SDCERS April 21,
2006 Meeting by Joe Flynn
Retirees:
It has been a busy week. But last things first. Today the Board
hired a new Administrator,
and I think you will like him; I know I do. It has been a long search for
a new Administrator. An executive search firm has been on the job since
December. In January, we thought we had a good candidate, an man who managed a State Retirement System and seemed very
well qualified. But, after careful research and consideration, he
declined to accept the job offer. After that, I was worried that we would
not find someone with the qualifications we need, and the courage to take
up the reins of SDCERS in the charged environment we work in. But
the search firm pressed on, and our Board Executive Committee stayed with the
task and we now have a new SDCERS Administrator. His name David B. Wescoe. The
attachments are the press release from SDCERS and Mr. Wescoe's
resume.
Mr.
Wescoe is an attorney with extensive
experience both in law practice, investments, and
management. When asked frankly, "Why do you want this
job?" he replied, "I moved to
I could go on, but I will leave it to you
to read the press release and his resume, and I hope in the near
future you will have an opportunity to meet him. I will be urging
him to speak at both of the retirement associations as soon as he can be
scheduled.
The Navigant
Report Committee met on Wednesday, April 19. A good meeting and we did have two retiree
stakeholders in attendance,
The morning session of the Board meeting started at 8:30 AM with 12
members, the highest number since we started in April of 2005. Our two
new members, Peter Q. Davis and Wayne Kennedy, appointed by Mayor and confirmed
by Council, took their seats today and fit right in to the discussion.
They are a welcome addition. Now we need only the Mayor's representative
and we will have our full 13 member Board for the first time. Some people
are superstitious, but not me, I have never been troubled by triskaedekaphobia (that’s fear of the number thirteen.)
A
fair amount of discussion was devoted to the reinstatement of the Committee
system of SDCERS
Board. Since we started as a new Board in April of 2005, and
replaced a number of members along the way, we felt it was necessary to
consider all of the items as a full Board in order to become familiar with
the disability appeal cases, investment review procedures and
decisions, audits, administration, and all of the special topics
surrounding the litigation and investigations at that time. Now, the
dust has settled slightly, and the committee system can save time and
still give the items the special attention they deserve.
One
suggested change in the committee structure was the discontinuation of the
Health Advisory Committee (HAC.) I chaired this committee,
along with two Board members, and retired members of both retiree
associations. The reason for discontinuing this committee was that the
City has now resumed the responsibility for retiree health care. In
addition, items considered by the HAC can be considered by the Business and
Governance Committee. Mark Sullivan, active Police Dept. Rep. is the
Chair, and I am a member of that committee so I am sure we will be able to
cover the ongoing issues in health care.
The
main thrust will be to establish a committee/group to work with the City to
address retiree health care issues. Today, I urged the Board to
maintain a presence in this area to aid in the transition of this function to
the City. The May 10 meeting of the Navigant Report Committee will
be discussing Retiree Health Insurance. This will provide another
opportunity become informed and to speak on this issue. Mark your
calendars.
Tax compliance review of the retirement system is making progress. Last
year the Board hired tax consultants Ice Miller to request a Voluntary
Compliance Program (VCP) with the Internal Revenue Service. Tax
liability questions had been raised about a number of recent benefit
programs and court ordered settlements. The VCP asks the questions before IRS comes calling, and if problems are
found, they can be corrected more easily and usually without penalties.
It is an important study which will provide protection for the retirement
system.
Training for the
Board remains a key
topic. Our Fiduciary Counsel, Harvey Leiderman
would make a good professor. Very knowledgeable,
and the ability to make complex topics understandable and interesting.
We went into closed
session from 1:30 PM
to 3:15 PM to discuss litigation, past present and future. We also
discussed the hiring of the new Administrator. And, thanks to our wonderful
Board Secretary, Donna Hawthorne, we also had a sandwich. She keeps us on
track and makes sure we don't starve to death; I think she also carries the
title of Den Mother.
Back in open session at 3:30 PM, we
launched into Finance and Investment.
Oh yes: I have a
correction to make.
I thought, and advised you of same, that the Actuary's final report was due at
this meeting. Wrong! I jumped the gun. It was and is
scheduled for May. As they say, "we regret the error."
The Board also selected
State Street Bank and Trust for a five year custodial bank and securities
lending agreement. The bank maintains custody of SDCERS stocks and
bonds, handles transactions, and monitors SDCERS portfolio managers to
ensure that they are following SDCERS investment guidelines. I
chaired the subcommittee, staffed by SDCERS investment personnel, which
interviewed the three finalist custodial banks, twice. The second
interview was to evaluate their internet banking platforms and benefits payment
programs. All three were impressive, but
Items of
interest: At
the end of February, SDCERS earnings for the fiscal year stood at $281.7
million. The earnings threshold for payment of the 13th Check and
Corbett is $112.6 million.
You
often read about the Pension Fund deficit of $1.4 to 1.9 billion dollars.
You rarely read, however, the that the retirement
assets in March hit $4.2 billion. Another little publicized fact is
that 70% of the retirement benefits are paid, not from direct contributions by
the city and the employees, but by earnings
from investments made with those contributions. I will leave you with
that fact and one opinion;
We are fortunate
to have a very qualified SDCERS investment team, headed by Doug McCalla.
Take care,
Joe Flynn, Retiree
Rep to the Board.
David Wescoe Biography
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