| LOS ANGELES, June 25
LOS ANGELES, June 25 Texas hedge fund
billionaire John Arnold is taking his campaign to reform
America's public pension systems to California, pension reform
groups and a spokesman for his foundation told Reuters.
Arnold, the founder of Houston-based hedge fund Centaurus
Advisors and a former trader at Enron, the defunct energy
company, is looking to fund groups supporting ballot initiatives
that would scale back what critics regard as overly lavish
public employee pension deals.
Unfunded pension liabilities for U.S. states - the
difference between what they have promised workers for their
retirement and the assets they have to pay for them - have risen
to a total of more than $1 trillion, according to the latest
analysis from the nonpartisan Pew Charitable Trust.
The issue is especially acute in California, where public
employee pensions have exceptionally strong legal protections
even as many local governments and state agencies struggle with
chronic budget deficits.
Two California cities, Stockton and San Bernardino, have
filed for bankruptcy protection in part because of soaring
Arnold, 38, amassed a personal fortune estimated at $3
billion running Centaurus, a natural gas trading hedge fund he
established after leaving Enron shortly before it collapsed in
Last year he closed Centaurus as natural gas prices hit a
slump and turned full-time to running a philanthropic foundation
with his wife, Laura. According to the John and Laura Arnold
Foundation, the fund has assets of $1.2 billion.
The foundation's stated goals on its website are improving
outcomes for criminal justice, education, public accountability
and research integrity.
"The cost of public employee benefits in most states and
communities is unsustainable," the website states.
According to the Federal Election Commission database,
Arnold gave money to Barack Obama's presidential campaign in
2007 and 2008. He also gave money to other Democratic
politicians, and the committee that funds Senate campaigns for
The foundation has spent about $10 million in the past two
years backing pension reform efforts in 25 jurisdictions,
according to Josh McGee, the foundation's vice president for
McGee did not specify what those jurisdictions were but said
the efforts included support for groups that successfully backed
pension reform packages in Rhode Island and Kentucky, where laws
that cut benefits for current and new workers were passed.
McGee attended a private "pension retreat" in Sacramento on
May 22 where California city officials, lawyers and taxpayer
groups concerned with pension debt shared information and
He stressed that no decisions by the Arnold Foundation had
been made over whether, or how, to deploy funds in California.
"We don't want to do a bunch of one-off efforts," he said.
"We want to see if we can build momentum for a sustained reform
effort in the state, and nationally."
Two pension reform advocates in California say they have
received calls from officials at the Arnold Foundation in recent
weeks asking about ballot initiatives.
McGee said he attended the May 22 retreat as part of an
"outreach effort" as the foundation looks at ways to approach
pension reform in California.
He said the foundation is interested in fairness for workers
as well as employers. The foundation's website said efforts must
be fair to "all parties."
Unions, however, are not necessarily happy with Arnold's
involvement with pension reform.
"It's the height of narcissism for a Texas billionaire who
doesn't have to worry about his retirement to come into
California and try to meddle with the secure retirement of
working-class people," said Lowell Goodman, communications
director for the southern California chapter of the Service
Employees International Union.
A request for comment by Arnold was made through McGee, but