Influential CalPERS Retiree Group Demands Resignation of Board President Henry Jones; Calendars Confirm Secret “Board Within Board” Abuse

We’ve been saying for some time that the CalPERS board has been making a credible imitation of potted plants. One of the contributors is the leadership, if you can call it that, of Board President Henry Jones, who seems to think his job consists of making sure nothing happens at board meetings. Some CalPERS beneficiaries are keenly aware of the fact that the explicit purpose of public sessions is for the board to deliberate in the open and make decisions, and have had it with Jones’ dereliction of duty.

The retiree organization, the Retired Public Employees’ Association of California, published its rap sheet on Jones’ sorry tenure and called for him to resign from the CalPERS board. We’ve embedded their letter below and encourage you to read it in full.

Even though the letter details Jones’ negligent, staff-cronyistic behavior over many years, the straw that appears to have broken the camel’s back was Jones’ failure to inform the board of the staff investigation into departed Chief Investment Officer Ben Meng’s conflicts of interests. Recall that State Controller Betty Yee, who looks to be slow to anger, was irate at being blindsided over this scandal and took the unusual step of calling for an emergency board meeting….where Jones shamefully shut her down when she asked when her issues would be addressed. Jones also illegally barred any public comment.1

The letter criticizes the many ways that Jones has undermined the board deliberating in public, as required by law, by both supporting extensive pre-board meeting briefings by staff and co-ordinating among the power faction of the board.

Former board member Michael Bilbrey described illegal the pre-board meeting briefings, which is verboten as a “serial meeting” under the Bagley-Keene Open Meeting Act. This practice dates to former CEO Ann Stausboll’s tenure, meaning it was enabled by Henry Jones as head of the Investment Committee. From a 2015 post:

Board member Michael Bilbrey unwittingly described how CalPERS as part of the routine for its regular board meetings, engages in the “serial meeting” violation. From the most recent Governance Committee meeting:

Board Member Michael Bilbrey: We have briefings for a reason. And usually in those briefings, you ask questions and questions are answered, and of course sometimes questions will come out of that between the briefing and the meeting. But when you ask questions in a briefing and are [sic] answer to those questions, I don’t understand why those same questions have to be answered again in the open meeting just because there’s two different situations. I mean, I think that’s where half of the questions sometimes come again and waste our time, when you’ve already asked them, either in the briefing or at any time, staff has made it abundantly clear if there’s ever a question, don’t hesitate to ask in whatever it may be. I think we have lots of opportunities to ask questions and they don’t always have to be in an open setting.

So the toad hopped out of Bilbrey’s mouth, that board members think it’s hunky dory to have illegal private briefings.

And before you try arguing that this practice might not have continued, CalPERS’ calendars show that the staff’s Three Stooges, Henry Jones, Theresa Taylor, and Rob Feckner, regularly meet with Marcie Frost before board meetings:

It appears someone has a guilty conscience, since “Frost, Marcie” detail has been omitted from later entries. For instance:

The reason this is inherently suspect is the only legitimate pre-board discussions that Frost could have with board members before a public meeting is to go over the board meeting agendas for particular committees. First, the composition of this regular group is not consistent with that. You’d expect to see the chair and vice-chair of the various committees, not the Board President, the chair of the Investment Committee (Taylor), and the chair of the Pension & Health Benefits Committee (Feckner). In fact, those meetings, such as Frost with David Miller and Lisa Middleton, the chair and vice chairs of the Risk & Audit Committee, are listed on the official board calendar, as opposed to relegated to the status of “private meeting”.

Second, the meetings are far too frequent to be related to committee heads signing off on staff-proposed agendas, which are almost certainly pro-forma affairs.

Even though the number of board participants is less than a quorum, and CalPERS might attempt to argue that this means these discussions don’t rise to the level of being a “serial meeting,” it is not hard to infer that the intent is to stage manage, as in limit, the deliberations during the public board meetings.

From the closing section of the letter:

More generally, we have been extremely disappointed on an ongoing basis by how you wield your power as Board President inappropriately in board meetings. You have shown yourself as eager to cut off anyone who would offer facts or viewpoints inconsistent with staff recommendations… Despite the board showing generally too little interest in fact-finding or debate, on the rare occasion when it does occur you frequently respond by trying to shut it down. When RPEA or other members of the public offer comments…. you almost always refuse to acknowledge the information and have, on numerous occasions, cut off fellow board members who attempt to enter into a dialogue….

