CALPERS CEO and Sen. John Moorlach to Talk Socially Conscious Pension Investing

CALPERS headquarters in Sacramento. Photo by Coolcaesar

John Moorlach and Marcie Frost are not running against one another for office, but they are poised to take different sides on a public policy issue they will discuss Thursday in Huntington Beach.

Moorlach (R-Costa Mesa) is the state senator for the 37th district that stretches from Huntington Beach south to Three Arch Bay and inland to East Anaheim. Frost is the CEO of the California Public Employees Retirement System (CALPERS), which is the largest public pension fund in the U.S., with a $326.4 billion total fund market value for the current fiscal year.

She has defended CALPERS’s socially responsible investment policy, which favors stock purchases, mutual fund choices and private equity investments that are grounded in social and environmental sustainability. The theory is that by steering the massive financial pool in those directions, other investors will follow and the world will become a better place.

For instance, in June 2017, Frost issued an official statement in defiance of President Donald Trump’s declaration that the U.S. would abandon the Paris Agreement that had 149 countries pledging to take steps to combat climate change. “As a global investor and as fiduciaries focused on the long-term sustainability of our investments, we will continue to support the Paris Agreement on climate change,” Frost stated. “The Paris Agreement enables us to manage material risk and build opportunity in our investment portfolio. Supporting its goals ultimately benefits our members and their long-term retirement security.”

State Sen. John Moorlach (R-Costa Mesa). Official California Senate photo

Moorlach first rose to prominence as a private accountant running for Orange County Treasurer-Tax Collector in 1994, when he predicted the county would go bankrupt because of the risky investments of incumbent Robert Citron. The GOP-controlled Orange County Board of Supervisors circled the wagons around Democrat Citron, saying conservative Republican Moorlach did not know what he was talking about. Citron won the race, but after the county did indeed suffer what was then the largest municipal bond portfolio loss and bankruptcy in U.S. history, he resigned in disgrace. He was later convicted of felony financial crimes and died in 2013. 

Meanwhile, the county board eventually appointed Moorlach to fill the Treasurer-Tax Collector vacancy, and he springboarded from that seat to county supervisor and state senator. Along the way, he has warned about a looming public pension crisis and has questioned the CALPER’s socially responsible investment policy.

Last summer, when speaking about the Public Divestiture of Thermal Coal Companies Act authored by his Senate colleague Kevin de Leon (D-Los Angeles), who is now seeking to unseat U.S. Senator Dianne Feinstein (D-California) in November, Moorlach told CalWatchdog.com’s Steven Greenhut that chief investment officers “invest for value and don’t appreciate being hamstrung by legislators who don’t know how to manage a diversified portfolio. I think I’m the only legislator who managed a $7 billion portfolio. And the studies I’ve seen have shown that social investing has produced lower returns.”

Ironically, some public employee union members, who want the biggest bang for their invested pension bucks, find agreement on this point with Moorlach, who recently danced on the grave of the California labor movement in light of the Supreme Court’s Janus ruling.

Marcie Frost. Courtesy of CALPERS

Huntington Beach Mayor Mike Posey, who also held a town hall in February that tackled local housing issues, brings Frost and Moorlach to the Council Chambers from 4:30 to 6:30 p.m. Thursday to discusses the topic, “Point of No Returns – Environmental Social Governance Investment Strategies and CALPERS.”

City Hall is at 2000 Main St., Huntington Beach.

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