The CalPERS board approved a $1.15 million performance bonus for Frost, a sizable jump from the $766,000 incentive she received the previous year. Combined with a newly approved base salary of $641,000 — up from $601,000 — Frost’s total pay package now exceeds $1.7 million.

The raise comes as CalPERS continues to post strong investment gains and enjoys a rare stretch of steady leadership. Frost took the helm of the fund in 2016, a time when CalPERS held assets covering only about 65% of what it owed retirees, a lingering scar from the 2008 financial crisis. Since then, the fund has required government employers to increase contributions toward their workers’ retirement benefits, and it has now strung together three consecutive years of investment returns that outpaced targets.

Last year alone, CalPERS reported a 14.8% return, more than double its long-term goal. As of June 30, the fund’s portfolio was valued at $637.1 billion, enough to cover about 85% of its long-term obligations to members — a marked improvement from where things stood when Frost arrived.

CalPERS Board President Theresa Taylor praised Frost’s leadership in a statement, calling her “a CEO on top of her game” who is “delivering excellent results for CalPERS members.”

Not everyone on the 13-member board agreed. Board member Mulissa Willette and a representative for state Controller Malia Cohen cast dissenting votes. Deborah Gallegos, speaking on Cohen’s behalf, told the board during Wednesday’s meeting that the pay package failed to reflect the full range of opinions among board members and ignored California’s current budget challenges.

“The views of the board members with dissenting views were dismissed,” Gallegos said. “I cannot stand behind a motion which does not equitably take into consideration all relevant factors, particularly in light of the current structural deficit in California.”

The bonus also drew criticism from several retirees affiliated with the Retired Public Employees Association, a group led by former CalPERS board member Margaret Brown, who addressed the board directly.

“There is something fundamentally wrong when public service compensation begins looking like Wall Street compensation,” Brown said.

Despite the record bonus, Frost remains far from the top earner among California’s two major public pension systems. Chief investment officers at both CalPERS and the California State Teachers’ Retirement System typically out-earn their agencies’ chief executives. CalPERS Chief Investment Officer Stephen Gilmore brought home $2.2 million in total compensation last year, while his CalSTRS counterpart, Scott Chan, earned $1.4 million, according to figures from the State Controller’s Office.

Frost’s bonus tends to draw early attention each year simply because of scheduling — CalPERS board meetings fall earlier in the calendar than those at CalSTRS, which does not disclose its own executive bonuses until November.

Frost’s time leading CalPERS has not been without turbulence. Between 2019 and 2024, the fund churned through three different chief investment officers, the executive responsible for shaping CalPERS’ investment strategy toward its 6.8% annual return target. That instability ended when Gilmore was hired in 2024, bringing a measure of continuity to the fund’s top investment post.

Original source: CalMatters

The post CalPERS Chief Executive Earns First Seven-Figure Bonus as Pension Fund’s Strong Returns Continue appeared first on The Hemet & San Jacinto Chronicle.

The discussion was sparked by the resignation of Jacob Coxon, a researcher who left AI company Anthropic and went public with warnings that the industry’s leading firms may be putting humanity at risk. In a social media post, Coxon — who previously worked at OpenAI — accused both Anthropic and OpenAI of “gambling with our lives” in their rush to build increasingly powerful, humanlike artificial intelligence systems. He suggested the consequences could arrive within the next several years.

The comments rattled more than just Silicon Valley. They reached the boardroom of CalPERS, the pension system that manages retirement funds for millions of California’s public employees and retirees, with assets totaling roughly $655 billion.

During Monday’s meeting, CalPERS Board President Theresa Taylor raised Coxon’s resignation directly with Chief Investment Officer Stephen Gilmore, framing the issue in stark terms.

“This is humanity,” said Taylor, a retired state worker and former union leader, as she pressed the board to consider whether CalPERS should speak out publicly on the risks posed by unchecked AI development.

Taylor noted that even in the wake of Coxon’s warning, the chief executives of both Anthropic and OpenAI — Dario Amodei and Sam Altman, respectively — have called for the industry to slow down its race toward more advanced AI systems, an acknowledgment that even top developers see cause for caution.

Taylor argued that CalPERS has a stake in the conversation beyond its investment portfolio. While the board’s primary duty is to safeguard the fund’s financial performance, she suggested that ignoring the societal risks of AI would be shortsighted.

“If we don’t have retirees, if we don’t have state workers because of AI, we don’t have a pension fund,” Taylor said, making the case that protecting the workforce and the public at large is inseparable from protecting the fund’s long-term stability.

Despite the pointed exchange, the board did not commit to issuing any formal statement on AI risks, nor did it signal any change to its investment strategy involving artificial intelligence companies. Gilmore, addressing the board, acknowledged the uncertainty surrounding the technology’s trajectory, saying the future holds “a very wide distribution of possible outcomes.”

