CalPERS Board Members Say They Don’t Want to Do Their Jobs, Can’t Be Bothered With Dealing With Their Mail

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It’s hard to believe how terrible the CalPERS board is until you make yourself watch some open sessions. The most stunning part is how they regularly and openly show their lack of interest in understanding complex issues, their willingness to cheerlead staff for merely doing their jobs, and their eagerness to escape work whenever possible.

The latest example is the controversy over the CalPERS Board Services Unit, which reports to Board President Priya Mathur (already an irregular arrangement), opening and reading mail addressed to fellow board members and reserving the right to answer it without even informing the board member.

We aren’t making that up. From an April 16 post:

Brown found out about the interception, reading, and even diversion of her mail and e-mail by accident. A constituent complained about Brown’s failure to respond to a letter he had sent in March, which Brown had not received. After Brown asked why she hadn’t gotten her mail, here was the response from a member of the Board Services unit (note that Karen Perkins is the head of that group):

From: “Ortega, Christina” <>
Date: April 11, 2018 at 9:57:12 AM PDT
To: “Brown, Margaret” <>
Cc: “Perkins, Karen” <>
Subject: RE: Member Correspondence – XXXX

Hi Margaret,
To answer your questions, we received two copies of this letter on March 22nd: one was addressed to Priya and one was addressed to you.

Following is our procedure for handling member correspondence:

* Priya reviews all correspondence addressed to board members and directs how to proceed.
* Depending on the matter at hand or the specific circumstances, emails are either routed to the appropriate program area (via the Executive) to handle directly with the member and/or a response is developed for the Board President’s review, approval, and signature.
* In either case, when the letter is forwarded to the program area/Executive, we also send it to the board members included on the letter (after redacting personal information).
* When the program area develops a response for the Board President’s signature, we send a copy of the signed response to all board members included on the letter.

It should be obvious what an outrage this is.

Brown is an elected official. It would be completely unacceptable for, say, the chairman of a Congressional committee to intercept, read, and answer mail sent to members of his committee. It is even worse in the case of CalPERS because board members like Brown are jointly and severally liable for the performance of their fiduciary duties. Mathur is thus actively undermining the independence and thus performance of board members.

On Monday, the Board Governance committee took up the matter. All the members of the committee, save Brown and the the state Treasurer John Chiang’s deputy, Steve Juarez, said they didn’t want to deal with their mail and were perfectly content to let staff deal with it on their behalf.

This is a slap in the face to all CalPERS beneficiaries and California taxpayers. For those officials that are elected (six members, by beneficiaries, plus the two statewide officials, the Treasurer and Controller), this is a firm and loud statement that they can’t be bothered with pesky constituents.

All board members who supportnot getting their mail should be turfed out at their next election. They care more about protecting their free time than doing their job as a board member.

Mind you, there is nothing to prevent a board member from giving a letter back to staff to compose a response for their review, and even to have canned letters for requests that a board member can’t get involved in, like interceding in a medical claim. Busy executives typically do fob that off on secretaries. But no competent executive would allow someone carte blanche to intercept their mail and dispose of it on their own.

But there are other reasons to be appalled by this practice:

Undermines Brown’s performance of her duties of office. Brown is a California elected official. Brown is also a fiduciary. Mathur has no legal basis for usurping her authority.

Perpetuates corruption. Less than a decade ago, CaLPERS’ CEO Fred Buenrostro and former board member Al Villalobos were indicted for bribery and other charges. Buenrostro had, among other things, taken $200,000 in cash in paper bags. Villalobos committed suicide. Buenrostro is serving a four and a half year sentence in a Federal prison. One current board member resigned and two who were close to Villalobos did not run for reelection.

So given this record of criminal conduct, it isn’t a stretch to think a whistleblower might try to send a sympathetic board member, hard copy evidence about misdeeds. Evidence could come from an insider or from an outside party that had seen improper conduct first hand.

