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Is there a more Machiavellian story than this? We’re talking about a fiduciary responsibility in the many billions of dollars. Is anyone paying attention? The Wall Street Journal’s Heather Gillers reports:
In what was otherwise a lighthearted question-and-answer session at a staff meeting this month, Marcie Frost turned serious.
After rising from a clerical position in Washington state government to head the largest pension fund in the country, the California Public Employees’ Retirement System, Ms. Frost had been the subject of reports questioning how she had presented her educational credentials.
“I cannot allow this 30-year career to be minimized,’” Ms. Frost, 54, recalls telling the 900 employees. In an interview, she said she talked about how she’d been honest during her hiring process about not having a college degree. The staff had too big a job ahead of them to be distracted, she added.
Calpers, which oversees $360 billion in assets for 1.9 million police officers, firefighters and other public workers, is dealing with challenges on several fronts. The largest is financial. Calpers has just 71% of what it needs to pay future benefits, putting the fund in the middle of America’s massive pension shortfall.
Estimates of governments’ total unfunded promises to workers range from $1.6 trillion to $4 trillion nationwide, and the funding gap is straining taxpayers and putting pension promises in jeopardy.
Ms. Frost is also wrestling with upheaval within the Calpers executive suite. A series of top officials have left or announced their departures during her two-year tenure. The fund Monday named a former investment director, Yu Ben Meng, to replace its investment chief, who plans to leave by year-end. The fund is set to have three different chief financial officers this year.
Ms. Frost’s own history added to the challenges. She has come under scrutiny following an August report from the blog Naked Capitalism that she hadn’t been enrolled at the Evergreen State College in Olympia, Wash., when Calpers hired her in 2016. A Calpers news release in July that year stated that Ms. Frost “is pursuing” a dual degree from that school.
The blog cited a document provided to Calpers by a recruiting firm during the 2016 CEO selection process. The document, which was reviewed by The Wall Street Journal, said that Ms. Frost was “currently matriculated in a dual-degree program” at Evergreen. Calpers said it based its July 2016 news release on that document, which Ms. Frost now says is incorrect.
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