SACRAMENTO — The board that oversees California's teacher pension fund is poised to ban financial firms that it does business with from making large political contributions to its members and the governor.
Implementation of such a ban, which could cost candidates for governor and other statewide offices millions of dollars in campaign cash, was set in motion Thursday with a unanimous vote of the board's corporate governance committee. Over the next two months, staff attorneys will craft statutes, subject to board approval, that would put the new rule into effect.
The move, instigated by proxies for Gov. Arnold Schwarzenegger, would prohibit companies or their employees who are seeking business from the pension fund from donating more than $250 to Schwarzenegger, the state treasurer or the state controller, all of whom control seats on the board.
The development follows revelations in The Times that Treasurer Phil Angelides and Controller Steve Westly, rivals in the June primary election, steered the pension boards they sit on, including the teacher fund panel, to invest in firms that contributed to their campaigns. Both men have collected millions of dollars from companies seeking pension-system cash. But both quickly endorsed the new plan.
"The treasurer wholeheartedly supports the proposal," Angelides spokesman Nick Papas said. Joy Higa, the controller's representative on the board, said Westly also backs the measure.
The push comes as pension boards nationwide have been tainted by "pay to play" scandals. Investigations into the awarding of investment contracts to political patrons of pension board members have been launched in several states.
"There should not be a perception out there that one pays to play, in terms of making campaign contributions to officials in California and as a reward you have access to the nation's second-largest pension fund," Peter Reinke, a campaign finance reform advocate whom Schwarzenegger recently appointed to the board of the California State Teachers' Retirement System, said at the board's meeting. The spirited discussion on political giving stretched across 2 1/2 hours.
During President Clinton's years in office, the Securities and Exchange Commission launched an effort to put such a ban in place. But it unraveled amid intense opposition from financial firms.
