What is CalPERS? We explain in one minute
In the last two years, a former CalPERS board member known for his sharp criticism of the nation’s largest public pension fund worked to unseat two of its leaders in tense elections.
Now, J.J. Jelincic is running his own campaign to return to the board that manages the $360 billion fund.
He’s challenging Henry Jones, an incumbent who is the first African American man to lead the CalPERS Board of Administration as its president. He’s a former chief financial officer of Los Angeles Unified School District.
In interviews, both Jelincic and Jones said their biggest differences lie in their management styles.
Jelincic, who worked as a CalPERS investment officer in addition to serving on its board, regularly questioned the pension fund’s staff in a manner that some people found inappropriate.
“There were a number of times when staff were making presentations to the board and J.J. either said to their face or later made disparaging comments about staff,” said Jones, 78, of Los Angeles. “To me that’s unacceptable.”
Jelincic supported the campaigns of Margaret Brown and Jason Perez, who won upset elections against incumbents in 2017 and 2018 after they criticized the board’s management and investment decisions.
“I’m more concerned about monitoring the staff than being polite; he’s more concerned about being polite than monitoring staff,” Jelincic, 70, of Hayward, said of his opponent.
Jones said he favors holding the fund’s CEO accountable rather than criticizing staffers in an open setting, a practice he said is unproductive and reflects poorly on the fund, which has many business partners.
“A loud and critical voice is not necessarily the best approach,” he said.
CalPERS will mail ballots Aug. 30 to about 600,000 retired members, who will have until Sept. 30 to vote by mail, telephone or online. The seat’s term runs from January 2020 to January 2024.
The election comes at a time of change on the 13-member board, which includes six elected members and seven who are appointed by state government leaders or who gain a seat by virtue of holding another state office. Five new members joined the board this year.
Before Brown and Perez’s victories, incumbents tended to keep seats on the board election after election, often running unopposed.
Al Darby, president of the Retired Public Employees’ Association, wrote in the group’s magazine that Brown and Perez share the “inquisitive zeal” of Jelincic. The organization endorsed all three of them, and Brown and Perez have also endorsed Jelincic.
The board’s management of staff came under scrutiny after revelations that former Chief Executive Officer Fred Buenrostro had accepted $250,000 in bribes from a Lake Tahoe businessman looking to influence billions of dollars in investment decisions. Buenrostro was sentenced in 2016 to four and a half years in prison.
The bribery scandal came amid ongoing struggles to increase the pension fund’s financial health after it lost $100 billion during the recession. The fund now has about 70 percent of what it would need to pay all current and future obligations to retirees, down from more than 100 percent before the recession.
The board is looking for ways to increase returns, including a strategy to increase its holdings in private equity, an investment class that comes with murky risks but which has had a higher rate of return than any of the fund’s other investment classes.
The plan, developed over the last two years, would create two limited liability companies that would initially manage up to $20 billion in new investments in private companies. The board voted in March to move forward with the plan, but didn’t give final approval.
Jelincic has shown up at board meetings to criticize the plan, saying it gives the fund too little control over investments and provides too little transparency to the fund’s members. Those concerns were shared by the Retired Public Employees’ Association and California State Retirees, another group that has endorsed Jelincic.
Jones said that while private equity is less transparent for members than the stock market, transparency for staff under the new strategy would be enhanced compared to the way the fund invests in private equity now, which puts the fund’s money in the hands of third-party managers.
Groups representing unions and local governments have supported the plan, saying higher returns are needed now. Many of those groups have endorsed Jones, including SEIU, the California School Employees Association and the American Federation of State, County and Municipal Employees.
In an interview, Jones called attention to Jelincic’s background as another difference between the two.
Jelincic was censured by his colleagues three times. The first was in 2011 after the State Personnel Board found merit to a complaint that he had harassed three female CalPERS employees, making them uncomfortable with “up and down” looks and commenting on their appearances. He was reprimanded again in 2014 for comments he made criticizing the appointment of a chief investment officer and then in 2017 over allegations he improperly leaked information to news outlets.
Jelincic, who served on the board from 2010 until 2018, denied all the allegations, saying they were spurred by personal enmities.
Endorsements are important in CalPERS elections, where turnout is low and candidates have little information about where voters live.
Turnout for last year’s election among public agency members was 6.4 percent. In the last retiree election in 2007, 32 percent of about 400,000 retirees voted. Jones was unopposed in 2011.
Jelincic, a former president of California state government’s largest union, has secured support from some of the biggest retiree groups, who have some of the best contact information for retirees. Jones has support from unions, who he hopes will nudge the retirees among them his way.