In late 2025, independent journalist and teacher  Jim Vail documented a striking confrontation between Teacher Trustee Erika Meza and the Chicago Teachers’ Pension Fund’s external consultant, Callan Associates, at a board meeting on December 11, 2025. The exchange highlights the growing tension between rank-and-file educator fiduciaries and institutional insiders pushing private markets — especially private equity — with all of the attendant cost, complexity, and opacity that has plagued many U.S. public pension systems. secondcityteachers.substack.com

A. Callan’s Defense of Private Equity Met With Skepticism

At the board meeting, Callan consultant Angel Haddad presented an upbeat defense of private equity, emphasizing “diversification” outside of traditional public equities and claiming that private equity offers exposure to businesses that might not otherwise be accessible. Haddad argued that private equity can provide “different return sources” for the pension fund. secondcityteachers.substack.com

Trustee Meza pushed back forcefully on several fronts:

• She highlighted the cost structure of private equity, including fees and carried interest, questioning whether the net returns justified the risk and cost. secondcityteachers.substack.com
• She pointed out that CTPF has a large number of managers relative to other large plans, and that the plan conducts frequent RFPs — “unheard of” in size and frequency, suggesting manager proliferation and consultant facilitation without demonstrable benefit. secondcityteachers.substack.com
• She directly asked Callan to prepare a true opportunity-cost comparison between the private equity portfolio and simple public market benchmarks (e.g., Russell 3000), including all fees and projected distributions. secondcityteachers.substack.com
• She questioned the fee structure for private equity manager searches, pointing out that CTPF paid Callan roughly $25,000 per search, an amount nearly equal to the cost of a three-day board trip. secondcityteachers.substack.com

Meza also observed (echoing academic research) that there is “mounting evidence that private equity is not outperforming a regular index fund” net of fees, and that the risk–return profile (higher volatility for marginal return improvement) may be unfavorable. secondcityteachers.substack.com

B. The Broader Context: Consultant Conflicts of Interest

This boardroom clash is not an isolated event — it reflects a systemic issue within the institutional consulting industry.

An analytical piece circulated in late 2025 argues that the largest pension consultants — including firms like Mercer, Aon, Russell, Wilshire, and even “independent” firms such as Callan — have become the distribution arm for private equity and private credit. The CommonSense 401k Project

Key points from this industry analysis include:

• Many major consultants are now owned by private equity firms, publicly traded with shareholder incentives to grow high-fee areas, or structured so that consultant compensation increases materially when clients allocate more to private markets. The CommonSense 401k Project
• Even independent, employee-owned consultants like Callan are implicated because they:
  • charge premium fees for alternative consulting services;
  • operate “paid access” events such as Callan College, where private markets managers pay for exposure to pension clients (a “pay-to-play” dynamic); and
  • have internal compensation structures that reward consultants for growing alternative allocations. The CommonSense 401k Project
• This creates an economic incentive tied not to net performance for beneficiaries, but to the expansion of high-fee private investments. The CommonSense 401k Project

In short, when consultants benefit structurally from helping private equity and credit grow within pension portfolios, their advice can no longer be presumed neutral or purely fiduciary — it is shaped by economic incentives that may be anti-beneficiary.

C. Confirmation from Chicago Trustee Questions

Across multiple meetings, Chicago Teachers trustees — both active and retired — have begun to question the role and performance of private markets allocations:

• Another trustee asked why Callan was not present or vocal in the decision process for new private equity commitments, despite being paid to vet these investments. secondcityteachers.substack.com
• Trustees also flagged questionable travel and due-diligence practices (e.g., a CIO trip to South Africa with unclear justification), underscoring weak internal oversight and consultant dependency. secondcityteachers.substack.com
• At least some trustees pushed back on relying solely on external narratives without transparent risk/return comparisons to public markets. secondcityteachers.substack.com

D. Public Pension Underfunding and Risk

The backdrop to these governance tensions is sobering: Chicago’s pension funds are among the most underfunded in U.S. history, with Chicago Police and Teachers plans facing deep fiscal stress attributable in part to high-cost, opaque alternative allocations and compounding actuarial pressures (a theme explored elsewhere in my Chicago Police Pension work). Wirepoints

Private equity — attractive in theory — is increasingly questioned by trustees who see:

• performance shortfalls,
• high fee drag,
• limited liquidity,
• and opaque valuations.

Despite these realities, consultants continue to advocate for expanded private markets commitments, creating friction between fiduciary responsibility and consultant incentives.

E. Hypocrisy of Charter-Aligned Investment Narratives

A further dimension of consultant capture relates to alignment of values and investment narratives. For example, some consultants and practitioners argue that private equity can finance projects like affordable housing or economic development, enabling social goals. secondcityteachers.substack.com

Yet this often sits alongside:

• Investments in charter school facilities or charter-aligned companies (which raise political/ideological concerns for many public educators),
• A lack of member disclosure about how fees and management decisions support private markets interests,
• And, as seen in other contexts (e.g., CalPERS, Kentucky Teachers), fiduciary narratives that prioritize consultant comfort over member outcomes.

Chicago trustees like Meza have pointed directly to the need for clarity on fees, opportunity costs, and benchmark comparisons, and against simply repeating diversification rationales that assume complexity is a virtue. secondcityteachers.substack.com

F. Takeaway: Governance, Fiduciary Duty, and Pension Reform

Jim Vail’s coverage — and the trustees’ questioning — highlights several key governance challenges now emerging across teacher pension funds:

1. Consultant incentives often diverge from beneficiary best interests, particularly around private markets expansion. The CommonSense 401k Project
2. Opaque valuations, smoothed return profiles, and non-investable benchmarks require trustees to demand better risk/return transparency. The CommonSense 401k Project
3. Trustees with fiduciary courage (like Erika Meza) are pushing back on narratives that protect consultant interests rather than member outcomes. secondcityteachers.substack.com
4. Public pension underfunding and elevated risk mean that expanded private markets exposure warrants heightened scrutiny, not automatic endorsement. Wirepoints
5. Hypocrisy and conflict concerns (e.g., charter connections and political influence) underscore the need for clear disclosure and accountability.

https://secondcityteachers.substack.com/p/teacher-trustee-questions-callans?

How America’s Largest Pension Consultants Became the Distribution Arm for Private Equity & Private Debt

Twisted Priorities