Recall that it was an insider, Anne Stausboll, who outed the evidence of the massive placement fees that wound up incriminating Buenrostro. Stausboll at the time was Chief Operating Investment Officer, and sufficiently senior to put information in the name of transparency so as not to look like a whistleblower. Few have that luxury. Hindering the exposure of dubious conduct typically results in even worse damage to an organization when it finally comes to light, but CalPERS seems to prefer to stick its head in the ground.

Violates law against officials using public resources for campaigns. Remember the absurd sanction of Brown over her friend using a scanner without Brown’s permission? The justification was that state laws prohibit officials from making personal use of state resources.

All of the elected officials campaign periodically and have tasks related to both completed campaigns and when they are close to elections, upcoming ones. The Board Services Unit opening and reading any campaign-related mail would be a violation of the very same section of the California Government code that was used to punish Brown. Moreover, while the law clearly contemplates incidental use of government facilities, like someone visiting the office of a state official, and the unapproved use of the scanner was cost-free, the regular reading and handling of board member mails is not an accident but a deliberate, institutionalize practice that has been going on for years. So why haven’t the other board members been sanctioned for far more egregious violations of the very same provision of law?

To give a picture of how extreme the mail censorship is, Brown at 1:10 in the video below describes how she has received one unopened piece of mail so far, in five months on the board. She received three other opened pieces. Tell me how credible it is that she’s gotten so little. At a minimum, board members are certain to be targets for bulk mail like conference invites and publication solicitations, some of which could be relevant. But the staff censors keep all of that well away from the board.

To her credit, as the board committee was moving to ratify the bad status quo, Margaret Brown challenged General Counsel Matt Jacobs, who hadn’t even bothered to investigate the legality of CalPERS’ practice. Jacobs repeatedly took the strong form position that CalPERS owns all mail sent to its address.1 Brown objected at 1:07:20:

Board Member Margaret Brown: So let me start by saying I respectfully disagree with your opinion Mr. Jacobs and so does the Postal Inspector and the US Attorney regarding who that mail belongs to. You’re citing a code that refers to us as employees and we are not employees. We are elected officials and therefore we have constitutionally protected rights to that mail. So I’m just gonna say I disagree and we could have another conversation or we can have another conversation with lawyers over this.

Then skip to 1:10:10:

Board President Priya Mathur: Can you please address the first part of Ms. Brown’s comments whether you’re citing a code or with respect to the mail being owned by CalPERS and not by the individual board member, what is, what are the citation for you

General Counsel Matt Jacobs: Well I don’t have those handy.

Mathur: [over him] Okay

Jacobs:…but I’m happy to come back and if I’m proven wrong, I’m happy to change my opinion if that is the case. I’m pretty confident of it but I’d be happy to come back with it, I just don’t have it on hand.

Mathur: Okay.

By contrast, you can see Theresa Taylor, an elected official, at 1:04, saying it’s just too onerous to handle constituent mail, generalizing from her guess at what mail she could possibly receive at a completely different agency where she also sits on the board….and an irrelevant example, since she does not have a fiduciary duty in that role. And at 1:19:57. Investment Committee Chairman Henry Jones says he’s happy with the status quo, completely missing the basic point that he has no idea how much of his mail is being intercepted and answered behind his back, or just ignored, as Brown’s was.

But predictably, Adam Ashton of the Sacramento Bee ignored the real story, the appalling spectacle of board members rationalizing not doing their jobs, and tried again to spin Brown as a trouble-maker. The good news is given that most people recoil at the idea of a Stasi reading their letters, it’s hard for Ashton to dirty up Brown as much as he’d like to, given the headline the higher-ups put on his article, Stop opening my mail, CalPERS board member demands.

Ashton does present the basic bone of contention accurately, but then offers a disingenuous defense in his own voice, with no expert quote or material from the open session to back it:

Margaret Brown, the new board member, contends the practice hurts her ability to respond to constituents or hear from whistleblowers who might want to call attention to misconduct.

“If someone is going to personally address a letter to me, then I would like to personally take the time to read it,” she said.

