California State Treasurer John Chiang refuses to be politically correct. He doesn’t care whose feathers he’s rustling, and he has written a letter asking the state’s two pension funds to join his efforts to require fee disclosures from private equity firms that the pension funds invest in.

In a recent letter to the California Public Employees’ Retirement System and the California State Teachers’ Retirement System, Chiang wrote that the profit strategies private equity firms employ “too often run counter to the values of public fund trustees and their constituents, particularly with respect to the lack of transparency and detail in how much it costs our pension systems to invest in their products.”

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More on California campaign to make private equity firms fully disclose fees

In the letter, Chiang noted that the California Public Employees’ Retirement System and the California State Teachers’ Retirement System, along with other limited partners, “pay excessive fees to private equity firms and do not have sufficient visibility into the nature and amount of those fees.”

He called on all California public pension funds, as well as the University of California Retirement System, to work with his office to come up with legislation to put comprehensive fee disclosure requirements in place for PE firms.

Of interest, public pension funds are among the largest investors in private equity.

CalPERS is the largest public pension fund in the U.S., and has around $293 billion of total fund market value today. CalPERS’ has invested in private equity funds for almost 25 years, and investments in private equity as of the end of March were $28.9 billion.

CalSTRS has total assets of about $184 billion, and had around $18.4 billion invested in private equity as of late August.

Analysts point out that public pension funds have been feeling pressure to disclose the various fees paid to private equity.  The Institutional Limited Partners Association announced in September it planned to seek a better understanding of “all monies paid to the fund manager.” CalPERS has agreed to start reporting the amount of carried interest paid to general partners later this year.

While Chiang spoke positively of these efforts, he also noted “more needs to be done to ensure public pension funds and their trustees have the transparency they need to determine the value of private equity investments.”

The Treasurer of the Golden State is not lobbying to impair existing contracts with PE general partners. He wants to see disclosure requirements beefed up to include gross management fees, management fee offsets, fund expenses and carried interest, and also related party transactions.