State Personnel Board Does Not Re-Elect Harrigan to CalPERS Board

As expected, the State Personnel Board on Wednesday voted 3-2 to remove CalPERS President Sean Harrigan as its trustee to the pension fund, marking the end of a period "punctuated by sharp conflicts" between CalPERS and some corporations over corporate governance, health care costs and other issues, the Los Angeles Times reports (Lifsher, Los Angeles Times, 12/2).

Harrigan had said on Tuesday that corporate and political interests were forcing him out of CalPERS, which has $178 billion in assets and has long sought to use its holdings to influence corporate behavior.

A group of union presidents and consumer and retiree advocates this week sent a letter to the State Personnel Board urging it to re-elect Harrigan and expressing the belief that he was being opposed by Gov. Arnold Schwarzenegger's (R) administration and various business groups.

Harrigan, who February 2003 was elected as the first new CalPERS president in more than a decade, is a career labor union official and vice president of the United Food and Commercial Workers International Union, which earlier this year went on strike at supermarkets in Southern California. After the strike, CalPERS voted its shares against the re-election of several Safeway directors, including Chair Steven Burd. Harrigan had said that Safeway executives were among those leading the effort to oust him as CalPERS president (California Healthline, 12/1).

Harrigan also had led CalPERS, which provides health insurance for the state's workforce, in its efforts to challenge hospitals over their prices and enact SB 2, which would have required some employers to provide health insurance for employees or pay into a state fund to provide such coverage (Williams Walsh, New York Times, 12/2).

Harrigan will remain on the State Personnel Board for the remaining five years of his term (California Healthline, 12/1).

The personnel board's two Republicans and one Democrat, Maeley Tom, voted in favor of Ronald Alvarado (R), rather than Harrigan. Alvarado is served as a CalPERS trustee from 1996 through 1999 (New York Times, 12/2).

Tom denied allegations that she had switched her vote to Alvarado in exchange for his support in the future. Although Tom said she would be interested in serving on the CalPERS board "somewhere down the line," she said there was "no conspiracy, no secret agenda" against Harrigan. "I trust the process. I will have my chance," Tom said (Wallack, San Francisco Chronicle, 12/2).

Alvarado said that he had not been contacted by business interests or the Schwarzenegger administration. He added, "I have no agenda for labor or for management but a commitment to balancing all the valued interests" (Chan, Sacramento Bee, 12/2).

CalPERS Vice President Rob Feckner, who also is a labor leader, will serve as interim president from Jan. 1 to mid-February, when the board will elect a new leader. Feckner and former San Francisco Mayor Willie Brown (D) are considered leading candidates for the position, according to the Chronicle (San Francisco Chronicle, 12/2).

According to the New York Times, Harrigan's removal from CalPERS could be "an early success" in a campaign by Republicans to refocus the board on projects that are "more in keeping with Republican ideals."

Richard Ferlauto, director of pension investment for the American Federation of State, County and Municipal Employees, said, "Clearly, we're seeing a Republican attack on public pension systems. And California has been targeted in a very strong way."

However, California Republican Party spokesperson Karen Hanretty said that CalPERS likely would continue its shareholder campaigns because its board is still dominated by trustees with ties to the Democratic party and organized labor. Hanretty added that GOP officials had not sought to influence the vote to remove Harrigan (New York Times, 12/2).

Richard Holober, executive director of the Consumer Federation of California, agreed that Harrigan's removal is "not likely in the short run to tip the balance on CalPERS," but he added that the move "is clearly a shot across the bow coming from Wall Street, the Chamber of Commerce and big corporations, who are very anxious to remove the spotlight that CalPERS and shareholders put on corporate misdeeds" (Los Angeles Times, 12/2).

"Going back almost a year, the state Republican party and the Chamber of Commerce have been critical of (me). The governor has had influence on this decision today," Harrigan said, adding that his removal "will not reduce the strength, the commitment nor the resolve to fight for our members" (Yu, USA Today, 12/2).