Highlights of  SDCERS' Investment, Governance committees and Board meetings of August 2007
Submitted by Patricia Karnes

(This is my understanding of what happened. Some information is from SDCERS' monthly Board Packet, available at the back of the meeting room and also in the SDCERS' reception area.)

Does final settlement of  SDCERS's Voluntary Compliance Program with the IRS, require any action by the City Council or City Attorney? Joe Flynn asked this question at SDCERS' Business and Governance Committee. (Note: Watch the City Council and media for the answer to this question.)
Roxanne Story Parks, SDCERS' Compliance Officer, said SDCERS is working toward a final agreement as early as September or October 2007. Settlement is pending a Technical Tax Compliance Ordinance.

(Note: At July's Business and Governance Committee meeting, David Wescoe, SDCERS' administrator, said  a copy of the Ordinance would go to the City and that the City could forward it to Aguirre. It was announced that the IRS wants the Ordinance as written by the IRS passed, no re-writing of this ordinance by anyone.)

Impact of the "sub-prime" market drop on SDCERS only exposed approximately 1.25% of SDCERS' $5 billion trust, according to SDCERS' Dawne Clark.

New appointments in SDCERS Auditing and Finance:
Bob Wilson moved from Chief Financial Officer to SDCERS' newly created Internal Auditor position. (Note: Mr. Wilson came to SDCERS when his position was transferred from the City to SDCERS after study recommendations.)

Mark Hovey replaces Wilson as the Chief Financial Officer. (Doug McCalla remains Chief Investment Officer.)

SDCERS' Comprehensive Annual Financial Report (CAFR) for 2005 is at the printer. The CAFR for 2006 is expected to be finished by October 2007. The 2007 CAFR is expected out by December 2007.

SDCERS' Realized rates of return by quarter:
09/30/06- 2.09%
12/31/06- 3.02%
03/31/07- 3.79%
06/30/07- 2.55%
Total for fiscal year: 11.94% or $460.1 million

Alternative investment strategies and levels of risk will be discussed at SDCERS' Investment Committee on Thursday, September 20 at 1:30p.m. Confirm days and times. Callan, investment consultant for SDCERS, is focusing on what the appropriate risk is to take to pay benefits: best case and worse case. He noted that people in the USA are now spending out of their savings.
This alternative investment report to the full SDCERS Board meeting is expected to occur in September or October.
(Note: Usually the Board is delayed broadcast on the 3rd Friday of the month, at 5 or 6 p.m. As Channel 24 varies schedules, confirm the time by calling 619-533-4784 for times the SDCERS Board will be televised. SDCERS' Committees are not currently broadcast, as they are for the City Council.)

Underwriters' report on possibilities of Fiduciary Insurance for SDCERS' Board will be discussed in September.
(Note: At the July SDCERS Board meeting, it was announced that the City is not covering SDCERS. The cost will depend on the underwriter accepting SDCERS' story. AON was working with Excel Insurance.)

SDCERS goes to trial in September to recover monies owed SDCERS by the City for MPI and MPII.

SDCERS has 17,000 members now, said Rebecca Wilson, SDCERS' communication specialist. The SDCERS August packet said the 5752 retiree members, includes DROP members. Monthly benefits and operation expenses were $16.7 million.

Revision of SDCERS' web-site is out to bid.

P.Karnes 09/18/07