Taylor responded with a mix of skepticism and concern, noting that while investors continue to chase the financial upside of the AI boom, the ultimate result could look nothing like what anyone expects.

“We’re waiting for the money,” she said, “and unfortunately the outcome could be something entirely different.”

For now, CalPERS — like many major institutional investors — remains deeply intertwined with the fortunes of the AI sector, even as some of its own leaders openly question whether that reliance carries risks far greater than market volatility.

Original source: CalMatters

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Linda Samsom retired from Riverside County after decades overseeing unclaimed estates and indigent burials. Around the time she left, the Yolo County Sheriff’s Office reached out, hoping she could help build a similar program from scratch. She signed on as a “consulting specialist,” writing policies and procedures for the new office.

“I love the work. I enjoy the work. I was happy to help Yolo set up this office, they were so gracious and so appreciative,” Samsom said.

Over the years, according to pay data published by Transparent California, she earned between roughly $7,200 and $23,000 annually through the arrangement, all while collecting a state pension of about $10,000 a month.

Then came the letter.

CalPERS auditors determined that Samsom’s $50-an-hour pay rate exceeded what a comparable government position would pay, putting her in violation of California’s laws governing retirees who return to public-sector work. The consequence: CalPERS wanted back every dollar of pension income she’d received during the roughly eight years she worked the Yolo County contract — a bill of $1,050,875. Her only alternative was to accept a permanent 50% cut to her monthly pension.

“The emotional roller coaster I’ve been on has been absolutely frightening,” Samsom said. “I go from being in a panic thinking of what will happen if my pension is cut in half to being really angry that CalPERS, which I believed belonged to the retirees and the government employees, could do this to us.”

Samsom is now suing CalPERS in San Francisco Superior Court, arguing the agency is ignoring a three-year statute of limitations that should apply to pension errors and that its penalties are disproportionate to the alleged violations. A CalPERS spokesperson said the agency had not yet been served with the lawsuit and declined to comment on pending litigation.

In related administrative proceedings, CalPERS has argued there is no time limit on pursuing violations of the post-retirement work rules, characterizing them not as innocent mistakes but as deliberate attempts to skirt the system. State law does require retirees to repay pension funds if they return to work illegally.

The lawsuit comes just months after CalPERS settled a separate, years-long dispute with four other retirees who had been hired as consultants in various city governments through a private staffing firm. Like Samsom, those retirees were blindsided by demands for repayments approaching $1 million. CalPERS backed off that effort in April.

Attorney Scott Kivel, who represents Samsom, said his client had no reason to think she was breaking any rules.

“She thought she was doing a good thing,” Kivel said. “She had no idea that eight years later CalPERS would come after her and say, ‘You violated the law because you were paid this slightly higher amount than a comparable position.'”

**A system under scrutiny**

At the center of these disputes is CalPERS’ office of audit services, which is responsible for ensuring that public employers and workers make correct pension contributions and that retirees receive accurate benefits. Given that CalPERS oversees a portfolio now worth roughly $658 billion — the largest public pension fund in the country — getting those numbers right is no small task.

The audits are designed largely to prevent so-called double-dipping, in which retirees draw both a pension and a paycheck from a California public agency. State law limits how many hours retired employees can work for government agencies specifically to guard against that overlap.

The audit that ensnared Samsom actually stemmed from a broader review of how Yolo County uses retired workers. County spokesperson Will Arnold said officials are still reviewing the findings and will decide whether policy changes are needed.

These audits can catch both workers and the agencies that hired them off guard, sometimes resulting in expensive corrections on both sides. In April, organizations representing California cities and counties sent letters urging the CalPERS board to apply clearer, more consistent standards when determining whether retirees’ part-time roles comply with the law.

State lawmakers have taken notice. Last month, the Legislature passed Senate Bill 1038, which would require CalPERS to give employers earlier notice of audits and require those employers to alert relevant public employee unions when investigations begin. The California School Employees Association, one of the state’s largest public worker unions, backed the bill to protect members caught up in these reviews.

“Public employees and their unions are important stakeholders in the audit process, and quick resolution benefits everyone — especially in cases where an ongoing payroll reporting error compounds over many months or years,” the union wrote in support of the legislation.

**A pattern retirees say needs fixing**

Samsom isn’t the only plaintiff in the new case. David Dowswell, a retired public employee who later did consulting work for the city of Dixon, faced a nearly identical ordeal. He was hired through a third-party firm, Regional Government Services, in an arrangement both he and city officials believed followed pension rules.

Years later, CalPERS determined otherwise.

“The largest pension fund in the United States by far sends me an invoice that I owe them $1,064,000 and I have 30 days to repay. If you didn’t see it in black and white, there’s no way you’d believe it,” Dowswell said.

