►
Description
San José Federated City Employees' Retirement Board
View Agenda at https://sjrs.legistar.com/View.ashx?M=A&ID=743033&GUID=D6A47BCC-545C-45B5-BA4E-7FBEDD822FEA
B
A
Orders
of
the
day
we
have
a
time,
certainly
at
10
o'clock-
item
5
II.
It's
a
presentation
or
discussion
on
the
city
budget
to
be
made
by
the
city
budget,
director,
Jim
Shannon
and
finance
director
Julie
Cooper,
and
then
we
also
have
a
correction
to
item
one
to
a
that
is
the
date
for
mister.
Dangs
retirement
should
be
effective.
January
15
2020,
not
January,
15
2019
I
have
a
motion
in
a
second
for
orders
of
the
day.
Make.
A
D
A
So
on
the
consent
to
calendar,
we
have
the
approval
of
the
service
retirement
school,
a
deferred
vested
approval
of
Board
minutes
who
will
return
contributions,
acceptance
of
communication
information
reports
who
will
change
our
retirement
date
and
approval
of
administrative
matters?
Are
there
any
changes
to
the
consent?
Calendar?
B
B
B
A
B
You
can
take
the
dinner
motion.
Original
motion
was
for
most
of
the
ideas
that
said
for
the
ID,
that
was
appalled
by
trustee
Sun
said
you
have
to
have
two
motions:
the
first
one
to
approve
all
the
items
which
he
already
D
and
then
a
second
one
to
approve
the
change
request
about
trustee
stone
on
that
particular
animal.
B
C
A
So
a
motion
from
trusty
Chandra
and
a
second
from
trustee
or
for
the
consent
calendar
with
the
exception
exception
of
I,
know
one
point
seven.
So
if
you
have
a
motion,
a
second
we
do
lose
me.
I
was
like
you
know:
he
got
all
in
favor,
aye
all
opposed
okay
and
then
for
the
amendment
identified
by
trustee
son.
A
All
right,
I,
yes,
so
item
two
is
death
and
survivorship
notifications.
I
likes
to
ask
for
a
moment
of
silence
were
those
who
served
the
city
and
was
recently
fast.
A
G
You
mr.
chairman
I
have
a
few
updates
for
the
board.
Firstly,
I
may
have
mentioned
this
before
we
are
going
to
issue
an
RFP
for
investment
consultant
services,
and
it's
been
a
few
years
since
we've
done
that
it's
good
practice
to
go
back
and
survey
and
find
out
what's
available
out
there
in
terms
of
consulting
services.
We
have
made
a
decision
to
consolidate
consulting
and
risk
services.
Right
now
we
have
two
different
consultants,
one
for
risk
management
and
the
other
for
investment
consulting.
G
G
G
G
Blackrock
is
a
large
farm
with
very
deep
resources,
so
and
and
the
person
who
left
was
not
a
portfolio
manager
and
not
involved
with
any
of
the
asset
classes
that
they
manage
for
us
and
I.
Believe
it's
a
one-off
incident
and
it's
not
representative
of
the
culture
at
Blackrock
and
has
really
happy
with
the
way
Blackrock
dealt
with
it.
So
just
wanted
to
update
the
board
on
that.
G
F
G
You
know,
consultants
and
staff
had
the
boards
have
added
value
or
not,
and
so
within
it
we've
kept
an
open
mind.
You
asked
migite
to
go
and
actually
gather
some
data
as
far
back
as
possible
and
so
they're
in
the
process
of
doing
it.
So
those
are
additional
slides
that
I
will
add.
My
fee
presentation
and
I
will
actually
bring
that
presentation
back
to
this
board
next
month
and
share
those
results
with
all
of
you.
C
G
Say
specifically
that
the
board
can
have
its
own
consultant
and
staff
can
have
its
own
consultant.
The
RFP
will
actually
go
out,
there'll
be
two
sections
on
that,
and
the
board's
consulting
services
is
mainly
for
asset
allocation
and
staff
is
more
for
manager
selection.
It
is
my
hope
that
we
end
up
with
one
consultant.
It
will
just
be
easier
and
but
the
board
may
decide
to
have
two
different
consultants
and
which
is
why
I
would
like
to
have
a
representative
of
the
board
involved
in
the
process.
E
G
It
happened
by
accident
that
we
have
two
different
consultants.
The
last
time
this
happened
several
years
ago,
staff
actually
made
a
recommendation
for
an
investment
consultant
and
the
board
actually
overruled
staffs
recommendation
when
they
did
that
they
said.
Oh
okay,
so
we
will
take
your
choice
and
give
them
the
risk
consulting
piece
to
that
to
your
choice,
and
so
it
is
more
by
accident
than
by
design
that
we
have
two
consultants
and
I
believe
that
by
consolidating
consultants,
there
might
be
some
cost
savings.
G
E
E
G
Report
so
when
I
make
the
presentation,
these
are
just
PowerPoint
slides
and
so
it's
important
to
actually
listen
to
the
presentation
and
the
video
and
the
audio.
Because
if
you
just
look
at
the
slides,
you
may
not
get
the
right
information
out
of
it.
So
it's
not
meant
to
be
an
exhaustive
written
report.
So
it's
more
of
a
presentation
where
I
actually
talk
to
these
slides
and
we
give
those
explanations.
A
Mr.
Pony
on
the
RFP,
the
investment
consultant
RFPs,
you
say
it
more
about
where
you're
at
in
the
process
of
forming
the
selection
committee,
because
I'd
missed
it
the
first
time
around.
But
to
the
extent
it
is
possible
that
the
board
makes
a
separate
decision
than
the
staff
consultant
and,
of
course,
board.
Representation
on
the
selection
committee
will
be
important,
but.
G
There
isn't
a
selection
committee
per
se,
so
we
will
have
internally
staff
will
review
responses
and
which
is
why
I'm
reaching
out
to
the
board,
to
request
that
you
know
it
is
my
intention
to
work
with
the
IC
chairs
and
so,
which
is
I,
am
reaching
out
and
informing
the
board
that
I'm
going
to
it's
my
intention
to
reach
out
to
the
IC
chess,
and
hopefully
they
can
work
with
me
on
this.
But
the
board
is
free
to
nominate
anyone
that
the
board
wants
to
be
involved
in
the
process.
G
G
A
A
That
includes
the
key
ala,
key
raging
elements
of
leadership,
planning,
problem,
solving
communications
and
management,
so
that
this
and
there
are
four
ratings
for
those
key
elements-
outstanding,
commendable
satisfactory
and
improvement
needed.
So
we
will
take
action
on
the
CEO
and
CIO
separately
and
I
should
also
mention
before
we
jump
into
that
police
and
fire
the
police.
A
So
so
we
won't
do
too
much
detail,
but
I'm
also
mindful
about
the
board
members
who
are
not
part
of
the
GPC
you've
not
had
heard
the
haven't,
been
part
of
the
in-depth
discussion
about
it.
So
I'm
hoping
to
provide
you
with
enough
information
that
I
hopeful
that
aligns
with
what
you,
your
experiences
so
far
and
then
I'll
put
forward
a
recommendation,
emotion
and
asked
for
a
second
which
I
take
action
on
that
and
then
we'll
do
the
same
with
CIO
any
questions.
Before,
we
jump
into
the
individual,
yes,
I.
F
Just
a
little
bit
of
information,
particularly
since
we
have
some
newer
trustees
here,
just
on
how
the
process
works.
There's
there's
three
things
that
I
think
are
important
to
understand
about
this
process.
Number
one
is
because
it's
a
public
entity
all
of
the
review
part
of
this,
the
the
confidential
personnel
type
information
that
happens
in
closed
session,
but
the
compensation
discussion
has
to
happen
in
open
session.
F
There's
no
discussion
at
all
of
compensation
in
closed
session,
so
sometimes
it
creates
a
little
awkwardness
because
you're
doing
half
in
closed
session,
the
other
half
in
open
session
we're
in
the
open
session
part
right
now,
where
we're
talking
about
compensation,
that's
the
first
thing.
The
second
thing
is
that
in
this
process,
under
the
city
charter,
the
City
Council
actually
sets
the
compensation
for
the
CEO
and
the
CIO.
F
These
boards
just
make
recommendations.
So
what
you're
doing
today
is
determining
what
you
want
to
recommend
to
the
City
Council
and
then
the
third
thing
I
wanted
to
say
is
that
there's
some
in
this
particular
City
you
have
to
Retirement
boards
and
so
they're,
actually
both
making
recommendation
to
the
City
Council.
Now,
there's
nothing.
There's
nothing
in
the
Charter
that
says
they
have
to
recommend
the
same
thing,
but
obviously
I
think
as
a
practical
matter.
F
If
the
two
boards
can
agree
on
the
same
thing,
that
would
be
ideal
so
that
it's
a
unified
single
message
to
the
City
Council.
But
if
the
boards
did
disagree,
they
could
work
with
that
too.
But
in
the
end,
it's
all
just
a
recommendation
to
the
City
Council.
So
that's
what
we're
discussing
now
in
the
chair
is
going
to
explain
what
the
police
and
fire
board
already
did
in
terms
of
what
it
believes
it.
What
it
wants
to
recommend
to
the
City
Council
and.
B
B
It
is
true
that
the
City
Council,
what
the
City
Council
determination
is,
is
based
on
information
provided
by
the
boards
and
data
that
compares
public
pension
plans.
A
secretive
payee
across
the
nation.
The
city
council
decides
what
the
pay
scale
is
once
that
decision
is
made
by
the
City.
Council
is
ultimately
just
up
down
to
the
board
to
decide
the
pay,
so
in
other
words,
if
they,
if
the
pay
scale
is
from
A
to
B
federal,
both
boards
have
to
decide
pay
between
a
and
B.
They
cannot
go
to
C
without
going
to
City.
F
B
C
C
C
Minimally
attended
board
meeting
by
the
full
board,
so
I
know
trustee
Sonny
and
I
participated,
and
now
retired
trustee,
lush,
participated
and
I
believe
we
had
one
other
person
there,
Oh
Jay
was
there.
Thank
you
so,
but
we
spent
quite
a
bit
of
time
and
for
the
purpose
of
this
CI
o
review
I
took
all
those
comments
and
then
trustee
Girardi
who's,
the
chairman
of
the
investment
committee
for
police
and
fire
and
I
reconciled
them,
and
that's
how
we
got
to
where
we
are
today.
Ceo
process
was
probably
similar
right,
Jay!
That's
yes!
So
it's.
B
D
A
A
A
A
C
C
B
Yes,
so
we
based
on
years
of
service,
you
have
a
number
of
vacation
days
that
you
accumulate.
In
addition
to
that,
the
employer
provides
you
with
annually
five
executive
days
and
then
based
on
the
discussion
for
the
review,
the
employer
decides
whether
you
can
get
an
additional
five
executive
day.
So
maybe
four
three.
So
in
this
particular
case
they
are
in
addition
to
that
regular
five
consecutive
days,
they're
recommending
an
additional
five
executive
days,
which
is
the
limit.
Then
you
can
be
see.
B
E
E
B
E
I
only
want
to
make
comment:
I'm
not
going
to
sing
because
I
don't
know
the
overall
rating
of
there's.
Only
three
percent
is
it
I
believe
is
three
percent.
The
merit
increase
is
highest
within
the
city,
I've,
never
seen
more
than
that,
and
you
have
to
be
rated
extremely
well
to
get
three
percent
top
rate
top
marry
race.
I.
Just
wanna.
Make
comment
on
that.
Can.
E
E
Marry
the
race
is
the
city
policy,
so
we
all
know
and
then
constantly
cost-of-living
adjustment
is
it's
also
known
to
all
city
employees.
So
that's
a
city
policies
known
to
the
city
and
on
to
the
public,
but
I
just
know
that
3%
meri
increase
very
rare
within
the
city.
Of
course.
I.
Don't
know
you
know,
I'm,
not
executive,
so
I
don't
know.
If
that's
in
an
executive
level,
maybe
they
are
considered
differently.
Thank
you.
C
F
C
Yeah
we
have
done
compensation,
surveys
and
I'm
losing
track
of
time.
I
don't
know
if
it
was
the
beginning
of
2019
or
2018,
but
the
JBC
hired.
What's
the
consultants
name,
car
finance
office
and
I
don't
have
the
numbers
off
the
top
of
my
head.
It's
complicated
because
there's
a
lot
of
apples
to
oranges,
but
we
we
were,
if
I
remember
correctly,
we
were
below
the
median
and
was
that
survey
something
that
was
presented
to
the
board
at
that
time
or
yes?
C
B
Was
presented
to
the
boards
and
also,
as
we
indicated
before,
they
said
sponsibility
by
the
boards
to
bring
this
information
to
the
City
Council
for
approval,
and
then
it
was
a
game
presented
to
the
City
Council.
So
he
saw
public
knowledge.
We
certainly
can
make
it
available
to
you
and
so,
along
with
the
consultant
that
spoke
at
the
City
Council
as
well.
I.
A
C
A
C
Absolutely
well
and
thanks
for
all
the
background,
so
that
helps
me
dive
straight
in
similar
constraints.
We
can't
talk
too
much
about
the
personnel
matters,
because
it's
a
private
matter,
I
do
want
to
first
start
off
by
saying
I
believe
sometime
in
February
March
trust
me
excuse
me.
Cio
Palani
will
have
been
in
his
seat
for
two
years,
and
this
is
that
correct
some,
and
this
will
be
his
first
review,
so
apologies
that
it
hasn't
happened
sooner,
but
wanted
to
thank
him
for
his
outstanding
service.
C
The
the
criteria
by
which
we
do
the
we
judge.
The
position
are
in
leadership,
planning,
problem-solving
communications
and
an
overall
management,
and
the
two
boards,
in
conjunction
through
the
jpc,
scored
the
CIO
at
the
highest
level
in
all
of
these
things,
and
really
wanted
to
just
point
out
that
there's
been
a
lot
of
leadership
as
a
word
that
kept
coming
up
a
lot
of
leadership
that
has
been
brought
to
the
position.
C
A
H
C
E
I
E
J
E
Just
make
a
want
to
make
a
request.
I
know.
Personnel
matter
is
rather
a
private
matter,
but
as
a
board
member,
when
the
evaluation
is
being
finalized,
I
would
really
appreciate
you
to
see
that
even
through
email,
so
people
when
we
make
a
final
decision
on
that
and
then
understand
the
scale
you
know
what's
the
like.
What's
the
range
of
recommendation
is
better.
So,
as
I
said,
you
know
earlier
I
thought
of
City
had
a
mirror
increase
up
to
three
percent,
but
according
to
you,
that's
actually
big
arranger
for
that
level.
For.
E
C
C
D
D
I
guess
I
just
had
a
comment:
I've
been
on
the
board
now
exactly
a
year,
I'd,
say
and,
as
we
think
about
compensation
performance
in
merit,
I
think
keeping
that
in
our
minds
over
the
course
of
the
year
is
helpful,
because
a
lot
of
the
things
that
we
are
pondering
I
would
I
should
say,
are
actually
self-evident.
As
we
see
the
evolution
of
the
plans
over
the
various
quarterly
meetings
in
various
that
we
attend,
so
we've
changed
the
discount
rate
we've
seen
staffing
that
trustee
the
board
level,
composition
change.
D
So
at
least
my
experience
I've
been
seeing
a
lot
of
progress
moving
forward,
rather
than
falling
back
so
I'm.
Also
thinking
about
not
only
when
we
think
about
other
plans
and
city's
sizes
is
certainly
important
and
I
think
also
noting
the
multiple
features
and
characteristics
of
our
of
our
starting
position.
If
you
will
matters
as
well,
so
just
food
for
thought,
it's.
C
Question
you
mentioned
that
there
is
a
salary
range
established
by
the
city
between
a
and
B
and
I,
probably
should
have
asked
this
about
the
CEO
as
well,
with
the
current
proposed
increase.
Where
does
that
put
us
between
a
and
B
at
50
percent,
90
percent
20
percent?
How
close
are
you
to
the
top
of
the
range
yeah.
B
B
And
I,
just
I
will
speak
to
eventually
the
chair,
but
I
did
take
notes
on
new
requests
and
questions
and
trustees.
Certain
questions
so
we'll
make
sure
the
information
is
provided
and
make
sure
that,
obviously
for
future
reference
there's
a
better
job
as
it's
true
many
of
Trustees
are
new
to
the
process.
So
it's
important
that
us
understood
beforehand.
So
it's
just
a
fairly
quiet,
so
I
may
not
do
that.
A
B
You
mr.
buy
share
and
I
just
have
a
few
comments.
The
first
one
is
that
again,
first
of
all,
I
want
to
welcome
mark
Kelleher
to
his
first
board
meeting
and
I
also
want
to
let
you
know
this
bore
has
not
been
fully
staff
for
some
time.
The
one
position
that
is
now
vacant
is
the
one
that
was
left
by
our
former
chair
I'm
at
large
and,
to
that
extent
wonderfully
you
know,
the
ballots
went
out
to
city
employees
regarding
the
Fed
employee,
member
vacancy,
the
balance
due
to
the
clerk
office
in
January
6.
B
After
that,
the
city
clerk
will
then
certify
the
election,
and
the
goal
is
to
bring
the
certification
for
appointment
to
the
City
Council
in
January
in
time
for
the
board
meeting
on
January
23rd
I
just
want
to
remind
you
and
we
will
follow
with
emails
to
you
in
the
new
year.
