The Manhattan Institute’s Steven Malanga has described the history of California’s major public pension fund as “a three-decade-long transformation from a prudently managed steward of workers’ pensions into a highly politicized advocate for special interests.” The latest evidence: The fund—which faces unfunded liabilities north of $100 billion, and rising—recently announced that it would require companies it invests in to signal their concern for climate change by changing their board composition, even if it cuts into their bottom line. Governing magazine reports:
In an effort to highlight the potential impacts of global warming, the nation’s largest public pension fund is asking corporations to include climate change experts on their governing boards.On Monday, the investment committee for California Public Employees’ Retirement System (CalPERS) voted to start requiring the corporations it invests in to include people on their boards who have expertise in climate change risk management strategies.
It’s important to remember that CalPERS is investing with taxpayer money, and that it is taxpayers that will be on the hook if and when the size of the shortfall (created by a combination of incompetent investment and union capture of the state political system) becomes to large for the fund to bear. CalPERS’ latest political stunt, like the many that have come before it, foists more risk onto taxpayers—without their consent—for little reason other than to signal its own institutional virtue.The state legislature should protect Californians from the inept multibillion dollar financial corporation it created by imposing a back-to-the-basics investment policy. Before adding these kinds of bells and whistles to its portfolio, CalPERS should be required to either meet its investment targets for a number of years, or adjust its investment targets and contribution schedules, so that its finances are sound.The American military commander Joe Stilwell used to say about Generalissimo Chiang Kai-shek that he should spend more time “generaling” and less time “issimoing.” As with the endeavors of the Chinese Nationalist Party, state governance would proceed more smoothly if leaders focused on getting the basic job done (like funding their basic obligations) before taking on gratuitous special projects.