NEW SDCERS BOARD MEETS AGAIN - NO DECISION ON WAIVER
    The new SDCERS Board held its second meeting on Friday, May 20, 2005 before a full house and many TV cameras. The reason for the crowd was the request by the Mayor and Council, asking the Board to waive the attorney-client privilege. The Board had rejected this request in closed session at its first meeting in April. Mayor Murphy was accompanied by Councilmember Toni Atkins, City Manager Lamont Ewell and consultant Tony Dahlberg (Kroll, Inc.). Also requesting the Retirement Board to waive the privilege were SDREA Advocate Virginia Silverman, Local 127 President Joan Raymond, former Retirement Board President Jim Gleason, and City Attorney Mike Aguirre.
Board members asked many questions of the Mayor and consultant Tony Dahlberg. One question to the Mayor was if the City Council would indemnify the current SDCERS Board from personal liability. Surprisingly, the Mayor seemed unprepared for the question and did not answer, even though the City Council had voted to indemnify the previous board. At the end of a very long meeting the Board went into closed session, and emerged with no decision on the waiver request, now scheduled for the June meeting.
Other items on the June agenda include: 1) staff recommendation to credit all DROP accounts at the current 8% rate for the quarter ending June 30, 2005. (Staff recommendations for possible changes to DROP interest rates will be discussed at the August Board meeting); and 2) a proposal to revisit the Gleason settlement to make the actuarial assumptions in Gleason the 'floor' and permit the City to pay higher amounts to the pension fund.

RESIGNATIONS AND INDICTMENTS AT CITY HALL
    Following Mayor Murphy=s late April announcement of his impending resignation, the turmoil at City Hall increased in May. On May 14, former Assistant City Auditor Terri Webster was placed on leave of absence, closely followed on May 16 by the resignation of three high-ranking City officials, including Deputy City Manager Pat Frazier, City Treasurer Mary Vattimo and Human Resources Director Cathy Lexin.
The next day, County District Attorney Bonnie Dumanis announced the indictment of six former (one still current) Retirement Board members on felony conflict of interest charges under Section 1090 of the State Government Code, including two officials who had just resigned.
The indictments were something of a surprise, in part because the District Attorney had only recently announced an investigation of conflict of interest. However, The District Attorney revealed that the investigation began the previous year. Arraignment of the six is scheduled for June 20.

STILL NO END IN SIGHT FOR KPMG AUDIT AND INVESTIGATIONS
    Despite resignations and indictments, the KPMG FY 2003 City audit and the SEC and FBI investigations appear to be no closer to resolution. We reported last month that new City consultants, Kroll Inc. (former SEC officials), were proposed to receive a $2 million increase in fees at the City Council meeting on May 10. The increase was approved after Kroll spokesman Tony Dahlberg discussed reasons for the delay, during a lengthy Q&A.
According to Dahlberg, part of the problem is the lack of waiver of attorney-client privilege by the SDCERS Board, which keeps needed documents unavailable. However another important reason is the failure by the City=s previous consultant, Vincent & Elkins, to provide detailed documentation to their findings, and in a form needed by KPMG. Kroll is now working with V&E (also former SEC employees) to compile the necessary work papers and other backup documentation. These backup documents will apparently constitute V&E=s promised >written report.= The total consultant costs to resolve the audit and investigations are approximately $10 million and rising, with about $4 million to V&E. Dahlberg stated that the goal is to have the KPMG audit issued by the end of the year.

RETIREE HEALTH BENEFITS IN CITY FY 2006 BUDGET
   Whoops, we goofed. According to Financial Management Director Ron Villa, the 'Retirement' issue before the City Council on Monday, June 13 included only the Retirement Administration budget, NOT retiree health care. He said City Council approval for this payment was granted last Fall, when the City Council approved the Pension Reform Committee's recommendation to transfer health care payments back to the City. In fact, the City picked up about half of the current FY 2005 retiree health care costs. Looks like we can rest easy on this issue, at least for now.

