CalPERS’ Election Rigging: Pushing for Most Costly, Insecure Online and Phone Voting Despite Abject Failure, Why? To Help SEIU Influence Election

CalPERS gave another display of its signature brazenness and dishonesty on Tuesday at its Finance and Administration Committee meeting. Then, the staff presented to the board their proposals for how to conduct the next set of board elections.

Even though the security and accuracy of voting methods has become a regular news topic, thanks to worries about Rooskie hacking and fiascoes like Iowa caucus app meltdown demonstrating the risks of Internet tabulation, CalPERS’ staff served up nonsensical justifications for doubling down the failure of having phone and Internet voting along with paper ballots. The rationale for this much more costly approach was to increase participation, when the reverse has happened, with turnout continuing to slide. To add insult to injury, the new methods are also more tamper and manipulation friendly. For instance, the Internet “channel” has no paper trail.1

Yet the subcommittee voted to stick with a newfangled turkey rather than revert to a cheaper and more successful approach. The full CalPERS board is set to approve or reverse the Finance and Administration Committee today.

Despite going through the pretense of having formal criteria for evaluating which approach to prefer, it’s clear the real driver is to help union leadership to influence the elections. Union leaders were clearly behind the CalPERS decision to add these insecure methods; Operations Chief Kim Malm even thanked the two union officials who have long had considerable clout at CalPERS, Dave Low of CSEA and Terry Brennan of SEIU, for their help in getting the additional methods approved.2

As we’ll show, the staff presentation and many board member remarks were nonsensical and even blatantly dishonest. They added up only when SEIU California’s Terry Brennan cleared its throat in public comments, pushing hard for current methods to stay in place and contending that CalPERS needed to throw even more money at them than in their forecast, when sticking with the bad new normal pencils out at $8.5 million versus $5 million for going back to paper ballots only.

Brennan tried to present online voting as a success when the percentage of online voting was 34.7% in the 2018 election, which had the pathetic turnout of 6.4%, and a mere 16,200 votes. The next year, in the ugly and bitterly contested 2019 election, online voting was only 17.4% of the 117,600 votes cast, a lower ratio than in 2017 and 2018 elections.

To the extent that Brennan has a bona fide claim, his argument is that “restricting access” to voting will reduce turnout. In fact, three years of CalPERS’ experimentation, including ever-more aggressive outreach, shows the reverse, that these additional “channels” cause voter confusion and among the ones who can parse the now-demanding ballot package, complacency about voting. Both lead to fewer votes being cast.

SEIU wants them to assure that CalPERS board seats remain under their, as opposed to beneficiary, control. That’s why they poured unprecedented amounts of dark money into the retiree election last fall and even ran a phone bank out of New York, despite the fact that this seat has never been one of “theirs”. Only a trivial number of CalPERS retirees are active union members.

History of CalPERS’ Election Chicanery

For those of you new to this sorry tale, in the 2017 board election, CalPERS changed its voting method for the six board members (out of a total of 13) elected by various beneficiaries.

Since the mid-1990s, CalPERS used voting by mail. That change was forced on CalPERS to keep the heavy hand of union pressure out of CalPERS elections.

Until the 1994 board election, the unions were able to exercise a great deal of influence over the vote. Ballots were distributed at work, either by the shop steward or with the steward close on the heels of the responsible party, telling voters who they should pick.

A court ruling invalidated this procedure and forced CalPERS to implement mail-in ballots.

The unions, led by SEIU, are now seeking to turn the clock back and reassert control over the election.

For the 2017 election, CalPERS added voting by phone and voting by Internet. The ostensible purpose for introducing these new ways to vote was to increase turnout. You can see how well that has worked:

Another, not explicit rationale but one that the board and staff kept invoking was “because technology” as in more must be better. That has proven not to be the case. CalPERS beneficiaries have complained of unacceptably long hold times, confusing and biased instructions, and sometimes inaudible audio for voting by phone.

We also found out that at least some and likely all of the support staff for voting by phone and Internet were temps working out of their homes, which is not exactly encouraging since each temp had access to the database of eligible CalPERS members.

