The entire investment staff of the California State Teachers' Retirement System has personally offered its support to their counterparts at the California Public Employees' Retirement System amid a headline-grabbing investigation into gift reporting. In a strongly-worded letter, signed individually by CalSTRS investment officials, the $155.4 billion pension said the past two weeks had become “simply too much to bear without letting all of you know that we, the CalSTRS investment staff, support you”.
About 49 CalPERS staff are under investigation by California’s Fair Political Practices Commission (FPPC) for failing to report gifts received from fund managers. CalPERS board of administration president Rob Feckner was one of the 49 under investigation for failing to properly report two free meals from AEW and Goldman Sachs in 2007 and 2008, respectively. On Thursday, he told the State Worker newspaper: “I have now signed the stipulation order and submitted payment for my $400 fine for two dinners in five years. I am putting this behind me and chalking it up to lessons learned.” The FPPC launched their investigation after a special CalPERS review in the wake of the pay-to-play placement scandal found apparent misconduct by former officials and board members, including gifts and travel.
CalSTRS’ letter to CalPERS, dated 1 June, did not specifically mention the FPPC investigation, but it said the fallout of the placement agent scandal has been “deeply sadden[ing]. As competitors in this challenging investment industry, we know full well that the CalPERS investment officers are dedicated, hard-working and, most of all, ethical employees,” the letter stated. “The CalSTRS investment staff stands by and supports you. If there is anything we can do to help, just ask.”
Signed by each member of the CalSTRS team, including director of real estate Mike DiRe, the letter insisted that defined benefit plans are “under attack,” with public employees in the spotlight like never before. “Couple all of that with the burden of new rules and regulations and it is apparent that it’s getting harder and harder to simply do our jobs. We can rise above, and we know you will overcome these events.”
The pay-to-play scandal, the letter said, had “hurt us all” in Sacramento. “As the two largest funds in the United States, together we can persevere and show great character under these stressful situations.”
CalSTRS and CalPERS were unavailable for comment at press time.