SACRAMENTO, Calif. (AP) – Gov. Arnold Schwarzenegger on Thursday abruptly fired four appointees to the nation’s largest teachers retirement system – a week after the four voted against the governor’s plan to privatize the state’s public pension system.
Last month, Schwarzenegger proposed turning the state’s two huge public pension plans into a system more like a 401(k) savings plan, in which workers make defined contributions.
The California State Teachers Retirement System and its board manage $126 billion. The California Public Employees Retirement System, the nation’s largest public fund, manages $182 billion.
“The governor concluded that these particular appointees are not best suited to implement his mission for reform,” said Schwarzenegger spokeswoman Ashley Snee.
The Feb. 3 vote to oppose the privatization plan was advisory only. Those prevailing in the 10-2 vote said the change would undermine the fund’s structure by pulling money out and reducing investment earnings for thousands of retirees.
Officials at CalSTRS had no immediate comment on the ousters.
Board member and treasurer Phil Angelides called the firings “outrageous” because the appointees “stood up for taxpayers, for teachers and school children.”
The firings were “particularly troubling because trustees of pension funds sit there as fiduciaries with a legal obligation to do what’s right from the financial perspective and they rejected the governor’s proposal on its merits,” he said.
State Superintendent of Public Instruction Jack O’Connell said he was “extremely disappointed” by the firings. “The STRS board has a record of acting in the best interest of teachers, rather than blindly following political agendas,” he said in a statement.
Schwarzenegger removed his appointees on the same day he staged an event in San Diego to promote the privatization plan. Speaking before two Brinks armored security trucks, where white bags marked “Taxpayers $$” and “$” spilled out from one truck, he said, “Right now our treasury is like the armored cars right behind me – the doors kicked wide open and the money is flying out and bleeding our state dry.”
Wading into San Diego’s pension scandal, the governor said the city needed a defined contribution plan, similar to the one he’s promoting for state workers. The nation’s seventh-largest city’s pension deficit has mushroomed to $1.4 billion after the city cut contributions to its retirement system and, at the same time, promised more benefits.
Federal authorities and regulators are investigating San Diego’s financial practices amid questions about whether the city hid bad news from investors and taxpayers.
Also Thursday, the made a surprise cameo in the Los Angeles mayoral race, lining up behind a controversial proposal from one candidate to dismantle the huge Los Angeles Unified School District.
Schwarzenegger, who lives in the city’s Brentwood section, has said he will not endorse a candidate before the March 8 primary. But by embracing candidate Bob Hertzberg’s signature issue, the governor appears to be sending a tacit signal of his preference.
Hertzberg is one of four major candidates trying to oust Mayor James Hahn. Like the incumbent, they are all Democrats. If no candidate wins 50 percent of the vote in the nonpartisan primary, the top two vote-getters move on to a May 17 runoff.
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