His pension was ultimately restored in April as part of a settlement CalPERS approved after an administrative law judge ruled in his favor, along with three others who had worked through the same staffing arrangement. But the road to that outcome was rocky — a California appeals court had previously sided with CalPERS at an earlier stage of the case, and the final settlement stopped short of establishing any formal statute of limitations for these violations.

That unresolved question is part of why Dowswell joined the new lawsuit — he wants a court to settle, once and for all, how far CalPERS can go in demanding repayment from retirees years after the fact.

“CalPERS shouldn’t be allowed to just run roughshod over their retired annuitants,” Dowswell said, referring to the state’s term for retirees who return to work. “[CalPERS] should be like any other agency, obligated to follow the law, not just apply it as they see fit.”

Original source: CalMatters

The post Decades of Pension Payments, Then a $1 Million Bill: One Woman’s Fight With CalPERS appeared first on The Hemet & San Jacinto Chronicle.

Assembly Bill 1383 would lower the retirement age for full benefits from 57 to 55 for public safety workers and would let unions negotiate pension formulas with an accrual rate as high as 3% per year of service, up from the current 2.7%. The bill also raises a cap on pensionable income for higher-paid public employees across the board, not just those in law enforcement and fire service.

The measure cleared the Legislature with broad bipartisan support, passing 33-0 in the Senate and 70-2 in the Assembly. Sen. Suzette Martinez Valladares, a Lancaster Republican, said she backed the bill because public safety workers “run toward fire, violent crime and life threatening emergencies” and deserve retirement benefits that reflect the toll of that work.

Should Newsom sign it, the bill would represent the first expansion of public employee pension benefits since 2013, when then-Gov. Jerry Brown pushed through reforms requiring newer employees to work longer and contribute more toward their retirements. That earlier overhaul came in response to the dot-com crash and the Great Recession, which drained tens of billions of dollars from California’s pension systems and raised alarms about their long-term solvency.

Those wounds haven’t fully healed. The California Public Employees’ Retirement System, the state’s largest pension fund, held about $637 billion in assets as of July 1 — roughly 85% of what it ultimately owes its 2 million members. To close that gap, CalPERS has steadily raised the rates it charges cities, counties and the state over the past decade, both to pay down unfunded liabilities faster and to reflect more conservative investment return expectations. Combined employer and employee contributions to the fund rose from $14.9 billion in 2017 to $30.2 billion last year.

The pension expansion is expected to add $282 million in near-term costs to CalPERS, covering the earlier retirement age and higher income cap. That figure could climb by hundreds of millions more if public safety agencies statewide opt into the maximum benefit levels, according to estimates from the state Department of Finance, which has urged Newsom to reject the bill.

Local governments across California have lined up against the measure, hoping the governor will veto it. Napa Mayor Scott Sedgley, a retired firefighter himself, said cities want to reward public safety workers but need the numbers to work. “We want to pay our police and fire and all our employees all we can, but it has to pencil out at the end,” he said.

Despite the uncertainty, some police and firefighter unions moved ahead as if the bill’s passage were assured. In Napa, for example, the city’s firefighter union secured a five-year contract that includes a clause reopening pension negotiations if Newsom signs AB 1383. Attorney Michael Youril of the law firm Liebert Cassidy Whitmore, which represents public agencies, said unions are eager not to get locked into contracts that don’t reflect the new benefit levels. “I would say there’s going to be immense pressure” on local governments to adopt the maximum allowable pension formulas, he said.

The legislation would benefit two labor groups that have been steady political allies to Newsom: California Professional Firefighters and the California Correctional Peace Officers Association. Firefighter union leaders pushed hard for the lowered retirement age, citing the toxic exposures and physical toll that can cut short both careers and lives in the profession.

Union representatives note the bill doesn’t fully reverse the 2013 reforms — before that law, police and firefighters could retire at 50 with even richer pension formulas. They describe the current proposal as a more modest update rather than a full rollback.

For the Peace Officers Research Association of California, which represents law enforcement unions statewide, the bill has been the top legislative priority this session. Association president Brian Marvel said he’s concerned about the possibility of a veto.

“We’re really hoping that the governor doesn’t want to go down that path because we really feel that this is a great opportunity for him to leave office addressing a huge issue within public safety,” Marvel said, pointing to ongoing struggles with police recruitment and retention. “We want to make sure that we have the necessary resources to be able to address what the community’s needs are.”

Marvel added that if Newsom vetoes the bill, law enforcement groups would have to “have serious conversations” about the decision — particularly if the governor pursues a future run for president.

Original source: CalMatters

The post Lawmakers Back Earlier Retirement, Bigger Pensions for First Responders — Newsom’s Decision Looms appeared first on The Hemet & San Jacinto Chronicle.

