SAN DIEGO CITY EMPLOYEES RETIREMENT SYSTEM 401 B STREET, SUITE 400, SAN DIEGO, CA (DISABILITY ACCESSIBLE)

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1 SAN DIEGO CITY EMPLOYEES RETIREMENT SYSTEM 401 B STREET, SUITE 400, SAN DIEGO, CA (DISABILITY ACCESSIBLE) BOARD OF ADMINISTRATION SCHEDULED FOR 8:30 AM * REVISED 2/9/07 * SDCERS TRUSTEES Peter Preovolos, President; Steve Meyer, Vice-President; Joe Flynn, Thomas Hebrank, Wayne Kennedy, Richard Kipperman, Franklin Lamberth, George Murray, Jo Anne Sawyerknoll, William Sheffler, Mark Sullivan and John Thomson. CALIFORNIA GOVERNMENT CODE SECTION 1090: INTEREST DISCLOSURE Pursuant to California Government Code Section (a)(9), a city officer or employee does not have a financial interest in a city contract if these conditions are satisfied: (i) his or her interest is that of a person receiving a salary, per diem or reimbursement for expenses from a government entity; (ii) the contract does not directly involve the department of the government entity that employs him or her; and (iii) the interest is disclosed to his or her body or board at the time the contract is considered and is noted in its official record. In accordance with this statute, the individual Board members identified below request that the Board note in its official records that they receive a salary, per diem or reimbursement for expenses from the City of San Diego: Franklin Lamberth, Steve Meyer, John Thomson, Jo Anne SawyerKnoll and Mark Sullivan. John Thomson is also a Board member of San Diego Fire Fighters Local 145 and a DROP participant. Joe Flynn notes he is a retired City employee and receives a retirement allowance from SDCERS. Mark Sullivan is also a Board member of the Police Officers Association. I. NON- PUBLIC COMMENT This portion of the agenda is for members of the public to address the Retirement Board on any subject within the Board s jurisdiction that is not on today s agenda. To address the Board during Non-Agenda Public Comment, you must complete a Request to Speak form and submit it to the Board Secretary before the meeting begins. To address the Board on a subject that is on today s agenda, you must submit a Request to Speak form before the item is called. These forms are located in the back of the Board Room. The chairperson will call your name to address the Board during Non-Agenda Public Comment or when your item is to be heard. Non-agenda Public Comment is limited to 3 minutes per speaker and 15 minutes per topic. Public testimony on an item on the agenda is limited to 3 minutes per speaker and 15 minutes per side. II. APPROVAL OF CONSENT ITEMS A-F Retirement benefits paid by SDCERS must comply with the Plan and the limits set forth in Internal Revenue Code Section 415(b). Under the Plan, any benefits that exceed these limits must be paid from the Preservation of Benefit Plan (POB), which is designed to be a Qualified Excess Benefit Arrangement. Excess benefits cannot be paid from the SDCERS trust fund. SDCERS has submitted a Voluntary Correction Program (VCP) filing addressing past excess benefits paid and committing to implement ongoing testing procedures beginning in January SDCERS is also filing a private letter ruling request with the IRS to approve a new POB structure. These procedures and the new structure provide that excess benefits are paid from the POB. Accordingly, the Board's approval of the retirement benefits on this agenda will not result in the violation of Code Section 415(b).

