Teacher pension fund betrays its mission
If you think that CalSTRS, the behemoth pension system that supports California’s retired teachers, is focused on pensions, you are wrong. The largest teacher-focused pension system in the country is abandoning its core fiduciary role to chase left-wing political goals. Its mission creep will hurt teachers, taxpayers, and students alike.
In April, CalSTRS issued an extraordinary press release stating their priorities for the companies they invest in, including corporate greenhouse gas disclosures. CalSTRS is interested in achieving a “net zero” emissions portfolio. Of course, CalSTRS is also interested in corporate diversity, and states: “CalSTRS will vote against an entire board of directors that does not include at least one woman and against a board’s nominating and governance committee if at least 30 percent of its board members are not women. Furthermore, CalSTRS will vote against the nominating and governance committees of Russell 3000 companies that do not disclose their board members’ diversity characteristics.”
CalSTRS’ Board has morphed into Alexandria Ocasio-Cortez with a $300-billion billy club to swing at businesses that aren’t sufficiently Progressive.
If you were scouring the news for a few words about supporting corporate boards trying to grow profits, entering or creating new markets, utilizing innovation, expanding geographically, then CalSTRS is not the investment entity for you.
Who has time for the actual business of business when you can be leading a social revolution?
CalSTRS might want to check out the work of Bjorn Lomborg, who shows that the climate catastrophists claims about global warming deaths, costs, hurricanes, polar bears, forest fires, etc. are routinely contorted to further the policy agenda of the anti-fossil fuel crowd.
They might want to ask teachers if they themselves are willing to pay out of their own pockets for these political goals.
They might want to ask parents if they are willing to take dollars out of their children’s classrooms to diversify corporate boards.
Because the problem with CalSTRS lifting its leftist political banner above all others is that the organization has an actual role, which is fiduciary. Its job isn’t to be in the political vanguard but to caretake and grow its investments to meet its payout obligations.
CalSTRS pension payments are funded by payments from the state, from teachers and school districts. If investment gains fall short, contributions need to increase.
The system was already facing a serious insolvency threat in 2040, which is a blink of an eye for a pension system. In 2014, the legislature crafted a plan to stave off the problem and mandated increased contributions from all parties.
California has seen an explosion of education spending in the past decade. Parents hope and assume that their taxpayer dollars go towards classroom enrichment, student activities, training that increases student performance and so on. Some of it surely has.
But when investments fall short, school spending will go to backfilling pension obligations. That has also been the case. What good is that increased school spending if it doesn’t benefit students?
Women and minorities should, of course, be welcome on every corporate board without a discriminatory roadblock. But their presence should indicate merit, not government fiat or race-and-gender box checking. Diversity itself should not be the goal for corporate governance.
Every single California government activity should not be Progressive activism. CalSTRS should honor the teachers, parents, taxpayers and students who are all affected by its decisions and stick to its fiduciary job.
About Ted Gaines
Senator Ted Gaines (Ret.) was elected to represent the Board of Equalization’s First District. He is a leading taxpayer advocate, defender of Proposition 13 and is committed to providing trustworthy and transparent representation for nearly 10 million constituents in 34 counties of northern, eastern, and southern California. For more information, visit boe.ca.gov/Gaines.