State Controller Betty Yee Calls for Public Discussion of CalPERS Governance Reforms Following Sudden Departure of CIO Ben Meng
CalPERS CEO Marcie Frost’s charm offensives appear to be backfiring now that more and more parties are paying attention. CalPERS best-paid officer Ben Meng departing like a bat out of hell appears to have focused a few minds.
As we’ll discuss longer form, at a CalPERS “retiree roundtable” on Tuesday, Frost tried claiming that Controller Betty Yee’s concerns about CalPERS governance that Yee had voiced in the press and again in a special meeting on August 17 before Board President Henry Jones rudely shut Yee down had been addressed in that closed session. Yee shot back almost immediately, sending a letter to Board President Henry Jones requesting that specific issues be added to the agenda for the September 16 Board of Administration meeting for public discussion. We’ve embedded her letter at the end of this post.
Yee’s missive is an even bigger deal than it seems. Not only did her letter effectively deny Frost’s assertion that Yee’s issues had been put to bed, but Yee has escalated. The bill of particulars in her letter amounts to a frontal assault on key staff measures that have gutted the board’s authority.
As an aside, even if what Frost asserted remarkably happened to have been true, Frost would be admitting that CalPERS had engaged in yet another violation of the Bagley Keene Open Meeting Act. First, Yee’s items had not been listed on the closed session agenda as required. Second, Yee’s topics could not be legally relegated to a secret discussion.
We have also embedded the audio recording for the stakeholder meeting at the end of the post.
After Frost made remarkably non-substantive remarks, she said she planned to leave after she took questions addressed to her. Larry Woodson, the Health Benefits Committee Chair of the largest CalPERS retiree group, CSR, California State Retirees, who normally asks the first question at these sessions,1 turned his spot over to the president of CSR, Tim Behrens (starting just before 14:00; emphasis ours):
Tim Behrens, President, California State Retirees: I have a request for you, Marcie. I would like you to meet with the president of the CalPERS board, Mr. Jones, and honor Bettie Yee’s request for an emergency board meeting to discuss the issues related to the CEO’s oversight, implementation of policies, etc.. I have a lot of concerns about the board not having the oversight they should have had and billions of dollars now moving forward to invest in private equity and private lending without having a without out having a CIO or having addressed the problems leading up to Ben’s resignation. Thank you.
Marcie Frost: I think Betty. I believe Betty. I can’t see Betty. But it might be worthwhile to check in with her. But I believe she believes that her request has been honored based on our August 17th meeting, which I can’t get into a lot of detail on.
Larry Woodson spoke a few minutes later (starting at 18:29, emphasis ours):
Larry Woodson, California State Retirees: This is Larry with CSR and I’d like to follow up on Tim’s comments, if I could.
OK, so I hear what you’re saying. There has been a lot of stakeholder concern about lack of transparency around Mr. Meng’s departure, sudden departure. And I understand that, you know, personal matters are confidential. There was a certain amount of information that I was kind of surprised I thought would be confidential.
But it was released to Bloomberg about your meeting with Mr. Meng and his violations and so forth. So, I mean, that was, I suppose, pretty transparent, but it’s troubling to me that Mr. Jones would deny the board members the opportunity to meet in special session and to review Mr. Meng’s violations and the policies themselves and your oversight of the policies and the need for any additional safeguards.
And so the only, as far as I know, the special meetings never occurred. And he up until the 17th really either denied or denied by ignoring that request.
And so if if you’re saying that Mrs. Yee’s request was granted or she’s now satisfied that’s news to me, if that meeting, that meeting on the 17th, is that actually that closed session meeting that actually addressed her concerns and that was on the agenda.
There should have been a follow up open session, according to Bagley Keene, where you reported that the general nature of the matter is considered in the closed session and whether any action was taken, that would have been our opportunity to at least here it had been addressed. No open session occurred, which seems to me a violation that we can’t so I’ll just I still feel that that kind of a meeting is very important to encourage. The board’s not only prudent for the board, but it seems to me absolutely required.
Shorter: Behrens was unhappy about Yee having been steamrolled by Henry Jones and wanted her issued put on the agenda. Behrens was also worried about the risks posed by CalPERS plans to pile on more risk by increasing its private equity and debt holdings.
Woodson objected to how CalPERS disclosed confidential information about Meng, when it has used Meng’s purported privacy rights2 as a basis for covering up who knew what when at CalPERS. Woodson also pointed out multiple meeting abuses: the closed session agenda was incorrect if Yee’s issues were discussed, that there was no open session for public comments, and no reporting out of the closed session as required.
Now back to Frost (emphasis ours):
Marcie Frost: Yes. Thank you, Larry. And I appreciate you asking the questions. I really do. So, you know, I can’t speak on behalf of the controller, but I do. What I can tell you is I don’t have a current request to schedule a special meeting, so I can’t, again, talk with you a lot about what happened in court.
Yee evidently heard about Frost’s claims. The Ben-Meng-departure-level speed of Yee’s pushback shows that Frost’s efforts to avoid substantive discussion and reforms are meeting with hardening resistance.
If you are a California resident and have a few spare minutes this weekend, it would help to send a short e-mail to Controller Yee thanking her for persisting in defending open government and seeking reforms at CalPERS. She’s sticking her neck out and it would help for her to hear that California voters support her. Please also cc Board President Henry Jones, CEO Marcie Frost, and State Treasurer Fiona Ma (Ma appears in need of a spine implant).
California State Controller Betty Yee
CalPERS Board President Henry Jones
CalPERS Chief Executive Officer Marcie Frost
California State Treasurer Fiona Ma
1 Woodson normally goes first because he is recognized by staff and the retirees as usually being the best prepared.
2 Experts in California civil service practices to a person have told me CalPERS’ assertions about Meng’s personnel privacy is bogus. By resigning voluntarily, he is now an ex-employee and his privacy rights are limited to truly personal information, like his Social Security number and details about his health. In other words, people in the know see that CalPERS’ privacy handwaving is to protect CalPERS, not Meng.