One of the reasons we’ve had insight into what CalPERS is thinking is that it has an internal news site that it curiously has not password protected, as you’d expect, particularly given how it operates.1 Historically, we found it useful not only because it gave us insight into what the Office of Public Affairs (PAOF) deemed newsworthy for staff and the board, but also because it regularly featured investment-related articles from subscription-only site like Private Equity International. In other words, CalPERS has been publishing copyrighted material for years when it is unlikely that it has obtained site-wide subscriptions.
Why are we so confident in our view? Because CalPERS in the past would post entire articles from Naked Capitalism when our work is copyrighted. We are very restrictive in who we allow to republish our work. CalPERS never sought permission to use our work and was thus violating our intellectual property rights. We didn’t complain at the time because CalPERS has fewer than 3000 employees and we were impressed that they were willing to let employees see critical articles.
And we are far from alone. For instance, we’ve embedded an article from Private Equity International which as of this writing, was still on CalPERS’ internal site. As you can see if you Google the headline, or click here, that article is for subscribers only.
CalPERS’ Daily News Summary also regularly reproduces articles in full from the Wall Street Journal, as you can see from the next two embeds. The second embed presents the summary for June 8, which has three articles from the Journal listed, as you can see on pages one and two (if you move your cursor to the very bottom of the document, the navigation bar appears). If you clicked on the links on the site, you get the complete text, as you can see in the third embed.
While we didn’t ask the Journal how much a site license would cost, Babson College, which has a bit more than 3000 students, asked in 2011 and found the price would be over $100,000. The Wall Street Journal has raised prices since them, become very restrictive about access to articles, and has also introduced an additional price tier, “WSJ Pro”. And prices for academic institutions are often lower than for other organizations. However, we gave the Journal the background and asked if CalPERS had a license that would cover all its employees and board members (and whatever riff-raff like former employees, that knew how to access the news pages). The response was that they were “not able to comment on this.”
Moreover, sites that do not have subscriptions want readers to view their articles on their site, not have third parties misappropriate them. Virtually all of sites that CalPERS links to regularly, such as the Sacramento Bee, Los Angeles Times, New York Times, Washington Post Orange County Register, Washington Post, Mercury News, Chief Investment Officer, Reuters, and Pensions & Investments, run advertisements just as Naked Capitalism does. Taking eyeballs away from them deprives them of ad impressions, meaning income. It also artificially reduces the number of page views they receive. Prospective advertisers evaluate publisher based on their level of traffic and reader demographics. So CalPERS is also ripping off non-subscription sites.
The reason we’ve decided to expose this service is that CalPERS has become so bunkered that its news summary has descended into internal propaganda. It’s one thing to stop featuring our work, as CalPERS did as of late 2015, after we ran two series criticizing CalPERS private equity program (they did feature some of the posts from that series, as you can see below, but it seems to have been the last straw). It’s now omitting unflattering major media stories. Apparently consistent with its aim of presenting only CalPERS-friendly news, it’s gone silent on private-equity-related topics.
For instance, as the fourth embed below shows, CalPERS didn’t feature the May 22 Wall Street Journal story, ONLY ROBOTS CAN TALLY WHAT THE LARGEST U.S. PENSION FUND PAYS IN FEES, even though CalPERS was the focus of the piece (non-subscribers can read our post here to get the gist of the story). It also left out the May 19 Journal article, Critic of Wall Street Fees to Leave Calpers Board (see here for a summary).
Another issue is that having this service is inconsistent with the board’s stance on Bagley-Keene Open Meeting Act. Board members have repeatedly criticized JJ Jelincic for sending links to news articles by e-mail to fellow board members. Bagley-Keene prohibits state agencies from holding meetings privately, except as specified by law. Even then, the matters discussed in private must be put on the agenda and the legal authority for the private discussion cited. E-mail can serve as a venue for having a prohibited private discussions of matters before the CalPERS.
However, the purpose of Bagley-Keene is to make sure that public bodies don’t deliberate in private. Sending news tidbits around isn’t the same as having substantive discussions. Yet Jelincc has been criticized for just that, repeatedly, even though a member of the attorney general’s office stated that sending articles to board members is informational, not deliberative, and hence is permitted,
If CalPERS really believes the line it is taking with Jelincic, as opposed to is just using Bagley-Keene as another “any stick to beat a dog” approach with Jelinic, it needs to bar the board from accessing the news summary. And it might help if it walked its talk on a lot of other fronts too.
1 No, JJ Jelincic has never sent us the link to this site.CalPERS PE International story
CalPERS News Summary June 8
CalPERS June 8 WSJ story
CalPERS 5:23 news summary