The Public Eye

Pay for CalPERS board members varies widely

Sacramento

Over the years, longtime CalPERS board member Priya Mathur has drawn widely varying amounts for her service. One year she received $18,500. Last year, it was $118,900.

Member Henry Jones, who is retired, receives $100 a meeting, about $500 or $600 a month.

Member Richard Costigan holds down a full-time lobbying job and serves on another state board. He gets nothing for his CalPERS duties.

The broad range in compensation is dictated by law and CalPERS policy and has long been a fact of life for the 13-member board. But experts said it’s unusual in the world of pension administration, with one calling it “highly irregular.”

The unusual payments involve only five board members elected from the ranks of public employees. Unlike retired or appointed members, those elected to the board get paid leave from their regular jobs while on board business. The pension fund covers the cost of their salary and benefits, though in some cases, they have not worked at those positions in years. Board members self-report the hours they spend to justify their leave – and the hours they report working on CalPERS business also vary widely from member to member.

The retirement system’s pension trust fund, fed by member contributions and taxpayer dollars, has paid nearly $3.4 million since 1999 on the salary and benefits of those five board members, a review by The Sacramento Bee found.

The Bee also found irregularities in the way the system’s rules are applied: One board member was paid for more than a year despite failing to turn in quarterly reports justifying her paid leave as required under CalPERS policy. Another board member who is collecting a portion of his pension is also reimbursed tens of thousands of dollars annually as a retired annuitant faculty member. Other retired members receive $100 per meeting.

The CalPERS board sets the course for the nation’s largest public-pension trust fund, with $298 billion in assets underpinning retirement promises for nearly 1.7 million members. Board members approve policy, hire and fire key executives and hold ultimate responsibility for the health of the fund.

State law spells out who on the board gets paid and how much. Four officials who hold another public office receive no compensation. In addition to the retirees, gubernatorial appointees and legislative appointees receive $100 per diem on meeting days.

But the five board officials elected every four years by CalPERS members operate under a different set of rules. The law has evolved so that employers must be “reimbursed by the retirement fund in an amount equal to the salary and benefits paid to the elected board member by the employing agency.”

The board has interpreted the law as allowing those elected members to receive paid full-time or part-time leave from their civil-service jobs to handle fund business. Qualifying members request the percentage of time off they want each year. The board, including the officials asking for the compensated “release time,” votes on the requests.

Some members never work their civil-service jobs.

Board member J.J. Jelincic, for example, has kept his investment officer title at CalPERS but he hasn’t worked in that capacity since going on full-time board leave in 2011. Board member George Diehr’s online biography says he has been a professor at CSU San Marcos since 1990. It doesn’t mention that he hasn’t taught a class since joining the CalPERS board in 2003.

“It was immediately obvious that the demands of CalPERS would be much more than a monthly meeting,” Diehr said in an interview. “I couldn’t say to CalPERS, ‘I can’t come up for a one-day meeting because I have a class.’”

Breakdowns and lapses

CalPERS’ policy since 2007 has required board members on release time to sign and file quarterly time reports justifying their paid leave. Their employers must ask CalPERS for repayment. Failure on either end shuts off the reimbursement. A unit within CalPERS tracks reports, nudges board members to file tardy paperwork and flags irregularities for review.

The system broke down from October 2012 through December 2013 when, CalPERS records show, Mathur failed to file her quarterly reports. That should have cut off reimbursement to the Bay Area Rapid Transit System, where she remains on the payroll as a financial analyst.

It didn’t, according to BART financial records acquired through a Public Records Act request, and the district continued to pay 60 percent to 70 percent of Mathur’s salary and benefits as she had requested, a total of $123,919.84. She submitted the late reports with her January-to-March 2014 filing.

Mathur has a history of paperwork lapses, including a string of failures to file legally required campaign finance reports to the state. After she accepted a $4,000 fine for her latest lapse in October, the CalPERS board removed her as vice president, stripped her of her committee leadership posts and lowered her leave reimbursement for the rest of the fiscal year from 91 percent to 80 percent.

CalPERS has reimbursed BART $1.8 million for Mathur’s pay and benefits since she joined the board in 2003. She did not respond to requests for comment.

CalPERS CEO Anne Stausboll, who shares oversight of board compensation with board President Rob Feckner, also declined to discuss board compensation with The Bee.