Usually
speaking,
your
board
meetings
are
the
third
Thursday
of
the
month.
That's
not
going
to
be
the
case
in
January,
so
we
will
follow
up
with
emails
to
remind
everyone
not
to
be
here
on
the
16th,
as
the
meeting
would
take
place
in
January
23rd.
B
Also
money
to
mention,
obviously,
all
of
you
so
in
the
kafirs
were
finally
printed
and
distributed.
You
have
a
copy
of
the
cover.
Our
seems
like
it
was
yesterday,
but
one
lease
agreement
and
some
changes
that
we
made
were
location
happy
five
years
ago.
It's
coming
up.
It's
coming
up
for
the
five-year
edition
in
the
spring
of
2020.
We
have
decided
to
remain
in
the
building
and
we
are
working
through.
The
specifics
of
the
the
new
rain
leaves
information,
so
I
just
wanted
to
keep
you
posted
on
that.
B
We
also
working
on
again
reissuing
the
first
edition
of
the
brand-new
newsletter.
The
newsletter
is
going
to
be
known
as
the
retirement
connection
is
going
to
be
issued
to
all
members
of
the
plan
in
media.
You
will
certainly
have
a
copy
of
the
newsletter
for
you
meeting
on
communication
of
January
23rd.
B
In
addition
to
that,
one
of
the
things
that
I
wanna
be
working
on
with
the
new
communication
consultant
is
to
sometime
in
the
spring,
bring
forward
a
discussion,
ID
and
strategic
planning
for
communication
planning
for
both
plans
and
that's
going
to
take
place
sometime
in
the
spring.
It's
specifically
related
about
social
media,
so
just
just
keep
that
in
mind,
which
also
have
implications
for
the
our
website
upgrade.
This
is
going
to
take
place
in
the
second
half
of
the
fiscal
year.
B
So
two
more
things
we
recently
hire
a
new
benefit
analyst
and
she
was
with
us
for
two
weeks
and
unfortunately
decided
to
go
back
to
her
corporate
work.
Work
I
believe
that
they
offered
her
back
whatever
she
was
asking
for.
So
that
just
means
now
that
we
have
to
repost
the
position
so
we're
down
a
couple
of
benefit,
analysts
and
a
single
benefit
analyst,
and
we
are
actually
right
now
in
search
for
those
three
positions
and
lastly,
I
wanted
to
let
you
know
there
is
a
public
members
seat
open
at
the
police
and
fire.
B
The
application
process
actually
ends
s
on
time
back.
He
had
to
be
reopened
because
we
didn't
receive
any
applicants.
The
new
extended
time
line
ends
on
December
31st
and
just
we
did
reach
out
to
all
bargaining
units,
academia,
health
organizations,
as
was
directed
by
both
boards,
some
time
back,
but
we
still
have
not
received
any
applicants,
so
I
wanted
to.
A
D
H
Good
morning,
bill
hallmark
with
Stephen
Hastings.
Here
we
are
here
to
present
the
final
valuation
results
for
the
June
30th
2019
valuation
for
the
pension
plan,
and
please
stop
us
if
you
have
any
questions
as
we
go
through.
This
I
want
to
make
sure
that
you're,
following
what
we're
presenting
but
want
to
start
with
just
our
basic
diagram
of
how
a
pension
system
works
and
where
the
the
valuation
fits
into
that
process.
H
We
we
start
by
using
assumptions
and
the
plan
provisions
to
estimate
what
the
benefits
are
going
to
be
in
the
future,
and
that's
the
the
read
out
flowing
pipe
in
this
diagram
for
the
benefits
going
out
and
then
we
also
look
at
the
assumed
rate
of
return
and
estimate
the
investment
earnings
coming
into
the
system.
And
then
we
use
our
actuarial
methods
to
come
up
with
how
much
money
should
be
in
the
pension
fund.
H
At
this
point
in
time,
which
is
represented
by
the
size
of
the
tank
up
there,
and
we
compare
that
to
the
actual
assets,
which
is
the
green
level
of
how
full
the
tank
is,
and
all
of
that
is
to
get
to
the
point
of
how
should
we
change
those
valves
for
the
contributions
that
go
in
to
ensure
that
we
have
a
sustainable
pension
system?
In
the
end
over
time,
all
the
that
goes
in
our
contributions
and
investment
returns,
and
that
has
to
add
up
to
the
expenses
of
the
system
and
the
benefits
paid.
H
Now
this
valuation
we
are
setting
the
contribution
rates
for
the
fiscal
year,
ending
June
30th
2021
the
chart
on
the
Left
shows
a
comparison
to
the
prior
valuation,
which
sets
the
set
the
rates
for
the
current
year
to
the
current
valuation,
and
you
can
see
that
member
rates
are
pretty
stable
from
seven
point.
Eight
to
seven
point:
seven
percent,
we're
averaging
here
across
both
Tier
one
and
tier
two.
This
is
on
an
aggregate
basis.
The
city's
rate
increases
from
about
a
hundred
basis
points
from
fifty
eight
percent
to
fifty
nine
percent
of
pay.
H
H
Everything
above
that
red
line
is
to
go
to
pay
for
the
unfunded
liability.
The
blue
line
up
at
the
top
there
represents
the
normal
costs,
plus
the
interest
on
the
unfunded
liability
and
we've
labeled
at
red
water.
You
have
to
contribute
that
amount
so
that,
if
all
our
assumptions
are
true,
the
unfunded
liability
would
stay
at
the
same
dollar
amount.
If
you
contributed
exactly
that,
so
it's
only
the
amounts
above
that
blue
line
that
are
actually
going
to
pay
down
the
unfunded
liability
and
historically,
we've
been
working.
H
We
had
an
amortization
method
that
did
not
pay
that
unfunded
liability
and
we've
been
increasing
the
the
contribution
rates
over
time
to
get
up
to
that
level.
We
crossed
it
last
year,
actually
was
the
first
year
that
we
had
contributions
over
the
Treadway
level
and
started
to
pay
down
the
unfunded
liability
and
so
we're
projecting
that
to
expand
and
work
to
pay
it
down.
You'll
see
our
projections
later
the
right
hand.
Side
is
a
measure
of
the
funded
status.
H
So
you
can
see
that
the
vast
majority
of
the
liability
is
actually
for
people
who
are
already
receiving
benefits,
and
certainly
the
for
people
who
are
no
longer
working
for
the
city.
The
the
two
lines.
The
green
line
represents
the
market
value
of
assets
in
the
teal
line,
the
actuarial
value
of
assets,
the
the
actuarial
value
of
assets,
smooths
out
investment
returns
above
and
below
our
expected
return
over
a
five
year
period.
So
over
time.
K
Okay,
good
morning,
everyone
so
moving
on
to
slide
four.
We
show
the
city
contribution
rates
rates
and
amounts
and
how
how
they
have
been
impacted.
So,
as
bill
mentioned,
the
the
prior
evaluation
determined
the
rates
and
dollar
dollar
amounts
for
fiscal
year
in
2020,
and
the
current
evaluation
is
for
fiscal
year
in
2021,
so
at
the
top
we're
showing
the
prior
year's
results:
58.2%
City
rate,
170,
9.5
million
City
amount
and
based
on
the
prior
year
evaluation.
We
expected
fifty
nine
point,
two
percent
and
one
hundred
and
eighty-eight
point
six
million.
K
Now,
that's
that
is
due
to
in
in
part
smoothing
in
of
some
asset
losses.
So
so
we
did
expect
an
increase
when
we
get
to
the
actual
evaluation
that
was
just
performed.
What
we're
going
to
call
the
baseline,
so
no
changes,
the
City
rate
dropped
to
fifty
eight
point,
one
percent
and
the
the
amount
that
dropped
a
little
bit
as
well.
K
Additionally,
this
year,
as
we
discussed
in
Prior
meetings,
there
was
an
experience
study
we
put
together,
and
so
there
were
assumption
changes
and
they
didn't
move
the
meeting
the
needle
a
lot.
But
but
there
there
were
some
tweaks
in
general,
the
assumptions
were
doing
a
pretty
good
job,
but
some
of
those
tweaks
came
in
and
and
actually
ended
up
increasing
the
City
rate,
basically
back
to
what
was
expected
so
so
so
baseline.
There
was
a
bit
of
a
drop.
The
Assumption
changes
increase
the
raid
back
to
59.2%
and
these
city.
K
K
So
I
think
there
are
only
eight
in
this
valuation,
so
they
don't
even
show
up
on
the
on
the
pie
chart
here
so
six
percent.
When
we
say
VT,
we
mean
vested
terminated
so
people
who
have
left
employment,
but
our
do
a
pension
later,
but
and
so
six
percent
of
the
total
member
account
for
tier
2
and
11
percent
for
tier
one,
but
we
don't
want
to
look
at
member
counts
in
a
vacuum.
So
what
matters
more
is
the
liability
associated
with
these
members?
K
We
show
the
active
member
payroll,
so
that
has
been
roughly
50/50,
but
you
know
you
can
see
tier
1,
52
percent
here
to
48
percent
and
over
time
the
tier
2
payroll
will
grow
and
the
tier
1
payroll
will
shrink
because
it's
a
closed
crew
and
again
on
the
bottom
right.
Looking
at
the
market
value
of
assets,
there
there's
a
very
large
difference
between
tier
1
and
tier
2
sort
of
live,
the
majority
being
tier
1,
97
percent
of
the
assets.
K
In
light
of
the
slide
we
just
looked
at
you,
you
can
see
why
the
that
there's
also
a
large
discrepancy
here
between
tier
1
and
tier
2
when
it
comes
to
the
contribution
balance,
so
the
the
member
amounts
actually
are
similar
and
that's
you
know
the
active
payrolls
were
are
similar,
so
so
in
purple
we
show
the
member
dollar
amounts
in
gold,
we're
showing
the
city's
normal
cost
dollar
amounts.
Now
those
are
from
from
one
year
to
the
next
decreasing
slightly
for
Tier
one
as
as
members
retire,
no
longer
have
normal
cost.
K
New
members
come
in
in
Tier
two
and
and
have
have
more
cost,
so
the
gold
actually
increases
a
little
bit
for
tier
two,
thirteen
million
to
14
million,
but
the
you
know
the
dominant
bar.
What
we're
stammen
ating
the
bars
here
is
the
city's
unfunded
actuarial
liability
contributions,
so
the
amounts
to
pay
off
at
under
under
funding
and
that's
137
million
fiscal
year
in
2020,
increasing
248
million.
So
the
the
increase.
K
So,
on
slide,
7
that
the
tier
1
member
rates
increase
slightly
seven
point:
zero,
six
to
seven
point
two
to
the
tier
2
member
rates,
drop
forty-one
basis
points
and
that
the
main
thing
going
on
here
is
how
the
Assumption
changes
from
the
experience
study,
how
those
impacted
the
different
groups
so
salary
scale.
You,
if
you
have
a
younger
group,
the
salary
and
merit
some
of
these
things.
What's
that.
H
H
We
changed
it
to
a
dollar
amount
per
member,
which
includes
all
the
retirees
as
well
and
so
much
more
of
the
administrative
expense
is
now
being
paid
in
the
to
being
charged
in
the
tier
one
which
matches
where
it's
being,
where
it's
hitting
the
assets
as
well,
but
that
that's
the
largest
factor
actually
and
why
the
tier
2
member
rates
went
down.
Yeah.
K
K
So
we
show
the
city
rates
and
amounts
as
well.
The
eleven
million
dollar
increase
to
tier
two
contribution:
what
1
million
dollar
increase,
so
that
11
million
is
on
the
UAL
payment,
so
the
largest
impact
was
the
UIL
payment
so
down
at
the
bottom,
where
we
aggregated
the
aggregate.
The
to
the
eleven
million
dollar
increase
in
the
city's
dollar
amount
is
almost
entirely
the
UIL
payment.
K
So,
moving
on
to
slide
8,
we
show
how
the
unfunded
actuarial
liability
changed
from
year
to
year.
There
was
a
an
increase
in
the
UAL
of
about
51
million,
and
that
was
primarily
due
to
investment
losses,
but
we
on
the
right
column
here
and
column.
We
do
show
the
components
there.
There
were
some
data
Corrections
actually
decreased
the
liabilities
contributions,
meaning
contributions
in
excess
of
the
tread.
Watermark
decreased,
the
UAL
12
million
the
Assumption
changes
again.
K
Those
were
small
small
tweaks,
some
of
them
offsetting,
but
in
total
about
a
three
million
dollar
decrease
on
the
on
the
side
of
increasing.
So
the
the
gold
gold
bar
in
the
center
there
is
primarily
is
the
investment.
So
that's
that's
the
bulk
of
it.
There
were
also
some
small
increases
due
to
salary
assumption
changes
in
retirement
about
sorry,
experienced
retirements.
K
H
I
think
what
happened
is
with
the
conversion
to
the
new
pension
administration
system.
There
was
a
review
of
the
data,
so
a
bunch
of
retirees
who
were
reported
previously
as
having
a
beneficiary
no
longer
had
a
beneficiary,
and
so
that
reduces
the
potential
liability
to
that
and
that's
an
assumption.
That's.
H
B
I
ask
for
a
favor
two
things.
The
first
question
is:
could
you
comment
on
what
the
threat
watermark
is,
and
let
me
give
you
the
background
for
that
and
also,
as
you
make
comments,
because
we
have
new
trustees,
it's
kind
of
helpful
I'm,
not
asking
you
to
expand
representation
too
much,
but
just
to
provide
some
basis.
So
there's
an
understanding
and
I
think,
especially
in
here
the
tribe
watermark,
so
that
it's
understood
generally
what
that
means,
but
also,
as
you
have
other
explanations
and
other
slides
kind
of
give
some
basis.
B
For
you
know,
new
trustees
and
I
will,
at
the
end
of
your
presentation,
do
my
best,
maybe
with
your
help,
to
also
for
the
new
trustees
to
provide
just
a
general
explanation
of
how
we
got
you.
You
know
to
the
final
portion
of
a
so
this
understanding
that
there's
some
reviews
and
some
decision
by
the
board
beforehand
to
get
to
this
point.
So
thank
you
so.
H
The
the
tread
water
was
trying
to
cover
that
on
this
slide
that
tread
water
amount
is
represented
by
that
blue
line,
but
that's
the
amount
you
have
to
contribute
so
that
the
unfunded
liability
would
stay
the
same
the
next
year.
If
all
of
our
assumptions
held
true.
So
if
you're
not
contributing
that
amount,
it's
it's
like
you're,
not
you're,
not
paying
you
first
pay
for
the
new
benefits
that
are
being
earned.
Then
the
next
thing
you
pay
for
is
interest,
that's
charged
on
the
unfunded
liability.
H
So
the
unfunded
liability
can
be
thought
of
as
a
debt.
That's
got
interest
at
6.75%,
and
so
that's
the
next
piece
and
that's
the
that's
the
big
piece
right
now
that
that
we're
paying
and
so
we've
been
trying
to
get
above
that
tread
watermark
so
that
we
could
actually
reduce
the
principal
of
that
unfunded
liability
and
bring
things
down,
and
so
we're
we've
just
crossed
that
threshold
and
what
Stephen
was
showing
here.
This
contributions
line
that
shows
12
million.
H
We
had
12
million
more
in
contributions
this
year
than
the
tread
water
mark,
so
we've
got
a
couple
billion
dollars
in
unfunded
liability,
but
we
we
worked
12
million
off
of
it
based
on
contributions.
Now
there
were
other
things
that
made
the
net
increase,
be
50
million
and
then
Stevens
gonna,
look
at
the
history
here
can.
D
I
just
add
it
might
be
helpful,
I,
don't
know
if
it's
I
looked
at
the
back
of
this
for
your
page
slide,
3
and
then
I've
looked
at
this
chart
a
lot
and
you've
explained
this
quite
a
few
times,
but
if
we
could
just
include
maybe
some
appendix
for
that,
like
the
MVA
and
your
t2v
to
a
VA
there,
it
it's
obvious
I
need
to
think
about
it.
But
if
there's
just
a
quick
reference
point,
I
think
it'll
help
refresh
people
and
shorten
your
comment.
H
Just
to
get
it
out
orally
MVA
on
the
right
hand,
side
and
we
do
use
it
periodically.
I
think
stands
for
market
value
of
assets
and
a
VA
stands
for
actuarial
value
of
assets,
and
so
we
we
have
historically
done
some
education
sessions
and
review
that
process
and
how
we
establish
the
actuarial
value,
and
we
didn't
really
review
it
here.
D
E
B
H
H
H
But
one
of
the
reasons
we
put
the
you
al
bars
there
was
just
to
give
you
some
scale
about
this
compared
to
the
size
of
the
UIL.
Many
of
those
things
should
just
be
compared
to
the
size
of
the
full
actuarial
liability,
which
is
you
know
about
twice
that
whale,
so
those
gains
and
losses
for
salaries,
retirements
and
stuff
are
really
tiny
percentage.
So
it's
really
pretty
pretty
good
on
the
mark.
K
So
that
the
tread
water
discussion
is
actually
a
good
segue
to
this
slide
and
slide
9.
So
so
the
slide
aber,
which
we
were
just
looking
at,
would
be
represented
by
the
far-right
2019
bars
on
slide
9.
