Los Angeles Times’ Mike Hiltzik Says CalPERS Needs to Come Clean About CEO Frost’s Educational Claims

Pulitzer Prize winner Mike Hiltzik just posted a lengthy article that patiently and judiciously dissects the excuses that CalPERS has been making for CEO Marcie Frost and finds them to be sorely wanting. Please circulate his article widely, particularly to anyone in California, since the proper stewardship of CalPERS affects not just CalPERS beneficiaries, but California taxpayers generally.

From the top:

When the CalPERS Board of Administration comes together for its regular three-day monthly meeting starting Sept. 24, the agenda will include the annual performance review for the pension fund’s chief executive, Marcie Frost.

This won’t be any ordinary review. Or to put it bluntly, it shouldn’t be an ordinary review.

That’s because questions have been raised publicly about Frost’s educational experience. Frost doesn’t have a college degree, but that’s not the issue; it’s whether, when she was recruited and interviewed for her job, she misrepresented her enrollment in a higher education program aimed at garnering her baccalaureate and master’s degrees.

Key sections:

But in the announcement of her hiring, CalPERS stated that Frost was “pursuing dual bachelor’s and master’s degree in public administration from Evergreen State College” in Olympia, Wash. Evergreen is known for its unconventional approach to academics. Evergreen administrators say, however, that the college doesn’t offer a program for a “dual bachelor’s and master’s degree in public administration.”

One can get a bachelor’s degree at Evergreen, and one subsequently can apply for its master’s in public administration program, according to administrators at the school. But a single program that leads to both degrees doesn’t exist.

CalPERS officials also told me that Frost had enrolled in a “prior learning from experience” program at Evergreen, in which credits toward a degree can be earned from workplace experience. But Evergreen says that’s applicable to bachelor’s degrees only, not graduate-level programs.

Participants in the prior learning program are required to take two writing courses. CalPERS spokesman Wayne Davis says Frost enrolled in the courses in 2010 but didn’t submit any writing samples “before her career took off” in Washington and she abandoned the effort….

Davis says Frost told Heidrick & Struggles that she had enrolled at Evergreen in 2010, and still harbored the goal of receiving her diplomas. Yet if Frost inaccurately suggested at any point along the line that she was enrolled in a program that doesn’t exist, that’s a serious matter calling her integrity into question. (Even business executives with long tenures at the top and distinguished records of accomplishment have lost or given up their jobs for padding their resumes.)

CalPERS has tied itself up in knots trying to deflect concerns about Frost’s background. The fund’s communications staff say they blame themselves for any confusion. “I take accountability for what’s in that press release,” Davis says.

But that’s not an acceptable answer. It’s implausible that the communications office simply fabricated the assertion that Frost was pursuing a dual bachelor’s and master’s degree at Evergreen in 2016. More recently, the communications office has pointed a finger at Heidrick & Struggles. According to a document Webber reproduced, Heidrick & Struggles informed CalPERS in 2016 that Frost was “currently matriculated in a dual degree program” for a bachelor’s and master’s degree at Evergreen. But where did that impression come from?…

Another mystery is how the claim persisted so long in public, if it was not true. On the CalPERS website, the claim appeared on Frost’s bio page as recently as Dec. 19; the bio was subsequently revised to remove the reference. It also appeared on the archived version of the press release announcing Frost’s appointment until Tuesday, when we brought the language to CalPERS’ attention.

Hiltzik has to hew to norms of letting CalPERS have its say, plus his preferred tone is California understatement rather than New York “in your face”. But he makes clear that none of CalPERS defenses make sense and if anything, dig Frost’s hole deeper by showing CalPERS, after three weeks of dealing with press and beneficiary scrutiny, can’t come up with anything that dimly resembles satisfactory answers.

And as Hiltzik stresses, executives with far more impressive accomplishments than Frost’s were defenestrated for similar misrepresentations. CalPERS can’t try to offset her supposedly good performance (which we have argued also does not hold up to scrutiny) against lies told during and after she was hired.

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  1. Geoff

    $387k a year. I’m sure she earned every penny of that. Yup. Absolutely sure.

    And you wonder why the little people are furious…

  2. cm

    Hmm, the closing paragraph in the LA Times article states “CalPERS long has stood for good corporate governance. ” — is that why the prior CEO is in jail?

    What passes for “good corporate governance” in the minds of LA Times reporters???

    1. Yves Smith Post author

      I agree he might have unpacked it a hair more. He means that CalPERS demands good governance from the companies in which it invests. CalPERS was a leader in this arena in the 1990s, and a successful and profitable activist. It still wraps itself in the ESG (Environment, Social, and Governance) flag, even thought the Fred Buenrostro bribe-taking case should have dented CalPERS’ credibility. But as we wrote. CalPERS staged a fake cleanup that was really a cover-up, and too many people who wanted CalPERS dough weren’t about to question CalPERS’ failure to do serious house cleaning.

