Senate Leader Don Perata and his fellow Democrats on the Rules Committee rejected the confirmation of David Crane, a top adviser and long-time friend of Gov. Arnold Schwarzenegger, to a powerful post on the CalSTRS board.
In a 3-2 vote, the committee on Wednesday turned down Crane’s appointment to the board of directors of the State Teachers Retirement System, the influential panel that directs the investment of billions of dollars in teacher pensions. Crane’s confirmation hearing took place two weeks ago, but the day before the scheduled vote, Craned offered to resign his post in the governor’s office, as special adviser for jobs and economic growth, in exchange for confirmation.
Perata delayed the vote–twice–to consider Crane’s fate. But on Wednesday, Perata declared in a lengthy statement that Crane’s past criticism of defined benefit pension plans, combined with his “‘macro-economic’ viewpoint” doomed his candidacy.
“I don’t believe he has any realistic intention of reining-in that world view and focusing exclusively on the welfare of the members of this retirement system,” said Perata. “I simply don’t believe it’s in his economic ‘DNA.'”
Crane received votes and support from both of the Republican members of the Rules Committee, Sen. Jim Battin, R-La Quinta, and Sen. Roy Ashburn, R-Bakersfield.
“If you are not qualified to do it, I don’t know who is,” said Ashburn at the hearing.
Margita Thompson, Schwarzenegger’s press secretary, said the governor’s office was disappointed with the Senate’s decision.
“It is unfortunate that the Senate did not recognize that David Crane’s unique financial expertise would have been of great value to California teachers and taxpayers,” she said.
In his statement, Perata did acknowledge that, “Mr. Crane is a tremendously creative and successful financial entrepreneur. He is very talented, and, doubtless, has been as much an asset to this administration as he has to the governor personally in their many years of friendship and business partnership.”
Before joining the governor’s staff, Crane spent 20 years directing investments for Babcock & Brown, a multi-national corporation with 18 offices, in 13 countries and 600 employees.
Appointees to CalSTRS first became a hot-button issue last year, when Schwarzenegger announced that his special-election reform package would include pension reform, shifting retiree benefits from defined benefit to defined contribution plans.
Schwarzenegger’s proposal was sent to the CalSTRS but was dealt a setback when the 12-member board rejected the plan, with the only dissenting votes coming from then-Director of Finance Tom Campbell and Schwarzenegger-appointed trustee Kathleen Smalley.
Schwarzenegger responded by pulling his appointees to the board, besides Smalley. The Senate then rejected Smalley’s confirmation.
Crane was one of four nominees picked to replace the removed trustees, but now Schwarzenegger must name a replacement for Crane on the board.