CalPERS CEO Marcie Frost has stopped presenting the giant pension’s current funding level at monthly board meetings. And instead of keeping her eye firmly on that as CalPERS’ top priority, Frost is famously obsessed with surveys and polls as a means to preserve her hold on power, so she can better tell people what they want to hear. As we’ll see shortly, this polling fetish has produced another burgundy-level affair (for those of you who managed to miss it, in a not-organic looking development, staff members took to sporting burgundy clothing at CalPERS board meetings to show support for Frost, and employees were also exhorted to wear burgundy ribbons).
Results of a poll posted on CalPERS’ intranet, “Recent ‘Today’s Question’ Poll Reveals Much About Who We Are” indeed does reveal much about what CalPERS is, and not in a good way. I’m not sure what is worse, that CalPERS employees actually spent beneficiary (and ultimately taxpayer) monies devising, implementing, and publishing this survey (with a disconcerting professional-looking layout for such a frivolous exercise), or that sheep-like employees answered its questions. In an organization with adults as workers, a survey this juvenile and bizarrely intrusive would have elicited eye-rolls, complaints, and have been binned on a widespread basis. But CalPERS wasted employee time and beneficiary money cooking this embarrassment masquerading as…I’m not even sure what….entertainment?… and even more employees squandered time answering it and even reading the results.
Pray tell, how could anyone think it made sense for CalPERS as an institution to find out if staff members had a point of view on what was the proper way to install a toilet paper roll? Or how may pillows they use when sleeping? Or whether they’d rather work for a best friend or particular relatives? Or what their diet preferences are? Just have a look. I’m not making this up.
Now I sincerely doubt Frost suggested this survey be made.1 This foolishness looks instead to be a case of acting on priorities communicated by the leader. It may also indicate that Marcie went overboard in expanding CalPERS’ PR operation and its members are having to dream up busywork to justify their jobs. The fact that Frost didn’t insist that the results be pulled down as a potential embarrassment to CalPERS is evidence she approves of this sort of thing.
Given that CalPERS’ underfunding is one of the big reasons it isn’t getting the deferential treatment from the press that it once regarded as a right, you’d think Frost and other top managers were doing everything they could to address the problem. Since many employers are having to make budget cuts to pay their CalPERS’ contribution, CalPERS ought to be belt-tightening too and cracking down on waste. Even if that type of measure wouldn’t necessarily add up to big bucks, the symbolism is important: that CalPERS recognized times are tough and is engaging in sacrifices of its own. Dedicating CalPERS resources to pointless frivolity is poking a big stick in the eye of CalPERS’ constituencies. If CalPERS execs think pick-me-ups enhance productivity, they can provide that way more cheaply: have Dow Jones add some cartoons to the Daily News Summary it is supplying as part of CalPERS copyright infringement settlement.
Frost once religiously told the funded status every month at the end of her CEO update to the Board. She apparently wanted to depict the improvement in the funded status resulting from the Trump rally as a personal accomplishment. But the funded status is the result of CalPERS’ asset allocation, and Frost has no role in setting that.
But those who live by the sword die by the sword. At the February board meeting, Frost provided only the fund asset balance instead of percent funded. Regulars in the audience noted the change and thought it awkward. As one said by e-mail, “Marcie’s M.O. is to pick and choose her data points so It must be very bad.”
This change came after the new Chief Investment Officer, Ben Meng, said at the January offsite that he estimated the then-current funded ratio at 65% to 66% .
Frost has taken to citing more flattering, dated figures, falling back on citing the June 30, 2018 funded ratio, which was 70%, both to the state legislature and last week at a retirement planning event. And that was after Jerry Brown gave CalPERS a mini-bailout in the form of $6 billion of pre-funding, which improved the funding ratio by nearly three percentage points.
Of course, given the sparkling performance of the stock market in January and February, it’s possible that the funded ratio is now close to 70% again. Yet it appears that Frost is unwilling to present any funded ratio in the 60% range. There’s no excuse for her trying to pretend that things are better than they are.
We’ve made a major issue of how Frost made significant misrepresentations about her educational attainment and other accomplishments on her resume and during her hiring interviews. One of the defenses of the CalPERS PR machine was to try to mislead stakeholders by depicting our (and later Los Angeles Times’ Pulitzer Prize winning reporter Mike Hiltzik’s) beef being about her having only a high school education. That approach was designed to insinuate that those who thought it as a lousy idea to have a liar as CEO were instead hostile to people who overcame having a limited education.
However, in calling for an investigation of Frost’s credential inflation, former board member George Diehr also questioned why CalPERS had not insisted on a bachelor’s degree as a minimum requirement, as in the norm for public pension CEOs. Dieher was on to something. CalPERS is too important an institution to run like a junior high school clique.
1 If she did, it would show I need to revise my assessment of Frost downward.stupid survey temp 3