And the vendor had a meltdown in 2018. For hours, the since-defunct vendor Everyone Counts was locked out of their own voting data:

Showing that CalPERS is concerned this sort of fiasco could happen again, the pension fund since set a huge time buffer compared to its past timetable for report the election results. Why don’t they get a better process instead? The global gold standard of hand counting paper ballots in public would take vastly less time.

Moreover, if you scroll down in this post, you’ll see a video from this tally showing that one of the election vendor’s workers inserted a thumb drive into the computer making the count. Needless to say, this how lax CalPERS is about making sure the count is done correctly…which may be the point.

So much for technology being more efficient.

In fact, as we’ve also written at length, virtually no expert regards Internet voting as secure (save the “experts” working for Internet voting firms). The State of California agrees. It explicitly disallows voting by Internet in its election code. That also means the Secretary of State has never certified any vendor for online elections.

One might ask how CalPERS gets to thumb its nose at state law. The answer is, and I am not making this up, is that CalPERS maintains it is not subject to the state election code. CalPERS is relying on the fact that no one has the energy and firepower to sue over that.

So even though the Secretary of State still certifies the CalPERS election, the certification is form over substance. If you read the text, it effectively says that records provided by CalPERS say the declared winner won, and he says he does not certify the method of voting:

Why More Voting Methods Aren’t Better

Before we turn to CalPERS’ often falsified defenses of its recommendation to carry on with insecure and big ticket voting gimmickry, it’s worth dwelling on why introducing new voting “channels” has suppressed participation.

What isn’t at all from the presentations and discussions is that the ballot packages, which were once simple, have become daunting. In addition to candidate statements, which are a staple of voting in California, plus the ballot proper, a short instruction sheet or checklist and a return envelope, the multi-channel mailer is complicated. It describes the voting options, where to log in or call in, and provides a PIN on top of the candidate statements and instructions for the mail-in ballots.

Complexity is off-putting and dampens participation.

And even for those not put off by needing to understand the options, having more choices winds up encouraging voter procrastination and misplacement of materials.

Consider: How would you behave if you knew the only way you could vote was with a mail-in ballot? If you were seriously or even casually interested, you’d make sure to either to fill it out and send it in pronto, or put it someplace where you could find it so you could send it in comfortably before the deadline.

Now think of what happens if you get a mailer that tells you that you have other ways to vote. That booklet becomes less critical. Fewer people will send the ballot back right away or make sure they keep tabs on the package.

Yet that same mailer contains the PIN needed for online and phone voting. And if you can’t find that mailer (and why not just fill in the ballot and send it back in the paid envelope if you’ve bothered to find it?), you have to call and be verified to get your PIN again. That’s a nuisance and takes time even if the prospective voter doesn’t run into long hold times.

So in fact, contrary to the image CalPERS wants to project, the need to validate votes by phone and Internet with a PIN creates friction and makes voting harder, not easier. And they create the dangerous perception that voters can wait till the very end, when that procrastination alone can lead beneficiaries to miss the cutoff. And waiting till the end means they are more likely to run into delays in getting a new PIN if they need one.

CalPERS’ Strained and Dishonest Justifications for Failed and Costly Voting Methods

CalPERS continued in its bad habit of trying to sell big lies. And the board too often is too clueless or too cowed to take issue with them, with Betty Yee a noteworthy exception, but disadvantaged yesterday by having to speak from the floor (Yee is not on the Finance and Administration Committee) and thus not being able to offer motions or vote. She was refreshingly direct:

Board Member Betty Yee: I’ve been troubled by this conversation because it’s all being framed within the context of cost savings and I think it really should be framed within the context of improved voter participation. And from that perspective and given kind of the context in which we’re all operating in terms of voting methods, I guess I would concur with Ms. Brown and Mr. Perez that I think moving away from mail-in ballots is a real mistake at this point.

Admittedly, some of the misleading staff arguments were merely artful data cherry-picking. Dallas Stone, a deputy to operations chief Kim Malm, flogged, as SEIU’s Terry Brennan later did, the relatively high level of online voting by public agency employees in 2018. That was 5,600 votes when CalPERS has 1.9 million beneficiaries. The fact that a small subpopulation is amenable to online voting and made even greater use of it in the 2019 election does not mean you can generalize that propensity to beneficiaries as a whole.

