SACRAMENTO — Gov. Arnold Schwarzenegger fired four of his appointees to the state teachers retirement system board Thursday after they condemned his plan to overhaul the state's teacher pension system.
The appointees were part of a majority on the California State Teachers Retirement System board that last week voted to oppose Schwarzenegger's plan to shift to school districts the state's $469-million-a-year contribution to teachers' pensions.
The appointees also opposed Schwarzenegger's proposal toreplace the existing guaranteed annual pensions with 401(k)-style defined contribution plans. Schwarzenegger last month said that such a change was one of his priorities this year.
The 12-member board made clear that it considered his approach foolhardy because it would risk the stability of the pension system and discourage experienced teachers from staying in schools.
Though the votes were largely symbolic, they were a embarrassment to the governor because of the retirement system's prominent role as a steward of teacher pensions. The system is the largest such fund in the country, managing $116 billion for about 754,000 retired educators.
"Clearly this was a board that put the interests of the teachers ahead of politics, and to stifle opposition and dissent in a democracy is very narrow-minded," said state Supt. of Public Education Jack O'Connell, who sits on the retirement board. "It sends a signal to all of his appointees: either strict adherence to policy from the governor's office or you're going to be given your walking papers."
Only two members dissented from the board's condemnation of the governor's plan; one was a Schwarzenegger appointee and the other an administration representative.
Normally, Schwarzenegger would be unable to remove retirement system board members because they serve fixed terms, not at the pleasure of the governor, to ensure their independence. But the four members -- Mark Battey, James Gray, Gloria Hom and Miguel Pulido -- had been nominated by the governor last March and had been sitting on the board while awaiting Senate confirmation, which was scheduled for next Wednesday.
"The governor concluded that these particular appointees are not best suited to implement his mission for reform," a spokeswoman said.
State Treasurer Phil Angelides, who sits on the board, said Schwarzenegger's action was "a dangerous political intrusion, almost unparalleled."
"Pension trustees have a legal obligation to act as fiduciaries," he said. "They did what was right and it doesn't agree with his right-wing agenda to demolish the pension plan, so he retaliated."
The board's analysis of Schwarzenegger's proposal last week was sharply critical. It said that ending the state's pension contributions could lead to reductions in benefits by pressuring school districts to have employees pick up more of the annual contributions. Districts now put the equivalent of 8.25% of their payroll into the plans; the state provides 2%. Teachers contribute 8% of their salaries.
The board also made dire predictions about moving to a 401(k) system, as Schwarzenegger and Assemblyman Keith Richman (R-Northridge) have proposed.
Under that plan, the board said, it would have to dig into the retirement fund earlier to pay benefits, thus reducing the fund's long-term return and increasing benefit plan costs.
The board also said that teachers would lose more than other public employees because they collect no Social Security, and that the change would eliminate a major incentive for veteran educators to continue teaching.
"The proposal that the governor's endorsed is highly flawed," said Battey, who is a financial consultant in Half Moon Bay, Calif., and a former state controller's aide. "It's an overly simplistic approach to a highly complicated problem. It's bad for the state, it's bad for teachers."
Schwarzenegger withdrew another nomination Thursday, but more reluctantly. Marilyn Hendrickson, his nominee to the state Fish and Wildlife Commission, has been criticized by environmental groups, which complain that the commission has become increasingly reluctant to protect endangered species since she joined the panel.
Schwarzenegger acted after Senate leaders told him that Hendrickson, who has been on the commission since April, would have difficulty winning confirmation. Her removal took effect Thursday.
Hendrickson had provided the pivotal vote to block state officials' recommendations on squid fishing limits and on considering the tri-colored blackbird and California tiger salamander as endangered species. She also voted against banning lead ammunition in areas where condors could eat pellets and be poisoned.
"I think there was so much opposition expressed by a real variety of people and a strong indication from the Senate that on the merits we were not likely to confirm," said Sen. Sheila Kuehl (D-Santa Monica), chairwoman of the Senate Committee on Natural Resources and Water.