BOARD OF ADMINISTRATION

AGENDA

 

Friday, September 8, 2017 8:30 AM

401 WEST A STREET

SDCERS BOARDROOM, THIRD FLOOR

SAN DIEGO, CA 92101

 

(DISABILITY ACCESSIBLE)

 

 

SDCERS MISSION

 

The mission of the San Diego City Employees’ Retirement System is to deliver

accurate and timely benefits to its participants

and ensure the Trust Fund’s safety, integrity and growth.

 

 

SDCERS TRUSTEES

 

Valentine S. Hoy – President, Thomas P. Battaglia, Carol Broad, Carina E. Coleman, Natasha L. Collura, William W. Haynor, Charles F. Hogquist, George C. Kenney, Michael H. McBride, Thanasi K. Preovolos,  Roberta J. Spoon, Thomas A. Sullivan, Jeffrey J. Wallace

 

CALIFORNIA GOVERNMENT CODE SECTION 1090: INTEREST DISCLOSURE

 

Pursuant to California Government Code Sections 1091.5(a)(3) and 1091.5(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, including without limitation retirement benefit accruals and/or payments from SDCERS, and, any contemplated change in that interest would apply broadly to similarly situated SDCERS members, such that the interest is not unique, personalized or individually tailored to the Board member; (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 following Board members 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:  Thomas Battaglia, Natasha Collura, Charles Hogquist, Michael McBride, Thomas Sullivan, Jeffrey Wallace.  Thomas Battaglia is a board member of the San Diego Municipal Employees Association. 

 

Gov. Code §54957.5 Notice: Any public documents distributed to the Trustees of the Board of Administration less than 72 hours prior to the meeting are available for public inspection at SDCERS’ offices located at 401 West A Street, Suite 400, San Diego, CA 92101. Contact the Board Secretary, Cynthia Joyner, at (619) 525-3626 to arrange for inspection.  Items listed as non-action or informational items are appropriate for action if the trustees wish to take action.

 

It is SDCERS' intention to comply with the Americans with Disabilities Act ("ADA") in all respects.  If, as an attendee or participant at this meeting, you will need any special assistance beyond that normally provided, SDCERS will attempt to accommodate your needs in a reasonable manner. Please contact the Board Secretary at (619) 525-3626 as soon as possible prior to the meeting to tell us about your needs and to determine if accommodation is feasible.  We would appreciate at least 48 hours notice, if possible.  Please also advise us if you plan to attend meetings on a regular basis.

 


 

I.

PREVIOUS BOARD MEETING SUMMARY (TAB 1)

 

II.

CALL TO ORDER

 

III.

NON-AGENDA PUBLIC COMMENT

 

This portion of the agenda is for members of the public to address the Board of Administration on any subject within the Board’s jurisdiction that is not on today’s agenda.  To address the Board during Non-Agenda Public Comment, please 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, please 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.

 

IV.

APPROVAL OF CONSENT AGENDA ITEMS A-D

 

A.

SERVICE RETIREMENTS (TAB 2)

 

B.

DEFERRED RETIREMENT OPTION PLAN (DROP)ENTRIES (TAB 3)

 

C.

DEFERRED RETIREMENT OPTION PLAN (DROP)RETIREMENTS (TAB 4)

 

D.

STATEMENTS OF MEMBERSHIP THROUGH JULY 31, 2017 (TAB 5)

 

V.

CONSIDERATION AND ACTION OF ITEMS PULLED FROM CONSENT AGENDA

 

VI.

AUDIT COMMITTEE – GREG KOWIESKI, CHAIR (TAB 6)

 

A.

NEW BUSINESS

 

ACTION REQUESTED

 

1.

Appointment of the Audit Committee Chair  Mark Hovey  (TAB 7)

 

2.

Discussion and Consideration of Internal Auditor Compensation  Johnny Tran & Lourdes Silva  

 

NO ACTION REQUESTED

 

3.

New Independent Audit Committee Member Appointment  Mark Hovey  (TAB 8)

 

4.

Aon Hewitt's Total Fund Performance Report for the Quarter and Fiscal Year Ended June 30, 2017  Liza Crisafi  (TAB 9)

 

5.

Review of Private Markets Compliance and Risk Monitoring  Jamie Hamrick & Demitrios Haldes  (TAB 10)

 

6.

Unaudited June 30, 2017 Trust Financial Statements  Ted LaSalvia  (TAB 11)

 

7.

KPMG's Review of SDCERS' Tax Compliance Program  Johnny Tran & Marcelle Voorhies Rossman  (TAB 12)

 

8.

Purchase of Service Credit Audit  Lee Parravano  (TAB 13)

 

B.

STATUS REPORTS

 

NO ACTION REQUESTED

 

1.

Information Technology  David Bond  (TAB 14)

 

2.

Legal Division  Johnny Tran  (TAB 15)

 

3.

Audit Committee Activities Annual Summary - Fiscal Year 2017  Greg Kowieski  (TAB 16)

 

4.

