My term ends in January 2018. I have decided not to run for re-election.
I originally ran for the CalPERS Board because I thought the Board was not doing its job and was too often being manipulated by staff. After eight years on the Board, I can tell you it was even worse than I realized.
I have tried my best to improve the situation, and I think I have helped do that. But in the process, I have angered some senior management and fellow Board members who are invested in the status quo. It is clear to me that this Board has abdicated its responsibilities to challenge, monitor and supervise the staff.
The CalPERS Board is responsible for managing trust funds--other people’s money--but has allowed staff to fail to properly track costs. We have given staff permission to withhold information from the Board and allowed them to have exclusive control of the information given to the Board. The Board routinely rubber-stamps staff’s recommendations without examining alternatives or the implications of those decisions.
The Board recently changed asset allocations. Why? Secret! What factors were considered? Secret! What costs were evaluated? Secret! Was the impact on beneficiaries and employers considered? Secret!
Why should Board members know or care? Because they are fiduciaries who have an obligation to act “with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with these matters would use in the conduct of an enterprise of a like character and with like aims.” (from the California State Constitution) Would you hire someone to manage your money if they couldn’t tell you what they are doing or why? I invite you to ask any Board member to identify the investment strategy within any asset class.
A new election is coming up. Please look closely at the candidates. I encourage all of you to hold the Board to a higher standard. Demand real engagement. Demand real transparency. Demand real accountability.
I thank all of you for your support over the years.