PersWatch

Think Board elections don't matter? Think again. Recent research on pension fund governance found that better governed funds outperformed poorly governed funds by 2.5% per year! (The Pension Governance Deficit: Still with Us). Key factors included:

Selection of directors with relevant skills and knowledge
Development of a board self-improvement culture
Insulation from conflicts of interest, political and third party agendas

As we all know, poor performance adds fuel to those seeking to destroy CalPERS and our defined benefit plans. Of course, the main motivation for such initiatives is to line the pockets of money managers with the increased commissions and to reduce the effectiveness of shareowner initiatives to hold corporate CEOs and boards accountable. (See Making Corporate Governance Decisions That Work for Whom? presented at the 2005 International Conference on Corporate Governance.

CalPERS Board members are required to minimize employer contributions but the Board's highest duty is to its participants and beneficiearies. The PersWatch coalition works to improve the benefits of CalPERS members...better health insurance at lower cost; increased retirement formulas; and improved services.

PersWatch will use the Internet to keep members up to date on the issues and to actively lobby other Board members for improvements. Please join our efforts by adding your name to our growing mailing list. We'll ask you to help develop position papers, campaign and once elected we'll send you 3-4 form e-mails a year on the most fundamental issues at CalPERS.

By spending a total of approximately 40 minutes each year working on CalPERS issues, you can help ensure the Board works in your best interests. The recent increase in retirement benefits demonstrates that involvement by members adds value and results in positive change. There are still many more areas which need further improvement.

CalPERS, the nation's second largest public pension fund, is credited with creating a revolution in corporate governance by making the CEOs and boards of corporations more accountable to their shareholders. Yet, the CalPERS Board tried to adopt regulations sharply limiting disclosures to members in future elections. A Sacramento Bee editorial called the policy self-serving, anti-democratic, chilling and wrong, warning that they "risk creation of a permanent board: unaccountable, untouchable and isolated from the people who elect it." (see CalPERS muzzles critics: Ballot rules protect board, keep others in the dark, Sacramento Bee editorial, 5/24/99 )

With the help of union and CalPERS activists, we were able to defeat this draconian measure and instead won real reforms, like more informative candidate statements and a runoff process so that no candidate would ever hold office again by winning less than 6% of the vote. More recently, PERSWatch.net has been working to avoid the need for a runoff in future elections by instituting "Instant Runoff Voting," which would allow voters to rank candidates in order of preference. This could save CalPERS up to $1 million dollars by avoiding the costs of a second election.

Examples of issues raised by the PersWatch coalition:

Refine pay for performance measures for portfolio managers to award negative points for under-performance, subtracting these from positive basis points. Payments should also be delayed to ensure performance reflects market, rather than book, value. (testimony) Still working on this.
Stop the Board's illegal activities. Partial Victory.
The California Supreme Court upheld a ruling that CalPERS violated several laws in raising the pay of board members and affirmed that CalPERS rules must be promulgated through the legally required process specified in the Administrative Procedure Act. The Board continues to need reminding that it must follow the law.
Abolish mandatory Tier 2. Who can live on $650/month? VICTORY!
Give backs. Remember the $1 billion lawsuit? The Board essentially returned it, by reducing employer contributions based on the assumption that state employee wages would grow by 3.75%, even when private sector wages were growing at rate of 4.9%. We will continue to fight for gain sharing, never give backs.
Board approved a $100 million closed session deal which provided a $750,000 "placement fee" to former Board member, Al Villalobos. The deal was structured so that Hicks Muse (a partnership) could profit by $40 million a year, even if CalPERS loses money. PersWatch editor, Jim McRitchie, got the closed door minutes released. He testified before the Board and State Senate, calling for stronger laws and regulations. VICTORY!
For years members of the Board accepted gifts, such as entertainment, travel, and dinners from those doing business with CalPERS. The Sacramento Bee, L.A. Times, and Pensions&Investments joined PersWatch in calling for measures to end apparent conflicts of interest on the CalPERS Board. The Board passed window dressing rules to require further reporting. Jim McRitchie's efforts led to a determination by OAL that the rules had been adopted illegally. Unfortunately, rather than legally adopting reporting rules or prohibitions, the Board chose to revert to state law, which they interpret as allowing the flood of gifts to continue. PERSWatch will continue to fight to make gifts from contractors illegal. CalSTRS adopted fairly stringent rules. So should CalPERS.
Election fraud. During the 1998 election, an incumbent was given the opportunity to submit a new candidate statement in order to specifically respond to McRitchie's statement. The protest panel, appointed by the CalPERS attorney who allowed the election rule violations in the first place, found that although her decision was "ill-advised," the "technical violation" was "unlikely to be deemed significant by more than a handful of voters, even assuming candidate statements were widely read." We fought for reforms to make elections fair and in late 2000 the Board finally relented. A new election process was to be used starting in 2002. There was to be a runoff if no candidate wins a majority of the vote (no more 5.5% winners). PARTIAL VICTORY!

