost of Additional Retirement Service Credit Purchases, or "airtime," by up to an average of 23 percent for state workers. The table above, which comes from this CalPERS staff report, shows how the proposed increase would affect the state's miscellaneous employees in various age groups who make $50,000 per year.

When legislation passed during the 2003-04 legislative session made airtime available to CalPERS members, the assumption was that many employees would purchase service time mid-career. That would allow the employees' money to grow until they retired and then drew against the funds.

It didn't happen. After studying CalPERS member retirement patterns and service-credit purchases over a 10-year span, the fund's staff found that members bought airtime shortly before retiring, which meant the added contribution had little or no time to grow before being drawn down.

That's why CalPERS' staff ...

Reminder: CalPERS health plan open enrollment starts on Monday and runs through Oct. 8. This page has plenty of links to the pertinent info, including this open enrollment newsletter with details about how to enroll or change your health plan.

IMAGE: www.freeditigalphotos.net / jscreationzs

CalPERS has announced that Kurato Shimada has resigned from the fund's board, effective immediately.

According to this release, Shimada has left "to focus on personal matters."

Shimada was first elected to the board in 1987. He won reelection three times before leaving in 1999 when he retired from his career as Supervisor of Operations for the Oak Grove School District, in San Jose, California.

He rejoined CalPERS in 2002 for a fourth term after winning a seat open to all CalPERS members. He was re-elected to that seat in 2006 and again in 2009.

Colleague Dale Kasler has more on Shimada's resignation here on Sacbee.com.

PHOTO: Kurato Shimada / CalPERS file

As we reported here, CalPERS and CalSTRS have filed a Petition for Writ of Mandate to the state Supreme Court, seeking to block Gov. Arnold Schwarzenegger's July 28 furlough order.

Click here to download the 126-page brief.

CalPERS board candidates Inderjit Kallirai and George Diehr are set to face off on early next month at a forum sponsored by the Sacramento Central Labor Council and PERSWatch.net. The two men are vying for the state member seat on the 13-member board.

Board President Rob Feckner and Priya Mathur, who are running unopposed, have also agreed to participate in the forum. Details:

Date: Sept. 7
Time: 6 p.m. to 7:30 p.m.
Where: CalSTRS Boardroom, 100 Waterfront Place, West Sacramento (next door to the Ziggurat)
Moderator: The League of Women Voters of Sacramento County

The hosts are trying to work out free parking for the event. Seating is limited to about 95 people, according to James McRitchie of PERSWatch.

Click here for more details about the forum.

This link opens up information about the election, which starts when ballots go out to members on Sept. 3 and ends Oct. 1, the date on which ballots must be returned or postmarked. Counting starts Oct. 4.

CalPERS, which has taken some heat over the Bell salary scandal, announced Wednesday that it's reviewing the pay of all members who earn $400,000 or more annually.

In press release, CalPERS Chief Executive Officer Anne Stausboll said, "We are taking immediate action to investigate whether salaries of top public officials are being reported correctly and in accordance with the laws and rules that govern our system. We are committed to increased transparency and will take all steps necessary to protect our members, employers and stakeholders."

Click here to read the entire press release.

PHOTO: CalPERS' Sacramento headquarters / Sacramento Bee file

The state's multifaceted furlough civil war took a new twist today as CalPERS CEO Anne Stausboll sent a letter to Controller John Chiang asking that he "continue to transfer funds from our accounts sufficient to fully compensate our employees, notwithstanding the governor's illegal furlough order."

The letter which you can read here, says that furloughing CalPERS employees doesn't help the general fund, that an Alameda judge ruled that furloughs are "capricious and unlawful," and that Chiang has the authority to "exercise your independent judgment on the matter."

Stausboll also says that the "new furlough will continue to interfere with our ability to carry out our constitutional duties of prudently administering the retirement system and delivering the promised benefits to our members and their beneficiaries."

Worth noting: The Stausboll letter doesn't mention that CalPERS sued Schwarzenegger over his furlough order and lost. You can read more about that case here.

We've left a message with Chiang's office seeking comment about the letter. Schwarzenegger spokeswoman Rachel Arrezola sent this e-mail comment in response to the letter:

"The state controller has said he will have to begin issuing IOUs without a budget in place, so the governor was forced to implement this short-term furlough program to preserve cash. The furlough program must be applied with only the very narrow exemptions to achieve maximum savings, feasibility and equity. The governor's authority to furlough state workers is clear and has been upheld in the courts, including the San Francisco Superior Court decision upholding CalPERS furloughs."

As we've reported, the Government Accounting Standards Board last month issued its preliminary thinking on major issues related to pension accounting and financial reporting by employers. The potential impact of the rule changes could be far-reaching with serious political repercussions. The Bee's Dan Walters wrote about GASB's proposals in this column.

GASB has been taking public comment on the proposed rule changes. The deadline for submitting one is Sept. 17. A few State Worker blog users have asked how they can participate.

You can click here to send an e-mail to the board's director of research and technical activities at director@gasb.org. Reference Project No. 34 in the subject line.

Send letters to:

Director of Research and Technical Activities
Project No. 34
GASB
401 Merritt 7
PO Box 5116
Norwalk, CT 06856-5116

Click here for a plain-English explanation of the proposed rules. This link opens analysis of the potential impact to state and local government by The Segal Group. You can view a video Q&A about the GASB proposals by clicking here.

CalPERS this morning announced the ballot order of the names of the two men running for the state seat on the fund's Board of Administration, challenger Inderjit Kallirai and incumbent George Diehr. Member ballots will go out on Sept. 3.

The terms for schools' representative and board President Rob Feckner and Priya Mathur, who represents public agencies, are also ending, but no challengers stepped up, so both are considered reelected to their seats.

Click here to read the CalPERS notice about the election and ballot name order.

Which leads us to our poll question for today, which is aimed at State Worker blog users who are eligible to vote in CalPERS' elections:

PHOTO: CalPERS headquarters in downtown Sacramento / Sacramento Bee file

CalPERS has a Q&A on its website that addresses what the Health Care and Education Affordability Reconciliation Act of 2010 means to CalPERS members.

It's worth a look. Click here to check it out.

Thanks to blog user T for calling this to our attention.

IMAGE: CalPERS headquarters / Paul Kitagaki Jr., Sacramento Bee, 2005

Dale Jablonsky, the Employment Development Department tech chief who said he'd quit if he failed to fix the department's technical troubles, is leaving for an executive officer job at CalPERS. He'll take his new post, replacing fund CIO Teri Bennett, on Aug. 2.

You may recall that Assemblyman Charles Calderon, D-Whittier, put Jablonsky on the spot during an Insurance Committee hearing in February examining $80 million in tech project cost overruns at the department. According to this Feb. 9 Bee report, this was how the hearing went for Jablonsky:

EDD technology boss Dale Jablonsky told legislators his department's systems currently run ancient COBOL programming language and they've been behind many of the delays in processing claims and getting checks out.