The California Public Employees Retirement System reported a 14.8% investment gain for the 2025-26 fiscal year, a figure unions are now citing as evidence that the state can afford richer pensions for public safety workers without burdening taxpayers.

For local governments fighting the proposed pension increase, the report was unwelcome news. City officials argue that expanding benefits for police and fire employees would inevitably lead other public worker groups to demand similar treatment, straining budgets already stretched thin.

The measure at the center of the debate, Assembly Bill 1383, cleared the Assembly with strong bipartisan support before lawmakers left for their summer break. It now appears positioned for passage in the Senate before the legislative session wraps up in the coming weeks, leaving opponents with little room to maneuver.

Longtime observers of California politics see echoes of a similar episode nearly three decades ago. Shortly after Gray Davis took office as governor in the late 1990s, he moved to reward the public employee unions that had bankrolled his campaign through a bruising primary and general election. Davis backed a pair of benefit expansions — one for unemployment insurance, another for pensions — arguing, with union support, that CalPERS’ strong investment performance meant the pension boost would essentially pay for itself.

That assumption unraveled when the Great Recession hit and investment returns collapsed. Cities and counties across California found themselves on the hook for sharply higher contributions, as state law requires when pension fund earnings fall short of projections.

Local leaders at the time warned that the ballooning pension bills were siphoning money away from core services, including the very police and fire departments residents depend on. The fallout eventually forced a sweeping pension overhaul in 2012, which left benefits intact for existing employees and retirees but scaled them back for new hires — the same reforms AB 1383 would partially reverse.

Officials had hoped the 2012 changes would gradually ease the financial strain as veteran employees retired and were replaced by workers under the leaner pension formula. But the damage from the earlier benefit increases lingered for years, squeezing municipal budgets long after the recession ended.

At one point, it wasn’t unusual for California cities to contribute 50 cents to the pension fund for every dollar paid in salary to police officers, with firefighter contributions not far behind. Steve Schwabauer, who was Lodi’s city manager during that period, delivered a blunt warning to CalPERS trustees, telling them the city was on “a slow, inexorable slide toward insolvency” if pension costs kept climbing at that pace.

Three California cities — Vallejo, Stockton and San Bernardino — ultimately filed for bankruptcy, with soaring pension obligations playing a significant role in each case. During Stockton’s bankruptcy proceedings, federal Judge Christopher Klein stirred controversy by ruling that the city had legal authority to cut pension benefits as part of its financial recovery. Despite the ruling, none of the three cities chose to reduce pensions.

Now, with AB 1383 back in the spotlight, the numbers at stake are substantial. CalPERS actuaries estimate the bill would add $4.8 billion in long-term costs for state and local governments, with annual employer contributions rising by an estimated $233 million.

Critics warn the true financial impact could grow far beyond that projection. Once the 2012-era pension limits for police and firefighters are rolled back, other public employee unions are likely to push for comparable increases — and in a Legislature where Democrats aligned with labor hold strong majorities, resisting those demands may prove difficult.

Original source: CalMatters

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The California Public Employees’ Retirement System reported Monday that its investment portfolio grew 14.8% during the 2025-26 fiscal year, more than doubling the fund’s target return of 6.8%. It marks the second year in a row that CalPERS has posted double-digit gains, fueled largely by a strong stock market.

CalPERS CEO Marcie Frost called it the fund’s best performance since 2014, not counting 2021’s market rebound following the pandemic crash. In a statement, she credited the fund’s investment team for staying the course through market swings.

“Our team has maintained a disciplined approach to building the health of the pension system, and our improved funded status shows this effort is paying off for our 2.4 million members,” Frost said.

The fund ended the fiscal year with total assets of roughly $637.1 billion, an increase of about $80 billion from the previous year.

For local governments, school districts and other public agencies throughout Southern California, CalPERS’ investment performance carries real financial weight. When the fund falls short of its targets, those agencies — and by extension, taxpayers — are required to contribute more money to make up the difference. Strong years like this one ease that burden.

CalPERS remains what’s known as underfunded, meaning its assets don’t fully cover everything it owes to current and future retirees. As of this year, the fund’s assets equal about 85% of its total obligations. That’s a marked improvement from a decade ago, when CalPERS was funded at only about 68% in the aftermath of the Great Recession. Since then, a series of reforms have required both public agencies and employees to contribute more toward pension costs.

The strong earnings report lands at a politically sensitive moment. Public safety unions representing police officers and firefighters are pushing state lawmakers to expand retirement benefits for the first time since 2012, when then-Gov. Jerry Brown signed legislation scaling back pension perks amid the state’s fiscal troubles. A robust investment year could give legislators more confidence to revisit those limits.

Still, not everyone is convinced CalPERS is performing as well as it could. Critics — including some candidates who ran unsuccessfully for seats on the CalPERS board last year — argue the fund’s investment strategy is overly complicated and could be delivering stronger returns with a simpler approach.

