PERS Investing in Unicorns and Rainbows, Part II
PORAC has taken an active role in ensuring that CalPERS is focusing its fiduciary responsibility on the health of its funds, not whether the investment mechanism is politically correct or not. During the legislative portion of the June Executive Committee meeting, we had the opportunity to discuss PERS and its investments. Your PORAC Board took active steps to ensure that we actively oppose any bill that deals with CalPERS divesting. Last month, I discussed the Legislature’s concern with where CalPERS chooses to invest its money. The Legislature is not concerned because CalPERS is making poor choices and failing in its fiduciary responsibility, but because it is choosing to invest in politically incorrect funds, such as tobacco, oil, coal, the Dakota Access Pipeline and other similar investments. While these investments may be politically incorrect, they are making solid positive returns. Nonetheless, the Legislature has chosen to run three bills to get PERS to divest its investments in tobacco, oil, coal and other politically incorrect ventures: AB 20 (Kalra), AB 946 (Ting) and AB 1597 (Nazarian).
It is very interesting how the health of the fund is not the prevailing issue for our state legislators, but the type of fund the money is being invested in. Unfortunately for our legislators, the “Unicorns and Rainbows Fund” is not making the needed returns to make PERS sustainable. However, since our state is beyond blue, the legislators worry about what funds the money is in versus the return on those funds — which is quite a dichotomy, since they should be focused on helping their local counties and municipalities reduce their respective CalPERS unfunded liabilities. What better way to help than ensuring that CalPERS is making the best returns possible? It’s obvious that legislators are being myopic and foolish, or following the misguided requests of their constituents. However, I find the latter a bit hard to accept, since most of their constituents who would follow CalPERS and its investments are probably concerned about its recent dismal returns. While tobacco, oil and coal are politically incorrect, they are generating healthy positive returns, which is what PERS needs to achieve sustainability.
Fortunately for everyone, PORAC has taken an active role in ensuring that CalPERS does the right thing and puts its money in areas known to be profitable, if not necessarily politically correct. However, we need your assistance in this area. I will digress for a moment based on a meeting we had with an Assembly member at the Capitol. Assembly Member Cooper is a retired Sacramento Sheriff’s captain. He scheduled a meeting with us on Sunday evening to discuss some of the things occurring at the Capitol dealing with law enforcement in California. During this meeting, we were able to pick up some gold nuggets on what we can do collectively to help ourselves.
PORAC represents more than 69,000 active and retired members throughout California. We have an outstanding platform and collective voice to help enact change, despite some of the things going on regarding law and order. It is in this area where each individual member of PORAC can help. As you monitor the bill chart included in the PORAC magazine and on the website, you can take an active role by calling your local legislators and expressing your thoughts on how they should vote on the legislation. Your local lawmakers are actually concerned with what you think as a constituent. Please make every effort to take a few minutes and share your opinion; don’t just rely on PORAC to carry the weight. We will continue to do so, but we can be an even more overwhelming force with your support. I have listed the divestment bills in this article, so as you call your local legislator, share with them how you feel about this legislation.
Please remember to keep yourself, family and friends informed. PORAC continues to work diligently to maintain the strength and vitality of your pension investments. It is imperative that you do your part by attending your local chapter meetings, taking the time to make a phone call to your local legislators to express your views and keeping yourself abreast of the ever-changing situation in our state. Information is constantly flowing from PORAC and other sources that affects us all. Your chapter meetings are the dissemination points for this information and your opportunity to get clarification on those issues. See you at your next chapter meeting.
Be safe and have fun.