      1. mle detroit

        Yves, how can you write that last sentence and still argue against Bob this morning, who observed that Ms.Frost is not operating in a vacuum? Her lies are so egregious, one has to ask Cui bono? And you specialize in the tactics of Wall Street wolves and private equity fee-hunters.
        Five years ago, we in Detroit learned how that works, especially on naive union members and pension trustees. Follow the money.

        1. Yves Smith Post author

          I’m not “arguing against Bob,” I’m explaining why what Hiltzik wrote would be read by people in the finance industry and probably in CA. CalPERS makes tons of noise about its leadership in demanding high ESG standards from companies. I agree Hiltzik could have sharpened the irony in his closing remark, that CalPERS is a hypocrite on this issue.

  3. The Rev Kev

    Mike Hiltzik’s article mentions that “The board seems poised to examine Frost’s performance behind closed doors, as a personnel matter.” A personal matter. About the integrity of their chief honcho. To see if she can be trusted with the handling of CaLPERS and its $350 billion. Well, may I dedicate a song to their combined efforts then?


  4. RUKidding

    Glad to see this; hope the article has the desired effect of the Board kicking Marcie Frost to the curb.

    And please: no golden parachutes.

    Sheesh. Who gets a pass like this? Certainly would not fly in any private or public sector job that I’ve held.

    Marcie Frost needs to go… NOW.

  5. Susan the other

    This is the first time “California understatement” has been identified. I agree Hiltzik is being very kind to Marcie and the Board. Raises the question, what is really going on between Marcie and the Board? Anybody else would have resigned long ago just to preserve some integrity for the corporation. Marcie is going to bring the whole thing down. Could be another Lehman moment if they are hiding massive losses… or maybe something like a blackmail standoff. Who knows. The only obvious thing is that this needs to stopped.

    1. Yves Smith Post author

      I think Hiltizik was quite deliberate in taking this approach. He was much more pointed on the Asubtonetn misrepresentations, and he was out early on that story. Here, Frost has taken to trying to depict the press as out to get CalPERS. His tone prevents her and her allies from using that claim with him.

  6. Alan D. Wade

    The many Cal-PERS members active and retired who have at some time in their lives undergone months of anxious waiting for the results of extensive background checks have a right to be furious. As do those who struggled for years to get college degrees to qualify for jobs that paid 10% of what the PERS CEO gets–which with benefits and extras comes close to $500k.

  7. Lambert Strether

    The heavily staffed CalPERS public relations department has yet to address how Frost’s misrepresentations are materially different from those for which former CalPERS CEO Charles Asubonten was let go; and while the board opened an investigation into the Asubonten affair, it was yet to open an investigation into Frost. That seems odd. A double standard like this, if double standard it be, is not a good look.

  8. Tom Stone

    “California Understatement”…
    look at the number of lawyers in California per capita.
    Mike Hiltzik was about as tough on CalPers as the LA Times legal department allowed him to be.
    I’m finishing up my CE as a Broker, 45 hours, at least 40 hours of it is about shifting or avoiding risk.

    1. Yves Smith Post author

      No, see my comment above. It is pretty much impossible to win a defamation case in the US, particularly if you are a public figure, and if Frost or CalPERS were to sue the LA Times over his coverage, he’d be able to use discovery to get at everything Frost and CalPERS said re her background….including deposing the people at Heidrick & Struggles who worked on her hiring.

      I think Hiltzik was writing to the board and therefore needed to be as measured as possible while confirming our reporting and saying that her having a high school degree was not the issue, it was the lying, and if she lied, she has to go. Recall their “vendetta” and “spiteful” nonsense re me. Hiltzik bent over backwards not to let him be depicted as a press meanie. One insider thinks it will be much harder for the board to ignore this that it would have a more finger-wagging piece.

      1. Tom Stone

        Yves, on reflection I believe you are right and I was wrong.
        Hiltzik’s piece is likely to be picked up by a number of outlets and it does focus on the lies rather than the lack of a degree, something the AP and SacBee articles avoided mentioning.
        The tone is important on more than one level…

        1. Lambert Strether

          Lying should be enough to dismiss a CEO; there are plenty of examples. After all, if she’s lying about this, what else is she lying about?

          She’s also a perjurer, at least in the state of Washington. If the lying isn’t enough, the perjury should be.

  9. David in Santa Cruz

    Terrific work getting the L.A. Times to pick up this story. It’s amazing how this level of fraud stays under the radar as far as the mainstream media is concerned. I’m a lot less worried about the Russians than I am about the money being siphoned-off in Sacramento!

  10. ThisIsNuts

    Hiltzik’s article was printed in the Sunday Business section today, which hopefully brought the news to more retirees.

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