GOOD MORNING EVERYONE AND OF
WELCOME TO THE JOINT SENATE --
JOINT INFORMATIONAL HEARING FOR
WITH THE SENATE LABOR PUBLIC
EMPLOYEE IN RETIREMENT COMMITTEE
AND THE ASSEMBLY PUBLIC
EMPLOYMENT AND RETIREMENT
COMMITTEES --
I'M SENATOR JERRY HILL --
WHO CHAIRS THE COMMITTEE IN THE
SENATE AND?
I WILL BE CHAIRING THE HEARING
TODAY THE WE TAKE TURNS AND THIS
IS MY TURN THIS YEAR OR THE YEAR
THE SENATE'S TURN TO DO THAT SO
THAT'S WHY --
I'LL BE DOING THAT --
THANK YOU ALL FOR ATTENDING THIS
JOINT HEARING AND THIS IS A A
GOOD EDUCATIONAL OPPORTUNITY FOR
ALL OF US --
TO TO GET UP TO SPEED IN TO
LEARN.
AS MUCH AS WE CAN SO THAT WE CAN
SERVE THESE COMMITTEES --
THE BEST --
AS WE MOVE FORWARD IS THE FIRST
OF TWO HEARINGS WE WHAT WE HAVE
SCHEDULED TO PROVIDE AN
EDUCATIONAL OVER VIEW OF POLICY
AREAS WITHIN BOTH COMMITTEES
JURISDICTION.
TODAY WE'RE GOING TO HEAR FROM
DEPARTMENTS AND STAKEHOLDERS THE
DEAL WITH CALIFORNIA'S PUBLIC
RETIREMENT SYSTEMS.
IN TWO WEEKS ON FEBRUARY TWENTY
SEVEN PART OF OUR JOINT
JURISDICTION THE AREA OF LAW
REGULATING PUBLIC EMPLOYMENT.
I'D LIKE TO THANK OF MY
COLLEAGUES FROM THE ASSEMBLY AND
CERTAINLY ASSEMBLY MEMBER
FREDDIE RODRIGUEZ TO THE CHAIR
OF THE ASSEMBLY COMMITTEE.
ON PUBLIC EMPLOYMENT RETIREMENT
AND HIS STAFF FOR WORKING WITH
US TO MAKE THESE HEARINGS HAPPEN.
I ALSO LIKE TO WELCOME ALL THE
PANELISTS THAT HAVE AGREED TO
PROVIDE INFORMATION AND ANSWER
OUR QUESTIONS TODAY SURE THANK
YOU TO ALL FOR FOR BEING HERE.
WILL START TODAY WITH THE
LEGISLATIVE ANALYST'S OFFICE
WILL PROVIDE A A GENERAL ROAD
MAP.
OF THE AREAS WHICH THE LEADER
PANELISTS WILL DISCUSS IN
GREATER DETAIL DIRECTLY AFTER
THE LA WAS PRESENTATION.
AND TO FULFILL THE REQUIREMENTS
OF THE GOVERNMENT CODE.
202-222-0229 WE WILL HEAR FROM
THE DESIGNATED REPRESENTATIVE OF
THE CALIFORNIA ACTUARIAL
ADVISORY PANEL WHO WILL COMMENT
ON CALPERS MOST RECENT ANNUAL
STATE.
AND SCHOOLS VALUATION REPORT
AFTER THE CAP PRESENTATION WE
WILL HEAR FROM CALPERS.
WHO MAY WISH TO RESPOND DURING
THEIR GENERAL PRESENTATION TO
ANY QUESTIONS BROUGHT UP BY THE
CAP REGION TATIAN THEIR COMMENTS?
WE THANK THEM IN ADVANCE FOR
ACCOMMODATING US TO IN
ADDRESSING THE CAT PRESENTATION.
FOLLOWING THE CALPERS WE WILL
FOLLOWING CALPERS WE WILL ALSO
HEAR FROM REPRESENTATIVES FROM
CAL STERN.
AND FROM THE THIRTY SEVEN ACT
COUNTY WERE FROM REPRESENTATIVES
OF THE STATE'S SAVINGS PLUS PLAN.
TOGETHER WE HOPE TO GET A GOOD
HOLISTIC SENSE OF THE PROGRAM
STRUCTURE THAT PROVIDES
RETIREMENT SECURITY FOR THE
PUBLIC WORKFORCE. FOR A FINAL
PANEL WE WILL HEAR FROM A
COLLECTION OF STAKEHOLDER
REPRESENTATIVES FROM PUBLIC
EMPLOYERS PUBLIC EMPLOYEES AND
PUBLIC SERVICE RETIREES.
THEY WILL PROVIDE US A DEEPER
INSIGHT INTO THE IMPORTANCE AND
LONG TERM NATURE OF THE
RETIREMENT PLANS.
HOW THE PLANS PROVIDE RETIREMENT
SECURITY AND WHAT ISSUES AND
CHALLENGES WE MIGHT ENCOUNTER
DURING THIS LEGISLATIVE SESSION
WE'RE PROGRAMMED APPROXIMATELY
FIVE MINUTES?
PER SPEAKER AND IF YOU DON'T
TAKE THE FIVE MINUTES --
DON'T FEEL OBLIGATED TO KEEP
GOING IF YOU NEED MORE TIME WILL
TRY TO ACCOMMODATE YOU --
THE DEPENDING ON THE AVAILABLE
SPACE WE HAVE AT THE END WE WILL
HAVE A PUBLIC COMMENT PERIOD AT
THAT TIME INDIVIDUALS WILL HAVE
MAKE COMMENTS WITH PROXIMITY ONE
TO THREE MINUTES DEPENDING ON
THE TIME THAT WE HAVE REMAINING.
YES IT INDIVIDUALS IDENTIFY
THEMSELVES AND THEIR
ORGANIZATION IF ANY THEY
REPRESENT.
AND THAT THEY KEEP THEIR
COMMENTS AS BRIEF AS POSSIBLE TO
CONSIDER FOR CONSIDERATION OF
OTHERS AGAIN THANK YOU ALL VERY
MUCH AND NOW CHAIR RODRIGUEZ.
TURN IT OVER TO YOU.
THANK YOU SENATOR I WANT TO ONCE
AGAIN THANK EVERYBODY FOR
JOINING US THIS MORNING AS WELL.
AS MANY OF YOU KNOW PUBLIC
RETIREMENT IS AN IMPORTANT
SUBJECT TWO PLAYERS EMPLOYEES
AND THE PUBLIC.
WHEN CONSIDERING THE NUMBER AND
SIZE OF CALIFORNIA'SPENSION
FUNDS?
THEY ARE RESPONSIBLE FOR OVER A
TRILLION DOLLARS THAT THESE.
ARE COMMITTEES ARE COMMITTEE HAS
OVERSIGHT RESPONSIBILITY FOR
THAT SUBJECT AND WE HAVE A DUTY
TO ENSURE THAT THE POLICIES WE
ADOPT.
OUR SOUND TO PROMOTE
ACCOUNTABILITY STABILITY GROWTH
SECURITY FAIRNESS AND CONTINUED
FULFILLMENT OF PROMISES.
ALTHOUGH FOR WORK WITH MY
CULTURE AND THE MEMBERS OF OUR
COMMITTEES ON PUBLIC RETIREMENT
DURING THIS LEGISLATIVE SESSION.
A LOOK FORWARD TO THE SHARON AND
ONCE AGAIN THANK YOU ALL FOR
JOINING US THIS MORNING.
THANK YOU CENTER IT THANK YOU
VERY MUCH IS THAT CHAIR
RODRIGUEZ UP FIRST THAT WILL GO
INTO OUR FIRST WOULD ANY OTHER
MEMBERS HERE TO MAKE SOME
COMMENTS.
HI GOOD ALL RIGHT WE'LL MOVE
RIGHT INTO OUR HERE AND AND OUR
FIRST PANELIST I GUESS WOULD BE --
NEXT NEXT ROTOR PRINCIPLE FISCAL
AND POLICY ANALYST FOR THE LA
OWES OFFICE.
GOOD MORNING WELCOME THIS IS AN
OVERVIEW OF OF THE CALIFORNIA'S
PUBLIC EMPLOYMENT RETIREMENT
SYSTEM.
MORNING AND WELCOME AND THANK
YOU GOOD MORNING THIS IS THANK
YOU -- IS.
ONE OH ONE YEAH BEFORE YOU HEAR
FROM THE ACTUARIES AND THE
PEOPLE WHO ADMINISTER THE
BENEFITS.
FOR US PUBLIC EMPLOYEES IN
CALIFORNIA FIRST CAN PROVIDE
SOME OVER VIEW OF EXIT ACCIDENTS
IN MY NAME I NEXT ROTOR FOR THE
LA -- BEFORE
YOU HEAR FROM.
FROM THE OTHER PEN --
PANELS --
I'M JUST PROVIDE AN OVERVIEW OF
SOME COMMON ISSUES THAT THEY
PROBABLY WILL BE TOUCHING ON
DURING THEIR PRESENTATIONS AND
JUST YOU HAVE KIND OF AN INITIAL.
BACKGROUND OF SOME COMMON THEMES
I'LL PROBABLY CROSSOVER AMONG
THE VARIOUS.
PRESENT --
PRESENTERS FIRST TIME WE WERE
TALKING BENEFITS IN EMPLOYEE
COMPENSATION PACKAGES --
AND THEN I WILL BE TALKING ABOUT
THE KIND OF JUST THE LAY OF THE
LAND OF PENSION SYSTEMS IN
CALIFORNIA.
OTHER A LOT OF DIFFERENT PENSION
SYSEMS AND THEIR SIMILARITIES
AND DIFFERENCES AND I'M GONNA
GIVE A VERY VERY HIGH LEVEL --
DISCUSSION ABOUT THE INCLUDING
THE DIFFERENCES BETWEEN THE ROLE
OF A CAP OF A PENSION BOARD
VERSES THE EMPLOYER IN THE
SYSTEMS.
AND THEN LASTLY I'M TO BE
TALKING ABOUT --
FROM THE STATE'S PERSPECTIVE THE
COSTS FOR PROVIDING CALPERS
PENSIONS --
AND KIND OF WHY THE COST ME
GOING UP SO MUCH OVER THE PAST
DECADE OR SO.
ALL THAT IN FIVE MINUTES I LOVE
I'M GONNA TRY --
SO IN TERMS OF THE ROLE THE
RETIREMENT --
BENEFIT IN EMPLOYEE COMPENSATION
ACROSS THE STATE ACROSS THE
DIFFERENT TYPES EMPLOYEES TIMES
OF EMPLOYERS.
THE MIX OF BENEFITS REALLY
VARIES BUT A COMMON.
CAUSE STRUCTURE OF CROSS PUBLIC
EMPLOYEE COMPENSATION IS THAT
YOU HAVE A SALARY HEALTH
BENEFITS AND RETIREMENT BENEFITS
AND A KEY DISTINCTION BETWEEN
THESE BENEFITS IS THAT SALARY
AND HEALTH BENEFITS EARNED TODAY.
AND ALSO RECEIVED TODAY FOR AS
THE RETIREMENT BENEFIT IS EARNED
TODAY DURING THE COURSE OF THE
EMPLOYEES CAREER.
UP IT'S NOT RECEIVED UNTIL SOME
FUTURE DATE AFTER THEY RETIRE --
AND WITHIN THE BUCKET OF
RETIREMENT BENEFITS PENSIONS ARE
WHAT WE ARE GOING TO TALK ABOUT
MOSTLY TODAY.
BUT THERE ARE ALSO RETIREE
HEALTH CARE BENEFITS.
THAT -- MANY --
PUBLIC EMPLOYEES ACROSS THE
STATE RECEIVE --
AND ONE THING I WANTED TO
MENTION ON IN TERMS OF PENN.
IT HAS A DIFFERENT --
ALTHOUGH IT'S IMPORTANT BENEFITS
FOR ALL EMPLOYEES IT HAS THAT
KIND MORE IMPORTANCE FOR UP
CERTAIN GROUPS OF EMPLOYEES AND
IN THE PUBLIC SECTOR.