But then Stone showed CalPERS’ true cards, trying to argue that the cost saving method of eliminating the ballot package, and critically, the candidate statement, would improve participation. This claim is an insult to intelligence. Mailed candidate statements are required for California state and local elections. The idea that people will be more likely to vote when CalPERS makes it harder to make a decision by forcing them to go online to search and find a candidate statement is ludicrous.

Kim Malm started fielding questions, and the truthfulness of the responses took a dive. From the rough transcript:

Finance and Administration Committee Chairman Theresa Taylor: And then second, my second question, second question was on the Internet votes, I know we’ve talked about this before, is there a paper trail that can be created?

Operations Support Services Division Chief Kim Malm: So the vendor handles this entire election, right, CalPERS does not. And they have, are required to have auditable trails and they’re not audits performed by CalPERS but CalPERS can request an audit of the election and that third party would then have to come in and do an audit of their election process.

Taylor: So they have some kind of trail.

Malm: Yes, and certified by Secretary of State and they have – that one.

Help me. There is no paper trail. And Malm has zero idea of what if anything the vendor could provide to substantiate its Internet votes in the absence of one. Ditto the phone channel. The contract doesn’t specify what is needed to satisfy an audit, so all it does in practice is allow CalPERS to root around in the vendor’s underwear. There’s no basis for thinking CalPERS would find reasonable substantiation.

And as for the certification, that’s flat out false. Board member Margaret Brown cornered Malm and got her to admit that the only certification the vendors had was for ballot printing, which is irrelevant to running an election.

There was also the peculiar addition of “sustainability” as a criterion as another argument against mail-in ballots. Margaret Brown pointed out that getting rid of the other channels would allow CalPERS to reduce the size of its mailer, and CalPERS could also use recycled paper.

Malm also blathered on about non-existant “accreditations” from the Department of Defense, and we shredded those claims earlier. Or you can read The Internet Is No Place for Elections from the MIT Technology Review, which points out that vendor use of terms like “military-grade encryption” are red flags that suckers like Malm fall for, demonstrating how out of their depth they are.

As CalPERS-watchers know too well, the giant pension fund’s big problem is its lack of adult supervision. The general counsel to the previous Secretary of State has told us his boss would not have certified a CalPERS election with Internet voting. But the incumbent, Alex Padilla, is all too willing to let CalPERS have its way. Similarly, most board members are all too willing to abdicate their jobs and let staff call the shots, and ones who are responsible enough to take their fiduciary duties seriously, like JJ Jelincic and Margaret Brown, are on the receiving end of abuse and smears. For an institution with a history of corruption, the rejection of transparency and integrity is a great way to assure another round of institution-endangering scandals.3


1 CalPERS staff points out that its contract with its election vendor calls for CalPERS to be able to audit the election results. However, CalPERS has claimed that it does not receive vote by candidate by voting channel, which is a bare minimum metric to check for anomalies that might point to systematic tallying errors or tampering. CalPERS has maintained that it cannot get this information, which in turn indicates its election vendors have sorely deficient records. In keeping, CalPERS’ past Internet vendors have said they don’t have a paper-based backup, which experts regard as essential to assure the accuracy of Internet voting.

2 From a 2017 post:

Consider this section of a transcript from a CalPERS board meeting in August 2016, when the first version of the change in CalPERS voting procedures was presented to the board (emphasis ours):

Operations Support Services Division Chief Kim Malm: At this time, I’d like to take a minute of personal privilege, Mr. Chair. I’s like to thank the staff that have worked really hard on this over the last couple of years. Anthony Martin, Christina Nutley, Nina Dinsdale, and Dallas Stone from my staff. Also Erin Lopez and Renee Salazar from the Legal Office, and also Public Affairs. We would not have been able to do this without them, in addition to the constituents that have been extremely supportive over the last couple of years. And especially Dave Low and Terry Brennand who kind of got this in front of some people – important people to help us push this forward. So I’d like to say thank you to all of them, in addition, of course, to my Executive, Doug Hoffner and the Board.

