By Jay Rogers
The Pentagon is asking, out loud and in public this week, a question my own research already tested weeks ago. The Department of Defense Education Activity is weighing a proposal to shift its worldwide school system away from DEI programming and back toward academics, parental input, and school choice for military families, according to reporting published July 3 by Open the Books.
Strip away the education-policy framing and the question underneath is the one I ran the numbers on in mid-June, across an entirely different institution. Does an institution’s investment in demographic administration come at the cost of the mission it exists to serve.
I’ve spent thirty years managing institutional capital and have served as an expert witness in securities and fiduciary litigation. The standard I was trained under, and have testified about under oath, has one job. Protect the beneficiary’s interest, full stop.
Apply that standard outside a brokerage statement and you land on an uncomfortable comparison between two institutions that rarely share a sentence: public pensions and the United States military.
Both exist to deliver a specific, measurable outcome. Pensions have to pay retirees. The armed forces have to win wars.
Both spent the last decade layering identity-based administrative structures on top of that mission, and my own six-plan analysis shows what the layering costs once you can actually measure it.
The analysis examined six pension systems chosen for contrast in governance culture: CalPERS, New York City’s NYCERS, the Illinois Teachers’ Retirement System, Wisconsin’s Retirement System, South Dakota’s Retirement System, and Tennessee’s Consolidated Retirement System.
Over a ten-year horizon, the high-DEI-intensity funds and the low-DEI-intensity funds posted broadly comparable investment returns.
The funded ratios told a different story. They diverged by roughly 30 percentage points. Wisconsin’s plan is almost fully funded. South Dakota and Tennessee sit close behind, proof that solvency does not require a diversity statement.
CalPERS, by contrast, carries a $153 billion unfunded liability against a 79% funded ratio as of June 30, 2025, despite a strong 11.6% investment return that year.
The low-DEI-intensity funds also carried lower expense ratios and more consistent actuarial discipline, meaning they kept their assumed rate of return honest instead of adjusting it to flatter the numbers.
I want to be precise about what that data proves and what it does not. Comparable returns paired with a 30-point funding gap is correlation, not causation, and I’ve been careful to say so every time I present it.
What the data does show is that an institution can hire the same class of asset managers and chase the same benchmarks and still land in a radically different financial position depending on the discipline of its governance.
DEI intensity turns out to be a workable proxy for that discipline. The formal test, a fifty-state regression controlling for the obvious confounders, is the next step once full state-level data becomes available.
The White House’s own economists reached a parallel conclusion in the private sector. The 2026 Economic Report of the President found that industries pursuing DEI most aggressively became roughly 2.7% less productive by 2023 than industries that did not, with the gap opening precisely when DEI-driven hiring and promotion accelerated after 2016. Same mechanism, different institution.
Prioritize the demographic profile of decision-makers over their qualifications, and the organization pays a bill nobody bothers to itemize.
Which brings us back to the barracks.
Last August, the Justice Department settled Students for Fair Admissions’ lawsuits against West Point and the Air Force Academy, following an earlier settlement with the Naval Academy. The Defense Department’s own position in that settlement reads like a fiduciary finding.
That is not a talking point from a cable news panel. That is the Pentagon’s formal legal position, entered into the federal record, abandoning a “compelling national security interest” argument the prior administration had defended in court for years.
I have a stake in this that goes past the spreadsheet. My son is a West Point graduate and wears the uniform of an institution built entirely on the premise that competence is the only currency that matters once the shooting starts.
Bunker Hill did not care about anyone’s diversity statement, and the next fight will not either.
An officer corps selected on a demographic curve rather than a merit curve accepts a worse average by design, and nobody put that tradeoff on a briefing slide for the taxpayers and families who cover the cost.
The Pentagon’s school proposal, the academy admissions settlements, and my pension data are three separate institutions arriving at the same finding from three unrelated directions.
Organizations that measure themselves against a mission outperform organizations that measure themselves against a demographic target, and the gap shows up wherever anyone has the discipline to look for it.
I built this pension analysis because retirees deserve to know whether their fund’s governance is sound. The country deserves the same clarity about the institution it asks to fight and die for.
The data says readiness is a fiduciary duty, and fiduciary duties do not come with an exception for good intentions.
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Jay Rogers is a financial professional with more than 30 years of experience in private equity, private credit, hedge funds, and wealth management. He has a BS from Northeastern University and has completed postgraduate studies at UCLA, UPENN, and Harvard. He writes about issues in finance, constitutional law, national security, human nature, and public policy.
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