Retirement Board Update - Meeting of June 17, 2005 - By Joe Flynn

Never a Dull Meeting

   The third meeting of the new Retirement Board on June 17, 2005 provided as much excitement as the two previous meetings but ended a little earlier; 6:45 PM. And no, the Board did not get to a vote on whether to waive the attorney client privilege but instead sought additional legal advise on questions of liability. (A special meeting is planned early July to reconsider the matter.) A time certain presentation was provided at 3:30 PM, by Michael Young, an attorney retained by the City Audit Committee. Mr. Young specializes in audit investigations, especially those involving the Securities Exchange Commission. Bright and articulate, Mr. Young explained in the clearest possible terms that KPMG's audit for the City of San Diego will not be completed without review of the materials now covered by the attorney client privilege held by the Retirement Board. That message was contested by some on the Board and not well received by others. A spirited exchange followed. From my view, however, Mr. Young presented the clearest and most concise case to date on the connection between the waiver and the City's ability to complete it's audit and return to the Bond markets for capital improvement financing.

Non Agenda Comment
   City Attorney Michael Aguirre spoke to the Board during the non-agenda comment period. He suggested that the Ret. Bd. meet weekly, that we investigate the SDCERS 2003 Audit, that Mr. Torres step down, that the 2002 indemnification granted to the previous Board by Council is invalid, and suggested that the Board enter into mediation to determine if the City Attorney or outside counsel represents SDCERS.
Virginia Silverman, representing CSDREA, spoke to request that the Board vote to approve waiver of the attorney client privilege to allow the City's audit to go forward.
Tom Rhodes, active Police officer and former Retirement Board member, addressed the Board on the new IRS regulations on DROP account withdrawals. This question came up earlier this month at the board meeting of the Retired Fire and Police Association (RFPA). Based on that inquiry, I had contacted Paul Barnett, Assistant SDCERS Administrator, to determine the impact of that IRS ruling on retirees. He advised that, Roxanne Story Parks, assistant legal counsel for SDCERS, had been reviewing the new regulations and that information would be available next month. Officer Rhodes and myself, emphasized that time is of the essence to give retirees as much time as possible to consider what impact the new IRS regulations have on how retirees utilize their DROP accounts.

Budget
   Under budget items, SDCERS sought a $2,500,000 increase in the budget ending June 30, 2005 for outside legal counsel expenses already incurred. I requested that these requests be accompanied with details showing names of the law firms involved, the matter for which they were retained, and amount paid. The item was approved by the Board 11-0 with John Torres absent.

Health Advisory Committee Summary
   The new Health Advisory Committee (HAC) met at 8:30 AM. I am the current Chairman, and John Torres is Vice Chair. Members include Ret. Bd. representatives, Mark Sullivan, active Police; John Thomson, active Fire, and retirees, John Casey, General, Ron Moskowitz, Fire, and C.J. Cloniger, Police. It's a good group and we have everybody covered.
The HAC received a briefing from SDCERS staff on current activities in the health care field. The City Council has voted to eliminate a couple of health care options, the Kaiser "M" option and the PacifiCare COB plan. The 43 affected retirees/survivors have been contacted and SDCERS staff will assist them in selecting an alternate health insurance plan.
SDCERS has also completed testing of a new computer software program designed for health care administration. The new system is designed to speed processing and reduce errors.
The issue of health insurance problems experienced by out-of-state retirees was also on the agenda. Dave Crow had started this discussion when he served as chair of HAC, and I picked it up where he left off. Staff presented a report and a recommendation to work with City Staff to resolve questions on negotiating contracts for out-of-state retiree health insurance plans. Currently there are 32 retirees enrolled in these specific out-of-area plans. Perhaps not a large number, but a critical issue to the 32 retirees. Staff was directed to work with City staff and report back to the committee on streamlining this process. No changes are to be made until the matter is researched and brought back to the HAC.

Other Agenda Items
   Two items from the Board agenda concerning crediting of interest to employer and employee contribution reserves and to DROP accounts were continued to provide an opportunity for the Investment Committee to consider the matter.
   A few other items were continued due to time constraints of the special meeting and the closed session meeting.
   This Board meeting on June 17 was well attended by media and retirees. But there were still plenty of seats available. I would urge you to attend at least one of the Retirement Board Meetings, you may want to attend more, but do attend at least once. They start at 1:30 PM on the third Friday of the Month, and your parking is validated at the receptionist outside the Board meeting room on the 4th Floor of the Wells Fargo Building at 401 B. St.
Tell'em Joe sent you!

Joe Flynn, Retiree member of the Retirement Board