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Quote of the Month
“Try to be a rainbow in someone’s cloud.”
▪ Maya Angelou

Upcoming RESDC Events

• April 10: RESDC Roundup Social Mixer at Black Angus in Mission Valley. More info →
• April 24: April General Membership Meeting at the COC – Meet SDCERA Leadership! More info & RSVP →
• June 14: Flag Day Luncheon, back at the Ronald Reagan Community Center in El Cajon! More info & register →
• July 31: Day at the Padres, Padres vs San Francisco Giants at Petco Park. More info & tickets →

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General Membership Meeting
Meet SDCERA Leadership
Tuesday, April 24

WHEN: Tuesday, April 24, 2018

TIME: Beverages and light refreshments will be available at 12:30 p.m.
Program from 1:00 p.m. — 2:00 p.m.

PLACE: County Operations Center
Chambers Meeting Room
5520 Overland Ave, San Diego, CA 92123

RESDC members and any other interested parties are cordially invited to join RESDC as they proudly welcome the leadership of San Diego County Employees Retirement Association (SDCERA).

Our guests will include:

• David Wescoe, Chief Executive Officer
• Steve Sexauer, Chief Investment Officer
• Greg Bych, Chief Financial Officer
• Jim Lery, Chief Benefits Officer
• Mary Montgomery, Public Communications Manager
• Jerry Fafaul, Communications Manager

This casual meet and greet is your opportunity to hear directly from and interact with SDCERA’s leadership. You will learn more about current activities and future priorities of the organization and the Board of Retirement. We hope you join us for this interactive and information session!

Directions to the County Operations Center:

From the North or South:
From 163, exit onto Clairemont Mesa Blvd. Eastbound, turn Left (North) onto Overland Ave.
From I-15, exit onto Clairemont Mesa Blvd. Westbound, Turn Right (North) onto Overland Ave.

To access parking structure from Overland, turn right onto Farnham St. Parking structure is on the left.

From the East or West
From 52, exit onto Ruffin Rd. Southbound. Turn right (North) onto Hazard Way, turn left into parking structure.
Or
Turn Right (West) onto Farnham St. Turn Right into parking structure.

This is a free event. Click here to RSVP online or call 619-688-9229. ◾

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Long-Term Care Insurance,
It Sounded So Good

By Stan Coombs

Some of us, those prone to worrying about such things early on, took warnings seriously in the 1970s, about whether we should buy long-term care insurance to cover our declining years.

We were told that 53% of U.S. adults were expected to need nursing home or other care services, and about half that number for as long as five years, with costs ranging to $250,000.

We were told that Medicare didn’t provide long-term care, and Medicaid would ante-up only after hapless recipients impoverished themselves by spending their life savings. The long-term care insurance premiums seemed doable, about $1,677 annually in 2000, and we knew they’d become more costly as we aged. Once bought, premiums were supposed to rise only minimally. Some insurers promised no rate increases, and inflation protection.

Insurance benefits would begin when the policyholder couldn’t perform two of six basic activities – eating, dressing, walking, bathing, continence, using the toilet or transferring to a wheelchair, or had severe cognitive impairment. Caregivers watching while we bathe, dress and relieve ourselves might be unappealing, but many folks bought coverage anyway just in case they were part of the 53% (!)

For a while the long-term care insurance market was hot, but inconclusive. The National Association of Insurance Commissioners reported there were 7.2 million policies in force in 2014, covering 20% of the over-65 set, with nearly 255,000 claimants receiving benefits. That’s far from the 15 million Americans Morningstar says will have high long-term health needs by 2050.

Today about 9% of long-term care spending is by private insurers, according to reports, 43% is by Medicaid, 19% by Medicare and 13% are out-of-pocket patient expenditures. Sixteen percent is reported to be by “Other.”

The question remained, however, whether insurance actuaries had figured costs, revenues, and market characteristics well enough to meet company obligations. And, there was a substantial glitch lying in plain sight.

The insured are vulnerable. If actuaries err, leaving insufficient funds to cover claims, and premiums increased, the insured remains obligated to keep paying premiums, increased or not, until they file a claim. And, if policyholders can’t handle the increased premiums, they have to stop paying and allow their policies to “lapse,” losing coverage and all the funds they’ve previously paid, or try to renegotiate for lesser benefits they can afford.

And, it turns out that many insurance actuaries were wrong!