Modernization projects have also been stalled or delayed because scarce staff needed to be reassigned to prepare the state's systems for the string of federal benefit extensions, Jablonsky said. That includes projects funded with stimulus money.

But Calderon said that if EDD had met its own initial deadlines to modernize its systems, instead of missing them repeatedly, it could have been ready for the current unemployment crisis.

The assemblyman asked Jablonsky if he'll resign if he misses his next deadlines.

"Yes," Jablonsky said.

Several blog users sent The State Worker an e-mail that went out last week to EDD staff about Jablonsky's upcoming departure for CalPERS. We confirmed its authenticity with department spokeswoman Loree Levy before posting it, unedited, here:

The Legislative Analyst's Office has released its recommendation for the state's 2010-11 CalPERS pension contributions, including an assessment of the fund's decision on Wednesday to delay acting on a recommendation to raise employer rates:

The state's pension plans face huge unfunded actuarial accrued liabilities that will pass significant and increasing annual costs onto future taxpayers. Delaying implementation of needed rate increases to 2011-12 or beyond will pass more of these costs to future years and probably will result in even higher costs for taxpayers, given the lost opportunity of CalPERS to invest those contributed funds sooner. In effect, delaying implementation of rate increases will result in the state's General Fund and other funds borrowing hundreds of millions of dollars for one or more years at an assumed annual interest rate of 7.75 percent (CalPERS' assumed annual investment return). We recommend that the Legislature request that CalPERS provide a detailed estimate of how any delay in implementing needed contributions will increase future state costs and describe how any delay of this type is consistent with the fiduciary and constitutional responsibilities of the CalPERS board.

Click here to read more LAO analysis, including its assessment that CalPERS actuaries have overestimated how much more employers need to contribute and that the rate hike will not increase the general fund's 2010-11 budget deficit, since the expense will be borne largely by special funds departments.

CalPERS this morning postponed a decision on imposing a $600 million rate hike on the state, with an eye toward delaying the increase for a year. Bee colleague Dale Kasler reports the breaking news in this story.

Here's our State Worker column about the CalPERS staff recommendation to raise the employer rates. This link opens a post with the fund actuary's proposal. And click here to for the Legislative Analyst's assessment that CalPERS probably doesn't need to boost employer contributions by $600 million.

Today's State Worker column in The Bee notes that CalPERS actuaries are recommending the fund's board boost the state's pension contribution by $600 million for the next fiscal year. Click here to read the actuaries' report, which lays out the rationale for the increase.

The board will take up the matter next week.

We're still digging out from under a mountain of e-mails, news and information that accumulated while we were on vacation last week. Here's one item:

Bee photographer/videographer Hector Amezcua shot video of Attorney General Jerry Brown's Friday press conference, during which the presumptive Democrat nominee for governor announced that he is suing former CalPERS officials for a kickback scheme to illegally influence decisions on how the fund invested billions of dollars. Click here to see the 2-minute, 34-second video clip.

You can click here to read Bee colleague Dale Kasler's report on the lawsuit. This link opens the court complaint against former CalPERS board member Alfred Villalobos and former fund CEO Fred Buenrostro.

Hope|Against|HOPE, the Roseville-based not-for-profit organization that offers home mortgage counseling, is conducting a Foreclosure Prevention Workshop on Wednesday from 6 p.m. to 8 p.m. at the Rancho Cordova Library, 9845 Folsom Boulevard, Sacramento .

This session will include discussions about loan modification, short sales, and the federal "Making Home Affordable" plan.

This link opens Hope|Against|HOPE's website. Click the "Workshops" button at the top for meeting dates, times and locations. Registration is required so that organizers can plan materials appropriately. There's no cost to register or to attend the workshop.

Click here for our April 8 State Worker column about Hope|Against|HOPE and its services.

On a related note, CalPERS has said it's going to modify mortgages for some members. Click here to read a report by The Bee's Jim Wasserman.

Our lead story in today's Bee reviews the sharp increase in the rate of state worker retirements last year and the 30 percent jump in the number of initial CalPERS pension checks issued in January.

The data came from the fund. Click here to open the spreadsheet with more detailed statistics, including monthly retirement figures for for all CalPERS members, not just state workers, going back to the start of 2007.

IMAGE: www.freeclipart.com

In a memo sent to staff on Thursday, CalPERS Deputy Executive Officer of Operations Stephen Kessler announced the fund has hired Michael A. Willihnganz to head its Human Resources Division. Willihnganz is leaving his current post as Napa County's assistant director of Human Resources to start his new job on April 26.

Click here to read the CalPERS memo.

A few months ago, The Bee ran this story about a spat over public pensions that got personal between Gov. Arnold Schwarzenegger's economic adviser David Crane and California School Employees Association lobbyist David Low. The two went at each other during a CalPERS forum Jan. 29 in Sacramento that was intended as a reasoned discussion of pension fund costs.

Crane, who amassed a fortune in global investments, has been the administration's point man in its effort to trim pension benefits for new hires. Low has been an outspoken opponent of the idea.

We knew that CalPERS had recorded the daylong forum and asked for the footage a while ago, but we didn't know the video was available. On Thursday, we ran across this page on CalPERS' Web site with links to video of the Sacramento forum and a similar forum Feb. 12 in Los Angeles.

Clicking the viewer below will start the 72-minute segment that included the David-vs.-David debate. Crane's remarks start at the 30-minute mark. Low's comments start at about the 45-minute mark. He takes a shot at Crane's income during the 49th minute. Things get heated at the end of minute 54 when Crane responds to the Low blow.

CalPERS has responded to the recent the Stanford Institute for Economic Policy and Research brief that concluded the fund, along with CalSTRS and the University of California Retirement System are collectively unfunded by about $500 billion dollars and have needlessly engaged in overly-risky investments.

A few points among the many CalPERS makes in this "CalPERS Responds" post:

• CalPERS does not believe that using a risk-free rate as suggested in the study is appropriate since the fund can earn a premium over the risk-free rate with high certainty by investing in a diversified portfolio with an acceptable level of risk.

• The study relies on data when the system had $45 billion less in assets than it has today. CalPERS assets are valued at $206 billion - a gain of more than $45 billion since the market downturn.

• (The Stanford study) ignores our diversified investment portfolio that has been time-tested during our 78 year history. If CalPERS had followed the recommended approach in the study, we would have given up billions of investment earnings, that have helped finance pensions rather than tax dollars.

• Funded status should not be viewed as a long-term irreversible trend. A pension fund's funded status - whether a liability or surplus - is constantly changing, depending on current economic circumstances. It is a snapshot in time that can change dramatically over a fairly short period of time due to the health of the overall economy.

IMAGE: www.freewebart.com

Our sister blog, Capitol Alert, sums up the findings of a new report from The Stanford Institute for Economic Policy and Research, which bills itself as "an independent, non-partisan research institute at Stanford University."

The bottom line: CalPERS, CalSTRS and the University of California Retirement System are underfunded by a combined $500 billion.

