CalPERS Oversight Is Lacking, Recent Survey on Accountability Says
The survey gave California a B-minus for state government accountability and transparency (Small, "KPCC News," KPCC, 3/19).
CalPERS is the largest U.S. public pension fund, with about $223 billion in assets.
Last week, the CalPERS board announced that it cannot count on the high returns on investments it previously projected and that it will need $303 million more from the state to fund public employee pensions (California Healthline, 3/15).
CalPERS' Board of Administration has 13 members, six of whom qualify for CalPERS pensions. New board members are elected by other members and potential board members are permitted to raise campaign contributions to get elected. The way board members manage the pension fund affects their own pensions and can influence billions of taxpayer dollars, according to KPCC's "KPCC News."
Critics Call for More Oversight
Stuart Drown -- executive director of the Little Hoover Commission -- said that more independent oversight of CalPERS could be beneficial.
He said, "The degree to which there's an over-representation on a board of people who have a direct potential to benefit from those decisions, I think it diminishes the public's confidence."
Joe Nation -- a former state lawmaker who now is with the Stanford Institute for Economic Policy Research -- said that public employees on CalPERS' board have an incentive to overestimate investment returns. He said it allows board members to contribute less to their pensions, and if CalPERS investments do not perform as well as expected, the state must pay the difference.
CalPERS Deputy CEO Robert Udall Glazier said that taxpayers are well represented on the board. According to Glazier, "[T]he fact that all of them are personally interested by profession or by their career path to make sure that the citizens and the public employees of California have a secure retirement is very strong, good thing for our state" ("KPCC News," KPCC, 3/19).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.