But
if
you
look
at
contributions,
so
the
red
you
can
see
over
time
and
there's
there's
if
so
well,
I
should
I
should
first
state
anything
above
zero.
Here
is
an
increase
to
the
UAL.
Anything
below
zero
is
decreasing
the
UAL.
K
So
over
time
you
can
see
that
the
red
was
above
above
zero,
meaning
there
were
increases
because
the
contributions
were
not
covering
the
normal
cost.
You
know
the
cost
of
accruals
during
the
year
and
the
interest
on
the
unfunded,
but
as
bill
mentioned
things,
things
have
just
recently
flipped,
so
you
can
see
in
2019
the
red
is
it's
below
zero.
That's
the
12
million
that
was
contributed
over
the
tread
watermark
so
again,
similar
analysis
to
slide
a
but
we're
showing
it
historically
here
a
couple
couple:
key
takeaways.
K
You
know
the
one
being
that
if
you
look
at
the
blue
line,
which
is
the
net
change,
I
mean
every
year.
It
has
been
above
zero
right,
so
so
losses
or
an
increase
in
the
UAL
every
year
and
the
two
large,
the
two
largest
drivers
are,
the
are,
the
you
know:
the
yellow
bars
the
gold.
You
know
the
yellow
gold
bars
and
the
purple
bars,
those
being
the
investment,
gain,
losses,
gains
and
losses,
and
the
liability
gains
and
losses
so
anything
anything
above
zero
is
a
loss
and
then
at
the
bottom.
K
We
tally
for
this
period,
those
mouths,
so
in
total
1.2
billion-
and
you
know
more
more
than
half
of
that
was
due
to
investment
returns.
So,
additionally,
as
discount
rates
have
been
lowered
with
with
the
interest
rate
environment,
you
know
nearly
600
million
there
as
well,
so
583
million
the
other.
The
other
items
are
largely
offsetting,
but
but
it
is
good
news
to
see
the
the
red
now
underneath
0,
so
that
contributions
are
above
the
tread
water
levels.
B
B
H
That's
very
helpful
because
I'm
at
my
computer
and
I
just
pull
up
the
reports
and
look
at
but
the
so
the
losses
for
the
Great
Recession
happened
in
2008
and
2009.
Yes,
here
the
smoothing
is
over
five
years,
and
so
a
lot
of
this
loss
that
you're
seeing
in
10,
11,
12
and
13
is
really
attributable
to
2009,
because
we
we
spread
it
out
over
that
five-year
period.
Now,
that's
it's
tempered
somewhat
by
the
investment
gains.
When
the
market
bounced
back
some
and
we're.
H
You
know
recognizing
20%
of
that
each
year
as
well,
and
so
that
accumulated
in
2014
our
only
gain
on
the
actuarial
value
of
assets
in
the
last
ten
years.
So
that
was
the
only
time
that
we
had
an
a
return
on
the
actuarial
value
that
exceeded
our
assumed
return.
So
I
I
don't
have
that.
That
number
right
here
of
how
much
was
a
809,
but
it
was
large,
it
was
significant.
B
The
stood
and
and
given
your
experience
as
an
actuary
I'm
gonna,
ask
you
to
make
an
educated
guess
if
you
can
and
the
reason
it's
important
for
us
to
understand.
That
is
because,
when
we
go
in
front
of
stakeholders,
that's
a
large
number
actually
is
a
team.
More
of
an
issue
is
even
larger
in
the
police
and
fire
spreadsheet
that
we
get
and
it
will
be
helpful
just
to
get
a
sense.
B
B
In
fact,
there
was
a
question
that
was
posed
by
the
mayor,
which
I
thought
was
very
fair,
but
I
think
it's
good
to
understand,
because
when
we
again,
especially
when
Prabu
goes
to
the
public,
to
speak
about
these
numbers,
I
think
it's
important
to
keep
in
mind
that
there
was
a
Great
Recession.
That
I
still
have
implications
and
the
numbers
that
we're
providing.
B
H
C
G
H
And
so
the
the
other
piece
that
the
Great
Recession
impacted
was
interest
rates.
So
not
only
did
you
have
the
investment
losses,
but
once
you
got
the
bounce
back,
you
had
lower
expectations
going
forward
because
interest
rates
are
lower,
so
lower
assumed
returns
going
forward
and
that's
really
captured
primarily
by
the
Assumption
changes.
Now
there
were
other
assumption
changes,
but
that's
something
that
is
hit
your
plan
and
every
pension
plan
out.
H
There
is
not
just
those
investment
losses,
but
we
used
to
be
able
to
assume
8%
and
10-year
treasuries
were
six
and
just
before
the
recession.
I
think
they
were
I.
Don't
have
that
hurt
here,
but
I
think
they
were
around
five
and
now
they're
at
two,
and
so
that
is
much
more
difficult
to
get
those
investment
returns,
and
so
that's
really
what's
driven
the
reduction
in
the
discount
rates.
H
C
H
It's
largely
now
I
do
want
to
point
this
out
because
we
did
an
experience
study
this
year.
This
plan
had
a
number
of
other
assumptions
that
needed
to
be
updated,
and
so
you
can
see
on
this
chart.
We
did
experience
studies
every
four
years,
so
we
did
one
in
2011
and
the
result
was
a
significant
set
of
assumptions
that
increased
your
liability.
We
did
another
one
in
2015
and
the
result
was
another
significant
increase
this
one,
a
big
part
of
this
one
was
mortality
changes.
H
This
one
had
I
haven't
looked
at
this
in
a
while,
but
I
remember
there.
There
were
things
like
refund
rates,
retirement
rates
and
other
things
that
had
a
material
impact.
I
think
part
of
the
good
news
going
forward.
Is
we
just
did
another
experience,
study
and
look
at
how
big
the
purple
bar
is
for
2019?
You
can't
find
it
so
our
assumptions
are
hitting
much
closer
to
our
experience
levels,
so
we've
really
made
those
significant
Corrections
over
the
last
ten
years.
In
addition
to
the
the
reduction
in
the
discount
rate.
C
D
C
C
H
D
Right,
we
had
increases
of
in
the
triple
digits
millions
in
the
recessionary
time,
10
11
12,
so
that
we
and
then
we
did
have
to
cut
services
in
order
to
make
these
payments
right.
H
C
D
H
H
The
other
issue
is
the
plan,
maturity
and
so
there's
actually,
a
new
actuarial
standard
on
disclosure,
assessment
and
disclosure
of
risk,
and
one
of
the
things
it
requires
is
a
disclosure
of
some
maturity
measures
and
how
that
affects
your
sensitivity
to
risk
and
that
the
general
idea
is
the
more
mature
you
are
the
more
sensitive
you
are
to
risk.
It's
kind
of
the
opposite
of
the
way
you
think
of
maturity,
you
think
of
someone
who's
mature
as
being
able
to
be
rather
a
very
stable
person
and
handle
a
lot
of
different
things.
H
H
H
We
set
contributions
as
a
percent
of
payroll,
and
so
just
as
in
a
fundamental
sense,
you
can
just
look
at
the
counts,
and
so,
if
you
look
at
the
top
chart
here,
we've
broken
out.
Federated
membership
counts
going
back
to
2001.
There
are
gaps
there,
because
this
plan
didn't
do
annual
valuations
until
starting
in
2009
before
that
it
was
every
other
year.
But
you
can
see
the
the
dark
blue
is
the
actives
or
the
Tier
one
actives,
and
that
teal
is
the
Tier
two
actives.
So
start.
H
H
After
2009
we
started
a
significant
decline
in
the
active
membership
and
that
presumably
reflects
the
city's
revenues
and
budget
and
the
impacts
of
the
recession.
On
on
that,
we've
gradually
started
stabilizing
and
growing
again,
so
that
active
membership
is
growing,
but
it's
still
not
back
to
the
4000
level
that
it
was
and
seemed
to
be
pretty
stable
at
before.
H
We
call
the
support
ratio
now
the
chart
on
the
bottom
shows
the
distribution
of
those
support
ratios
for
all
the
plans
in
the
public
plans
database
and
that
database
has
180
to
190
large
public
sector
plans
across
the
country
in
it,
and
you
can
see
again
that
our
support
ratio
was
about
the
middle
of
the
pack,
starting
to
rise
a
little
bit
before
the
Great
Recession,
but
then
with
the
Great
Recession.
It
shoots
up
now
for
these
measures.
H
Most
of
the
plans
in
that
database
are
a
mix
of
public
safety
plans
and
general
member
plans,
and
so
we're
showing
on
these
charts.
The
federated
plan
is
a
black
diamond,
and
then
we
combine
you
with
police
and
fire
to
get
the
gold
diamond
the
on
this
particular
chart.
The
support
ratios
you're
about
the
same
as
police
and
fire,
so
it's
hard
they're
kind
of
overlapping
each
other,
but
were
in
the
upper
quartile
nationally
for
plans
based
on
this
measure.
H
Now,
that's
a
relatively
intuitive
measure.
These
two
measures
we
call
leverage
ratios,
get
much
more
to
the
point
of
the
dynamics
in
the
pension
plan,
so
the
top
one
again
we're
using
that
MVA
abbreviation
that's
market
value
of
assets,
leverage
ratio,
it's
simply
the
market
value
of
assets
divided
by
the
payroll,
and
it
is
a
measure
of
your
sensitivity
to
investment
risk,
and
the
idea
is
this:
if
you
miss
your
expected
return
by
10
percent,
so
at
six
point,
seven
five
we'd
be
looking
at
minus
three
and
a
quarter
as
the
return.
H
If
you
have
a
leverage
ratio
of
10
that
10%
miss
is
equal
to
a
hundred
percent
of
payroll
ten
times
ten
and
you're
gonna
have
to
make
up
for
that
on
a
payroll
contribution
basis.
If
your
leverage
ratio
was
only
five
that
same
10%,
miss
is
only
fifty
percent
of
payroll.
It's
a
lot
easier
to
make
up
fifty
percent
of
payroll
than
a
hundred
percent
of
payroll.
It's
twice
as
easy,
so
the
higher
you
are
on
this
measure,
the
more
sensitive
you
are
to
risk
now.
H
The
interesting
thing
here
is
what
really
drives
San
Jose
off.
The
charts
in
terms
of
this
measure
is
the
police
and
fire
plan.
If
you
look
at
the
Federated,
diamonds
were
right
at
about
the
75th
percentile,
so
we're
high,
but
we're
not
off
the
charts,
if
you
put
police
and
fire
on
here,
they're
up
here
off
the
charts
somewhere
and
then
combined
you're
right
at
the
top
of
the
chart
for
public
plans,
and
so
that
means
in
aggregate.
If
we
put
the
plans
together,
your
leverage
ratio
is
about
ten,
and
so
that's.
H
That
is
the
genesis
of
saying
that
you're,
mature
and
you're
more
sensitive
to
investment
risk
than
other
systems,
and
it
is
really
much
more
dominant
in
the
police
and
fire
system
than
the
federated
system.
Now
the
the
bottom
chart
is
a
similar
idea,
but
instead
of
looking
at
the
assets,
we
look
at
the
actuarial
liability.
That's
the
AL
is
the
actuarial
liability
divided
by
payroll,
and
so,
if
you
were
a
hundred
percent
funded,
these
ratios
would
be
the
same
right.
H
But
here
you
can
see
the
federated
system
by
itself
is
at
the
very
high
end
of
public
plans
and
then,
when
you
combine
it
with
police
and
fire
you're,
even
higher
this
in
the
short
term,
this
measures,
your
sensitivity
to
things
like
assumption,
changes
and
experience,
gains
and
losses
for
like
salary
increases
and
mortality
and
those
sorts
of
things
those
tend
to
be
much
smaller,
so
the
the
big
impact
tends
to
be
from
assumption
changes.
So
what
we're
saying
here
is
reducing
your
assumption.
H
So
that's
the
the
maturity
piece
San
Jose
as
a
whole
is
pretty
sensitive
to
these
risks,
meaning
that
the
contribution
rates
will
change
by
more
for
a
given
loss
or
gain.
It
works
both
directions
right.
So
when
you
get
those
investment
gains,
you'll
get
a
bigger
reduction
in
the
contribution
rate
than
other
systems.
But
if
you
have
those
losses,
you
get
a
bigger
increase.
I.
H
The
next
couple,
slides
I'm,
going
to
look
at
the
projecting
results,
the
top
one
the
gray
bars,
represent
the
liability.
The
blue
and
green
lines
are
the
actuarial
value
of
assets
and
the
market
value
of
assets.
The
dark
shades
are
are
things
that
were
calculated
in
the
past,
their
historical
or
it
includes
2019.
It's
it's
calculated
it's
in
the
books.
The
lighter
shades
are
our
projections,
and
so
you
can
see
back
in
2010,
we
were
about
69
percent
funded.
H
We've
declined
to
53
percent
for
all
the
reasons
that
were
in
that
the
chart
that
Steven
went
over
on
I
think
page,
eight
or
nine,
but
as
we
look
forward,
if
our
assumptions
are
met
and
we
don't
change
them,
this
is
the
pattern
we
expect.
So
it's
going
to
take
some
time
by
2034.
We'd
expect
to
be
82
percent
funded.
H
H
This
is
the
one
point
two
billion
dollar
increase
that
Steven
was
showing
on
his
chart
going
forward.
If
we
make
the
payments
that
we've
got
scheduled
in,
we
will
hold
relatively
close
to
the
same
level
for
the
next
four
years
before
we
really
start
making
progress
and
drawing
down
the
dollar
amount,
and
then
we
wouldn't
be
paid
off
until
2040,
one
or
2042.
H
So
this
chart
looks
at
the
contributions
historically
and
projected,
but
the
top
chart
is
looking
at
percent
of
pay.
The
bottom
chart
at
dollar
amounts,
and
so
we
were
talking
about
the
significant
increases
and
you
can
see
those
from
2011
10
20
21
you've
got
more
than
a
doubling
of
the
contribution
and
it
went
up
very
rapidly
here
after
the
the
recession,
the
big
jump
being
between
2012
and
2013.
H
The
the
red
bar
the
red
line
at
the
top
represents
what
the
projection
was
from
the
2018
valuation,
and
so
you
can
see
between
the
two
valuation.
There's
not
a
whole
lot
of
change.
There's
some!
But
not
a
lot
and
let's
say
again:
the
purple
bars
are
the
members.
Gold
is
the
city.
This
line
is
the
normal
cost
and
then
this
line
is
the
tread
water.
H
Now
we
are
expecting
payments
to
increase
each
year.
Even
our
amortization
payments
go
up
two
and
two
and
three
quarters
percent,
and
we
expect
payroll
to
increase.
So,
while
we've
designed
this
to
be
a
relatively
level
and
slightly
declining
percent
of
payroll,
the
dollar
amounts
are
actually
continued
to
go
up
and
we
do
see
some
drops
just
after
we
get
off
the
chart
here.
H
Now
these
starts
are,
if
everything
goes
as
planned.
We
know
that
doesn't
happen.
So
this
chart
is
looking
at
the
range
of
projected
city
contribution
rates
along
with
the
history,
and
we
have
the
member
contribution
rates
at
the
bottom
that
are
not
not
affected
much
by
the
investment
returns
other
than
tier
two,
which
will
show
you
remains
pretty
small
in
comparison
to
tier
one
through
this
period.
H
The,
but
that
range
from
the
bottom
of
the
green
bars
to
the
top
of
the
red
is
ninety
percent
of
the
results
we
expect
from
the
investment
returns
to
fall
within
that
range.
So
you
can
see
that
the
median
is
this
line
in
the
center
between
the
dark,
green
and
the
dark
red
and
that's
kind
of
our
expectation,
which
is
the
the
level
with
gradual
declines.
But
there
is
quite
a
range
based
on
the
actual
investment
returns
and
I
think
we
noted
in
the
slide.
H
H
Here
we're
looking
at
the
ranges
same
same
chart
but
ranges
looking
at
dollar
amounts
and
the
top
chart
is
tier
1
and
the
bottom
chart
is
tier
2,
and
so
you
can
see.
All
of
this
variability
is
really
tied
to
tier
1,
because
that's
where
all
the
assets
are
right
now,
that's
where
all
the
liability
is
right.
Now
tier
2
is
growing.
It's
half
the
the
current
active
population,
but
those
people
have
very
limited
service.
H
H
You
know,
am
I
fading
I,
don't
know
that
all
of
you
have
seen
this,
but
these
projections
come
out
of
an
interactive
model,
and
so
we
can
actually
look
at
some
different
scenarios
and,
and
that
can
be
helpful
to
understand
kind
of
the
potential
impacts
of
short-term
events.
And
so
these
are
the
same
kind
of
charts.
We
were
showing
where
the
gray
bars
are.
The
liability
and
lines
are
the
assets
and
the
funded
ratios
are
shown
at
the
top
and
then
at
the
bottom.
We've
got
the
member
contributions,
City
contributions.
H
On
the
left
hand
side
here
we
show
the
investment
return,
the
actual
investment
return
for
each
of
the
future
years
and
right
now
it's
just
sat
at
our
assumption.
But,
for
example,
we
can
be
optimistic
and
put
in
something
like
a
20%
return
in
one
year
and
you
can
see
the
the
impact
that
that
has
on
future
contributions
or
you
could
look
at
a
minus
5%
return
and
see
the
impact
that
has
on
contributions.
