Democrats Say No to Governor’s Choice for Teacher Pension Panel

Democratic lawmakers Wednesday rejected one of Gov. Arnold Schwarzenegger’s oldest friends and advisors for a position on a state board. The rebuff showed that labor-union distrust of Schwarzenegger still lingers strongly from last year’s special- election fight.

Along party lines, the Senate Rules Committee declined to confirm Schwarzenegger’s nomination of David Crane to the California State Teachers Retirement System Board, which oversees the pensions of public educators.

Public employee unions had strongly contested Crane’s appointment to the nonpaying position because he did not believe that the board should have weighed in on last year’s intense debate, initiated by Schwarzenegger, about whether to change the retirement plans for public employees.

Schwarzenegger had wanted to replace the current arrangement, under which retirees receive a guaranteed amount each year, with 401(k) style plans where individuals’ benefits could rise and fall based on how they were invested.

The board condemned the idea, which was intended to save the state money in future years, and Schwarzenegger promptly fired four of the appointees, saying that their role was to oversee the $143-billion fund, not make policy decisions.

In July, he appointed Crane as a trustee to the 12-member board. When the board again took a stand against a legislative version of Schwarzenegger’s plan, Crane abstained.

Schwarzenegger shelved his plan, but the two largest unions representing teachers still view it as a threat. The three Democrats on the five-member Senate panel agreed that Crane seemed too concerned about the burden of pension shortfalls on taxpayers.

“I don’t believe he has any realistic intention of reining in that world view and focusing exclusively on the welfare of the members of this retirement system,” said Senate President Pro Tem Don Perata (D-Oakland). “I simply don’t believe it’s in his economic DNA.”

A wealthy financier from San Francisco who has known Schwarzenegger since the 1970s, Crane holds a $94,500-a-year job as special advisor to the governor for jobs and economic growth. He has developed a reputation for abrasiveness, one matched by regard for his intellect.

Crane did not attend the meeting, but Schwarzenegger’s spokeswoman, Margita Thompson, said: “It’s unfortunate that the Senate didn’t recognize David Crane’s unique financial expertise. That expertise would have been of great value to California’s teachers and taxpayers.”

The unions and Democrats had originally complained that Crane would be insufficiently independent of Schwarzenegger’s views if he sat on the board.

In a hearing last month on his nomination, Crane called himself a “longtime Democrat” who is “independent to a fault” and would not blindly support the governor’s positions.

He also downplayed his influence in the administration, saying that he had not played a role in crafting Schwarzenegger’s pension proposal. At one point in his testimony, Crane said he could not remember the last name of the governor’s previous chief of staff, Patricia Clarey.

Crane said that if confirmed, he would resign his job as a gubernatorial advisor. However, he said, he would not end his relationship with the governor.

“You should assume that I would still be in touch,” he told the senators.

Sen. Jim Battin (R-La Quinta) said Crane’s bluntness was exactly what was needed in government positions.

“He tells you what he thinks knowing full well that might not be what you want to hear,” Battin said. “Those people are very few.”

Under Senate rules, Crane can continue to serve on the board until a year after his appointment, which comes next month.

Perata said he would welcome Crane’s nomination for a different state government job.

“I am a teacher at heart, I can’t wash that out of my body,” he said, referring to his former career. “I feel very jealously protective of what meager retirement provisions are provided to teachers.”