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Special General Membership Meeting with SDCERA Leadership

Attention RESDC Members – You’re Invited!

We’re pleased to announce a special RESDC General Meeting on January 28th with SDCERA’s Chief Executive Officer David Wescoe and Chief Investment Officer (CIO) Steve Sexauer. This is your opportunity to hear directly from and interact with SDCERA’s new leadership.

David and Steve will be discussing SDCERA’s transition to an in-house CIO model, recently adopted Investment Policy Statement and Asset Allocation, and a general “What’s happening at SDCERA.” David and Steve will also be fielding your questions. We hope to see you there!

Date: Thursday, January 28, 2016
Time: 10:00 a.m. – 11:30 a.m.
Location: SDCERA Board Room, 2275 Rio Bonito Way, #200, San Diego, 92108

Planning on attending? Visit www.resdc.net/resdc-events or call (619) 688-9229 to RSVP.

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President’s Message

By John J. McTighe

Greetings! It is my privilege and honor to serve as your new President. I have some big shoes to fill after Susan Mallett’s outstanding service as your President over the past five years. I’ve always looked upon RESDC as a vital organization advocating for the rights & benefits of County retirees, and offering added benefits that a large organization is able to provide to its members. As your President, you have my pledge that I will do all within my power to sustain and grow the value of RESDC to its members. To that end, with the support of our very active Board of Directors, we will find ways in which RESDC will add even more value to your membership.

Every year, RESDC surveys a sample of our members to determine their level of satisfaction with our services and to solicit suggestions for other activities and benefits our members would like to see offered. Satisfaction levels have consistently been high and we’ve received some good suggestions over the past few years, some of which have already been implemented. However, those surveys reach out to only a small, though representative, sample of our members. I want to give the opportunity to everyone to offer suggestions for benefits and activities for our members. Please send me an email with your suggestions (no matter how off the wall they might be) for how we can add value to your membership. To twist a saying, “the only bad suggestion is the one that doesn’t get made.” Please send me an e-mail with your suggestions to jmctighe@RESDC.net. If you don’t have email, just drop me a note to the RESDC office address: 8825 Aero Dr., Suite 205, San Diego, CA 92123.

Along with offering more benefits and activities, I am passionate about growing the membership of RESDC. RESDC represents the interests of all retired County employees and is the only recognized organization of retired County employees that advocates before the San Diego County Employees Retirement Association (SDCERA) which administers retired County employee benefits. Unfortunately, we have seen a slow decline in membership over the past few years. Our current membership is approximately 6,500. While this is a substantial number of people, as of the end of November, there were a total of 17,318 living retired County employees. That means that only a little over one in three retired employees is a dues-paying member of RESDC. I’m asking you to help me turn this around.

With this article, I’m launching my personal campaign of “Each One, Reach One.” I’m asking every member of RESDC to reach out to just one fellow retiree to get them to join RESDC (more than one is okay, too). Remember, you are an ambassador of RESDC. Our staff is standing by to help you in this effort any way they can. If you identify a friend or former coworker you have talked to about joining RESDC, our staff will do the rest. Simply, call the office at (619) 688-9229 or (888) 688-9229, and let them know the name and mailing address of the person you’ve talked to about joining, and the staff will send them information including a membership application.

“Why should I do this?” you ask. By increasing our membership, we will be able to have a stronger advocacy voice against those who are trying to eliminate defined benefit retirement plans. We will be able to offer more and better benefits to you and other retirees. We will be able to have more social opportunities where you will get a chance to reacquaint with long lost coworkers. We will have more and deeper group discounts. But, all that won’t be possible unless we grow our membership. I’m excited that SDCERA has been working with RESDC recently on ways that we can collaborate in reaching out to retiring County employees so that they will join as soon as they retire. That will definitely help in the future recruitment of new members, but we need your help to reach out to all of those who have fallen through the cracks of time and didn’t join earlier. Will you join with me in the effort?

Each One, Reach One.

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Update: San Diego County Retirement Financials

By Stan Coombs

With the incessant clamor about public retirement systems reported to be in financial trouble, and major recent changes in the San Diego County system that arose from controversy over investment strategies, maybe we should reexamine our own financial situation. Conveniently, the San Diego County Board of Retirement approved their annual “June 30, 2015 Actuarial Valuation and Review” at the December 3rd Board meeting.

Just the sort of reliable information we need. The Valuation is provided to the Board by their system Actuary, Segal Consulting, and there’s lots within its pages that members will find interesting.