One CalPERS critic, Marcia Fritz, said Mathur’s time-report lapses raise larger questions about CalPERS’ Board of Administration. Fritz, a certified public accountant, is president of the California Foundation for Fiscal Responsibility, a leading advocate for cutting public pension benefits to rein in their costs.

“This is indicative of bad leadership,” Fritz said. “It’s the CalPERS board just leading by bad example.”

Ted Siedle, a former Securities and Exchange Commission lawyer and noted pension fund management expert, said Mathur’s failure to file her reports and the board’s failure to enforce its own policy “indicates that this is not a finely honed machine operating beyond reproach.”

Since 1999, CalPERS has paid nearly $3.4 million to cover pay and benefits for Mathur, Feckner and three other current board members. Repayments in fiscal 2013-14 ranged from $17,351 for half of board member Michael Bilbrey’s compensation, to $118,963 returned to BART for 100 percent of Mathur’s pay and benefits.

Retirees in member-elected board positions and gubernatorial and legislative appointees receive $100 per meeting day instead of a paycheck. That works out to $6,000 to $7,200 a year, assuming two or three meetings beyond the board’s monthly three-day summit to conduct business.

Board members’ estimates of how much time they spend on CalPERS business each month also vary widely.

Some, like Costigan, hold full-time jobs or other state appointments and serve on the CalPERS board for no money.

“Between calls, meetings and everything, I spend 40, 50, 60 hours per month” on CalPERS business, said Costigan, a lobbyist who also sits on the State Personnel Board. “A lot of it is reading and talking to staff.”

Jelincic estimated that “it’s about a three-quarter-time job” between meetings, preparation time and travel – about 120 hours a month. Jelincic said that he had asked for part-time leave from his CalPERS investments-office job, but the board put him on full-time leave anyway.

“I think it was for management’s comfort,” he said, because of potential conflicts of interest created by having a working CalPERS part-timer who also sits on the board and sets policy. Jelincic has had a rocky relationship with some of his board colleagues. He has been reprimanded once by the board for sexual harassment and once for talking to the press.

Jelincic recorded working an average of 151 hours per month on CalPERS business in fiscal 2012-13 and 2013-14, nearly three days per month less than the full-time hours for which he was paid.

CalPERS records are complicated by its policy. All board members on release time start with 105 baseline hours per month. Additional time is automatically granted for leadership positions such as president, vice president or chairing a committee. Each member can add hours for travel, meetings and other duties.

During the two-year period reviewed by The Bee, Feckner requested that CalPERS reimburse Napa Valley Unified School District between 85 percent and 95 percent of his compensation for his job as a glass-repair worker. CalPERS checks to the district totaled $153,254 for Feckner, whose position as board president carries more responsibility.

Feckner’s time records show he worked far more than that. He averaged almost 200 hours per month, nearly one day of overtime every week. He started each month, however, with 160 hours of baseline time and credit for his duties as president and committee leadership positions.

Feckner declined to speak with The Bee about board policy or his own hours and compensation.

A vote for double-dipping

In 2013, the board approved a payment plan for one of its own that let him take both a pension and a paycheck at the trust fund’s expense.

Diehr has received $1.28 million in reimbursed pay and benefits in his 12 years on the board. Some years he claimed as little as 60 percent of his time went to board business. Most of the time, however, he claimed 100 percent of his full-time university pay and benefits or very close to it.

In the summer of 2013, Diehr retired and took a portion of his pension, about $4,100 per month. Typically, that would have pushed him into the retired board-members group that receives $100 per meeting.

But Diehr, 73, also had filed papers to become a retired-annuitant faculty member who could work up to half time each academic year. Although he wouldn’t be teaching, Diehr asked for release time, just like always. He said he was due the salary he would have earned had he taught for one semester: $55,883. California State University, San Marcos, paid him that amount. CalPERS then reimbursed the university.

During the spring semester this year, Diehr wasn’t eligible to teach, so he received the retirees’ $100 per diem. With the start of the fall semester in August, Diehr went back on the university payroll, as though he again were teaching. San Marcos started cutting him checks. CalPERS will again have to repay the school.

Diehr said the university system’s faculty contract gives tenured professors the right to teach half-time up to five years after retirement, and he merely availed himself of that provision. Financially, he said, it’s a wash.

