CITY OF SAN DIEGO RETIRED EMPLOYEES ASSOCATION

GENERAL MEETING HELD IN CONJUCTION WITH SDCERS FIRST ANNUAL MEETING
SEPTEMBER 9, 2008 

Patti's Notes - (As I understood the meeting.)
SDCERS 1st Annual Meeting- Sept. 9, 2008 at Balboa Park Club.

Member Services Director, Cynthia Queen introduced SDCERS' staff.

SDCERS Board President, Tom Hebrank said SDCERS' success could be measured by SDCERS not being news worthy and the Board President not being as unpopular as the IRS at a cocktail party.

Chief Administrative Officer, David Wescoe pointed out SDCERS' continuing effort to improve SDCERS's communications and SDCERS' service to members.

SDCERS ACHIEVEMENTS
Wescoe noted that no other retirement system has accomplished as much in two years as SDCERS.
SDCERS apportioned assets between City, Port and Air Port, recognized Corbett, 13th check and Cola Supplement as SDCERS' liabilities, and observed IRS limitations on pension payments according to IRS section 415.

SDCERS implemented a four year asset smoothing method of gains/losses to average out the City's annual payments. Hovey explained SDCERS takes 25% and defers the other 75% to a future year, vs. market value of assets.

SDCERS also adopted the most conservative and prudent 20 year amortization of the unfunded annual liability.

FUNDING RATIO:
Using the newly adopted, and more accepted funding method, EAN, the funding ratio has climbed from 62.?% in June 30, 2004, to 78.8% in June 30, 2007.
On April 17, 2007, Joe Esuchanko, the actuary hired by Aguirre, testified in defense of the City's situation on the pension funding. Esuchanko said the ratio that is the most important is the Financial Accounting Board Funding, or FASB ratio. (If the fund were to be closed down on April 17, 2007, with no more retirements allowed), Esuchanko said SDCERS' FASB ratio was 106.99%. Wescoe compared that number with 98.87% in 2006, 95.05% in 2005, and 94.?% in 2004.

FINANCIAL CONTROLS STRENGTHENED
Wescoe noted the establishment of SDCERS' own Independent Audit Committee, creation of an Internal Auditor position who reports directly to the Audit Committee, etc.

SDCERS GOVERNANCE
Chief Compliance Officer was created, fiduciary training…etc.

GROUP TRUST
City's, Port's and Airport's assets were separated into separate trusts within a Group Trust..

TAX COMPLIANCE
IRS Voluntary Correction Program was completed and a favorable Tax Determination Letter was received, maintaining SDCERS tax-qualified status. Few pension plans have this.

OPERATIONAL EFFECTIVENESS
Talent has been re-organized and added. Technology is now integrated into the business. There is a clear business vision, etc.

SDCERS' FACTS
There are 65 employees for 9,377 active members and 7,040 retirees. Operating budget is $41 million and total annual benefit payments are $235 million.
For each dollar that is paid out, 70% of that dollar is from investments, 15% is from employers and 15% is from employees.

CORBETT, 13TH CHECK AND SUPPLEMENTAL COLA PAYMENTS
Bob Wilson, Internal Auditor, noted that the formula, for when these contingent benefits are paid, and the amount of the payment is the same as it was under the Waterfall. Corbett will be automatically paid in years that the 13th Check is paid, otherwise it will be carried forward.

Calculations for the Fiscal Year 2008 payments are being made, and will be followed by SDCERS Board action.

Wescoe noted that the City has been paying for the 13th Check, Corbett and the Supplemental COLA from 2005 and not from "surplus earnings".

DROP INTEREST
SDCERS' actuary, Cheiron suggested reduction of the assumed investment return rate from 8% to 7.45%, which would decrease DROP interest rates. (I think this only applies to those not retired.)


MEMBER SERVICES
This is a new division. The web site allows access to your personal information. (Notice of SDCERS 1st Annual Meeting was posted six weeks in advance to this meeting on SDCERS' web site. Apparently members will get news of SDCERS's activities, etc., by watching the SDCERS web site.)

QUESTIONS-VERIFY YOUR DATA
A member asked what he should do if he received a letter from SDCERS telling him that he was dead? Wescoe took the opportunity to say SDCERS has new software and is scrubbing data and working hard to make corrections. Wescoe asked members to go online and check their data and who the beneficiaries are.