LAWSUITS (CURRENT STATUS)
    David Wood et al. and SDCERS v. Hanson et al, the malpractice suit against Robert Blum, SDCERS fiduciary counsel for giving the SDCERS board 'bad advice' on the MPII underfunding proposal. The initial settlement hearing was held on March 24, and continued to May 31st. to review attorney fees and permit the new SDCERS Board to vote on the settlement.
At the May 31 hearing, Judge Pate heard testimony from persons requesting to opt out of the settlement, including Diann Shipione and attorneys for the six indicated pension board members. Also, Judge Pate indicated that any attorney fees would be outside the settlement and payable by SDCERS. However, no specifics are known until Judge Pate issues a written ruling within the next 90 days B probably much sooner.
SD County Taxpayers v. City of San Diego and SDCERS v. Aguirre -- no change from last month.

CANDIDATE FORUM IN PROGRESS!
    Advocacy member Ruth Ann Hageman has been busy organizing the Mayoral Candidate Forum to be held on Wednesday June 29 (details below). Concerned with all the talk about pension benefit rollbacks? bankruptcy? receivership? Who isn't? At the Forum you can ask the candidates for mayor about their positions on these and other important issues. Bring a friend or neighbor.

ADVOCACY COMMITTEE
    In addition to the waiver request to the SDCERS Board, we also spoke to the City Council on the same issue. As a follow up, President Nancy Acevedo sent a letter to the Mayor and Council requesting that the Council indemnify the new SDCERS Board to protect the members against lawsuits, to facilitate a waiver by the Board.
For comments or suggestions on this newsletter, email Virginia Silverman at VirginiaLA35@cox.net. And remember to check our website at www.csdrea.com, your one-stop information source.

UPCOMING MEETINGS B DETAILS
    June 17, 2005 - Retirement Board Meeting
    1:30 p.m. SDCERS Meeting Room, Wells Fargo Bldg, 4th Floor, 4th & B Streets
    Parking underneath building; validation at SDCERS reception desk.
         (For Board agendas, information on committee meetings, and staff reports, go to www.sdcers.org).

*   June 29, 2005 - CANDIDATE FORUM!!
      9:30 a.m-11:30 a.m., War Memorial Building, Balboa Park. Open to All!

    June 14 - June 27, 2005 - City Council FY 2006 Budget Hearings (all in City Council chambers)
    See Retiree website (csdrea.com) or City website (sandiego.gov) for list of specific dates and topics.

Note: Retirement Board meetings are videotaped and usually replayed the same Friday, beginning at 7 p.m., on Cox Cable Ch. 24 or Times Warner, Ch .24. City Council meetings are broadcast live and replayed the same evening, and on Saturday morning at 7 a.m.( Monday Council) and Sunday morning at 7 a.m. (Tuesday Council). ___________________________________________________________________________________________
CITY HALL CONTACTS (Mailing Address for all City officials is: 202 'C' Street, San Diego, CA 92101.
Call City information at 619-236-5555 for phone numbers)

MAYOR: Dick Murphy - Email: dickmurphy@sandiego.gov
CITY ATTORNEY: Mike Aguirre - Email: cityattorney@sandiego.gov
COUNCILMEMBERS:
    District 1, Scott Peters - Email: scottpeters@sandiego.gov
    District 2, Michael Zucchet - Email: mzucchet@sandiego.gov
    District 3, Toni Atkins - Email: ToniAtkins@sandiego.gov   
    District 4, Anthony Young - Email: anthonyyoung@sandiego.gov
    District 5, Brian Maienschein - Email: bmaienschein@sandiego.gov
    District 6, Donna Frye - Email: DonnaFrye@sandiego.gov
   District 7, Jim Madaffer - Email: jmadaffer@sandiego.gov
   District 8, Ralph Inzunza - Email: rinzunza@sandiego.gov