“From my standpoint, if I had not been on the CalPERS board, I would have then taught,” he said. “The CSU would have been paying my salary, and I would have been drawing my pension.”

A few months before Diehr retired, his release-time request went to the full CalPERS board. With a single vote, the panel approved it and requests for Jelincic, Mathur, Feckner and Bilbrey. Jelincic cast the lone dissent.

He said he was troubled that Diehr received pay on top of his pension at the expense of the pension fund, and that his own reimbursement exceeded what he had requested.

“I knew that George was collecting this money that he wasn’t entitled to,” Jelincic said. “And I knew I had only put in for 84 percent leave time, but when it came to the board it was changed to 100 percent.”

CalPERS spokeswoman Rosanna Westmoreland said other CalPERS officials knew about Diehr’s unusual situation. No one counseled him to rethink double-dipping, she said, but now the fund is taking action to prevent it from happening for any other board members.

“We will be working with the Legislature and the university,” Westmoreland said, “to eliminate this unique situation.”

Pay structure ‘irregular’

While paid-leave provisions are unusual for pension boards, they are a common feature in public-employee labor contracts. California state agencies, for example, continue to pay an employee who takes time off for bargaining, then bills the employee’s union for reimbursement. Some higher-level labor officials leave their state jobs for years while they conduct union business full time.

All of the board members who qualify for paid leave are public employees and have close ties to labor. Theresa Taylor, for example, recently won a CalPERS seat to represent state workers after SEIU Local 1000 independently spent $218,000 on behalf of her campaign. In January, she will replace Diehr.

Bilbrey, a bookstore employee at Citrus Community College in Glendora, is president of the California School Employees Association. Feckner is the association’s past president.

A Bee survey of states and interviews with experts in pension governance found that the CalPERS policy, which essentially pays some board members a full-time wage or close to it, is unusual.

Nevada law gives its seven pension fund board members $80 per day to attend meetings, plus travel expenses, said Tina M. Leiss, executive officer of that state’s public employees’ retirement system, which is about one-tenth the size of CalPERS.

“That really means they get $80 per month. Our meetings are one day,” Leiss said. “They rarely travel.”

New York’s State Common Retirement Fund has one trustee, the state comptroller, who maintains several advisory committees that meet throughout the year. Committee members don’t receive any compensation, although their travel expenses are reimbursed.

California’s teacher retirement system comes closest to the CalPERS board reimbursement model. The three member-elected leaders on its board can claim up to 50 percent leave from their regular jobs to handle board business.

Siedle, the pension expert, called the varying levels of compensation on the board and the complex policies underpinning the reimbursement system “highly irregular.”

“In my 30 years in this business, I’ve heard of nearly everything. I’ve heard of pension funds investing in Beanie Babies,” Siedle said. “I’ve never heard of this. This CalPERS scheme is certainly exceptional.”

Keith Brainard, research director for the National Association of State Retirement Administrators, said that outside California, “I am unaware of a public retirement system that provides compensation for board members’ service, beyond a stipend and reimbursement of travel costs.”

Jim McRitchie, a consultant specializing in best practices for corporations and pension funds, said it can be valuable for board members to participate in the regular workforce. But he said a seat on the board of one of California’s most powerful agencies can tempt members to do that work exclusively.

“There’s something to be said for still having your foot in the life of the normal civil-service person,” said McRitchie, a retired state employee who publishes CorpGov.net. “I can see that if you’re, say, the president of the CalPERS board, you’re flying all over the world. People are happy to see you wherever you go. So if you don’t have to go in to work, you tend to be a little further removed from the everyday person. After a while, an attitude of entitlement sets in.”

Call Jon Ortiz, Bee Capitol Bureau, (916) 321-1043.

How CalPERS board payment works

The law permits paid leave for CalPERS Board of Administration members who take time off from their civil-service jobs to conduct the pension fund’s business. Here’s how the system works:

1. Qualified board members annually submit percentage estimates of how much leave they will need for the coming fiscal year.

2. All receive 315 baseline hours per quarter plus more time credits for leadership jobs, such as board president or committee chair.

3. The board, including members requesting leave time, vote on all the leave packages at once.

4. Members submit quarterly reports to account for their time. Meanwhile, their employers must request reimbursement.

5. Once both documents are received, CalPERS reimburses the employer.

6. Reporting irregularities go to the CalPERS board president and the CEO or their designated staff for review.

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