First, the easy stuff. The Valuation tells us that, as of June 30, 2015, there were 40,116 members in the system, including 17,186 retirees and beneficiaries. Average age of active employees was 44.7 years and their average compensation was $65,891. Average age of retirees was 69.1 years, and the average pension was $34,860, or about $2,905 a month.

The retirement fund started the fiscal-year, in July 2014, with a market value of $10,185,438,000, the Valuation says, and ended with $10,336,900,000 last June, reflecting disappointing growth of about 1.5% overall.

But, we’re actually a little better off than that. The picture gets more complicated. Changes in total net assets over succeeding years are affected by more than earnings, and those complexities also affected that growth. Pension payouts and other expenses reduced the fund and revenues. Active employee contributions, County normal contributions, County payments against the amortized unfunded liability and fund earnings were all added in. There is also a smoothing mechanism in place that deliberately delays the affect of each year’s gains or losses, in order to minimize annual funding changes.

Nevertheless, 2014-15 investment earnings are specifically reported to be only 2.25% against an assumed, long-term annual earnings goal, or assumption rate, of 7.5%. And, while that’s only one year of a very long-term system, it still means that the expected earnings that didn’t materialize must be added to the unfunded liability, increasing argumentative ammunition available to critics of public retirement systems.

As a result of this less-than-stellar 2014-15 performance, the funded level of the system decreased, from 83.3% to 78.65% on a market value basis, and the unfunded liability increased from $2.32 billion to $2.54 billion. Not disastrous in the overall scope of things, but certainly short movement in the wrong direction.

To put these events further into perspective, bull and bear market cycles occur despite best efforts to the contrary, bringing high and low earnings cycles. But, since the 2009 crash, County retirement fund earnings have been: 13.39% in 2010; 20.91% in 2011; 5.46% in 2012; 7.78% in 2013; 13.39% in 2014; and, 2.25% in 2015. That averages about 10.5%, by my simple math, and well over the 7.5% long-term assumption rate. SDCERA also reports a healthy twenty-five year net return of 8.43%.

And, as we’ve noted before, the unfunded liability resulting from low-earning years isn’t ignored. Each such deficit is amortized and paid off over 20 years. According to the new, 2015 Valuation, six deficit years since 2005 are in various stages of amortization, ranging from one having ten years of payments remaining, to this 2015 deficit, which will run the full twenty-year amortization period.

There are other factors in the mix. This assumption rate is revisited by the Board every three years, and adjusted if deemed necessary. The intent is to settle on a fact-based estimate of average future fund earnings, reliable enough to project additional funding required from County and employees’ contributions, knowing that changes in the assumption rate will affect County and active employee contribution levels.

As confidence in market performance has wavered in recent years, there’s been a general downward trend in public retirement system assumption rates. Our Actuary, Segal’s Paul Angelo, advises that public retirement system assumption rates now range between 7.25% and 7.75%. We currently stand dead center.

The County assumption rate stood at 8.25% for years until the Board of Retirement reduced it to 8% in 2010, 7.75% in 2013 and 7.5% this year. The Board could further reduce the rate when they undertake the regular three-year review next spring.

A stress-factor is that any reduction in the assumption rate means an increase in annual County and employee contributions, to compensate for the expected lower earnings, which, of course, means higher expenditures for the County and larger payroll deductions for active employees.

Each .25% reduction in the assumption rate raises annual County costs about $27 million, we are told, and an increase in the average employee payroll deduction rate of .42% according to the Valuation.

San Diego County employee payroll deduction rates range widely, from a low of 3.68% to a high of 19.08%, depending on age at hiring, Tier, and General/Safety member designations.

San Diego County Employee Retirement net assets decreased $281.9 million during August, the last month for which a financial report is available, decreasing fiscal-year-to-date gains to a loss of $207.5 million, and total net assets to $10.1 billion.

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Board Member Profile

Stan Coombs — A member of the RESDC Board of Directors for 10 years, Stan retired from the County Housing and Community Development Department in 1998 with 25 years of County service. He also worked on the staff of a County Supervisor and spent time in the Office of Management and Budget. Prior to joining the County, Stan worked at the City of San Diego and in non-profit management.

Stan has Bachelors and Masters Degrees from San Diego State University. In addition to volunteering with RESDC and serving currently as First Vice President, his enjoyable retiree activities include cycling, travel, reading, home improvement, and grandchildren.

