CalPERS continually makes headlines because of management problems, outright misconduct, and scandals. Such events tend to drive changes in state pension policy. Sadly, the headlines are continuing, to the indirect detriment of UC's pension system. See below:
THE STATE WORKER of Sacramento Bee
CalPERS board violated open meetings law, judge rules. Ex-board member wants more information
Wes Venteicher, 5-9-22
The CalPERS Board of Administration violated California’s open meetings law when it excluded the public from a discussion two years ago related to the exit of its former investment chief, a judge ruled last week. The retirement system’s board held a closed-session meeting in August 2020 after the sudden resignation of former Chief Investment Officer Ben Meng. Meng quit after someone filed a conflict-of-interest complaint over his personal investments in Blackstone, a private equity firm in which the pension fund also was invested. A notice published by the board said the meeting, held 12 days after Meng’s resignation, was closed so board members could discuss a “chief executive officer’s briefing on performance, employment, and personnel items.”
J.J. Jelincic, a former CalPERS board member, requested a transcript of the meeting and other CalPERS records through the state’s Public Records Act. CalPERS denied his requests, and Jelincic sued in March 2021, saying the pension system had improperly closed the meeting and withheld records. Alameda County Superior Court Judge Michael Markman issued a final judgment in the case Tuesday, after determining nearly everything discussed in the meeting should have been held in open session, with the exception of some comments made by Matt Jacobs, the retirement system’s chief counsel.
Judge Markman ordered the retirement system to provide the transcript to Jelincic but allowed redactions of Jacobs’ comments. On Wednesday, Jelincic appealed to the First Appellate District Court of Appeal, asking the higher court to remove the redactions. “PERS has become more and more secretive, and is frequently doing policy discussions in closed session,” Jelincic said. “Quite frankly, the beneficiaries are entitled to know what the hell their trustees and fiduciaries are doing, and they should understand why they’re making the decisions they did.” CalPERS spokesman Brad Pacheco said in an email that the system appreciates and respects the court’s decision and “will factor it into our decisions about future meetings.”
Markman also denied Jelincic’s request for other records, including additional information related to a CalPERS audit that showed the system — recently valued at about $454 billion — had overestimated the value of some of its assets by about $583 million in fiscal year 2018-2019. Jelincic did not appeal that portion of the ruling.
MEETING TRANSCRIPT
In the course of the lawsuit, CalPERS submitted the transcript of the Aug. 17, 2020 meeting to the court for review. In an apparent mistake, the transcript — with redactions — was posted in a publicly visible way to the court’s online document system in August 2021. Naked Capitalism, a blog that covers CalPERS, posted the transcript online. The transcript shows the 13 members of the CalPERS board and at least six employees attended the meeting. They discussed CalPERS’ investigation into what happened with Meng, how to strengthen the system’s conflict-of-interest protections and the possibility that Meng might take legal action, among other matters.
The potential for legal action from Meng was central to Judge Markman’s decision to uphold CalPERS’ redactions of Jacobs’ comments in the transcript. Jacobs’ comments took up about 27 of the transcript’s 167 pages. Markman determined CalPERS properly redacted Jacobs’ comments under a section of the California Public Records act that allows agencies to withhold information if they determine the public interest in withholding the information outweighs the public interest in disclosing it. “The discussion itself is the sort that would be privileged and would be properly discussed in a closed session,” Markman wrote.
Judge Markman didn’t view the redacted portions himself, according to Jelincic’s appeal. The appeal argues a court must review the redacted portions before determining they should be withheld. The appeal also takes issue with withholding documents in anticipation of legal action, arguing the law’s exemption for discussing legal strategy is not that broad. In February of this year, CalPERS announced it was hiring Nicole Musicco, who most recently worked at New York private investment firm RedBird Capital Partners, as a permanent replacement for Meng. Deputy chief investment officer Dan Bienvenue filled the job in the time between Meng’s departure and Musicco’s hire.
Source: https://www.sacbee.com/news/politics-government/the-state-worker/article261195657.html.
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THE STATE WORKER of Sacramento Bee
CalPERS audit found widespread violation of laws meant to curb pension ‘double-dipping’
Wes Venteicher, 5-10-22
A CalPERS proposal to limit how many years retirees may work for public agencies while continuing to receive a pension has its origins in a 2019 audit that identified widespread violations of state retirement laws. The retirement system found violations in the use of retired annuitants at 72% of the 61 local government agencies it audited, according to a copy of the audit CalPERS provided in response to a Public Records Act request. Two dozen of the agencies didn’t report retired annuitant hires to CalPERS from summer 2014 through summer 2017, according to the audit.