NAMELY TEACHERS AND POLICE
OFFICERS AND FIREFIGHTERS WHO
ARE NOT ELIGIBLE TO PARTICIPATE
IN SOCIAL SECURITY --
WHERE AS MANY MISCELLANEOUS
PUBLIC EMPLOYEES ARE TO
PARTICIPATE IN SOCIAL SECURITY
ANNA PENSION BENEFITS WHEN THEY
RETIRE THEY HAVE? TO GUARANTEED
INCOME STREAMS AND RETIREMENT --
TEACHERS IN PEACE OFFICERS --
REALLY RELY ON THE PENSION AS
THEIR PRIMARY INCOME SOURCE IN
RETIREMENT.
AND THE OTHER THING I WANT TO
TALK ABOUT IN TERMS OF THE ROLE
OF PUBLIC --
OF RETIREMENT AND COMPENSATION
IS JUST PEPPER IT'S THE PUBLIC
EMPLOYEES PENSION REFORM ACT OF
TWENTY THIRTEEN AND IT'S
IMPORTANT FOR YOU TO KNOW JUST
BECAUSE IT.
IT REDUCED BENEFITS GOING
FORWARD FOR FUTURE EMPLOYEES AND
ALSO CREATED A STANDARD WHERE BY
EMPLOYEES WILL CONTRIBUTE HALF
OF WHAT'S CALLED THE NORMAL COST --
AND THE NORMAL COST IS
ESSENTIALLY THE AMOUNT OF MONEY
THE ACTUARIES DETERMINE MUST BE
SET ASIDE EACH YEAR TO PRE FUND
THE BENEFIT OVER THE COURSE OF
THE EMPLOYEES CAREER SO THAT.
THE MONEY IS AVAILABLE AT THE
END OF THEIR CAREER FOR IN
RETIREMENT --
TO THE EXTENT THAT THERE'S AN
UNFUNDED LIABILITIES TURNS FOR
LESS THAN ACTUAR IS ASSUMED WHEN
THEY DEVELOP THE NORMAL COST --
THE UNFUNDED LIABILITIES
RESPONSIBILITY OF THE EMPLOYER
AND THAT WOULD BE WHY.
THE THERE'S A LITTLE DISPARITY
IN BETWEEN --
IN TERMS OF THE AMOUNT THAT
EMPLOYEES CONTRIBUTE VERSES THE
SIZE OF THE EMPLOYER
CONTRIBUTIONS BECAUSE EMPLOYERS
ALSO.
PAYING DOWN THE ON FROM
LIABILITY IF THERE IS.
ONE THAT'S UP TURNING TO THE LAY
OF THE LAND OF THE PENSION
SYSTEMS --
EACH PENSION SYSTEM IS DIFFERENT
AND THAT THEY OFFER DIFFERENT
BENEFITS THEY SERVE DIFFERENT
LAWYERS THEY SERVE DIFFERENT
TYPES OF EMPLOYEES --
BUT THERE ARE SOME COMMON THINGS
ACROSS ALL THE SYSTEMS ONE IS
THAT THEY'RE ADMINISTERED BY
PENSION BOARD.
AND THE PENSION BOARD HAS
PLENARY AUTHORITY AS WELL AS FOR
TO SHARE RESPONSIBILITY TO THE
MEMBERS OF THE SYSTEM --
TO ENSURE THAT THIS BENEFIT
EXISTS ONCE THEY THEY DO RETIRE
AND AND SO THE DIFFERENCE
BETWEEN THE EMPLOYER AND THE
BOARD IS REALLY THAT THE
EMPLOYER.
AND THE ALSO THE EMPLOYEE TO
THEIR CONTRIBUTIONS PUTS THE
MONEY INTO THE PENSION TRUST AND
IT'S UP TO THE BOARD TO THEN
DETERMINE HOW TO INVEST THE
FUNDS --
WHAT ACTUARIAL ASSUMPTIONS USED
TO DETERMINE WHAT CONTRIBUTIONS
ARE NECESSARY AND REALLY TO IT
JUST ADMINISTER THE BENEFIT
GOING FOR BUT THE PENSION?
SYSTEM ITSELF DOES NOT PAY FOR
THE HE'S CONTRIBUTIONS.
AND SO THERE'S REALLY TWO
DIFFERENT TYPES OF PENSION
SYSTEMS IN CALIFORNIA THERE'S A
STATE WIDE SYSTEMS AND THERE'S
THE LOCALLY ADMINISTERED SYSTEMS.
FROZE FOR THE STATEWIDE SYSTEMS
THERE'S CALPERS AND CAL STIRS --
AND ALSO YOU SEE OUR P. WHICH IS
OUR P. IS AVAILABLE TO
UNIVERSITY OF CALIFORNIA PLEASE
AND IS ADMINISTERED BY THE BOARD
OF REGENTS.
ALSO FOR THIS PURPOSE FOR TALK
MOSTLY ABOUT CALPERS AND CAL
STIRS BECAUSE WHAT THE
LEGISLATURE HAS THE MOST OF THE
WORK DIRECT AUTHORITY OVER --
CALPERS IS --
PROVIDES BENEFITS TO LOCAL
GOVERNMENTS AS WELL AS TO STATE
GOVERNMENT EMPLOYEES AND FOR THE
LOCAL GOVERNMENTS AS THOSE LOCAL
GOVERNMENTS WHO CHOOSE TO
CONTRACT WITH CALPERS TO PROVIDE
PENSION BENEFITS --
IN ADDITION CALPERS ALSO
ADMINISTERS PENSION BENEFITS FOR
SCHOOL DISTRICT EMPLOYEES WERE
NOT TEACHERS SO CAFETERIA
WORKERS CUSTODIAL STAFF THOSE
TYPES OF CLASSIFICATIONS --
IN ADDITION TO THE PENSION
BENEFITS CALPERS ALSO
ADMINISTERS HEALTH BENEFITS FOR
STATE EMPLOYEES AND STATE
RETIREES.
AND ALSO FOR ANY EMPLOYEES
RETIREES OF PARTICIPATING LOCAL
GOVERNMENTS.
AND SO UNDER FOR CAL STIRS THEY
PROVIDE PENSION BENEFIT A
MINISTER THE PENSION BENEFITS
FOR TEACHERS --
AND THE ONE THING I WANT TO
HIGHLIGHT ABOUT CAL STIRS THE
TWENTY FOURTEEN FUNDING PLAN.
WHERE THE LEGISLATURE ADOPTED A
FUNDING PLAN WERE BY?
TEACHERS AS WELL AS THE SCHOOL
DISTRICT AND THE STATE ALL BE
CONTRIBUTE MORE MONEY INTO THE
CAL STIR SYSTEM.
SO THAT --
THE PENSION SYSTEM WILL BE FULLY
FUNDED BY TWENTY FORTY SIX
THAT'S THE TARGET DATE. FIVE
WHICH WILL BE FULLY FUNDED.
OKAY THEN THERE'S THIS OTHER
POCKET OF OF SYSTEMS THAT ARE
LOCALLY ADMINISTERED AND AS THE
CHAIR INDICATORS THE NINETEEN
THIRTY SEVEN ACCIDENTS WHICH
THOSE ARE THERE'S TWENTY SYSTEMS
THERE AND RUN BY COUNTIES UNDER
THAT LAW.
AND IT'S THE COUNTY EMPLOYEES
RETIREMENT LAW OF NINETEEN
THIRTY SEVEN BUT WE REFER TO
THEM AS THE THREE SAT SEVEN X.
SYSTEMS.
IN ADDITION OF THE COUNTY SAN
LUIS OBISPO ALL ITS OWN
INDEPENDENT SYSTEM BUT THAT'S
ESTABLISHED UNDER ANOTHER
SECTION OF LAW.
CHARTER CITIES ALSO ADMINISTER
OR CANISTER THEIR OWN SYSTEM SO
FRESNO SAN DIEGO A LOS ANGELES
ALL MINISTER THEIR OWN --
SYSTEM OTHER THAN THAT THE
COUNTIES AND CITIES AND OTHER
LOCAL GOVERNMENTS A SPECIAL
DISTRICTS CAN CHOOSE CONTRACT
WITH EITHER THE COUNTY SYSTEMS
OR WITH.
CALPERS TO ADMINISTER THE
BENEFITS FOR THEIR EMPLOYEES.
OKAY SO NOW LOOKING AT THE
STATE'S KIND OF PERSPECTIVE OF
OF PAYING FOR THIS BENEFIT --
THAT OVER THE PAST TEN YEARS OR
SO THE COSTS OF REALLY.
GROWN SIGNIFICANTLY IN THIS IS
SOMETHING THAT ALL EMPLOYERS
HAVE EXPERIENCED --
AND JUST TO ILLUSTRATE THIS --
IN EIGHTEEN NINETEEN SO IN THE
CURRENT BUDGET YEAR THE STATE'S --
CONTRIBUTION AS A PERCENTAGE OF
PAY RANGES BETWEEN 19% AND 54% A
CALPERS --
AND THE STATE'S FIVE PENSION
PLANS IN CALPERS AND A
CONTRIBUTION AMOUNT VARIES
DEPENDING ON THE GENEROSITY THE
BENEFIT WHICH IS DETERMINED BY.
THE EMPLOYEE TYPES OR THE PEACE
OFFICERS WAS IS THEIR ONLY FORM
OF INCOME IN RETIREMENT ETCETERA
AND TO THE EIGHTEEN NINETEEN
RATES AND EIGHT OR NINE OTHER
RATES RANGE FROM 16% 232% OF THE
COUNTRY'S RATES OF REALLY GONE
UP QUITE A BIT OVER THE PAST TEN
YEARS.
JUST AS ONE EXAMPLE THE
MISCELLANEOUS PLAN WHICH IS THE
STATE'S LARGEST PLAN WAS --
BY SIXTEEN POINT 6% IN --
EIGHT OR NINE AND IT'S NOW 29%
OF PAY SO IT'S GONE QUITE A BIT
AND THE MEAT THERE REALLY TO
DRIVING FACTORS BEHIND THIS ONE
ARE ARE THE INVESTMENT LOSSES
MOST NOTABLY BECAUSE OF THE
GREAT RECESSION --
I MEAN I'VE I PULLED AWAY --
TO NINE NUMBERS FOR REASON IS
KINDA ILLUSTRATING JUST BEFORE
WE HAD THE LARGE INVESTMENT
LOSSES --
AND THEN ALSO THERE SINCE THE
GREAT RECESSION HAVE ALSO BEEN
SOME PERIODS WHERE THERE HAVE
BEEN LOWER THAN ASSUME
INVESTMENT RETURNS AND SO THOSE
OF ALSO CONTRIBUTED TO IT.
BUT ALSO NOTABLE IS THAT THE
CALPERS BOARD IS ADOPTED NEW
ACTUARIAL ASSUMPTIONS.
ARE THAT REALLY ARE INTENDED TO
PUT THE SYSTEM ON A BETTER
FOOTING FOR MORE SUSTAINABLE
BENEFIT GOING FORWARD AND THESE
THESE ACT WORLD SECTIONS OF
INCLUDED.
ASSUMING THAT --
MEMBERS LIVE LONGER BECAUSE THEY
REAL ASSUMING AND ALSO MOST
IMPORTANTLY IS THE LOWERING OF
THE DISCOUNT RATES IN OTHER
WORDS THEY'RE ASSUMING THAT. FOR
LESS MONEY WILL BE COMING IN FOR
THEIR INVESTMENT GAINS IN THE
FUTURE WHICH MEANS MORE MONEY
HAS TO COME IN.
THEIR CONTRIBUTIONS --
AND THAT'S ALL I HAVE PREPARED
IF I'LL BE HAPPY TO TAKE AND
VERY NICE THANK YOU VERY MUCH
FOR SURE QUESTIONS.
WELCOME YES HOMELESSNESS AND MY
NUMBER DOWN THANK YOU I HAVE A
COUPLE QUESTIONS IN A MAYBE YOU
ARE THE INDIVIDUAL HANSON MAYBE
YOU'RE NOT --
WITH REGARD TO A DEFINED
CONTRIBUTION --
THAT'S TYPICALLY ON A FOUR
THIRTY SEVEN RIGHT MEGACITIES
OPTED OUT OVER THE PAST SEVERAL
YEARS.
