CalPERS CEO Marcie Frost no doubt assumed that she had managed to ride out the fact that she made misrepresentations about her educational history and work experience, going back to 2013 in Washington State, where she made false statements in her own hand on a gubernatorial questionnaire filed under penalty of perjury.
After her annual review, in which it was clear that the board decided to do nothing, State Treasurer John Ching issued a press release calling for an independent investigation. And more shoes seem to be dropping. For instance, the head of an important stakeholder organization remarked to someone who had supported investigating Frost, asking for reassurance that they hadn’t given up on getting rid of her.
As you’ll see below, the lead story in the California State University Emeritus and Retired Faculty and Staff’s November newsletter is: “Council Calls for Investigation of CalPERS CEO Marcie Frost’s Hiring.” Key section:
CSU-ERFSA’s State Council on October 13, 2018 approved a motion from its legislative committee strongly recommending that a letter be sent to all members of the CalPERS board, as well as to appropriate legislators, supporting the call of Board members John Chiang and Margaret Brown for an independent investigation of the hiring of CalPERS CEO Marcie Frost.
On page 8, the newsletter reproduced part of the public comment by former CalPERS board member George Diehr:
My name is George Diehr, Emeritus Professor at Calif StateUniversity, San Marcos; a retired member of CalPERS; and a former Board member serving from 2003 through 2014. I am here to present my concerns about the hiring of now CEO Ms.Frost.
In brief, the key issue is Ms. Frost’s misrepresentation of her education—specifically, claiming for several years that she was pursuing a program at Evergreen State College that would lead to both a bachelor’s and master’s degree. That was and is simply not true. She started 2 writing courses but turned in no assignments
from either one. She was never enrolled in a degree program there.
Ms. Frost originated this myth many years ago and repeated the claim on her application to CalPERS. The claim was posted on line by CalPERS and Board members repeated the myth to constituents. Even after she was hired she did nothing until very recently to refute or correct documents and a press release that perpetuated the myth. It seems reasonable to believe that if Ms. Frost had been truthful and completely upfront about her actual college experience she might not have been hired.
Criticism has been leveled at the original source of information about her misrepresentations—the Naked Capitalism blog— essentially charging it with “fake news.” This is shooting the messenger. The majority of NC’s assertions have been validated by Bloomberg and others. Sunday, Michael Hiltzik, a Pulitzer Prize winning LA Times journalist, wrote an article titled “Pension fund CEO’s murky hiring.” As a CSU professor put it: “Ignore Hiltzik at your peril.”
If this issue is ignored, it will return to haunt CalPERS with the next attack on public pensions—most likely when there is another downturn in financial markets.
I conclude that it is essential that a thorough investigation be conducted; and that it be conducted by an independent, external organization, not one selected by CalPERS Board, which is so heavily invested in their decision and in the CEO. In addition to the misrepresentation, the investigation should determine why,
for example, a bachelor’s degree was not a mandatory requirement as is the case with most pension system CEO searches. Given the debacle in the hiring of the previous CFO, this investigation should also recommend changes in the CalPERS hiring process to ensure that this situation does not repeat.
Editor’s Note: In spite of our and other entreaties about CalPERS CEO Marcie Frost, the Board of Administration gave her a vote of confidence at its meeting September 24, 2018, along with an $84,873 bonus. Her base pay is now $330,720. CSUERFSA, along with others, has called for an investigation into Frost’s hiring. Some of the Frost controversy seems to have been fueled by her urging the Board to approve a new organizational scheme for private equity investing, which some consider to lack accountability.
If you are in California, I hope you’ll circulate this post, or alternatively, the newsletter widely, calling attention to page 8 as well as the lead story.CSU Reporter-Nov-2018