Staff of the California Public Employees' Retirement System recommended terminating Dimensional Fund Advisors, which runs $780 million in passive domestic microcap equities for the system, the residual of a $1.2 billion small-cap equity portfolio that CalPERS terminated last August. The money would be managed internally by the $165 billion system, Sacramento. The CalPERS staff argued that internal management would save $25 million a year in transaction costs, save on fees and sharply cut projected tracking error. CalPERS investment committee will consider the recommendation March 15. Gretchen Flicker, a vice president at DFA, declined to comment.