California State Treasurer John Chiang on Wednesday called for an independent investigation into the hiring of CalPERS Chief Executive Officer Marcie Frost to resolve questions about whether she misinformed the $360 billion pension fund when she applied for her job.
Chiang stressed in announcing his call for an investigation that he has a “favorable opinion” of Frost. He worries, he says, that the questions about Frost will discredit the pension fund if they are not addressed in a manner that restores public trust.
As state treasurer, Chiang is a member of the CalPERS Board of Administration. He joins CalPERS board member Margaret Brown in calling for an investigation into Frost’s hiring.
Other board members have said they were well aware of Frost’s credentials when they hired her and have reiterated their support for her in public comments. Chiang was on the board in 2016 and voted to hire Frost. Chiang through a spokesman declined to say whether Chiang felt misled by Frost.
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CalPERS board members this week awarded Frost an $84,000 bonus and a 4 percent raise following her annual performance review. They did not discuss her performance in an open session.
The board had a lengthy closed session discussion about Frost and other executives on Tuesday.
“We spent over three hours in a closed session doing the performance evaluation of our CEO, and during that period of time each of us, including the treasurer’s representative, had the opportunity to ask all the questions regarding performance that they wanted to ask. What was voted out of the meeting was a performance bonus for the fiscal year and an increase in her base pay. That speaks volumes,” said board member Bill Slaton.
Brown voted against awarding Frost her raise and bonus. Chiang did not attend this week’s board meeting. A deputy in his place did not oppose Frost’s new pay package.
Board member Theresa Taylor said Chiang’s office did not ask for a vote on opening an investigation this week. “I thought they were satisfied,” she said.
CalPERS Board President Priya Mathur also rejected Chiang’s call for an official inquiry. Mathur also was on the board when Frost was hired and has said she did not feel misled.
“There is no need for an independent review. Marcie’s leadership is exactly what we need, and the board’s review this week on all matters regarding her performance sends a clear and unequivocal message that she has delivered for California public sector workers and retirees. She is the right person to lead CalPERS,” she said.
Questions about Frost’s background have been building since August, when the financial blog Naked Capitalism reported that a consultant-prepared summary of Frost’s qualifications in 2016 included misleading information about her education. It implied that she was enrolled in a dual-degree program at The Evergreen State College in Olympia, Washington.
Frost, 54, was not enrolled in a program and had not taken classes there since 2010. The information was repeated in a press release announcing her hire and in an official biography. She was hired after holding a series of top positions at Washington state’s public pension fund, including an appointment as its executive director.
Public employee unions and advocacy groups that represent local governments have declared their support for Frost since the questions about her background surfaced. Other retirees and public employees have said they were troubled by the reports and surprised that CalPERS hired a chief executive without a college degree.
Chiang said in a news release that CalPERS owes an independent investigation to its members.
“An organization with the strong reputation of CalPERS needs to have a leader with unimpeachable integrity. If we do nothing, we will be perpetuating a double standard. Worse yet, a cloud of controversy will continue to hang over the head of the nation’s largest public pension fund. Until that cloud is removed, pundits will continue to question the decisions made by its leadership,” he said.
Board members said they were surprised by his public call for an investigation.
“I’m disappointed in John, who I considered to be a friend and who I’ve support for years. On this, he just got it wrong,” CalPERS Vice President Rob Feckner said.
Chiang has been a member of the CalPERS board since 2007, when he was state controller. Earlier this year, he pushed the board to divest from retailers that sell certain kinds of guns and ammunition.
The board declined, finding that its policy of communicating its preferences to corporate boards had already resulted in restrictions on sales of guns and ammunition at sporting goods stores.