How a governor’s bid to exert control over California public pensions backfired
Facing an unprecedented budget deficit shortly after taking office in 1991, Republican Gov. Pete Wilson made an unusual request of the state’s largest pension fund: Can you be more liberal in your predictions about the stock market?
If the California Public Employees’ Retirement System raised its official projection of investment growth, Wilson said, the state’s required contribution to the pension fund would go down by more than $300 million.
CalPERS rejected the idea, but Wilson still needed a way to balance the books. So he proposed a sweeping reorganization of CalPERS that attempted to grab more than just pension cash.
What happened next helped chart the course of pension politics over the past quarter century — and ensured that the autonomy of public pension funds would be spelled out in California’s constitution.
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