2 PAGE 2 A. SERVICE RETIREMENTS CITY OF SAN DIEGO 1. Janet Buttman, Metropolitan Wastewater. Assistant Civil Engineer years creditable service. Effective date 2/24/ Ramona Chester, Police. Police Officer/Detective years creditable service. Effective date 2/4/ Raymond Francel, Water. Utility Worker I years creditable service. Effective date 2/10/ Michael Palermo, Police. Latent Print Examiner II years creditable service. Effective date 1/25/ Thomas Story, Mayor's Office. Chief of Staff years creditable service. Effective date 2/18/ James Wageman, Metropolitan Wastewater. Senior Civil Engineer years creditable service. Effective date 2/24/ Margaret Hanley, The Centre for Organizational Effectiveness. Consulting Partner years creditable service. Effective date 2/3/2007. SAN DIEGO COUNTY REGIONAL AIRPORT AUTHORITY 8. Geraldine Del Pozo, APA. Airport Operations Asst years creditable service. Effective date 3/1/2007. UNIFIED PORT DISTRICT 9. Iris Bitton, Audit Risk Management & Safety. Senior IT Auditor years creditable service. Effective date 2/24/2007. B. DEFERRED RETIREMENT OPTION CITY OF SAN DIEGO 1. David Chivers, Park & Recreation. Grounds Maintence Worker II years creditable service. Effective date 2/10/ Steven Bixler, Fire. Fire Captain years creditable service. Effective date 2/10/2007.

3 PAGE 3 3. Robert Davis, Police. Police Officer II. 30 years creditable service. Effective date 2/10/ Robert Dear, Environmental Services. Senior Disposal Site Representative years creditable service. Effective date 1/13/ James Dollins, Police. Police Officer II years creditable service. Effective date 2/10/ Fay Faulkner, General Services. Information Systems Analyst II years creditable service. Effective date 2/10/ Robert Lewis, Police. Detective years creditable service. Effective date 1/27/ Royal Manaka, Metropolitan Wastewater. Associate Civil Engineer years creditable service. Effective date 2/1/ Michael McCullough, Police. Sergeant years creditable service. Effective date 2/10/ Guy Mc Elroy, Police. Police Officer II years creditable service. Effective date 1/27/ Maurice McKeirnan, Stadium. Carpenter years creditable service. Effective date 2/24/ John Pich, Water Operations. District Manager years creditable service. Effective date 2/10/ Juan Ruiz Jr., Metropolitan Wastewater. Utility Worker II years creditable service. Effective date 2/10/ Danny Schrotberger, Engineering & Capital Projects. Project Manager years creditable service. Effective date 2/10/ Joseph Taormina, Fire. Captain years creditable service. Effective date 1/27/2007.

4 PAGE 4 C. STATEMENTS OF MEMBERSHIP THROUGH JANUARY 31, 2007 Retired (including DROP s) 1981 Pension Plan Continuance DRO s Active Retired Deaths Active Member Deaths (paid) Enrolled Deferred / Inactive 5, , ,614 D. ACTIVE DROP TO RETIRED DROP Kent Floro Assistant Deputy Director 02/08/2007 Larry Smith Grounds Maintenance Worker II 02/02/2007 Milagros Acasio Supervising Recreation Specialist 02/15/2007 William Pomfret Word Processing Operator 02/28/2007 Sara Padilla Utility Worker I 01/27/2007 Patrick Shanley Detective 01/19/2007 Rina Kelley Senior Contracting Officer 01/10/2007 Michael Leonard Police Officer II 02/24/2007 Charles Shaw Welder 02/10/2007 Mary Ellen Andrews Word Processing Operator 02/10/2007 Robert Johnson Jr. Firefighter 01/27/2007 William Holmes Detective Sergeant 01/26/2007 Gene Manley Equipment Repair Supervisor 01/24/2007 Paul Dyresen Police Lieutenant 02/19/2007 E. DROP ACTIVITY THROUGH JANUARY 31, 2007 TOTAL ACCOUNTS: DROP ACTIVE AND RETIRED, FUNDS LEFT ON ACCOUNT 1493 TOTAL DEPOSITS: DROP ACTIVE AND RETIRED, FUNDS LEFT ON ACCOUNT $251,316, DROP ACTIVE MEMBERS DROP RETIRED MEMBERS, FUNDS LEFT ON ACCOUNT PLAN COUNT BALANCE PLAN COUNT BALANCE LEGISLATURE 0 0 LEGISLATURE 1 $43, $57,877, $33,274, SAFETY LIFEGUARD 6 $899, SAFETY LIFEGUARD 2 $367, SAFETY POLICE 222 $39,504, SAFETY POLICE 118 $36,114, SAFETY FIRE 179 $40,354, SAFETY FIRE 120 $39,469, UPD SAFETY 5 $391, UPD SAFETY 2 $398, UPD 26 $2,011, UPD 4 $288, APA 3 $163, APA 1 $156, TOTAL DROP ACTIVE 986 $141,202, TOTAL DROP RETIRED 507 $110,113,980.59

