PATTI'S NOTES
SDCERS BOARD MEETINGS October 17, 18, 2009

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(These notes are from the Business and Governance Committee on Thursday and the Board meeting on Friday. Notes are by subject. They are my understanding of what happened.)
SDCERS Web Access - Board meetings, with subject access, are available for viewing at www.sdcers.org
TELEVISION- If you live in the City limits, Board meetings are on Channel 24 around 5 or 6pm, usually the third Friday of the month, and usually repeat on the following Sunday at 1pm
Official CDs of SDCERS' committees and Board meetings are available through the Board Secretary; visual recordings are available through City Channel 24. Motions and votes are in SDCERS monthly summaries of Board meetings.

Directions to on-line pension numbers:
Jay Goldstone has SDCERS' numbers on-line (pdf) at the City's bond investors web site. Go to City web site, on the upper left hand corner click on "Investor Information", at the bottom you must click on "read terms of use now". This takes you to the Investor page. Go down about 9 sentences/paragraphs, and click on the blue "OK" at the bottom. Click on "pension up-date".  Click on pension by month. It is approximately four pages long.

JOIN CITY OF SAN DIEGO RETIRED EMPLOYEES ASSOCIATION FOR ACCESS TO PREVIOUS PATTI'S NOTES ON SDCERS BOARD MEETINGS, PROGRAMS, LUNCHEONS, ETC.
Contact SDCERS at 619-525-3600 and ask for a payroll deduction form for the $2.00 monthly dues to CSDREA.

SDCERS INVESTMENT RETURNS AND CONTRIBUTIONS
David Wescoe noted SDCERS lost 19% last year, compared to the other  pension system losses of 23-24%. In dollars, that was $240 million SDCERS did not lose. Over twenty years, he noted that means a difference of $1 billion.
More recently, CFO, Mark Hovey noted investment returns of $284 million for two months (not including an ARC payment). Board Vice President and Chair of the Business & Governance Committee, Ray Ellis, hopes the upward trend, from last years' negative returns, continues. Chief Investment Officer Liza Crisafi and her staff are evaluating asset percentages to managers and options. Trustee and Chair of the Investment Committee, Steve Meyer, reported robust discussions at his committee.

Trustee Steve Meyer said the City's conversion to SAP software may result in possible errors when calculating contributions to SDCERS. He was pleased SDCERS's Mark Hovey was already doing tests of data with the City.

SDCERS Total Assets
Unaudited as of September 30, 2009 was $4,313,228,521
(from "Current Actual Asset Mix")

Audited as of August 31, 2009 was $4,286,543,000
(from Sara Jimenez' "Statement of Plan Net Assets")

SDCERS BENEFITS PAYMENTS AND NEW RETIREES
SDCERS' CFO, Mark Hovey noted SDCERS' benefit payments are up 11% as there are more retirees.
$22.785 million was needed for September benefit payments.
(from "Executive Summary of Staff Reports")

More retirement seminars are planned before the end of the year, (due to City's expected budget cuts).

RETIREES CONTRIBUTE TO SDCERS MEMBERS
Retiree Trustee Dave Hall noted the SDCERS Board has the responsibility of 16,000 members.
He recognized Bill Farrar of the retired Fire and Police association, and Nancy Acevedo of the retired General employees association, for their contribution in bringing up "housekeeping" concerns at the Retiree Issues Task Force meetings.
Hall also recognized David Wescoe for speaking at the quarterly retired Fire & Police association. Hall noted Wescoe's quick access to data, his ability to be articulate and his professional manner with retirees.

SDCERS CAFR and ANNUAL June 30, 2009 ACTUARIAL VALUATION
Mark Hovey reported on outside auditor MGO's progress. Sections of the Comprehensive Annual Financial Report are at the printer. "Targeted audit completion and CAFR issuance remains in November."
Cheiron's June 30, 2009 Actuarial Valuation is "…on-target for completion in December.

NEW SOFTWARE FOR SDCERS
David Bond's presentation noted that the complexity of the City's pension plans drive this expense. The old PensionGold software began in 1997, went live in 2003 and is being phased out by the vendor. A new system is part of the strategic plan and the finished negotiation is included in next year's budget.

Outside auditor, MGO, is also conducting a routine audit of IT for best practices and quality.

LEGAL REPORT
(Patti's note: Please write your Council Member to inquire why the City is not settling lawsuits with SDCERS and saving money for taxpayers, who pay for the City's attorneys, SDCERS attorneys and the settlements between the two entities according to April Boling. Settlements would help reduce SDCERS' annual budget, sure to please the City Council.)

Barton Case: Elaine Reagan wrote: " We are still awaiting the final ruling on the City's Motion for Summary Judgement….Judge Barton requested additional briefing on the impact of the Gleason settlement.  SDCERS filed its supplemental brief on September 25, 2009. Oral argument is scheduled for October 8, 2009.  Trial has been scheduled for February 19, 2010."
San Diego Superior Court Case No. GIC 841845 consolidated with GIC 851286 Judge: Hon. Jeffery Barton

Lexin Case: "Oral argument in the Lexin case …continued to November 4, 2009." "Felony conflict of interest charges against six former SDCERS Board Members based on a violation of Gov. Code Sec. 1090"
San Diego Superior Court Case No. SCD 190930, Judge: Hon. Frederick Link

USA v. Saathoff: U.S. District Court 06CR0043-Ben (no status given)

Fire Fighters, Ron Saathoff and Presidential Benefit: "…filed their complaint on September 24, 2009 alleging causes of action for Unconstitutional Impairment of Contract, Violation of Public Policy, Breach of Contract, Negligence, Breach of Fiduciary Duty, Declaratory Relief and Promissory Estoppel. The claims arise out of the now-discontinued Presidential Leave Benefit for Ron Saathoff and the now-discontinued Cashless Leave Benefit for the Annual Leave Plaintiffs. The complaint was served on SDCERS on October 1, 2009…."
Case No. 37-2009-000990066-CU-WW-CTL, Judge: Hon. Yuri Hoffman

Italiano' Presidential Benefit Case: October 9, 2009 - Status conference.
SD Superior Court Case No. 37-2008-000961145-CU-BC-CTL< Judge: Hon. Vargas

Police Presidential Leave Case: Served on SDCERS September 18, 2009
SD Superior Court Case No. 37-2009-00088422-CU-BC, Judge: Hon. Charles Hayes

Elaine Reagan, SDCERS General Counsel, guided the Board regarding new state legislation effective on or before June 30, 2010 that requires the Board adopt "…a policy requiring the disclosure to placement agents in connection with system investments in or through external managers…any campaign contributions or gifts made to Trustees." Also, "…a member or employee of the Board may not directly or indirectly, as an individual or as an agent, partner or employee of a person or entity other than the Board, sell or provide any investment product that would be considered an asset of the fund to any public retirement system in California."

INSURANCE TO COVER WHAT THE CITY DOES NOT COVER Trustees expose their person holdings to being sued for their work on the Board, legal expenses and lawsuits. So to keep talented Trustees willing to serve, the Board approved $25 million in insurance coverage for the next year that runs November to November. This is under the median of $30 million for other public pension systems.
SDCERS General Counsel Elaine Reagan advised that if a system had several Trustees or several lawsuits, the current $10 million policy would burn-off fairly quickly. The policy covers actions in the year of coverage and does not cover past claims.
Coverage of the entity was not recommended by Elaine as the typical lawsuit to SDCERS would not be covered anyway.

CLOSED SESSION
There was nothing to report out.