Governor Seeks Outside Donors for Campaigns

Times Staff Writers

Gov. Arnold Schwarzenegger said Friday he would enlist donors from across the country to fund a multimillion-dollar fight over California’s public pension system and its voting districts -- reforms being watched with keen interest on Wall Street and a bit of panic in Washington, D.C.

The governor’s comments signaled that his ambitions for 2005 could flood California with campaign contributions from lucrative new sources. And raising money on a national scale would allow Schwarzenegger, frequently mentioned as a presidential hopeful even though the Constitution bars foreign-born citizens from serving, to take a wider stage and expand his fundraising network.

In a wide-ranging interview, Schwarzenegger also modified his plan to reward teachers with merit pay based on their performance in the classroom -- a controversial idea staunchly opposed by unions. The governor shifted his focus to the less contentious idea of “combat pay” -- extra money for teachers who work in low-income schools where, he said, they are “threatened always with their lives and their cars are stolen.”

As for his political ambitions, the governor said he wanted to raise at least $50 million to fund his 2005 proposals for overhauling government. His plans, announced three weeks ago, could include multiple ballot propositions and a TV advertising blitz leading up to a special election in November.


“We all know the issues we are addressing are not just state issues, that the rest of the country is looking at California and as California goes, so goes the rest of the nation,” said Schwarzenegger, who spoke Friday to the Los Angeles Times editorial board and to a news reporter in a later telephone interview.

The governor’s aides have said they hope to raise another $50 million for a possible reelection campaign in 2006. Combined with the $50 million already spent on Schwarzenegger’s 2003 recall election and ballot campaigns last year, the governor would have collected and spent $150 million in just three years in politics.

In Washington, Democratic and Republican party leaders have taken interest in the governor’s plan to prohibit lawmakers from drawing their own legislative districts. Few issues carry such fierce controversy among political leaders as how districts are drawn.

Schwarzenegger wants an independent panel to draw lawmakers’ districts, possibly creating more competitive races for Congress and the state Legislature. One proposal would require that every district have numbers of Republican and Democratic voters within 7 percentage points of each other. In many California districts, the margins are much wider, virtually assuring reelection for whichever party dominates.


Legislative districts get new boundaries every 10 years, after the national census is completed. In California and most other states, the ruling political party crafts those boundaries. Schwarzenegger wants the independent panel to begin work next year -- not in 2011, the next scheduled date for redistricting.

Schwarzenegger said he does not expect financial support for his plan from the national political parties; most of the complaints he has received on the subject have come from Republicans. California Republicans in Congress worry they could lose their seats in any reshuffling.

“I will not get the backing from the traditional party guys, because they’re against redistricting,” the governor said.

For its part, Wall Street has an enormous stake in how Schwarzenegger proposes to transform California’s pension systems for teachers and state workers, now worth nearly $300 billion in combined assets.


Schwarzenegger’s plan would move new state employees into individual 401(k) investment plans by mid-2007. That means Wall Street investment houses would be able to work with tens of thousands of clients instead of just the handful of expert investors at CalPERS and CalSTRS, the two public pension systems. The windfall could be huge.

The governor said his plans will be closely watched in other states, and that national curiosity would translate into campaign donations as well. Money will be coming from both people who support his agenda and others who are opposed, he said.

“You know that with the pensions there are a lot of states that are struggling,” he said. “Some of them have already redone the pension plan, trying to go to the 401(k). Others are still struggling with that. They’re looking at California, and where California goes, they’ll be able to go.

“So there is national interest here: from the various interest groups, from the unions, from everybody,” Schwarzenegger added. “So there will be national money coming in to fight us and national money coming in to help us fight the battle.”


Rather than go back to the same Californians who have funded his various campaigns, Schwarzenegger said he wants to solicit well-heeled businesspeople across the country.

“I feel it’s wise not to just rely on the same people that we normally go to, and let other people participate a little bit,” he said.

Likely donors would include people who’ve been “successful in the real estate market or successful in the restaurant business,” he said. “Maybe they can contribute $10,000 or $20,000 or $50,000 or be in charge of raising $500,000 from smaller donors.”

Schwarzenegger’s celebrity may help him woo contributors from other states. He is widely known because of his movie career, but he also reached a national audience last fall when he campaigned for President Bush in Ohio and, before that, gave a televised prime-time speech to the Republican National Convention in New York City.


The planned fundraising blitz has opened Schwarzenegger to criticism from campaign fundraising groups. They are particularly upset that committees formed to support ballot initiatives the governor may launch are not subject to the same fundraising limits that apply to candidates. The governor can raise unlimited amounts for these efforts; the money he raises for reelection, however, is limited to $22,300 per donor.

“At the very least, the governor seems to be mocking the spirit of California laws, which were passed by voters and put already high limits on contributions to candidates,” said Ned Wigglesworth, a Sacramento analyst with, a group that monitors campaign finance laws.

Many of Schwarzenegger’s donations come from insurance companies, telecommunications firms and other corporate interests that lobby state government. Though Schwarzenegger often derides “special interests” as a dangerous force in Sacramento, he repeatedly states that he is not beholden to anyone because he is wealthy.

“I think this is why the people sent me to Sacramento,” the governor said in a news conference this week, “because I cannot be bought.”


On Friday, Schwarzenegger pushed his plan to institute merit pay for teachers. He visited two classrooms and greeted an auditorium full of students at the Vaughn Next Century Learning Center in San Fernando. The 1,450-student school gained charter status in 1993, the first campus in the Los Angeles Unified School District to do so.

Teachers at Vaughn have received performance-based pay bonuses of up to $4,000 a year based on a strict set of criteria, said Principal Yvonne Chan. The school has been offering the bonuses for the last seven years as a way to further staff development and inspire teachers to increase their skills and knowledge.

The charter school, many of whose students come from disadvantaged backgrounds, “did not choose to throw around excuses,” said Schwarzenegger. “This is what I love about this school. They went into action. They gave students more class time. They gave the students more school days. And they shrank down the class size.”

Critics of Schwarzenegger’s plans said the amount the governor has dedicated to education in his proposed budget is not enough to support similar changes in the state’s public schools. They said the idea of merit pay isn’t the right approach.


“We should focus on getting a better long-term support base for public education,” said Supt. Roy Romer of the LAUSD. “We are drifting way below the national average in support of our students, and it is showing up in terms of the quality of education we can deliver.”

John Perez, the president of United Teachers Los Angeles, which represents 45,000 teachers, had a similar concern. “Before we try nostrums like merit pay and combat pay, shouldn’t we try what other states who are outperforming us are doing, to see if it doesn’t improve student achievement?”

But Schwarzenegger said conditions in some schools are so poor, teachers deserve extra pay for agreeing to work in such an environment. The state should reward teachers who move from a “comfortable school, where everything is dandy and fine,” to a school where children are unprepared and underfed, the governor said.

Teachers at these schools “should get more money,” Schwarzenegger said. “The union -- the way they look at it -- is no. If you give one person more money, everyone has to get more money. So there’s a disagreement.”


Times staff writer Cara Mia DiMassa contributed to this report.