Worth noting, according to this press advisory: "The client for this project was the Office of Governor Arnold Schwarzenegger."

Click here for the Capitol Alert post with a link to today's report brief. A Stanford spokeswoman said that the full report will be released later this week.

Veteran reporter Ed Mendel reports today that last fall's CalPERS board election cost the fund $3.1 million, including a runoff between J.J. Jelincic and Cathy Hackett that cost $1.1 million.

Click here for a breakdown of the elections' costs.

Meanwhile, voter participation among CalPERS' 1.26 million members continued a downward trend that started many years ago, according to this staff report. About 15.7 percent of the ballots sent out were returned, down from 16.67 percent for the at-large representative election in 2005. In 1997, members returned 20.7 percent of the at-large ballots mailed out.

The staff report also lays out some of the fund's efforts to increase turnout over the years. It also compares the fund's member turnout rate with voter turnout for CalSTRS elections (about 10 percent) and SEIU Local 1000's recent elections (13.5 percent to 16.33 percent of eligible members).

Click here to read Mendel's Calpensions blog.

The California Public Employees' Retirement System has scheduled five Retirement Planning Fairs for March and April. The events aim to help members plan for their retirement by giving access to government and labor representatives who can counsel on various offerings and strategies available to prepare for life after work.

Here are the locations, dates and times:

• Los Angeles, March 30 from 9 a.m. to 4 p.m. at the Sheraton Los Angeles Downtown, 711 South Hope Street.
• Sacramento, April 2 from 9 a.m. to 4 p.m. and April 3 from 9 a.m. to 3 p.m. at the Sacramento Convention Center, 1400 J Street.
• Redding, April 8 from 9 a.m. to 4 p.m. at the Red Lion Hotel, 1830 Hilltop Drive.
• Fresno, April 14 from 9 a.m. to 4 p.m. at the Radisson Hotel, 2233 Ventura Street.

Click here to read the CalPERS press release about the fairs.

A couple of bills that bear watching:

Bill number: SBX 8 29
Author: Senate President Pro Tem Darrell Steinberg, D-Sacramento.
What it does: "Employees in positions funded at least 95 percent by sources other than the General Fund shall be exempt from furloughs implemented by any state agencies, boards, and commissions."
Votes needed to pass: Majority
Click here to read the bill.

Bill number: AB 1783
Authors: Assemblymen Ed Hernandez, D-West Covina, and Ted Lieu, D-West Covina.
What it does: "This bill would prohibit a person from acting as a placement agent in connection with any potential system investment made by a state public retirement system unless that person is registered as a lobbyist and is in full compliance with the Political Reform Act of 1974 as that act applies to lobbyists."
Votes needed to pass: Two-thirds.
Click here to read the bill. This link opens an earlier State Worker blog post that was written before AB 1783 was available online.

In the aftermath of reports about placement agents earning millions of dollars for activity at CalPERS, Assemblyman Ed Hernandez, D-Baldwin Park, has introduced legislation that would make them register with the state.

AB 1743 would define placement agents -- middlemen who open pension funds' doors to investment pitches -- as lobbyists in accordance with the state's Political Reform Act. That would limit how much they could give in gifts and campaign contributions, prohibit them earning commissions based on CalPERS' investment decisions. The placement agents, their firms and employers would be required to report quarterly on their fees and compensation and on any honoraria or gifts.

Treasurer Bill Lockyer and Controller John Chiang both support the measure.

Last year Gov. Arnold Schwarzenegger signed a bill that requires placement agents to disclose campaign contributions they've made to public pension funds board members. They also must disclose whether a money manager has hired placement agents to make a pitch to the funds.

Click here for the CalPERS press release.

CalPERS employee John Hobbs, who co-chaired the fund's employee November-to-January food drive, sent out this Thursday e-mail about the effort:

Good Afternoon CalPERS,

Attached are the final CalPERS results for the 2009 State Employees' Food Drive. We do not have the results for the other state departments yet. When we get the overall state numbers we will let you know.

I want to thank all of the those here at CalPERS, who participated in the State Employees' Food Drive this year. Because of you, we were able to donate 41,981.54 pounds of food this year.

Hopefully the economy will be in better shape next year and we will be able to help even more of those less fortunate people in our area.

I also want to thank all of the division food drive, coordinators for their hard work this year, without them we couldn't do what we do here at CalPERS.

Here are the results for the most food and the most food per employee:

Total Weight:
Investment Office -- 13,659.94 pounds
Actuarial and Employer Services Branch -- 6,138.13 pounds
Information Technology Services Branch -- 5,711.30 pounds
Customer Services and Education Division -- 4,140.37 pounds

Pounds per Employee:
Executive Office -- 59.50 pounds
Investment Office -- 59.13 pounds
Office of Policy and Program Development -- 58.80 pounds
Actuarial and Employer Services Branch -- 37.43 pounds

Thank You

John Hobbs

2009 CalPERS Food Drive Co Chair
Innovation and Implementation Services Division
Portfolio Information & Analysis Office

Food collected by CalPERS and other state agencies and departments is going to Foodlink for distribution to over 120 food closets and agencies throughout the Sacramento area.

CalPERS is sponsoring a day-long discussion "California Retirement Dialogue" this Friday at the Sacramento Convention Center from 9 a.m. to 4 p.m. The event, which a fund release says "will examine the current state of California's public pension plans and analyze emerging ideas for ensuring future retirement security," is open to the public at no charge, but you must register to attend.

The discussion panels feature union representatives, government officials and retirement fund officers -- most of them aren't likely to agitate for radical public retirement changes. A notable exception: David Crane, Gov. Arnold Schwarzenegger's special adviser for jobs and economic growth, who's pictured above.

Crane has been the administration's point man on making the case for rolling back retirement benefits for new hires. Example: Last week the San Jose Mercury News published this Crane op-ed taking to task Senate President Pro Tem Darrell Steinberg for backing state employee pension increases 10 years ago when the Sacramento Democrat was in the Assembly.

(Sidenote: The Merc piece also says that pension costs have risen 2000 percent since SB 400 passed in 1999, a figure that Schwarzenegger cited during a Sacramento Press Club luncheon Monday. CalPERS responded with this e-mail blast , suggesting that the governor is data-parsing to score political points. The fund says that the state pays proportionately less per employee for pensions than it did in 1981.)

Click here to view Friday's agenda. Crane is scheduled for a 1:30 p.m. panel that tackles the question, "Retirement benefit changes: Are they needed?"

This link opens the registration page.

The fund is sponsoring a similar forum next month in Los Angeles.

IMAGE: David Crane / Sacramento Bee, Mark Morris, 2008

Here's one for you spin-watchers out there. Take a look a the top of this story, "CalPERS investments underperform in 2009," in today's Los Angeles Times:

Heavy losses in real estate holdings battered 2009 investment returns at California's giant public pension fund, although the portfolio overall rose in value for the year.

