Hostname: page-component-8448b6f56d-gtxcr Total loading time: 0 Render date: 2024-04-23T14:29:59.277Z Has data issue: false hasContentIssue false

Interest Groups on the Inside: The Governance of Public Pension Funds

Published online by Cambridge University Press:  21 March 2019

Abstract

New scholarship in American politics argues that interest groups should be brought back to the center of the field. We attempt to further that agenda by exploring an aspect of group influence that has been little studied: the role interest groups play on the inside of government as official participants in bureaucratic decision-making. The challenges for research are formidable, but a fuller understanding of group influence in American politics requires that they be taken on. Here we carry out an exploratory analysis that focuses on the bureaucratic boards that govern public pensions. These are governance structures of enormous financial consequence for state governments, public workers, and taxpayers. They also make decisions that are quantitative (and comparable) in nature, and they usually grant official policymaking authority to a key interest group: public employees and their unions. Our analysis suggests that these “interest groups on the inside” do have influence—in ways that weaken effective government. Going forward, scholars should devote greater attention to how insider roles vary across agencies and groups, how groups exercise influence in these ways, how different governance structures shape their policy effects, and what it all means for our understanding of interest groups in American politics.

Type
Article
Copyright
Copyright © American Political Science Association 2019 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

A list of permanent links to Supplemental Materials provided by the authors precedes the References section.

*

Data replication sets are available in Harvard Dataverse at: https://doi.org/10.7910/DVN/CNTPVV

