CalPERS Averts Engineering Union Lawsuit

The California Public Employees’ Retirement System came within inches of being sued by the Professional Engineers in California Government this week, but managed to avoid litigation after hours of talks between the two organizations on Thursday. On Wednesday, news emerged that PECG had threatened legal action against the $230 billion pension fund regarding an investment policy. The engineers’ union took issue with CalPERS’ planned investments in public-private partnerships through its Infrastructure Program, claiming that the program, if adopted, would lead to the outsourcing of public-sector jobs. On Aug. 13, Reuters broke the news of PECG’s plan to initiate a lawsuit against CalPERS the following day, challenging CalPERS’ outlined investment policy for its infrastructure program. According to pension fund documents, the program called for the pursuit of infrastructure investment opportunities with private partners on projects involving endeavors ranging from transportation to utilities to communications. “Our concern had been that, based on CalPERS’ investments staff, they would potentially adopt a policy that would allow CalPERS to use members’ contributions to retirement to outsource jobs,” Bruce Blanning, PECG executive director, told CPN. “It would have allowed investments in the kinds of projects that members typically work on themselves. The way the staff had drawn up the proposal, we were concerned about that possibility.” PECG had been expressing its trepidations regarding the matter with CalPERS’ investments staff, but to no avail; hence, the decision to file suit. PECG felt its beef was supported by the law. “According to the California Constitution and the statute that deals with CalPERS’ responsibilities, they have to act solely in the interest of members,” Blanning said. “We thought the program was a violation of the constitution.” After yesterday’s talks between the two organizations, however, PECG abandoned its plans to take CalPERS to court over the public-private partnership infrastructure investments program. “They made changes in the language and with those changes, we’re not supporting the policy, but we are no longer opposed to the policy they’re going to adopt.” The changes, he said, are to be presented to CalPERS’ Board on Monday, August 18, and PECG is hopeful that all will go as planned. “Our concern was with the staff proposal, not with how the Board conducts itself or represents members; that hasn’t been a problem.”