CalPERS Governance: Election Reforms


James McRitchie

Testimony of James McRitchie

Finance & Administration Committee, Agenda Item 6b, February 18, 2014 (Staff Report)

As the Harold Stassen of CalPERS, having run for the Board more times unsuccessfully than anyone else, I have some experience with the governing rules and favor the actions recommended by staff but with additional improvements to recommendation 2, CEO Certification.

I agree, it doesn’t make any sense to have the Secretary of State certify the elections. I once naively thought certification meant something. However, in 1998 I after CalPERS General Counsel allowed the board president to alter his candidate statement in direct violation of CalPERS regulations, I got an education. Certification doesn’t guarantee fair elections or that those who violate the rules will be punished. The function can be done by the CalPERS CEO on a much more cost-effective basis. However, I see both danger and opportunity. First the danger.

CalPERS risks the perception that certification is meaningful. We don’t need any more bad publicity. The Committee should also recommend strengthening election regulations. For example, in 2006 CalPERS amended its election rules, section 554, to prohibit those “directly involved in conducting a CalPERS election” from using his or her official position to favor one candidate over another. Most non-lawyers would read that to imply that staff not directly involved is free to use the prestige or influence of their office to the advantage of one or another of the candidates. Yet, Government Code section 19990, subdivision (a), prohibits any State agency staff from “using the prestige or influence of the state or the appointing authority for the officer’s or employee’s private gain or advantage or the private gain of another.” Who is “directly involved”?  Where is that term defined in the regulations? Examples from the 1998 elections for the state member seat. (provided in written testimony but not orally, so as to be less of an embarrassment)

  • Staff who produced a CalPERS newsletter that went out just before the elections prominently featuring the incumbent in a 3 page cover article, were they “directly involved” in the elections?
  • Was the Chief of Public Affairs “directly involved” in elections when she tried to get the incumbent’s opponent to remove information from his Internet site concerning his efforts and success in obtaining closed door votes and potential conflicts of interest?
  • Was the CEO “directly involved” in the elections when he attacked the incumbent’s leading opponent in the press, implying he was unqualified to comment on the legality of actions supported by the incumbent, which were later overturned in court?
  • Was the Chief Counsel, whose salary was in part determined by the incumbent, “directly involved” when she allowed the incumbent to violate the rules by changing his statement after the legal deadline so that he could address issues raised by the challenger?
  • Was the Board “directly involved” when they allowed the Chief Counsel to appoint a protest panel to determine, in part, if the election should have been invalidated?

What legitimate reason does the Board have for limiting its prohibition to staff directly involved? My intent isn’t to rehash prior grievances. It is simply to note that CalPERS election regulations and elections are likely to face additional public scrutiny if they are certified in-house. Lack of recent election scandals has more to do with the high standards and culture of the current administration, rather than the rules or infrastructure. Be prepared; review the election regulations and procedures. It might also be a good time to look at the idea of creating an ombuds office to further ensure ethical conduct at CalPERS.

Second, opportunity. The Committee should broaden the staff recommendation to include further investigating ranked voting. Without required certification by the Secretary of State, ranked voting may further reduce election costs by saving the need for runoff elections. The last time staff investigated ranked voting it turned out to be more expensive because the Secretary of State required an elaborate voting machine certification process that cost in excess of a million dollars and there was only one potential contractor. That would no longer be the case if elections were certified by the CEO. Bidding would be competitive.

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