5 PAGE 5 F. TERMINATIONS/WITHDRAWALS OF CONTRIBUTIONS FOR THE MONTH OF JANUARY 2007 NAME ANDREWS, RICHARD DOUGLAS, CHRISTOPHER L. HARROD, ROBERT R. IGE, CRISTAL A. SARVER, STEVEN KRITZ, NICOLE J. PHILLIPS, FRANCINE ASTORGA, DAVID A. CARNEY, CLINTON O. TAYLOR, JOE A. MEMBERSHIP SAFETY FIRE SAFETY FIRE SAFETY POLICE TOTAL WITHDRAWAL OF CONTRIBUTIONS: $83, III. CONSIDERATION AND ACTION OF ITEMS PULLED FROM CONSENT IV. BUSINESS OPERATIONS A. NEW BUSINESS 1. Approve the June 30, 2006 Actuarial Valuation Report for the City of San Diego. Gene Kalwarski, Cheiron (TAB 1) 2. Approve the June 30, 2006 Actuarial Valuation Report for the San Diego Unified Port District. Gene Kalwarski, Cheiron 3. Approve the June 30, 2006 Actuarial Valuation Report for the San Diego Regional Airport Authority. Gene Kalwarski, Cheiron 4. To waive the Board s privilege over Reed Smith letter, dated September 18, 2006 concerning City and employee normal retirement allowance contributions. (TAB 2)

6 PAGE 6 V. TRAINING A. NEW BUSINESS 1. Training: (TAB 3) Certificate of Achievement in Public Plan Policy in Employee Pensions, March 3-4, 2007, San Diego, CA 2007 Benefits Conference for Public Employees, March 5-6, 2007, San Diego, CA CALAPRS General Assembly, March 11-13, 2007, Monterey, CA Council for Institutional Investors, Spring Conference, March 18-20, 2007, Washington, D.C. Portfolio Concepts and Management, Wharton School, May 21-24, 2007, Philadelphia, PA NCPERS Trustee Educational Seminar (May 18-19, 2007) and Annual Conference (May 20-23, 2007), Honolulu, HI 2. Planning Calendar. (TAB 4) VI. DISABILITY COMMITTEE WILLIAM SHEFFLER, CHAIR (TAB 5) A. STATUS REPORT B. APPROVAL OF DISABILITY CONSENT ITEMS Recommendation to refer James Tucker s disability retirement for hearing regarding the potential termination of his benefit. (SDMC ) (TAB 6) 2. Heleodoro Lopez, Water Operations Department. Water Utility Worker years of creditable service. Effective date 11/16/2002. Adjudicator's recommendation to approve the application for industrial disability retirement. (TAB 7) 3. Leslie Lucas, Water Operations Department. Water Utility Worker I years of creditable service. Effective date 02/17/2007. Staff's recommendation to approve the non-industrial disability retirement application. (TAB 8)

7 PAGE 7 NO 4. Engagement of Administrative Hearing Counsel. C. CONSIDERATION AND ACTION OF ITEMS PULLED FROM DISABILITY CONSENT D. OLD BUSINESS 1. Jeffrey Napier, Police Department. Police Sergeant years of creditable service. Effective date 12/17/2007. Staff's recommendation to refer to hearing before an adjudicator the industrial disability retirement application. (TAB 9) E. AFFIDAVIT AND RE-EXAMINATION PROJECT NO 1. Affidavit and Re-Examination Project Chart. (TAB 10) 2. Second Reading of Proposed Changes to Board Rules 15 and (TAB 11) VII. BUSINESS & GOVERNANCE COMMITTEE MARK SULLIVAN, CHAIR (TAB 12) A. Presentation on Stanford Principles of Fund Governance and Example of Governance Policies. (TAB 13) B. STATUS REPORTS NO 1. Staff Reports by Division: Benefits Administration. (TAB 14) Compliance. (TAB 15) Finance and Administration. (TAB 16) Information Systems. Investments. (TAB 17) Legal Services. (TAB 18) Member Services. (TAB 19) 2. December 2006 Financial Statements. (TAB 20)