The California Public Employees' Retirement System earned an 11.8% return on its portfolio as global stock markets recovered from the collapse of 2008, the fund said Tuesday. The portfolio had dived 27.1% in 2008.

This afternoon the fund issued a press release with the headline, "CalPERS Sees Strong Investment Gains in 2009." Here's the top:

The California Public Employees' Retirement System (CalPERS) said today that it earned an 11.80 percent return on investments for the 2009 calendar year.

Since March 2009, when global financial markets plunged amid a historic worldwide economic recession, the CalPERS market value of assets has come back by more than $46 billion. Total fund assets closed 2009 at $203.3 billion. Today they stand at more than $206 billion, up more than $3 billion in just the first three weeks of the new year.

Click here to read the Times piece by Marc Lifsher. Clicking here will open the CalPERS release.

Same essential data, different takes. What's yours? Take our poll.

In his state of the state address today, Gov. Arnold Schwarzenegger renewed his call to legislators to negotiate a deal to reduce retirement pension for future state workers.

If the Schwarzenegger/Shriver household's pet pig and pony can work together to wedge a canister of food up against a wall, pry its lid off and get the food inside, Democrats and Republicans can negotiate a newer, lower cost pension system, the governor said.

Otherwise, the state will soon be in worse financial trouble than it is in now, he warned, equating the crisis to the moment a person realizes they're about to be run over by a locomotive.

Here's the part of the governor's speech that dealt with pensions:

"The cost for state employee pensions is up 2,000 percent in the last ten years, while revenues have only increased by 24 percent.

The pension fund will not have enough money to cover this amount, so the state -- that means the taxpayer -- has to come up with the money.

This is money that is taken away from important government services.

This is money that cannot go to our universities, our parks and other government functions.

Now, for current employees these pensions cannot be changed -- either legally or morally.

We cannot break the promises we already made. It is a done deal.

But we are about to get run over by a locomotive. We can see the light coming at us.

I ask the Legislature to join me in finding the equivalent of a water deal on pensions, so that we can meet current promises and yet reduce the burden going forward."

Schwarzenegger aides say his pension proposal would save $74 billion in reduced pension payouts and $19 billion in in reduced retiree health benefit bills through 2040.

The two men who won fall elections for member-at-large spots on the CalPERS board of administration will officially begin their four-year terms Jan. 16.

Kurato Shimada and Joseph (J.J.) Jelincic won the spots on the fund's 13-member board.

The Secretary of State's office will formally certify the results in a week or two, CalPERS said in a news release today.

Shimada was re-elected and has served continuously on the board since 2002.

Jelincic, a CalPERS investment officer, won a runoff election for the other seat, which was vacated by retired Caltrans attorney Charles Valdes, whose term is expiring.

CalPERS announced these unofficial runoff results:
J.J. Jelincic: 109,094 votes, 51 percent.
Cathy Hackett: 104,664 votes, 49 percent.

More than 80 percent of eligible CalPERS members -- active and retired -- didn't vote.

Two Cal Poly Pomona professors emeriti have called on the Legislature and Attorney General Jerry Brown to probe flawed investment choices by CalPERS in recent years.

Professors Walter Coombs of Claremont and Ralph Shaffer of Covina called for the investigations in an opinion piece published in The Riverside Press Enterprise.

To read their full commentary, click here. Here are their ending remarks:

It's time for a thorough examination of CalPERS by the state attorney general and the Legislature.

Recent investments smack of cronyism and outright conflict of interest. Were investment transactions based on proper research or did certain favored real estate firms exercise any influence? The attorney general must determine if there is any criminal liability involved.

Unless some outside authority undertakes a painstaking investigation, the nation's biggest public pension fund will remain the biggest example of questionable management of its members' retirement nest egg.

It should not be forgotten that the attorney general already is conducting his own investigation of some CalPERS deals.

Though some California firms have been investigated by the New York attorney general, and one has even paid $2 million to settle a case, nobody has been prosecuted by Brown's office though the pension fund/placement agent scandal has simmered for months.

CalPERS itself has hired an outside law firm from Washington, D.C., to conduct a review of the fund's dealings with Nevada placement agent Alfred Villalobos, who has raked in more than $70 million in fees for helping investment firms secure deals with CalPERS.

The pension fund's board has also moved recently to strengthen its own ethics rules. Read more about that by clicking here.

Buffeted by months of public and private investigations into cronyism, questionable investment deals and possible conflicts of interest, California's giant public pension fund today announced strengthened ethics rules for its board members.

Wayward board members who engage in dodgy conduct will be punished by the CalPERS board president himself, according to a CalPERS news release.

Punishments for ethics violators on the CalPERS board "could include admonishment, censure, temporary termination of travel privileges, removal as a committee chair or vice chair, or the requirement of additional ethical or fiduciary training," according to the release.

If the board president himself crosses the line,  then the CalPERS board-vice-president is responsible for any action against the president.

Board members will now be required to attend annual training "detailing their responsibilities to fund participants and beneficiaries."

To read the news release, click here. 

San Francisco Superior Court Judge Charlotte Woolard has ruled from the bench to uphold yesterday's tentative ruling against CalPERS in its lawsuit to exclude fund employees from Gov. Arnold Schwarzenegger's furlough order. The governor's attorneys will now write the formal order for the judge's signature. Until then, there won't be any other documentation to share with you.

UPDATE at 11:47 a.m.: Here's a statement on the ruling from Schwarzenegger spokeswoman Rachel Arrezola:

"The governor's authority to furlough all state workers is clear and this is another ruling in our favor. As California families and businesses are forced to cut back in today's economy, the governor does not believe that state workers should be shielded from the same economic realities."

We called CalPERS for a reaction knowing it was futile, since fund employees are on furlough today.

Click here to read the tentative ruling that became final this morning.

Side note: As of 11:15 a.m., Alameda Superior Court Judge Frank Roesch had not issued any rulings in the three remaining furlough cases that he is deciding. Click here to read our story in today's Bee about the judge's decision in the CCPOA furlough case.

And this link will take you to our updated Furlough Fights spreadsheet, now showing 24 lawsuits, 23 of them active.

Both the Schwarzenegger administration and CalPERS have just let us know that a San Francisco Superior Court judge has tentatively ruled in the state's governor's favor in CalPERS' furlough lawsuit.

The preliminary ruling says Gov. Arnold Schwarzenegger "has broad authority to control the workweek of employees and ... acted reasonably to save funds and maintain parity," CEO Anne Stausboll wrote in a memo to members of CalPERS' board of administration.

Stausboll added that CalPERS counsel will contest the tentative ruling at a court hearing Friday morning.

In other words, stay tuned.

Bee colleague Dale Kasler reports in this story that CalPERS' board has approved a relatively modest bump in what the state will pay the pension fund to make up for the heavy investment losses incurred the last year or so. The payouts are based on a "smoothing" plan that spreads out over three years what the state will pay to make up for the fund's investment losses.

