CalPERS CEO Under Fire?
Marcie Frost did not claim to have a college degree when she applied to lead the California Public Employees’ Retirement System in 2016. She emphasized it in blue ink, writing “not degreed yet” in a box that asked about her education.Mr. Ashton followed up on this article with another, CalPERS CEO with no college degree: ‘Integrity’ or ‘sad, sad circus?’:
But two years after she got the job, Frost is under fire with a financial blogger alleging that she mischaracterized her education in her application and in a subsequent press release by implying she was further along in obtaining a degree than she actually was.
The report from blogger Susan Webber now is raising questions among retirees who are learning for the first time that the CalPERS chief executive officer did not graduate from college. Webber’s reporting this year has already led CalPERS to oust a chief financial officer and she has a dedicated readership among people who pay close attention to the fund.
“We are surprised. You just assume in today’s market if you’re going to be CEO of the nation’s largest retirement system that you’d have some kind of degree,” said Tim Behrens, president of California State Retirees. He added, “I don’t think anything happened badly because of her lack of a degree.”
The questions date back to the CalPERS Board of Administration’s decision in 2016 to select Frost as the successor to Anne Stausboll. Board members said they chose Frost because of her commitment to engaging with retirees and public employers, as well as her track record leading Washington state’s public pension fund, the $90 billion Department of Retirement Systems.
CalPERS did not list a college degree as a necessary qualification for the job when it began searching for Stausboll’s successor. Frost said she told the board and a headhunting firm that she was interested in pursuing degrees at The Evergreen State College in Olympia, Washington, but board members did not ask her to complete a program when they hired her.
Frost, 54, said her career accelerated first in Washington state and then at CalPERS since she first took classes at Evergreen in 2010. She did not enroll in a class after that year, although she said she still intends to complete a degree some day.
“It’s something that I will finish in my life but this position at CalPERS is the most important thing I’m doing today,” she said.
Frost’s salary in her last full year in Washington state was $139,000. She earned $387,000 at CalPERS last year, according to state salary records.
No ambiguity, board members say
Five board members told The Sacramento Bee that there was no ambiguity about Frost’s education in her application or in her interviews. They said they chose her because they believed she was someone who could work with a public governing board and bring together people with strong and opposing opinions about CalPERS to advance the fund’s goals.
“It was very clear (Frost) did not have a degree,” CalPERS Board of Administration member Dana Hollinger said. “We were told she was not a college graduate. It never got more nuanced than that.”
Theresa Taylor, another CalPERS board member, said Frost closed her interview by reminding board members that she did not have a degree. Taylor said Frost told the board she was interested in obtaining one and she would make it a priority if the board asked her to do so. The board did not direct her to earn a degree.
“Quite frankly it’s not a piece of paper. It’s about somebody who can do a job. She presented herself as the best person who could do the job in that interview,” said CalPERS Board of Administration Vice President Rob Feckner. He described Frost as “up-front, very forthcoming” in disclosing that she did not have a college degree.
The chief executive is not the highest paid position at CalPERS, or the post that recommends major investment decisions for the fund. That position is chief investment officer, a position that has mandatory education requirements in its job description. CalPERS is recruiting a new chief investment officer, and Frost will oversee that position.
She rose up the ranks over 30 years in Washington State government and held a series of leadership positions at its pension fund between 2000 and 2016. She said she began working for the state on a 30-day temporary clerical contract as a young mom. That led to a nine-month contract, and eventually full-time work.
“I think that 30-day (contract) really illustrates what I did throughout my career. I work very hard, I get completely consumed by that job, and I want to build capacity in that job,” she said.
Washington State Gov. Jay Inslee, who appointed her to lead his state’s public pension fund, through a spokeswoman told The Sacramento Bee that he would hire her back “and that one of the worst things California has done is taking her from us.”
A problematic press release
The questions date back to the CalPERS Board of Administration’s decision in 2016 to select Frost as the successor to Anne Stausboll. Board members said they chose Frost because of her commitment to engaging with retirees and public employers, as well as her track record leading Washington state’s public pension fund, the $90 billion Department of Retirement Systems.
Webber pointed to a section in the hiring packet that indicated Frost was pursuing dual degrees at The Evergreen State College in Olympia when she applied to work for CalPERS.
In fact, Frost had not taken classes at the college in years.
