Secret out-of-state donor powering pension reform group

April 7, 2011 12:58:05 PM PDT
An unknown out-of-state foundation has become a substantial backer of an ambitious nonprofit group that is positioning itself at the center of the state's debate over public pensions.

Democratic consultant Marcia Fritz, who runs the nonprofit Californians for Fiscal Responsibility, first mentioned at a San Francisco forum last month that the group had received a substantial contribution from an out-of-state foundation. She said the money will be used to research several competing pension plans that are being proposed this year.

The organization, which is closely tied to advocacy group California Pension Reform, has already made headlines for publishing details of top state pension recipients, suing for access to pension records in San Diego and supporting suits elsewhere. The two groups have also published numerous guest columns and have been quoted in news stories around the state.

Fritz confirmed to California Watch that she does not intend to reveal the identity of the anonymous donor but said the funding came from a foundation, not an individual, and that her group won it in open competition. The group plans to use the funding to present research reports and create Web-based tools evaluating the competing reform plans.

At the San Francisco forum in March, Fritz said her group was selected for the funding because it planned to develop a model for evaluating pension plans that could be replicated in other states.

"Once we formed a (nonprofit organization) all of a sudden people are interested in giving us money for certain things," Fritz said at the forum. "We got a very large grant from an out-of-state foundation to actually do some research, and we're in the process of spending their money doing research. ... And the thing that they wanted is to develop a solution that can be modeled in the rest of the United States."

As Capitol Weekly noted, the consulting firm hired to prepare the group's research is run by Gov. Arnold Schwarzenegger's former finance director, Mike Genest, though Fritz said he was not personally working on the reports. The firm, Capitol Matrix, will be paid $150,000 for its work, according to Capitol Weekly.

As a 501(c)(3) nonprofit organization, Californians for Fiscal Responsibility is not required by law to disclose its individual contributors. Such organizations have to file annual reports detailing their aggregate fundraising and expenditures, but because state records show the group only incorporated late last year, its first report will not be due for months.

Because of its nonprofit status, the organization faces restrictions (PDF) in how it can lobby government (thanks to Ken Larsen at the California Association of Nonprofits for pointing this out.). Its sister group, California Pension Reform, has no such restrictions and is pushing several proposals to lawmakers. Fritz said the two groups do not coordinate now that they have split into distinct nonprofit and political advocacy organizations, but some critics have voiced other concerns.

It is not unusual for nonprofit donors to request anonymity. California Watch and its parent organization, the Center for Investigative Reporting, are similarly classified as nonprofit groups and at times accept anonymous contributions, though the organizations list a majority of their donors, including their primary funders, on their websites.

Pension reform has become a popular cause this year for donors on both ends of the political spectrum. Everyone from tech investors and donors to Barack Obama to the conservative Koch brothers have been throwing down money and clout in the effort to rework the public pension system.

Advocates in California have gained traction this year, as large public pension obligations have come into focus in the context of state budget crises here and elsewhere. The issue has already inspired several reform proposals in California, along with several local measures.

A statewide Field Poll released earlier this month shows strong support for pension reform, even among Democrats, who are typically perceived as being union-friendly. The poll found that 42 percent of Californians now believe that public pensions are too generous, up from 32 percent in late 2009.

The poll also found that Californians support a 401(k)-style plan for new public employees, as opposed to the classic defined benefit system currently in place. A report [PDF] by the Little Hoover Commission supported that idea as well, calling for a hybrid plan that uses elements of defined benefit and defined contribution plans.

Story courtesy of our media partners at California Watch (A Project of the Center for Investigative Reporting)

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