TO INTO IT OPTED OUT OF OF PURSE
OR WHATEVER MAYBE YOU EVEN
MODIFIED THEIR OWN SYSTEM X.
INDIA IS AN EXAMPLE OF THAT.
WHAT WOULD THAT CITY IF THEY DO
NOT HAVE AN UNDEFINED ATTENTION
WHICH AND THEY HAD A DEFINED
PENSION WITH THEY HAVE?
TO PAY SOCIAL SECURITY.
I'M I'M NOT SURE THAT I THINK
WOULD HAVE TO TALK WITH A TAX
ATTORNEY HOME.
ANOTHER BECAUSE I I GUESS THE
QUESTION IS IS IT A FINE PLAN A
PENSION.
RIGHT BECAUSE YOU CAN YOU CAN
OPT OUT OF SOCIAL SECURITY HER
PUBLIC AGENCY OR COULD HAVE AT
SOME POINT I BELIEVE.
IF IF YOU IF YOU IF YOU HAVE A
PUBLIC PENSION RIGHT.
I'M DEEMED YOU KNOW THE ANSWER
THAT I DON'T KNOW THE OKAY
THAT'S OUR THAT'S UNDERSTOOD --
AND WITH REGARD UP TO PERSON
STIRS WHAT IS I GUESS WHO IS AT
THE DISCOUNT RATE THE RATE OF
RETURN WHAT IS IT WHAT IS IT FOR
OUR THE SYSTEM SIMILAR.
WE HAD A NUMBER OF BOTH GOING
DOWN 27% AND THAT'S ABOUT GOING
AND THEY REALLY SHOULD BE A WHAT
[inaudible] FIVE WHY THERE'S A
LOT OF A LOT OF DE THAT DECLARES
Là CONVERSATION ABOUT WHT THE
RATE SHOULD BE IF YOU LOOK AT
THEIR HISTORICAL RETURNS FOR THE
PAST THIRTY YEARS FOR CALPERS.
THE RETURNS OF ACTUALLY BEEN
OVER 8% ON BUT THE FUTURE
DOESN'T NECESSARILY LIKE THE
PAST.
AND SO THERE'S A LOT OF
SPECULATION AS FAR AS WHAT THAT
ASSUMPTION SHOULD BE GOING
FORWARD WITH THE MORE
CONSERVATIVE FOUR OR MORE OR
MORE.
RISKY SO THAT THAT THE TO
INDIVIDUAL BOARDS ACTUALLY SET
THE DISCOUNT RATE AT LEAST OFF
MAYBE A STAFF RECOMMENDATION.
YES THEY MIGHT ACTUARIES FOR THE
FOR THE SYSTEMS MAKE
RECOMMENDATIONS TO THE BOARDS
AND ON THE BOARDS ADOPT WHAT THE
POLICIES ARE.
I HAVE THAT HAS THE BOARD ALWAYS
ADOPTED WHAT THE ACTUARIAL
RECOMMEND HE WITH REGARD THE ARE
ARE.
ARE YOU BOTH OF THE SYSTEMS HAVE
A GUARANTEED COLIN BUILT INTO
THEM -- FOR
KERR'S THERE IS A GUARANTEED
COLA UP TO A CERTAIN POINT --
BUT IT'S ALSO GUARANTEED --
LEVEL OF PURCHASING POWER --
FIRSTERS IT'S A IT'S A SIMPLE
COLA SO IT'S BASED ON YOUR
INITIAL PENSION AMOUNT AND NOT A
COMPOUNDED COLA FOR CALPERS AT
THE COMPOUND.
IN.
DO THE THOSE CALLS OBVIOUSLY
IMPACT THE OVERALL HEALTH OF THE
PHONE AS WELL CORRECT THEY THE
ACTUARIES INCORPORATE
ASSUMPTIONS RELATED TO THE COLA
IN THEIR CALCULATIONS FOR THE
VALUATIONS.
THANK YOU FOR WHAT WHAT QUESTION
WHERE WOULD I GO TO GET MY
QUESTION ANSWERED WITH REGARD TO
THE THE DIVIDE LIKE HAVE YOU
HAVE FOUR THREE SEVEN PLANNED
YOU --
MUSTER MUST NOT.
CALPERS MIGHT BILL ANSWER THE
QUESTION FOR YOU I'M NOT SURE --
NAY ON THAT WITHIN MAYBE LET'S
COUNSEL FOR THEIR HERE TODAY
SORRY THEY'RE THEY'RE HERE TODAY
I WON THE I'LL BE QUITE THE NO
NO NO YOU.
THANK YOU VERY MUCH OTHER
QUESTIONS.
HEARING ON THANK YOU MISTER
APPRECIATED VERY MUCH.
WILL MOVE TO PANEL THREE DAVID
LATERAL.
THIS IS A REPORT OF THE
CALIFORNIA ACTUARY ACTUARIAL
ADVISORY PANEL.
MR LAMBRO WELCOME GOOD MORNING
AND YOU SHOULD ALL RECEIVE A
PIECE OF PAPER.
SO MY NAME IS DAVID LUMBER --
DEPUTY SYSTEM ACTRA CALLOUS TO
RIVERS BUT TODAY I'M HERE ON
BEHALF OF THE CALIFORNIA ACT
PROVIDES RE PANEL.
THAT THEY'LL REFER US TO CAP AS
I GO THROUGH MY PRESENTATION.
SO THE CAP WAS CREATED IN TWO
THOUSAND AND EIGHT IT CONSISTS
OF EIGHT FACTORIES ALL OF US ARE
PUBLIC SECTOR ACTUALLY SO WE
WORK MOSTLY ON PUBLIC SECTOR.
PENSION PLANS AND OPEC PLANS WE
ARE ALL APPOINTED BY A GOVERNING
BODY.
A DO YOU GOVERNOR APPOINTS TWO
OF THE ACT TREES CAL STAR IS A
POINTS ONE MYSELF CALPERS
APPOINTS ONE THE BOARD OF
REGENTS OF THE UC SYSTEM
APPOINTS ONE THE ASSOCIATION OF
THE COUNTY RETIREMENT SYSTEM
APPOINTS.
ONE THE SPEAKER OF THE ASSEMBLY
POINTS ONE AND THE SENATE
COMMITTEE ON RULES APPOINTS ONE
SO EIGHT ACTUALLY IT'S A AND
BASED ON WHAT THE STATUTE SAYS
THE PANEL SHOP PROVIDE IMPARTIAL
AND INDEPENDENT INFORMATION ON
PENSIONS ARE PENSION EMPLOYMENT
BENEFITS.
AND BEST PRACTICES TO PUBLIC
AGENCIES SO THAT'S SORT OF WHAT
WE DO WE MEET ABOUT SIX TO EIGHT
TIMES A YEAR --
BUT THE REASON I'M HERE TODAY AT
BERMAN CODE SECTION.
TWO OH TWO TWO NINE UNDER THAT
SECTION.
CALPERS IS REQUIRED TO DISCLOSE
IN THE REPORT ONCE.
INFORMATION ON WHERE WOULD
FUNDING LEVEL WAS BE FOR CALPERS.
AND CONTRIBUTION RATES.
IF IT'S WHERE TO ASSUME.
SO.
MISTER SHORTER BEFORE TALKED
ABOUT THE INVESTMENT RETURN
ASSUMPTION IF CALPERS WERE TO
ASSUME AND INVESTMENT KERN
ASSUMPTION THAT IS EITHER. 2%
LOWER OR 2% HIGHER THAN IT
ASSUMES AND IT ALSO ASKED THAT
CALPERS DISCLOSES WHAT CUT WHERE
WHAT WOULD BE THE CONTRIBUTION
RATE WHERE WITH THE RATES B. E..
IF THE UNFUNDED LIABILITY WAS
AMORTIZED OVER A GENERALLY A
SHORTER PERIOD BASED ON THE HALL
ALONE STATE EMPLOYEES ARE
EXPECTED TO WORK SO THIS IS ONLY
FOR THE STATE PLANS SO THIS IS
WHAT GOVERNMENT SECTION TWO OH
TWO TONIGHT SAYS.
CALPERS YOU SHOULD PUBLISH THAT
ONCE A YEAR.
AND CALPERS HAS DONE SO EVERY
YEAR IN THE FULFILL THAT
REQUIREMENT EARLIER LAST FALL
WHEN THE PUBLISHED WHAT IS
CALLED THE THE JUNE THIRTIETH
TWO THOUSAND AND SEVENTEEN
ACTUAL VALUATION FOR THE STATE
PLANS.
IF YOU ARE EVER INTERESTED TO
LOOK AT IT TELL YOU DOCUMENT AT
THE BOTTOM OF THE FIRST PAGE I
PROVIDED A LINK HERE.
KINDA WHERE YOU CAN GET A COPY
OF THE INFORMATION AND THE
INFORMATION SPECIFIC TO SECTION
TWO OH TWO TWO NINE BEGINS ON
PAGE FORTY OF THAT REPORT.
SO IF ALSO IN GOVERNMENT CO TWO
OH TWO TWO NINE IT REQUIRES
SOMEONE FROM THE CAP TO COME
SPEAK TO YOU ABOUT THREE
SPECIFIC TOPICS.
FIRST EXPLAIN THE ROLE PLAYED BY
THE INVESTMENT RETURN ASSUMPTION
AND THE AMORTIZATION PERIOD.
IN THE CALCULATION OF
CONTRIBUTION RATES. TO DESCRIBE
THE CONSEQUENCES ON FUTURE STATE
BUDGET IF THE INVESTMENT RETURN
ASSUMPTION IS NOT MET.
AND ALSO TO IDENTIFY TO YOU
WHETHER OR NOT DE CURRENT
AMORTIZATION PERIOD FOR CALPERS
EXCEEDS WHAT IS REFERRED IN TWO
OH TWO TWO NINE AS THE AVERAGE
REMAINING SERVICE.
FOR A CALIFORNIA.
STATE EMPLOYEES SO THAT'S WHAT
I'M HERE FOR TODAY.
AND ALL OF AFTER I'M DONE I'LL
BE HAPPY TO ANSWER ANY QUESTION
AND I MAY BE ABLE TO ANSWER YOUR
CALL.
MISTER O'DONNELL YOUR QUESTION
ABOUT THE SOCIAL SECURITY I CAN
STILL LITTLE SOMETHING AFTER
THIS.
SO WHEN IT COMES TO FUNDING
PENSION.
AS ACTUARIES WE HAVE TO SET
SEVERAL WE HAVE. TO TO SET
ACTUAL ASSUMPTIONS AND YOU CAN
LOOK AT THEM THERE ARE SOME
DEMOGRAPHIC ASSUMPTIONS ECONOMIC
ASSUMPTIONS.
AND IF YOU LOOK AT PENSION PLANS
IN GENERAL ON THE DEMOGRAPHIC
SIDE PROBABLY TWO OF THE MOST
IMPORTANT ASSUMPTIONS ARE WHEN
DO YOU EXPECT THE EMPLOYEES TO
RETIRE AND THE WHOLE LONG ARE
THEY GOING TO LIVE.
IS THAT BASICALLY DICTATES HOW
MANY YEARS OF BENEFITS.
AND ON THE ECONOMIC SIDE THE
INVESTMENT.
RETURN ASSUMPTION IS PROBABLY
THE MOST IMPORTANT.
SEC CALPERS ED.
CALPERS MADE A DECISION AT THE
ABOVE FOR RECALL TWO YEARS AGO
TWO THREE YEARS AGO TO GO FROM
SEVEN AND A HALF PERCENT THAT
WAS THE OLD THE ACTUAL
ASSUMPTION. TO GO DOWN TO SEVEN
OVER MULTI --
OVER A THREE YEAR PERIOD SAID
THERE ABOUT THE DAY OF THEIR
ASSUMING THAT THEIR LONG TERM
RETURN WILL BE 7% THAT THIS IS
KEY BECAUSE IF OVER THE NEXT
FIVE TEN YEARS.
THE INVESTMENT RETURN IS BELOW
SEVEN IT'S GONNA START PUSHING
PRESSURE IT'S GOING TO PUT
PRESSURE ON CONTRIBUTION RATES
AND IT'S LIKELY THAT THE THAT
THE CALPERS BOARD WILL HAVE TO
INCREASE CONTRIBUTION RIGHT.
