UC Davis Extends Education Partnership with Nation’s Largest Public Pension Fund
Custom Programs for CalPERS Investment Office and Board

What’s the most effective way to manage an investment fund to help people retire? What are the fundamental differences in investment options for pension funds and private funds?

These lead questions open up the dialogue in a three-year INVO Smart, Pension Fundamentals Program designed by the UC Davis Graduate School of Management in partnership with California Public Employees Retirement System (CalPERS), the nation’s largest public pension fund.

Launched in September 2013, the School’s finance faculty have held four programs for CalPERS employees from the fund’s investment office. The successful program concluded in April.

With more than $300 billion in assets under management, CalPERS is a heavyweight institutional investor on Wall Street and beyond. The INVO Smart, Pension Fundamentals Program is one piece of a three-part educational strategy at CalPERS. The other sections include “Financial Fundamentals” delivered online and “CalPERS Fundamentals,” where department leaders within CalPERS describe their day-to-day responsibilities in detail.

UC Davis Executive Education won the contract for this custom program for CalPERS’ investment office over several other California business schools. The uniquely tailored educational experiences were designed for the professionals who work in and with the asset and portfolio managers at CalPERS. The curriculum for the CalPERS staff focused on the areas of pension fund basics, an investment office overview, fiduciary issues and the regulatory environment.

“Developing our talent at CalPERS is essential to our mission of stewarding the retirement and health benefits of our more than 1.7 million members,” said CalPERS’ Chief Executive Officer Anne Stausboll.

Our partnership with the UC Davis Graduate School of Management on the successful INVO Smart Pension Fundamentals Program provided world-class faculty expertise in finance, portfolio management and corporate governance, which has been instrumental in our efforts to increase the knowledge and productivity of more than 200 of our professionals in our investment office,” said CalPERS’ Chief Executive Officer Anne Stausboll.

“UC Davis faculty delivered on directly tying business theory to practice that our participants could immediately apply in their roles.”

Seminars in Institutional Investing

Led by the Graduate School of Management’s finance faculty, the curriculum was broken down into three segments to allow participants to absorb detailed strategies without getting overwhelmed by the complexity of the topics.

The first session was taught by Professor Paul Griffin, a leading international authority in accounting and financial information and disclosures. He covered liabilities, expanding on topics such as future cash flow needs of the system, liquidity requirements for retirement, and issues and solutions for underfunding.

Associate Professor Joseph Chen led the second segment, explaining how investments are made, high-level investment strategy, and the theory and tools that are available to investors to help create optimal portfolios across different asset classes. Chen’s research focuses on stock market reward-to-risk returns.

Finally, Professor Robert Yetman covered CalPERS governance. Yetman is an expert on corporate tax, financial accounting, income tax, U.S. and international financial accounting, and nonprofit accounting and tax issues.

CalPERS is a public nonprofit and is governed by a board of administration. Professor Yetman explained how the board members are elected, their terms and roles, and how they keep up to date with investment strategy. Of particular interest is that a majority of these board members are public servants such as school district or municipal employees without a background in investing.

Yetman then moderated a “fireside chat” with Rob Feckner, president of CalPERS’ Board of Administration, to give the CalPERS staff a “feet on the street” version of the responsibilities involved with being a board member along with the challenges and opportunities of being president.

New Board Education Program

Part of the challenges for the CalPERS board is keeping up to date on the latest trends and knowledge in pension fund investment, governance and benefits administration. The Graduate School of Management is offering its expertise to help the board members stay current.

Because of the effectiveness of the INVO Smart program, CalPERS recently extended its partnership with UC Davis Executive Education to assist in meeting the education requirements of a new law in California. This past summer, the California Legislature passed Assembly Bill 1163. The law requires that policy be created for board education programs that identify appropriate topics. The bill requires 24 hours of education over two years, 20 of which are included in the agreement between CalPERS and UC Davis Executive Education.

“Building on the success of the Pension Fundamentals Program, we’re partnering with the UC Davis Graduate School of Management’s on a new educational program for the CalPERS Board of Administration,” Stausboll said. “We have worked closely with the faculty to develop a five-part program designed to provide CalPERS’ board members with cutting-edge knowledge and trends in our core strategic areas of retirement planning, asset management, financial compliance and risk, pension fund governance and health care delivery. We look forward to the sessions.”

The sessions, which will start in July and be held during regular public board meetings, will include:

  • U.S. Retirement, Public and Private Environment by Dean Ann Huff Stevens (July 2015).
  • Asset Liability Management, Economic Principles and Investment Markets by Associate Professor Joseph Chen and Professor Paul Griffin (September 2015).
  • Financial Reporting, Risk, Compliance and Internal Controls by Professor Griffin in November, 2015. The School will partner with the UC Davis Law School to offer an additional session on Hearings Process Training, including topics such as fair hearings, disability Retirement and other key benefit determinations (November 2015).
  • Pension Fund and Board Governance by Professor Robert Yetman (January 2016).
  • U.S. Healthcare System, discussing the healthcare landscape and delivery (July 2016).

The sessions will also be open to the public and videotaped to be added to the CalPERS YouTube channel for public record.