From John Curry, September 4, 2013
Slash and Burn: The War Against California
by Gary Cohn on September 3, 2013
[Click images to enlarge. View article for links.]
Benjamin Gamboa doesn’t know John Arnold, but they are linked by a shared
concern over the fate of public-employee pensions in California.
“I’m proud to have a pension,” the 30-year-old Gamboa says. “I believe
every American should have a pension.”
The two men live in very different worlds. Gamboa is a research analyst at
Crafton Hills College in Yucaipa, California. Arnold is a hedge-fund billionaire
from Houston, Texas.
There’s another difference between them: Arnold recently had a
representative present at a secret “pension summit” held at a Sacramento hotel,
where strategies to limit public employee retirement benefits were discussed;
Gamboa, a union member, did not – representatives of labor were specifically not
“Pension reform” has become the latest battle cry in a seemingly endless
war that has ostensibly been declared against tax-dollar waste, but whose
single-minded purpose has been to slash the job protections and benefits enjoyed
by California’s working middle class. Pension-cutting advocates have filled
airwaves, websites and op-ed pages with stories about employees retiring in
early middle age on six-figure pensions. The reality is that the average state
and municipal worker retires on about $26,000 a year.
The Sacramento summit took place May 22 at the Citizen Hotel, a luxury
boutique inn two blocks from the state capitol. It was hosted by the Reason
Foundation, a Los Angeles-based conservative and libertarian public policy group
that embraces privatizing government functions and cutting public employee
pensions. The foundation’s most prominent trustee is billionaire businessman
David Koch, a longtime advocate of reducing public sector retirement
The meeting’s agenda – a copy of which was obtained by Frying Pan News —
was written in the terse, opaque prose of event planners, but still offers a
glimpse into the group’s plans. Among other items, it lists an hour-long
session on “Overcoming Opposition: Anticipating and Addressing Government and
Union Opposition.” Perhaps the agenda was even more important for what it did
not say: That the attack on public sector pensions may soon be transformed into
a state ballot initiative that would change California’s constitution.
The participants in the closed-door meeting were Republicans and Democrats,
and included public officials and representatives of numerous foundations and
think tanks intent on reducing pensions for public employees.
Among those attending were San Jose Mayor Chuck Reed; former San Diego city
councilman Carl DeMaio; Josh McGee, a vice president at the Laura and John
Arnold Foundation; Marcia Fritz, president of the California Foundation for
Fiscal Responsibility; Dan Pellissier, president of California Pension Reform;
Ed Ring, executive director of the California Public Policy Center (CPPC) and
editor of UnionWatch.org; Jack Dean, executive director at the Reason Foundation
and editor of PensionTsunami.com, and Steven Greenhut, a journalist and author
of the book Plunder! How Public Employee Unions Are Raiding Treasuries,
Controlling Our Lives and Bankrupting the Nation.
Their gathering received no media coverage, with the exception of a brief
mention in a column Greenhut wrote for the San Diego Union-Tribune. Despite the
pension-cutting movement’s talk of the cause’s bipartisan pedigree, it seems to
rely upon transfusions of money from wealthy rightwing personalities and
nonprofits. Apart from the Reason Foundation’s close ties to David Koch,
Greenhut’s own former online hobby, CalWatchdog, is the creation of the Pacific
Research Institute, a libertarian think tank with deep pockets.
Both the Reason Foundation and Pacific Research Institute are allied with
the Koch-funded American Legislative Exchange Council (ALEC), which has been
writing corporatist model legislation for about 30 years. More locally, however,
the nexus for pension-cutting is the Tustin-headquartered California Public
Policy Center, a conservative nonprofit led by Ed Ring, who worked to promote
the anti-union Proposition 32 last year. CPPC’s advisors include Marcia Fritz
and Jack Dean; its president is Mark W. Bucher who helped qualify and pass
2000’s Proposition 22, which effectively banned same-sex marriage in California.
(Bucher is also a board member of Family Action, a rightwing Orange County
political action committee.) Another CPPC board member, Robert Loewen, also
serves as president of the ultraconservative Lincoln Club of Orange
The Sacramento meeting apparently helped set the stage for moves that are
now occurring largely behind the scenes.
In an interview, Reed confirmed that he attended the pension summit and
that he has been working on a statewide ballot initiative that would allow the
state and local governments to reduce retirement benefits for current employees
for the years of work they performed after his proposed reforms would go into
effect. He says that such statewide reform is necessary for California’s fiscal
health, to ensure that the state and local governments can provide a reasonable
level of services to the public and to protect public employees.