Internal Audit  Lee Parravano  (TAB 17)

 

VII.

BUSINESS OPERATIONS

 

A.

NEW BUSINESS

 

ACTION REQUESTED

 

1.

Appointment and Confirmation of Board Vice President Mark Hovey    

 

 

 

2.

Staff's Recommendation to Deny Anna Martinez's Request for Reconsideration of the Board's Denial of Appeal to Waive Principal and Interest on Overpaid Benefits  Susan Youngflesh   (TAB 18)

 

3.

Cheiron Discussion on Actuarial Funding and Economic Assumptions  Gene Kalwarski, Cheiron  (TAB 19)

 

NO ACTION REQUESTED

 

4.

Segal Consulting Audit of Cheiron's June 30, 2016 Actuarial Valuation  Paul Angelo & Andy Yeung  (TAB 20)

 

VIII.

DISABILITY COMMITTEE – NATASHA COLLURA, CHAIR (TAB 21)

 

A.

APPROVAL OF DISABILITY CONSENT AGENDA ITEMS 1-6

 

ACTION REQUESTED

 

1.

Staff's Recommendation to Approve the Industrial Disability Retirement Application of Joseph Krawcyzk  Sandra Claussen  (TAB 22)

 

2.

Staff's Recommendation to Approve the Industrial Disability Retirement Application of Miguel Lopez  Sandra Claussen  (TAB 23)

 

3.

Staff's Recommendation to Approve the Industrial Disability Retirement Application of Paul Rorrison  Sandra Claussen  (TAB 24)

 

4.

Staff's Recommendation to Approve the Industrial Disability Retirement Application of Yezenia Sanchez  Sandra Claussen  (TAB 25)

 

5.

Adjudicator's Recommendation to Deny the Industrial Disability Retirement Application of Don Silver  Susan Youngflesh  (TAB 26)

 

6.

Staff's Recommendation to Dismiss the Industrial Disability Retirement Application of Scott Morrison  Susan Youngflesh   (TAB 27)

 

B.

CONSIDERATION AND ACTION OF ITEMS PULLED FROM DISABILITY CONSENT AGENDA

 

C.

STATUS REPORTS

 

NO ACTION REQUESTED

 

1.

Disability Status Report Sandra Claussen (TAB 28)

 

IX.

BUSINESS AND GOVERNANCE COMMITTEE – THANASI PREOVOLOS, CHAIR (TAB 29)

 

A.

APPROVAL OF BUSINESS AND GOVERNANCE CONSENT AGENDA ITEMS 1-6

 

ACTION REQUESTED

 

1.

New Independent Audit Committee Member Appointment Mark Hovey (TAB 30)

 

2.

Staff's Recommendation to Deny the Appeal of Christopher Leahy Susan Youngflesh (TAB 31)

 

3.

Staff's Recommendation to Deny the Appeal of Marguerite Hightower Susan Youngflesh (TAB 32)

 

4.

Staff's Recommendation to Revise Board Rule 5.10, Proof of Age Marcelle Voorhies Rossman (TAB 33)

 

5.

Staff's Recommendation to Revise Board Rule 6.60, Member to Enter DROP at the Beginning of a Pay Period Marcelle Voorhies Rossman (TAB 34)

 

6.

Staff’s Recommendation to Adopt the CY 2018 Board and Committee Meetings Schedule Johnny Tran (TAB 35)

 

B.

NEW BUSINESS

 

NO ACTION REQUESTED

 

1.

KPMG's Review of SDCERS' Tax Compliance Program Johnny Tran& Marcelle Voorhies Rossman  (TAB 36)

 

2.

Employee Satisfaction Survey Lourdes Silva (TAB 37)

 

3.

Annual Report of Fees In Excess of $50,000 Johnny Tran (TAB 38)

 

4.

Semi-Annual Travel and Training Report: January 1, 2017- June 30, 2017 Johnny Tran (TAB 39)

 

C.

OLD BUSINESS

 

ACTION REQUESTED

 

 

1.

Staff’s Recommendation to Revise Board Rules 7.100, 8.120, and 10.90 (Related to Requests for Reconsideration)  Johnny Tran  (TAB 40)

 

NO ACTION REQUESTED

 

1.

Report on Overpayments to Members Exceeding $10,000  Marcelle Voorhies Rossman  (TAB 41)

 

D.

STATUS REPORTS

 

NO ACTION REQUESTED

 

STAFF REPORTS BY DIVISION

 

1.

Legal Division Johnny Tran (TAB 42)

 

2.

Information Technology Status Report David Bond (TAB 43)

 

3.

Member Services Cynthia Queen (TAB 44)

 

4.

Benefits Administration Marcelle Voorhies Rossman (TAB 45)

 

5.

Finance Ted LaSalvia (TAB 46)

 

6.

June 2017 Trust Financial Statements Ted LaSalvia (TAB 47)

 

7.