About 2012, reports of large premium increases surfaced; the story was recently outlined in a long, January 18th Wall Street Journal article. CNA Financial Corp was said to increase one couple’s insurance bill by 90%, to $4,831. Even fourfold premium increases were reported. Genworth, a top seller, apparently lost $2 billion and sold itself to a Chinese conglomerate. Credit Suisse reported 4,500 insurer rate increase requests nationwide, between 2009 and 2017.

The most notable story may be that of long-term care policies promoted by CalPERS, the huge, 1.9 million member California Public Employee Retirement System. The Sacramento Bee indicates that between 1995 and 2004, 150,000 state and local government employees bought CalPERS’s long-term convalescent care, assisted living and similar services, with promises of guaranteed, lifetime, inflation-proof coverage, and premiums rates that wouldn’t increase.

About 2012, policyholders were advised that coverage would be much more expensive. In July 2015, some $597 monthly premiums increased to $813, and on to $1,220 in 2016, according to reports, a 104% increase. Alternatively, fixed benefit policies were available for $237 a month. CalPERS has been sued for alleged mismanagement.

What happened? The insurance companies weren’t familiar with long-term care coverage, erred with their business model and experienced bad breaks, we’re told.

Many insurers seriously underestimated how long policyholders would live and keep their policies and draw benefits, rather than let them lapse, says the Wall Street Journal. And, insurers didn’t anticipate the popularity of attractive, new assisted living facilities, expecting families to avoid placing their elderly in nursing homes. Finally, extremely low interest rates denied insurers investment earnings they’d expected.

As shoppers learned about the premium increases, they turned from stand-alone long-term care coverage toward hybrid life insurance/long-term care arrangements, which allow benefits to be used for care, and to annuities that provide sizable payouts. Those alternatives led to an imbalance between people paying-in stand-alone premiums, and people utilizing benefits, further stressing industry finances.

Stand-alone sales fell from 372,000 in 2004 to 91,000 in 2016, according to the Life Insurance and Market Research Association, and new premiums, from their $1.5 million peak in 2003 to about $400,000 in 2013. New hybrid premiums rose from about $300,000 to $2.7 million. Only a dozen or so companies still sell stand-alone policies, according to the Wall Street Journal, down from more than a hundred.

Is long-term care insurance still viable? Alternatives can be considered. Hybrid life/long-term care policies are a possibility, and annuities another. Early shoppers might consider increasing investments, instead of insurance coverage, in hopes of generating enough to meet long-term care costs. And, for others, higher premiums for stand-alone, long-term care insurance may be acceptable. It seems a “Buyer Beware” situation at this point. ◾

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Pension Facts
Cities’ Advocacy Group Analyzes Rising Pension Costs

By Chris Heiserman, Director

California cities are sounding budgetary alarms over the rising cost of public pensions. However, unlike the strident pension critics who aim to erase traditional defined benefit retirements, cities are looking for ways to deal with the challenge of substantial unfunded future pension obligations without seriously eroding local services.

A report released recently by the League of California Cities said the projected pension tab for municipalities will rise quickly as a percentage of their General Fund budgets over the next seven years. A key finding derived from the study was that “For many cities, pension costs will dramatically increase to unsustainable levels…”

The study was conducted by Bartel Associates LLC, a California actuarial firm serving only public-sector clients. The analysis was based upon actuarial valuation data from the League’s member cities and a 2017 City Survey which generated responses from more than 200 cities.

The League’s analysis predicted the annual pension cost for the average California city will nearly double as a percentage of General Fund budget from FY 2006-07 to FY 2024-25. In 2006-07 the average city spent 8.3% of its operating budget on pensions; that increased to 11.2% currently in 2017-18 and is anticipated to rise to 15.8% by 2024-25.

The study pointed out that under current law cities have two basic choices to cover expenses that exceed normal budget dollars – increase revenue or reduce services. Of course, an obvious alternative option would be to utilize labor negotiations to get workers to increase their share of benefit costs, or to accept reduced benefits. As anyone who follows local and state government activities knows, lowering public employee benefits, particularly for retirement, is an issue of great controversy and concern. It has generated a continuing stream of media articles, Op-Ed pieces and editorial board positions in California and across the nation questioning the fiscal viability of public retirement systems.

