CalPERS Sues Over California State Employee Furloughs

CalPERS is suing California Gov. Arnold Schwarzenegger over his state-imposed furloughs, claiming that the mandated three days of unpaid time off from work each month compromises the pension fund’s ability to meet its contractual obligations.

The $190.6 billion California Public Employees’ Retirement System, based in Sacramento, filed the lawsuit Wednesday, August 19, in state Superior Court in San Francisco, according to a news release.

CalPERS maintains that the furloughs hinder its ability to clearly reconcile investment trades, post collateral and monitor the activities of external investment managers for risk and compliance, the news release said. They also put the pension fund at risk of not providing timely disability and retirement checks and health care benefit services.

Rob Feckner, CalPERS board president, issued a statement arguing that the savings created from the CalPERS furloughs do not accrue to the state’s general fund.

“State law does not permit general fund budget problems to jeopardize the financial soundness of CalPERS or the benefits that we are obligated to pay retirees,” he said in the release.

Lisa Page, a spokeswoman for Schwarzenegger, said CalPERS should share the same sacrifices as the 200,000-plus other state government workers.

“Every California family and business has been cutting back, and state government has to do the same,” she said.

Filed by Pia Sarkar of Pensions & Investments, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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