CalPERS Reverses Itself on Its Plan to Violate California Constitution, Pave Way for Hiring Underqualified Candidate for Chief Actuary

Yesterday, we put out an alarm in a post titled, CalPERS Plans to Violate California Constitution, Pave Way for Hiring Under-Qualified Candidate, for Critically Important Job of Chief Actuary.

At 12:20 PM, which is 9:20 AM Sacramento time, I received this e-mail from Brad Pacheco, CalPERS’ head of media relations. I didn’t see it until later in the day because I work nights and then go through my e-mail box in reverse chronological order:

Yves,

I saw your post about our Chief Actuary position. I wanted to let you know that we are no longer pursuing the change to the position and the item is being pulled from the Nov. 3 meeting. The intent of the change was to help us cast the net wide in our search. We feel good about the candidate pool that we have so we are forgoing the change.

Please let me know if you have any questions,
Brad

This is certainly very good news, and thanks to you readers who contacted potentially journalists as we requested.

For those of you wondering about the timing, meaning as to whether CalPERS had requested the removal of its proposed revisions to the Chief Actuary Specification Classification from the agenda of the November 3 meeting of the State Personnel Board before our post ran, that seems unlikely.

First, under California law, notices for public meetings, including the agendas and any materials that are part of any deliberative process, are to be published ten days before the session. Admittedly, the State Personnel Board could have released its agenda earlier, but my observation of California agencies is that the usual practice is to stick with the minimum notice period (I’ve upon occasion seen CalPERS be a day late). The item had also been on the agenda of the October 6 State Personnel Board meeting and was pushed back to November. Inside sources tell me that the actuaries at CalPERS met before the original October meeting, upset at the fact that the new specifications might even allow a non-actuary to be appointed as Chief Actuary. So given the degree of upset in the department in question, it would have behooved CalPERS to withdraw the revisions sooner rather than later if that had been the intent before yesterday.

Second, the interviews for Chief Actuary started in Sacramento at 9:30 AM Pacific time yesterday….a mere ten minutes after Pacheco e-mailed me. Given that CalPERS was using an outside search firm, Heidrick & Struggles, to find candidates, and the search process has a certain degree of formality about it, the idea that CalPERS suddenly found a raft of better candidates and changed its mind this late in the game for that reason seems unlikely.

Fortunately, CalPERS corrected this mistake rather than expose itself to more media criticism.
With the investing environment as difficult as it is, and with public pension funds under even fiercer attack than before, high profile players like CalPERS need to as pure as Caesar’s wife. Hopefully the organization will act accordingly.

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7 comments

  1. Jim Haygood

    Chief actuary for Calpers … oy.

    Woody Allen submitted the best resume cover letter. One pithy paragraph:

    “More than any other time in history, Calpers faces a crossroads. One path leads to despair and utter hopelessness. The other, to total extinction.”

    Probably the candidate who rolls up a shirt sleeve to show “7% hasta la muerte” tattooed on their bicep wins.

  2. TheCatSaid

    Congratulations Yves! The timeline is clear. Your writing and NC readers make a difference yet again.

  3. Sluggeaux

    The intent of the change was to help us cast the net wide in our search.

    I’m sorry, Brad, but as I read it the change was intended to unlawfully delegate the CalPERS Board’s fiduciary obligation to be the sole provider of actuarial services to the pension system under California State Constitution Article XVI section 17:

    (e) The retirement board of a public pension or retirement system,
    consistent with the exclusive fiduciary responsibilities vested in
    it, shall have the sole and exclusive power to provide for actuarial
    services in order to assure the competency of the assets of the
    public pension or retirement system.

    This unconstitutional and illegal move appears intended to facilitate staff hiding from the public the funding deficiencies that they have created and perpetuated — and that a properly qualified actuary has been, and would be continuing to, call-out. When your former CEO is in the Federal pen for accepting bribes from another former Board member in order to steer investments into risky vehicles who have not yet had their final accountings, the need is for greater transparency, not less.

    Well done, Yves. I’m sure that Mr. Pacheco’s phone lit-up yesterday morning. There are still a few reporters left in California, and I’m sure that they were calling based on your call to action.

  4. john k

    As a beneficiary I find it difficult to understand why they wouldn’t want the most qualified person in the first place? So why lower the bar??
    So puzzling…

    1. Sluggeaux

      It is quite troubling how fast. Yves posted at 6 am EST, and Pacheco was e-mailing her “Oh, never mind, that’s not what we meant and anyway, after doing all that work to parse-out the wording we’re just dropping the whole thing!” by 12:20 pm EST. West Coast reporters probably didn’t even have a chance to read the post until 11:30 am EST (8:30 in the morning in Sacramento).

      Somebody on CalPERS staff or legal team knew that dumbing-down the Chief Actuary and taking the Chief Actuary’s reporting away from the Board wasn’t Kosher, and backed down at the first whiff of a call from a reporter. This suggests that their default strategy is to push past the edges of legality until they’re caught. Kind of a strange way to act when your ex-CEO is still in prison — unless the cover-up of losses and/or wrongdoing is ongoing.

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