With all the discussion regarding out of control state and
local government pension liabilities, many are struggling with how to balance
committed retirement obligations with projected revenues.  The numbers are dizzying.  Lost in much of this discussion is who owns
the risk?  Right now, it is just the
taxpayers, acting as a backstop, who will shoulder much of the future
burden.  But is that where the discussion
should end?  How responsible are the
employees themselves?

Government employees who regulate California have virtually
no stake in the economic performance of our state.  This imbalance creates the perverse incentive
to regulate businesses out of the state, while those same bureaucrats and
legislators assume none of the risk from the economic damage they are
inflicting.  It’s time for public
employees to get some skin in the game.  
The only way to improve the State’s economy is for us all to share the
risk, and the rewards, of our actions and decisions.  Business owners risk their capital, their
businesses and their employee’s livelihood every day to provide jobs and
services for California.  It is now time
for those who do the job killing and regulating to share the same risks, the
same fates, and the same opportunity for an optimistic financial future. 

It’s time we tied the quality of the retirement of
California public employees DIRECTLY to the economy of the state in which they
regulate, arbitrate, mandate and teach.

The mandate is simple: public employees should be required to
invest their retirement in the state they regulate.  To that end, the California Public Employees
Retirements System (CalPERS) should be required to invest at least half of its
portfolio in California based companies. 
Currently CalPERS invests only 10% of its portfolio in California based
companies.  How much better would our
business climate be if that number were mandated to be no less than 50%?  Perhaps then they would care.

At a recent meeting of the Association of California
Cities-Orange County (the organization for the County’s City Council Members),
the CEO of AQMD touted the cleaner air of the state, but was unable to point to
one business, one job, one paycheck that the AQMD has saved over the past three
decades.  How many pink slips in Southern
California have been cosigned by the Air Quality Management District, the
California Air Resources Board, or some faceless bureaucrat ensconced in

Now, if the AQMD CEO’s retirement future were directly tied
to businesses actually operating in our state, he should have been able to run
the names of dozens of saved companies off the top of his head.  Instead, we heard stammering and
evasion.   Did I mention he has been the
Executive Officer of the AQMD for 10 years? 
Certainly enough time to have done something positive for our economy.

Several years ago, Clark Foam, South Orange County based
maker of surf boards, was basically run out of the state by local and federal
regulators.  It was simple, the
regulators had nothing invested in surf boards and the despised the chemicals
needed to create them, California manufacturing, California jobs.  Would Clark Foam still be in business today
if the retirements of those same job killing regulators were tied to the
performance of Clark Foam?   Jobs lost, lives ruined, taxes shipped out of
state or out of the country?  And not one
sustainable benefit that anyone can even remember.

CalPERS should be prohibited from investing in companies
located in countries or states with environmental laws more lax than ours.  We don’t want to enable their hypocrisy, now
do we?  Why should the California Air
Resources Board employee enjoy a retirement based on investments in India or
China?  Currently, roughly 20% of CalPERS
investments are allocated to "global" funds, meaning countries with regulatory
burdens which pale next to our job killing state mandates.  So where is CalPERS going for to achieve
higher returns?  Not to California.

CalPERS should not be able to invest in energy, oil and
natural gas, pharmaceutical or chemical industries, in other states, that we
have regulated out of existence in our own. 
You may have never heard of Diacetyl, but it used to provide the butter flavor
in your popcorn.  Many flavor and
chemical companies in California not only made it, but also sold it
worldwide.   But no more.  Our regulators have run it virtually out of
existence, along with the added costs of replacements, and jobs shipped to
neighboring states under the guise of altruism. 
Perhaps we should export the regulators and keep the jobs?

The only way we are going to be able to assure the long term
economic viability of the state is to tie each and every government employee’s
retirement to the private business success of California.   Bottom line: 
California public employees should have their retirement tied not to
some phantom return rate (2% at 60 or 3% at 50), but on the actual economic
health of businesses based in California. 
Pretty simple concept, invest where you regulate.