City of San Diego Retired Employees Association
July 9, 2024
Board Meeting Minutes
NOTES: All votes were unanimous unless otherwise noted
Call to Order: The meeting was called to order by President Mike Bresnahan at 9:30am.
Board Members Present: Jim Baross, Clay Bingham, Mike Bresnahan, Liza Crisafi, Shirley Hall, Joan Hernandez, Brad Jacobsen, Joan McNamara, Estella Montoya, Dick Wilken, and Greg Woods.
Guests Present: Joe Flynn
AGENDA: There were no additions to the agenda.
MINUTES: The minutes of the May 2024 Board meeting were approved (one abstention).
TREASURER’S REPORT: Liza reported that the June $500 deposit for the Holiday Party was paid to the Bali Hai. The interest on our CD is approximately $100/month.
M/S/C to approve the May and June Treasurer’s Reports.
INVESTMENT COMMITTEE REPORT: Liza reported that the Fund is now officially over $400K and our rates of return are very good.
RETIREMENT BOARD REPRESENTATIVE’S REPORT: See attached report.
COMMUNICATIONS AND INFORMATION ITEMS:
1) Mike met with John Tsiknas about what duties/tasks John performed related to membership statistics. The Board discussed the options of soliciting members with IT backgrounds/experience to take these tasks on or to contract out to Integrated Labor Solutions.
2) Mike noted that we need to have our usual meet-and-greet with the new CD4 Councilmember, Henry Foster. Ideally, an REA Board member who lives in the district should accompany Mike. Greg noted that Foster is a former City employee and that they have had dealings with each other.
3) Clay reported that he had spoken with Benny Cartwright, who is in charge of PR for Park & Rec, about publicity for the Learn to Swim programs. Benny wants to do media outreach before ComicCon takes all the media attention. Clay also attended a Read Across America event at Horton Elementary; it appears that Gary Katz organized it and the program went very well without our support.
Estella reported that the banner on Voice of San Diego’s Morning Report will focus on the food drive; on or after July 15 the emphasis will be on the Learn to Swim program.
ACTION ITEMS: None
OTHER COMMITTEE REPORTS
Membership: No report.
Newsletter: Deadline for the next issue is July 19 at 8:00am. Material should be sent directly to Connor Sorensen and Mary Ann Stepnowsky.
OTHER RETIREE/ACTIVE EMPLOYEE ASSOCIATION REPORTS
Retiree Issues Task Force (RITF): The next meeting will be July 30. Mike reported that BOS will take over retiree health benefits in November, and that there will be no changes to providers but that premiums may change.
Retirement Security Roundtable: No report.
MEA: At the meeting with Mike Zucchet he urged REA to support a Council-proposed ballot initiative to raise the City sales tax by 1% with the additional money earmarked specifically for the General Fund. There was debate about the measure; a Zoom meeting to discuss further will be scheduled.
PROGRAMS: Clay reported that he has received suggestions for next year’s speakers and is working to book them.
ADJOURNMENT
The meeting was adjourned at 10:55am.
Respectfully submitted,
Brad Jacobsen
Secretary
REA Board Briefing – Chris Brewster – July 9, 2024
Additional Contributions: As I reported earlier, in reviewing the San Diego Charter and Municipal Code (SDMC) after I was elected last year, I came upon language in the Charter and two Municipal Code sections (one for safety and one for general) that state that a member (in this case an active employee) may elect to make post-tax “Additional Contributions” at rates in excess of the member’s “Normal Contributions,” for the purpose of providing additional benefits upon their retirement. (This is separate and distinct from buying “airtime.”)
Per the SDMC, upon application, the SDCERS Board must furnish to the member information concerning the nature and amount of additional benefits to be obtained by the additional contributions.
When I first inquired of the SDCERS Deputy CEO last year how active employees can make these contributions, I was told that there is an SDCERS policy that bars this benefit due to an IRS rule. When the policy came up for review in May 2024, I asked the SDCERS General Counsel if this IRS rule continues to prohibit such a system. It turns out it doesn’t and it’s unclear to me if it ever actually did. So members seem to have been barred from this option for no valid reason.
Apparently SDCERS once allowed pre-tax additional contributions, which are not allowed by the IRS, at least presently, so that practice was ended; but due to a misunderstanding by SDCERS staff, it seems that post tax contributions were also disallowed, ultimately by the Board, even though the Charter and SDMC expressly allow them. From what I’m hearing, the only IRS limit on post tax contributions is the lesser of $69,000 (annually I believe) or the employee’s compensation (whichever is less).
As a result of my inquiry, the SDCERS General Counsel is proposing to amend the SDCERS Board rule to remove the prohibition on additional contributions at our July meeting.
The way these contributions were handled in the past (the pre-tax approach) was that the additional contributions went to an annuity that would pay out to retirees monthly, enhancing their defined retirement benefit, I’m assuming with a separate line item in their monthly statement.
This could be an attractive benefit for active employees who would like to make additional contributions for a guaranteed benefit upon retirement.
