Schwarzenegger plan to borrow from pension fund called 'theft'

California's largest public employees' union Wednesday blasted Gov. Arnold Schwarzenegger's proposal to borrow $2 billion from CalPERS to help balance the state's budget.

The loan is "more of a $2 billion theft," said Randall Cheek, legislative advocate at Local 1000 of the Service Employees International Union. He made the comment while addressing the governing board of the California Public Employees' Retirement System.

It marked the first time the 95,000-member union has offered an opinion on Schwarzenegger's plan, and it could be important in determining whether the idea gets much traction. CalPERS would have to approve any loan to the state, and the pension fund's board tilts toward union interests.

Anne Stausboll, chief executive of CalPERS, told the board that her staff held "informal discussions" with the governor's Department of Finance on the loan.

In a letter to Schwarzenegger and legislative leaders Aug. 30, she said CalPERS has "significant concerns" about the proposal. Among other things, the loan could put a financial strain on the fund, she wrote.

While it controls $210 billion in assets, CalPERS is still reeling from huge losses in 2008 and is counting on a $3.9 billion infusion from the state in this fiscal year. The loan would effectively cut the infusion in half.

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