City of San Diego Retired Employees Association

May 9, 2023 

Board Meeting Minutes

NOTES: All votes were unanimous unless otherwise noted

  A quorum was not met; no action was taken at the meeting

Call to Order: The meeting was called to order by Vice-President for Advocacy Mike Bresnahan at 9:40am.

Board Members Present: Jim Baross, Mike Bresnahan, Chris Brewster, Joan Hernandez, Brad Jacobsen, John Tsiknas, and Dave Twomey

Guests Present: Joe Flynn

AGENDA: There were no additions to the agenda.

MINUTES: Approval of the minutes of the March 2023 Board meeting was deferred to the June special meeting*.

TREASURER’S REPORT: No report. Approval of the May and June 2023Treasurer’s Reports was deferred to the June special meeting*.

INVESTMENT COMMITTEE REPORT: John reported that the appreciation for the Russell 3000 is 36.19% and for the Money Market it is 5.51%. The value of the Legal Fund is $343,683.

There was a question about whether the Fund should be able to be used to advocate for healthcare issues.

RETIREMENT BOARD REPRESENTATIVE’S REPORT: Chris’ full report is attached.

COMMUNICATIONS AND INFORMATION ITEMS: 

1) Dave reported that the Read Across America video has been completed. The 2024 event may be at Valencia Park Elementary in District 4.

There will be two summer swim lessons, one at the Martin Luther King Pool and one at Kearny Mesa Pool.

Two virtual food drives will be held: June 13 to July4, and pre-Thanksgiving. The goal for each is $5000. It was suggested that we find a sponsor who will provide matching funds. There was a question about what kind of acknowledgment the Food Bank gives us.

2) Brad reported that REA member Byron Frohn donated $250 to offset the production and mailing of the hardcopy newsletter.

ACTION ITEMS:

None

ADVOCACY COMMITTEE REPORT

The next Advocacy Committee meeting will be Thursday May 25 at 9:30am via Zoom.

OTHER COMMITTEE REPORTS

Membership: No report.

Newsletter: Deadline for the next issue is May 19 at 8:00am. Material should be sent directly to Connor Sorensen.

OTHER RETIREE/ACTIVE EMPLOYEE ASSOCIATION REPORTS

Retiree Issues Task Force (RITF):Mike reported that the RITF met with staff from Risk Management and SDCERS to discuss the proposed transfer of retiree healthcare management from SDCERS to the City.

The RFP is still a work in progress. The City expects that, once issued, vendors will have 3 to 4 weeks to respond followed by a 4 to 5 week evaluation period. (REA and RPFD will be able to provide input during the evaluation process but will not be able to vote.) The proposed contract will then go to the City Council for approval; however, Council does not meet in August, so that approval may come too late for the vendor to be able to provide required services by the time of the enrollment process.

If this is the case, SDCERS is willing to continue for another year. If no vendor responds to the RFP, or if the vendors’ proposals are too expensive, SDCERS is willing to continue but with funding for additional staff.

The issue will be presented to the SDCERS Board at its May meeting as an informational item.

Retirement Security Roundtable: No report.

MEA: No report.

Other Retired Public Employee Associations: No report.

PROGRAMS: No report.

ADJOURNMENT

The meeting was adjourned at 10:45am. 

*Because of the lack of a quorum and there is no June General Membership meeting, a Special Board meeting will be held on June 13 via Zoom. 

 

Respectfully submitted,

 

Brad Jacobsen,

Secretary

REA Board Briefing

The City Charter states that employees shall, with the approval of the Board, be allowed to contribute more toward their pensions than required, and thereby be entitled to receive the proportionate amount of increased allowances paid. This was added as part of voter approved “pension reform” changes in 2004. I inquired of SDCERS as to how employees could avail themselves of this option. I was told that in addition to the language in the Charter, the Municipal Code provides for additional contributions in sections 24.0205 and 24.0305; but the IRS prohibits additional contributions and an SDCERS Board Rule states that additional contributions are not allowed.

The state legislature passed a bill that became law this year which requires that any overpayment to a CalSTRS retiree that is not the fault of the retiree cannot be clawed back. Whether this approach will spread to other systems is unknown. Last year SDCERS reported collecting almost $475,000 from individuals, but this is not only money from retirees. It includes payments after deaths, one large settlement of a legal case by the City ($207k), etc. Most claw backs tend to be in the $2,000 range.

Wharton training: I travelled to Philadelphia for a four-day seminar on pension portfolio concepts and management which was also attended by the SDCERS Deputy CEO.

The recent negotiations increasing many City employees’ pay by 25% will have a substantial impact on the amount paid each year to SDCERS by the City. SDCERS actuaries assume a 3.05% annual salary increase. Apparently, the pension costs were considered as part of the negotiations, but it seems quite possible that next year’s pension payment will attract media attention. 

An article by David Garrick appeared in the UT in April after a briefing of the City Council by the SDCERS actuary. The article wrongly stated that the SDCERS actuary is the City’s actuary – an important distinction because SDCERS is legally separate from an oversight perspective. The article was quite misleading, implying that the actuary would be recommending to the SDCERS Board that it spread out required pension payments by the City over a longer than presently planned period of time to reduce current costs. This was followed by a UT editorial suggesting that this would be unwise. Some of this will be discussed by SDCERS in July and a decision is likely to be made by the SDCERS Board in September. 

The SDCERS Board meets on Friday, with committee meetings prior thereto. 

  • There will be a verbal overview of retiree healthcare, at which point the issue of the City taking over management is likely to be aired. 
  • It will be proposed that the COLA be increased by 2% (which will be substantially below inflation)