(February 10, 2011) — California Controller John Chang has said he is sponsoring two new bills aimed at tightening lobbying restrictions for the nation’s two largest public pensions — the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS).

The efforts by Chiang reflect the goal of weeding out scandals of influence-peddling practices.CalPERS has been spearheading the push for heightened transparency, after worries about lack of disclosure in the pension fund community exploded last year when a pension-fund scandal in New York exposed the role of placement agents in bribery and corruption charges. And in May 2010, California’s attorney general filed a civil lawsuit alleging CalPERS officials Federico Buenrostro Jr. and Alfred R. Villalobos participated in a scheme to obtain business for investment firms, providing pension officials with luxury trips and other gifts.”Gathering information is not enough,” said Anne Stausboll, CalPERS chief executive officer, to the LA Times early last year. “We remain firmly committed to pursuing a full and fair examination that the special review will provide, and to backing legislation that would remove contingent fee arrangements and require placement agents to comply with the same rules as lobbyists.”

“California’s public pension systems are the largest in the country and should be held to a higher standard,” Senator Gloria Negrete McLeod, chair of the Senate Public Employment and Retirement Committee, said in a statement about Chiang’s decision to tighten lobbying restrictions. “Limiting gifts from individuals and organizations trying to influence the decisions of pension boards and government employees is the right thing to do.”

According to Chiang, the bills would place a cap on the amount of gifts members and staff may receive each year, requiring a pension fund board member or employee to wait two years after leaving before working with a firm that has business with the funds. “The appearance of impropriety by some former board members and investment staff of CalPERS raises concerns that members and staff may be using their past relationships and positions of power to influence decisions regarding the investment of public pension funds,” the controller said in a statement. “I believe these bills are a critical step toward restoring the public’s confidence in the professionalism of all of our activities on behalf of the retired public employees and teachers, and the taxpayers of California.”

More specifically, one bill — authored by McLeod — would reduce the amount of gifts members and staff of the two funds are permitted to receive under the Political Reform Act. The second measure — pushed by Assembly Member Furutani, chair of the Assembly Public Employees, Retirement and Social Security Committee — would place restrictions on CalPERS’ and CalSTRS’ board members and employees from accepting jobs with employers who had contracts or investments while the employee or board member worked at the fund. CalPERS employees have been banned from receiving any gifts since 2009.

Chiang indicated in letters last week to officials from CalPERSandCalSTRS that as a result of the placement agent scandal, the public has lost confidence in the way public funds around the country are being handled.