BECAUSE IT TO ITS COULD PROBABLY
GONNA PUSH THE UNFUNDED
LIABILITY TO A HIGHER LEVEL.
ON THE OTHER HAND IF THE
INVESTMENT RETURN IS HIGHER THAN.
SEVEN YOU'RE LIKELY TO SEE THE
OPPOSITE THERE SAY IT'S PROBABLY
GOING TO PUSH CONTRIBUTION RATES
DOWN TO THE INVESTMENT RETURN
ESTAMOS.
CRITICAL AND WHERE CONTRIBUTION
RATES ARE GOING TO GO IN THE
FUTURE IF CALPERS CAN EARN MORE
THAN.
SEVEN THEN THE CONTRIBUTION
RATES UP RECORDED EARLIER APPLE
GOING TO GO DOWN AND VICE VERSA.
AND THE ADVERTISE ASIAN PERIOD
IS ALSO --
PAYS PLAYS A CRITICAL ROLE
BECAUSE THERE IS AN UNFUNDED
LIABILITY SO TO PAY FOR TO
KALISTO REFER TO CALPERS STATE
PLANS THE UNFUNDED LIABILITY IS
ESTIMATED TO BE JUST BELOW SIXTY
BILLION DOLLARS.
AND IS BEING PAID FOR RIGHT NOW
OVER.
DIFFERENT PERIODS FOR THE
DIFFERENT STATE PLANS BUT
ANYWHERE BETWEEN EIGHTEEN TO
TWENTY TWO YEARS IS THE FUNDING
THE AMORTIZATION PERIOD THAT
CALPERS IS USING FOR THE STATE
PLANS --
ASPER GOVERNMENT CUT ASK OF TO
COMPARE --
IS CALPERS AMORTIZING UNFUNDED
LIABILITY OVER A PERIOD THAT
EXCEEDS WHAT IS CALLED THE
AVERAGE REMAINING SERVICE A
PERIOD.
SO I PROVIDED YOU IF YOU GO TO
THE BACK OF THE PAGE A PROVIDED
YOU.
THERE'S A TABLE AT THE BOTTOM
THAT SHOWS A CONTRIBUTION RATE
WITH THE CURRENT FUNDING PERIOD
IS FOR CALPERS.
AND IT ALSO SHOWS THAT IF
CALPERS WERE TO INSTEAD I'M MORE
TIES UNFUNDED LIABILITY OVER.
A MUCH SHORTER PERIOD ABOUT
RANGING BETWEEN --
ELEVEN TO THIRTEEN THEN
CONTRIBUTION RATES WOULD HAVE TO
INCREASE IF YOU'RE CURIOUS TO
FIND OUT BY HOW MUCH ALL OF THIS
IS INCLUDED IN THAT REPORTS OF
THE LINK AT THE HAVE ON THE
FIRST PAGE.
BUT THE MAIN THING TO REMEMBER
IS THAT WHEN IT COMES TO FINDING
A PENSION PLAN INVESTMENT RETURN
TO SKI.
IF THE IF THE SYSTEM DOES NOT
MEET THE ASSUME RETURN --
AND IT'S THE RETURN TO LOWER
CONTRIBUTIONS ARE GOING TO HAVE
TO GO UP.
AND SAME THING AT THE
AMORTIZATION BEARD PLAYS A KEY
ROLE BECAUSE THE LONGER YOU PAY
FOR IT.
AS THE LORD A CONTRIBUTION RATE
IT'S LIKE GETTING A FIFTEEN
VERSUS A THIRTY YEAR MORTGAGE --
THIS CONCLUDES MY TESTIMONY I
WOULD BE HAPPY TO ANSWER ANY
QUESTION.
AND JUST TO START WITH YOUR
QUESTION YOU HAD EARLIER MISTER
O'DONNELL --
IT IS POSSIBLE FOR A A AND NOT
BE IN SOCIAL SECURITY BECAUSE
NOT ALL EMPLOYEES CAN BE.
AS LONG AS THE FOUR ONE K. PLAN
OF THE FOUR FIFTY SEVEN IF IT'S
A DEFINED CONTRIBUTION IT HAS TO
MEET THE IRIS MINIMUM
CONTRIBUTION.
SO YOU COULD NOT JUST OFFER FOR
EXAMPLE A FOUR ONE K. THAT PUTS
2% OF THE EMPLOYEES OUT OF REACH
WOULD NOT BE HIGH ENOUGH THE
IRIS HAS RULES AS TO IF YOU
DON'T WANT TO PROVIDE SOCIAL
SECURITY.
YOU HAVE TO AT LEAST PROVIDE A
MINIMUM BENEFIT AT THE IRIS HAS
RULES AS I DON'T HAVE THEM IN
FRONT OF ME BUT IT IS POSSIBLE
AS LONG AS YOU MEET THE MINIMUM
RULES SET BY THE IRS
[inaudible]
THANK YOU.
THANK YOU OTHER QUESTIONS FOR
ANYONE.
UP I I HAVE WHEN YOU KNOW HOW
HOW DO YOU DETERMINE WHETHER OR
FUNDS ACTUARIAL ASSUMPTIONS ARE
ACCURATE OR CORRECT OR
REASONABLE.
AND HOW HOW DOES THAT WORK IN
THE LENGTH OF TIME THAT THE
AMORTIZATION PERIOD.
GOES IN THE DETERMINATION OF
THAT I KNOW WITH STIRS WE SET A
CERTAIN DATE.
ARBITRARILY I THINK A COUPLE OF
YEARS AGO --
IN WHICH THE THE BASIS OF THAT
SO OF ALLEN AT THE GALA APPROACH
YOUR QUESTION TWO DIFFERENT WAYS
WITH RESPECT TO THE ACTUAL
ASSUMPTION FOR EXAMPLE THE
INVESTMENT RETURN.
ALONG MEMBERS ARE EXPECTED TO
LIVE.
MOST RETIREMENT SYSTEMS IN
CALIFORNIA PERFORM WHAT'S CALLED
AN EXPERIENCED ADD YOUR REVIEW
OF THE ASSUMPTIONS EVERY FOUR
YEARS MORE WERE YOU LOOK AT THE
ACTUALEXPERIENCE OF THE PLAN
ALONG A MEMBERS LIVING --
SALARY INCREASES EVERYTHING THAT
YOU CAN THINK ABOUT.
THAT COULD AFFECT THE MEMBERS
BENEFIT SO DOES A THE BOARD AND
THOSE ASSUMPTIONS ARE ADOPTED.
SO BASICALLY THE WAY YOU MAKE
SURE THEY'RE APPROPRIATE IS BY
ENSURING THAT WHAT YOU ASSUME IS
IN LINE WITH YOUR ACTUAL
EXPERIENCE OF YOUR PLAN. TO
ANSWER YOUR OTHER QUESTION ABOUT
THE FUNDING PERIOD THIS IS MORE
OF A I'M NOT SURE THERE WAS
SOMETHING.
TAKE AN EXACT ANSWER HERE WHEN
YOU TRY TO FUND A PENSION PLAN
IT'S ALMOST LIKE THE SAME
QUESTION YOU HAVE AS AN
INDIVIDUAL YOU'RE ABOUT TO BY
YOU FOR WAS HOUSE.
YOU WALK INTO THE BANK.
AND NOW YOU ASK YOURSELF SHOULD
I GET A FIFTEEN YEAR MORTGAGE OR
SHOULD I GET A THIRTY YEAR
MORTGAGE.
IF YOU CAN AFFORD IT.
I THINK EVERYONE WOULD AGREE
IT'S PROBABLY BETTER TO HAVE A
FIFTEEN YEAR MORTGAGE YOU GOING
TO PAY LESS INTEREST LONG TERM.
BUT NOT EVERYONE CAN AFFORD IT
THAT THE FUNDING A PENSION PLAN.
IS THE SAME THING IT'S A
BASICALLY IT'S A COMPROMISE
BETWEEN HOW QUICKLY DO YOU WANT
TO GET. TO A 100% FUNDED VERSUS
ALL HIGH THE CONTRIBUTION RATES
NEED TO BE AND HOW MUCH
VOLATILITY ARE YOU WILLING TO
TAKE ON ON THE YEAR TO YEAR
BASIS.
SENATOR THERE IS AN EXACT ANSWER
TO QUESTION IT'S MORE OF A I
THINK IT'S WHAT MOST OF THE BORE.
MOST OF THE RETIREMENT SYSTEM
THE BOARD MEMBERS WILL GO TO
THIS DISCUSSION WITH IRAQ TREES
AS TO WHAT'S AN APPROPRIATE --
FUNDING PERIOD AND BOARD MADE
THE DECISION GOING FORWARD IN
THE FUTURE TO GO FROM THIRTY
YEARS TO A TWENTY YEAR
AMORTIZATION.
A FAUCET CAL STIRS --
DE FUNDING PERIOD AS WAS QUOTED
EARLIER IS SET IN STATUTE WE'RE
TRYING TO FIND AND ELIMINATE THE
UNFUNDED LIABILITY BY TWO
THOUSAND AND FORTY SIX BUT FOR
MOST OF THE RETIREMENT SYSTEMS
IN CALIFORNIA.
THE BOARD WILL GO THROUGH THIS
DISCUSSION AND DECIDE WHAT IS AN
APPROPRIATE FUNDING PERIOD.
PERIOD THANK YOU MISTER ALAA YES
SEVEN OVER DOT.
HOW HAS LIFE EXPECTANCY AND YOU
MAY NOT YOU I'M YOU MAY NOTICE
HOW THE TOP YOUR HEAD YOU MAY
NOT LET'S JUST TAKE MAYBE LAST
FIFTEEN YEARS?
HOW HAS LIFE EXPECTANCY CHANGED?
IT HAS YOU HAVE THE NUMBERS YES
I DO AN ENTER TO CREATE BUT HOW
AMONG CREASE. FOR US AT CAL STAR
IS WE'VE ADDED ALMOST FIVE TO
SIX YEARS --
THE OTHER THING THAT'S VERY
IMPORTANT TO LOOK AT IS OF NOT
EVERYONE IN THE UNITED STATES.
LIVE A HAS THE SAME LIFE
EXPECTANCY FEW LOOK ACROSS THE
US IT'S QUITE DIFFERENT WE YEAH.
WE ARE BLESSED IN CALIFORNIA
BEING IN IN IN THE STATE WHERE
LIFE EXPECTANCY TENDS TO BE
LONGER THAN THE REST OF THE
COUNTRY.
AND WHEN YOU LOOK AT RETIREMENT
SYSTEMS IN CALIFORNIA NOT I
DON'T KNOW IF YOU SAW SAID THERE
WERE A COUPLE NEW STORIES
RECENTLY ABOUT THE A STUDY
RELEASED BY THE SOCIETY OF
ACTUARIES.
IT'S SOMETHING THAT'S BEEN WELL
KNOWN TO US BUT FOR EXAMPLE
TEACHERS HAVE ALWAYS LIVE MUCH
LONGER THAN THE REST OF THE
POPULATION.
IF YOU LOOK AT US AT CAL STARS
AND YOU COMPARE TO CALPERS CAL
STAR WAS MEMBERS LIVE ON AVERAGE
THREE YEARS LONGER THAN THE
CALPERS MEMBER.
AND A CALPERS MEMBER LIVE
SOMETIME ON AVERAGE TWO THREE
YEARS LONGER THAN YOUR TYPICAL
SOCIAL SECURITY --
INDIVIDUAL TO SOMETIME AGO WHEN
WE HAD A DISCUSSION CAL STARS
OVER THE PROPER ASSUMPTIONS YOU
HAVE.
TO YOU KNOW WHEN THE SYSTEM PAYS
THAT CALPERS AND CAL STIRS WILL
BOTH PAYING IN THE FIFTEEN TO
TWENTY BILLION DOLLARS OF
BENEFIT TO YOU --
YOU CAN DO THE MATH QUICKLY WHEN
YOU ADD ONE YEAR LIFE EXPECTANCY.
IF THAT IT ADDS UP QUICKLY AND
SO A A ARE THOSE ASSUMPTIONS.