The board's decision sets up one more thing for Republican Gov. Arnold Schwarzenegger and Democrats in the Legislature to fight about during upcoming 2010-11 budget talks. Schwarzenegger wants to skip spreading out the payments. If he prevails, it would add at least $1 billion that lawmakers would have to scrounge up from somewhere to give CalPERS instead of $200 million under the smoothing plan.

Click the following link to read more about what the administration and unions are saying about this.

This just in: J.J. Jelincic has won the runoff election for CalPERS' Board of Administration, according to a text message to The State Worker from the Jelincic campaign. The winner received 109,088 votes to 104,656 votes for Cathy Hackett.

CalPERS reports that as of today it has received 212,204 ballots for the Board of Administration runoff election between Cathy Hackett and J.J. Jelincic. Ballots had to be postmarked by last Friday to be counted.

Now the ballots will opened and tabulated. Unofficial results for the seat, Position A, will be posted online mid-December. The Secretary of State will certify the runoff election in January, as well as the election for Position B that Kurato Shimada won with 83 percent of the vote tabulated in October.

Some of our "Recommended Links" on the right side of this page, including stories you may have missed over the weekend:

Squaw Valley USA is cutting lift ticket prices for state workers on "Furlough Fridays" starting this week. (Check the company's Web site for more info by clicking here .) ... Bee colleague Dale Kasler reported that, "CalPERS is reviewing its relationship with a Los Angeles investment firm after its principal pleaded guilty in a pension corruption case in New York." ... San Joaquin County government leaders are talking about cutting pensions for new employees, noting that momentum is building statewide for changes to public employee pensions for new hires. One union leader says government workers are being pinched for the local's own fiscal mismanagement ...

And scroll down The State Worker home page for documents and links for a story about a official who signed off his own permit to use a state vehicle home for his weekly 540-mile commute ... On Saturday we reported that FTB has proposed exempting its employees from furloughs -- in fiscal 2010-11.

CalPERS' members, the deadline to vote in the Board of Administration runoff election between Cathy Hackett and J.J. Jelincic is almost here. You have to get your ballot postmarked by Friday. And don't forget to sign the envelope or the ballot won't be counted.

The fund reports that about 14 percent of the 1.3 million ballots sent out had been returned as of Nov. 30. The ballot count starts Dec. 11. The results will be posted online in mid-December, according to CalPERS' election overview Web site.

Still thinking it over?

Check out the Hackett campaign's Web site here. View Jelincic's campaign site by clicking here. Click here to see our recent interviews with the candidates. This link will lead you to Insight host Jeffrey Callison's interview with Hackett and Jelincic on KXJZ (90.9 FM).

Bee Capitol Bureau reporter Andrew McIntosh reports that CalPERS board member Charles Valdes has admitted he violated state campaign finance laws by accepting contributions that exceeded legal limits. He'll be fined $12,500 under terms of a deal with the California Fair Political Practices Commission.

Click here for Andrew's report on our sister blog, Capitol Alert.

CalPERS members, remember that Dec. 4 is the last day to return your ballot in the fund's Board of Administration runoff between Cathy Hackett and J.J. Jelincic.

We've heard that some members have received voting packets without ballots. Others may have lost their ballots or simply didn't get one in the mail. The fund has an automated 24-hour election hotline to request ballot cards or packets: (916) 795-3952 or (800) 794-2297.

Click here to see our recent video interviews with the candidates.

CalPERS Board of Administration candidates Cathy Hackett and J.J. Jelincic recently visited The Bee's Capitol Bureau to chat with The State Worker. We videotaped the conversations, which included:

• The role of placement agents and their influence with the board.
• Nepotism at CalPERS.
• Changes and challenges facing the fund.
• The 3 percent at 50 retirement formula for law enforcement officers, specifically CHP.
• Ken Hamidi.
• Pension spiking.
• Corporate governance.
• The long-term viability of CalPERS.
• Political moves afoot to cut pension benefits for new hires.
• The stalled SEIU labor contract.

And the candidates talk about their qualifications for the board -- and talk briefly about their opponent.

The deadline for CalPERS members to return ballots for the election is Dec. 4. Click here for details.

Click the following link for video links to interviews with the candidates.

CalPERS has revised its employee gift policy, an early move in the fund's launches a wide-ranging review of its ethical standards. Click here to read the memo to employees. This link will open the policy language.

As Bee colleague Dale Kasler reports today, CalPERS is on a mission to clean up its tarnished image after disclosing a former board member has earned more than $60 million in "placement" fees for helping arrange meetings that led to fund investments. No one has been charged with breaking the law. CalPERS has hired an outside firm to investigate.

The fund has also tightened its policy on placement fee disclosures and supports draft legislation requiring placement agents to register as lobbyists. Controller John Chiang and Treasurer Bill Lockyer, both CalPERS board members, are writing the bill.

CalPERS Board of Administration candidates Cathy Hackett and J.J. Jelincic made a Monday appearance on Jeffrey Callison's public radio show, Insight, on KXJZ (90.9 FM). If you missed it, click here to download the podcast. The discussion starts about 12 minutes into the show.

The discussion touches on the role of placement agents, the fund's investment strategy, the board's responsibilities to members, changes that the candidates want to see, corporate governance policies, the fund's viability and more.

Watch this blog for video interviews we've lined up with Hackett and Jelincic. And remember, board election ballots have to be in to CalPERS by Dec. 4.

CalPERS Board of Administration candidates Cathy Hackett and J.J. Jelincic are scheduled to appear on Jeffrey Callison's Capitol Public Radio show, Insight, some time between 10 a.m. and 11 a.m. today.

Hackett and Jelincic are in a runoff election for an at-large seat on the fund's board. Ballots went out to CalPERS members last week and must be returned by Dec. 4. This blog also is working on video interviews with both candidates that we'll run here.

You can tune in to the show on KXJZ, 90.9 FM, or pick it up online by clicking here. The state posts previous shows on the site, too, so you can listen later if you miss the live talk. Insight also has a regular "Furlough Friday" interview with couples who both work for the state. Check it out.

Paul McCauley, the Southern California accountant who has authored several initiatives aimed at cutting public employee pension benefits, has responded to our inquiries after his latest measure failed to gain enough signatures to make the ballot. (Click here to read the specifics of the McCauley Pension Recovery Act and its failure to gain 433,971 signatures it needed by Oct. 15 to qualify for a statewide vote.)

The California Task Force on Youth and Workplace Wellness has given CalPERS a 2009 Silver Award for promoting a healthy workplace environment. According to the organization's Web site, "Winners were selected based on the breadth of their health and wellness programs; the quality and focus of their policies; the involvement of their leadership; the impact of their endeavors; and the reasons given for having wellness programs." Click here to learn more about the wellness task force and the award.

Fund CEO Anne Stausboll told staff about the recognition in a Friday evening e-mail that you can read by clicking here.