8 PAGE 8 3. Milestone Report. (TAB 21) C. NEW BUSINESS 1. Adopt Preservation of Benefit Plan for City Members. (TAB 22) 2. Adopt Preservation of Benefit Plan for Unified Port District Members. (TAB 23) 3. Adopt Preservation of Benefit Plan for Airport Authority Members. (TAB 24) 4. Approval of projected employer contributions to preservation of benefit plans. (TAB 25) 5. Adopt resolution (1) Recommending the City adopt the revised Technical Tax Compliance Ordinance, and (2) Affirming that SDCERS will administer the plans in accordance with current tax law. (TAB 26) 6. Board Member Election Rule Changes. (TAB 27) 7. Discussion of Board Officer Election process. (TAB 28) NO 8. Discussion of KPMG Management Representation Letter request. 9. Discussion of Purchase of Service Program. 10. Discussion of Deferred Retirement Option Plan. VIII. INVESTMENT COMMITTEE THOMAS HEBRANK, CHAIR (TAB 29) A. NEW BUSINESS 1. Approve the addition of Private Equity as an eligible asset class for SDCERS investment program. SDCERS Target Asset Allocation Policy will be revisited during the Annual Asset Allocation review in Summer 2007 to determine the level of exposure to this new asset class, up to a maximum of 5% (at cost at time of purchase) of fund assets. (TAB 30)

9 PAGE 9 2. Withdraw $22.8 million discretionary funding commitment from US Realty Leveraged Net Lease real estate investment program. (TAB 31) NO 3. Discuss modifications to SDCERS Investment Policy. (TAB 32) B. STATUS REPORTS NO 1. Investment Performance Report as of December 31, (TAB 33) 2. Staff Reports Executive Summary. (TAB 34) Investment Division Status Report and Proxy Voting Activity through January Year-To-Date Realized Gains Chart through December 31, SDCERS Asset Allocation Status. Managers Watch List. Securities Lending Earnings Report through Second Quarter FY 2007 (through December 2006). SDCERS Realized Rate of Return through December 31, IX. QUESTIONS AND COMMENTS FROM PRESIDENT, TRUSTEES AND STAFF X. CLOSED SESSION A. CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION (SUBDIVISION (a) OF SECTION , CALIFORNIA GOVERNMENT CODE) 1. Michael Abramsky, et al., v. Alstom Sa, et al., 03-CV-6595(VM) United States District Court, Southern District Of New York. 2. San Diego Police Officers' Association v. Michael Aguirre, et al., United States District Court Case No. 05CV SDCERS v. City of San Diego & City Attorney Michael Aguirre, San Diego Superior Court No. GIC San Diego City Employees' Retirement System v. City of San Diego, San Diego Superior Court Case No. GIC

10 PAGE Erica Aaron et al. v. Mike Aguirre, City of San Diego, San Diego City Employees' Retirement System, et al. (aka POA Class Action); Case No. 06CV Sergio Alcala v. SDCERS, Court of Appeal Case No. D Rochelle Glenn v. SDCERS, San Diego Superior Court Case No. GIC B. CONFERENCE WITH LEGAL COUNSEL - ANTICIPATED LITIGATION 1. SIGNIFICANT EXPOSURE TO LITIGATION PURSUANT TO SUBDIVISION (b) OF SECTION : ONE CASE XI. NON-DOCKETED ITEMS XII. NEXT MEETING XIII. ADJOURNMENT Friday, March 16, :30 AM 401 B Street, Suite 400 San Diego, CA 92101