California’s public employee unions often put up the big money — and the only money — in elections for seats on the board that oversees the state’s largest pension fund.
This summer, they pulled together $660,000 through an independent expenditure committee to support their favored candidates at the California Public Employees’ Retirement System by sending mailers on their behalf.
But a different vein of money is pouring into the races, and it’s likely to make this the most-expensive CalPERS election ever.
The money is coming from a mix of mostly private sector construction and trade unions that have been urging the $584 billion pension fund to favor union shops in its real estate and construction investments.
They’re backing incumbent Jose Luis Pacheco, who indicated during board meetings that he’s open to more restrictive labor agreements. Pacheco raised more money in direct contributions than any other CalPERS candidate in history, pulling in $184,000 with more than $54,000 of that coming from construction trade unions.
His is one of two seats up for grabs, with voting scheduled to end Sept. 29. Pacheco is defending his seat against Troy Johnson, a challenger with backing from the major public sector unions; and Sam Hassan Akkad, a retired Caltrans engineer.
In the other race, incumbent David Miller, a longtime state government labor leader, is facing Santa Monica firefighter Dominick Bei and retired Pasadena City Manager Steve Mermell.
“It’s amazing to see this kind of race drawing this kind of money from folks who aren’t part of the system,” said Miller, a two-term incumbent on the CalPERS board who previously was a union leader in the California Association of Professional Scientists and who has benefited from labor spending in his past campaigns.
About 1.7 million civil servants and retirees are eligible to vote in the election. CalPERS is overseen by a 13-member board. Six are elected by members and seven are either elected officials or are appointed by the governor or Legislature.
Average taxpayers can’t vote, but what happens at CalPERS affects how much money schools, local government agencies and the state can spend on public services. CalPERS is considered underfunded because its assets are worth about 80% of what the system owes over time to its members. It beat its earnings target last year, but when it misses, it charges government agencies more money to make up the difference.
Overly rosy projections in the early 2000s led California to sweeten pensions for its government workers, but then the Great Recession hobbled the fund. It hasn’t clawed out from that one-two punch.
“CalPERS hasn't been managed well,” said Mermell, the former city manager. “California is the fourth-largest economy in the world, so wouldn't you think its public pension would be the envy of all the other states? But it’s not. It’s sort of in the middle of the pack.”
'Money talks' in pension board election
The dynamics of the race are more complicated than incumbents versus outsiders.
Incumbent Miller and challenger Johnson are running as a slate. They’re getting a lift from the unions that sent out mailers stressing their bona fides as public sector labor leaders. Their independent expenditure committee was funded primarily by locals from Service Employees International Union and the California School Employees Association.
Incumbent Pacheco and challenger Bei are running on a competing slate, although Bei does not have the kind of direct contributions from trades unions that Pacheco received. They have support from public safety unions, as well as watchdog retiree organizations that have been critical of CalPERS’ investment strategies.
Both coalitions — the SEIU-led alliance supporting Miller and Johnson as well as the police and firefighter partnership behind Pacheco and Bei — have produced winning campaigns in the past.
“It all comes down to who’s voting,” said Johnson, who has worked in California schools for 33 years and participated in his union for more than 20 years.
Mermell and Akkad have less resources but could find themselves in a runoff.
“Money talks, I thought that was only in politics, not in something like this,” said Akkad, who has been receiving political text messages from competing CalPERS campaigns. “It’s a mess. And I’m glad I’m different from them.”
Pacheco refused an interview request for this story. Bei said he was unavailable because of work commitments.
Why the trades are spending on CalPERS
In a twist, the well-funded SEIU coalition behind Miller and Johnson previously supported Pacheco. The same groups in 2021 spent $483,000 through an independent expenditure committee to help him unseat former board member Margaret Brown.
Johnson, who is a leader in the same public sector union that initially propelled Pacheco, said the California School Employees Association gradually lost trust in Pacheco and chose to break with him.
Brown now is the president of a group called the Retired Public Employees Association, which has endorsed Bei and Pacheco and purchased campaign signs on their behalf.
Brown four years ago could not keep up with the union spending against her. She raised about $47,000 that year. Pacheco, with help from the trades, has a war chest to reach voters.
The trades earlier this year sponsored a bill in the Legislature that would have prohibited public pension funds from investing in construction firms that do not adhere to prevailing wage or apprenticeship programs. That effectively would boost trades unions but also would limit the pension fund’s options when it hires contractors for its $66 billion real estate holdings. The bill did not get a vote in a committee.
The trades also pressed CalPERS to adopt those rules on its own through the fund’s “responsible contractor policy,” which shapes about $1 billion in annual spending.
Reaffirming the policy without additional labor protections “will be a lost opportunity for CalPERS to use its market power to hold employers accountable and uplift the lives of local California construction workers and apprentices,” Jeremy Smith of the State Building and Construction Trades Council told the CalPERS board in March, according to a transcript.
The vote did not go his way, with seven members affirming the policy without additional labor protections and three voting against it. Pacheco was a no vote. According to the meeting transcript, he said some aspects of the policy “have fallen short, with respect to prevailing wages for instance, the apprenticeship program.”
In a written statement, trades spokesperson Brooke Patton said the unions were supporting Pacheco because he “has shown a strong commitment to protecting their hard-earned retirement savings and has advocated for responsible contractor policies. He has demonstrated genuine respect for working people, and we believe it’s more important than ever to support that leadership."
Correction: CalPERS board member David Miller was a leader in the California Association of Professional Scientists prior to winning a seat on the pension board. An earlier version of this story incorrectly described his union background.
This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.
