CalPERS board votes to reissue RFP for DEI consultant after hours-long debate over legal risk

The California Public Employees Retirement System Board of Administration on Tuesday agreed to reissue a request for proposals to hire an outside diversity, equity and inclusion consultant for the board, after a lengthy discussion about legal risks and fiduciary duties.

Trustee Yvonne Walker moved that the board "recommit" to releasing the RFP; Melissa Willett seconded. Trustees debated whether the board should proceed while federal and state litigation and recent administrative guidance around DEI remain unsettled. Board counsel advised the board that the legal landscape has changed in recent months and that the litigation and regulatory environment is in flux.

The debate split trustees along practical and risk-management lines: supporters said an independent consultant would help the board identify systemic gaps and reduce long-term fiduciary risk by aligning DEI work with the pension system's mission; skeptics urged caution and asked for detailed legal analysis before moving forward. Trustee Irene Ortega requested a formal review of litigation risk and process considerations. Tiffany Reese, fiduciary counsel, told the board that more than 60 cases and multiple executive actions and agency directives are pending and recommended discussing litigation risk in closed session so the board could make an informed public decision afterward.

President Theresa Taylor directed the board to go into closed session to hear the counsel''s update on pending litigation and reconvene to vote in public. After the closed-session review, trustees returned to open session and conducted a voice vote to proceed with reissuing the RFP. The board recorded that the motion carried.

Why it matters: CalPERS serves about 1.5 million members and oversees more than $500 billion in assets. Trustees said they view DEI as a strategic issue that intersects with investment oversight, workforce management and member services. But several trustees emphasized that, given the unsettled legal landscape, the board must document a deliberate fiduciary process before adopting any board-level DEI program or policy.

What the board asked staff to do next: staff said the RFP language had been refined to clarify deliverables and will be circulated to trustees before it is posted. Staff also said they will proceed with recruiting an internal DEI executive (a classified state executive position) and that the RFP will be reissued with an invitation to prior shortlisted firms to respond.

Votes at a glance: - Motion to reissue RFP to hire a DEI consultant for the board: motion by Trustee Yvonne Walker; seconded by Trustee Melissa Willett; outcome: approved (voice vote). The board conducted a public roll call after closed-session discussion and the chair announced the motion carried. - Action consent items (general consent calendar): approved by voice vote (motion by Trustee David Miller, seconded by Trustee Jose Luis Pacheco). No requests to remove items were recorded. - Finance & Administration committee recommendations (approved by the board on the committee''s motion): approved (voice vote). Notable items listed in committee materials included approval of the FY 2025-26 annual budget of $2,740,000,000 and 2,843 positions; approval to fund $38,000,000 in the 2025-26 budget for a Total Fund and Capital Markets portfolio management platform and extension of a standard five-year SaaS contract term to seven years with an optional three-year extension; adoption of actuarial valuations and employer/employee contribution rates for the 1959 Survivor Benefit Program and PEPRA contributions for 07/01/2025 to 06/30/2026; approval of a school pool employer contribution rate of 26.81 for 07/01/2025 to 06/30/2026. - Proposed decision agenda item 8A1 (administrative law judge proposed decision): motion to adopt with minor staff modifications; motion carried. Petition for reconsideration at 8B1: denied.

Public comment: a representative of the Retirement Protection Alliance urged careful oversight of long vendor contracts and recommended stronger inspector-general style oversight; the speaker also urged trustees to review Bagley-Keene open-meeting requirements for pending litigation disclosures.

Context: the board's deliberations came at the end of a multi-hour meeting that included staff presentations on CalPERS' DEI framework, investments with diverse and emerging managers, health equity, supplier diversity achievements and human-resources recruitment metrics. Trustees repeatedly connected the DEI-consultant discussion to those operational programs and asked staff to ensure any consultant scope aligns with existing enterprise efforts.

Ending note: trustees said the board will review refined RFP language before publication and expects to receive counsel''s litigation update before finalizing the procurement. Staff committed to circulate the revised RFP language to trustees and to keep the board informed about the internal DEI executive recruitment.