John Arnold: the Texas billionaire taking aim at California public workers.
A new pension initiative funded by out-of-state interests has been filed to amend the California Constitution to let cities reduce the pension benefits of government employees.
Texas billionaire John Arnold provided the majority of the funding for this initiative, which backers hope to place on the November 2014 ballot.
Arnold is credited with making three quarters of a billion dollars for Enron in 2001 and was rewarded with an $8 million bonus. Enron collapsed shortly thereafter in a scandal that resulted in criminal convictions of its top officers, Jeffrey Skilling and Kenneth Lay.
Enron’s gaming of energy markets, among other things, led directly to the bankruptcy of PG&E in 2003. Enron’s collapse destroyed its own workers’ pensions and helped to damage the financial stability of public pension funds across America. The New York Times noted that “across the United States, pension funds for union members, teachers, government employees and other workers have lost more than $1.5 billion because of the sharp decline in their Enron holdings.”
Now Arnold wants another shot at public workers’ pensions. The new California initiative that he is backing would allow all public employers to unilaterally reduce their employees’ pension formula going forward, increase the age at which employees would be able to retire to collect a retirement under the new formula, and increase the amount of money employees have to pay into the pension system.
The initiative establishes that all of the changes would be set at whatever level the employer wants, according to the Los Angeles Police Protective League. The initiative sets no floor on benefit changes, so city employees would be at their employer’s mercy as to how low the takeaways will go, the League says.
Dave Low, chairman of Californians for Retirement Security, which represents active and retired public employees, said the measure “breaks the promise of a secure retirement made to millions of Californians, many of whom are ineligible for Social Security and have an average pension of $26,000 per year. It will allow public employers to unilaterally cut the retirement benefits promised to current teachers, firefighters, police officers and school bus drivers.”