Former Enron Trader Continues to Fund Pension Policy Reforms From Behind the Scenes

one dollar bill

Former Enron trader John Arnold has given large amounts of money to various public pension reform initiatives around the county in recent years.

Many of those measures mandate a shift to a 401(k)-style system, or allow benefit cuts.

Most recently, he gave $1 million in support of Proposition 487, a Phoenix ballot measure that would have shifted new city hires into a 401(k)-style system.

From Politico:

When former Enron trader and Texas billionaire John Arnold donated more than $1 million to a November 2014 initiative to reform the public pension system in Phoenix, Ariz., pension activists took notice.

Arnold’s donation to Proposition 487, also known as the Phoenix Pension Reform Act, constituted close to 75 percent of total donations for the ballot measure, which failed. Had it passed, it would have moved new state employees from a defined benefit plan into a less-generous (and less expensive) defined contribution plan such as a 401(k).

Despite his Arizona defeat, no one believes Arnold is done.

Arnold’s money has also been involved in reform initiatives in Kentucky, Rhode Island and California. From Politico:

In the 2014 cycle, Arnold and his wife donated $200,000 to a super PAC that supported Democrat Gina Raimondo’s successful gubernatorial campaign in Rhode Island. As Rhode Island’s state treasurer, Raimondo had enacted pension benefit cuts that cost her union support. Rahm Emanuel, who made similar changes to Chicago’s pension system, also received financial assistance from Arnold.

San Jose Mayor Chuck Reed, another Democrat, tried, unsuccessfully, to place an initiative on California’s November 2014 state ballot that would have allowed public employers, under specific circumstances, to reduce employee benefits and to increase contributions to underfunded plans. Arnold bankrolled the entire effort, to the tune of $200,000.

According to data compiled by the NPPC, based on donations disclosed on the website of the Laura and John Arnold Foundation and on news articles, Arnold has since 2008 spent more than $53 million on pension policy reforms, not all of it in the political realm. (In an email interview with Reuters, Arnold disputed those numbers.)

Other beneficiaries listed include universities and think tanks such as Brookings and the Pew Research Center. Much of the money was spent to support pension reforms, but some was spent on education reform. Both efforts, unions point out, tend to favor benefit cuts to public employees.


The Arnold Foundation is also participating in the Colorado Pension Project, chaired by former Colorado governors Bill Owens, a Republican, and Richard Lamm, a Democrat. As governor, Lamm drew national headlines 30 years ago when he said that elderly people who were terminally ill had a “duty to die and get out of the way.” (Lamm will turn 80 next year.) The Colorado Pension Project’s website says that recent legislative reforms to the state pension system — which reduced cost of living adjustments, raised the retirement age for new employees and increased employee salary contributions — did not go far enough. McGee said Arnold’s foundation was drawn to the state’s history of “fruitful left ideological discussions.”

Read the full Politico report here.


Photo by c_ambler via Flickr CC License

Former Governors: Colorado Pension Benefits Are “Skewed”, Insufficient

Denver capitol

Two former Colorado governors penned a column in Friday’s Denver Post that raised questions about whether too many employees were getting the “short stick” regarding pension benefits.

Richard D. Lamm and Bill Owens write:

The debate over the unfunded liability has overshadowed an equally critical issue.

What has gone largely unexamined — by PERA members, policymakers and the broader public — is the question of whether the state’s public retirement plan provides fair benefits to the majority of public servants and allows public entities to recruit and retain the highest-quality employees.

Given that virtually all public school teachers are PERA members — along with other state employees and many who work for Colorado municipalities and counties — this is a critically important question that impacts us all.

We put our trust and the safety of our families in the hands of these educators, state troopers, and snowplow drivers so it makes sense that we want to ensure that they’re treated fairly and that they represent the best and the brightest employees available.

The authors argue that, although Colorado’s average pension benefit appears more than adequate (over $3,000 a month), it masks the fact that many workers lose out. From the column:

Some PERA critics have argued that its benefits are too generous, outstripping what’s available to private sector employees. But the secret that goes unaddressed is that the vast majority of PERA members lose out under its current structure. For many of them, in fact, the benefits are insufficient to provide them with the retirement security they deserve.

Despite the buzz that it’s a 24-carat retirement plan, many of these public servants may end up with fool’s gold.

Why? While PERA highlights its average retiree benefits — $3,068 monthly, according to the latest data — this statistic hides the fact that a few retirees make far more than that and the vast majority make far less. Quite simply, the benefit structure, set by the state legislature, is skewed to benefit a minority of public employees at the expense of the rest.

Who are the rest who get the short stick under the current system? They’re employees who are more typical of the modern-day workforce — those who don’t stay at one job for the majority of their career. This could include those who move between the public and private sector or move in or out of Colorado, including, for example: a teacher who spends a half dozen years in the classroom before taking a private sector job; a public servant who follows his spouse out of Colorado — even if he continues a career in the public sector in another state; and a dedicated career Colorado public employee who wants to continue serving after becoming eligible for retirement.

Richard D. Lamm and Bill Owens are co-chairs of the Colorado Pension Project, “a group working to strengthen retirement security for Colorado public servants”.


Photo credit: “Denver capitol” by Hustvedt – Own work. Licensed under Creative Commons Attribution-Share Alike 3.0 via Wikimedia Commons