Frost told The Bee that she described her educational goals to headhunting consultant Heidrick & Struggles, which CalPERS hired to help it select a chief executive. The firm listed the degrees she hoped to obtain in the information packet it prepared for the board, describing Frost as “currently matriculated in a dual degree program.”
CalPERS included a similar description of Frost pursuing degrees at Evergeen in its press release announcing her hire and in her employee biography. CalPERS has since edited the biography in a way that deleted a reference to Evergreen.
The headline of Webber’s Aug. 27 piece on Frost’s background read, “CalPERS CEO Marcie Frost’s Misrepresentations Regarding Her Education and Work History During and After Her Hiring.”
Webber declined to speak to The Bee by phone. In an email, she said the body of her work on CalPERS speaks for itself.
CalPERS board member Margaret Brown told Bloomberg last month that she wants CalPERS to open an investigation into Frost’s hiring. Brown was not on the board when Frost was hired. So far, she is alone in demanding some kind of action following Webber’s pieces on Frost.
In a follow-up piece on Frost’s background, Webber connected her work this year revealing misleading information in ousted CalPERS Chief Financial Officer Charles Asubonten’s application to Frost’s performance.
“While it may seem pedantic to hector Frost over her error-rife resume, it is actually telling evidence of her failings as a manager,” Webber wrote.
She further criticized CalPERS board members for accepting claims in Frost’s application. “The fact that the board can’t be bothered to do this right says they are not fit to serve and need to be replaced,” Webber wrote.
Webber’s take on Frost’s application resonated with retirees who believe CalPERS withholds public information and suffers from weak leadership.
To them, CalPERS did not have a good reason to describe Frost as pursuing a degree when she was not enrolled in a program and not making progress toward a credential.
“Part of it for me is the pattern of secrecy CalPERS does about everything,” said Tony Butka, a former state labor relations mediator. He wrote a letter to the State Personnel Board this week asking that it investigate Frost’s hiring and discipline board member Richard Costigan. Costigan also is a CalPERS board member who has defended Frost’s hiring in news reports.
“If it was OK to have a high school degree, fine,” Butka said. “But to imply she was working on it when she’s not, that’s wrong.”
Outside groups backing Frost
Outside of CalPERS, lawmakers and advocacy groups have weighed in on Frost’s behalf since Webber began writing about Frost’s education.
“The CalPERS Board of Administration has the appropriate authority to address internal issues should anything be deemed inappropriate. I do not believe that will be necessary in this instance,” said Assemblyman Freddie Rodriguez, D-Pomona, chairman of the Public Employees, Retirement and Social Security Committee.
On the other side of the aisle, state Sen. John Moorlach, R-Costa Mesa, said he appreciated that Frost has been “accessible and she’s been willing to meet, she has experience.” Moorlach is a pension reform advocate who proposes every year to adjust the retirement benefits public agencies can offer.
The League of California Cities, which has been the most outspoken advocacy group raising concerns about CalPERS’ fiscal health since Frost took office, also continues to back her. The league earlier this year issued a report that said CalPERS fees were becoming “unsustainable” for some of its members.
Leaders of the league say Frost has motivated cities to become more active in CalPERS, and kept them informed about important votes.
“From sitting down with the League’s executive officers this last spring, to meeting with mayors and council members from all over the state in June, we have appreciated the efforts of Ms. Frost and her team to listen, actively engage our membership and identify common ground.,” league Executive Director Carolyn Coleman said.
Frost on Wednesday spoke about her background during an all-staff meeting at CalPERS. “I have to stay focused. We have to stay focused. It really is the only way we can achieve the goals we have set,” she said.
A coalition of public employee unions is doubling down on its support for CalPERS CEO Marcie Frost, who has been taking heat for several weeks since a financial blogger drew attention to alleged misrepresentations in Frost’s job application and in a press announcement describing her background.You can read Dave Low's letter to President Mathur here or here.
The Labor Coalition on Sept. 5 sent its letter backing Frost to CalPERS Board of Administration President Priya Mathur.
The letter, signed by California School Employees Association President Dave Low, praises Frost’s outreach to unions and public agencies. It criticizes Susan Webber, the corporate management consultant and Naked Capitalism blogger, who wrote the original pieces drawing attention to public announcements that portrayed Frost as enrolled in a college program when in fact Frost was not actively pursuing a degree.