You sit in the seat on the Board of Administration reserved to be elected by retired beneficiaries, yet you appear to be more concerned with covering-up the incompetence and misdeeds of staff than in protecting our benefits….You appear to be beholden to interests other than those of the beneficiaries of CalPERS and your recent outrageous conduct confirms this to be the case.

In other words, the governance at CalPERS has become so obviously deficient that even a normally extremely loyal and deferential group can’t stomach it. They are deeply concerned, with justification, that the Jones’ acting as the muscle for an at best incompetent and at worst corrupt staff, is a threat to their pensions. They can no longer afford to sit back and let that continue.


1 CalPERS was required to have an open session before moving into a closed session. Open sessions must alway allow for public comment. That could have been agendized to take place after the closed session, which would have allowed for CalPERS to comply with the law yet still stymied effective input (who would wait for hours for the uncertain ending time of the closed session, plus the key discussion would have already taken place). CalPERS couldn’t even be bothered to do that. Nor did it report out after the closed session as required.

00 Letter to Henry Jones
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  1. Mcw

    Pre-board meetings/briefings:

    This bad practice is rife in all aspects of private business and government down to the local government level.
    It is willful corruption and shameful. I found out about it years ago when I watched the Plan Commission members march into the hearing room as a group. When I publicly asked why, they said they meet to discuss issues prior to the public meeting. This practice has stopped here but only on this commission.

  2. Matthew G. Saroff

    Someone is making millions off of this chickensh%$ stuff.

    My guess would be the child/spouse of someone among the staff.

    It’s no secret that a half competent staffer can lead most board members they nominally work for by the nose in most organizations.

    Do you think that it might one of the Jones/Taylor/Feckner troika?

    1. Off The Street

      Becerra, nicknamed Basura, which means, take your pick, garbage, trash, waste, junk, rubbish or disposable material in Spanish.

      Shocked, or not, that Yee was treated so poorly. As the Rip Torn character in Men In Black might have said about Jones, or Basura: You’re everything we’ve come to expect from years of CalPERS training.

    2. Timh

      Could a whistleblower law be used to force action? As in, file a whistleblower complaint which has to be investigated by law and can’t be ignored?

  3. John Zelnicker

    Geez, your takedowns of CalPERS are getting to be a daily occurrence, Ida, umm, Yves.

    Keep up the muckraking.

    Ida Tarbell brought down Rockefeller’s Standard Oil, so maybe you can force CalPERS to start seriously looking out for its participants’ best interests instead of the personal interests of the individual board members and staff.

      1. John Zelnicker


        You’ve published your last two CalPERS posts late at night (here) and I’ve read them as soon as they hit my inbox. I look forward to the continuing tragi-comedy as you receive more PRA responses.

        I await your next CalPERS missive with bated breath.

    1. Samuel Conner

      Wonderful work, Yves. I hope that many others follow your example. Perhaps the collapse of professional journalism can be mitigated.

      Yesterday it was suggested in comments that there are probably CALPERS employees among NC readership.

      I’m reckoning that increasingly, there will be CALPERS beneficiaries among the annual fund-raiser contributors. One could think of it as a diversification strategy.

  4. juno mas

    Ms. Frost, like Mr. Trump, is wholly unqualified to lead. Being overwhelmed by the knowledge and experience needed to operate within the rules, they make it up as they go along.

    Henry Jones is Marcie’s Mitch McConnell. So whom is the CalPERS version of Bill Barr? (Rhetorical question.)

  5. ALM

    Here is Henry Jones’ reply to my recent complaint about spectacular CALPERS governance failures i.e. Marcie Frost’s resume fraud, Frost’s failure to vet former CFO Asubonten, Frost’s failure to ensure compliance with conflict of interest rules re former CIO Meng, and the crackpot decision to go hard into private equity an private debt. As you can see, Jones’ response is evasive, misleading, and not at all not serious.

    “Thank you for your email.  We appreciate hearing from our members and welcome the opportunity to address your concerns.