Colleague Dale Kasler has a bit more in today's Bee on California Attorney General Jerry Brown's lawsuit against Boston-based State Street Bank and Trust for overcharging CalPERS and CalSTRS. We had the news in this quickie Tuesday blog post. Dale's story, which you can read here, fleshes things out.

We contacted Brown's press secretary,Christine Gasparac, and requested the unsealed complaint. She quickly sent over the file, which you can read by clicking here.

They're getting ready to say goodbye to the "potato guy" at CalPERS.

Research program specialist Tom Peterson is retiring at the end of this month. In the four years that he has run the fund's annual food drive, the event has taken in 361,000 pounds of potatoes.

Hence the nickname.

That's more than 180 tons o' spuds. Put another way, that's the same weight as Cleopatra's Needle, a 68-foot-tall granite obelisk in Whitehall, London. It's also about 30 tons more than a blue whale weighs, according to this fact sheet by the American Cetacean Society.

The CalPERS food drive under Peterson's leadership has also collected $52,172 in cash and 458,137 pounds of food, an average of 114,534 pounds per year.

Good work, Tom. You'll be missed.

IMAGE: www.wsu.edu

The votes for the two at-large seats on CalPERS Board of Administration have been tabulated. The results:

Seat A
J.J. Jelincic - 71,197 (36.8 percent)
Cathy Hackett - 54,934 (28.4 percent)
Dan Villella - 34,628 (17.9 percent)
Dennis Yates - 25,203 (13.0 percent)
Muriel Strand - 7,651 (3.9 percent)
Total votes - 193,613

Seat B
Kurato Shimada - 155,170 (83.3 percent)
Inderjit Singh Kallirai - 31,080 (16.7 percent)
Total votes - 182,250

Since no one running for Seat A won a majority of votes, Jelincic and Hackett face a runoff. The ballots will go out Nov. 9 with a Dec. 4 deadline.

We were working on a comprehensive catalog of furlough lawsuits when we realized that this blog failed to post the petition that CalPERS filed in San Francisco Superior Court in August.

One of the arguments that caught our eye, on PDF page 19:

The furlough orders interfere with CalPERS participants' and beneficiaries' vested rights to prompt delivery of benefits and related services and an actuarially sound retirement fund.

Then, from paragraph 33 on the same page:

The furloughs are impairing the vested rights of CalPERS' participants by, among other things: threatening CalPERS' ability to respond to the extraordinary and unprecedented investment losses of 2007-2009; hampering CalPERS' ability to trade and settle daily in the securities markets; impairing CalPERS' ability to monitor risk in its investment portfolio; delaying implementation of significant IT projects, thus potentially incurring significant penalties; inhibiting CalPERS' ability to timely process and deliver retirement, disability and health benefits; and forcing CalPERS into non-compliance with state and federal regulations.

Click here to read the brief.

Click here for our August post about the CalPERS furlough lawsuit.

CalPERS is giving members enrolled in its self-funded Preferred Provider Organization plans a two-month reprieve from paying premiums. The savings for active state workers will show up for the September and October pay periods, according to this press release.

The announcement also has details of the "premium holiday" for state and public agency retirees and active public agency retirees.

As The Bee reported in this July story, the discount was part of the last budget fix signed by Gov. Arnold Schwarzenegger. The deal will save the state about $131 million, since it gets a holiday, too. The arrangement doesn't apply to employees or retirees in HMOs.

If you haven't voted already, do it soon. Next Friday, Oct. 2, is the deadline for voting on CalPERS board members.

Ballot counting starts the following Monday, Oct. 5. If no candidate wins a majority of votes for a seat, a runoff vote will be conducted from Nov. 9 through Dec. 4.

To view the election schedule, click here. The Web site notes:

Voted ballots must be postmarked or received by CalPERS at the address shown on the front of the return envelope by this date to be counted. The reverse side of the envelope must be signed by the voter; otherwise the ballot will not be counted.

CalPERS Board of Administration had furloughs on its agenda again this month. No word yet on any decisions about the policy. As TSW regulars know from this post, the fund is suing to exempt itself from furloughs.

On an entirely different note, CalPERS is hosting a member retirement planning fair to day from 9 a.m. to 4 p.m. in Kings Beach at 8313 North Lake Blvd., Lake Tahoe. The fund has another fair scheduled for those same hours on Sept. 25 and on Sept. 26 from 9 a.m. to 3 p.m. Both those events will be at Redding's Red Lion Hotel, 1830 Hilltop Drive.

If you haven't returned your CalPERS' Board of Administration ballot, you have until Oct. 2 to get it in. A few folks have called and e-mailed us that they have been holding their vote until they could watch the video from the Sept. 2 candidate's forum at Sacramento's Dante Club. They missed our earlier post and asked that we direct them to it.

We figure that there may be other blog users who want to see the video, so we decided to post it again here.

The Bee's video staff distilled the 28-minute video from two hours of raw footage shot by Kim McElroy of Shout TV, the public access television show devoted to SEIU Local 1000 issues. (Local 1000 doesn't sponsor the show or sanction its content.)

Watch the video and you'll see CalPERS Board of Administration candidates J.J. Jelincic, Inderjit Singh Kallirai and Muriel Strand taking questions from Bee editorial board member Ginger Rutland and the dean of Sacramento's political press corps, columnist Dan Walters. The video also includes closing remarks by each candidate.

Candidates Cathy Hackett, Kurato Shimada, Dan T. Villella and Dennis Yates did not participate.

The Bee and PERSWatch co-sponsored the event. The League of Women Voters moderated.

Click here for more information about the election.

The Bee's Andrew McIntosh reports today on former DMV employee Lisa Trevino-Angelo who is facing criminal charges for disability fraud.

Fraudulent disability claims aren't anything new in either the public or private sector, but this one is a bit different because the case is being tried in the courts instead of through administrative action by the fund.

You can click here to read Andrew's story. We have a couple of public documents available that give more details about the case:

Click here for the Investigative Summary (4 pages).

Read Trevino-Angelo's letter to CalPERS' Disability Unit requesting reconsideration of a previous disability denial by clicking here (3 pages).

Here's footage from last week's CalPERS candidate's forum at Sacramento's Dante Club. Our video staff has distilled it from two hours of raw footage shot by Kim McElroy of Shout TV, the public access television show devoted to SEIU Local 1000 issues. (Local 1000 doesn't sponsor the show or sanction its content.)

The 28-minute video captures CalPERS Board of Administration candidates J.J. Jelincic, Inderjit Singh Kallirai and Muriel Strand taking questions from Bee writers Ginger Rutland and Dan Walters. The footage also includes closing statements by the candidates.

Candidates Cathy Hackett, Kurato Shimada, Dan T. Villella and Dennis Yates did not participate.

The Bee and PERSWatch co-sponsored the event. The League of Women Voters moderated.

The CalPERS board election ballots went out on Friday and must be returned by Oct. 4. Click here for more information about the election.