References

Andonov, Aleksandar, Hochberg, Yael V., and Rauh, Joshua D.. 2018. “Political Representation and Governance: Evidence from the Investment Decisions of Public Pension Funds.” Journal of Finance 73(5): 2041–86.CrossRefGoogle Scholar
Anzia, Sarah F. and Moe, Terry M.. 2017. “Polarization and Policy: The Politics of Public-Sector Pensions.” Legislative Studies Quarterly 42(1): 3362.10.1111/lsq.12145CrossRefGoogle Scholar
Arnold, R. Douglas. 1992. The Logic of Congressional Action. New Haven, CT: Yale University Press.Google Scholar
Baumgartner, Frank R., Berry, Jeffrey M., Hojnacki, Marie, Kimball, David C., and Leech, Beth L.. 2009. Lobbying and Policy Change: Who Wins, Who Loses, and Why . Chicago: University of Chicago Press.10.7208/chicago/9780226039466.001.0001CrossRefGoogle Scholar
Baumgartner, Frank R. and Jones, Bryan D.. 2009. Agendas and Instability in American Politics, 2d ed. Chicago: University of Chicago Press.Google Scholar
Bawn, Kathleen, Cohen, Martin, Karol, David, Masket, Seth, Noel, Hans, and Zaller, John. 2012. “A Theory of Political Parties: Groups, Policy Demands and Nominations in American Politics.” Perspectives on Politics 10(3): 571–97.10.1017/S1537592712001624CrossRefGoogle Scholar
Borenstein, Daniel. 2017. “Borenstein: Backroom CalPERS Deal Piles Pension Debt on Taxpayers.” The Mercury News , January 6.Google Scholar
Brown, Jeffrey R. and Wilcox, David W.. 2009. “Discounting State and Local Pension Liabilities.” American Economic Review 99(2): 538–42.10.1257/aer.99.2.538CrossRefGoogle Scholar
Buchanan, James M. and Wagner., Richard E. 1977. Democracy in Deficit. New York: Academic Press.Google Scholar
Carpenter, Daniel and Moss, David A., eds. 2014. Preventing Regulatory Capture: Special Interest Influence and How to Limit It. New York: Cambridge University Press.Google Scholar
CBS Los Angeles. 2012. “Unions Blast Gov. Jerry Brown’s Pension Plan.” cbsla.com, August 28.Google Scholar
Clark, Robert L., Craig, Lee A., and Sabelhaus, John. 2011. State and Local Retirement Plans in the United States. Northampton, MA: Edward Elgar Publishing.10.4337/9780857930590CrossRefGoogle Scholar
Dahl, Robert A. 1961. Who Governs? Democracy and Power in an American City. New Haven, CT: Yale University Press.Google Scholar
Denzau, Arthur T. and Munger, Michael C.. 1986. “Legislators and Interest Groups: How Unorganized Interests Get Represented.” American Political Science Review 80(1): 89106.10.2307/1957085CrossRefGoogle Scholar
DiSalvo, Daniel. 2015a. Government against Itself: Public Union Power and Its Consequences. New York: Oxford University Press.Google Scholar
DiSalvo, Daniel. 2015b. “The Limits of Retrenchment: The Politics of Pension Reform.” Manhattan Institute, Center for State and Local Leadership, Civic Report No. 103, September.Google Scholar
DiSalvo, Daniel and Kucik, Jeffrey. 2017. “Unions, Parties, and the Politics of State Government Legacy Cost.” Policy Studies Journal 46(3): 573–97.10.1111/psj.12232CrossRefGoogle Scholar
Downs, Anthony. 1957. An Economic Theory of Democracy. New York: Harper.Google Scholar
Finley, Allysia. 2012. “The Democrat Who Took on the Unions.” Wall Street Journal, March 25.Google Scholar
Gilens, Martin and Page, Benjamin I.. 2014. “Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens.” Perspectives on Politics 12(3): 564–81.10.1017/S1537592714001595CrossRefGoogle Scholar
Gray, Virginia and Lowery, David. 1996. The Population Ecology of Interest Representation. Ann Arbor: University of Michigan Press.10.3998/mpub.14367CrossRefGoogle Scholar
Gregg, Katherine and Stanton, Mike. 2011. “Panel Votes to Lower Its Level of Expectation.” Providence Journal , April 14.Google Scholar
Hacker, Jacob S. and Pierson, Paul. 2014. “After the ‘Master Theory’: Downs, Schattschneider, and the Rebirth of Policy-Focused Analysis.” Perspectives on Politics 12(3): 643–62.10.1017/S1537592714001637CrossRefGoogle Scholar
Hess, David. 2005. “Protecting and Politicizing Public Pension Fund Assets: Empirical Evidence on the Effects of Governance Structures and Practices.” U.C. Davis Law Review 39: 187227.Google Scholar
Hojnacki, Marie, Kimball, David C., Baumgartner, Frank R., Berry, Jeffrey M., and Leech, Beth L.. 2012. “Studying Organizational Advocacy and Influence: Reexamining Interest Group Research.” Annual Review of Political Science 15: 379–99.10.1146/annurev-polisci-070910-104051CrossRefGoogle Scholar
Howell, William G. and Moe, Terry M.. 2016. Relic: How the Constitution Undermines Effective Government—And Why We Need a More Powerful Presidency . New York: Basic Books.Google Scholar
Jochim, Ashley E. and Jones., Bryan D. 2012. “Issue Politics in a Polarized Congress.” Political Research Quarterly 20: 118.Google Scholar
Kasler, Dale. 2015. “Questions Arise on CalPERS Investment Risk-Reduction Plan.”Sacramento Bee , October 20.Google Scholar
Kasler, Dale. 2016a. “With Investments Soft, CalPERS Eyes Higher Contribution Rates. What Does That Mean for Workers?Sacramento Bee , November 21.Google Scholar