Among the most vocal critics are former CalPERS board members Margaret Brown and J.J. Jelincic, now affiliated with the Retired Public Employees Association. They’ve raised concerns about the fund’s growing reliance on private equity investments, which often come with steep fees and less transparency about their true value. Both backed a state bill this year that would have required CalPERS to disclose more details about those investments, though the measure ultimately failed.

“These are very good results, however you need to think about how you got there,” Jelincic told the board. “You expanded high risk private equity and you moved into higher risk segments within that asset class.”

Fund leadership has defended the strategy. Last year, the CalPERS board approved a new approach that gives Chief Investment Officer Stephen Gillmore greater flexibility to shift investments quickly across the entire portfolio, rather than being confined to specific categories like real estate or private equity. Under the policy, CalPERS aims to keep about 75% of its holdings in stocks and 25% in bonds.

Frost and Gillmore have both said private equity remains a key piece of the fund’s long-term strategy. CalPERS formally opposed the transparency bill, arguing it could cost the fund billions of dollars in missed investment opportunities.

“Investing in the private markets gives us potential to earn higher returns while spreading our risk from the often volatile public stock market,” Frost told the board.

For the year, CalPERS’ private equity holdings returned 17%, while its stock investments gained 24% — outpacing the S&P 500, which rose 21% over the same period.

Original source: CalMatters

The post CalPERS Posts Its Best Investment Returns in Years — Here’s What It Means for Local Taxpayers appeared first on The Hemet & San Jacinto Chronicle.

Three measures advancing through the Legislature would either boost pay for Cal Fire firefighters or expand retirement benefits for public safety workers across California. Backers say the changes are a fair trade-off for people who put their lives on the line and endure the kind of physical toll that can cut careers short. So far, the bills have drawn strong bipartisan support in the Legislature.

“Every day has a cost, and it’s one that we pay with our lives,” Darrell Roberts, president of California Professional Firefighters, told lawmakers at a recent hearing on a bill that would let public safety employees retire at 55 instead of 57. “This job is physically and mentally demanding in the extreme, and asking us to work until 57 is pushing us not just to our limit but beyond it.”

The proposals aren’t cheap. Together, they could add hundreds of millions of dollars a year in new state spending and billions more in long-term financial obligations — a tough pill for Gov. Gavin Newsom to swallow given warnings of budget deficits ahead.

The retirement-related bills, in particular, are stirring memories of California’s pension crisis during the Great Recession, when the state’s major retirement funds lost tens of billions of dollars almost overnight. Critics point back to benefit increases signed by then-Gov. Gray Davis in the years before that crash as a cautionary tale.

Marcia Fritz, an accountant and longtime pension watchdog, sees history repeating itself. She noted that during Davis’ time in office, pension funds were riding high on a booming stock market driven largely by tech stocks — much like today. CalPERS and CalSTRS, the state’s two largest pension systems, still haven’t fully recovered from recession-era losses, though both have recently exceeded their investment targets thanks to a tech-fueled market rebound.

“They’re drinking the Kool-Aid that the markets are never going to go down,” Fritz said of lawmakers backing the bills. “We’re the ones paying for it with reduced services.”

California reined in retirement benefits for employees hired after 2012 under a law signed by then-Gov. Jerry Brown, which required workers to stay on the job longer to earn a full pension and to contribute more toward their own retirement. CalPERS estimates that reform saved government agencies $4 billion in its first decade and projects it will save another $24 billion over the next 10 years.

To taxpayer advocates, those savings are proof the Brown-era reforms are working as intended. Public safety unions see it differently, arguing that the savings show government agencies can afford to sweeten benefits without abandoning the 2012 framework altogether.

Here’s what the three bills would do:

Assembly Bill 1383 would lower the retirement age for public safety workers from 57 to 55. It would also let unions negotiate richer pension formulas — up to 3% of salary for every year worked — and raise the cap on pensionable earnings by nearly $60,000, to $249,000 annually.

Assembly Bill 1054 would establish a new deferred retirement option for California Highway Patrol officers and Cal Fire firefighters, allowing them to bank money during their final years on the job and collect it as a lump sum upon retirement — an incentive meant to keep experienced personnel working longer.

Assembly Bill 2129 would push for a new pay formula for Cal Fire firefighters, encouraging the governor’s office to bring their salaries closer to — though not necessarily equal to — the average paid by 20 local fire departments around the state.

The cost question

The bill lowering the retirement age carries the steepest price tag. CalPERS estimates it would require $282 million more in annual contributions and add $4.8 billion to the fund’s long-term liabilities. If local governments choose to offer even more generous pension formulas under the bill, that cost could climb to $353 million annually, with additional strain on the fund’s finances. Those figures don’t include California’s 20 independently run county pension systems.