H
So
we
do
smooth
those
impacts
out,
but
that
doesn't
mean
they
don't
have
an
impact.
It
just
is
spread
over.
It's
spread
over
time.
We
recognize
the
gains
and
losses,
investment
gains
and
losses
over
a
five
year
period,
but
once
they're
recognized,
then
we
amortize
that
cost
over
a
20-year
period.
So
for
this
minus
5%
loss
it
takes
25
years
before
we've
fully
accounted
for
it
and
paid
for
it.
H
C
H
So
so
that
is
the
history
here.
I
would
say
that
both
the
California
actuarial
advisory
panel
and
the
conference
of
consulting
actuaries,
nationally
so
kind
of
a
model
amortization
period
for
these
kinds
of
gains
and
losses
to
be
between
15
and
20
years.
In
turn,
balancing
the
needs
of
paying
it
back
with
stabilizing
contributions
and
the
impact
federated
uses.
20
years,
police
and
fire
uses
15.
G
H
H
Oh
yeah,
that
was
the
other
Thank
You
Steven.
The
because
part
of
that
is
just
balancing
the
volatility
of
the
contribution
rates,
and
you
saw
how
tier
2
was
not
it's
not
that
volatile
I
think
it
was
two
years
ago
we
changed
the
tier
to
a
MERS
Asian
to
be
ten
years
so
that
they
stay
much
closer
to
a
hundred
percent
funded
and
adjusts
more
quickly.
H
E
E
That's
my
question:
I
mean
how
do
we
want
to
handle
that
I
hope?
We
don't
have
that
issue
to
die
as
that
which
I
hope
that
we
as
a
board.
We
can
continue
discussion
and
come
up
with
a
plan.
I'm
not
saying
we
should
take
action
right
now,
this
year
or
next
year,
Jer,
it's
relatively
small
small,
but
it's
increasing
fairly
fast.
So
just
give
you
some
matter
some
as
a
cheer
to
the
membership.
Wise
is
about
equal
with
the
tier
one
on
an
active
member.
E
Although
you
know
Intertoto
membership
tier
two
is
relatively
small
and
the
pyro
is
almost
50/50
tier,
two
and
48%,
because
the
newer
people
have
a
lower
pay
scale
and
a
more
senior
people
have
higher.
So
it's
almost
a
50/50
and
if
you
look
at
a
pure
country,
pure
asset
increase
on
tier
two
by
itself,
it
has
increased
tremendously
high
percentage.
I,
remember
the
last
experience
study
we
had
a
two
thousand
eighteen
chair
to
SLA
was
at
fifty
million
at
this
study.
It's
almost
70
million,
so.
H
E
Looking
at
an
increase
at
that
rate,
very
fast,
we
need
to
come
up
with
appear
to
come
up
a
feasible
plan
for
tier
two
members.
What
I'm
really
concerned
is
because
you're
so
much
in
liquidity
building
and
for
the
pension
assets.
I
wonder
if
it's
a
suitable
for
to
two
members.
We
only
have
as
right
now
only
eight
retirees,
so
the
asset
doesn't
really
need
be
so
liquid
and
then
we
have
talked
about.
How
do
we
increase
the
risk?
Tolerance
for
the
city
should
because
the
tier
2
has
a
so
little
cash
outflow.
E
Tier
two
really
can
tolerate
a
lot
of
a
risk.
Exposure
live
in
morgue,
not
a
lot
of
them.
Look
more
raised
risk
exposure,
so
in
that
matter
we
can
save
the
city
contribution
from
metier
to
eventually
the
city
probably
can
shift
assembler
member
for
tier
2
contribution
to
tier
1
contribution
to
help
to
alleviate
some
of
the
some
of
the
problem
from
tier
1.
So
this
is
just
my
concerns.
C
Well,
I'd
certainly
like
to
second
that
notion.
It
seems
to
me
a
critical
issue
for
the
pension
fund
is:
how
do
we
come
up
with
reasonable
ways
to
increase
the
city's
risk
tolerance
because
otherwise
we're
in
a
bind
and
I
agree
with
the
distinction
between
tier
1
and
tier
2
over
time?
It's
it's
the
one
thing
I.
Can
you
suggest
that
it
could
be
beneficial
to
tier
1?
C
I
need
to
understand
that
better,
but
my
concern
is
that
the
way
pension
plans
and
systems
are
created
is
for
current
paying
to
help
support
at
least
a
portion.
Investments
also
provides
a
portion
of
the
current
payout
to
retirees
and
obviously
that
would
get
upset
if
we
were
to
create
different
risk
models
which
would
have
different
liquidity
assumptions
as
well
for
tier
to.
E
E
E
H
C
B
Just
a
couple
of
comments,
a
couple
of
things:
I
think
trustees,
some
comments
right
on
the
money
and
certainly
very
very
reasonable,
but
I
do
want
to
mention
a
couple
of
things
number
one.
This
bore
is
well
aware
of
those
issues
and
in
fact
they
the
board.
Most
of
you
don't
notice,
because
you're
new
to
the
board,
but
your
board
has
had
two
retreats
in
the
last
three
years
in
which,
in
both
cases,
they
have
actually
deal
and
actually
receive
education,
not
only
from
actuary
but
investment
consultant
on
that
specific
issue.
B
The
CIA
I
would
like
to
see
how
you
speak
about
the
challenges
of
doing
that.
I
can
think
of
a
couple
of
issues
number
one.
Obviously,
since
the
size
of
the
asset
for
tier
2
are
smaller,
there
will
be
more
limitation
on
the
kind
of
asset
options
that
we
can
invest
on
as
opposed
to
tier
one
right.
There
are
some
limitations
on
that
and
to
what
it
is
completely
true,
as
tradition
indicated
that
we
may
be
able
to
take
a
little
more
risk
on
tier
two
that
were
eventually
could
help
the
city.
B
If,
if
we
reaping
the
benefits
of
having
a
more
raised
investment
program,
which
always
keep
in
mind
that
both
tiers
were
still
be
investing
in
the
same
market,
so
so
that
if
we
are
reaping
the
benefits,
so
have
any
more
risky
investment
program.
Tier
two
then,
even
though
we
have
less
risky
tier
one,
with
sticking
up
reaping
the
benefits
of
the
fact
that
the
market
is
doing
well
right.
B
Conversely,
if
we
tame
one
recent
here
to
on
the
markets,
both
are
doing
bad,
then
you
know
I
think
it's
going
to
exacerbate
the
situation,
because
then
we're
going
to
have
more
losses
in
Tier
two,
because
we're
taking
more
risks.
So
we
can
forget.
You
know
that
Dell
equilibrium,
but
I
left
the
CIO
talks
about
some
of
those
challenges,
but
but
trustee
stone
is
correct.
There's
some
point
where
we'll
make
sense
to
split
this
I
think
the
key
question
is
a
timing
and
I
think
for
that
number
one.
B
It
will
be
helpful
that
every
so
often
when
you
have
a
retreat
that
we
bring
this
issue
to
the
forefront
to
be
discussed
and
also
really
use
the
help
of
voltage'
consultants.
Now
not
only
Chiron
for
an
electoral
standpoint,
but
also
the
investment
consultant
from
the
SSI
standpoint
and
now.
Having
said
that,
you
know
I
know
it
has
spoken
to
Bill
awful
I'm
on
this
issue.
He
certainly
agrees
that
this
is
something
that
the
board
should
consider.
C
B
B
You
tier
two
members,
unlike
Tier
one
members,
they
share
fifth
fifteen
on
the
normal
cost,
but
also
known
from
the
liability,
which
is
another
reason
why
you
don't
want
them
fund
the
liability
on
tier
two
to
get
our
hands,
because
it
has
implications
on
the
contribution
by
both
not
only
the
plan
sponsor,
but
also
the
members.
So
that's
certainly
a
very
key
issue
that
needs
to
be
addressed
as
well.
B
H
The
the
benefit
payments
to
current
members
and
the
one
that
affects
the
investments
is
the
net
cash
flow,
so
net
cash
flow
is
contributions,
benefit
payments
and
expenses,
and
so
tier
two
has
you
know
positive
net
cash
flow
and
tier
one
has
negative
and
right
now
we
managed
to
the
net
negative
cash
flow
and
so,
to
a
certain
extent
you
know
I
think
you're.
It
typically
a
plan
is
using
contributions
that
come
in
the
door
to
pay
benefits
that
are
going
out
the
door
rather
than
liquidating
an
investment
and
then
reinvesting
a
contribution.
H
H
We
have
right
now
for
tier
1,
because
it's
it's
the
city,
that's
bearing
that
in
the
impact
of
that
volatility,
and
if
that
volatility
were
carried
through
directly
to
tier
2
employees,
that
would
be
even
more
painful
than
the
city's
budget
impacts.
So
so
we
I'd
be
concerned
about
reducing
tier
two
contributions
right
now,
because
we
may
need
to
be
saving
more
money
for
tier
two
so
that,
when
they
retired
they
can
have
a
more
conservative
investment
policy
and
less
volatility
in
the
future.
H
So
that's
all
that's
to
say
the
dynamics,
trusty
son
talks
about
are
exactly
right.
The
timing
of
it
is
right
now
tier
two
is
still
so
small
that
reflecting
those
dynamics
doesn't
make
a
big
impact
to
the
plan.
So
the
the
board
has
plenty
of
time
to
kind
of
work
through
and
figure
out
what
the
right
strategy
might
be.
G
But
just
from
a
purely
implementation
point
of
view
to
trusty
Suns
point,
you
know
it's,
we
can't
separate
the
assets
if
the
board
makes
the
decision
and
directs
us
to
manage
it
as
two
different
pools
of
capital.
It's
not
that
difficult
and
in
fact,
for
our
own
selfish
reason,
I
would
like
to
manage
to
year
two
separately
and
the
reason
is
this:
the
tier
two.
As
mr.
Pena
pointed
out,
we
have
fewer
options,
but
we
can
take
a
lot
more
risk
right.
G
We
could,
for
example,
do
a
70/30,
S&P
and
bond
index
and
that's
going
to
trounce
the
returns
of
tier
one
right
and
so
for
all
those
people
who
say:
oh
you're,
running
a
very
sophisticated
plan,
but
your
returns
are
only
six
percent.
You
guys
don't
know
what
you're
doing.
We
can
simply
point
at
your
two
returns
and
say:
look
at
your
two
returns
and
look
how
well
they've
done,
because
that's
a
criticism
that
the
pan
gets
constantly
ortc
plan
has
done
well,
o
our
S&P
500
index
is
done.
G
E
Click
claim
your
name
after
that.
That's
what
I'm
saying
you
know:
I,
don't
want
to
have
this
discussion
to
be
kicked
down
the
road
one
year
after
another
year.
So
true,
this
discussion
happening
probably
in
2017
when
I
wasn't
in
on
the
board
may
happen
again
this
year.
2019
and
you
sort
of
got,
kicked
down
the
road,
so
I
don't
want
it
to
be
a
can
sure.
Maybe
right
now
it's
not
a
good
point,
but
good
time,
because
we
only
have
70
million
as
a
the
in
terms
of
the
2
billion
SS.
E
It's
nothing
but
I
do
expect
the
tier
2
membership
to
ramp
up
the
contribution.
Has
more
employees
coming
on
board
and
salary
increase
as
well.
So
you,
the
increase
on
the
tier
2
asset.
It's
going
to
be
hiring
a
higher!
So
can
we
dis
director
the
staff
working
with
investment
consultant
and
actuary
to
come
up
with
a
kind
of
course
of
action
recommendation?
And
then
this
then
Porter
can
discuss
I
my
personal
feeling
on
the
border.
E
So
we
come
from
all
different
lines
of
life
and
then
we
don't
have
a
lot
of
expertise
in
this
when
we'd
go
into
retreat
and
when
we
go
through
the
discussion,
we're
just
discuss
and
discuss
and
discuss.
There's
no
action,
recommendation,
I,
think
staff
working
with
actuary
and
consultants
investment,
because
I
mean
that
may
come
may
better
suit
you
to
come
up
with
a
recommendation
that
this
body
can
come
in
and
discuss
it,
and
then
we
can
make
edits
and
modification
to
the
recommendation
and
common
ways
a
course
of
action.
A
Well,
I
I
certainly
remember
the
conversation
during
this
during
the
retreat
and
it
is
an
item
out
there.
I
didn't
hear
any
real
pushback
upon
any
discussion
about
that
I
think,
but
because
it's
not
eminent
I
think
the
an
appropriate
approach
to
this
would
be
once
we
you
know
we
had
the
discussion
order
prior
chair
who's,
not
here,
and
we
haven't
selected
a
chair
prospectively,
but
once
once
that
business
taken
care
of
them.
A
We
have
a
10:00
o'clock
time,
certain
1037
now,
but
I
think
it's
a
the
issue
is
valid,
but
I
would
like
to
suggest
that
we
we
deal
with
the
issue
in
the
agenda
setting
process
again
in
alignment
with
the
retreat
and
strategic
planning
issues
and
that
we
separately
work
to
get
this
particular
agenda
item
completed
so
bill.
Did
you
did
you
want
to
go
through
more?
The
slides,
I
think
we
right
at
the
end,
yeah.
H
A
So
with
that,
we
do
need
to
take
action
on
this
one.
It
does
directly
dovetail
with
the
next
with
the
time
certain
presentation
regarding
budget,
but
we
do
need
to
approve
this
one
so
that
the
contributions
can
be
confirmed
and
the
whole
report
same
with
the
whole
report.
So
with
that,
we
need
a
motion
in
a
second.
B
A
G
A
A
B
They
sturms
a
chair
I
want
to
first
thank
both
Jim
and
Julia
Cooper
for
taking
the
time
to
be
here
this
morning
to
present
to
you
the
city
budget
process,
which
is
a
critical
part
of
the
obviously
the
city
process,
but
also
for
you
boy
to
understand
how
there's
implications
of
that
budget
process
to
the
business
of
the
borer
and
second
to
apologize
for
having
you
weigh
for
40
minutes.
Although
I
can't
think
of
a
better
action
item
to
wait,
40
minutes
on
doctoring
information
that
has
implications
in
the
City
pointer.
L
Hi
there
folks,
my
name
is
again:
my
name
is
Jim
Shannon.
The
city's
budget
director
joined
here
by
Julia
Cooper
and
was
our
finance
director
and
we're
gonna
do
a
little
bit
of
a
tag.
Tag
team
where
I'm
gonna
go
over
just
a
sort
of
a
high
level
overview
of
the
city's
budget
and
how
retirement
plays
a
factor
in
that
it
will
also
sort
of
touch
on
some
of
the
key
historical
things
that
have
happened
in
the
past.
L
To
kind
of
put
us
where
we
are
today
and
then
Julia
will
go
forward
with
a
presentation
on
how
rating
agencies
view
our
pension
obligations,
and
so
here
we
go,
keep
going
to
dancing
here
so
just
a
broad
overview
of
the
city's
budget.
So
we
have
a
4.5
billion
dollar
budget
in
1920
and
that's
all
of
our
funds
combined.
So
we
have
general
funds
special
fund
and
capital
funds.
L
A
lot
of
our
discussion
is
centered
around
the
general
fund
and
we
have
about
sixty
six
hundred
positions
and
that
funding
split
is
about
27%
general
fund
27%
capital
funds,
which
is
supports
all
of
our
public
assets
and
rehabilitation
of
those
Instructor
items
and
then
special
funds
of
46,
and
that
would
be
things
like
airport
related
funds,
our
water
pollution
control
system,
our
sanitized
for
a
collection
system,
water
system
stuff,
like
that.
Okay
next
slide-
and
this
is
a
little
sampling
of
all
those
other
funds
that
we
have
so
Airport
funds
at
the
top.
L
So
these
are
all
the
the
various
special
funds
that
help
the
city
go
about
its
business,
maybe
one
of
the
newer
ones.
There
is
the
San
Jose
clean
energy
fund
so
that
as
a
Community
Choice,
aggregator
San
Jose,
clean
energy
kicked
off
in
spring
of
2019
to
service
all
of
San
Jose
customers,
and
so
those
funds
are
captured
there.
L
This
is
a
broad
overview
of
the
different
elements
of
our
capital
improvement
program,
so
we
have
fun
funding
and
resources
dedicated
to
a
variety
of
our
csa
areas
like
the
collection
system
for
standing
in
stormwater,
our
library
and
park
systems
airport
our
parking
structures,
traffic
is
all
of
our
roads
and
signals
and
bridges,
and
then
we
have
an
item.
We
call
strategic
support,
which
is
funded
by
a
mix
of
special
funds
and
the
general
fund
things
for
communication
equipment
like
radios,
service
yards
or
where
we
have
folks
just
dispatched
out
of
to
service.
L
You
know
to
work
in
the
field
and
then
municipal
improvements
is
a
broad
category
like
City
Hall
and
the
police
building,
where
there's
not
really
a
special
fund
dedicated
for
that,
but
they,
but
they
land
in
the
zone
of
municipal
improvements,
looks
like
so
here
is
a
overview
just
looking
at
the
general
fund
of
where
the
money
comes
from.
So
we
have
a
1.5
billion
dollar
budget
in
1920,
and
the
good
news
about
about
us
is
that
we
have
a
variety
of
funding
sources.
