Advertisement
Canada markets closed
  • S&P/TSX

    22,167.03
    +59.95 (+0.27%)
     
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • DOW

    39,807.37
    +47.29 (+0.12%)
     
  • CAD/USD

    0.7387
    +0.0014 (+0.19%)
     
  • CRUDE OIL

    83.11
    +1.76 (+2.16%)
     
  • Bitcoin CAD

    95,758.04
    +2,141.10 (+2.29%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • GOLD FUTURES

    2,254.80
    +42.10 (+1.90%)
     
  • RUSSELL 2000

    2,124.55
    +10.20 (+0.48%)
     
  • 10-Yr Bond

    4.2060
    +0.0100 (+0.24%)
     
  • NASDAQ futures

    18,465.00
    -38.75 (-0.21%)
     
  • VOLATILITY

    13.01
    +0.23 (+1.80%)
     
  • FTSE

    7,952.62
    +20.64 (+0.26%)
     
  • NIKKEI 225

    40,168.07
    -594.66 (-1.46%)
     
  • CAD/EUR

    0.6842
    +0.0037 (+0.54%)
     

Defeated in CalPERS elections, 2 ex-board members vow to press for pension fund changes

Get the State Worker newsletter

Work for the state of California? Get the latest news on pensions, pay and more in the State Worker newsletter.

SIGN UP

Margaret Brown’s final public meeting may have been this month, but the defeated CalPERS board member and pension plan critic isn’t going away quietly.

Brown, who calls herself a CalPERS watchdog, said she is in the process of forming a political action committee that will keep the spotlight on CalPERS and raise money in support of candidates for the pension system’s board.

Its name: Your CalPERS Watchdogs.

The plural reflects two other founding members of the organization. They are former board member J.J. Jelincic, and Tiffany Emon-Moran, a retired police department fraud investigator, who lost her bid to join the CalPERS board in October.

ADVERTISEMENT

The three of them want CalPERS to talk more openly about issues often put behind closed doors, like how the pension fund intends to execute its plan to raise its stake in private equity investments.

Brown said her new organization will educate members and argue CalPERS is taking too much risk in its investments. The fund, recently valued at $493 billion, must hit its earnings targets or risk charging government agencies more fund unfunded liabilities.

“This is a pension organization and we need to be more conservative,” she said.

Brown, Jelincic and Emmon-Moran’s new political action committee could set up contested elections in coming years if they succeed in finding donors and candidates. The CalPERS board consists of 13 members: six are elected by CalPER members, five are appointed by the governor or Legislature and two are elected officials, the state treasurer and the controller.

The new group brings together two former board members in Brown and Jelincic who often cast themselves as outsiders. Each was rebuked twice while sitting on the board.

Jelincic was censured in 2011 over a finding that he sexually harassed colleagues in the CalPERS investment office and again in 2017 over allegations that he leaked information to news media. Board presidents rebuked Brown in 2018 after she allowed a friend to enter a restricted area at the pension fund headquarters and in 2019 over her use of the CalPERS logo in social media.

Brown and Jelincic gained backing from retiree and public safety groups that favored their style of sometimes adversarial questioning of CalPERS policies but lost support from other civil service unions who concluded Brown and Jelincic created “chaos” for a pension fund that provides retirement benefits to some 2 million people.

SEIU California and a coalition of unions raised approximately $500,000 to defeat Brown and Emon-Moran. A similar coalition spent heavily to prevent Jelincic from returning to the CalPERS board in 2019, where he had served from 2010 to 2018.

“If my members felt as though (Brown) was in fact the watchdog that she claimed to be, she would have been reelected,” said Terry Brennand, a lobbyist for SEIU California.”But that was not the case.”

Bown was defeated decisively in the recent CalPERS election. Results revealed in October show that challenger Luis Pacheco received 61.76% to Brown’s 38.24%.

Soap opera at the pension board

Pension system meetings sometimes seemed like soap operas with Brown stirring the pot.

She had continuing conflicts with CalPERS CEO Marcie Frost.

Brown’s latest issue was CalPERS’ refusal to allow the controversy over former Chief Investment Officer Ben Meng’s resignation to be discussed publicly in greater detail. Meng stepped down in August 2020 amid an ethics complaint against him. It alleged he approved a $1 billion deal with a firm in which he had a financial stake. CalPERS is still looking to fill his job.

Two months ago, Brown voted against Frost’s compensation for a fourth year in a row. The CalPERS board approved Frost’s base salary of $534,689 and incentive award of $143,590.

Brown cites her opposition to a plan to build a $550 million office building on a CalPERS-owned vacant lot at Third and Capital Mall as an example of her making a difference..

CalPERS in 2007 during the real estate crash halted plans to build two 53-story towers on the site, the former home of now defunct Sacramento Union newspaper. It created a sore point between Sacramento city officials, who wanted the site developed, and CalPERS, which had already lost an estimated $60 million on the project.

Brown seized on documents by CalPERS hired real-estate consultants that showed that finding office tenants for the revised project in 2018 would be difficult, making solid investment returns would be speculative.

The plan for the building was subsequently scratched. CalPERS ended up firing its development partner and now is working with a new manager in attempting to develop the vacant land.

“They can call me a troublemaker, but they don’t call me a liar,” she said. “And that’s the point. I might be a troublemaker. But I will tell the truth about what’s going bad at CalPERS.”

Here’s our best subscription deal, California state workers.

The relationship between Brown and board President Henry Jones was particularly strained.

Jones suspended much of Brown’s travel reimbursements for meetings the first part of 2020 after saying she had used the CalPERS name in her Twitter and Facebook account in a manner that violated state political ethics rules.

Brown sued in Sacramento County saying that she was not involved in “impersonation.” She stated that she represented herself as a CalPERS board member in the accounts not as the CalPERS organization.

A judge dismissed the lawsuit that year saying Brown had not proved her case. CalPERS spent around $80,000 defending the lawsuit.

Brown’s last CalPERS meeting

CalPERS board member Theresa Taylor, who has had verbal clashes with Brown during open board sessions, said Brown was an additive for the pension board because she asked inquisitive questions.

At the same time, Taylor said, Brown’s questioning style was often “gotcha”, creating adversarial relationships with investment staffers.

Taylor said that she and other board members often ask the same questions, but do it behind closed doors or in informal meetings, advocating for the best investment results.

“We still ask the questions,” said Taylor. “I think we just ask them a little differently than Margaret does.”

For instance, Taylor said Brown isn’t the only board member concerned about private equity fees which have amounted to more than $4 billion over the last two decades. She said the private equity investment staff has been aggressively working to reduce fees.

Brown at her last meeting got some compliments from Neil Johnson, a CalPERS retiree and a former representative of Service Employees International Union Local 1000

“I didn’t always agree with where she was going with some of her questions, or her particular positions, but I did enjoy her inquisitiveness and her desire to dig in,” he said.

Jelincic commended her, too. “I want to congratulate you for maintaining your integrity,” he said. “You may have lost your seat but you can still look at yourself in the mirror.”

At one point, Brown joined board President Jones for a goodbye ceremony, and they partially embraced. She received a plaque and a board resolution thanking her for four years on the pension system board.