Republicans and pension busters have been whacking CalPERS like a pinata for the past year. But here's something they don't like to talk about: CalPERS is a huge job creator in California. And weakening it would be a major drag on the state's economy.
CalPERS has invested more than $17 billion in California-based companies, properties and projects, helping to generate nearly one million jobs throughout the State, the California Public Employees' Retirement System (CalPERS) Investment Committee was told on Monday.
The investments represented 8.5 percent of the System's $200.5 billion portfolio as of June 30, 2010, and are spread across all asset classes, according to CalPERS for California, a report presented to the committee that details the Fund's statewide investments for fiscal year 2009-2010. The report includes an update on CalPERS California Initiative, a 10-year-old private equity program designed to invest in traditionally underserved markets that are primarily, but not exclusively, in California.
The report also outlines CalPERS future plans for additional investments in California, particularly in private equity and infrastructure, where renewable power generation, power transmission and energy pipelines offer promising opportunities. A change to a real estate benchmark with a larger California weighting also means increased investment in statewide properties.
"Our California investments are helping to create and support jobs during tough times for our state," said George Diehr, Chair of the CalPERS Investment Committee. "While our overall portfolio is global in scope, in keeping with our fiduciary responsibility to get the best possible risk-adjusted investment returns, we do try to ‘think California' to help nurture the economy of the state where most of our members live."
The largest California investment - $6.1 billion - was in public companies, 644 of them with headquarters in the State. Those California-based businesses were responsible for employing an estimated 700,000 workers statewide, nearly 5 percent of the State's total workforce.
Among other highlights in the CalPERS for California report:
- $4.7 billion in fixed-income investments in companies doing business in California, including $810 million invested in 14 California-based companies employing an estimated 85,000 workers in the State
- $2.9 billion in private equity investments, including investments in 1,331 California-based companies supporting more than 140,000 California workers
- $3.3 billion in real estate investments in 387 State projects, benefiting construction, property asset management, affordable and workforce housing and transit-oriented community development
- $80 million in infrastructure investments in six California-based projects; $73.6 million in projects that bring water to drought-prone areas
"These are good investments, not only for California but for CalPERS," said Joe Dear, CalPERS Chief Investment Officer. "Our primary responsibility is to find investments that fit our strategy and can generate attractive financial returns, regardless of where the companies are located. Our California investments do just that."
The $1 billion California Initiative program has investments in 115 California companies that employ more than 17,000 jobs statewide, according to CalPERS for California. Many of the workers live in low- to moderate-income areas.
The program consists of two funds, Phase I launched in 2001 with a $480 million commitment and Phase II, known as the Golden State Investment Fund, launched in 2007 with a commitment that now totals $560 million. About $757 million of funds committed has been invested to date.
Other key points concerning the California Initiative:
- 45 percent of companies in which CalPERS invests are in underserved areas that historically have not received institutional equity investments.
- 42 percent of the capital is invested with companies where at least one of the executive officers is a woman.
- 61 percent is invested in firms that employ at least one minority officer.
The California Initiative also includes a $100 million fund-of-funds investment in Banc of America California Community Venture Fund (BACCVF). As of June 30, 2010:
- BACCVF had invested in 15 funds that have investments in 162 companies, 33 percent of which are located in California.
- 31 percent are majority-owned or managed by minorities.
- 45 percent have some female ownership.
CalPERS is the nation's largest public pension fund with approximately $235 billion in assets. It administers retirement benefits for more than 1.6 million active and retired State, public school and local public employees and their families, and health benefits for 1.3 million enrollees. More information about CalPERS is available online at http://www.calpers.ca.gov/.