California state treasurer Phil Angelides has no doubts about what’s behind efforts in his state to convert traditional pensions for public employees to riskier accounts that are more like 401(k) plans.

“The California prong of a national attack on the pension funds that have stood up for corporate reform and the interests of ordinary families and investors,” is how the effort is described by Angelides, who sits on the governing boards for the state’s two largest public employee pension funds.

And it should come as no surprise, he adds, that the driving force behind the move in California is “the same crew of anti-tax advocates, free market enthusiasts and Wall Street interests” that is pushing President Bush’s Social Security privatization plan and views the battle in California as a high priority.

Gov. Arnold Schwarzenegger is proposing to force teachers, faculty and other public employees hired after July 1, 2007, from traditional defined-benefit pensions, which pay guaranteed amounts based on length of service and ending salary, to a defined-contribution plan, under which individual employees are given a sum of money and are responsible for making their own investment choices—whether or not they feel qualified to manage their own investments.

This is more extreme than President Bush’s Social Security proposals, which would privatize only a portion of people’s Social Security contribution, points out Carolyn Widener, vice chair of the board of trustees of the California State Teachers Retirement System (CalSTRS). Executive vice president of the Los Angeles Faculty College Guild/AFT and an English professor at West Los Angeles College, Widener was elected to the board by the CalSTRS community college membership and has been outspoken about her opposition and that of a majority of her fellow board members to the governor’s plan.

“There are quite a few states that have made defined-contribution systems voluntary. They have had very dismal records of attracting public employees to those. In Nebraska, for example, after 40 years of both a defined-benefit and a defined-contribution plan, the differences were so dramatic that the state went back to just a defined-benefit plan.

“What is so hurtful about the California situation is that the California teachers are not in Social Security,” Widener notes. “CalSTRS is their only guaranteed retirement security. If the governor succeeds in forcing them into defined contribution accounts, they will be among the most vulnerable of all working Americans.”

Yet, at least eight states are considering similar moves for public employees, although many are floating the plan, at least initially, as a defined-contribution option rather than as a Schwarz­ enegger-style mandated change. New York City mayor Michael Bloomberg told the state Legislature last year that switching employees to a defined-contribution plan was “worth considering.”

One of the groups to seize most aggressively on the Cal­ i­ fornia proposal was Grover Norquist’s Americans for Tax Reform, which sent a letter to governors in all 50 states urging them to adopt Schwarzenegger’s plan, which the group likes to call a “pension liberation” movement.

“Across the country, [Schwarzen­ eg­ ger’s] ideological soul mates are targeting public pension funds for elimination,” warns Angelides. The movement, he says, isn’t about “pension liberation”—it’s about payback from extremists who loathe managers of public employee pension funds for standing up against Enron, World­ Com and other scandals that have recently plagued the investment industry and the corporate world. “That’s why the governor and his right-wing ideologues have targeted the pension funds … [whose trustees] are leading the fight on behalf of ordinary shareholders to put transparency and accountability back into American capitalism,” Angelides says.

Another motivator is money, says Widener. “If thousands of state workers have to manage private accounts, they’ll turn to professional money managers. The financial industry stands to make billions on the backs of people who will spend that money out of their retirement reserves.”

Widener is writing articles and making speeches about the impact such changes would have on California citizens.

The contributions made by pension fund trustees like Angelides are certainly not lost on New York state Attorney General Eliot Spitzer, who has gained a national reputation for his aggressive fight against corrupt Wall Street practices. “My office has been working hard to address corporate abuses and to ensure that companies act in the best interest of their shareholders,” Spitzer says. “Man­ a­ gers of public pension funds have been strong allies in these efforts, particularly in using their shareholder voting powers to try to implement needed improvements in corporate transparency and accountability.”

On Feb. 23, the board of trustees of the Los Angeles Community College Dis­ trict unanimously passed a resolution oppos­ ing the constitutional amendments that would privatize the employee plans. According to Glendale Community College professor Mona Field, an LACCD board member who is also a California Federation of Teachers vice president, the board is encouraging the state’s 70 other district boards to pass similar resolutions. While the amendments’ future in the legislatures seems uncertain, labor and public employee groups are girding for a battle of the ballot measures next fall.

“We are truly suffering the results of California voters thinking that a muscleman movie star could ‘terminate’ our state’s troubles,” she says.