3 I’m late to debunk Board President Henry Jones’ counterfactual claim that he supports transparency.

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  1. The Rev Kev

    First off, I would like to thank CalPERS for waiting all the way to February before all their usual flakiness and skullduggery merited an article on them. That must have taken a lot of restraint on their behalf. Kudos.

    Over the past year I have seen a few videos on how elections are carried out in California which is why Bernie will have to watch his step over the next two weeks there. Rather than being the usual case of CalPERS b******* at work, I think that I am beginning to see a bit of cross-fertilization between CalPERS and California itself.

    The key here is the name of the man that validated – kinda – CalPER’s election, one Alex Padilla. An honest public servant would have given CalPERS a roasting and tossed the results of their hokus elections as being the result of broken election laws but he passed it anyway but left himself a CYA by saying that he did not strictly endorse their election methods.

    A little over a year ago there was an article talking about him wanting to push electoral reforms and then proceed to make them a national model for democrats to push. He says that he wants to push security and openness in elections but that is the opposite of what is happening with CalPERS. So what I am trying to get to is whether CalPERS is being used as a test-bed for some of Padillas’s ideas on how to rig elections for the Democrats. And this explains the political cover they continue to receive-

  2. flora

    My long-time experience with large, state government bureaucracies tells me they never, ever admit making mistakes. However, to back away from or correct a mistake or bad process, they wait at least a year from the time the bad process is exposed as bad, then take up a new course as if the old process had never existed. Well, ok, saving face and all that. Course correction onto a better process is welcome.

    But, when a govt bureaucracy not only does not change course when shown the mistakes and inherent badness of a process, and instead doubles down, there’s more than ego or face-saving going on, imo. There’s open disregard of the voters, and very likely high-level corruption at work.

    Two Boss Tweed quotes come to mind:

    “I don’t care who does the electing, as long as I get to do the nominating.”
    “The appearance of the law must be upheld – especially when it’s being broken.”

    Thanks for NC’s continued reporting on CalPERS, pensions, and PE.

  3. David in Santa Cruz

    The CalPERS staff presentation showing that voter turn-out has been successfully suppressed is a feature, not a bug. High-fives all around!

    As the comments above allude, Follow the Money. CalPERS has been systematically looted over the past 15 years, as has been made obvious by the fund’s abject failure to recover from the 2008 Global Financial Crisis. Governance by a captured and blinkered board has become nothing but a cover-up of the gross under-funding of CalPERS via obfuscatory accounting, unrealized losses, and shameless propaganda.

    The mechanism for the looting of the fund has been the steering of investments to politically-connected/lobbyist-adjacent real estate developers and private equity investment advisors, who then facilitate kick-backs via political contributions and captive charitable donations to those ostensibly in charge of governmental oversight at the state and federal levels. It was quite evidently CalPERS money skimmed through this mechanism that “Turned Orange County Blue.”

    While the unions are complicit in the cover-up of losses and under-funding, at least their leadership’s motives can be seen as somewhat altruistic: if CalPERS losses were to be made good by the state government, union members in both state and local government will likely never see another pay raise for the rest of their working lives.

    People used to go to prison for this sort of thing, but CalPERS has become yet another example of the culture of elite impunity that has rotted the rule of law in America.

  4. Bob

    Where there is smoke there is fire –

    And the smoke is the continued mismanagement of CALPERS. It is CALPERS hiring of a flawed barely competent Ms. Frost. It is the continual wrangling of elections.

    Isn’t time to follow the money ?

    There are very questionable investment strategies principally those using dodgy investment strategies.

    And so there are a series of sweetheart deals with investment firms who make a ton of money.

    The real question is where do the sweets go ?

    To the investment firms of course. However a hard look at whom the investment firms support will be an interesting enterprise. Are the investment firms bankrolling certain politicians ? Are they donations to certain labor organizations ? Are certain State official being supported with “campaign donations” ? Are any of the various and sundry contractors providing givebacks?

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