L
The
port
you
see
of
fund
balance
carryover
is
a
about
a
common
percentage
so
that
what
that
is,
is
our
variety
of
reserves,
as
well
as
money
for
projects
or
programs
that
were
started
in
a
prior
year
and
then
our
carry
forward
into
the
following
year,
and
so
we
always
kind
of
have
a
little
bit
of
fund
balance
in
any
given
year.
Next
slide.
There.
E
L
Will
give
my
best
shot
at
that
I
know
our
economic
development
director
does
a
really
good
good
job
at
this,
but
you
know
what
San
Jose
is
a
couple
of
unique
factors,
but,
but
maybe
the
broader
one
is
kind
of
interesting
is
that
we
are
the
only
big
city
who
has
a
higher
nighttime
population
and
a
daytime
population.
So
people
live
here,
but
generally
they
go
work
somewhere
else,
broadly
speaking
and
most
big
cities,
that's
the
opposite.
L
Right
folks,
come
from
outside
the
big
city,
go
work
in
the
big,
the
big
city
and
then
all
of
the
tax
revenue
related
to
job
act,
activities.
Sales,
tax,
business
tax
are
higher
because
of
that,
and
so
when,
but
you
know,
San
Jose
has
historically
been
built
out
more
of
a
single-family
home,
more
bedroom
type
of
community
as
a
big
city
that
has
implications
on
the
type
of
revenue
that
can
be
generated
per
per
capita.
L
So
it's
a
little
bit
of
less
revenue
per
capita
plus
the
service
demand
for
a
broader
geographic
area,
comprised
mostly
of
single-family
homes,
also
has
sort
of
a
higher
service
burden.
So
a
little
bit
of
less
revenue
per
capita
a
little
bit
of
a
higher
cost
per
capita
sort
of
makes
it
a
little
bit
challenging.
L
And
so
that's
why
you
know
the
council
talks
a
lot
about.
You
know
trying
to
balance
the
jobs
and
housing.
So
if
we
just
pursuit
housing,
which
is
certainly
a
key
element
for
the
city,
because
we
know
we
have
a
shortage
of
housing,
it's
always
tried
to
be
balanced
with
the
the
preserving
of
lands
for
job-creating
activities,
because
that's
so
important
for
the
city's
economic
health.
C
L
Again,
I'm
a
little
bit
more
outside
of
my
comfort
zone,
but
I'll
need
to
say
that
those
in
Julie
can
certain
chime
in
if
she
likes
to
but
they're,
certainly
those
business
taxes
and
other
and
property
taxes.
A
round
office
still
are
pretty
net
revenue,
positive
that
compared
to
single
family
but
I'm
sure
Julie
might
want
to
jump
in.
J
C
L
L
So
when
we
think
about
our
city's
budgetary
position,
we
always
think
about
ongoing
revenues
to
ongoing
costs.
I'll
touch
on
this
a
little
bit
later.
So
that's
what
we
want
to
balance
our
budget
to
the
amount
of
money.
That's
in
fund
fund
balance
are
generally
one-time
resources
either
for
specific
things,
like
maybe
a
specific
capital
project
or
there's
monies
held
in
reserve
against.
L
You
know
bad
economic
times
or
again,
they're
just
carryover
funding
that
maybe
we
didn't
quite
finish
the
thing
we
wanted
to
do
last
year
so
that
excess
money
was
carried
forward
and
the
current
year
to
finish
that
off,
and
so
we
kind
have
a
lot
of
those
so
that
amount
of
that
slice
of
that
pie
doesn't
vary
too
much
on
a
year-to-year
basis.
But
we
don't
really
look
at
that
as
an
ongoing
revenue
stream.
So.
C
L
L
Okay,
so
looking
at
the
next
slide
for
our
uses,
we
are
like
most
cities
where
we
spend
a
lot
of
our
money
on
public
safety,
and
so
this
isn't
very
unique
here,
but
gives
us
a
little
bit
of
a
slice
of
the
different
types
of
uses.
So
public
safety
is
a
big
component.
General
government
are
things
like
the
finance
and
HR
departments.
Non
non
departmental
are
the
things
we
call
a
better
citywide
in
nature.
We're
multi
departments
are
managing
those
resources
or
they
are
within
to
capital
projects.
L
Community
services
are
things
like
Park
and
library,
and
cap
remains.
Does
folks,
like
the
Public
Works
Department
slide,
and
here
we
are
showing
that
we
are
a
service
organization
because
we're
cities.
So
like
most
cities,
we
spend
most
of
our
money
paying
people
to
do
work,
and
so
that's
63
percent
of
the
general
fund
and
I
know
that
the
the
boards
are
interested
in
this
amount.
L
So
getting
a
little
bit
into
the
historical
backdrop
of
where
we
currently
are,
we
had
a
sort
of
a
decade
of
shortfalls
that
we
had
to
manage
from
the
early
2000s
into
the
early
teens
there,
where
what
those
lines
represented
is
our
estimated
shortfalls
of
ongoing
revenues
compared
to
ongoing
expenses,
and
so
those
given
years,
we
had
to
close
that
gap
either
through
reductions
and
expenditures
or
identification
of
new
revenues.
Yeah.
L
So
that's
an
interesting
challenge
that
we
continue
to
face,
and
so,
if
we
go
to
the
next
slide,
we
can
see
two
components
that
are
going
to
impact
us.
So
we
had
the
revenue
declines
associated
with
our
last
couple
of
recessions.
So
in
the
sales
tax
you
can
see,
the
dot-com
bust
was
a
pretty
big
drop.
There
then
the
Great
Recession
we
had
a
decline
and
a
property
tax.
L
We
actually
had
a
lowering
of
property
tax
receipts
in
the
Great
Recession,
which
we
had
never
experienced
since
the
end
of
World
War
two,
so
that
was
a
kind
of
really
traumatic
thing
that
the
cities
had
to
grapple
with,
because
normally
property
tax.
You
know
growth
rate
is
caps
at
two
percent,
but
then,
when
you
have
the
properties
change
over,
you
get
reassessed
the
higher
value.
So
it
was
very
surprising
and
dramatic
to
see
actually
revenues
go
down
in
property
tax,
so
that
was
the
revenue
side
and
we
go
to
the
next
slide.
L
We
see
the
you
know.
One
of
the
big
cost
components
was
the
retirement
contributions
with
which
with
the
boards
are
familiar
with
so
back
in,
oh
one,
the
so
what
what?
What
this
graph
shows
are.
Both
the
the
contributions
from
the
general
fund
to
the
retirement
systems
and
I
believe
that
is
the
blue
line
and
the
Purple
Line
is
the
the
retirement
costs
as
a
percentage
of
the
general
fund,
and
so
we
were
at
forty
six
point.
L
Three
million
total
contribution
amount
and
six
point:
five
percent
of
the
general
fund,
and
as
for
the
adopted
budget
in
nineteen
twenty,
we
had
three
hundred
and
thirty
nine
million
in
the
general
fund
for
contribution
which
represented
about
twenty
two
percent.
So
you
can
see
that
big
spike
that
we
had
in
two
thousand.
L
You
know
nine
nine,
two
thousand
eight
thousand
nine
through
eleven
twelve,
which
was
really
we
had
to
struggle
with
that's
when
you
saw
the
pension
reform
efforts
and
we,
this
was
I-
think
a
reflection
of
the
challenging
market
times,
plus
the
the
changing
in
the
assumptions
that
the
Retirement
boards
were
using
to
make
sure
that
the
pension
plans
were
on
on
sustainable
footing.
So
that
really
spiked
up
the
contribution
had
to
make
which
really
had
to
made
a
big
opponent
into
those
deficits
that
we
had
to
solve.
L
The
good
news
now,
though,
is
that
we've
been
in
a
pretty
stable
position
over
the
last
several
years,
where
we're
at
about
twenty
two
percent
of
the
overall
overall
budget.
Thanks,
like
a
couple
briefly
touched
on
a
couple
of
strategies
that
we
use
to
kind
of
get
through
those.
Those
tough
times
so
we
we
looked
at
cost
savings,
we
did
some
revenues
and
then
we
also
had
some
service
reductions
and
elimination.
I'll
just
touch
on
a
couple
of
these
here
and
starting
in
the
next
slide.
L
Our
cost
saving
strategies
were
things
we
tried
to
do
without
reducing
service
level,
so
we
froze
our
wages.
We
did
have
a
10%
total
compensation
reduction.
We,
of
course
we,
the
city,
went
through
the
pension
reform
process,
which
had
significance
both
short
term
and
longer
term
savings
components.
We
did
outsourcing.
L
L
It's
really
that's
our
mantra,
but
if
that,
if
that
deficit
is
so
big
that
we
really
can't
close
it
on
an
ongoing
basis
in
one
year,
we
will
sort
of
use
some
of
the
one-time
funding
to
sort
of
bridge
that
gap
and
we've
we
did
do
that.
We
had
this
thing
called
the
economic
uncertainty
Reserve.
We
now
call
about
the
budget
Stabilization
Reserve,
where
we
spent
it
all
down
and
had
to
start
building
it
back
up.
L
We
made
some
pretty
significant
reductions
to
service
levels
that
we've
been
over
the
last
say
seven
years
been
trying
to
strategically
add
back
now
we
are
a
different
city.
The
environment
is
different,
so
we're
not
gonna
add
back
the
same
way
that
we
cut
necessarily
but
are
still
looking
to
try
to
strategically
add
back
those
services
where
we,
where
we
think
we
need
a
most
okay.
L
What
will
be
the
cost
to
deliver
the
same
level
of
service
next
year,
as
we
had
promised
council
for
this
year?
That
becomes
basically
our
base
budget
between
our
base
level
cost
and
our
expected
revenues
and
from
there
we
determine
what's
going
to
be
a
shortfall
or
deficit,
and
so
we're
in
the
process
of
that
right
now
and
the
culmination
of
that
is
going
to
be
a
five-year
forecast
that
we're
going
to
release
at
the
end
of
February,
which
is
going
to
incorporate
the
information
that
we
received
here
plus
all
of
our
other
information.
L
And
that's
so.
We
will
do
a
really
detailed
look
ahead
for
next
fiscal
year.
But
we
also
look
ahead
for
the
next
four
years
to
see
where
you
know
where
we
think
the
city
might
be
over
a
medium
to
long
term
horizon.
That
forecast
informs
the
mayor's
March
budget
message,
which
really
sets
the
tone
for
the
budget
making
process
for
a
budget
that
gets
released
in
the
end
of
May.
The
council
has
study
sessions
on
that
throughout
the
month
of
May
and
then
mayor's
June
budget
message
approves
any
changes
to
that.
L
The
message
that
gets
to
the
budget
that
gets
released
by
the
city
manager
and
then
ultimately
gets
adopted
by
the
the
City
Council
so
that
we
have
a
budget
on
July,
1
and
next
slide
here,
so
the
retirement
cost.
So
these
are
the
discussion
that
you
had
today
is
very
critical
and
is
one
of
the
biggest
cost
components
that
goes
into
the
budget
so
from
the
preliminary
valuation
results.
L
You
know
the
presentation
that
we
had
in
November
we've
already
kind
of
taken
some
of
that
information
and
tried
to
do
some
early
analysis
of
what
that's
going
to
be
on
the
expense
side.
We
get
the
final
contribution
so
now
that
you've
have
made
that
approval
today,
we're
gonna
be
sending
a
letter
to
both
the
federated
and
the
polices
and
Fire
boards
asking
for
those
five,
your
contributions
in
a
formal
way,
and
so
we
can
factor
that
into
our
five-year
forecast.
L
What
we
do
also
is
that
we
use
a
little
bit.
The
numbers
that
you
see
and
the
numbers
that
we
carry
in
our
budget
are
a
little
bit
different,
because
the
payroll
assumptions
that
Chiron
uses
is
a
little
different
for
us
because
we
have
to
factor
in
the
budget
for
vacant
positions,
and
so
we
put
kind
of
translate
a
little
bit.
What
what
kind
on
gives
us-
and
so
it's
slightly
different,
then,
but
but
essentially
it's
that
information.
L
That's
driving
the
retirement
contributions
for
the
budget
process,
interestingly
enough,
starting
in
nineteen
twenty,
what
we
did
is
prior
to
nineteen
twenty
we
had
the
retirement
contributions
were
budgeted
between
tier
1
and
tier
two
proportionally.
So
you
know,
as
we
know,
a
lot
of
the
costs
are
related
to
tier
one
cost,
and
so
it's
your
one,
employee,
look
more
expensive
on
paper
than
a
Tier
two
employee.
But
you
know
that,
has
you
know
the
tier
two
tier
one?
It's
been
essentially
a
closed
system
to
your
one.
L
Employees,
essentially
we're
just
looking
more
expensive
than
they
actually
were.
That
UIL
is
a
city
obligation,
not
the
employee
obligation,
so
we've
now
used
to
spread
that
UAL
more
more
broadly
on
a
budgetary
basis,
so
that
those
positions
don't
don't
look
so
out
of
out
of
whack,
but
and
and
we'll
see
that
when
we,
when
we
display
how
the
city
thinks
about
the
UIL.
E
F
Know
the
idea
that
you
a
lower
base
of
active
employees
supporting
a
higher
base
of
retired
employees,
but
but
the
comment
you
just
made
who's
saying
that
you,
it
seems
to
me
like
you're
looking
at
the
dollar
amount,
you're
spreading
it
out
over
many
years
in
your
county
board
that
way
and
I'm
just
I.
That
might
be
an
interesting
piece
of
information
for
this
board
to
have.
If
you
could
elaborate
on
that,
those
kinds
of
like
leverage
ratios
that
you're
listening
to
in
the
last
presentation.
F
L
We
look
at
it,
we
do
like
a
dollar.
Let's
hold
that
question
just
for
a
couple
more
slides,
then
I
can
talk
through
what
it
looks
like
on
paper
there.
But
but
the
short
answer
is
we
look
at
the
doll
or
not
on
a
budgetary
basis,
yeah
yeah.
So
here's
what
we
published
for
the
last
forecast
and
this
was
released
in
February
29:19.
L
So
we
add
that
for
this
fiscal
year
we
had
a
5.1
million
dollar
surplus
of
ongoing
revenues
to
ongoing
expenses,
and
we
had
direction
in
the
mayor's
March
message
to
essentially
set
that
aside
and
not
spend
that
on
an
ongoing
basis,
and
so
which
was
good
news,
because
that
ten
point
nine
million
dollar
negative
figure
that
you
see
for
2021
was
about
15.6
million,
but
because
we
didn't
spend
most
that
ongoing
surplus
that
lowered
the
next
year's
anticipated
deficit.
So
this
is
what
we
had
had
had
seen.
L
The
the
positive
number
you
see
in
22
23
was
related
to
a
payoff
of
an
obligation
related
to
police
and
fire
Retirement,
System
I
think
they've,
mostly
since
probably
smooth
that
out.
So
that
number
will
look
quite
a
bit
different
I
think
when
we
released
the
next
year's
forecast,
but
this
what
this
does
is.
This
helps
not
only
figure
out
what
our
surplus
deficit
isn't
going
to
be
for
the
most
immediate
fiscal
year,
but
it
gives
the
city
administration
and
the
City
Council
look
at.
L
You
know
how
all
assumptions
coming
true
what
will
happen
over
the
next
five-year
period
and
so
it's
kind
of
moving
there.
So
this
is
an
another
version
of
the
slide
that
showed
you
earlier,
but
what
this
does
is
this
looked
at
the
forecasted
ongoing
cost
for
retirement.
So
again
we
see
the
green
line.
There
is
the
the
ongoing
the
retirement
contributions
from
the
general
fund
that
are
ongoing
and
the
percentage
of
that
contribution
of
general
fund
as
well.
So
what
this
is
this
is
taken.
L
This
is
data
taken
from
all
of
our
previous
forecast,
starting
in
7
8
and
seeing
what
it
was
for
that
budget
year
until
you
get
to
1920,
where
that
red
line
is
everything
to
the
right
of
that,
red
line
are
what
the
projections
are
based
on
the
last
forecast,
and
so
this
is
kind
of
where
you
know
all
things.
Staying
the
same,
we're
in
a
nice
stable
position,
which
is
a
good
feeling
given.
What's
on
the
left
side
of
that
line,
where
we
had
those
that
was
big
big
rises.
L
However,
that's
contingent
upon
making
sure
that
those
assumptions
hold
true.
So
if
the
discount
rate,
you
know,
let's
say,
is
lowered
or
investment
returns
or
poor
or
we
have
a
recession,
you
know
that's
that
that's
gonna
change
both
of
those
lines
there,
but
it
is
a
nice
reflection
of
where
we
are
versus
where
we
have
been,
and
so
this
so
now
we
can
go
back
and
back
that
question
here
some
extent.
So
here
is
what
we
show
in
our
forecast
about
how
the
retirement
amounts
are
budgeted.
L
So
for
federated,
we
we
split
out
the
funding,
the
the
contra,
the
city's
contribution
in
the
following
way
of
where
we
have
a
dollar
amount
for
the
normal
cost
related
to
tier
Tier
one,
and
you
can
see
that
sort
of
goes
down
because
we
have
in
as
the
years
progressed,
because
we
have
we're.
Gonna
have
fewer
Tier
one
employee's
the
tier
two
pension,
normal
cost.
Why
that's?