PERSWatch will work to:

Put Members First!!
Keep CalPERS financially sound
Lower insurance premiums and the cost of health care
Improve benefits, services and delivery
Institute gain-sharing of surpluses for active members and retirees
Reduce expensive contracting out
Increase COLAs and pension protection funding
Enhance health benefits by lowering the cost to members and including alternative medicine
Ban contractor gifts and campaign contributions to board members
Move dental, Savings Plus and other programs from DPA to CalPERS
Institute ombudsperson to help members work though red tape and to review improprieties
Provide an initiative process so that members can enact policies when the Board refuses to act
Make CalPERS internet site interactive so that members can express their concerns to each other as well as the Board and staff.

Let's discuss the issues. E-mail jm@perswatch.net.

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	2009 Member-At-Large Board Election J.J. Jelincic received 51 percent of the 213,744 ballots cast to narrowly defeat Cathy Hackett for an at-large seat on the pension fund's 13-member board. CalPERS distributed 1.3 million ballots to members. Jelincic will replace Charles Valdes in January. Jim McRitchie will meet with Board members of CalPERS to try and convince them that all future elections should include at least one candidate's forum sponsored by CalPERS. PERSWatch spent hundreds of dollars this year to ensure members had an opportunity to meet the candidates in a neutral setting, where each could be asked the same questions. CalPERS first allowed us permission to hold the forum in their auditorium, then refused, then allowed it but at a substantial fee plus high insurance requirements. Were they expecting a riot? We held the forum elsewhere but not all candidates were able to attend... Mr. Jelincic did. We were able to get Mr. Jelincic and Ms. Hacket together in one forum later during the runoff. Both were heard on Jeffrey Callison's show, Insight, on November 16th. The official results of the runoff election, certified by the Secretary of State, will be posted online in January 2010. With our encouragement, both candidates agreed to appear on Jeffrey Callison's show, Insight, on November 16th. Listen on the internet at http://www.capradio.org/programs/insight/. (Look for Nov 16 under "Recent Shows" on the left.) The CalPERS portion runs about 17 minutes and starts about 12 minutes into the show. We will continue such efforts in future elections and hope candidate forums and radio interviews will become a routine part of campaigning. For the first time in many election cycles, James McRitchie, the publisher of CorpGov.net and PERSwatch.net, is not endorsing any candidates. I felt I could play a more productive role by encouraging dialogue with the candidates and objectively reporting on their responses. The current election is for the two at-large seats, elected by all 1.6 million members of the System. (see CalPERS announcement) Eligible active and retired members who did not receive a ballot should contact the CalPERS Board Elections Office at (916) 795-3952 or (800) 794-2297 to request a replacement ballot. PERSWatch surveyed the candidates. Download a pdf that includes their responses to ten critical questions, as well as contact information for each candidate. VoterMedia.org provides links to other sites and blogs covering the CalPERS election. At VoterMedia.org you can vote for the websites/blogs offering the best information on the election and you can e-mail them to add websites/blogs. We hope you'll consider taking the time to vote for PERSWatch as providing the best coverage of the CalPERS election. "California Foundation for Fiscal Responsibility" in in the signature-gathering phase of a measure to cut CalPERS and other public pensions dramatically. Please ask your friends and neighbors not to sign. CalPERS Responds offers a good start in separating fact from fiction—about issues related to pensions, investments, and national health care reform. Candidate Forum PERSWatch.net and the Sacramento Bee co-sponsored the first ever CalPERS Candidate Forum on the evening of September 2, 2009 in Sacramento at the Dante Club. Download a press release on the event with all the details. View highlights of the CalPERS board candidates forum with questions from Ginger Rutland and Dan Walters of the Sacramento Bee. CalPERS is believed by many, and for good reason, to be a paragon of virtue with regard to its advocacy of good corporate governance. Yet, their own election process has long been criticized as making it nearly impossible to unseat incumbents. At one point, the Board voted in favor of regulations prohibiting criticism