City of San Diego Retired Employees Association
June 12, 2023
Board Meeting Minutes
The meeting was held via Zoom
NOTES: All votes were unanimous unless otherwise noted
Call to Order: The meeting was called to order by Vice-President for Advocacy Mike Bresnahan at 9:30am.
Board Members Present: Jim Baross, Mike Bresnahan, Chris Brewster (left at 10:00), Liza Crisafi, Shirley Hall (at 9:50), Brad Jacobsen, Stacey LoMedico (left at 10:20), Joan McNamara (left at 10:00), Mary Ann Stepnowsky, John Tsiknas, and Dave Twomey, and Dick Wilken
Guests Present: Karen Butler, Joe Flynn
AGENDA: There were no additions to the agenda.
MINUTES: The minutes of the and May 2023 were approved, with one abstention.
TREASURER’S REPORT: Liza reported that the $500 deposit to the Bali Hai was made, as were final invoices to Gary Katz for editing the videos of the Read Across America event.
M/S/C to approve the May and June 2023Treasurer’s Reports.
INVESTMENT COMMITTEE REPORT: John reported that the appreciation for the Russell 3000 is 36.53% and for the Money Market it is 5.91%. The value of the Legal Fund is $346,850.
RETIREMENT BOARD REPRESENTATIVE’S REPORT: Chris’ full report is attached.
COMMUNICATIONS AND INFORMATION ITEMS:
Dave reported that the 2024 Read Across America event may be at Valencia Park Elementary in District 4, but based upon the Councilmember’s schedule and prior commitments, we may want to host the event at Monarch School for homeless children instead.
The swim programs will begin July 24 and will run through August 3.
The first virtual food drive begins today and runs through July 4. An eblast has already gone out and there will be two or three more during the course of the drive.
ACTION ITEMS:
1) The RFP to bring an outside company to manage retiree health care under the City (not SDCERS) is apparently stuck in the Purchasing Department. REA will get a copy of the RFP once it is ready to be released. There is a feeling that because of the ever-shortening timeframe for the RFP that SDCERS will probably administer the program for another year.
2) It was suggested that we reach out to Greg Woods to fill one of the three vacant positions on the Board. He is recently retired and was President of the MEA Board. Dick will contact him.
Dick reminded the Board that a Nominating Committee will be formed in July; this is a good time to look for people to fill the vacancies on the Board.
Dave said that Martha Zapata from the District 9 office was very enthusiastic and interested in REA’s activities while gearing up for the Read Across America event. He recommended that we reach out to her to serve as a consultant to the REA Board.
3) Liza presented the final draft of the Investment Policy Statement, subject to correcting a few typos.
M/S/C to approve the Investment Policy Statement subject to minor corrections.
4) Connor Sorensen can take on eblast duties at a rate of $50/hour. Mary Ann said that creating an eblast takes minutes, so the cost will be minimal.
M/S/C to hire Connor Sorensen to prepare eblasts through the summer at a rate of $50 per hour.
ADVOCACY COMMITTEE REPORT
The next Advocacy Committee meeting was scheduled for Thursday June 22. Mike noted that most of the Committee members were present and that most of the issues had just been discussed and decided. The June meeting was cancelled.
OTHER COMMITTEE REPORTS
Membership: John reported that we lost 15 members.
Newsletter: Deadline for the next issue is June 20 at 8:00am. Material should be sent directly to Connor Sorensen.
OTHER RETIREE/ACTIVE EMPLOYEE ASSOCIATION REPORTS
Retiree Issues Task Force (RITF): No report.
Retirement Security Roundtable: No report.
MEA: No report.
Other Retired Public Employee Associations: No report.
PROGRAMS: The July program will be an oceanographer from the Scripps Institute and Birch Aquarium. Dave is trying to finalize Charlie Hogquist for September.
ADJOURNMENT
The meeting was adjourned at 10:25am.
Respectfully submitted,
Brad Jacobsen, Secretary
REA Board Briefing
Health Administration: On June 9th the SDCERS CEO advised that that the City’s project timeline is slipping and that SDCERS anticipate they will continue handling healthcare benefit administration “well into 2024.” I passed this information along to REA and RFPA leadership to ensure they were in the loop.
Current Board president Paul Kaufmann and Investment Committee Chair Cliff Schireson were reappointed by the City Council for 4-year terms.
I attended a pre-retirement seminar to better understand what prospective retirees hear from SDCERS. It was an outstanding presentation that seemed to answer all questions provided by the participating employees. I was really impressed with Jessica Taylor’s professionalism and attention to detail.
Investment Portfolio Changes: At the May 2023 SDCERS meeting a proposal came forward to move 5% of the pension fund investment (about $500 million) to “private debt” (and thus lessen investments in other areas). According to the proposal, “The introduction of Private Debt reduces the expected volatility of returns while not giving up on expected return … Overall, the prospects for private debt are especially compelling in the current market environment of tighter financial conditions leading to greater spreads and reduced availability of capital.”
Private debt involves institutional (like pension fund) lending to companies to finance buyouts, and for other reasons. The use of private debt has increased greatly since the Great Recession (2008) after which banks retreated from leveraged lending.
I voted against this change because of concerns that this large move would be at the expense of investments in equity (such as US stock funds) and I am concerned about the level of exposure this represents. The proposal was approved.
The good news is that SDCERS’ consultant, AON, modeled this approach and believes it will result in an increase in average overall returns on investment from 7.46% to 7.68%. That improved return, if realized, would be a good outcome.
The Social Security Fairness Act of 2023 now has 280 cosponsors in Congress, which is more than a majority of the Members of Congress.