He has been married 29 years, has five children and eight grandchildren. Stan’s favorite travel experience was a Mediterranean and Baltic tour.

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Pension Facts

U-T Columnist Sees Conspiracy in State Savings Plan for Workers

By Chris Heiserman, Director

Union-Tribune reporter Steven Greenhut regularly berates state and local pensions for public sector employees. In a December 6, 2015 column he broadens his assault, taking aim at California’s Secure Choice Retirement Savings program, a voluntary, portable savings plan designed to promote savings for the state’s estimated 6.3 million private sector workers with no access to employer-sponsored retirement plans.

Greenhut acknowledges there is a national savings crisis. He agrees the problem is serious and cites statistics from California Treasurer John Chiang indicating that 45 percent of private sector workers age 25-64 have no work place retirement plan. However, he feels this new saving opportunity for employees in small businesses was contrived by public sector labor unions as a way of enlisting non-government workers in the battle against pension reforms.

According to Greenhut, once this program is created it is likely to “morph into something more far-reaching.” He worries along with the Wall Street Journal that a state-managed pension program will “drive financial institutions out of the retirement marketplace…”

Before we get too far down this ominous-sounding road, let’s step back and take a look at the facts. First of all, Secure Choice is a “savings” program to help workers put away money for retirement. It is not a pension. In the August, 2015 NETWORK, RESDC Director Stan Coombs outlined the California program in his column, “Secure Choice is Going National.” He explained that several states are considering similar plans, some using California’s as a model. The California Secure Choice Retirement Savings Trust Act was enacted as Senate Bill 1234 in 2012. Administrative groundwork has been laid and the program may soon be operational under the auspices of the State Treasurer’s Office. (You can read Stan’s entire column by going to the RESDC website – www.resdc.net/newsletters – and finding the August NETWORK under Newsletters)

The legislation requires businesses with five or more workers and no retirement plan to enroll them in a 401(k)-style program with payroll deductions of about 3% of salary. Employees will be automatically placed in the plan but they can opt out. Workers also have the ability to increase their contribution level.

Let’s be clear. Allowing private sector workers with no pension plan to sock away 3% of salary in a deferred compensation account will not provide anything close to a comfortable nest egg in retirement. A Federal Reserve Board survey reported that the median balance in a 401(k)-type account for workers between 55 and 64 years of age is $60,000, which would provide an income stream of less than $400 monthly. Compare that to the average benefit we’ve reported before for San Diego County retirees: $2,905 per month, or $34,860 annually.

Initially conceived in the 1980s as a supplemental savings program to augment pensions, 401(k)-style plans have become the primary retirement model in the private sector because workers assume all the investment risk and the business bottom line is maximized. However, going it alone in saving for retirement hasn’t worked out so well historically for most private sector workers. A report by a Washington, D.C.-based research organization (the National Institute on Retirement Security), said that four out of five working families have retirement savings of less than one year’s annual income. Numerous other sources, including the Wall Street Journal, have reported in recent years that 401(k) plans are coming up woefully short for American families.

Nevertheless, after Stan explains in his August column that the Secure Choice program simply increases emphasis on 401(k) plans and will add many more workers to the ranks of retirees with inadequate savings, he succinctly states the obvious: “Any saving is better than not saving.”

Now to return to our intrepid U-T reporter and his conspiracy theory. Columnist Greenhut says Secure Choice “essentially creates a state-based mini-Social Security system.” Then he adds in parentheses: “(That system faces trillions of dollars in future liabilities, a big mess even by federal government standards).”

So in his view, the state should not try to help private sector workers save for retirement because government will always mismanage the program, it will compete with private financial institutions (aka, Wall Street) that have done little to address this aspect of America’s savings crisis, and politically powerful labor unions will try to somehow expand the plan even though the Secure Choice legislation says the employers of these workers and the State of California have no liability for payment of benefits.

I’m reminded of the Wendy’s television ad campaign from the 1980s which popularized the catch phrase “Where’s the beef?” Or in this instance, “Where’s the story?”

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2016 Scholarships

By Carlos Gonzalez, Scholarship Committee Chair

RESDC will again offer five $2,000 scholarships to graduating high school seniors who are immediate family members of a RESDC member. An immediate family member is defined as a child, grandchild, step child, or step grandchild.