The disagreement hinges on whether CalPERS board members should be considered independent policy makers — like state legislators — or leaders of a complex agency that might better serve retirees by steering information requests to staff experts.

Help me. Having a board member be the first to review their mail does not preclude having staff draft an answer subject to the board member’s approval, or even having a board member explicitly authorize that a specialist answer and state that the board member directed the letter to them as the proper party to handle the inquiry.

The fact that the board is unwilling to consider the logical option of letting the board member decide if they want to receive their mail to decide how to dispose of it, or fob it off to the Board Services Unit, strongly suggests that this “practice” is not to improve board member productivity but to control the flow of information to them.

Ashton disingenuously brings up the recent conflict between Mathur and Brown, when that was irrelevant to the mail discussion and even conflates it with the past excuses about restricting Brown’s access to close session transcripts, when that was a different agenda item and Ashton does not pretend to be covering that in this article (the word “transcript” is absent:

Mathur is concerned that privileged information will accidentally leak into the public domain, where it could harm CalPERS.

Help me. The safest way to handle mail is to have as few people as possible involved. Routing it all over CalPERS is inherently less secure. So pretending that this idea has any place in the mail contretemps is misleading. But that seems to be Ashton’s stock in trade.

The good news is that opening mail is such an affront (my last post on this matter garnered a large number of comments for a CalPERS matter, all seeing CalPERS’ behavior as deeply corrupt) is that the more CalPERS persists in doing the wrong thing, the more that strengthens Brown’s cred in the wider world.


1 Although I have not researched this issue in depth, the Postal Service regulations are silent on the notion of who “owns” the mail in an institutional context, so Jacobs’ formulation is almost certainly an overreach, particularly since some law firms suggest that even corporate employees could sue over having their mail opened under common law theories, such as the right to privacy and larceny.

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  1. Tony Butka

    This is total BS. If an elected official elects to directly handle mail addressed to them, there is absolutely no statutory authority for the Board President, the General Counsel, or the Tooth Fairy to interfere with their right to perform their fiduciary duties as an elected official.

    Shame on the appointees to the CalPERS Board, and a special call out to Richard Costigan, appointed by the very State Personnel Board, and Richard Gillihan, California’s Director of Human Resources. God knows what slime they are passing off on the hundreds of thousands of California’s State employees.

  2. Tom Stone

    Should this be filed under “Class Warfare”?
    Both the Board and Staff of CalPers clearly consider themselves as part of the same privileged class as Ross Mirkarimi and other officials in the State of California.
    For those that don’t recall Ex sheriff of SFMirkarimi is barred from possessing firearms due to being convicted of domestic violence…
    The SF Chronicle had a short series reporting on his violation of the law, it’s a felony.
    Laws are for the “little people” in California

  3. diptherio

    It’s beginning to seem like most all of the board members are in on….something. Why would I want to see my mail? I just pretend to be interested during board meetings and collect my paper bag full of cash every month…

  4. Clive

    CalPERS don’t track in a detailed way mail in? (one of the answers given in the footage). This is just incredulous. Any organisation of any size, let alone something on CalPERS’ scale, simply cannot have mail going missing. You need a basic procedure to track mail internally. At the exasperated reaction of stating the obvious, any piece of mail is a potentially high risk (high impact / high probability) event in-waiting.

    It could be a subpoena or other essential legal document. It could be a regulatory or other mandatory request or response. It could be a high-value check. It could be sensitive data. It could be a vital beneficiary instruction. You do not, ever, allow mail to be simply wandering aimlessly round an office or campus untracked in any way and just kind-a hope everything gets to everyone they need. You do as an absolute minimum a basic inwards / outwards count to make sure the numbers tallied at least as far as the mail drop point (a particular office floor or team). Anything other than infrequent and trivial discrepancies demand an immediate investigation.

    “Can’t get the data…”; the siren call of the incompetent and corrupt, everywhere.