“What we need to do statewide is make it possible for local governments to
change future accruals for work not performed,” he says. He adds that his
proposed ballot measure could be voted on as early as November, 2014.
Reed, a Democrat who has opposed same-sex marriage and the raising of the
minimum wage of his city’s workers, seems to be what pension-cutters have in
mind when they speak of their movement’s bipartisan makeup. (The gathering’s
other politician, Carl DeMaio, is a Republican — and Reason Foundation senior
fellow — who has advocated replacing San Diego city employees’ pensions with a
401(k)-type substitute.) Last year Reed pushed a ballot measure in San Jose to
reduce that city’s retirement costs for its public employees. The measure
passed, but is now tied up in the courts. He acknowledges that any such measure
is likely to provoke an all-out fight with the state’s public-employee unions.
Interviews with labor officials and their representatives seem to bear him
A ballot initiative to cut back pensions for existing employees would
“change the constitution and would be a horrible thing,” says Steven Maviglio, a
publisher of the California Majority Report and a Sacramento-based political
consultant whose clients include Californians for Retirement Security, a labor
coalition representing 1.5 million public employees and retirees.
Maviglio says that many employees have worked for years at jobs where they
were promised certain benefits and that it would be a breach of faith to “throw
out that understanding and break that trust. That’s the whole foundation of
He adds, “If someone is teaching for 25 years and somebody changes the
rules of the game, that’s hardly fair.”
Any statewide ballot measure campaign aimed at cutting back public employee
benefits would provoke an expensive fight with unions. “It would cost tens of
millions of dollars — $30 or $40 million,” Reed says. Fritz, president of the
California Foundation for Fiscal Responsibility (whose vice president is the
CPPC’s Jack Dean), says that the backers would likely look for funding from the
Arnold Foundation, among other sources.
The Arnold Foundation has funded similar efforts in the past. Two years
ago, for example, the Center for Investigative Reporting revealed that the
Arnold Foundation had given a $150,000 grant to Fritz’s group for a series of
reports seeking to limit public employee pensions. Last year, another of the
foundation’s checks made headlines when it was revealed that the Arnold
Foundation was a major backer of Engage Rhode Island, the group that pushed
through that state’s pension overhaul law.
The Arnold Foundation is clearly in the forefront of nationwide efforts to
scale back pensions for state and municipal workers. On its website, the
foundation identifies pension reform as one of its key initiatives, and it
provides position papers supporting its stances.
“The current system has allowed politicians to promise one level of
benefits without fully funding them,” the Arnold Foundation’s McGee told Frying
Pan News in an email last week. “Across the U.S., state and local governments
have underfunded workers’ benefits by at least $1 trillion.”
The Arnold Foundation, McGee wrote, works with state and local communities
to provide policy information and technical assistance to help them develop
pension reforms. He said that a ballot initiative is just one tool to improve
the retirement system, and added that the foundation “does not promote or fund
ballot initiatives.” He also acknowledged that he attended the pension summit in
“We discussed the need to deal responsibly with accumulated pension debt,
secure benefits that have already been earned, and create a system that is
affordable, sustainable, and secure,” McGee stated.
Others believe the Arnold Foundation has its eye on California in order to
promote public employee pension cutbacks across the nation. The foundation’s
thinking, Maviglio says, is that “if liberal California can do it, it can happen
In many ways, Benjamin Gamboa, the 30-year-old research analyst at Crafton
Hills College, is typical of those employees who find themselves in the
pension-cutters’ crosshairs. Working at a community college, he believes, is
serving the public good by helping students to reach their goals.
“I love what I do, and I love the security of my job,” he says. “My plan is
to retire with a pension just large enough to spoil my grandkids.” He says that
his hope and expectation will be for a pension of about $30,000 a year. “I want
to enjoy the simple things,” he says. “There are no European vacations in my
He adds that he is concerned to hear about the continuing efforts to limit
his and other workers’ pensions.
“To attack the work I do and the security I treasure . . .” he says, then
pauses. “It’s heart-wrenching. It’s demoralizing.”
Tags: ALEC • California Expose • Koch Brothers • pension reform
Gary Cohn is a Pulitzer Prize-winning journalist who has worked for the
Los Angeles Times, Baltimore Sun and Philadelphia Inquirer. Reach him with
comments or story ideas at firstname.lastname@example.org.