Applications are available at our office at 8825 Aero Dr., Suite 205, San Diego, CA 92123 or by calling the office toll free (866) 688-9229. You may use the RESDC e-mail address to request an application: resdc@resdc.net. You can also download the application off the RESDC web-site at www.resdc.net/scholarship-program.

The deadline this year is Friday, March 4, 2016. We are unable to accept applications postmarked after that date.

We suggest you start this process early and coordinate your references. In the past, we have had to disqualify applications for lack of references.

We strongly urge all students applying for the RESDC Scholarships to also apply for the Yakel Scholarships, which are available through the San Diego Foundation. Applications are available at www.sdfoundation.org. A document verifying that the sponsor is a RESDC member must be attached to the Yakel Scholarship application. Please call the RESDC office to obtain this signed document. The foundation will not accept an application without this signed document. The filing period for the Yakel Scholarship closes on February 3, 2016 at 2:00 p.m.

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County Investment Club Looking for You

The County Investment Club is recruiting new members. Applicants may be active or retired county employees and their spouses or others as invited by club members. The club has been around since 1965 and exists for the purpose of providing good principles for investing and to help members begin investing and better manage their investments. The Club meets monthly on the third Wednesday, 6:00 PM in the San Diego Room at the County Health Services Complex, 3851 Rosecrans Street. Interested persons are encouraged to attend two or more meetings prior to applying for membership. Further information is available by contacting Michelle Braatz at 858-748-9419 or John Melbourne (858-279-4368).

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San Diego County Credit Union

Protect your valuables and keep them safe. Important papers, such as birth certificates, insurance papers and loan documents, as well as special family heirlooms, can be hard to replace, or even irreplaceable.

To have peace of mind, keep them secure in a Safe Deposit Box at San Diego County Credit Union. Safe Deposit Boxes are available to rent at most SDCCU® branch locations and are offered in a variety of sizes to fit your needs.

Ask for details at your local branch or call SDCCU at (877) 732-2848.

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Best Bargain Ever

Lifetime Senior Pass to National Parks

One of the best senior travel bargains anywhere is the $10 lifetime National Park Pass that admits seniors (62+) to most U.S. national parks, forests, refuges, monuments and recreational areas. In parks that charge an entrance fee, the Senior Pass admits you and the passengers in your vehicle. It can be purchased at a federal area where entrance fees are charged, or at regional offices of the National Park Service, the U.S. Forest Service or the U.S. Fish and Wildlife Service. For more information about National Parks visit http://www.nps.gov/. The cost of obtaining a Senior Pass through the mail is $20. Ten ($10) for the Senior Pass and ten ($10) for processing the application. Applicants must provide documentation of age and residency or citizenship.

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Meet RESDC’s Newest Staff Member Liz Silverman

Hello, I’m Liz Silverman, the new Webmaster and Administrative Support at RESDC. I am very excited to join the team and look forward to helping serve our members! I have had the pleasure of meeting many of you already at both the Health Fair Picnic and the Holiday Luncheon, and I look forward to meeting more folks at future RESDC events.

I can tell that RESDC has a very engaged community of members. I will work diligently to bring that strong sense of community to our online presence, and to maintain the current level of excellence that you are accustomed to with RESDC. And I will collaborate with our board to explore ways to improve the relevancy and usefulness of our website and social media channels.

For those of you who are disinclined to use the internet, or fear the unknowns of social media, I hope I can help you tackle some of those worries and give you positive reasons to visit us online. And for those who are internet savvy, I’ll work to improve the ways you can connect with RESDC online. Whether it’s being in the loop about fun events, keeping up to date on current retiree issues, or simply the peace of mind in being able to connect with the wisdom of fellow county retirees, social media at its core is just as the name implies – a social network. And the greater presence RESDC has, both on and off the web, the more weight we hold when we advocate for county retirees.

But there’s only so much I can do on my own. We need your help to make a vibrant online community for RESDC! If you’re on Facebook, please like our page at www.facebook.com/RetiredEmployeesofSanDiegoCounty. If you’re on Twitter, follow us at www.twitter.com/RESDC. And I invite you to visit www.resdc.net for information about our events, details about the benefits we offer, current and past issues of the NETWORK, and more.

Plans are also underway to update our database system, which may sound rather dull but will provide some very exciting features. One major improvement will be the ability to RSVP and pay for our events online, or to call and pay by credit card. Additionally, by streamlining our processes in the office we will be able to spend more time on our main mission: advocacy and representation. We will keep you posted on this update and related improvements in future newsletters.

