Making the Headlines: I have been there before, and no one likes to see one’s name in the media regarding a controversial issue because one is taught not to be the “nail that stands out on a piece of wood.” But, I learned that in high-stakes politics, one cannot be governed by whether or not a decision will cause attention or be ignored. It is more important to make a decision that can be supported by one’s conscience.
The history behind the headline: Every year, the five-member State Personnel Board holds an election in December to elect a member to represent the SPB on the 13-member California Public Employees’ Retirement System (CalPERS) board, which governs the largest public pension fund in the world ($178 billion). Since each SPB member is appointed for 10 years, ideally, each member is eligible to serve on CalPERS for a minimum of two years, and generally the position rotates according to seniority. If a member waives his/her turn to serve, this allows other members to serve a longer term.
Sean Harrigan was the SPB’s representative to CalPERS for the past five years, and he was successfully elected president of the CalPERS board during his tenure. Harrigan’s presidency was important to labor and many key Democrats. He was the senior executive of the United Food and Commercial Workers International Union and was the catalyst behind CalPERS’ corporate-governance campaign. Under Harrigan’s leadership, there was some controversy. CalPERS was applauded for engaging in some innovative efforts in pursuing some needed corporate reforms; at the same time, Harrigan was also criticized for using the CalPERS clout to pursue union politics. Controversies aside, these issues were not relevant to what I had to do because I was a proud supporter of Harrigan’s leadership efforts.
Making the Tough Decision: The most senior SPB member was Ron Alvarado, Gov. Pete Wilson’s appointee to the SPB, who advised me that he had one more year on the board and would like the opportunity to serve another year on CalPERS before leaving. Alvarado had served on CalPERS previously during his 10-year term but politely stepped down mid-term to allow Harrigan, a Davis appointee, to replace him. Since the SPB members elect their own CalPERS representative and the board had a Republican majority at that time, Alvarado was under no legal obligation to step down — but he did so in deference to Gov. Gray Davis’ request. Alvarado subsequently supported Harrigan for four additional years with the understanding from Harrigan in December 2003 that 2004 would be Harrigan’s last year.
When Harrigan asked me if I would support him for a sixth year, I told him of Alvarado’s interest in serving and my concerns regarding the fairness issue of rotating the position. It was a difficult conversation because I knew that I was the pivotal vote as to whether he would remain president of CalPERS because the SPB board now had a Democratic majority.
Following my conversation with Harrigan, in November, during my vacation in Hawai‘i and the Thanksgiving holidays, I began to get calls from longtime friends from the U.S. Congress and the state Legislature and national and state leaders from the Democratic Party and labor organizations. Even Gov. Gary Locke called from Washington state. Despite the numerous calls, I felt that it was important to extend the political courtesy of listening to every individual who had been asked to call on behalf of labor and explain my position to them.
Facing the Media and Critics: By the time the vote was to take place, Dec. l, rumors and innuendoes as to the motive behind my pending vote were swirling out of control. Rumors generated included: 1) there was a conspiracy with Gov. Arnold Schwarzenegger to get rid of Harrigan; 2) Walt Disney Corp. was behind my vote to oust Harrigan; 3) I cut a deal with the two Republicans on the board so that I could serve on CalPERS next even though, by seniority, I am next in line to serve anyway; 4) I was negotiating a gubernatorial appointment for my husband; and 5) my old boss and former Assembly Speaker Willie Brown, a CalPERS board member, wanted to be the next president. For the record, I have not spoken to Brown in more than a year.
One learns in politics that the best way to address innuendoes and rumors is to face them head-on with the press when legally possible. Therefore, before I cast my vote, I made a statement to clarify why I was going to support Alvarado instead of Harrigan. Even though the press, including Time and Fortune magazine, printed the message I wanted to convey about my vote, Harrigan and others continued to spin the theory that this was a governor-orchestrated conspiracy. Some media sources continued to speculate why a party loyalist would take such a controversial position incurring the wrath of labor and her own party.
Bottom Line: Whether my position was politically correct or not was less important to me than the fairness issue. The SPB, a constitutionally mandated, independent, quasi-judicial board, is responsible for protecting the vested interest of state employees. My first obligation is to protect the integrity of this board’s process of ensuring that each SPB member has a fair and equal opportunity to represent the SPB on CalPERS. More importantly, I appreciated the friends who were asked to lobby me telling me that while they wished they could change my mind, they respected where I stood on principle. It was truly a liberating experience.
What is CalPERS
The California Public Employees’ Retirement System (CalPERS) has an investment portfolio with a market value of:
• $171.6 billion in 2004 (as of Oct. 31, 2004)
The portfolio has grown from:
• $28.6 billion in 1985 (as of June 30, 1985)
That provides retirement and health benefits to:
• 1,002,067 active/inactive members
• 416,783 retirees
• 2,500 employers
2003 - 2004 income and expenses
• $2,266,445,429 member contributions
• $4,261,347,422 employer contributions
• $24,272,572,596 investment and other income
• $230,038,192 administrative expenses
• 1,687.5 employees (as of July 1, 2004)
Source: CalPERS General Facts, Dec. 2004