THAT YOU MIGHT REBOOT THAT
NUMBER IN FUTURE YEARS ARE THOSE
ASSUMPTIONS BUILT IN YOUR
PROJECTIONS THEY ARE SO RIGHT
NOW THEY ARE BUILT INTO IT.
IT IS IT IS PROBABLY THE SECOND
BIGGEST DRIVER BEHIND COST AFTER
THE INVESTMENT RETURN ASSUMPTION.
IS THE WHAT WE CALL THE
MORTALITY ASSUMPTION OF THE LIFE
EXPECTANCY AT AND THEN WHAT IS A
WHAT IS FULLY FUNDED OR 1100%
FUNDED ME DOESN'T MEAN. FOR THE
MEMBERS YOU HAVE NOW YOU WON'T
HAVE TO PUT ANOTHER DOLLAR IN.
AND THEY WERE AND YEARS AGO WHEN
I WAS ON THE CITY COUNCIL USE
THE TERM SUPER FUNDED RIGHT.
THERE WAS A CLAIM THAT THEY WERE
SUPER FUN AND I THINK YOU'D
NEVER HAVE TO PUT ANOTHER DOLLAR
EVER.
IN IN IN THE PERSON.
CAN YOU CAN YOU WHAT WHAT ARE
THE DIFFERENCES THERE YES SO
FULLY FUNDED IT DOESN'T MEAN
YOU'LL NEVER HAVE TO PUT A
DOLLAR IN.
A SO FULLY FUNDED MEANS THAT YOU
HAVE.
YOU HAVE NO UNFUNDED LIABILITY
FOR THE SERVICE THAT'S LREADY
BEEN ACCRUED BY THE MEMBERS
MISTER SHORTER BEFORE TALKED
ABOUT THE NORMAL COST.
ON AN ONGOING BASIS THERE ALWAYS
NEEDS TO BE A CONTRIBUTION TO
PAY IF YOU WANT FOR THE SERVICE
THAT THE MEMBERS ARE ORDERING
AND THAT YOU.
MAY KNOW THE REASON BUT WHY MOST
RETIREMENT SYSTEMS IN CALIFORNIA
A COLLECTING CONTRIBUTIONS THAT
EXCEED THE NORMAL COST IS
BECAUSE MOST SYSTEMS HAVE AN
UNFUNDED LIABILITY.
SO THE SYSTEMS ARE TRYING TO
ELIMINATED.
SO TO THE EXTENT THAT YOU'RE A
100% FUNDED.
THEN THERE WOULD BE THEN THE
CONTRIBUTION WOULD SIMPLY BE THE
NORMAL COST.
A COUPLE YEARS AGO THE TERM
SUPER FUNDED STARTED TO FLOAT
AROUND BECAUSE IF YOU GO BACK.
TO NINETEEN NINETY NINE TWO
THOUSAND OF MOST RETIREMENT
SYSTEMS IN CALIFORNIA WERE WERE
ABOVE A 100% FUNDED.
AND MANY SYSTEMS NOT ALL BUT
MANY TOOK ALLOWED EMPLOYERS TO
TAKE CONTRIBUTION HOLIDAYS.
AT FOUR SEVEN CALLOUSED OR WERE
TO WERE EMPLOYERS AT THAT HAVE A
CONTRIBUTION HOLIDAY BUT MANY
DID.
AND THOSE SYSTEM THOSE PLANS
WERE OFTEN REFERRED AS SUPER
FUNDED SO YOU WERE YOU WERE
ALLOWED TO TAKE SOME KIND OF
CONTRIBUTION HOLIDAY.
WHICH NOW.
WITH GOV REFORM PEPPER ON TWO
THOUSAND AND THIRTEEN DOES
CONTRIBUTION HOLIDAYS WILL NO
LONGER BE ALLOWED IN CALIFORNIA
SO IF THERE'S EVER A TIME WHERE
WE ARE ONCE AGAIN.
WHICH YOU KNOW I HOPE WE DO --
WHERE WE ARE AND A SURPLUS
POSITION FROM A FUNDING
PERSPECTIVE THEN OF CONTRIBUTION
WOULD STILL HAVE TO FLOW INTO
THE PENSION SYSTEM?
AND WITH REGARD TO THE
GOVERNOR'S PROPOSAL WHICH IS
THREE BILLION INTO STIRS RIGHT
WAS IT ONLY STIRS.
IT'LL BUT IT'S BASICALLY FOR
YEAH SO FOR US IT'S A
FORECASTERS IT WOULD BE.
BASICALLY I THINK IN THE COMING
BUDGET YEAR FOUR POINT ONE
BILLION TWO CAL STIRS AN ADDICT
THREE BILLION TO CALPERS AND
IT'S REALLY ONLY A HOLIDAY FOR
TWO YEARS OUT ITS NOT A HOLIDAY
IT'S JUST TO PAY OFF THE ARE NOT
A LOT OF LEADER IT'S IT'S SOME
IT'S PART.
OF A HOLIDAY BECAUSE THEY'RE NOT
RAISING IT TO THE LEVEL THAT
THEY WOULD OTHERWISE CORRECT
IT'S A LITTLE BIT DIFFERENCE OF
FOR THE FOR THE THREE BILLION
THAT'S COMING TO CALLAS STAR IS
ON BEHALF OF THE EMPLOYER IS.
WHAT THE WHAT THE PROPOSAL IS TO
YOU WAS SEVEN HUNDRED MILLION TO
PAY THE AMOUNT ON BEHALF OF THE
EMPLOYER IS RIGHT?
AND THE OTHER TWO POINT THREE
BILLION TO REDUCE THE SIZE OF
THE UNFUNDED LIABILITY SO IT'S A
IT'S A LITTLE BIT OF BOTH.
THANK YOU THANK YOU DR BEN.
I THANK YOU.
IT YOUR PRESENTATION WHEN THINGS --
AS I HEAR YOUR ANSWER --
TO SUMMER MCDONALD'S QUESTION IS --
IS REALLY THINKING ABOUT HOW DO
WE COMMUNICATE TO THE PUBLIC
THIS WHOLE --
TERM OF FUNDED UNDER FUNDED OVER
FUNDED SUPER FUNDED OR WHATEVER.
BECAUSE I THINK UNFORTUNATELY AS
WE HEAR TRY TO MAKE PUBLIC
POLICY AND MAKE THE RULES LIKE
PEPPER OTHER TYPES RULE.
THE THE HELP GOVERN --
BOTH --
STIRS IN PERSON.
THAT I THINK PUBLIC
MISPERCEPTIONS ARE AN ABILITY TO
CLEARLY COMMUNICATE WHAT DOES IT
MEAN WHEN SOMEONE SAYS YOU'RE
FULLY FUNDED OR YOU'RE UNDER
FUNDED OR YOUR SUPER FUNDED --
CAN LEAD TO BAD POLICY MAKING
BECAUSE I THINK WITHOUT A TRUE
UNDERSTANDING OF WHAT THAT
REALLY MEANS.
WE START MAKING BAD POLICY
DECISIONS WE CAN ARGUE ABOUT THE
PENSION HOLIDAYS ARE MADE RIGHT
WHAT WAS THAT SUPPOSED TO MEAN
WHEN YOU'RE FULLY FUNDED OR
SUPER FUNDED RIGHT WHAT DOES
THAT REALLY MEAN SO.
I GUESS I WOULD URGE AND I KNOW
THAT --
WE'RE GOING TO HAVE --
THE OTHER SYSTEMS COME UP MORE
SPECIFICALLY ON THE ACTARIAL
SIDE TO FIGURE OUT HOW WE
COMMUNICATE THESE THINGS RIGHT
NOW WE'RE GOING TO HAVE TO
COMMUNICATE WHAT DOES IT MEAN
THAT WERE UNDER FUNDED RIGHT
THERE'S A LOT OF ANXIETY ABOUT
THAT WATER UNFUNDED LIABILITY IS
AND I THINK THERE'S SOME.
MISPERCEPTIONS ABOUT THAT AND
THEN ALSO IF.
I HOPE WE GET TO A SITUATION
WHERE WE CAN SAY WERE FULLY
FUNDED BUT WHAT DOES THAT REALLY
MEAN RIGHT THAT DOESN'T MEAN
THAT -- WELL
ALL THE MONEY'S THERE WE CAN
JUST WALK AWAY AND OR YOU DON'T
NOW WE CAN GIVES MORE STUFF AWAY
RIGHT -- AND
WE KNOW THE MARKETS GO UP AND
DOWN OVER FUNDED IS WHEN THE
MARKET'S UP IN WHEN THE MARKET
FALLS THAT UNDER FUNDED THAT.
FULLY FUND THEIR SUPER FUND IT'S
ONLY BECOMES UNDERFUNDED GREAT.
ARE UNFUNDED LIABILITY SO I
GUESS THAT WOULD BE MY PLEA TO
FIGURE OUT HOW WE BETTER
ACTUALLY MESSAGE THESE THESE
THINGS --
AND HOW WE CAN HELP I
COMMUNICATE THAT AS WELL SO WE
CAN COMMUNICATE OR CONSTITUENTS.
IF YOU COULD BE A BRIEF ANSWER
AT APPRECIATE IT WERE WAY BEHIND
SCHEDULE.
ALRIGHT THANK YOU ALL VERY MUCH
THANK PREVIOUS AREAS I JUST NEED
A CLARIFICATION ON ONE THING
I'LL BE GUESTS.
WITH REGARD TO THE CONTRIBUTION
RATE I'M LOOKING AT A CHART HERE
I'M NOT SURE IF THIS WAS FROM
YOU.
BUT TO TALK ABOUT THE VARIOUS
CONTRIBUTION RATES IS THAT
EMPLOYER AND EMPLOYEE COMBINE.
THESE ARE ONLY THE IT'S ONLY THE
EMPLOYER CONTRIBUTION WITHOUT
FOR THIS FISCAL YEAR ONLY THANK
YOU.
VERY GOOD THANK YOU SLAMMER --
FOR PROCEDURE PRESENTATION WHEN
I MOVED.
TO ITEM NUMBER --
FIVE FOR WHICH IS THE CALIFORNIA
PUBLIC EMPLOYEES RETIREMENT
SYSTEM MARTY FROST AND BEEN BANG
[inaudible]
GOOD MORNING [inaudible]
MY BEEN.
LOOKING FORWARD TO YOUR
PRESENTATION WILL THANK YOU OKAY
MORNING SENATOR HELL AND
ASSEMBLY MEMBER RODRIGUEZ
MEMBERS OF THE COMMITTEE MY NAME
IS MARCY FROST ON THE CEO IT
CALPERS.
SO I WILL USE MY FIVE MINUTES AS
WISELY AS I CAN AND TRY TO BE
ADDITIVE TO THE TWO FORMER
SPEAKERS WHO WERE BEFORE YOU.
SO WE'RE HAPPY TO BE HERE AGAIN
TO SHARE OUR PERSPECTIVE ABOUT
CALPERS AND BENDING ALL HAVE HIM
INTRODUCED HIMSELF BUT WE'RE
VERY EXCITED TO HAVE BEEN JOIN.
REJOIN THE TEAM AFTER BEING WITH
CALPERS FOR ABOUT SEVEN YEARS HE
IS SAD BACK WITH US AND HAS BEEN
HERE FOR ABOUT SIX WEEKS.
I'M A COUPLE OF THINGS FOR US SO
I MEAN IT'S BEEN A LITTLE BIT OF
TIME TALKING ABOUT THE LAST TWO
YEARS AND SOME OF THE REALLY
IMPORTANT DECISIONS HAD BEEN
MADE IN THE SYSTEM.
AND THEN I'M GOING TO ASK BEEN
TO REALLY TALK WITH YOU ABOUT
THE NEXT TWO TO FIVE YEARS AND
WHAT CALPERS IS REALLY FOCUSED
ON AND THINKING ABOUT.
I THINK YOU ALL HAVE THIS HAND
OUT BEFORE YOU IF NOT --
WE CAN GET THIS TO YOU --
BUT SOME PEOPLE IN THE AUDIENCE
HERE HOPE WE CAN GET THIS TO YOU
BUT I'M CALPERS REALLY IS ABOUT
PEOPLE AND WE FIRMLY BELIEVE
THAT DEFINED BENEFIT PLANS ARE
THE WAY TO MAKE SURE THAT PEOPLE
HAVE FINANCIAL SECURITY --
AFTER THEY STOP WORKING.