I want to make RESDC’s online presence the best it can be for you and all of our members, so if you have any questions or input about our website or social media, I invite you to contact me at lsilverman@resdc.net.

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Mailing Dates for 2016 Warrants

Electronic Deposit Date

• January 29
• February 29
• March 31
• April 29
• May 31
• June 30
• July 29
• August 31
• September 30
• October 31
• November 30
• December 30

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Sponsors of the 2015 RESDC Holiday Luncheon

A big thank you to the people and businesses who donated door prizes to RESDC for our Holiday Luncheon. This year we were fortunate to receive about 120 door prizes for 325 attendees.

• Ameritas
• Anne Schwartz
• Casino Pauma
• Chick-fil-A Sports Arena
• Cigna Dental
• Event Outfitters
• Filippi’s Pizza Grotto Santee
• Health Net California
• Kaiser Permanente
• My Senior Health Plan.com
• Pacific Group Agencies, (Steve Pettee, Agent, our supplemental benefit plans administrator)
• San Diego County Credit Union
• San Diego Padres
• Superior Direct, Kim Ehler (our printing service)
• Sycuan Casino
• United Health Care
• Western Group Agencies

To each and every one of these donors, we extend our heart-felt thanks and gratitude.

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Welcome New Members

Ronald Babcock – Parks & Recreation
Donald H. Blevins – Probation
Jane Duvall – District Attorney
Kevin D. Eccles – Probation
Milagros R. Fabon – Sheriff
Paul R. Greenwood* – District Attorney
Roberta Henderson – Superior Court
Evelyn Reyes Hodge – Assessor
Jillian Bonnie Howard-Regan – District Attorney
Stephen Jacobson – District Attorney
Patricia A. Jensen
Margaret M. Keen
Lucille Lefear – Information Technology
Juan Martinez
Oscar O Martinez – Health & Human Services
Don Maurizio – Superior Court
Rosa A. Michel-Alvarado – Health & Human Services
Don Morton – District Attorney
Kathryn Motto
Karen Ochoa – Assessor/Recorder
Hilda F. Perez – Social Services
Linda S. Peterson – Assessor
Enriqueta R. Quentin – Health & Human Services
John C. Seiferth – Sheriff
Susan I. Van Horn

*Associate Member

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In Memoriam

We were saddened to learn that two former RESDC Board members passed away recently. Kathryn (Kitty) Nelson passed away in November. Kitty served the county for over 27 years, retiring in 1991 as the Clerk of the Board of Supervisors. January 7, 2013 was proclaimed as Kathryn “Kitty” A. Nelson Week in San Diego County. She served on the RESDC Board from 2004 though 2006.

Oliver Cromwell retired from the Probation department in 1991. Oliver served on the RESDC Board in 2010 and 2011.

Another retiree with connections to RESDC also died this past fall. William T. Peck retired from Superior Court in 1997 and spent many years speaking about and teaching others about Abraham Lincoln. His likeness to Abe was remarkable and he was a very compelling speaker. RESDC was fortunate to have William speak at our 2012 Flag Day Lunch and at our February 2013 General Membership Meeting.

All three RESDC members will be greatly missed.

In Memoriam

Earl Anderson – Agriculture, Weights, & Measures
Edward Anthony – Surviving Spouse
Debra Blakeney – Municipal Court
Agnes Brown – Marshal
John W. Cothron – Parks & Recreation
Oliver Cromwell – Probation
William Duke – Public Works
Mary C. Garrett – Education
Dolores Haupt – Superior Court
Sylvia E. Jones – Superior Court
Dennis Manyak – Media/Public Relations
Kathryn “Kitty” Nelson – Clerk of the Board of Supervisors
Helen Newell – Welfare
William T. Peck – Superior Court
Claude Powers – District Attorney
Eunice Jo Redland – Welfare
Mary Lou Severe – EDP Services
Richard Stok – Sheriff
John Sutter – Surviving Spouse
Kathleen Terry – Revenue & Recovery
Doris Ward – Surviving Spouse
Tressie Watkins – Informational Services

*Active

Gone from our sight, but never our memories.
Gone from our touch, but never our hearts.

The surviving spouse of a member is eligible for RESDC membership. For enrollment assistance, call (619) 688-9229.

Member Privacy
Any retiree or surviving spouse who does not want his/her death notice published in the “In Memoriam” section of this newsletter may notify the RESDC office and your privacy will be maintained.

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