    First, we chose Ms. Frost for the job because of her commitment to engaging with retirees and public employers, as well as her track record leading Washington state’s public pension fund.

    Second, Mr. Meng resigned to focus on his health and family.  He’s made this clear in public statements.  While Mr. Meng advocated for more private equity investments, it should be noted that CalPERS has been investing in private equity since the early 1990’s, well before Mr. Meng was our Chief Investment Officer.

    Furthermore, our private equity investments have been our best performing asset class over the long term, with 10-year annual returns of 10.4% and 20-year annual returns averaging 7.5%.

    While I appreciate you taking the time to express your concerns, I believe the facts that I have provided are important for our members to know and understand. I hope these facts offer some reassurance to you about the operations of CalPERS and the oversight of our Board.

    Please know that our Board and our CalPERS team are focused on protecting the retirement and health security of you and all our members.

    Henry Jones
    CalPERS Board of Administration”

    1. vlade

      First – verifiable lie. She did not lead WS public pension fund.
      Second – most likely lie, you do not resign over health and family reasons overnight – if for nothing else, you need to hand over so unless you’re on your death bed, it’s massively irresponsible.
      Third – Is it “book value” returns, or cash returns? No returns exist until and unless they were realised, or can be realised reasonably quickly.

      Summary – out of three “facts”, one is an outright lie, one is a likely lie, and the third is unverifiable at best.

      1. EoH

        Boilerplate – inclusive of easily proven lies. That takes a lot of chutzpah and a lot of arrogance.

        You don’t hire a CEO because she “commits” to working with retirees and their former public employers. You hire her because she has a proven track record of doing it. You might hire her because she had managed Washington state’s public pension fund, but she didn’t. If you hired her for that reason, it would be cause to fire her.

        If Meng had resigned for health and family reasons, he would have taken care to keep his reputation and health insurance intact. He harmed both by leaving precipitously.

        Jones’s description of CalPERS’s record with PE seems iffy. If accurate, it seems unlikely to describe future performance. Focusing on performance avoids dealing with how CalPERS has worked to cut its board’s ability to oversee its PE investments.

    2. Abe Baily

      His response to the RPEA letter was even more vague and added some name calling and “us/them” name calling and rhetoric. Should you pursue this further please hammer him on receiving/needing near half a MILLION dollars to run for a seat on the Board of Ad of CalPERS for which he was the incumbent from an active employee union (SEIU) the president of which has publicly praised the “private equity & debt investment” plans.

  6. vlade

    It’s good that beneficiaries are up in arms, as it’s likely the only way a change can be affected, as they could be a powerful voting bloc in any Cal elections.

  7. PlutoniumKun

    There is a striking arrogance to so many Calpers actions. This only in my experience occurs when the main characters are either delusional about their own position and status (this type generally get taken down eventually), or if they feel so secure that nobody can touch them that they genuinely enjoy displaying their immunity.

    A longer term issue of this type of rot is that it tends to attract the flies. Years ago I worked in consultancy in the UK at the overlap of public/private and regulatory bodies. I recall my boss at the time turning down potentially lucrative work involving one (notoriously sloppy and corrupt) local authority because, as he put it, it was a waste of time and money doing months of work on a project, knowing that it could all be thrown away in a moment because of some backroom deal on a golf course. Even if my company got paid, he considered it too reputationally damaging. My boss at the time advised all his clients to steer clear of them, unless they were willing to get their hands dirty too (some did of course, but that was their business).

    Reputations spread rapidly in any professional community. I doubt that there are many straight dealers right now willing to deal with Calpers. This only makes things worse as time goes on.

  8. Clive

    A Board has one purpose: oversight. If a Board isn’t allowed to, or isn’t seeking to, provide that degree of challenge, curiosity, observation and second-opinion’ing then it is merely window-dressing and wasting everyone’s time. CalPERS Board (certainly the pet, tame Board-within-a-Board faction) seems to think its job is to be like some sort of weird anti-Board — a counterpoint to any serious independent review of staff strategy and staff actions.

    Institutions with this kind of showmanship, lackey Boards are always — often unbeknownst to the stakeholders — in a one-foot-in-the-grave parlous condition. They might look superficially alright, but they are doing stupid things and no-one is around to tell them they’re being stupid.