Disability Retirement Issues: As discussed earlier, I’ve been trying to address situations where an employee is barred from employment due to a job-related injury but excluded from disability retirement benefits by SDCERS. I made a presentation and proposal to the Disability Committee in May 2023. (Board members rarely make formal proposals to the Board.)
While my specific proposal, which would have granted a disability retirement in most cases where the City declines further employment due to a work-related disability, without further medical evaluation by SDCERS, was not accepted, the presentation raised significant concerns among the committee members. It was agreed that we would pursue this issue with the City Council to try to get these procedures better aligned to address what all seem to agree is a problem. The SDCERS General Counsel reports to the Board:
“In May 2024, the Disability Committee informally asked staff to research and report back with a plan to address the matter at hand. In researching the matter, we uncovered that around 2000 and again in 2012, the SDCERS Board recommended the Mayor and City Council amend the Municipal Code to remedy the matter at hand. Both times, the City did not take any action as a result of SDCERS’ efforts.
This time, staff recommends initially working with the Risk Management Director and other key personnel to see if the Worker’s Compensation and/or SDCERS’ disability retirement processes can be adjusted to address the matter. Staff hopes to gain the support of City management before approaching the City Council.”
Accordingly, he recommends that the SDCERS CEO write a letter as follows to the Risk Management Director:
“Recently, the SDCERS Board of Administration examined instances where the City of San Diego (City) has determined an injured employee is no longer able to perform their job duties (and cannot be accommodated) but SDCERS determines the employee is not entitled to a disability retirement benefit based on the San Diego Municipal Code requirements. SDCERS is concerned that these employees—especially those that are not eligible to service retire—are left without a job or a retirement benefit.
Per San Diego Municipal Code section 24.0100, the purpose of the City’s defined benefit plan “is to recognize a public obligation to City employees for their long service in public employment by making provision for retirement compensation and death benefits as additional elements of compensation for future services and to provide a means by which City employees who become disabled may be replaced without inflicting hardship on the employees removed.”
The current disability retirement statutes have this potential gap, which could create a hardship on the employee. On behalf of the SDCERS’ Board, I would like to meet with you and other City Officials to discuss how the City’s or SDCERS’ processes or disability retirement statutes can be amended to address this matter. I want to help ensure that disabled employees are provided the best possible outcome after separating from City service. Thank you for your consideration of this
matter and I look forward to working with you.”
Annual Affidavits: All members with disability retirements are required to complete annual affidavits testifying to their continued disability, until they reach normal retirement age. The RFPA Board informed me that at one point a police officer with an obvious life-long disability (paralysis as I recall) was required to complete an annual affidavit testifying to his continuing disability to preserve his benefits, despite improvement being impossible. I was advised that in this person’s case, the issue was resolved; however the SDCERS policy on this remains and there are no exceptions listed in the policy. I have requested that some modification of the policy be implemented so that a person with, for example, an amputated limb, is not required to complete the annual affidavit.
Retiree Health Administration Handover: I checked in with Sandra Clausen. She advised that SDCERS staff have been meeting weekly with Benefit Outsourcing Solutions (BOS) and Risk Management staff (RM is ultimately responsible for retiree healthcare administration but had outsourced some of it to SDCERS).
The SDCERS team includes Sandra Clausen, Michelle Wegner, the IT Director, and Norma Frank, the Software Manager. (Much of this process is data driven.) SDCERS have been busy pushing member information, plan data, and general program design information to BOS. BOS has been provided with a working copy of last year’s Open Enrollment booklet and SDCERS will be working with them to make updates. BOS have set a goal of having their website in place for Open Enrollment in November.
SDCERS has emphasized that they remain ready to step in if things don’t go as planned. Meantime, they are making updates to the system to pass information and handle deductions for amounts in excess of the healthcare allowance (dependent coverage and members out of allowance.)
Also, healthcare allowances all reset on July 1 and are available for members to access with the July pension payroll. (This has not been changed to a calendar year.) There are small increases for most retirees (under $100).
Proposition B: Victoria Fedalizo, Interim Member Services Director reports that SDCERS staff has been working closely with the City’s
Risk Management Department to facilitate Phase III of the Proposition B reversal, regarding those employees who were affected by the City’s pension plan closure, but who separated from City employment before having the chance to retroactively join the system. This group also includes employees who have since been rehired by the City and are actively contributing to SDCERS. There were over 200 employees in the Phase III group who opted to purchase their time. About half of them did not have enough money in their SPSP-H account to fund the purchase and needed to fund it from an outside source. It appears that most of the Phase III members who opted to purchase their time did so by the deadline of May 14th or were granted extensions due to unusual circumstances by the CEO. This was over $12 million in total contributions to the SDCERS trust fund.
Pension Check Rejections: SDCERS staff advises that in the month of April, SDCERS received almost 400 direct deposit rejections for members’ pension checks. Staff discovered that this was a result of the US Bank acquisition of Union Bank two years ago. US Bank had recently given all previous Union Bank members new bank account and routing numbers, but some SDCERS members failed to update their banking info with SDCERS since the acquisition. To rectify the problem, they sent a letter to each affected member, urging them to update their banking information before their next pension payment was made. Not surprisingly this resulted in a significant increase in calls to the SDCERS call center.