That price tag has put city and county governments in opposition. “We do definitely support strong retirement benefits, but those benefits must remain sustainable and fiscally responsible for our local agencies,” said Johnnie Pina, a lobbyist for the League of California Cities, during a recent Senate hearing.

The financial impact of the other two bills is murkier. Supporters of the CHP and Cal Fire deferred retirement plan say it’s designed to be cost-neutral, though similar programs run by cities and counties have ended up costing more than expected. The bill would require CalPERS to review the program every five years, giving lawmakers room to make adjustments down the line.

The Cal Fire pay bill is even harder to pin down financially, since it’s written to give the governor’s office flexibility rather than a mandate. It calls on Newsom to negotiate “in good faith” toward narrowing the pay gap between Cal Fire and local fire departments — a gap a 2023 state compensation survey put at 11% to 29% in favor of local departments.

“Instead of being the lowest paid, we will inevitably be somewhere in the middle” if the bill passes, said Terry McHale, a lobbyist for the firefighters union, at an earlier hearing this year.

Newsom vetoed a similar, more forceful version of this bill last year, warning it would “create significant cost pressures for the state and circumvent the collective bargaining process.” That earlier proposal was projected to cost between $373 million and $609 million in its first year alone.

Cal Fire’s union is essentially seeking a benefit that only one other state employee group enjoys: automatic raises tied to what other agencies pay. CHP officers already receive annual pay bumps based on compensation at several major California police departments, a perk no other state employee union has secured through legislation rather than negotiation.

What happens next

All three bills face a critical test later this month in the Senate Appropriations Committee, which can shelve legislation over cost concerns. Bills that clear that hurdle typically have a strong chance of reaching the governor’s desk.

At a recent hearing, several lawmakers said recruiting and retaining first responders was worth the cost, even if it meant trimming other programs. They pointed to the response to a chemical spill in Orange County this past May as an example of the risks emergency workers take on without hesitation.

“I still get goosebumps for these firefighters and their families that had to know that they were putting their lives on the line to save that explosion from happening, which they actually ended up doing,” said Sen. Tony Strickland, a Huntington Beach Republican. “You can’t put a price tag on that.”

Public safety unions have long been a fixture at the Capitol. Since 2019, firefighter unions have contributed $6.2 million to lawmakers and campaigns, while the Peace Officers Research Association of California has spent $4.5 million, according to CalMatters’ Digital Democracy database. Both California Professional Firefighters and the California Correctional Peace Officers Association were also major donors backing Newsom during the 2021 recall election.

Still, that support doesn’t guarantee the governor’s signature. As mayor of San Francisco during the Great Recession, Newsom championed a ballot measure requiring city workers to contribute more of their own money toward their pensions — a track record that suggests he may scrutinize these latest proposals just as closely.

Original source: CalMatters

The post Amid Budget Crunch, California Weighs Costly New Benefits for Police and Firefighters appeared first on The Hemet & San Jacinto Chronicle.

The bill, carried by Sen. Laura Richardson, an Inglewood Democrat, would create a five-year pilot program requiring health insurers serving public employees to cover treatment for chronic weight management. That coverage would have to include at least one GLP-1 medication, a class of drugs that includes Ozempic and similar treatments. The medications are commonly known for weight loss but also are used to help regulate blood sugar for people with diabetes.

The measure passed the state Senate in May with strong bipartisan backing, reflecting growing interest in expanding access to obesity treatments. But the California Public Employees’ Retirement System, which provides health coverage to about 1.3 million public employees and retirees, is recommending that its board oppose the legislation.

The reason, according to CalPERS, is the potential financial impact.

In a new estimate, CalPERS said the bill would raise premiums by $437.2 million, equal to about $28 per member per month. The system projected the cost to the state general fund would be $187.2 million in the first year, with expenses likely to rise by tens of millions of dollars annually in later years.

CalPERS staff warned that opening broad access to GLP-1 drugs would place major pressure on the health care system because of the large number of people who could qualify. Staff also cited studies from the commercial insurance market indicating that GLP-1 coverage tends to increase overall spending, with drug costs outweighing savings from reduced medical care.

The cost concern could become a major obstacle if the bill reaches Gov. Gavin Newsom. Last year, Newsom persuaded lawmakers to end Medi-Cal coverage for weight-loss drugs, citing the expense to the state.

Supporters of Richardson’s proposal argue that obesity is a serious chronic condition that should be treated like other major health risks. Being overweight or obese is associated with higher rates of heart disease, high blood pressure and some cancers. The American Diabetes Association estimates that about 11 million California adults, or 27%, have obesity. The organization projects that figure could rise to 41% by 2030.

Richardson has pointed to her own experience using Zepbound, another anti-obesity medication. During an April hearing, she said she lost 43 pounds on the drug but had to pay for it without coverage from CalPERS because it was prescribed for weight management rather than diabetes.