of the Board in candidate statements, which were to be strictly limited to biographical information. Until recently, Board members were elected on a plurality basis, so candidates could win with as little as 5.5% of the vote in a large candidate field. PERSWatch.net has been a force behind reforms. After convincing the Board to adopt majority voting, we have recently been urging them to use "instant runoff voting," to avoid the expense of up to $1 million for runoff elections. On September 2nd PERSWatch took another step, increasing democracy at CalPERS by paying for and co-sponsoring, with the Sacramento Bee, the first CalPERS Candidate Forum. The League of Women Voters of Sacramento agreed to moderate the event. The Forum gave eligible CalPERS members and the interested public an opportunity to see, meet, and question the candidates, resulting in a more informed vote in the upcoming election. All candidates were invited. Those attending had an opportunity to submit written questions on cards distributed and collected by League of Women Voter volunteers so that the moderator could group and ask questions, as time permited. After a ten minute intermission, each candidate was given an opportunity to respond to questions from the Sacramento Bee. Each candidate had two minutes for an opening statement and one minute for a closing statement. This was an historic event. The impact of decisions by Board members is felt locally, state-wide, nationally and internationally. For more information, see the invitation to candidates to participate and the press release.
	Find CalPERS covered jobs. For CalPERS news, see also CorpGov.Net. Watch the Board "The members of the retirement board of a public pension or retirement system shall discharge their duties with respect to the system solely in the interest of, and for the exclusive purposes of providing benefits to, participants and their beneficiaries, minimizing employer contributions thereto, and defraying reasonable expenses of administering the system. A retirement board's duty to its participants and their beneficiaries shall take precedence over any other duty." (California Constitution, Article XVI, section 17(b)) Subscribe to perswatch Think Board elections don't matter? Think again. Recent research on pension fund governance found that better governed funds outperformed poorly governed funds by 2.5% per year! (The Pension Governance Deficit: Still with Us). Key factors included: Selection of directors with relevant skills and knowledge Development of a board self-improvement culture Insulation from conflicts of interest, political and third party agendas As we all know, poor performance adds fuel to those seeking to destroy CalPERS and our defined benefit plans. Of course, the main motivation for such initiatives is to line the pockets of money managers with the increased commissions and to reduce the effectiveness of shareowner initiatives to hold corporate CEOs and boards accountable. (See Making Corporate Governance Decisions That Work for Whom? presented at the 2005 International Conference on Corporate Governance. CalPERS Board members are required to minimize employer contributions but the Board's highest duty is to its participants and beneficiearies. The PersWatch coalition works to improve the benefits of CalPERS members...better health insurance at lower cost; increased retirement formulas; and improved services. PersWatch will use the Internet to keep members up to date on the issues and to actively lobby other Board members for improvements. Please join our efforts by adding your name to our growing mailing list. We'll ask you to help develop position papers, campaign and once elected we'll send you 3-4 form e-mails a year on the most fundamental issues at CalPERS. By spending a total of approximately 40 minutes each year working on CalPERS issues, you can help ensure the Board works in your best interests. The recent increase in retirement benefits demonstrates that involvement by members adds value and results in positive change. There are still many more areas which need further improvement. CalPERS, the nation's second largest public pension fund, is credited with creating a revolution in corporate governance by making the CEOs and boards of corporations more accountable to their shareholders. Yet, the CalPERS Board tried to adopt regulations sharply limiting disclosures to members in future elections. A Sacramento Bee editorial called the policy self-serving, anti-democratic, chilling and wrong, warning that they "risk creation of a permanent board: unaccountable, untouchable and isolated from the people who elect it." (see CalPERS muzzles critics: Ballot rules protect board, keep others in the dark, Sacramento