The League report is intended as a clarion call and red flag warning that basic public services are in jeopardy if escalating pension costs consume greater shares of available resources. Specific steps offered up to make ends meet included raising taxes, creating special funds to pay down pension liabilities ahead of schedule, cutting current service levels or bargaining with labor to obtain changes in pay or benefits.

Modifying public retirement benefits is a matter currently front and center in California. Court rulings challenging a long-standing tradition of contractual rights for retiring public workers to pension calculations in place when they were hired are headed to the state Supreme Court. The Supreme Court could weaken the “California Rule” and open the door to substantial pension modifications for current employees, or it could rule narrowly and minimize the impact on workers’ vested rights.

The bottom line for the League report is it provides data and analysis to serve as background for discussions with labor organizations and citizens about the impact of pension costs on future city budgets. Their goal is to find solutions allowing city leaders to both meet retirement promises made to employees and continue to provide quality services for their residents. The League’s stance on pension reform is decidedly skewed toward fiscal management and enabling modification of employee benefits; however, the organization deserves credit for assembling detailed information and teeing up important issues for public debate.

The complete February 1 report can be found here: https://www.cacities.org/Resources-Documents/Policy-Advocacy-Section/Hot-Issues/Retirement-System-Sustainability/League-Pension-Survey-(web)-FINAL.aspx. ◾

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Join the RESDC Roundup Social Mixer!

In response to member suggestions for more social activities, we are launching The RESDC Roundup! Mark your calendars for our first outing – Tuesday, April 10 from 3:30 pm to 5:00 pm.

We’d like you to join us in the bar at the Black Angus Steakhouse, 10370 Friars Rd., San Diego, 92120 (Mission Valley). No reservations required (no host bar) for you to meet with old friends and make some new ones.

Future events are planned for July and September, and we’ll locate them in various parts of the county. If you have a favorite happy hour place, let us know – It could be the location of a RESDC Roundup! ◾

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Recent Events

• Center for Retirement Research at Boston College releases new Issue in Brief: “How Medicaid Helps Older Americans.” The brief’s key findings include:
  • Medicaid provides low-income retirees with critical health benefits by offering insurance directly, covering Medicare costs, or paying for long-term care;
  • Recently, the Medicaid expansion has also helped reduce the uninsured rate among workers nearing retirement;
  • But older Americans are only a small part of Medicaid, so their future depends on the outcome of the broader debate over the program’s size and scope.

  This Brief is available at: http://crr.bc.edu/.

• California’s 2018 State Budget Overview: On January 10, Governor Jerry Brown submitted his proposed 2018–19 budget to the legislature. Areas of focus include:
  • K–12 schools and community colleges receive significant funding increases;
  • Health and human services remain high priorities;
  • The proposal includes substantial new spending for road repairs and carbon reduction;
  • Bond funding would support natural resources, housing, and educational facilities.

  For further details, visit: www.lao.ca.gov/Budget. ◾

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Joe McGuire Resigns from RESDC Board of Directors

Joe McGuire has recently resigned from the RESDC Board of Directors. He has been a dedicated member of the RESDC Board since January 2000 and he will be missed.

Joe retired from the Department of Public Works in 1999 after 38 years of County service. He also worked for the Planning Department in Building Inspection.

Joe was an elected member of the San Diego County Employees Retirement Association (SDCERA) Board for seven years, ending in 1999.

Everyone here at RESDC thanks Joe for his long tenure and dedication to the members of The Retired Employees of San Diego County. We wish him well in his future activities. ◾

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RESDC Day at the Padres
Tuesday, July 31, 2018, 1:10 pm
Tickets Now Available!
San Diego Padres vs. San Francisco Giants

By Mark Nanzer, Executive Director

Greetings RESDC Members!

The month of April puts me in a good mood. Why, you may ask? Well, it’s the start of baseball season of course! As a lifelong baseball fan, I have 162 reasons (number of games in a season!) why I love this game. Here are but a few:

• The smells: Hot dogs, warm summer air, freshly cut grass, kettle corn, the grill, etc.
• Fans making amazing catches
• The first pitch
• The fan cam
• Keeping score (yes, I still do that!)
• Home Runs

And one of my favorites…
Hanging with RESDC members at the Day at the Padres event! I’m excited to announce that tickets are now available for purchase for this year’s outing. Petco Park is one of the greatest ballparks in the league. From the Tony Gwynn statue, to the Park at the Park, to watching batting practice from left field, this gem is a San Diego landmark.