CalPERS Board of Administration candidates J.J. Jelincic, Inderjit Singh Kallirai and Muriel Strand answered questions about the fund and their candidacy during a 2-hour forum Wednesday night.

Candidates Cathy Hackett, Kurato Shimada, Dan T. Villella and Dennis Yates did not participate.

Questions from the audience of about 50 at Sacramento's Dante Club covered everything from the pension fund's viability and board-to-member communication to whether the fund applies to itself the same good governance principles it pushes for companies in which it invests.

Bee editorial writer Ginger Rutland and columnist Dan Walters asked the candidates about board member ethics, particularly in light of the newspaper's recent report on Charles Valdes and big-bust investments such as the infamous Landsource real estate deal. There was also quite a bit of back-and-forth over Gov. Arnold Schwarzenegger's proposal to create a two-tier pension system and whether the fund's support for legislation 10 years ago that boosted pensions -- particularly for safety personnel such as the Highway Patrol officers and correctional officers -- has hurt CalPERS' credibility.

It was a wide-ranging discussion. We'll soon post video of the forum so that voters can view the comments before casting their ballots. Click here for more information about the election.

A word of thanks to Jim McRitchie of PERSWatch for working tirelessly to organize and to promote the forum. Thanks also to The League of Women Voters for moderating the event.

Here's the latest on who's in and who's out for Wednesday's CalPERS Board of Administration candidates forum, co-sponsored by The Bee and PERSWatch:

Accepted
J.J. Jelincic
Inderjit Singh Kallirai
Muriel Strand
Dennis Yates

Declined
Cathy Hackett
Kurato Shimada
Dan T. Villella

The forum is set for the Dante Club (click here for a map) on Wednesday from 6:30 p.m. to 8:30 p.m., and it's open to the public. If you attend, you'll have a chance to submit questions for discussion during the first part of the forum. The League of Women Voters is moderating.

Bee editorial board member Ginger Rutland and political columnist Dan Walters also will ask questions of the candidates. Your humble TSW blogger/columnist/reporter will be there, too. Hope to see you there.

Here's the latest on who is in and who isn't participating in Wednesday's CalPERS Board of Administration candidates forum, co-sponsored by The Bee and PERSWatch:

Cathy Hackett's campaign has told PERSWatch's Jim McRitchie that she will be out of town and unable to attend. Dennis Yates , who had committed earlier, has dropped out.

Inderjit Kallirai will attend, McRitchie tells us. So here's how things stand as of this afternoon:

Accepted
J.J. Jelincic
Inderjit Singh Kallirai
Muriel Strand

Declined
Cathy Hackett
Kurato Shimada
Dennis Yates

No response
Dan T. Villella

The forum is set for the Dante Club (click here for a map) on Wednesday from 6:30 p.m. to 8:30 p.m. It's open to the public and audience members will submit questions during the first part of the forum . The League of Women Voters is moderating. Bee editorial board member Ginger Rutland and columnist Dan Walters will ask questions of the candidates.

We hope you'll attend. For more information, click here for what PERSWatch is saying about the event. And click here for earlier TSW forum posts, including a survey of the candidates.

With the CalPERS board candidates forum on Sept. 2 quickly approaching with ballots going out two days later, we thought readers might want to know a bit more about the seven people who are running for the at-large seats on the board of the nation's largest pension system.

James McRitchie, head of PERSWatch, sent 10 questions to each candidate and has posted their responses (and non-responses) on his organization's Web site. The questions cover everything from candidates' qualifications to shareholder activism and health care costs.

Check out McRitchie's survey of Cathy Hackett, J.J. Jelincic, Inderjit Singh Kallirai, Kurato Shimada, Muriel Strand, Dan T. Villella and Dennis Yates by clicking here.

The Bee and PERSWatch are co-sponsoring next week's forum at the Dante Club on Fair Oaks Boulevard in Sacramento. The League of Women Voters is moderating. Click here for an earlier post with more details.

Click here for a PERSWatch press release with more details about the event. The Bee plans to video record the forum and post it for viewing on sacbee.com through the Oct. 4 deadline to return ballots.

Here's who has accepted so far, who's declined and who hasn't committed either way:

Accepted
J.J. Jelincic
Muriel Strand
Dennis Yates

Declined
Kurato Shimada

No response
Cathy Hackett
Inderjit Singh Kallirai
Dan T. Villella

Two seats are up for election with separate votes. Kurato Shimada and Inderjit Singh Kallirai are running against each other for one seat. The other five candidates are running for the other seat.

For more information about the election, click here.

As we mentioned Monday, The Bee and PERSWatch are co-sponsoring a Sept. 2 debate between candidates for the at-large seat on CalPERS's Board of Administration. Click here for that earlier post, which has all the pertinent details about the event, which is open to the public, at Sacramento's Dante Club and the election that runs from Sept. 4 to Oct. 2.

The Sacramento Bee and PERSWatch, the Elk Grove-based organization dedicated to promoting CalPERS accountability, are co-sponsoring a forum for candidates running for the fund's Board of Administration.

The event is set for Wednesday, Sept. 2, from 6:30-8:30 p.m. at the Dante Club, 2330 Fair Oaks Blvd. in Sacramento. (The location is pictured at left.)

Ballots for the election go out to fund members on Sept. 4 with an Oct. 2 deadline for their return.

The League of Women Voters will moderate the debate. During the first part of the forum, candidates will answer questions submitted by the audience. After a short break, Bee writers will ask questions of the candidates. The Bee hasn't yet selected who will serve that in that capacity.

There are here are two seats up for election with separate votes. Kurato Shimada and Inderjit Singh Kallirai are running against each other for one seat. The other five candidates are running for the other seat. James McRitchie of PERWatch has invited all of the candidates.

Candidates who have accepted:
J.J. Jelincic
Muriel Strand
Dennis Yates

Declined:
Kurato Shimada

No response yet:
Cathy Hackett
Inderjit Singh Kallirai
Dan T. Villella

For more information about the election, click here.

From colleague Andrew McIntosh's report in today's Bee on CalPERS' board member Charles Valdes:

... his campaign account is being scrutinized by the Fair Political Practices Commission's enforcement arm after a state auditor raised issues during a mandatory review, FPPC Executive Director Roman Porter said.

The campaign account "is now under investigation. I anticipate it being concluded soon," Porter told The Bee, refusing to say anything more.

Valdes did not return repeated calls for comment.

Click here to read the story. We've also added it to our "Recommended Links" list on the right side of this page.

IMAGE: Charles Valdes, 2005 / Sacramento Bee, John Decker

David Crane, senior adviser for jobs and economic growth to Gov. Arnold Schwarzenegger, has responded to a press release by CalPERS board candidate J.J. Jelincic that criticized the administration's push for public employee pension reform as an "attack" on civil servants. You can read the TSW post of Jelincic's release by clicking here.