L
Your
tier
2
pension
is
technically
normal
and
UIL
because
we
share
it
so
we're
not
technically
calling
just
normal,
even
though
most
of
that
is
normal,
and
so
that
is
going
up
a
little
bit
because
we
are
having
more
to
your
to
employees,
replace
the
tier
one
folks,
but
that
unfunded
actuarial
liability
is
is
just
as
a
dollar
amount.
So
that
used
to
be,
you
know,
on
a
budgetary
basis,
considered
as
like
a
percentage
of
pay
of
a
tier
1
employee,
but
that
wasn't
really
true
and
I
was
really
throwing
off
some
of
our
budgeting.
L
So
if
you
happen
to
be
a
small
department
and
you
had
more
tier
one
employs,
let's
say
that
we
were
budgeted,
you
could
have
a
budgetary
problem
same
thing
if
we
were
going
to
call
to
fee
based
on
it,
co
one
employee
ahead
of
Tier,
two
employee,
doing
the
work
you
just
had
adult
of
that
that
didn't
make
it
any
any
sense.
So
for
a
while,
it
was
very
efficient
to
kind
of
budget
in
that
way
between
tier
1
and
tier
2.
L
But
since
that
sure
was
a
closed
plan
overtime,
we
had
to
make
that
sort
of
switch,
and
so
we
made
that
it
starting
in
1920
and
so
on,
a
going-forward
basis
that
ul
is
really
just
a
city's
obligation
that
sort
of
spread
across
the
organization.
But
we
don't.
As
from
a
city
perspective,
we
don't
look
at
you
know
the
leverage
ratios
and
that
doesn't
factor
into
that.
We
need
to
take
what
kind
on
gives
us
and
what
you
approve
and
that's
what
factored
into
the
budget
process
so
well.
I.
L
F
It
does
I'm
curious,
I,
think
the
actuary
mentioned
some
things
about
liquidity
and
and
contributions
coming
in
that
can
go
out,
so
they
don't
have
to
liquidate
investments.
I'm
curious,
if
anything,
if
there's
anything
like
that
from
the
city's
budgetary
side,
where,
where
the
percentage
of
payroll
matters
to
you
frankly
well.
L
I
think
what
matters
the
most
to
us
is
is
what
the
contribution
amount
is
from
a
year-to-year
basis
and
over
a
longer
term.
So
you
know
we
with.
There
are
other
slides
there.
Where
you
see
you
know
the
plus
or
minus
for
surplus
or
deficit
is
very,
very
small,
which
means
that
any
increase,
that's
market
is
probably
going
to
have
a
detrimental
service-level
impact,
and
so
you
know,
generally,
you
know
from
the
city's
current
position.
You
know
a
stable
is
good
for
us.
However,
we
would
also
like
it
to
have
to
pay
less.
L
You
know,
so
we
could
do
more
services,
you
know
so
there
are
I,
know
the
retirement
solutions.
Working
group
is
kind
of
thinking
about
that
and
seeing
are
there
other
ways
to
do
you
know
if,
if,
if
risk
could
be,
you
know
in
increased
the
city's
ability
to
be
able
to
contribute
more
on
a
year-to-year
basis,
if
that,
if,
if
assumptions
weren't
more
met,
you
know
because
we
would
need
to
look
at
what
that
analysis
is.
L
B
Just
say-
and
you
may
have
mentioned
these
and
I
missed
it.
I
know
this
is
based
on
last
year,
five
year
projection
I'm
sure
you
mentioned
that
now
all
the
payments
made
to
the
retirement
planning
council
and
is
enough
fun
and
just
for
sake
of
discussion,
just
wanted
to
show
that
the
one
eighteen
point-
seven
million
here
for
federated
the
action
number
we're
gonna,
be
sending
to
the
cities,
one
90.9
so
I'm,
assuming
he
makes
about
two-thirds
of
it,
comes
from
the
general
fund
and
the
rest.
B
That
the
board
understand
that
at
some
point,
I
want
to
tell
bill
you're,
showing
a
26%
general
fund
percentage
that
goes
from
the
general
fund
to
the
retirement
plan.
I
know
Kiron
have
data
from
different
cities
across
the
state
of
California
I
believe
Oakland
may
be
higher
than
that,
but
at
some
point,
when
he's
Kairos
turned
to
talk
about
the
okay,
if
you
can
provide
sort
of
some
background
on
that,
if
you
have
it,
if
you
don't
that's
fine,
we
can
do
it
in
the
next
meeting,
but
I
think
it's
important.
B
L
J
Thank
you
Jim,
so
I'm
gonna
give
up
sorry
my
phone's
ringing,
my
daughter,
so
I'll
give
a
brief
presentation
on
the
rating
agency's
views
on
pension
obligations.
So-
and
some
of
you
may
have
heard
this
presentation
before
when
I
gave
it
to
the
last
year
and
then
to
the
retirement
working
solutions
group
or
whatever
that
group
is
called
so.
The
city
of
San
Jose
has
several
credit.
Ratings
were
rated
by
Moody's,
Standard,
&,
Poor's
and
Fitch
our
general
obligation
bond
rating,
which
we
kind
of
consider
kind
of
the
report
card
on
the
city.
J
Overall,
we
have
a
rating
of
a
double-a
one
double
a-plus
double
a-plus
from
the
three
rating
agencies,
which
is
one
notch
below
triple-a.
The
other
credits
that
are
rated
include
airport,
sewer
revenue,
lease
revenue
and
tax
allocation
bonds,
so
I'm
gonna
kind
of
just
walk
through
here,
the
from
the
three
rating
agencies.
They
all
kind
of
look
at
it
a
little
differently
and
then
kind
of
how
they
look
at
it
in
general
and
then
how
they
look
about
the
San
Jose,
specifically
so
with
Moody's
their
rating
process.
J
They
kind
of
have
a
scorecard
in
which
they
go
through
and
develop
different,
percentiles
and
and
rate
individual
cities
in
these
particular
categories.
So
what
I
did
there
is
I
kind
of
blocked
off
in
red
kind
of
what
they
look
at
with
respect
to
pensions?
So
they
look
at
the
adjusted
net
pension
liability
to
the
three-year
average
and
then
also
the
adjusted
net
pension
liability
on
a
three-year
average
and
on
the
scorecard
those
have
a
weighting
of
about
5%.
J
And
so,
if
you,
the
San
Jose,
is
rating
in
those
two
little
categories
is
an
A
and
a
B
Double
A,
so
we're
rated
fairly
low
as
compared
to
how
we
rate
overall
in
in
the
perspective
and
some
of
the
other
levels
like
at
the
tax
base
were
rated
triple-a.
So
they
put
all
that
stuff
together
and
they
create
this
scorecard
on
the
next
slide.
They
view
debt
and
pensions
as
an
important
component
of
the
long
term
financial
obligations
that
kind
of
facing
the
city
they
look
at
it
as
a
measure
of
our
financial
leverage.
J
So
you
know
there
is
disparities
in
the
way
local
governments
kind
of
measure
report
they're
obligate
their
pension
liabilities,
so
they
you
Moody's,
uses
kind
of
an
internal
standardization
process
to
adjust
for
that.
So
the
pension
scores
are
used
as
a
starting
point
for
the
analysis
and
its
impact.
But
you
know
it's
not
solely
driven
by
those
numbers:
they
use
other
components
to
to
come
to
the
long
term
to
come
to
the
ratings
for
the
city.
J
So,
on
the
next
slide,
the
city's
rating
on
the
general
obligation
rating
was
most
recently
confirmed
in
June
of
this
year
when
we
were
doing
our
GTL
bond
issuance
and
it
was
confirmed
at
a
double-a
one
with
a
stable
outlook.
They
always
kind
of
have
an
outlook
on
it.
They
can
have
positive,
stable
and
negative.
So
positive
means
that
you're
have
a
potential
to
be
increased.
Negative
means,
you're
kind
of
could
be
on
the
other
side.
J
So
stable
is
good
to
be
so,
and
so
I
pulled
out
kind
of
some
key
points
there
and
I
just
wanted
to
highlight
the
comments
and
the
rating
report.
You
know
first,
that
I'm
gonna
read
the
sound
financial
position
that
is
expected
to
remain
healthy,
which
is
largely
due
to
management's,
adopted
fiscal
policies
and
conservative
budgetary
practices.
Pension
no
peb
costs
will
remain
high
and
continued
to
be
budgetary
pressures,
so
you
know
so
we
have
a
very
methodical
and
detailed
budget
process
in
San
Jose,
which
really
helps
keep
us
highly
rated.
J
Our
five-year
forecasting,
the
periodic
review
that
we
do
is
looked
at
very
highly.
So
when
you,
when
you
go
and
you
look
at
that
net,
the
adjusted
net
pension
liability.
They
do
comment
that
ours
is
high,
elevated
at
four
times
operating
revenue
which,
as
I
mentioned
before,
equates
to
a
B
Double
A
rating
on
their
scorecard
and
when
they
put
out
their
report,
they
they
put
out
a
report
and
they
look
at
all
different
types
of
municipalities
across
the
country.
J
So
we
in
the
bucket
of
cities
over
500,000
in
population,
so
those
cities
that
are
rated
triple-a.
They
have
like
a
1.5
one
times
coverage
and
those
rated
double-a
have
a
3.0
three
times.
So,
as
you
can
see,
ours
at
4.1
is
significantly
elevated
compared
to
our
peers
in
terms
of
population.
So,
on
the
next
slide,
we'll
go
over
snps
kind
of
rating
process,
they
have
different
criteria
and
they
resign
them.
J
So
we're
still
a
little
bit
higher
than
that,
but
we
know
we're
a
lot
lower
than
some
of
the
other
agencies
that
we
compare
to
and
they
look
at
amortization
methods.
So
the
fact
that
you
have
a
closed
amortization
is
good
as
well
so
and
then
on
the
next
slide
kind
of
an
overview
of
just
how
they
look
at
pensions
in
general.
C
J
J
Okay,
so
in
terms
of
ESPYs
rating
processes
views
on
pensions,
they,
you
know,
they
look
at
their
funding
methods
and
then
under
kind
of
this.
What's
the
trajectory
of
those
costs
over
time?
How
are
we
looking
at
they're
gonna
increase
or
decrease
so
as
Jim
slide
showed?
You
know
we
show
this.
We
had
a
rapid
increase
but
they're
kind
of
stabilizing,
so
that
puts
us
in
in
a
better
position
from
ESPYs
views
with
respect
to
our
ratings
on
the
next
slide.
J
Again,
we
were
recently
our
ratings
were
recently
and
confirmed
by
SP
at
a
double
a-plus,
with
a
stable
outlook
in
June,
and
their
key
point
in
their
reading
report
is
a
significant
portion
of
the
revenue
growth
is
offset
by
rising
non
discretionary
expenditures,
specifically
for
pension
other
post-employment
benefits
and
very
large
liabilities
remain
in
these
areas.
So
again,
this
continued
pressure
between,
while
we
may
be
seeing
rising
revenue,
they
can
help
provide
services,
it's
being
tampered
by
these
costs
that
we
really
don't
have
a
lot
of
control
over
those
non-discretionary
pension
costs.
J
Also
in
terms
of
their
opinion
on
pension
liabilities.
You
know
we
do
have
a
very
large
pension
liability
and
low
funding
ratios
and
there's
no
way
to
get
around
that
as
part
of
the
conversation
with
the
rating
agencies.
So,
to
the
extent
that
we,
you
know
here
again,
we
have
a
lower
than
average
discount
at
675,
which
is
viewed
positively
still.
You
know
that
that
unfunded
liability
is
going
to
continue
to
put
pressure
on
the
rating
for
the
city
and
at
some
point
it
could
have
a
rating
impact.
J
Finally,
the
last
rating
agency
is
Fitch.
They
have
four
key
drivers
that
they
assess
when
they
look
at
our
ratings
revenue,
expenditures,
long-term
liability
burden
and
that's
where
you
would
see
debt
and
pensions,
they
consider
debt
and
pension
liabilities
as
a
metric
and
important
and
kind
of
accept,
looking
at
our
long
term
liability
burden,
they
believe
debt
and
that
pension
liabilities,
their
effect.
J
So
Fitch
confirmed
our
rating
in
June
of
this
year,
as
well
as
a
double
a-plus,
with
a
stable
outlook,
and
they
expressed
concerned
about
our
relatively
high
carrying
costs
for
debt
service
and
pension
liabilities,
which
are
partially
offset
by
management's
focus
on
fiscal
balance,
including
multi-year
forecasts
with
a
recessionary
scenario
and
demonstrated
flexibility
on
other
spending
categories.
So
again,
these
high
long-term
liabilities
are
being
offset
by
our
continued
review
and
budget
budget
process
so
I'm.
Just
in
summary,
the
pension
obligations
are
a
driver
in
the
rating
process.
J
All
three
rating
agencies
have
metrics
and
analytical
tools
in
which
they
measure
the
impacts
on
our
rating.
Our
in
terms
of
our
strong
management
and
budget
policies
have
demonstrated
our
dedication
to
kind
of
looking
at
these
obligations
and
seeing
how
can
we
offset
those
over
time
and
the
budgetary
tools
that
we
have
available
to
cover
those
increasing
pension
costs
are
often
only
on
the
expenditure
side
of
the
balancing
equation.
J
But,
what's
important
to
remember
is
to
think
about
in
California,
it's
very,
very
difficult
to
be
a
triple-a,
rated
City,
especially
a
large
city,
because
you
know
when
you're
trying
to
balance
a
budget,
you
have
expenditures
and
you
have
revenue
in
California.
We
have
very
little
control
over
how
we
can
how
we
can
move
the
lever
on
the
revenue
side,
because
all
tax
measures
have
to
require
our
require
voter
approval.
J
So
when
we
have
a
situation
where
we're
in
a
recessionary
or
we're
in
a
budget
cutting
mode
they're,
really
the
only
lover
that
we
have
that
we
can
do
on
a
budget
balancing
is
on
the
expenditure
side.
Those
revenues
really
do
require
that
require
voter
approval.
There's
not
much.
We
can
do
on
the
fees,
because
fees
can
only
be
set
at
a
cost
recovery
basis.
So,
as
a
singular
employer
plan,
we
report
on
our
pension
obligations
and
our
comprehensive
annual
financial
report.
The
bond
market
requires
extensive
disclosure
on
our
pension
obligations.
J
I
mentioned
we
issued
just
over
half
a
billion
dollars
in
geo
bonds
in
July
and
we
undertook
the
updating
of
our
appendix
C,
which
is
the
city's
retirement
plans.
It's
over
60
pages
Chiron
assists
in
the
review
process
for
that.
So,
if
you're
interested
in
reading
that
I
provided
the
link
to
the
msrb
EMA
website,
where
the
official
statement
is
posted
so
with
that
we're
available
to
answer
any
additional
questions,.
J
We
issued
taxable
and
tax
and
tax-exempt
bonds,
and
we
also
did
a
refunding
of
the
prior
bonds
that
had
been
issued
about
300
million
dollars
of
Prior
bonds
were
outstanding,
so
I
think
on
the
tax
exempt
side.
We
were
all
in
under
3%
and
that's
partly
because
we
had
refunding
so
there
was
a
shorter
maturity
of
the
of
the
refunding
bonds
than
the
new
money
bond
issue
and
then
I
think
on
the
taxable
side
we
were
just
around
4%,
but
I'd
have
to
go
back
and
look
at
my
notes
and.
J
J
A
Other
questions
and
comments
Julian
on
slide
31,
the
one
phrase
that
caught
my
attention
was.
The
second
starts
on
the
end
of
the
second
line,
with
no
plan
to
address
the
liability
other
than
annual
required
contributions,
and
when
I
read
that
I
thought
well,
you
know
it
seems
to
not
acknowledge
that
we
have
closed
at
an
amortization
schedule
and
the
fact
that
we're
in
the
in
the
next
funny
cycle
we're
paying
more
than
that
tread
water
lying.
Does
that
seem
like
a
fair
comment?
A
J
A
fair
comment
to
the
to
the
extent
that
it's
gonna
take
a
little
bit
more
than
just
doing
that.
To
get
out
of
that,
that
whole
I
mean
we're
barely
treading
it
50
a
little
bit
more
than
50
percent
funding
and
I,
don't
I
think
we're
gonna
be
able
to
get
to
that
hold
just
with
interest
earnings.
You
know
so
I
think
that's
what
they're
commenting
on
that
we're.
L
F
H
J
D
A
H
Bill
hallmark
and
I'm
with
Mike
shining
Mike
is
healthcare,
actuary
health,
actuary
and
I'm
a
pension
actuary
and
to
do
a
retiree
medical
evaluation
like
this,
you
need
one
of
each.
You
need
both
of
our
expertise
and
sometimes
I
pretend
to
do
Mike's
job
and
sometimes
I
pretends
to
do
my
job,
but
really
our
separate
expertise
so
we're
just
starting.
H
We
just
finished
the
evaluation
of
the
pension
plan,
we're
just
starting
the
valuation
of
the
retiree
medical
plan,
the
open
plan,
and
so
this
meeting
we're
hoping
to
get
you
to
adopt
the
assumptions
we
need
to
complete
the
valuation
and
then
at
the
January
meeting,
we'll
come
back
with
the
evaluation
results.
So
this
is
like
the
November
pension
meeting.
H
Their
contribution
is
fixed
at
seven
and
a
half
percent
of
pay,
so
it
whatever
we
do
in
the
valuation
does
change
that
that's
just
fixed,
and
so
we
just
work
on
the
city's
contributions
and
those
are
set
by
the
board.