She argued that chronic weight issues affect the state’s economy through higher health costs, disability, absenteeism, early death and reduced workforce participation. Richardson questioned why insurers would not cover a treatment that she believes could ultimately reduce costs.

The debate reflects a broader challenge facing California and other states as demand grows for GLP-1 medications. The drugs have been hailed by many patients and doctors as a breakthrough in treating obesity, but their high price has raised difficult questions for public programs and employer-sponsored health plans.

For public employees across California, including workers and retirees in the Inland Empire, the outcome could determine whether weight-loss medications become more widely available through government health plans or remain limited largely to those who can qualify under existing rules or afford to pay out of pocket.

The CalPERS board is expected to vote on its position next week. The bill is scheduled to be heard by the Assembly health committee on June 16.

Original source: CalMatters

The post California Weighs Cost of Ozempic Coverage for Public Employees appeared first on The Hemet & San Jacinto Chronicle.

The boards at the California Public Employees’ Retirement System and the California State Teachers’ Retirement System are facing campaigns from groups that want them to pull money out of companies associated with the Trump administration, scale back investments in fossil fuels and break with private equity firms over their labor records.

The list includes electric car maker Tesla, surveillance company Palantir, private companies that operate immigrant detention centers, ExxonMobil, Chevron and private equity firm Apollo Global Management.

To some extent, divestment campaigns are routine business at CalPERS and CalSTRS, which hold assets worth a combined $1 trillion and are headquartered in the capital of a deep blue state. 

But the combination of Trump-era politics and a concerted push by labor in the Legislature to force the pension funds to open the books on private equity holdings is attracting the focus of a more diverse mix of advocates.

“It’s politics,” said Richard Costigan, a Republican who served on the CalPERS board from 2011 to 2019 as an appointee of Democratic Gov. Jerry Brown. “When you look at Palantir and Tesla, it’s driven by politics. Seriously, why would you not invest in Palantir?”

The rebuttal: Despite their earnings and stock value today, the companies affiliated with the Trump administration’s immigration enforcement program are taking on serious reputational risk that could backfire on the funds. Separately, they say putting money into fossil fuel companies poses hazards both for the environment and for pension systems banking on long-term investments.

The pension funds “should be aligning their investments with the values of their state, the values of their members, and the long-term interests of their members,” said Richard Brooks, the climate finance program director at the advocacy organization Stand.Earth.

He recently released a study tallying CalPERS and CalSTRS investments in companies that participate in the Trump administration immigration sweeps, such as Palantir and private prison companies CoreCivic and GeoGroup. 

“I see a disconnect right now,” he said.  

Staff at CalPERS and CalSTRS oppose divestment and they consistently fight legislation that would tie their hands. Both systems are underfunded and owe tens of billions more than their assets, a crisis that in 2012 led the Legislature and then-Gov. Jerry Brown to pass a law mandating less generous pension benefits for employees hired after that year. 

But CalPERS and CalSTRS have pulled money out of industries in the past. CalPERS divested from firearms in 2013 and from tobacco in 2016. They’re also barred by state law from investing in coal as well as in businesses connected to Iran.

They’re governed by boards of directors that are made up of public employee union leaders, appointees of state Democratic leaders and the state controller and state treasurer, both of whom are Democrats. 

In short, they’re people who are aligned politically with the mostly liberal groups that are pressing them to change policies. 

That doesn’t mean it’s an easy call for them to withdraw investments from any industry.

“It’s so tricky. How do you divest from all of that is anti-union? The quick answer is you can’t,” said Kenny Waggoner of Ducenta Squared Asset Management, who advises union benefit plans.

He gave an example of a real estate investment trust with stakes in large warehouses — the kind operated by Amazon. Members might question an investment in a company with a reputation for fighting unionization, but the rent from the warehouse might be the best return available to support their pensions.

Here’s a look at the main friction points before CalPERS and CalSTRS.

Tesla volatility

A long–running campaign to persuade CalPERS to break with electric car maker Tesla peaked in September when the pension board commissioned a risk assessment on whether it should own stock in the electric car maker.

Tesla delivered returns for CalPERS over time. It’s considered one of the “magnificent seven” tech stocks that drive markets today.  

The company’s critics characterize it as a volatile risk under Trump ally Elon Musk, pointing to Tesla’s drop in sales last year along with regulatory challenges it’s facing with its self-driving cars. CalPERS as a Tesla shareholder has consistently voted against Musk’s pay packages.

“Tesla’s past gains don’t erase the present picture,” CalPERS board Mulissa Willette said at the meeting where she requested the risk analysis. 

In March, the board held a closed-door discussion on “owning Tesla”. Afterward, a board member said in open session that CalPERS would not sell off its holdings in the company. 