We will be back in the scenic Skyline Patio, which features box-style ballpark seats, a semi-private group area overlooking third base, and gorgeous views of downtown San Diego.

Tickets include a pre-game buffet with standard ballpark fare, served one hour before first pitch until one hour after first pitch, and soft drinks served from one hour before first pitch through the seventh inning.

Ticket price is $48.00 per person. Petco Park is located at 100 Park Blvd., San Diego, 92101.

Registration: Registration forms and payment must be received in the RESDC office by Thursday, July 26. Tickets will be mailed closer to the event date.

Register by Mail: Print and fill out the registration form, make a check payable to RESDC for $48 per person, and mail both to RESDC, 8825 Aero Dr., Suite 205, San Diego, CA 92123.

Register Online: Click here to register online. You will need to use the email associated with your member account. Click “Add guest” to add additional registrants for $48 each. To pay for yourself and guests, click “Pay Online” and pay with credit card.

Register by Phone: Call the RESDC Office at (619) 688-9229 during our hours of 9 am – 2 pm Mon-Fri.

For questions or assistance registering, contact us at (619) 688-9229 or resdc@resdc.net. ◾

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San Diego County Credit Union

In a big bank trap? Eligible SDCCU® cardholders can transfer their high-rate credit cards to a low-rate SDCCU Visa®! Transferring is easier than ever with the new SDCCU Easy Balance Transfer mobile app. Simply take a picture of the credit card payment stub you want to transfer and the app will collect the required information. It’s as easy as Balance. Snap. Transfer.^SM The app is available from either iTunes® or Google Play®, search for SDCCU.

Start saving today. You can make your balance transfer request by using the SDCCU Easy Balance Transfer mobile app, calling us at (877) 732-2848 or by visiting one of our more than 30 convenient branch locations. ◾

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Flag Day Luncheon 2018
Thursday, June 14, 11:00am
Ronald Reagan Community Center

We are pleased to invite you to our annual Flag Day Luncheon on June 14, 2018. This year we are returning to the newly renovated Ronald Reagan Community Center in El Cajon.

Our Flag Day Luncheon is a festive celebration commemorating the adoption of the flag of the United States. The event will kick off at 11:00 am with a social half-hour, followed by a brief program led by RESDC President John McTighe. Entertainment will be provided by the California Note Catchers, a nonprofit women’s barbershop harmony chorus. We’ll enjoy a buffet style lunch with ham, roast turkey, and assorted sides; the full menu will be announced in the May and June NETWORKs. This is an indoor event with ample free parking on both sides of the center.

When: Thursday, June 14, 2018, 11:00 am
Where: Ronald Reagan Community Center,
195 E Douglas Ave, El Cajon, CA 92020
Cost: $12 per person

Registration: Registration forms and payment must be received in the RESDC office by Friday, June 8. Name badges and opportunity drawing tickets should be picked up at the check-in table at the luncheon. They will not be mailed.

Register by Mail: Print and fill out the registration form, make a check payable to RESDC for $12 per person and mail both to RESDC, 8825 Aero Dr., Suite 205, San Diego, CA 92123.

Register Online: Click here to register online. You will need to use the email associated with your member account. Click “Add guest” to add additional registrants for $12 each. To pay for yourself and guests, click “Pay Online” and pay with credit card.

Register by Phone: Call the RESDC Office at (619) 688-9229 during our hours of 9 am – 2 pm Mon-Fri.

For questions or assistance registering, contact us at (619) 688-9229 or resdc@resdc.net. ◾

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Welcome New Members

Phillip Adamski – Library
Safa K. Arabo* – Library
William R. Bailey – Health & Human Services
Jerald A. Coleman* – Environmental Services
Laura A. Costello* – Environmental Health
Dennis I. Floyd* – County Counsel
RaeAnn Herrara – Superior Court
Theresa A. Liget* – Medical Examiner
Modesta M. Mantes – Health & Human Services
Carolyn Matinez-Kidd* – Health & Human Services
Esther L. Pedraza – County Counsel
Mishelle M. Shaffer* – Auditor/Controller
Gail E. Whatley – Superior Court
Brandy Winterbottom-Whitney* – Human Resources

*Associate Member

The Surviving spouse of a member is eligible for RESDC membership. For enrollment assistance, please call: (866) 688-9229. ◾

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