WE SERVE ABOUT ONE POINT NINE
MILLION MEMBERS ON THE PENSION
SIDE.
AND ONE POINT FIVE MILLION
MEMBERS ON THE HEALTHCARE SIDE
SO WE ARE ALSO THE SECOND
LARGEST PURCHASER OF HEALTH CARE
BESIDES THE FEDERAL GOVERNMENT
IN ADDITION TO RUNNING.
THE BIGGEST U. S. PUBLIC PENSION
PLAN.
WE PAY OUT ABOUT TWENTY THREE
BILLION DOLLARS PER YEAR AND
PENSION BENEFITS SEND MOST OF
THOSE BENEFITS ARE BEING SPENT
IN CALIFORNIA.
SO WE'VE TALKED A LITTLE BIT
ABOUT THE EMPLOYER CONTRIBUTION
RATES THE NUMBER CONTRIBUTIONS
THAT TWO THIRDS OF THAT BENEFIT
IS ACTUALLY BEING PAID OUT OF
THE INVESTMENT RETURNS WHICH IS
WHY THIS ROLE SITTING NEXT ME
THIS PERSON SITTING NEXT TO ME
IS REALLY CRITICALLY IMPORTANT
TO THE SYSTEM.
AND THE OVERALL HEALTH.
NOT MAJOR DECISIONS HAVE BEEN
MADE IN TWO THOUSAND AND
SEVENTEEN THAT SYSTEM SET AT
ABOUT 68% FUNDED ARE MEETING
WITH 68% OF THE ASSETS NEEDED TO
PAY FOR THE BENEFITS OF THE
LIABILITIES.
AS OF JUNE THIRTIETH OF TWO
THOUSAND EIGHTEEN A SYSTEM SET
AT 71%.
AND THERE ARE SOME DECISIONS
THAT HAD TO BE MADE AGAIN.
TO MAKE SURE THAT THE SYSTEM WAS
IN A SUSTAINABLE --
PLACE THINK EVERYONE HAS THEIR
COPIES DOWN.
AND THE FIRST DECISION THAT WAS
MADE AND THAT WAS ACTUALLY
DECEMBER OF TWO THOUSAND AND
SIXTEEN WE TALKED ABOUT THE
LOWERING OFTHE DISCOUNT RATE.
SO WE LOWERED IT FROM SEVEN
POINT FIVE THE STEPS AND WE
HEARD LOUD AND CLEAR FROM OUR
THREE THOUSAND PUBLIC EMPLOYERS
THAT THEY NEEDED TO PLAN FOR
THOSE REDUCTIONS THROUGH A MORE
METHODICAL WAY I EAT DON'T PUSH
THAT OUT IN A WHEN YEAR
REDUCTION AND GIVE US A LITTLE.
BIT OF TIME TO PLAN FOR THAT IN
OUR BUDGETS SO WE DID THAT THE
STATE TOOK IT IN THE FIRST YEAR
SCHOOLS AND LOCAL STICK IT IN
THE SECOND YEAR.
AND WE ARE MOVING THROUGH ALL OF
OUR VALUATION REPORTS AND
LOWERING THAT AGAIN THAT
DISCOUNT RATE DOWN TO SEVEN OF
WHICH THE STATE IS AT SEVEN I'LL
ASPIN TO TALK ABOUT THE ASSET
ALLOCATION.
BUT WE ALSO SPOKE A LITTLE BIT
ABOUT THE SHORTER AMORTIZATION
WHERE WE TOOK THE THIRTY YEAR
AMORTIZATION AND WE LOWERED IT
TO TWENTY YEAR.
AND THE TWENTY YEARS ONLY FOR
FUTURE GAINS AND LOSSES AT THE
THIRTY YEAR REMAINS IN EFFECT
FOR ALL FORMER --
GAINS OR LOSSES RELATED TO THE
U. L..
AND ONE OF THE REASONS THAT WE
DID THAT TWICE WE SOUGHT
NEGATIVE AMORTIZATION AND IN THE
FUND AND THAT IS NOT A GOOD
FINANCIAL POSITION --
FINANCIAL POLICY FOR THE
ORGANIZATION SO AGAIN WORKING
THROUGH NUMEROUS STAKEHOLDERS
THE EMPLOYERS REALLY WORKING
THROUGH THE AFFECTS OF THAT KIND
OF CHANGE ON BUDGETS.
SO WE WERE ABLE TO GET THAT IN
PLACE.
AND WE ALSO TALKED A LITTLE BIT
ABOUT THE EXTRA CONTRIBUTIONS
THAT HAVE COME INTO CALPERS SO
GOVERNOR BROWN AND THIS
LEGISLATIVE BODY SIX BILLION
DOLLARS CAME INTO THE PLANET TWO
THOUSAND SEVENTEEN WE REALLY
APPRECIATE THAT THANK YOU VERY
MUCH -- THAT
HELPS TO PAY DOWN THAT UNFUNDED
ACTUAL RELIABILITY.
AND THEN THERE IS A PROPOSAL TO
PAY CALPERS AND ADDITIONAL THREE
BILLION DOLLARS TO PAY DOWN
AGAIN ANOTHER PAYMENT TO THE U.
I. L..
AND THEN LAST BEFORE I TURN IT
OVER TO BàN AND THEN OBVIOUSLY
BE AVAILABLE FOR ANY QUESTIONS
THAT YOU MIGHT HAVE AS WE WE
REALLY HAVE BEEN THINKING ABOUT
THE TYPE OF TOWN I'M SO HIRING
THEN BACK INTO THE ORGANIZATION
AND THEN MANY OF YOU KNOW THAT
WE HIRED.
A NEW CFO NAY MICHAEL COHEN WHO
I THINK MANY OF YOU HAVE AN
OPPORTUNITY TO WORK WITH WHEN HE
WAS GOVERNOR BROWN'S FINANCE
DIRECTOR.
SO HE IS WITH US FIRMLY IN PLACE
AND WE'RE EXCITED TO HAVE THESE
TWO NEW HIRES WITH US BUT
APPLIES THEIR MAKE UP A LITTLE
BIT OF TIME AGAIN AND BE
AVAILABLE FOR QUESTIONS AS I
TURN IT OVER TO BEN.
THANK YOU BETTER MORNING
THINKING MORE SEE UGLY MONNING
OF COMMITTEE MEMBERS MY NAME'S
YOU BUT NONE OF THE SHIPPING
LANES AND US CHIEF YOU MUCH
OFFICE OF A CALPERS.
OF SOUL OF ANOTHER SPEND THE
NEXT FIVE MINUTES WERE BRIEFLY
GIVE YOU A INTRODUCTION FOR THE
YOU MUST IN OFFICE AND THEN
DISCUSS THE CHALLENGES WE FACE
IN THE U. MANAGEMENT OF THE
APARTMENTS TODAY AND
OPPORTUNITIES WHERE HIVE.
AND IMPROVE FOR THE LA TALK
ABOUT THE IMPORTANCE OF A
PRIVATE EQUITY PRIVATE ASSET
CLASSES.
TO HELP US TO ACHIEVE THE
REQUIRED RATE OF RETURN.
SO I DO SEE ON FLIGHT NIGHT OF
THE U. MUCH I'M OFFICE --
ISRAEL ORGANIZED AROUND AT THE
MAJOR ASSET CLASSES --
WE HAVE GLOBAL EQUITY --
BASE OF 50% OF THE I LOCATION
FIXING COME 28%.
AND THE PRIVATE EQUITY EIGHT
PRESS TERMS OF THE THAILAND THE
CAPITAL TO JANET WHICH RETURN
THE TO DECIDE SEE A NUMBER OF
CHALLENGES FOR ONE YOU KNOW --
IN THE PAST --
TEN YEARS OF THE CAPITAL MARKET
HAS DELIVERED --
PRETTY DECENT --
RETURNS BUT THE TAIL WIND AWARD --
FAVORABLE FACTORS THAT ATTRIBUTE
INTO -- TO
DECENT PERFORMANCE IN PASTA
YEARS SUCH AS A DECLINE IN
INTEREST RATES AND THAT THE
INCREASE IN PROFIT MARGINS ARE
LESS LIKELY TO REPEAT.
IN THE FUTURE.
AND ALSO AT THE TOP VIOLATIONS
OF OF ALL MAJOR ASSET CLASSES
ALL HIGH WHICH MAY IMPLY LOWER
RETURNS IN THE FUTURE.
AND TO ALL OF THE GLOBAL
ECONOMIC BY A BACKDROP SO WE
EXPECT THE GLOBAL ECONOMY --
TO GROW AT A SLOWER PACE --
A UNIT FUTURE DUE TO ON FIELD --
TRANSIT SATELLITE A SUCH AS A
DEMOGRAPHIC TRENDS AND UP FOR
FULL PRODUCTIVITY GAINS.
AND ALSO THE ANOTHER TRYING TO
THE FACES REALLY DO A FEW
OPPORTUNITIES AND OPPORTUNITIES
NOW IN THE FINANCIAL MARKETS.
AS TO THE FINANCIAL MARKETS ARE
BECOMING MALMO EFFICIENT WHICH
LEAVING OF FEW OPEN THE LAST
THAILAND'S LAST TIED INTO A FACE --
NOT LEAST IS ALL ON THIS THE ON
THE PHONE TO THE STATUS
ASSYRISKA LIMITS THE OPTIONS WE
HAVE TO A CHIEF OFF THE RECORD
RATE OF RETURN.
SO THESE ARE THE CHALLENGES WE
SEE IN THE CAPITAL MARKETS BUT
THEY ALSO ARE A C. OPPORTUNITIES
ALL AS WELL PARTLY.
THE OF THE ACTIONS A YOU AND I
GONNA TO BE IN THE RECENT PAST
BY INJECTING ADDITIONAL CASH
DOLLAR TO THE SYSTEM.
AND ALSO THE ACTIONS THAT --
THE INVESTMENT BOARD YOU MUSTN'T
COMEDIA CULPRITS TO SUCH AS
LOWERING THE DISCOUNT RATE 27% A
SHORTENED --
I'M A POSITION SCHEDULE FROM
THIRTY YEARS OR TWENTY YEARS
ALSO ALL THESE ACTIONS HELPED US
TO IMPROVE OF A LIQUIDITY
PROFILE.
AND WAYS TO IMPROVE THAT HE
COULD PROFILE.
WE HAVE SOME LIABLE OPTIONS TO
ACHIEVE THE 7%.
OF RETURN.
AND THAT THE REALLY APPLIES
REALLY FOR THE FUTURE IS FOLLOW
US TO FOCUS ON GENERATING 27% OF
RETURN.
DENTON OF FOCUSING ON DOING SO
BY ALL FOCUSING ON ABA
COMPARATIVE ADVANTAGES AND ADOPT
A LONG TERM FOCUS SO THAT'S
WHERE WE SEE THAT UNIQUE
OPPORTUNITIES.
THAT CAN AWAKEN REALLY TAKE A
LONGER TO OFFER THAT YOU
APPROVED OF THE CRITICALLY
PROFILE PASSED A TEN YEARS AND
TWENTY YEARS WITHIN OUGHT TO IN
A LONG TERM ALL BUT DIDN'T
ACHIEVE THE REQUIRED WITH.
HER.
AND AT THE LEAST TO MY THIS LAST
SECTION FROM MY MY TALK HERE IS
THE IMPORTANCE OF FOR PROBABLY
MARKET.
SO IT IF YOU LOOK AT CALPERS OUR
HISTORY.
WILL OUR OWN EXPERIENCE IN THE
PAST TWENTY YEARS PRIVATE EQUITY
IS A THE ONLY ASSET CLASS AT
DELIVERED A RETURN THAT HIGHER
THAN 7%.
AS YOU CAN SEE THE ONSLAUGHT ON
THE NEXT SLIDE.
UP IN THE PAST TWENTY YEAR
PERIOD PRIVATE EQUITY DELIVERED
TO ATTEND A HALF PERCENT AND THE
LAST YEAR A THEATER WITH US --
16%.
AND WE ALSO BELIEVE THAT GOING
FORWARD PRIVATE EQUITY IS EYES
ACOSTA DOUBLE GIVE US THE HIGHS
CHONG'S.