“While we are unable to provide specifics regarding the discussion, we can note that the company has been one of the top 10 drivers of performance in our global equity portfolio and is a key holding for our climate transition portfolio,” CalPERS board member Kevin Palkki said. “After our closed session discussion, we collectively agreed to make no changes at this time.” 

Immigration and surveillance

Palantir, a California company that supported the U.S. military during the wars in Iraq and Afghanistan, became a focus of public pension divestment campaigns during Israel’s assault on Gaza because of its work with the Israeli Ministry of Defense. The Berkeley Unified School District, for example, in September passed a resolution calling on CalSTRS to divest from the company. 

Now Palantir is facing more scrutiny because of its work with the Department of Homeland Security, which is carrying out the Trump administration’s immigration crackdown.

The climate advocacy organization Stand.Earth called attention to CalPERS’ and CalSTRS’ holdings in Palantir and six other companies working with Homeland Security in a study it published last month highlighting public pension investments in companies that Stand.Earth described as enabling “repression and violence”.

Fossil fuels

California lawmakers were close to forcing CalPERS and CalSTRS to divest from fossil fuels three years ago when a bill to do that passed the state Senate. But it didn’t become law.

Both of the big pension funds opposed the bill, although one of their board members, state Treasurer Fiona Ma, supported it.

Advocates and public employees who don’t want their pensions to support industries that drive climate change have pressed the funds to divest from oil and gas for a decade. 

California’s third largest public pension fund, the University of California Retirement Plan, divested from fossil fuels in 2020. At the time, its leaders cited financial reasons, finding that fossil fuels have a poor long-term outlook.

The UC Retirement Plan is in better shape than CalPERS and CalSTRS. The UC plan’s assets are worth 92% of what it owes over time to its beneficiaries, while CalPERS’ and CalSTRS’ portfolios are worth about 80% of what they owe.

Labor’s attention on private equity

Two bills in the Legislature this spring pit unions against unions in questions over how CalPERS and CalSTRS should do business. 

One would compel the funds to release more information about their private equity holdings, a change that CalPERS staff contends would so severely undermine its ability to invest with those firms that it would have to increase its charges to employers by more than $6.1 billion a year. 

The measure by Democratic Sen. Dave Cortese of San Jose has support from unions that represent grocery store workers and hotel employees, none of whom have pensions in CalPERS or CalSTRS. Public sectors have not yet taken a stand on the proposal  

The second one, carried by Democratic Assemblymember Robert Garcia, would direct the funds to commission a study on their labor standards for construction and development projects. The State Building and Construction Trades Council has urged CalPERS and CalSTRS to heighten their existing labor standards and is supporting the bill.

The California School Employees Association, whose members have CalPERS pensions, is on the record opposing the trades’ bill. 

“CSEA’s position is that investment and divestment decisions regarding CalPERS funds should be made by the CalPERS Board and its investment professionals, not by the Legislature,” Aaron Latham, the union’s spokesperson, said in a written statement. 

The post How California’s 2 biggest pension funds became a battleground for Trump politics and more appeared first on The Hemet & San Jacinto Chronicle.

Don’t get too excited. The charges are still high by historical standards. The state expects to spend $9.8 billion on contributions to CalPERS next year, more than double the $4.8 billion cost from 2016.

But a new CalPERS analysis projects the state’s contribution rate toward pensions will decline over the next few years.

It’s most evident in what CalPERS expects to bill the state for California Highway Patrol pensions. This year, the state is paying 69 cents toward CHP pensions for every $1 it spends on wages for officers.

The formula reflects both the costs of investing for current officers’ retirements as well as extra money the state plows into pensions to pay down debts from past CalPERS losses. 

CHP pensions were especially expensive because until 2013 those officers and other public safety employees were eligible for generous pension formulas that allowed them to retire at age 50 with retirement income worth 90% of their salaries. 

Next year, the state’s contribution rate for CHP pensions will drop to 64 cents for every dollar in offer pay.

Hey, that beats a number with a 7 in front of it.

Recent strong investment returns are part of the reason the contribution rate is declining a bit. Another is that the state has been on a hiring spree for CHP officers. That means more employees are paying into the fund. They put 14.5% of their earnings into CalPERS.

The new hires also earn benefits under a less generous formula and work longer to earn a full retirement. Officers hired under the post-2013 retirement formula now make up 48% of the CHP workforce, according to CalPERS.

Further out, CalPERS anticipates pension contribution rates will drop for other state workers, too.

These results, of course, are subject to change. If CalPERS misses its investment earnings targets, the state will have to kick in more money to make up for the loss. Today, CalPERS is considered underfunded because its assets are worth about 80% of what it owes over time to its beneficiaries.

The post How a CHP hiring spree started to bend the curve on CalPERS contribution rates appeared first on The Hemet & San Jacinto Chronicle.