Reccsf bulletin 6 2011

Retirement Committee ReportBy Jean S. Thomas, against his combining health $11.1 billion in January 2009Herb Meiberger, CFA, and and pension issues in a single to $15.6 billion at 4/29/2011.Stephen Herold measure. (He says he’ll be back SFERS management informs us with health issues next year.) that SFERS is the second best-No Definite Word about A ny way, he just held a live funded public pension plan inNovember 2011 Ballot ”town hall” phone call on how/ the country! (By the way, SFERSMeasures… why the San Francisco pen- management does not comment This is one of the most dif- sion system is “going broke,” on political matters affecting theficult and frustrating columns and he encouraged voters to Plan. It does, however, providethat we have ever written be- call in with questions. Space solid information.)cause no one knows what, or doesn’t permit extensive cover-how many, proposals affecting age of Mr. Adachi’s responses Other Items of Interestour pensions and health care and assertions. However, two • Virtually all of the SFERSwill be on the November 2011 are noteworthy. Mr. Adachi said 5/10/2011 meeting was dedi-ballot. The bargaining points that San Francisco’s pension cated to an annual review ofbetween the Public Employees plan is in such bad shape that SFERS’ real estate portfolio,Committee—or PEC—and the it will soon be “another Illinois,” with Townsend Group, SFERSCity shift constantly; the Mayor/ which is a public plan in serious real estate consultant, pro-Hellman proposals remain un- trouble. Of course, he did not viding a long term strategicclear; and Public Defender, Jeff cite SFERS’ performance figures plan and a short term—FYAdachi is circulating his latest at all, which we discuss in the 2011/12—program. Althoughproposal (There have been at next paragraph. Also, when a the Board felt the analysisleast six—will there be more?) caller questioned his statement and discussion were fruitful,for signatures to get on the No- that the average annual CCSF they nevertheless continuedvember 2011 ballot. Vis a vis pension is $75,000, he acknowl- the item. To summarize, theCity pensions, we believe that edged that he had no data to Board was not satisfied thatall proposals will attack, some- back that up. Townsend’s strategic planhow, our supplemental “excess was sufficiently “visionary”earnings” COLA. Adachi’s latest These are the facts about to pull the portfolio upward,proposal is that the supplemen- the City Pension System: and wondered why specifictal earnings COLA will be paid As of 4/29/2011, ten months recommendations for higheronly when the SFERS Plan is fiscal year to date (FYTD), pre- return investments appear to100% funded—that is, on an liminary performance figures be accompanied with higheractuarial basis, when assets are: earnings, 23%, Plan market risk, rather than added value.and liabilities are equal, dollar value, $15.6 billion. The actu- This is another example of thefor dollar. (FYI, the Plan is now arial rate, or estimate of how Board’s recent ever-deeper91% funded, meaning, on an much the Plan must earn to inquiries into staff/consultantactuarial basis, that there are cover all its long-term liabilities i nvest ment recom menda-91 cents of assets for every dol- in a given fiscal year, is 7.75%. tions.)lar of liabilities.) Unfortunately, Unless something drastic hap- • SFERS is moving toward moreMay 24, when proposals must pens in the next two months, online information accessibil-be in coherent form, is after our FY 2010/11 Plan earnings ob- ity, the least sensitive datapress deadline. viously w ill handily exceed to be on line first. Member 7.75%! These $3 billion in “paper password protection will beAttacks on SFERS profits” will substantially lower provided. But SFERS assuresPerformance Figures vs. the the unfunded liability, and will us that people will always beTruth be “recognized” over the next available to answer questions. We do know, though, that the five years, according to our Stay tuned.major local public press is fero- actuarial smoothing method.ciously attacking both CCSF’s Furthermore, SFERS’ histori- Questions? Comments? Con-public employees’ health care cal performance chart of Plan tact: Herb at herb.sf@gmail.com;and pensions. And, for now, market value shows an almost Jean at jeansthomas@yahoo.Mr. Adachi is concentrating his steady increase —w it h only com, or (415) 665-4149; Stephenefforts on CCSF pensions only, minor short term down trends at stephenhome@att.net, or (415)because the city attorney ruled along the way—from a low of 664-1201. Page 3

Reccsf bulletin 6 2011

by Herb Meiberger

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