As Governor Gray Davis begins his 2nd term, he faces a host of problems. One in particular that is likely to be among his greatest challenges - yet to date has received limited attention -- is reform of the California Public Employees' Retirement System (CalPERS). CalPERS is the nation's largest pension fund. In keeping with what Smart Money described as "the nation's most formidable force in shareholder activism," it has a reputation of being an international corporate governance watchdog, using its weighty economic clout to impose its will on large and small companies alike. Yet due to the Davis...