At 32 agencies, retirees worked more than 960 hours per year, the limit for working at a CalPERS agency in retirement, the audit showed. Retired annuitants who exceeded the 960-hour limit have had to return parts of their pension payments. And the system has taken action to prevent new violations, including automatically monitoring their hours, spokeswoman Amy Morgan said in an email.
The audit also noted 39 agencies that employed retired annuitants for “several years.” That suggested the agencies were running afoul of the law’s requirement that such workers only be used in “limited duration” appointments, such as for emergencies. CalPERS is crafting new rules that would limit retired annuitant appointments to two years in most cases, with possibilities for extension.
CalPERS executives have referenced the 2019 audit as they hashed out specifics of the proposal in meetings. Public agencies often hire retirees with specialized skills and knowledge to help on a short-term basis with projects like long-running lawsuits or work on highly technical state equipment, such as water infrastructure. But the arrangements have been exploited over the years by “double-dipping” former public employees who retired as early as age 50 and returned to their former agency at similar pay for similar work while collecting a pension. Lawmakers have attempted to rein in the abuse by limiting the hours per year retirees may work for CalPERS agencies, prohibiting an immediate return to work and restricting what retirees may do and what they are paid. The restrictions don’t apply to private-sector work or agencies that aren’t part of CalPERS. The 2019 audit, while covering only a fraction of the 2,900 agencies for which CalPERS provides retirement benefits, suggests many were slow to comply with laws regulating the use of retirees.
RETIRED ANNUITANT VIOLATIONS
Many of the agencies with violations told CalPERS they were unaware they had to report hours, or that specific employees had been retired. Some said they didn’t know they had retired employees who worked more than 960 hours annually. When agencies don’t report hours, CalPERS can’t track compliance with the 960-hour rule, according to the audit. The City and County of San Francisco failed to enroll six retired annuitants in the CalPERS system during the three-year audit period, according to the report.
Auditors found a retiree who worked 1,016 hours in fiscal year 2014-2015, then left and was rehired as a full-time employee in another division of the agency. No one notified CalPERS, and the retiree went on to work for a total of 1,828 hours in the following fiscal year while remaining retired in CalPERS’ system. The employee worked similar hours the next two years. The division that hired the retiree was “unaware” of their status, according to the audit. The agency hadn’t checked with CalPERS since the City and County of San Francisco started enrolling new employees in the San Francisco Employees’ Retirement System in 2012, according to the audit. Four of the retirees worked for “several years,” suggesting the agency might be violating the law’s “limited duration” restriction according to the audit. It doesn’t say how many years the retired annuitants worked for the county.
When The Bee asked San Francisco’s Office of the City Administrator about the audit last week, the office referred the request to the San Francisco Employees’ Retirement System. The retirement system said in an email that it didn’t have any information about CalPERS retirees. Monterey County did not enroll and report hours for nine retired annuitants in the audit period, according to the audit. Two other retired annuitants worked more than 960 hours per year, according to the audit. The agency told auditors it had misclassified some of the retirees as temporary employees and attributed the extra hours for the two properly classified retired annuitants to other mistakes. Additionally, three retired annuitants worked for “several years,” auditors found. A Monterey County spokesman did not respond to questions about the audit.
AUTOMATIC TRACKING
Morgan, the CalPERS spokeswoman, said each of the audit findings has been “resolved,” but that auditors have not followed up at the agencies. “However, with our increased compliance and system-triggered monitoring we have more monitoring in place now than when this audit was originally conducted,” Morgan said in an email. The system now automatically tracks retired annuitants’ hours and their start dates, and investigates complaints brought through an ethics hotline, she said. In 2018, a new law took effect that fines employers if they don’t report retired annuitants’ hours, she said. CalPERS has also increased communication with employers and employees before and during retired annuitant appointments, including automated warnings to those who reach 600 and 700 hours, she said. “We have seen a significant increase in communication with employers and retirees to ensure post-retirement employment is in compliance,” she said.
Source: https://www.sacbee.com/news/politics-government/the-state-worker/article261281677.html.
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