TO ACHIEVE THE 7%.
AND SO THE AS DO SOME OF YOU
KNOW THAT'S THE AWAY ARE
EXPLORING BECAUSE WE NEED A
PRIVATE EQUITY TO ACHIEVE THE
REQUIRED ME --
TO RETURN AND ALSO PROVIDE THE
STATE -- AND
WE CAN DO SO --
TO SYLVIA MOST MARK IN THE MODE
RISK PRUDENTLY IN A SMART WAY
NEAR SMARTLY WHAT I MEAN BY THAT
IS REALLY.
TO TAKE A LOT FIRST AND THEN THE
FLY OUR COMPARATIVE ADVANTAGES
AND THEN A TAKE A WANTED TO
FIGURE OUT A YOU MUST MISS
STRATEGY TO TAKE A LONGER TO OFF
OUR A STRUCTURE.
OF THE MONTH TO JUICE AND ONE OF
THESE TO TO A TO DO SO IS REALLY.
TO IMPART TO INCREASE OUR ALL
ALLOCATION TO PRIVATE EQUITY --
AND WE WILL HAVE BEEN TALKING
ABOUT TO TO ADDITIONAL BUSINESS
MODELS IN ADDITION TO WHAT ABOUT
DOING NOW WHICH IS THE CALPERS
INNOVATION AND A CELL CALPERS
PARTISAN FONT.
SO THESE ARE THE NEW IDEAS WE
ARE EXPLORING WAYS --
WITH THE INVESTMENT COMMITTEE AT
CALPERS -- I
THINK WE CAN SKIP THE LAST SLIDE
ON THE ALREADY IN CAVES AND
ENGAGEMENT AND DIVERSE MEANT ALL
POLICIES.
AND TURN OF BACK TO MARCY FOR
THE CLOSING REMARKS AND THEN
WE'LL BE READY TO ALL FEEL
QUESTIONS ALRIGHT SO JUSTIN KEY
TAKE AWAYS ONE OF THE THINGS WE
WANTED TO DO WITH YOU ALL THIS
MORNING IS TO UNDERSTAND THE
STRATEGIES THAT WE ARE WORKING
ON TO IMPROVE THE FUNDED.
STATUS 70% IS CERTAINLY A VITAL
SIGN ARTS A VITAL SIGN IT'S
COMMUNICATED OUT TO THE MEMBERS
AND TO THE PUBLIC ABOUT HOW
HEALTHY IS CALPERS.
SO WE TAKE THAT VERY SERIOUSLY
WE HAVE IT IN OUR OWN INNER IN A
RED INDICATOR FRANCIS 70% IS A
RED INDICATOR TO GET INTO A
YELLOW INDICATOR WERE THINKING
EIGHTY PERCENTILE TO GET INTO A
GREEN INDICATOR.
THAT'S GOING TO BE A 95% FUNDED
STATUS AND NAY STRATEGIES ARE
LONG TERM THESE ARE TWENTY
THIRTY YEARS STRATEGIES THIS IS
NOT A FIX THAT WILL HAPPEN
OVERNIGHT.
BUT WE ALSO KNOW THAT THE 7%
RETURN TARGET IS SOMETHING THAT
OUR INVESTMENT OFFICE HAS TO
FOCUS ON AND ONE OF THE WAYS
THAT THEY WANT TO FOCUS IS
REALLY LOOKING AT THE PRIVATE
EQUITY OR PRIVATE MARKETS.
AND LEVERAGING THOSE PRIVATE
MARKETS TO HELP US ATTAIN THAT
7% NOW THAT COMES THAT'S A VERY
HIGH REWARD --
TARGET 7% HIGH REWARD YOU HAVE
TO TAKE SOME RISK AND YOU HAVE
TO USE INNOVATION TO GET THERE
BUT WE HAVE TO BE VERY PRUDENT
ABOUT THE RISKS THAT WERE TAKING
BECAUSE AGAIN NOT BEING FULLY
FUNDED WE HAVE TO BE.
CAREFULLY MONITORING THAT FUNDED
STATUS SO WE ALSO I WANNA MAKE
OURSELVES AVAILABLE AND
ACCESSIBLE TO YOU ALL AT ANY
TIME AND REALLY APPRECIATE THE
ENGAGEMENT THAT YOU'VE HAD WITH
US SO FAR.
SO I THINK THAT DOES CONCLUDE
OUR REMARKS AND THANK YOU VERY
MUCH YES OF COURSE.
BEEN JUST QUICK QUESTION
REGARDING HIS PROPOSED --
INVESTMENT MODELS ANY BEEN
LOOKING OUT OF IS THERE ANY IDEA
FRIEDMAN FORWARD WHEN THAT BE
LIKE ANOTHER YEAR YOU THINK OR
OR WHAT'S WHAT'S THE TIME FRAME
ON THAT IF YOU ARE LOOKING AT
DOING THAT.
YEAH SO WE ARE.
APPROACHING THESE.
ICE PRUDENCE POSSIBLE AND
MEANTIME DUTCH WAIT NO WE NEED
X..
SOONER RATHER THAN LATER SOUL I
HOPE WE WILL BE ANOTHER --
WILL BE ANOTHER YEAR SHOULDN'T
BE ANOTHER YEAR.
THANK YOU SENATOR PAN OVER JUST
TO CUT CODE IF I MAY I JUST QUIT
YOUR BEST LIGHT ON HERE IS
NUMBER.
SIXTEEN ENGAGEMENT VERSE
DIVESTMENT I THINK IT'S A GREAT
OPPORTUNITY TO FURTHER EDUCATE
THE LEGISLATURE THAT WE SHOULD
NOT BE THE INVESTMENT ADVISER TO
THE CALIFORNIA PENSION FUNDS.
YOUR THE PROFESSIONALS YOU
SHOULD DO IT THANK YOU.
I THINK WE CAN ALL SHARE IN THAT
THOUGHT THANK YOU VERY MUCH OF
THE DOCTOR PAN I KNEW THERE WAS
A REASON AS TO KEEP US ALIVE.
WELL THANK YOU ACTUALLY I I WAS
GOING TO POINT OUT THAT PROBABLY
THAT WAS THE ONES LIKE YOU
SHOULDN'T HAVE SKIPPED.
WHEN JUST RECALLING MY LAST FOUR
YEARS IS CHAIRING AT FIRST
COMMITTEE --
PROBABLY TOOK MORE OF OUR TIME
THAN THAN THAN ANY OTHER ASPECT --
SO I'LL JUST LEAVE IT AT THAT SO
CERTAINLY WE WANT TO ENCOURAGE
ENGAGEMENT --
I IT IS CERTAINLY SO I SEE TWO
THINGS THE LAST. ONE EIGHT STEPS
YOU TOOK.
AND DRESSING SERVICE WAS THAT
PROFILE LOOK LIKE GOING INTO THE
FUTURE I MEAN WE HAVE WE TALKED
ABOUT LONGEVITY IN THE PREVIOUS
PANEL SO FORTH.
SO WE'RE LOOKING AT LIQUIDITY
OUR R. V. I MEAN APPRECIATE TAKE
THE STEPS ARE WE IN A GOOD PLACE
ON THAT I MEAN WE HAVE A
SITUATION WHERE WE'RE STILL
PAYING OUT MORE BECAUSE WE HAVE
MORE TIES THAN PEOPLE
CONTRIBUTING OF WHAT SO WHERE
WHERE ARE WE IN TERMS.
OF THAT PROFILE IN TERMS OF
PEOPLE CONTRIBUTORS VERSUS --
HE'S RECEIVING BENEFITS OKAY
THANK YOU CENTER PANTS YES WE
ARE STILL IN THE POSITION AND
NOT AND AND COMMON POSITION FOR
A PLANNED AS MATURE AS CALPERS
SERVER EIGHTY FIVE YEAR OLD
PLANS.
AND WE WE DO HAVE MORE RETIREES
BEEN ACTIVES AND I DON'T KNOW
WHAT THE RATIO IS EXACTLY BUT WE
CAN GET YOU THAT THAT DATA.
BUT THAT ALL YOU KNOW THAT
DEMOGRAPHIC GOES INTO HOW WE
FUND THE PLAN SO THE NORMAL
CLASS THAT DAVID SPOKE ABOUT
VERSES THE INFINITE ACTUAR
LIABILITY WERE FORECASTING --
THAT -- INTO
THE NORMAL COST CONTRIBUTION
RIGHT SO IT'S NOT UNEXPECTED.
THAT'S JUST A PART OF BEING A
MATURE PLANT WELL AND THE REASON
I BRING THIS UP IS AS WE FIGURE
OUT WHAT EXPECTATIONS ARE GOING
TO BE -- FOR
FOR THE PLAN --
WHEN YOU HAVE?
WELL IF YOU HAVE MORE MONEY
GOING OUT AND COMING AND THAT
ALSO MEANS THAT YOU MAY HAVE TO
HAVE A LARGER CASH POSITION YOU
MAY HAVE TO BE WHEN ANYONE WHO'S
BY THE MONEY MARKET.
ARE DOES THAT THAT RETURN IS A
BIT DIFFERENT THAN WHAT YOU CAN
GET THE STOCK MARKET.
AND ALSO THAT MEANS THAT SO YOU
HAVE TO HAVE A MORE CONSERVATIVE
THERE SHOULD BE SURE OF THE CASH
TO MEET YOUR OBLIGATIONS YOUR
OBJECT CURRENT OBLIGATIONS NOT
JUST IN THE FUTURE ONES AND SO --
AND SO JUST A I THINK ALSO THAT
ALL BECAUSE GIVING THAT
LIQUIDITY SO IT'S NOT JUST ABOUT --
I HAVE A CHUNK OF MONEY I CAN
JUST TAKE IT ALL THE SB FIVE
HUNDRED AND WHICH HAS A NINE
POINT NINE THE AND ALL THREE
YEAR RETURN IT'S ADDRESS THAT
YOU HAVE TO HAVE THAT BALANCE
AND MAKES THE RIGHT OUT.
YOU WON'T BE KEPT TRYING TO
LIQUIDATE ASSETS.
WHEN THE MARKET'S DOWN RIGHT
BECAUSE THEN YOU REALLY HAVE TO
TAKE THE LOSS YOU CAN'T IT'S NOT
TO THE PAPER LOSSES REAL LOSS SO
I GUESS THE OTHER QUESTION THOSE
AROUND THE PRIVATE EQUITY IN
NICE CERTAINLY HEAR WHAT YOU'RE
SAYING ABOUT PRIVATE EQUITY?
AT THE SAME TIME A I THINK THERE
IS PUBLIC CONCERN ABOUT SOME
THESE PRIVATE EQUITY GROUPS
BECAUSE SOME OF THEM CHARGE VERY
LARGE FEES.
SO FORTH SO --
AND AGAIN --
YEAH WE THINK ABOUT CALPERS IS A
VERY BIG SYSTEM WORD PROBABLY
COMPARED TO OTHER INVESTORS WERE
NOT SO BIG GUY THERE CERTAINLY.
NOW SOVEREIGN WEALTH FUNDS OTHER
TYPES OF THINGS OUT THERE AS
WELL BUT TO WHAT DEGREE DO YOU
THINK.
WHAT STEPS CALPERS IS ABLE TO
TAKE? ONE AS YOU ARE IN THE
PRIVATE EQUITY MARKET TO TRY.
TO NOT JUST MAXIMIZE RETURNS
THAT'S ALWAYS THE GOAL ONE BUT
ALSO SOMETIMES RETURNS ARE
DEPEND ON WHAT FEES PEOPLE TAKE
OUT AS WELL AND WILL OFTEN SEE
ARTICLES CRITICIZING THE LEVEL
FEES THAT ARE BEING CHARGED BY.
THESE PRIVATE EQUITY FUND SO
WHAT ARE WE GONNA WHERE THINGS
CALPERS CAN DO.
TO LOWER THE FEES WHICH ACTUALLY
THAT INCREASES OUR RETURNS AS
WELL AND AND STILL BE ABLE TO
PARTICIPATE IN THIS.
