Even though CalPERS is taking steps toward fixing its governance problem, officials at the $411.5 billion pension plan say the road ahead is long.
California Controller Betty T. Yee, who sits on the boards of both California Public Employees' Retirement System, Sacramento, and the second-largest U.S. public pension plan, the $262.5 billion California State Teachers' Retirement System, West Sacramento, is helping drive the changes.
Her duties on both boards give Ms. Yee an unobstructed view of the culture and practices at each plan, especially since she has served as chairwoman of CalSTRS' governance committee. Ms. Yee currently is vice chairwoman of that board committee.
There is a different culture at CalSTRS, Ms. Yee said.
"It's not a fair comparison," she said. "With respect to the proceedings of the board, there is a respect for the differing perspectives board members have at CalSTRS. No one on the board would ever say I wasn't heard."
At CalPERS, letters by Ms. Yee and fellow board member Margaret Brown helped spur the board to make governance changes in the wake of the sudden departure of former CIO Yu "Ben" Meng in August.
"I am not getting the sense that we (the CalPERS board) were operating as effectively as we could be," Ms. Yee said in a Sept. 21 interview. "I think there will be more work to be done. I think the board members are doing the best that they can and really do take their responsibility seriously."
She stressed that she was grateful that the president of the board, Henry Jones, scheduled items she wished to talk about in an open meeting, a month after the board discussed matters in closed session. An additional suggestion by Ms. Brown that the board also review its delegation of investment authority is scheduled for an investment committee discussion at its Nov. 16 meeting, Mr. Jones said in an email.
"I absolutely believe our governance allows for all points of view as evidenced by the number of meetings that we have throughout the year, including workshops and stakeholder meetings," Mr. Jones said. "And I believe that all of us should always be open to improvement."
During its September meeting, the board did make changes, including restoring the investment committee to a committee made up of the entire board. The investment committee of the whole will begin meeting in November, Mr. Jones said in another email.
Ms. Yee said she supported that move to an investment committee of the whole because she finds discussions of investment matters by all board members, who come from different disciplines, very constructive.
"It (the investment committee of the whole) can only result in a more robust outcome," Ms. Yee said. "If I'm on the losing side of a vote, I'm OK with it if I feel I've been heard and it has been discussed."
For instance, in 2019, CalPERS board voted to cut the number of meetings to reduce the time-consuming demands on investment staff of preparing and presenting at various meetings. The board lowered the number of board meetings to six from nine each year, curtailed off-site meetings to one from two and limited committee meetings, including investment meetings, to four.
Before the new schedule was put into place for 2020, the investment committee met nine times a year. The rationale given for the changes was in an Aug. 20, 2019, memo to CalPERS governance committee.