June 2017 YTD Expenses and Capital Expenditures - Actuals versus Budget Ted LaSalvia (TAB 48)

 

8.

July 2017 Trust Financial Statements Ted LaSalvia (TAB 49)

 

X.

INVESTMENT COMMITTEE – CAROL BROAD, CHAIR (TAB 50)

 

A.

NEW BUSINESS

 

ACTION REQUESTED

 

1.

Staff and Consultant's Recommendation for a $20 Million Commitment to the Torchlight Debt Opportunity Fund VI for the Real Estate Portfolio  Jamie Hamrick / Cate Polleys & Sarah Gal - Aon Hewitt  (TAB 51)

 

2.

GCM Grosvenor's Private Equity and Infrastructure Annual Investment Plan  Jamie Hamrick / Bernard Yancovich & Michael Rose - GCM Grosvenor  (TAB 52)

 

3.

Staff and Consultant's Recommendation to Amend the GCM Grosvenor Credit Opportunities Fund Term  Liza Crisafi / Steve Voss & Katie Comstock - Aon Hewitt  (TAB 53)

 

NO ACTION REQUESTED

 

4.

Review of SDCERS' Securities Lending Program  Demitrios Haldes / John Muir - State Street Global Markets  (TAB 54)

 

5.

Review of Private Markets Compliance and Risk Monitoring  Jamie Hamrick & Demitrios Haldes  (TAB 55)

 

6.

Update on Deutsche Asset Management's Real Estate Separate Account Transition  Jamie Hamrick / Cate Polleys & Sarah Gal - Aon Hewitt  (TAB 56)

 

B.

STATUS REPORTS

 

NO ACTION REQUESTED

 

1.

GCM Grosvenor's Private Equity and Infrastructure Performance Report for the Quarter Ended March 31, 2017  Jamie Hamrick / Bernard Yancovich & Michael Rose - GCM Grosvenor  (TAB 57)

 

2.

StepStone's Private Equity and Infrastructure Performance Report for the Quarter Ended March 31, 2017  Jamie Hamrick  (TAB 58)

 

3.

Aon Hewitt's Real Estate Performance Report for the Quarter Ended March 31, 2017  Jamie Hamrick / Cate Polleys & Sarah Gal - Aon Hewitt  (TAB 59)

 

4.

Aon Hewitt's Total Fund Performance Report for the Quarter and Fiscal Year Ended June 30, 2017  Liza Crisafi / Steve Voss & Katie Comstock - Aon Hewitt  (TAB 60)

 

5.

Investment Division Staff Reports  Liza Crisafi  (TAB 61)

 

XI.

TRAINING

 

A.

NEW BUSINESS

 

ACTION REQUESTED

 

1.

Education Opportunities  Johnny Tran  (TAB 62)

 

XII.

QUESTIONS AND COMMENTS FROM PRESIDENT, TRUSTEES AND STAFF

 

XIII.

NON-DOCKET ITEMS

 

XIV.

CLOSED SESSION

 

A.

CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION [Cal. Gov. Code §54956.9(a)]

 

GENERAL LITIGATION

 

1.         Lenhart  v. San Diego City Employees’ Retirement System, Case No. 37-2011-            00096587-CU-BC-CTL (PSC Corrections)

 

2.         Agnew v. San Diego City Employees’ Retirement System, Case No. 37-2013-            00077705-CU-OE-CTL (PSC Corrections)

 

3.         Goodman v. San Diego City Employees' Retirement System, Case No. 37-2016-            00024265-CU-BC-CTL (PSC Corrections)

 

4.         Krolikowski v. San Diego City Employees’ Retirement System, Case No. 37-            2015-00006255-CU-OE-CTL (Declaration Relief/Overpayment)

 

5.         Van Putten v. San Diego City Employees' Retirement System, Case No. 37-2015-            00021007-CU-OE-CTL (Declaratory Relief/Overpayment)

 

B.

CONFERENCE WITH LEGAL COUNSEL - INITIATION OF LITIGATION [Cal. Gov. Code §54956.9(c)]: ONE CASE

 

C.

SECURITY REVIEW OF USB PORTS [Cal. Gov. Code §54957(a)]

 

D.

PUBLIC EMPLOYEE PERFORMANCE EVALUATION [Cal. Gov. Code 54957(b)]

 

1.            Internal Auditor

 

2.            Chief Executive Officer

 

3.            Chief Compliance Officer

 

XV.

BUSINESS OPERATIONS

 

A.

NEW BUSINESS

 

1.            Discussion and Consideration of Compensation for Internal Auditor

 

2.            Discussion and Consideration of Compensation for Chief Executive Officer

 

3.            Discussion and Consideration of Compensation for Chief Compliance Officer

 

4.            Chief Executive Officer Succession Plan

 

XVI.

ADJOURNMENT

 

 

 

NEXT MEETING:

Friday, November 3, 2017 - 8:30 AM

401 West A Street

SDCERS Boardroom, Third Floor

San Diego, CA  92101