As one of 13 CalPERS board members, J.J. Jelincic presumably has some authority. But last June and July, he filed Public Records Act requests to force CalPERS to give him weekly reports from its federal lobbyists, much like any member of the public.

 

CalPERS tripled its federal lobbying force last year from one all-purpose firm, the Lussier Group, to three separate lobbying representatives for retirement policy, investment and market regulation, and health care issues.

 

Jelincic wanted to see what CalPERS was getting for its increased spending. So he asked for the weekly reports from the lobbyists, as specified in their contracts. But the rest of the board had decided monthly reports, also specified in the contracts, are enough, and Jelincic’s informal request was denied.

 

The unusual Public Records Act requests by a board member helped trigger a CalPERS governance committee discussion last month of “board member behavior” that was clearly aimed at Jelincic.  … In addition to filing the Public Records Act requests, Jelincic was criticized by other board members for “disparaging” staff in public and taking more than his fair share of time at board meetings by asking questions.

Board targets only member who challenges staff

CalPERS’ actions got two much more savage takedowns at Naked Capitalism, a popular niche website dedicated to exposing improper and unethical behavior by large financial institutions and corporations and the government agencies which regulate them. Susan Webber, a 35-year veteran of Wall Street and high finance, writes for the site under the name Yves Smith. Among her allegations:

• CalPERS board routinely tries to hide basic information about what its doing, apparently at the behest of its staff, which doesn’t like outside scrutiny.
• CalPERS ignores state laws on taking testimony at its meetings and uses security guards to intimidate individuals who ask difficult or multiple questions.
• CalPERS is trying to break Jelincic’s will by hassling him. Some specifics from Webber:

[Some video of last month’s] Governance Committee meeting clearly shows that the board, aided and abetted by [fiduciary counsel Robert] Klausner, is in the process of establishing a procedure for implementing trumped-up sanctions against Jelincic, presumably so as to facilitate an opponent unseating him in his next election. But Jelincic’s term isn’t up until 2018, so from their perspective they are stuck with an apostate in their ranks for an uncomfortably long amount of time. Part of their strategy appears to harass him into compliance with the posture the rest of the board, that of ceding authority to staff and conducting board meetings that are largely ceremonial. …

 

The board ganging up against Jelincic comes straight out of The Peter Principle. One of its corollaries was “hierarchical exfoliation,” in which organizations expel both poor performers and notable outperformers, the latter because they make everyone else look bad. Jelincic, the lone board member willing to do his job, must be tarred and feathered for his crime of showing the rest of the board up. …

 

[It] is particularly unseemly that the board member who has been the most aggressive in pushing the illegal notion that CalPERS can and should sanction Jelincic over filing Public Records Act requests is Priya Mathur, who has been fined repeatedly for violating state ethics laws.

Jelincic has history as CalPERS maverick

This isn’t the first time Jelincic has tangled with other board members and top CalPERS officials. The Sacramento Bee reported in April on one contretemps, involving limits put on his voting to avoid conflicts of interest because his full-time job is as a CalPERS investment officer.

In 2011, Jelincic was officially reprimanded for alleged sexual harassment of co-workers in CalPERS’ investment office. But he denied the allegations and called the sanctions “politically motivated.”

But Jelincic’s campaign biography and website doesn’t focus on his maverick ways. Instead, they emphasize his history as a union leader, including time as president of the California State Employees Association. Strong union support helped him first win his seat on the CalPERS board in 2009.

It’s another sign of how daunting pension reform is in California. Ed Mendel of Calpensions.com has the details:

A retiree group won a big victory last month. Reversing a superior court ruling, an appeals court overturned part of a voter-approved San Francisco pension reform in 2011 that ended higher payments to retirees when investments have “excess earnings.” …

Retirees, scattered and no longer union members, might seem unlikely to be formidable, particularly when battling a cost-cutting pension reform backed by all 11 county supervisors, business and labor groups, and 69 percent of San Francisco voters in 2011.

The reform, Proposition C, was the milder establishment alternative to deeper pension cuts in Proposition D by Jeff Adachi, one of the 16 candidates for mayor on the San Francisco ballot that year, including the incumbent and winner, Mayor Ed Lee.

“The epitome of greed,” Gary Delagnes, president of the San Francisco Police Officers Association, told SF Weekly in 2012 when the retiree group began its legal challenge.

“Vested benefits” theory protects flawed concept

The court decision shows that judges take the concept of “vested benefits” very seriously. Unlike in the private sector, once a government union is promised benefits, those benefits can’t later be reduced. When this legal axiom is combined with the state Public Employment Relations Board’s hostility to ballot measures on pension issues, the difficulty that taxpayers face in trying to scale back government pensions looks extraordinary.

But the San Francisco case is particularly noteworthy because it involves the single category of pension benefit that actuaries, accountants and good-government advocates find most indefensible. Giving government pensioners extra money when pension funds have strong years only makes mathematical sense if the pensioners get less when pension funds have bad years. No local government in California has such a policy.

“Excess earnings” benefits are never seen at big pension agencies with strong staffs like CalSTRS or CalPERS; it’s understood that they’re just not sustainable in the long run.

But in cities like San Francisco, San Diego and Fresno, and counties like Alameda and Mendocino, the actuarial, common-sense arguments were overwhelmed by political clout and expedience.

Here’s a link to a study commissioned by the Schwarzenegger administration that outlined the many costly quirks in local governments’ pension policies. It was highly critical of “excess earnings” bonuses.