    CalPERS Board (with some honourable exceptions): You are not there to have tea and cake with the staff, to be their bestest friends and to avoid any unseemly disagreements by stitching up decisions in advance.

    CalPERS Beneficiaries: If you think CalPERS funding is problematic now and are worried about your retirement security, just wait ’til you see what will be the situation in five or ten years’ time when dumbass staff mismanagement has wrecked CalPERS still further. Get a Board in place which truly has your interests at its heart.

    AG Becerra: I know you’ll be straight on to this, no shilly-shallying, no sir-ee, no, definitely not. Just a hint of advice in case you’re tempted to leave it ’til you’ve had coffee first, while you might think that Gruesome Newsom is just keeping your seat warm at the Governor’s Mansion, be aware that when — and it is a when not an if — CalPERS causes some serious bad news, the voters might wonder what, exactly, you were doing to stop the rot promptly. Just a thought. I’ll leave that with you.

  9. The Rev Kev

    Well this is embarrassing. So Henry Jones, Theresa Taylor, and Rob Feckner, regularly meet with Marcie Frost before board meetings. I guess that it is to set the agenda of what is allowed to come up and what isn’t. But if anything comes up that is too embarrassing, then Henry Jones is ready to jump in and turn any public meeting into a confidential meeting. I wonder if a board member is allowed to put a recording device on the table to record what is actually said then. Are minutes kept of a meeting closed to public comment? Or are they confidential?

    A successful entity is one that solves problems as fast as they appear but it appears for CalPER’s Board that they are having more problems stack up than they know how to deal with. In panic, they are reacting with gross errors and illegalities which puts individual Board members in future legal hazard. Whatever plans they had with Meng leading the way at the beginning of the year have turned to ash and with the “CalPERS Capers” starting to attract nation-wide attention, they are really starting to box themselves in. I wonder if they realize it yet? That the can they they try kicking down the street has turned into a cu-de-sac? I have a feeling that there is a lot more to come out and I do not think that we will have long to wait.

    1. Bob

      ” I have a feeling that there is a lot more to come out and I do not think that we will have long to wait.”

  10. voteforno6

    I have a hard time believing that people this stupid will be able to cover up their misdeeds forever.

  11. flora

    In other words, the governance at CalPERS has become so obviously deficient that even a normally extremely loyal and deferential group can’t stomach it.

    It’s an important step when retiree organizations, not just individual retirees, begin to question and challenge the board’s actions. Hard for the board to hand wave away their questions.

    Thanks for your continued reporting on CalPERS, PE, and pensions.

  12. Andy Silton

    Kudos to NC for outstanding and detailed reporting on the complete breakdown in the governance structure of CALPERS. We’ve had a similar experience in North Carolina, although our public pension is governed by a sole fiduciary. Our Staste Treasurer has been in complete violation of his own investment policy for three years and there hasn’t been an article in the local or financial press, a legislative hearing or inquiry, or an investigation by anyone in the executive branch of North Carolina government. At present our Treasurer’s actions have cost the state $3 billion from his attempts to time the stock market. Just as with CALPERS there’s no apparent remedy other than a blogger calling attention to the issue.
    I deeply appreciate Yves’s tireless efforts.

    1. Wukchumni

      When a little bit of chicanery and fraud is visible, there’s usually much more under the surface, and yes Yves doggedness in the matter has brought much to light, not to the delight of the perps.

      In the end Californians who were counting on the money being there, are the ones that’ll get the shaft.

      It’s better they find out sooner than later…

  13. Donna Snodgrass

    Henry’s response so far is to blame his opponent in the last election for spreading lies because he lost. As far as I know, Henry has not contacted the president of RPEA, who wrote and signed the letter, at all.

    1. RalphR

      So CalPERS. Smear people who provide detailed evidence of oversight failures and possible corruption. And refuse to clean up their conduct.

      Trump may be good enough of a huckster to pull this off, but not anyone in this clown show.

    2. ChrisPacific

      Fear not – Henry plans to deal with this by reading the letter out in closed session. After that anybody who ever mentions it again in a public forum will be sanctioned for breaching board confidentiality.

      (This applies even if the individual mentioning it was not actually in the closed session, as it will be assumed that Margaret Brown leaked it to them).

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