Meanwhile, don't count Mr. Harrigan out yet. He wants to replace fellow labor leader Mike Quevedo, whose term on the CalPERS board officially expired last January. Mr. Quevedo's seat is appointed by the state Legislature. However, some sources think it's unlikely that Mr. Harrigan will be able to cut a deal, and one source believes the seat already has been promised.
So that leaves Rob Feckner, a glazier from Napa, Calif., who represents non-teacher public school workers, as the front-runner for the presidency of CalPERS. Rumors are that former San Francisco mayor and current CalPERS board member Willie Brown also might want to make a second run for the board presidency, but some observers discount that speculation because they question whether Mr. Brown can win enough votes.
Still, Mr. Brown is a force to be reckoned with. "You never count out the mayor. He's a very prolific politician," Mr. Feckner said.
If Mr. Feckner wins the presidency at the board's Feb. 16 meeting, he would have to surrender his role as chairman of the powerful investment committee. The most likely candidate to succeed him there would be Priya Mathur, vice chairman, who has been groomed for the job since she joined the CalPERS board in January 2003.
Neither Mr. Feckner nor Ms. Mathur is likely to lead a significant change in CalPERS' policy, although their tone might be more moderate, observers said. Mr. Feckner is a close ally of Mr. Harrigan's, while Ms. Mathur, a principal financial analyst with the Bay Area Rapid Transit District, also has ties to organized labor.
Meanwhile, a larger threat to CalPERS and other California public pension funds looms on the horizon.
Starting July 1, 2007, all California state and local pension funds would be closed to new participants under a constitutional amendment introduced Dec. 6 by California Assemblyman Keith Richman, a pediatrician. Instead, new workers would join new defined contribution plans.
"We're making commitments to people that we just can't afford to pay," said Daniel Pellissier, Dr. Richman's chief of staff.
Dr. Richman's proposed constitutional amendment closing California public funds to new members is not expected to pass the Legislature, but could turn up later on a ballot initiative that would be decided by tax-wary California voters.
"There's no chance that it will pass the Legislature, because the Legislature is controlled by the Democrats," said long-term CalPERS watcher James McRitchie, editor of corpgov.net, a Web site that tracks corporate governance activities.
Dr. Richman, who has announced his plans to run for state treasurer, argues the state and localities no longer can afford defined benefit pension costs.
"The city of San Diego, Orange and Contra Costa counties all have pension deficits of more than $1 billion. CalPERS owes ($1.9 billion-plus more) than it has on hand and just last week state teacher pension fund officials said they may cut benefits for future retirees by $500 a month to eliminate their $23 billion deficit," he said in a news release.
The state's pension contribution has grown to $2.6 billion this year from $200 million in 2000, and the legislative analyst's office predicts it will reach $3.5 billion by 2009. That contribution is crowding out other needs for the state and localities, Mr. Pellissier said. "At some point, you just have to draw the line," he added.
In addition, California cities, counties and special districts have issued $11.7 billion in pension obligation bonds since 1994, which they will have to pay off down the road.