Bee editorial, 5/24/99 ) With the help of union and CalPERS activists, we were able to defeat this draconian measure and instead won real reforms, like more informative candidate statements and a runoff process so that no candidate would ever hold office again by winning less than 6% of the vote. More recently, PERSWatch.net has been working to avoid the need for a runoff in future elections by instituting "Instant Runoff Voting," which would allow voters to rank candidates in order of preference. This could save CalPERS up to $1 million dollars by avoiding the costs of a second election. Examples of issues raised by the PersWatch coalition: Refine pay for performance measures for portfolio managers to award negative points for under-performance, subtracting these from positive basis points. Payments should also be delayed to ensure performance reflects market, rather than book, value. (testimony) Still working on this. Stop the Board's illegal activities. Partial Victory. The California Supreme Court upheld a ruling that CalPERS violated several laws in raising the pay of board members and affirmed that CalPERS rules must be promulgated through the legally required process specified in the Administrative Procedure Act. The Board continues to need reminding that it must follow the law. Abolish mandatory Tier 2. Who can live on $650/month? VICTORY! Give backs. Remember the $1 billion lawsuit? The Board essentially returned it, by reducing employer contributions based on the assumption that state employee wages would grow by 3.75%, even when private sector wages were growing at rate of 4.9%. We will continue to fight for gain sharing, never give backs. Board approved a $100 million closed session deal which provided a $750,000 "placement fee" to former Board member, Al Villalobos. The deal was structured so that Hicks Muse (a partnership) could profit by $40 million a year, even if CalPERS loses money. PersWatch editor, Jim McRitchie, got the closed door minutes released. He testified before the Board and State Senate, calling for stronger laws and regulations. VICTORY! For years members of the Board accepted gifts, such as entertainment, travel, and dinners from those doing business with CalPERS. The Sacramento Bee, L.A. Times, and Pensions&Investments joined PersWatch in calling for measures to end apparent conflicts of interest on the CalPERS Board. The Board passed window dressing rules to require further reporting. Jim McRitchie's efforts led to a determination by OAL that the rules had been adopted illegally. Unfortunately, rather than legally adopting reporting rules or prohibitions, the Board chose to revert to state law, which they interpret as allowing the flood of gifts to continue. PERSWatch will continue to fight to make gifts from contractors illegal. CalSTRS adopted fairly stringent rules. So should CalPERS. Election fraud. During the 1998 election, an incumbent was given the opportunity to submit a new candidate statement in order to specifically respond to McRitchie's statement. The protest panel, appointed by the CalPERS attorney who allowed the election rule violations in the first place, found that although her decision was "ill-advised," the "technical violation" was "unlikely to be deemed significant by more than a handful of voters, even assuming candidate statements were widely read." We fought for reforms to make elections fair and in late 2000 the Board finally relented. A new election process was to be used starting in 2002. There was to be a runoff if no candidate wins a majority of the vote (no more 5.5% winners). PARTIAL VICTORY! PERSWatch will work to: Put Members First!! Keep CalPERS financially sound Lower insurance premiums and the cost of health care Improve benefits, services and delivery Institute gain-sharing of surpluses for active members and retirees Reduce expensive contracting out Increase COLAs and pension protection funding Enhance health benefits by lowering the cost to members and including alternative medicine Ban contractor gifts and campaign contributions to board members Move dental, Savings Plus and other programs from DPA to CalPERS Institute ombudsperson to help members work though red tape and to review improprieties Provide an initiative process so that members can enact policies when the Board refuses to act Make CalPERS internet site interactive so that members can express their concerns to each other as well as the Board and staff. Let's discuss the issues. E-mail jm@perswatch.net. Back to the top Find other jobs that allow you to keep your CalPERS coverage. Learn more about James McRitchie, PERSWatch.net moderator, through thousands of pages on Google. Back to the top Contact Jim McRitchie: jm@perswatch.net