But
the
city
has
an
option
to
impose
a
cap
on
those
contributions
at
fourteen
percent
of
pay.
H
H
The
benefits
of
the
plan
that
can
be
divided
into
two
kinds
of
subsidies.
The
main
focus
of
our
work
is
the
explicit
subsidy.
So
the
plan
pays
the
premium
for
health
coverage
selected
by
the
retiree
up
to
the
cost
of
the
lowest
cost
plan
offered
to
active
employees.
So
there's
there's
a
high
deductible
plan,
that
is
the
lowest
cost
plan
and
the
plan
this
plan
will
pay
for
retirees
the
premium
for
whatever
they
select
up
to
the
cost
of
that
plan,
and
so
that's
called
the
explicit
subsidy,
because
it's
a
direct
premium.
H
There's
an
implicit
subsidy
between
the
active
premiums
and
the
cost
for
the
retirees,
and
so
we
also
value
that
and
Mike
and
his
team
developed
the
the
claims
costs
by
age
and
we'll
show
you
those
in
this
presentation
and
that
just
goes
into
that
that
valuation.
That's
part
of
the
liability
for
the
plan.
H
H
So
these
are
results
from
last
year's
valuation,
similar
format
to
what
we
showed
earlier
on
the
pension
plan,
a
couple
things
to
note
we're
just
showing
dollar
amounts.
We
set
the
contribution
for
the
city
as
a
dollar
amount.
The,
but
again
the
member
contribution
on
the
left
is
in
purple
and
it
went
down
because
the
group
of
employees
covered
went
down.
H
The
city's
contribution
is
the
21
million
that
went
up
slightly
last
year
and
then
there's
the
implicit
subsidy
contributions.
The
blue
bar
on
top
the
black
line
is
that
normal
cost.
So
one
of
the
interesting
things
here
is
the
members
contribution
is
higher
than
the
normal
cost,
so
they
are
paying
the
full
normal
cost,
plus
a
portion
of
the
unfunded
liability
and
then
the
city's
contribution
up
to
that
red
line
is
the
dred
watermark
and
then
the
contributions
above
that
are
reducing
the
unfunded.
H
On
the
right
hand,
side
is
the
are
the
liabilities
in
the
bar
and
again,
the
dark
blue
is
for
people
receiving
benefits.
The
the
teal
is
the
vested
terms
and
the
red
is
the
actives
and
then
there's
the
implicit
subsidy
on
that
on
the
top.
I
think
one
thing
to
note
here,
just
as
a
reference
point,
the
total
liability
is
about
650
million,
as
of
the
last
valuation
compared
to
well
over
4
billion
for
the
pension
plan,
so
we're
dealing
with
a
much
smaller
obligation
here.
H
The
contributions
that
the
board
has
adopted
is
a
similar
structure
to
what
we
did
for
the
pension
plan.
It's
normal
costs,
plus
administrative
expenses
plus
a
Namor's
ation
payment
on
the
unfunded
liability,
the
member
contributions
that
are
fixed.
That's
what
the
city
contribution
is.
The
amortization
is
20
years
with
a
three-year
phase-in
and
phase-out,
which
means
we
take
the
instead
of
asset
smoothing.
We
don't
smooth
the
assets
here.
H
This
was
something
we
adopted
a
couple
years
ago:
it's
similar
to
a
method
that
CalPERS
had
used
when
they
got
rid
of
their
actuarial
value
of
assets
to
smooth
things,
and
it
works
well
on
an
open
plan,
because
a
lot
of
the
volatility
here
is
not
from
the
assets
or
the
investment
returns,
it's
from
health
care
costs
and
when
healthcare
costs
move,
it
moves
your
liability
around
and
then
we
have
the
amortization
payment.
So
we
switched
the
effectively
move,
the
the
smoothing
so
that
it
covers
both
the
investment
returns
and
changes
in
healthcare
costs.
H
If
you
look
at
our
projections,
the
top
graph
is
similar
to
what
we
showed
for
the
pension,
where
the
gray
bars
are
the
liability
here.
The
darker
piece
on
top
is
the
implicit
subsidy
and
the
lighter
piece
on
the
bottom
is
the
explicit
subsidy
and
you
can
see
we'd
be
projected
to
get
to
a
hundred
percent
funding
on
the
explicit
subsidy
by
2038,
we're
currently
just
under
fifty
percent
funded,
so
almost
as
well-funded
as
the
pension
plan,
even
though
we
just
started
funding
this.
H
What
a
decade
ago,
less
than
a
decade
ago,
the
bottom
chart
shows
the
historical
contributions
in
the
projection
of
contributions,
and
so
you
can
see
the
member
contributions
and
the
bottom
purple
are
projected
to
go
away
over
the
next
15
years,
essentially
or
nearly
go
away,
and
as
they
go
away.
The
city's
contribution
goes
up.
H
So
again,
the
focus
here
is
setting
the
assumptions.
We
use
a
lot
of
the
same
assumptions
as
the
pension
valuation,
so
the
same
retirement
rates
same
mortality.
All
of
those
kinds
of
assumptions
are
the
same,
but
we
need
to
set
some
that
are
specific
to
this.
The
discount
rate
is
specific
to
the
opah,
because
the
115
trust
that
the
open
assets
are
invested
in
has
a
different
investment
policy
than
the
pension
plan.
H
So,
looking
at
the
expected
return
on
assets,
even
though
the
allocation
is
very
different,
the
results
here
are
fairly
similar
to
the
pension
plan.
We
saw
using
makitas
capital
market
assumptions.
The
expectation
over
10
years
is
6.9
and
over
20
is
7.6,
but
those
were
based
on
December
2018
market
conditions
and
there
was
a
big
increase
between
2017
and
2018.
H
Due
to
those
market
conditions,
it
went
from
a
5.6
percent
expected
return
to
6.9
over
a
10-year
period
in
6.8
to
7.6,
and
so
like
with
the
pension
plan.
We
have
some
concerns
about
just
relying
on
those
2008
capital
market
assumptions,
2018
capital
market
assumptions,
because
the
market
was
so
different
in
December
than
before,
or
after
so
in
particular,
we
we
just
put
a
couple
key
things
for
market
conditions.
H
That
was
when
the
market
had
had
dropped
down
dramatically
and
since
has
has
recovered
quite
a
bit,
and
cape
is
the
cyclically
adjusted
price
earnings
ratio,
which
is
a
measure
of
the
valuation
of
stocks,
and
so
you
can
see
that
those
factors
change
significantly
and
those
are
factors
that
go
into
developing
those
cap
market
assumptions.
And
so,
given
that
uncertainty
we've
been
like
for
the
pension
plan,
we'd
recommend
that
you
not
change
the
discount
rate
and
wait
and
see
how
market
conditions
change.
H
I
The
explicit
subsidy,
which
is
the
amount
that
the
plan
actually
contributes
towards
retiree
coverage,
is
based
on
the
lowest
cost
plan,
which
remains
the
Kaiser
3000
deductible
plan,
so
those
are
going
up
in
2020
by
eight
point:
seven
percent,
that's
the
actual
increase,
which
is
a
little
bit
higher
than
our
assumption.
Our
assumption
was
an
eight
percent
increase,
so
it
went
up
a
little
bit
more
and
all
of
the
non
Medicare
members.
I
Will
we
see
this
level
of
subsidy
because
it's
the
lowest
cost
plan
for
almost
all
of
the
Medicare
eligible
plans
for
both
the
two
HMO
plans
that
are
offered
their
costs
are
actually
below
this
maximum
subsidy.
So
therefore,
they're
still
get
100%
of
the
cost
covered
and
those
who
enroll
in
the
PPO
were
actually
in
as
well
see
later
slide,
we'll
be
in
a
better
position
than
they've
been
historically,
because
those
premiums
actually
went
down
fairly
substantially
and
the
other
thing
we're
doing
this
year
is
changing
the
methodology
somewhat.
I
In
setting
long
term
health
care
trend
rates,
we're
actually
using
a
model
that
was
published
by
the
Society
of
Actuaries
called
the
gets
in
model.
It
takes
a
much
more
analytic
approach
to
setting
trends
and
what
we
do
is
your
initial
trends
are
really
based
on
short-term
expectations
of
what's
been
happening
in
the
last
few
years.
What
we
think
is
gonna
happen
in
the
next
few
years,
so
non-medicare
eligibles
we're
still
in
that
seven
to
eight
percent
range.
I
It's
a
little
bit
less
because
there's
something
called
health
insurer
tax
that's
been
coming
in
and
out
of
play
it's
back
into
play
for
2020,
but
in
the
latest
budget,
that's
going
through
that's
through
the
process,
that's
supposed
to
be
approved
by
the
House
this
week
in
the
Senate
next
week.
Actually
that
will
be
permanently
taken
away.
So
therefore,
that
will
kind
of
mitigate
the
trend
a
little
bit
next
year,
then,
basically,
what
the
model
does
is
it
on
a
very
long-term
basis?
I
It
grades
down
to
kind
of
a
growth
in
GDP,
so
kind
of
inflation,
plus
a
productivity
and
for
a
short
period
of
time,
there's
an
additional
amount
for
medical
technology,
and
things
like
that
and
the
model
basically
is
looking
at
saying.
We
all
believe
that
at
some
point,
medical
costs
have
to
quit
increasing
faster
than
GDP.
I
And
then
we
kind
of
keep
dental
flat
at
about
three
and
a
half
percent,
and
so
this
compares
the
actual
difference
between
the
2017
and
2018
assumptions,
and
you
can
see
what
it
does
is
before
we
had
just.
Basically,
it's
just
a
straight
line
down
over
15
years
to
what
our
long-term
assumption
was,
and
that
is
flat.
I
What
we're
doing
now
is
we're
starting
at
about
the
same
point,
but
it
grades
down
a
little
bit
more
quickly
to
a
number:
that's
right
around
the
GDP
growth
rate
and
then
slowly
over
time,
grades
down
so
we're
a
little
bit
lower
in
the
short
term,
a
little
bit
higher
in
the
middle
term
and
the
very
very
long
term,
a
little
bit
lower,
so
net
net.
The
trend
impact
is
about
the
same,
but
it
presents
a
little
bit
more
realistic
picture
about.
What's
going
on
the
one.
I
That's
that's
significantly
different
from
last
year
is
the
Medicare
and
it's
just
reflecting.
What's
going
on
in
the
a
care
environment
right
now,
it's
the
last
few
years,
the
growth
rate
in
expenses
and
the
Medicare
side
have
been
relatively
flat,
particularly
on
the
prescription
drug
side
of
which
accounts
for
on
a
premium
point
of
because
again,
this
plan
is
covering
the
cost
that
Medicare
doesn't
cover.
So
half
the
cost,
for
these
plans
are
prescription
drug
related
and
the
overall
costs
of
providing
as
much
as
we
read
about.
I
What's
going
on
in
the
press,
the
average
cost
of
providing
drugs
that
Medicare
population
over
the
last
few
years,
it's
been
relatively
flat
so
which
so,
basically
it's
like
we're
gonna
grade
up
to
kind
of
a
more
normal
level
and
then
back
down,
but
over
the
recent
term,
it's
been
fairly
flat
and
we
expect
it
to
continue
that
way
for
the
next
three
or
four
years
next
slide.
The
next
one.
Are
they
dependent
coverage
rates?
I
Again,
we
have
to
make
projections
as
to
what
active
employees
will
enroll
in
when
they
actually
retire,
and
we
do
that
by
looking
at
how
the
retirees
actually
enrolled.
So
the
top
chart
shows
for
the
pre
Medicare
population
between
male
and
female
retirees,
how
they
elected
family
coverage,
and
you
can
kind
of
see
at
the
bottom.
The
current
is
really
close
to
our
this.
I
Why
did
you
go
from
27
percent
to
28
percent
when
it
really
doesn't
do
anything,
and
so
we're
just
recommending
we're
just
gonna
leave
those
unchanged
until
we
if
at
some
point
in
time
it
changes
significantly
and
they've,
been
playing
back
and
forth
between
this,
these
plus
or
minus
1
percent
for
the
last
four
or
five
years.
So
it's
pretty
stable.
I
I
Assumptions
are
pretty
close
to
each
other.
The
one
thing
that
is
happening
this
year
is
before
people
had
a
choice:
machine
Kaiser,
a
Blue
Shield
plan
and
a
Sutter
Health
Plan
Anthem
Blue
Cross
is
replacing
all
of
the
non
Kaiser
plans
and
so
we're
just
making
the
assumption
that
people
are
going
to
select
the
corresponding
plans
if
they
were
in
the
Sutter.
I
F
is
an
in
lieu
option
where
a
retiree
can
actually
defer
their
coverage
and
build
up
an
account
with
it's
equal
to
25%
of
what
that
low-cost
plan
contribution
would
have
been,
and
then,
when
they
retire
in
the
future,
they
can
actually
use
that
to
help
pay
for
their
coverage.
We've
got
really
limited
experience.
I
We've
got
two
years
of
experience,
so
we've
been
looking
at
it
and
slowly
adjusting
it,
and
so,
if
we
go
to
the
next
page,
what
this
chart
really
shows
is
we're
looking
at
this
one
kind
of
as
a
confidence
interval,
because
we
have
such
little
data
that
big
gray
bars
are
90%
confidence
levels.
So,
basically,
based
on
what
limited
data
we
have
90%
of
the
time,
they're
gonna,
be
somewhere
in
between
the
observed
rate,
is
what
we've
seen
so
far.
I
So
the
observed
rate
for
the
active
members
when
they
actually
retire
and
then
elect
in
lieu
coverage,
is
running
somewhere
in
the
17
to
16
to
18
percent
range.
Our
assumption
that
we
originally
went
in
with
was
15
percent
and
so
we're
comfortable
just
leaving
that
one
alone,
the
actuals
pretty
close,
we're
still
talking.
You
know:
60
70
people,
80
people,
it's
not
a
lot
of
individuals
choosing.
We
are
proposing
a
slight
change
in
the
in
lieu
because
again
that
was
another
one.
I
Are
they
yeah?
That's
the
terms
there's
very
few
of
those
individuals
that
are
actually
electing
our
initial
assumptions,
which
is
assume
half
of
them
would
continue
to
take
this
coverage.
The
actual
observation
is,
it's
really
right
around
30
percent,
so
it
was
like
42
percent
the
first
year,
the
second
year
full
data
was
just
under
30
percent,
and
so
that's
enough
lower
that
we're
recommending
we
actually
reduce
that
from
50
percent
to
40
percent.
Just
to
reflect
the
fact
it
looks
like
it
is
coming
in
a
little
bit
lower.
I
I
The
other
two
sets
of
assumptions
again
were
similar
one
as
to
what
coverage
category
are
they're
gonna
take
and
our
initial
assumptions,
as
you
can
see
here,
was
you
know:
50
percent
would
be
retiree
only
10
percent
retiree
spouse,
40
percent
retiree
family
for
the
pre
Medicare
and
then
60
40
Medicare
eligible
you
can
see.
Reality
is
a
little
bit
different,
we're
proposing
keeping
the
medicare
one
unchanged,
because
it's
actually
pretty
close
and
making
a
slight
adjustment
to
the
pre
Medicare
cuz.
I
It
looks
like
more
people
are
going
in
little
out
of
the
family
coverages
rather
than
they
are
the
single
coverage.
So
we're
wanting
to
adjust
for
that
and
then
the
last
one,
which
is
we
have
no
data
Andrew
proposing
not
changing
it
at
all,
is
how
long
are
they
gonna
stay
and
LU
before
they
come
back
and
our
initial
assumption
is
just
five
years
to
just
pick,
something
that
seems
reasonable.
We've
got
absolutely
no
data,
I.
Think
three
people
can't
decided
to
come
back
out
of
the
120
or
some
odd
there
and
lose.
I
So
it's
we'll
keep
it
at
five
years
and
just
continue
to
assess
it
and
adjust
it
as
we
need
to
as
time
goes
on.
The
last
thing
is
we're
doing
something
here
similar
to
what
we
did
in
the
pension
plan
is
to
account
for
the
actual
administrative
expenses
on
the
trust.
So
this
is
just
to
administer
the
the
the
asset
allocations
and
investment
on
the
trust,
and
what
we
did
is
we
looked
at
what
the
historic
admin
expenses
were
adjusted.
I
All
the
numbers
you
see
in
the
table
had
been
adjusted
to
2019
using
a
three
and
a
half
percent
wage
inflation
divided
by
the
members
to
get
kind
of
an
average.
You
can
see
it's.
It
varies
everywhere
from
a
low
of
twenty
four
dollars
in
2018
to
a
high
of
52
from
the
2012
it
averages
out
to
42,
then
we
did
another
two
years
worth
of
inflation
to
say
we
would
recommend
just
making
it
45
dollars
for
this
valuation.
So
that's
a
converted
to
a
per
member
basis,
rather
than
it's
just
flat
percentage.
C
I
Because
again,
you
saw
the
Kaiser
plans
are
up
almost
9%.
The
other
plans
have
a
anywhere
from
a
6%
to
as
much
as
a
50%,
depending
on
the
plan.
There's
nobody
in
the
50%
plan,
but
so
it's
kind
of
a
big
variation.
So
that's
kind
of
it
just
falls
right
through
and
again.
