| PATTI'S NOTES
SDCERS BOARD MEETINGS December 16-18, 2009:
(These notes are from the Audit Committee on Wednesday and the Board meeting on Friday. Notes are by subject. Any Closed Session reporting is from Channel 24. 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 periodically updates 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.
SDCERS BOARD GOES TO NEW Approximately 6 WEEK SCHEDULE FOR REGULAR BOARD MEETINGS
Board Meetings are at 8:30 a.m. MARK YOUR CALENDARS:
January 22, no meeting in February, March 5, April 16, May 28, no meeting in June, July 9, August 20, no meeting in September, October 1, November 5, and December 17, 2010.
Special Meetings may be scheduled as needed with 72 hours notice.
Committee Meetings, not televised yet:
On the Thursday before the regularly scheduled Board meeting:
Disability Committee will meet from 8:30 am - 10:00 am
Business & Governance will meet 10:30 am - 12:00 pm
Investment Committee will meet 1:30 pm - 4:00 pm
Audit Committee will continue to meet quarterly on Wednesdays at 9:00 am.
on April 7, June 30, Sept 29, December 15, 2010.
SDCERS ASSETS
Just over $4.3 billion in assets for November 30, 2009 was reported by custodial State Street Bank. Net assets were up 10% over net assets last year.
Under Statements of Plan Assets:
Total assets as of October 31, 2009 were $3,680,110,000.
Total assets as of October 31, 2008 were $3,343,847,000.
Under Schedule of Reserve balances:
Total plan liability on October 31, 2009 was $1,323,372.
Total plan liability on October 31, 2008 was $1,196,020.
DROP
There has been an increase in the number of DROP participants and accounts have grown.
Retired DROP interest remains unchanged. For those retiring now the rate remains at 5%.
Interest for active DROP was reduced from last year's 3.54% to January 2010's 2.9%. The new policy is to review active DROP rates in October, effective in January. Trustees Meyer and Sullivan recused as they have DROP contracts.
CORBETT and 13th CHECK QUESTIONS
Staff experienced many questions when members didn't receive checks. Staff did not want to notify members in advance without audited reports on annual returns.
CORBETT PAYMENTS FOR DECEASED MEMBERS' ESTATES
The Board approved the new policy for paying deceased retiree's estates Corbett benefits in full, before the end of the year, or when investment returns are below the trigger to pay the Corbett, in order that estates can be closed to avoid administrative error enable timely tax reporting.
1981 PLAN TO CITY COUNCIL
Cheiron's report to the City Council went to the City Council on December 10th. The Council is expected to vote on the issue in 30-60 days.
SDCERS AUDIT COMMITTEE REVIEW:
Board President Mark Sullivan expressed the Board's sadness of the passing of the first Chair of SDCERS Audit Committee, Armon Kamesar. Armon reviewed 4 of SDCERS annual audits over an 18-month period. Committee Member Marilyn Brown said Armon was professional but still had a good sense of fun. Audit Committee Chair Michael Collins described Armon as a fellow whose advice was sought by others, a person of enormous good will toward others, and hard nosed about the duties of SDCERS first Audit Committee. Armon had introduced Mark Hovey to David Wescoe and led to Hovey's being hired as CFO at SDCERS. Sullivan expressed condolences to Armon's wife Barbara.
JUNE 30th 2009 CAFR is expected to be on SDCERS web-site by Dec. 31, 2009. It is at the printers awaiting illustrations, announced Mark Hovey, who is covering as interim Administrator, since David Wescoe went to the Motion Picture Industry Pension and Health Fund pension.
Jim Godsey of Macias Gini & O'Connell (MGO), SDCERS' outside auditor, announced MGO's audit opinion of SDCERS management's financial statements was clean. There were no negative "qualifying" statements. There were no corrected, or uncorrected mis-statements from SDCERS, no disagreements with SDCERS management. It was consistent with prior reporting periods.
There were no deficiencies in critical internal control processes.
MGO noted that SDCERS management is preparing formal adoption of currently informal Information Technology procedures for Board approval after SDCERS legal review.
Godsey pointed out that MGO expects that Boards, across the State, will be reviewing assumptions they traditionally use to guide their actuaries. In response to Trustee Ed Kitrosser's question, Godsey noted that SDCERS estimates are conservative.
Godsey also noted "Note 6" in the CAFR. In MGO's opinion letter, they wrote:
"….Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected."
"The most sensitive disclosure affecting the financial statements was:
The disclosure of funded status and actuarial methods and assumptions in Note 6 to the financial statement. This disclosure presents information about the funded status based on information provided by SDCERS' actuary."
MGO said that any changes in real estate, or other investment values will be incorporated into the June 30, 2010 actuarial valuation, which determines the Annual Required Contribution, or ARC, in FY 2012. The ARC for FY 2011 is not affected by changes in asset values after June 30, 2009. MGO will be looking at the qualifications, independence and reputation of next year's appraiser. Godsey added that he would take on the project of identifying definitions of "fair value". He said that just because you cannot sell a property or equity today, that doesn't mean it has no dollar value. He said to look at what is expected in the cash flow that it will generate in five years.
JUNE 30, 2009 VALUATION. There are legal points on the June 30, 2009 Valuation that SDCERS General Counsel Elaine Reagan is reviewing, so the Valuation was not yet available. Hovey's report said "…Cheiron had asked for guidance, and discussion on those items…." It is expected to be on the Board's January agenda.
PROPOSED 2010 INTERNAL AUDIT PLAN
Bob Wilson, SDCERS' Internal Auditor, reports directly to SDCERS Audit Committee. His audit plan for 2010 was approved unanimously by the Board. His risk assessments and work on internal controls are also information required by MGO.
SDCERS Investment Expenses
Hovey reported SDCERS' investment expenses were $6.793 million.
At the request of Liza Crisafi, SDCERS' Chief Investment Officer, Bob also plans to review investment management fees that SDCERS pays out. Board President Mark Sullivan asked if it was possible to compare SDCERS' fee expenses with those of other systems. A letter to the San Diego Union Tribune' Editorial section this week showed public concerns on investment fees.
Trustee Mark Oemcke asked specifically about State Street Bank's fees. Staff responded that they check the Bank's fees each month. Oemcke also asked to have the speed of security trades checked to see if others were benefiting from holding up funds.
Then Oemcke asked Bob about the review of membership disbursements before they go out the door. Bob was enthusiastic about Oemcke request to formalize the current informal procedure of staff bringing unusual situations to Bob's awareness.
|