“Our understanding is that the CalPERS board hired Marcie Frost with full knowledge of her resume, experience and education. Whether Frost has, or is currently pursuing a college degree, is therefore immaterial as long as the CalPERS board knew the facts when they made the decision to hire her. For those who believe a college degree is a requisite for a CEO, I have five words, Steve Jobs and Bill Gates,” Low wrote.
Education is not competence. https://t.co/kOjVMwLgDj— Jordan ⚡️ Staniscia (@jordanstaniscia) September 14, 2018
He wasn’t the only person likening CalPERS’ decision to hire Frost without a college degree to the Apple CEO Jobs. Guy Kawasaki, an early Apple marketing specialist, made the same connection on Twitter.
He tweeted a headline that began, “CalPERS hired a CEO without a college degree,” and added, “So did Apple.”
So did Apple. https://t.co/UtKXN0uE5H— Guy Kawasaki (@GuyKawasaki) September 14, 2018
The praise does not mean Frost is in the clear. The Sacramento Bee published a story following Webber’s reporting, and many more people learned that Frost did not have a degree when the CalPERS board chose her to lead the nation’s largest public pension fund.
“CalPERS, responsible pension organization, or sad, sad circus?” wrote Lois Henry, a former Bakersfield Californian editor, on Twitter.
Is there no end to the corruption in Sacramento. She earned $387,000 at CalPERS last year, according to state salary records. She has strong political support and the board believes she is qualified? Is there any wonder why our pension funds are in the red https://t.co/NJpcmqRGls— Paul Vargas (@Uvargpa) September 14, 2018
CalPERS, responsible pension organization? Or sad, sad circus?https://t.co/uCqKWETiRA— loishenry (@loishenry) September 13, 2018
The board chose Frost because of her record leading Washington state’s public pension fund. It’s expected to discuss her performance at a regularly scheduled review later this month. Webber on Thursday published a letter from a former deputy state controller urging the CalPERS board to dismiss Frost.
“What message does the retention of the CEO send to all CalPERS active and retired members who have pursued education goals and accurately presented their qualifications for their positions?” Terrence McGuire, the former deputy controller wrote. “The board failed the membership in the CEO hiring process; I hope the board does not fail them again in the termination process.”
Low’s support for Frost is not unexpected. He often speaks for labor to defend the state’s public pension funds and unions have a large voice at CalPERS because they advocate for current employees and retirees.
His letter to Mathur was supported by the California Teachers Association, California Professional Firefighters, SEIU Local 1000, Peace Officers Research Association of California, Professional Engineers in California Government., International Union of Operating Engineers and a number of other state and local unions.
You can also read Susan Webber's (aka Yves Smith) comment on the naked capitalism blog here going over how Marcie Frost supposedly misrepresented her education.
I stopped reading Yves' grossly biased and unreasonably critical comments on CalPERS a long time ago. Someone should ask her straight out: "Who is paying you to attack CalPERS every chance you get?" (I'm dead serious)
Anyway, this is another much ado about nothing questionning the credentials of CalPERS' CEO Marcie Frost.
The lady did not lie about not having a college degree, she made it clear to CalPERS' board a few times and yet they hired her because of her commitment to engaging with retirees and public employers, as well as her track record leading Washington state’s public pension fund, the $90 billion Department of Retirement Systems.
As far as I am aware, she did a great job there and that is why she was hired as the CEO of CalPERS.
Don't get me wrong, having a college degree is important but she was honest and has great experience and a proven track record so I don't understand why naked capitalism and others are questionning her or CalPERS' board.
It's ridiculous especially during a time when we need more women as CEOs of major corporations and public pension plans.
It's also worth noting that Mrs. Frost is not the highest paid employee at CalPERS, that honor deservedly goes to the fund's CIO as they have tremendous responsibility overseeing $360 billion in assets.
Still, she gets paid very well and has done a great job at CalPERS as far as I can tell so this really is another naked capitalism hatchet job which should be ignored.
That's all I will say on this latest CalPERS smear job. When you're reporting or blogging on something, make sure you have all the facts or risk looking like a total ass.
Below, CalPERS CEO Marcie Frost discusses agenda item 4 at the March board meeting. Listen to her speak, she might not have a college degree but she sure knows what she's talking about and she's very impressive and composed while delivering her comments.
Update: Yves Smith is back at it Wednesday, doubling down on her attacks on Marcie Frost. In my opinion, it's time CalPERS sues her for defamation, she obviously has an agenda and doesn't understand the role and responsibilities of the CEO position at CalPERS.
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