Kasler, Dale. 2016b. “CalPERS Ratifies Lower Investment Forecast. Higher Pension Contributions Are Coming.”Sacramento Bee , December 21.Google Scholar
Kiewiet, D. Roderick and McCubbins, Mathew D.. 2014. “State and Local Government Finance: The New Fiscal Ice Age.” Annual Review of Political Science 17: 105122.10.1146/annurev-polisci-100711-135250CrossRefGoogle Scholar
Lowery, David and Gray, Virginia. “The Comparative Advantage of State Interest Organization Research.” In The Oxford Handbook of American Political Parties and Interest Groups, eds. Maisel, L. Sandy, Berry, Jeffrey M., and Edwards, George C.. New York: Oxford University Press.Google Scholar
Lowi, Theodore J. 1969. The End of Liberalism. New York: Norton.Google Scholar
Malanga, Steven. 2013. “The Pension Fund That Ate California.” City Journal (Winter); available at https://www.city-journal.org/html/pension-fund-ate-california-13528.html.Google Scholar
McConnell, Grant. 1966. Private Power and American Democracy. New York: Knopf.Google Scholar
Mendel, , Ed. 2018. “CalPERS Faces Steep Climb to Replace Its Funding.” calpensions.com; available at https://calpensions.com/2018/04/16/calpers-faces-steep-climb-to-rebuild-its-funding/.Google Scholar
Mitchell, Olivia S. and Smith, Robert S.. 1994. “Pension Funding in the Public Sector.” Review of Economics and Statistics 76(2): 278–90.10.2307/2109882CrossRefGoogle Scholar
Monahan, Amy. B. 2010. “Public Pension Plan Reform: The Legal Framework.” Education Finance and Policy 5(4): 617–46.10.1162/EDFP_a_00014CrossRefGoogle Scholar
Myers, John. 2015. “CalPERS Pay-Down Plan Isn’t Fast Enough for Gov. Jerry Brown.” Los Angeles Times , November 20.Google Scholar
Myers, John. 2016. “A New Fight Seems Likely over California’s Long-Term Pension Fund Assumptions.”Los Angeles Times , November 16.Google Scholar
Nation, Joe. 2011. “Pension Math: How California’s Retirement Spending Is Squeezing the State’s Budget.” Stanford Institute for Economic Policy Research, December 13.Google Scholar
Nation, Joe. 2017. “Pension Math: Public Service Spending and Service Crowd Out in California, 2003–2030.” Stanford Institute for Economic Policy Research, October 2.Google Scholar
Novy-Marx, Robert and Rauh, Joshua. 2009. “The Liabilities and Risks of State-Sponsored Pension Plans.” Journal of Economic Perspectives 23(4): 191210.10.1257/jep.23.4.191CrossRefGoogle Scholar
Raimondo, Gina. 2011. “Truth in Numbers: The Security and Sustainability of Rhode Island’s Retirement System.” Rhode Island, Office of the General Treasurer.Google Scholar
Randazzo, Anthony. 2014. “Pension Reform Case Study: Rhode Island.” Policy Brief, January 15. Washington, DC: Reason Foundation.Google Scholar
Ritchey, Mark and Nicholson-Crotty, Sean. 2015. “‘Blue Ribbon’ Commissions, Interest Groups, and the Formulation of Policy in the American States.” Policy Studies Journal 43(1): 7092.10.1111/psj.12091CrossRefGoogle Scholar
Romano, Roberta. 1995. “The Politics of Public Pension Funds.” Public Interest 119: 4253.Google Scholar
Rose-Smith, , Imogen, . 2016. “How Low Can CalPERS Go?Institutional Investor, November 30.Google Scholar
Sabatier, Paul A. 1988. “An Advocacy Coalition Framework of Policy Change and the Role of Policy-Oriented Learning Therein.” Policy Sciences 21(2–3): 129–68.CrossRefGoogle Scholar
Schattschneider, E. E. 1960. The Semi-Sovereign People: A Realist’s View of Democracy in America. New York: Holt, Reinhart, Winston.Google Scholar
Slosson, Mary and Christie, Jim. 2012. “California Legislature Approves Pension Reform.” Reuters, August 31.Google Scholar
Smith, E. J. 2011. “State Pension Disaster!” richardcyoung.com, May 25. https://www.richardcyoung.com/politics/state-pension-disaster.Google Scholar
Stalebrink, Odd J. 2014. “Public Pension Funds and Assumed Rates of Return: An Empirical Examination of Public Sector Defined Benefit Pension Plans.” American Review of Public Administration 44(1): 92111.10.1177/0275074012458826CrossRefGoogle Scholar
Truman, David B. 1951. The Governmental Process. New York: Knopf.Google Scholar
Vermeer, Thomas E., Styles, Alan K., and Patton, Terry K.. 2010. “Are Local Governments Adopting Optimistic Actuarial Methods and Assumptions for Defined Benefit Pension Plans?Journal of Public Budgeting, Accounting & Financial Management 22(4): 511–42.10.1108/JPBAFM-22-04-2010-B003CrossRefGoogle Scholar
Yackee, Susan Webb. 2014. “Reconsidering Agency Capture During Regulatory Policymaking.” In Preventing Regulatory Capture: Special Interest Influence and How to Limit It, eds. Carpenter, Daniel and Moss, David A.. New York: Cambridge University Press, 292325.Google Scholar
Supplementary material: Link

Anzia and Moe Dataset

Link
Supplementary material: File

Anzia and Moe supplementary material

Anzia and Moe supplementary material 1

Download Anzia and Moe supplementary material(File)
File 86.4 KB