It’s gratifying to see that that Margaret Brown, who is running for the CalPERS’ board, is already rolling up her sleeves. She e-mailed the board to challenge how staff is hiding investment costs, with the probable aim of fattening staff pay. We’ve included her message at the end of this post.
Board candidate Margaret Brown’s concerns are justified in light of the way CalPERS has been playing fast and loose with executive and potentially staff bonuses.
May 26, 2017, 10:13 amMay 25, 2017, 7:33 am
...There’s a growing awareness that high fees devastate returns over time, and fees charged by private equity funds are notoriously high. There’s also widespread concern that the $2.5 trillion invested in those funds has stretched private equity valuations and thereby compromised future returns. If there was ever a time to blindly throw money at private equity, now isn’t it.
The nation’s largest pension plan has 380 people overseeing roughly $320 billion in assets. But when one of its top officials was asked during a board meeting how much in performance fees was paid to private-equity managers, he had to acknowledge no one knew.
Some critics also say the way Calpers presents the new data can be confusing. Earlier this month, for example, Calpers showed its board a chart illustrating that management fees and expenses paid for investments had fallen to $638 million in fiscal 2016 as compared with $1.04 billion in fiscal 2011.
But that $402 million difference excluded $121 million in management fees and “partnership expenses” such as legal and auditing costs, referencing these additional charges in a footnote. Calpers in a press release last week touted the drop without mentioning the extra charges.
A spokesman said Calpers will correct the press release.
“The transparency has not increased,” said Mr. Jelincic last week, the board member who first asked about the private equity data in 2015. “In fact, to some extent, it has decreased.”
BY DAN WALTERS
Over the last few decades, the once-straightforward process of fashioning a state budget devolved into duplicitous gimmickry.
Governors and legislators would paper over gaps with off-the-books loans, creative bookkeeping and deliberate falsehoods.
Posted on May 22, 2017 by Yves SmithCalPERS’ “most effective director” JJ Jelincic may be leaving at the end of the year, but he is not going quietly.
Jelicic criticized the star chamber that recently sanctioned him in his most forceful terms to date. From the Board of Administration meeting last Wednesday, starting at 4:08:
Bill Slaton has Matt Jacobs and his list of secret charges.
I have my own secret file and I’m going to share some of it with you today.
When Jon Ortiz left the Sacramento Bee, it was a great loss to the paper. Here, I have a reprint of his article from December 28, 2013 entitled “Securities and Exchange Commission looking into CalPERS stock purchases”.
What’s really amazing about this story is Misters Slaton, Jacobs and Feckner all believe it was based on my March 14, 2016 comments during an open Investment Committee. Who knew Jon was a time traveler?
How did these gentlemen figure it out?
Why do I believe they think that? I can’t tell you. The belief is based on a super-secret document. If I told you, I would undoubtedly be sent to yet another training.
On the other hand, Bill Slaton could actually come up with charges. If he did so and would make those charges public, just like he did his demand for my resignation, I would have the ability to offer a public defense.
I think it is called transparency.
There’s more bad news to come from CalPERS, the nation’s largest pension plan.
In December, the board of the California Public Employees’ Retirement System approved phase-in of a rate increase for the state and local government agencies that provide most of its funding.
But it won’t be enough to shore up the ailing system. That’s why next month the board will begin a review process that’s likely to lead to the approval as early as December of another increase.
EASTSIDER-CalPERS recently trumpeted that they got an 11.2% return on investments this year, which should make everyone feel good about their investment portfolio, even though it was less than 1% last year, and far from hitting the 7% average rate per year that they assume.
What was missing, in true CalPERS fashion, were a few “not so nice” facts conveniently buried under their claims of how wonderful they are. In a minute, we’ll take a look at a few of the glaringly obvious contretemps. But before that, a couple of tidbits yours truly gleaned from watching the videos from the June Board Meeting, a truly painful act.
Edward Siedle , CONTRIBUTOR
How hard would it be to steal millions from CalPERS, the nation’s largest public pension with $320 billion in assets? Easy-peasy.
Yesterday the Wall Street Journal reported a disturbing fact—a fact well known to pension insiders for years. That is, officials at CalPERS do not know the full extent of the fees the pension’s private equity managers take out of the pension.
...So, to re-cap the problem facing CalPERS: Private equity managers are taking billions from the pension but the pension has no idea how much. How comforting is that to pension stakeholders? You'd think that California’s largest state employee union, SEIU Local 1000 and AFSCME would be concerned about protecting the retirement assets of their members that are participants in the state pension.
...My advice to would-be criminals: If you want to steal millions, escape detection and prosecution, then set your sights on the mother of all pension honey-pots, CalPERS.
CalPERS, the nation’s largest pension fund with assets of $301 billion, invests money to pay the pensions of most California city and school employees. But it has really screwed up these investments the past couple of years, and we taxpayers will have to make up for that. For example, although CalPERS (California Public Employees Retirement System) projected a 7.5 percent rate of return, it made only .6 percent this past year and 2.4 percent the previous year. Off a wee bit, I’d say.
BY ADAM ASHTON
An outspoken member of the CalPERS Board of Administration is not seeking re-election, setting up a wide-open race to succeed him.
“I originally ran for the CalPERS board because I thought the board was not doing its job and was too often being manipulated by staff. After eight years on the board, I can tell you it was even worse than I realized,” he wrote.
April 20, 2017
Communications & Stakeholder Relations
The California Public Employees' Retirement System (CalPERS) Board of Administration approved new pension contribution rates for fiscal year (FY) 2017-18 for the State of California and school employers that are up from the prior year...
...Combined, the state and school employer's pension costs for FY 2017-18 are just under $8 billion. The state's contribution towards pensions is estimated to increase by $521 million from $5.4 billion to $5.9 billion from the previous fiscal year.
CalPERS used to set the gold standard for public pension funds in its investment approach, its integrity, and its management. A financial scandal and lackluster investment returns have eroded its reputation in recent years, but the CalPERS board better hope that no one pays too much attention to how it’s handled its latest intramural controversy if it hopes to preserve what’s left of its credibility.
For the second time in four months, CalPERS on Wednesday voted to cut pensions for a group of public workers whose former employer quit contributing to the retirement fund without making arrangements to protect their benefits.
The unanimous vote will lead to a reduction in benefits by up to 63 percent for about 200 former employees of the East San Gabriel Valley Human Services Consortium,