Here's part of what Crane said in an e-mail passed along to us by Schwarzenegger spokesman Aaron McLear:

It appears that Mr. Jelincic doesn't understand the governor's proposal or the impact on government programs from unfunded pension promises. But he is correct about one thing: No pension reform proposal can do anything about all the existing and massive unfunded pension liabilities already in place. Unfortunately, those massive costs were set in stone in 1999 when legislators passed legislation (SB400) that retroactively and prospectively increased pension benefits by tens of billions of dollars and compounded through decades of underfunding because of the use by CalPERS of GM-style pension accounting designed to understate the real cost of pension promises. Unfortunately we're seeing the terrible consequences of these actions today as billions are slashed from domestic violence shelters, health and human services, parks and recreation and more programs in order to pay off past unfunded pension promises.

Click here to read the entire unedited e-mail.

Good morning! There's quite a bit of news with direct impact on state workers in today's Bee: CalPERS lawsuit to end furloughs for its employees, plans to cut $1.2 billion from CDCR's budget and the folly of the State Fund sales proposal. Take a look at the "Recommended Links" list on the right side of this page for summaries and links to each.

And, of course, there's our Thursday column, which you can read by clicking the first link under "Now on the State Worker column," also on the right side of this page. Today's piece looks at why it's unlikely that Gov. Arnold Schwarzenegger will add a fourth "Furlough Friday" if another budget crisis erupts.

E-mail any news of interest to state workers on the Web today (and every day) that you think we should let everyone know about. We try to keep an eye on it, but it's a big cyber world out there and things do get past us.

UPDATE at 6:20 p.m.: Bee colleague Dale Kasler filed a quick CalPERS post on his Home Front blog a while ago. Click here to read it.

UPDATE at 5:20 p.m.: Click here to see CalPERS CEO Anne Stausboll's e-mail to fund staff. Unlike the press release, Stausboll calls the court action a "lawsuit," and that, "CalPERS is seeking relief from the furloughs and salary reductions for CalPERS employees."

This won't come as a surprise to TSW users who have been following our coverage of CalPERS and its shifting position on furloughs over the last month:

Title: CalPERS Takes Legal Action on Furloughs
Date: 8/19/2009 4:07:02 PM

PRESS STATEMENT

CalPERS Takes Legal Action on Furloughs
SACRAMENTO, CA - The California Public Employees' Retirement System (CalPERS) today filed legal action in Superior Court in San Francisco seeking judicial review of the applicability of the state's furlough program to the pension fund. CalPERS Board President Rob Feckner, noting that the savings created from the CalPERS furloughs do not accrue to the General Fund of the state of California, issued the following statement in connection with the lawsuit:

"State law does not permit general fund budget problems to jeopardize the financial soundness of CalPERS or the benefits that we are obligated to pay retirees. Further, the furlough is inhibiting our ability to provide services to our members and to meet our contractual responsibilities to local employers."

Click here to read the rest of the CalPERS release. Colleague Dale Kasler is writing a story for tomorrow's fiber and cyber Bee. Watch for it.

CalPERS has sent a letter to the employers it serves around the state that begins,

This is an update to Circular Letter #200-049-09, dated July 9, 2009, to inform you that CalPERS is scheduled to be closed to the public the first three Fridays of each month until further notice, while we continue to analyze the Governor's Executive Order.

We've been watching the furlough action at CalPERS as the fund's board considers whether to continue the policy. As we reported in this blog post last month, officials there have put the Schwarzenegger administration on notice that it might pull out.

The board met in closed session last month at a Folsom hotel. Furloughs were on the agenda. The fund didn't announce any changes, but it did commission further study of the policy.

Click here to read the letter to employers from Lori McGartland, chief of CalPERS'
Employer Services Division.

As we reported in this July 16 TSW blog post, CalPERS is thinking about dumping furloughs and returning to a regular work schedule. It appears that Gov. Arnold Schwarzenegger's decision to add a third furlough day starting last month prompted the fund's leaders to take a second look at their decision to go along with the order.
The board met in Folsom earlier this week and the agenda included furlough policy.

Here's what came of it, according to CalPERS CEO Anne Stausboll's e-mail to staff:

From: Stausboll, Anne
Sent: Friday, July 31, 2009 3:43 PM
To: Exchange Users, All
Subject: Furlough Update

As mentioned at our All Staff Forum last week, we discussed the issue of the furloughs at a closed session of the CalPERS Board offsite on Wednesday. Based on the results of this discussion, we are continuing our legal analysis. There is more work to do, and we will be updating the Board again in closed session on August 17. During August, we will continue having furloughs. We will continue with the same plan we had in July. Employees will not work on furlough Fridays, except for the limited number of employees who are required to take a rolling furlough day. Again, your supervisor will let you know if you are to take a rolling furlough day.

I want to thank all of you who have shared your concerns and ideas with me, and to let you know that those were shared with the Board. I appreciate your patience and your understanding.

Anne

Anne Stausboll l Chief Executive Officer l CalPERS Executive Office

Thousands of state workers and employers enrolled in CalPERS will get a break on their health care premium payments for two months this fall.

The governor just signed a bill allowing CalPERS to use more than $265 million in its excess reserves in the PPO health trust to relieve members and state agencies from health care payments. They'll provide provide about $43 million in paycheck deductions for 324,000 public employees enrolled in a preferred provider insurance plan, or PPO. Workers with HMO plans - the majority - would not not be eligible.

The savings will trickle down from employers.

"Once the savings are passed along to our employers, it will be up to them to ensure they get to our members," CEO Anne Stausboll said.

The press release from CalPERS also states that it will free up nearly $131 million for the state's general fund.

Click here to see the press release that CalPERS sent out.

For more information, here's what we've written about it before in the blog and in the newspaper.

Patricia K. Macht, spokeswoman for the California Public Employees' Retirement System for 15 years, was promoted to director of external affairs, a newly-created deputy-level position. She has been the assistant executive officer of public affairs since 2002.

View the press release by clicking here.

CalPERS CEO Anne Stausboll this week sent a letter to Controller John Chiang and DPA Director Dave Gilb. We'd sum up her message like this: We've been furloughing people, but we don't have to. We'll do it again this month, after that all bets are off.

We've heard that the furlough policy -- and the possibility of another day being tacked onto it -- has hurt CalPERS' ability to recruit new hires. Stausboll notes in her letter:

CalPERS has independent statutory authority, pursuant to Government Code section [20098], to appoint and fix the compensation of certain top level executive, actuary and investment staff. This authority is expressly reserved to CalPERS for the purpose of fulfilling its fiduciary responsibility "to recruit and retain highly qualified and effective employees ... " (Government Code, section 20098, subdivision (c).) In implementing any furlough order, CalPERS reserves all of its rights as set forth in Government Code section 20098 and related statutes.

Stausboll doesn't mention this, but we'd add that the fund's Board of Administration is set to meet in Folsom later this month. The fund hasn't put out the agenda yet, but we expect the board will take a look at CalPERS' furlough policy. This link takes you to the Board of Administration's Folsom meeting notice.

Read Stausboll's July 13 letter by clicking here.