This
doesn't
impact
the
explicit
subsidy
valuation
and
all
this
is
just
what
used
to
come
up
with
that
implicit
subsidy
piece
of
it.
C
Health
care
plans
being
thrown
about
that
could
at
first
blush,
have
a
major
impact
on
this.
Have
you
guys
thought
about
if
we
move
more
toward
a
Medicare
for
all,
or
even
if
it's
a
phased
in
I'm,
also
curious
if
the
Obamacare
had
any
influence
on
I?
Don't
because
I
wasn't
on
the
board
when
that
was
enacted,
dr.
I
Bones
I
should
call
the
Affordable
Care
Act.
Sorry
I'll,
take
the
easy
one.
First,
the
Affordable
Care
Act
did
have
some
impact
and
it's
mainly
because
it
mandated
certain
benefit
additions,
who's
like
free
preventive
care,
and
things
like
that.
So
that
actually
is
in
these
costs
so
that
one
could
argue
all
else
being
equal.
Maybe
your
premiums
would
be
a
little
bit
lower
than
they
would
have
been
had
you
not
had
to
do
that
yeah.
The
other
advantage
it
has
had,
though,
was
on
the
counter
basis.
I
Their
increases
have
been
very
moderate
here
after
a
year,
and
it's
mainly
because
they
were
one
of
the
few
states
that
when
this
went
in
and
the
big
comment
was
of
the
president
said:
oh,
you
can
keep
your
health
plan
by
people
or
no
I
can't
and
they
let
people
keep
individual
health
insurance
they
before
California
said
now.
You
want
individual
healthcare.
You've
got
to
participate
in
the
exchange,
so
it
had
a
much
better
risk
pool.
I
But
by
increasing
the
people
that
are
enrolled,
it
reduces
the
bad
debt
in
the
medical
community,
so
it
actually
helped
keep
costs
down.
So
you
know
going
into
the
next
cycle.
Depending
on
what
happens
in
an
election,
it
really
depends
on
what
they
do.
I
suspect,
short
term,
no
matter
what
they
do.
It's
not
gonna
have
a
major
impact
on
employer
based
coverage.
It's
anything
you
do
is
gonna
be
much
longer-term
and
just
this
is
not
Kyra's
opinion,
but
this
is
just
my
personal
opinion.
I
Having
been
this
River
I
don't
see
medicare-for-all
in
the
next
15
years.
Just
just
won
a
political
point
of
view,
because
once
you
start
telling
people
that
they're
gonna
lose
the
good
coverage,
they
have
an
employer-based
system,
because
a
Medicare
system
is
very,
very
different.
It's
a
lot
more
controlled,
there's
a
lot
more
rationing
that
goes
on
because
there
has
to
be
to
keep
the
cost
affordable.
All
of
a
sudden,
the
public
opinion
what
you
actually
see
surveys
when
people
are
explained.
This
is
what
this
really
means.
I
They
don't
like
it
anymore
and
so
I
just
don't
see
it
happening
very
quickly,
so
over
the
short
term
that
much
longer
term.
Arguably
you
could
argue
something
has
to
happen
because
costs
are
getting
more
and
more
unaffordable,
you're
getting
more
particularly
curative
therapies
on
the
marketplace
that
are
costing
and
they
cure
very
rare
diseases,
but
they're
a
million
dollars
they're
two
million
dollars
they
can
bankrupt
plants.
I
A
I
About
yeah
cuz
we've
never
recognized
the
Cadillac
tax
just
because
it's
so
it's
but
you're
right.
Basically,
the
three
things
that
go
away
in
this
budget
bill
is:
there's
a
tax
on
medical
devices.
It's
two
and
a
half
percent
that
has
been
kind
of
going
in
and
out
and
they'll.
Take
that
one
away
immediately.
There
is
the
Cadillac
tax
which
has
never
been
imposed,
and
now
it
will
never
will
be
imposed,
which
I
think
a
lot
of
us
would.
It
was
first
came
out
we're
projecting
it
would
never
be
imposed.
That's
official.
A
I
And
it's
a
it's
it
will.
It
will
be
official
once
the
bill
gets
to
the
President's
desk
and
he
signs
it
as
he
says
he
will,
and
the
other
is
something
is
called
the
health
insurer
tax
which
basically
for
all
fully
insured
plans,
there's
a
tax
that
went
on
top
of
it
to
help
fund
the
Affordable
Care
Act
and
over
the
last
four
or
five
years
it's
been
on.
I
It's
been
an
office
but
on
they
kept
like
putting
it
off
for
euro,
we
got
to
come
back
and
they
finally
just
said
under
this
it's
permanently
gone,
so
it
will
still
be
in
place
for
2020,
because
those
premiums
have
already
been
set
and
are
out
there
in
the
marketplace,
but
starting
in
2021
it'll
go
away
and
that's
not
an
insubstantial
number
for
Kaiser
it's
about
one
percent
of
their
premium
for
non
Kaiser
plans.
It's
about
two
and
a
half
percent
of
premium.
So
it's
a
pretty
hefty
increase
that
will
actually
go
away.
A
H
A
B
So
we're
gonna
kick
off
that
off
in
2020
and
so
I'll
be
working
with
Karen
for
any
suggestions
they
may
have
as
to
what
kind
of
training
we
should
be
providing
and,
as
you
know,
you're
born
next
month
is
going
to
have
a
brand
new
trustees.
So
trusty
Keller
hair
would
no
longer
be
the
most
recent
trustee
joining
the
the
board.
So
thank
you
so
much
yes,.
A
F
I
just
wanted
to
briefly
summarize
the
process
in
your
own
policy
document
and
explain
what's
going
on
today
under
your
policy
normally
today
at
the
December
meeting,
it
would
be
a
nominating
process
and
then
the
actual
election
would
be
on
in
the
January
meeting.
I
want
to
also
just
note
right
now
under
the
policy
trustee
J
is,
is
your
current
chair.
F
If,
if,
however,
only
there's
only
one
nomination
today,
there
would
only
be
one
person
that
could
possibly
be
up
for
election
in
January,
and
that
is
why
you
agenda
item
does
give
you
the
option
to
nominate
and
elect
today.
So
if
there's
only
one
nominee,
it
would
then
be
up
to
the
board
to
decide
whether
it
wanted
to
push
the
election
off
to
January
or
just
to
do
it
today
out
of
recognition
that
there's
nothing
else
that
could
happen
in
January
but
electing
the
one
nominee.
F
So
so
that's
where
we
are.
If
there
are
two,
if
there's
more
than
one
nominee,
then
then
the
expectation
would
be
we
would
push
it
off
to
January
under
the
normal
terms
of
the
policy,
so
that
all
all
trustees
have
the
same
options
that
they
expected
to
have
under
the
policy.
But
that's
where
we
are-
and
at
this
point
it's
really
just
a
question
of
taking
nominations.
I
think
we're
on
the
the
chair
item
right
now.
F
E
F
Hold
an
election
today,
in
which
case
you
need
four
votes
to
elect
a
chair,
or
you
can
defer
it
to
January.
It's
really
it's
up
to
the
board.
The
we
do
have
a
bake,
I
mean
not
a
vacancy.
We
have
a
chair,
but
we
do
have
somewhat
extraordinary
circumstance,
because
the
mat
Loesch
left,
less
or
excuse
me
I
believe
it's.
B
F
C
A
C
C
E
B
A
Well,
thank
you
very
much.
Everyone
I
appreciate
the
confidence
in
that
vote
and
I
know
that
we
also
next.
We
do
have
a
whole
list
of
committees
with
vacancies,
so
I
will
start
reaching
out
to
people
after
this
meeting
so
that
we
can
get
that
taken
care
of
in
the
January
meeting
anything
else
on
five
F,
okay,
item
five
G
discussion
and
action
on
the
nominations
in
election
for
the
position
of
vice
chair
for
calendar
year,
2020.
E
A
E
C
Thank
you
I
appreciate
that
thought.
What
I
think
the
best
I
could
say
at
this
point
is
I'm
at
a
cusp
here,
where
my
partners
are
already
annoyed
with
me
about
the
web.
The
amount
of
time
that
I
spend
on
San,
Jose,
work
and
I
feel,
like
my
best
use,
thus
far,
has
been
on
the
investment
committee.
I
hope
the
feeling
is
mutual
from
the
staff
and
the
CIO
and
there's
a
lot.
We
do
on
a
weekly
basis
behind
the
scenes
that
don't
manifest
in
this
meeting
or
in
the
IC
committee
meeting
and
I.
C
Think
Jay
PC
has
been
one
that
I've
been
well-suited
for,
because
of
my
prior
board
work
I'm
willing
to
consider
this
I
just
don't
know
what
it
entails.
Timewise
and
that's
like
the
critical
factor
right
now
for
me,
is
just
not
taking
anything
else
on
my
plate
that
makes
everything
fall
off.
So
if
there
was
an
opportunity
to
cycle
back
with
you
guys,
just
to
better
understand,
what's
required
outside
of
these
meetings
of
a
vice
chair,
I
can.
C
B
You
know
setting
meeting,
which
is
usually
a
30-minute
call
the
week
before
the
board
meeting
and
and
and
you
wouldn't
be
unthinkable-
that
if
you
actually
make
every
other
agenda
call
that
would
be
fine.
The
key
is
that
we
have
one
of
the
two
of
you
on
the
call
for
the
other
than
that.
Well,
the
other
issue
is
that,
in
a
event
that
the
chair
is
not
available,
you
will
have
to
run
the
meeting,
but
you
do
that
already
in
the
IC,
so
you
have
experience
doing
that.
B
B
B
You
will
have
to
make
that
decision
such
a
trustee
anyway
and
Solana's
J
doesn't
actually
stay
absent
on
a
day
that
we
have
in
hearings
you
as,
if
I
share
what
I
have
to
do
to
worry
about
that
either
that
that
that's
the
one
thing,
but
you
know
quite
honestly,
staff
put
together
a
very
clear
instructions
to
be
follow.
So
if
you
read
the
paperwork,
you
go
to
the
process,
but
I
I
agree
with
you
Matt,
you
know,
but
he
had
10
years.
B
C
B
F
F
C
Well,
I'm
just
curious:
are
you
giving
your
initial
reluctance?
Are
you
quite
certain
that
this
is
something
you
want
to
take
on,
or
should
we
actually
had
no
clue
what
the
extra
time
commitment
was
out,
so
the
meetings
are
fine,
because
that
I've
already
budget
for
that
and
spent
a
lot
of
time.
I
didn't
know
they
always
tell
you
know
in
any
volunteer
organization.
They
always
may
not
seem
like
less
than
it
is
I.
Think,
Roberto
and
I
know
each
other
I
think
he's
shooting
straight
up
on
this.
B
C
A
C
There's
like
working
groups
and
some
other
things
that
attach
to
us
and
I
I'm,
not
on
governance
or
audit,
but
I
know
that
they've
got
other
tangential
or
tertiary
meetings
that
come
with
it.
That
that
was
really
what
I
was
trying
to
better
understand.
But
thank
you
for
giving
me
that
chance
to
think
and
if
Roberto
lied
to
me,
then
it's
gonna
be.
B
H
A
C
J
E
I
A
C
Turned
out
the
agenda
for
the
December
meeting
last
week
was
gonna
be
very
light,
so
we
decided
to
also
the
meeting,
so
we
will
meet
again
on
January
28,
there's
really
not
much
to
report
out
but
coming
out
at
the
January
meeting,
where
we
start
yeah
talking
about
2020
I.
Think
we'll
have
some
updates
for
the
full
board.
Okay,.
B
Speak
to
him,
he
says
chair.
If
you
would
like
me
to
so,
we
do
have
a
meeting
join
the
committee
with
police
and
fire
at
the
last
after
the
last
police,
a
fire
board
meeting.
You
are
correct
that
there
is
no
chair.
That's
what
I'm
happy
to
to
lead
the
discussion
of
these
three
items.
But
again
you
indicated
those
issues
will
be
addressed
at
your
generally
meeting,
selecting
no
only
chairs,
but
also
members
of
the
various
committees
of
your
board
and
so
I'm.
B
Actually,
if
you
allow
me
a
chair,
trustee,
Cassiano
I
would
prefer
to
take
item
B,
C
and
D
together.
That
will
assume,
obviously,
that
you
have
had
a
chance
to
review
each
one
of
these
items
and
so
for
each
one
of
the
end.
There
is
a
cover
memo
that
summarizes
what
the
discussion
at
the
the
Governance
Committee
meeting
was,
and
then
you
have
a
red
line,
version
of
the
of
the
specific
charters
and
a
clean
version
of
it
and
I
just
wanted
to
give
you
some
background.
B
So,
basically
speaking,
the
suggested
changes
that
were
suggested
for
each
one
of
those
three
items
were
mostly
for
two
reasons:
they
were
to
align
the
charters
between
both
boards.
They
were
in
some
instances
some
changes
in
language
or
some
differences
between
one
boy
and
the
next,
and
so
the
suggested
changes
are
number
one
to
align
the
charters
between
the
two
boards
and
then
the
other
changes,
for
example.
B
Regarding
the
any
changes
that
had
impact
by
the
investment
project
that
was
taken
last
year
on
the
governance
standpoint,
it
was
also
to
to
align
or
to
make
changes
in
reference
to
the
changes
to
the
to
the
IPS
because
of
the
investment
project,
so
I'm
happy
to
go
individually.
If
you
ask
me
about
going
by
paragraph
or
page,
if
you
prefer
to
do
that,
I'm
happy
to
make
comments
that
otherwise
and
if
you
have
any
questions,
I'm
happy
to
address
them.
E
Trustee
or
and
I
attended
the
meeting
we
reviewed
all
those
revised
charters.
They
are
consistent
with
the
recent
fireboard
revision
as
well.
So
we
discussed
that
during
the
governance
meeting
there
was.
We
did
not
see
any
problem
with
those
charter
revisions
and
at
the
governance
meeting
at
least
the
Governance
Committee,
with
the
two
people
on
board,
approved
those
changes.
Okay,
thank
you.
Ii,.
H
E
E
A
A
B
A
B
General
yeah
I
do
want
to
say
he
will
include.
The
discussion
will
be
a
little
more
lengthy.
It
will
include
additional
items
besides
the
performance
metrics
and
right
now
we
will
follow
up
with
an
email,
but
right
now
we
are
considering
a
meeting
either
the
week
January
13th
or
the
week
of
January
27th.
We
will
reach
our
once.
We
have
a
more
specific
timeline
for
those
meetings,
but
I
just
wanted
you
to
know
upfront.
Those
are
the
two
weeks
we
are
considering
for
the
next
meeting.
Okay.
A
Thank
you
and
you
follow
up
on
that
anything.
On
else
under
item
six:
okay
item:
seven
education
and
training:
we
have
the
core-tex
report,
any
future
agenda
items
public
retiree
comments
other
than
to
welcome
again
trustee.
Oh
I'm.
Sorry
welcome,
trustee,
Kelleher
and
I
good
morning
good
afternoon
good
afternoon.
Hi.
D
Everyone
Cheryl
Parkman
office
of
employee
relations,
I,
was
asked
by
Roberto
to
come
and
give
an
update
on
the
CalPERS
benefit
that
we
are
working
with
CalPERS
on
to
provide
to
our
investment
services
stuff.
So
for
the
new
members,
you
may
be
aware
that
there
are
certain
members
of
the
investment
staff
that
are
not
in
the
city's
defined
benefit
retirement
plan
pursuant
to
a
city
charter
change
that
said
that
they
would
not
be
able
to
or
be
eligible
for,
our
defined
benefit
pension
system.
D
We
were
asked
by
both
boards
to
try
and
help
provide
them
with
a
CalPERS
defined
benefit
plan,
which
is
of
course
separate
from
our
plans.
The
update
that
I
have
for
you
today
is
that
it
looks
like
the
account
Membership
team
of
CalPERS
has
finalized
their
review
of
that
particular
benefit,
and
they
forwarded
it
to
their
contract
services
for
for
an
amendment
to
our
current
contract
with
CalPERS
for
our
council
members,
so
we're
moving
forward
for
those
of
you
that
know
about
this.
D
B
Well,
first
of
all,
thank
you
Cheryl
for
the
update
and
thank
you
for
working
diligently
on
this
issue.
I
know
it
hasn't
been
easy
just
that
we
have
a
very
understanding,
assuming
that
this
goes
true
to
the
CalPERS
I'm,
assuming
that
you
will
have
to
bring
that
idea
to
the
City
Council
for
approval.
That's.
D
Correct
the
City
Council
needs
to
amend
our
Municipal
Code
to
allow
for
our
our
employees
to
be
removed
from
our
tier
3
defined
contribution
plan
into
the
CalPERS
defined
benefit
plan.
It's
a
it's
a
contract
amendment
that
we've
actually
already
brought
forward
to
the
boards
and
they've
approved
without
comment.
So
then
it's
just
taking
that
to
to
Council
for
for
consideration.
Thank.
A
D
Yes,
so
the
council
so
well,
it
actually
would
be
a
little
bit
different
for
some
of
them
just
because
pepra
is
essentially
the
CalPERS
tier
to
all
of
the
employees
that
are
currently
incumbents
in
these
positions
were
hired
after
January
1st
2013.
So
then
they
would
go
into
the
pepra
plan
for
CalPERS.
Ok,.