    1. Jim Haygood

      Just goes to show that your second most important contact in a big bureaucracy (after your boss or chairperson) is the staff of the mail room.

      Margaret Brown needs to do some diplomacy with CalPERS mail sorters, starting with a round of donuts for all. :-)

  5. Tom Stone

    Clive, Incompetent and Corrupt pretty much describes Government in California at the State level.
    It’s a one party state, that’s what one party states are like.

    1. HotFlash

      Mr. Stone, I notice that you have said this and similar before. Do you mean that Ms Yves, Ms Brown, and the rest of us should just sit down and shut up?

  6. vlade

    If CalPERS boardmember does not want to deal with their mail, the next question should be “Do you wish to atten board meetings, or should we send someone to do so on your behalf?”

    Dereliction of duty, plain and simple.

    The problem though is (and not only in CalPers) that board places are given not to do work, but to reward (read – the perks and pay, no work).

    1. D

      Or they could do it like Texas does. nobody knows who manages it, their are noNe elected to a board.

  7. The Rev Kev

    Franz Kafka could learn something from working at CalPERS. Sooner or later there is going to an external investigation into this mob and some of the unbelievable practices going on here are not going to look good in an inquiry much less a court of law. It seems that at this point as things start to turn sour with their investment strategies that they are going all in on the behaviour that led them to where they are right now. Intercepting and opening other people’s mail has never been something that the US postal authorities have looked kindly on as an example. If it weren’t so hard on Margaret Brown I would say get in the popcorn.

    1. HotFlash

      But, are emails subject to the same privilege as postal mail? If the carrier is the USPS, I can see that mail tampering is a federal offence. But emails are carried by private companies whose dedication to client privacy is, um, notorious for its absence. I do knot know US law on this, although my guess is pessimistic.

      1. EoH

        Federal jurisdiction ends when the mail is delivered, in this case, to the corporate body. How it is handled and distributed after that is an internal matter. State statute and common laws may apply, such as privacy concerns. Policy issues seem paramount. Just not the one identified by Ashton.

  8. flora

    So then:
    No internal audit controls on incoming correspondence routing (except to forward everything to the pres and block direct delivery to addressees)?
    No internal controls on expense voucher verification (blank pre-signed voucher forms)?
    Plenty of internal controls to prevent board members doing their fiduciary job (denied access to prior board meeting records and other pertinent information unless pre-approved) ?
    What could go wrong?

    Thanks for your continued reporting on CalPERS and pensions.

  9. Matthew G. Saroff

    OK, given Bill Black’s thesis, (Paraphrasing) “If fraud can occur, it probably already has,” who the heck is ripping off CalPERS?

    It is clear to me from this crap that either someone very senior, or a large number of less senior staff, or both, are engaging in corrupt (and given California ethics laws, probably unlawful) activities.

    So, the question is: Cui bono, or more accurately (bad Latin ahead) Qui mercedem capientibus?

  10. EoH

    Board solidarity. You’d think Mathur was running the board of the Central States Pension Fund.

  11. EoH

    Ashton seems to be making sh*t up. He would know that the conflict is not about individual or corporate responsibility in setting “policy”, whatever he means by that. It is about doing a job rather than covering up not doing it.

    Answering mail sent to you in your official capacity as a senior public employee, keeping track of the concerns expressed in that mail – including opinions about whether and how well you and your peers are doing your jobs – and knowing that it is answered, when and how. These are basic responsibilities. Shirking them is not efficiency. It is about shirking responsibility. When that responsibility evolves around paying the pensions of millions of Californians, and having the resources to do so for years to come, it is not a trivial or personal matter.

  12. aa

    Why can’t she just have her mail forwarded to her house or a po box. keep it out of the calpers staff hands entirely. I would imagine that if you had something important to tell Brown, it would be wise to mail it directly to her home.

    1. Yves Smith Post author

      Mail is delivered to CalPERS’ address. The Post Office does not allow for forwarding of mail addressed to individuals at a particular address to be forwarded. They only forward for the entire business.

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