TELL US INDEPENDENCE BERKELEY
QUESTIONS SO YOU GO TO SLIDE
FIFTEEN TO NEW PROPOSALS THAT --
UNDER DISCUSSION UNDER
CONSIDERATION CALPERS IN THE
INNOVATION HARDER THAN FUND
COUNSEL YOU OUGHT TO WRITE THAT
YOU KNOW --
IT COULD GET THEIR TWO POINTS --
WE LOOK AT A PRIVATE PRIVATE
EQUITY AND I SAT CLASS A. HAS
DUE TO DELIVER THE BEST
PERFORMANCE TO ASSUME THAT HE'S
I COULD BE AS HIGH AS A CLASS
THAT WE DO NOT LIKE.
FOCUS ON THE HIGHER FEES BUT
AGAIN THE PULLED UP ALL
PERFORMANCE WHERE CODING IS
NIGHT OF THE FEES EVEN AFTER ALL
THE FEES EXPENSES TO THE BEST
PERFORMING ASSET CLASS.
BUT THERE ARE THINGS I DECIDED
HIGHER FEES LACK OF TRANSPARENCY
LACK OF CONTROL.
AND THAT THAT'S EXACTLY WHY WE
ARE PROPOSING AND CONSIDERING A
SLIGHT FIFTEEN OFFSET FIFTEEN
THE INNOVATION HARD ISN'T
DOESN'T INNOVATION TO MARCY ALL
WAS ALL REFERRING.
TO SO THE OLDER TO RETRIEVE THE
SAN PERCENT RETURN VISIT MARK
HOLIDAY --
WE NEED TO YEAH WE NEED THE
INNOVATION WAS ALL YOU KNOW
PATIENT IT'S LESS LIKELY WILL WE
CAN GET THAT TARGETS.
BUT DOING INNOVATION --
DOING IT --
THAT THAT --
NEW PIECES MODELED ON THE
CONSIDERATION WILL REDUCE THE
FEE.
WILL HAVE MORE TRANSPARENCY NO
LIGHTS TRANSPARENCY AND WILL
HAVE MORE CONTROL BECAUSE WEB
BREEN.
A LOT INVESTMENT DECISION AGAIN
HOUSE SO WE'LL HAVE MORE CONTROL
IN TERMS OF WHAT WHAT TYPE OF
INVESTMENT WHAT KIND OF STRATEGY
WE WILL ENGAGE AND WAS A DIRT
THAT THE SOCIETAL IMPACT.
CURRENTLY.
HOLIDAY USING SOME AUTOPAY EASES
FROM ALL OF THE HAVE LARGELY TO
SAVE OUR LEGAL CONTROL IN TERMS
OF WHAT KIND OF THE INVESTMENT.
AND YOU WHAT KIND OF INFORMATION
THE TRANSPARENCY THEY CAN SHARE
WITH US THE PROPOSES TO BRING A
HUFF OF THE IN HOUSE IN OKAY.
HOPPING HOLLIS BUT WILL HAVE
MORE CONTROL MALL TRANSPARENCY
AND LOWER SOCIAL INSTEAD OF JUST.
ESSENTIALLY HIRING AN OUTSIDE
HEDGE FUND MANAGER WHATEVER ELSE
FOR SOME OF THESE THINGS WERE
LOOKING AT ACTUALLY HAVING
PEOPLE IN HOUSE WHO WILL LOOK AT
SOME OF THESE THINGS WORKING
WITH. EIGHT EIGHT IS HOPEFULLY
NOT HAVE THAT HAPPEN OKAY I I
GOT ALL.
RIGHT TO BE PARTIALLY AND HOW
BUT BRING SOME OF THE IN HOUSE
SO THEREFORE WE CAN LOWER THE
COSTS AND ALSO INCREASE
TRANSPARENCY RIGHT SO YOU WILL
HAVE MORE.
INFLUENCE IN THE INVESTMENT
DECISIONS AND INFORMATION SHERRY
OKAY ART THANK YOU.
THANK YOU SENATOR PAM AND ANY
FURTHER QUESTIONS SEE NONE THANK
YOU VERY MUCH FOR YOUR
PRESENTATION.
WE'RE NOT MOVING TO CALIFORNIA
STATE TEACHERS RETIREMENT SYSTEM
ITEM FIVE ON OUR AGENDA.
JACK ENDS IN CHRIS.
ALMOND.
THIS IS NOT.
A JACK.
YOUR GOOD MORNING GOOD MORNING
IT IS STILL MORNING.
THANK YOU.
PLEASE SERVE AGAIN THANK YOU AND
WELCOME THANK YOU MISTER
CHAIRMAN AND COMMITTEE MEMBERS
I'M JACKING THIS I'M THE CEO OF
CAL STIRS --
I'M SORRY MY EIGHTEENTH YEAR IN
THIS ROLE IN THIS ORGANIZATION
AND CHRIS HILLMAN IS IN ITS
TWENTIETH YEAR IS OUR CHAU.
HE COULD NOT BE WITH US TODAY IS
OUT OF TOWN --
BUT I DO WANT TO MAKE SURE YOU
DO.
UNDERSTAND WE'VE BEEN THROUGH A
LOT OF THE CYCLES OF THE SYSTEM
A LOT OF THE CHALLENGES
UNDERSTAND THINGS WE'VE HAD TO
CONFRONT.
OVER THE YEARS MY OWN
BACKGROUNDS INSURANCE INDUSTRY I
WORK FOR AN INSURANCE COMPANY IN
ALL RIGHT --
FOR MANY YEARS SO I BRING THAT
RISK MANAGEMENT PERSPECTIVE I
THINK TO THE WORK WE DO I SEE
THIS MUCH LIKE AN INSURANCE
COMPANY IT'S MONEY COMING IN WE
INVEST THE MONEY AND WE'RE
PAYING PEOPLE.
REALLY LIFE ANNUITIES SO IT'S
REALLY MUCH LIKE A LIFE
INSURANCE --
BUSINESS.
YOU KNOW FROM AFAR PEOPLE TEND
TO LUMP CAL STIRS IN CALPERS
TOGETHER THIS IN THAT WE ALL DO
THE SAME THINGS IS ALL THE SAME
STUFF.
BUT ACTUALLY IS IS MARCY
HIGHLIGHTED NUYS BUILT WHY WILL
TO THERE ARE DIFFERENCES IN OUR
DEMOGRAPHIC CENTER FUNDING.
AND IN OUR INVESTMENT STRATEGIES
ONE THING THAT IS THE SAME
THOUGH IS THAT WE ARE FOR DO
SHERRY'S OF THE SYSTEM.
AND WE CAN'T SAY THAT ENOUGH WE
TALK TO YOU ABOUT THESE ISSUES
AND TALK ABOUT CONTROVERSIAL
ISSUES.
THAT PRODUCE SHIRI STANDARD IS
MUCH DEBATE IN THE PRIVATE
SECTOR.
CONGRESS THE SEC US DEPARTMENT
OF LABOR STILL HAVE NOT SETTLED
ON ON ADEQUATE FIDUCIARY
STANDARD FOR SELLING INVESTMENT
PRODUCTS IN THE PRIVATE SECTOR.
BUT FOR US HERE IN GOVERNMENT
IT'S VERY CLEAR WE ARE
ABSOLUTELY FIDUCIARY SO.
I WAS GONNA QUICKLY SHARE FOR
NUMBERS THAT I SHARE WITH MY
BOARD. TO REALLY HOPEFULLY BRING
US ALL TO UNDERSTAND THE
IMPORTANCE OF THIS PENSION AND
WHY WE NEED YOUR SUPPORT. FOR
WHAT WE DO WOULD CAL STIRS.
IT'S REALLY ABOUT THE MEDIAN FOR
SAVINGS ACCOUNT BALANCE IN THE
UNITED STATES.
SO THIS IS THE MEDIAN AMOUNT OF
MONEY PEOPLE HAVE.
IN A SAVINGS ACCOUNT.
YOU'LL BE SHOCKED AT THE NUMBER
THE SIMPLEST NUMBER TO REMEMBER
THE NUMBER IS.
ZERO AN UNFORTUNATE WHAT YOU
READ THE NEWSPAPER ALL THE TIME
OUR NUMBERS LIKE A HUNDRED
THOUSAND TWO HUNDRED THOUSAND
THREE HUNDRED THOUSAND BUT THOSE
ARE THOSE ARE PEOPLE THAT HAVE
RETIREMENT ACCOUNTS.
THE AVERAGE BELCHES ZERO IN OUR
COUNTRY.
THE PERCENTAGE OF WORKERS THAT
HAVE NO RETIREMENT ACCOUNT IS
59% IN THIS COUNTRY.
THE PERCENT OF WORKERS THAT FALL
SHORT OF THE MOST CONSERVATIVE
SAVINGS TARGET FOR THEIR AGE.
IS 77%.
AND THEN FINALLY THE NUMBER THAT
SCREAMS AT CAL STIRS WOMEN ARE
THREE TIMES MORE LIKELY TO LIVE
IN POVERTY IN RETIREMENT.
THAT IS THE PICTURE WE FACE IN
THIS COUNTRY AND WE HAVE TO
THINK ABOUT WHEN WE TALK ABOUT
THIS PENSION AND THE GOOD JOB IT
DOES FOR PRIMARILY THE WOMEN.
BECAUSE 72% OF OUR MEMBERS ARE
WOMEN.
HOME PORT IN THIS IS WHEN WE GO
THROUGH THESE CONTROVERSIES IN
CHALLENGES AND POLITICAL
CHALLENGES TALK ABOUT THESE
THINGS.
THIS ISTHAT IMPORTANT TO ALMOST
ONE MILLION TEACHERS IN
CALIFORNIA.
REMEMBER THE POPULATION
CALIFORNIA'S FORTY MILLION 25%
OF THOSE KIDS SO THAT'S THIRTY
MILLION ADULTS IN CALIFORNIA ONE
OUT OF THIRTY PEOPLE IS A SCHOOL
TEACHER IN CALIFORNIA COVERED BY
US.
DAVID R. I. ARE AREWONDERFUL
ACTUAR HIGHLIGHTED VIEW SOME OF
THE MORTALITY ISSUES THAT FACE
PENSION PLANS.
I DID WANT TO MENTION ONE
WONDERFUL STATISTIC FOR YOU
BECAUSE YOU ALL BECAUSE WE ARE A
ONE FEMALE BASED SYSTEM
OBVIOUSLY WE HAVE TO TAKE THAT
INTO CONSIDERATION THE DIFFERENT
MORTALITY.
BUT WHAT MAY SURPRISE YOU IS THE
WASN'T MENTION IS THAT FEMALE
TEACHERS LIVE LONGER THAN
FEMALES.
SO EVEN WITHIN THAT GENDER THERE
IS DIFFERENCES AND WE HAVE OVER
THREE HUNDRED AND TWENTY THREE
PRIMARILY WOMEN.
THERE NOW OVER ONE HUNDRED YEARS
OLD THAT WE PER TO DO SO PICTURE
OF THE AMOUNT OF FINANCIAL
SECURITY YOU NEED IF YOU RETIRE
AT AGE SIXTY TWO AND YOU'RE
GONNA LIVE DID.
NINETY AT IS INCREDIBLE.
WHAT WHEN I WAS BORN?
LONG TIME AGO.
PEOPLE THE AVERAGE RETIREMENT
AGE WAS SEVENTY AND YOU ONLY HAD
A PLAN FOR SEVEN YEARS OF
RETIREMENT.
TODAY RETIRING AT SIXTY TWO
SIXTY THREE SIXTY FIVE WHO NEED
TO REPLY AND FROM EIGHTY SIX TO
NINETY YEARS OLD SO IT'S
INCREDIBLE AMOUNT OF MONEY.
THAT HAS TO BE ACQUIRED IN SOME
WAY IN THESE PENSIONS TO THAT.
THE EXACT NUMBER FOR WOMEN IF
YOU LIVED AGE SIXTY TWO YOUR
LIFE EXPECTANCY IS NOW NINETY AS
A CALIFORNIA TEACHER.
CREDIBLE.
AS WAS MENTIONED OUR TEACHERS DO
NOT EARNED SOCIAL SECURITY
CREDITS OTHER HIGHLY DEPENDENT
UPON THIS SYSTEM FOR THEIR
BENEFIT THEY ALSO DO NOT GET IN
THIS IS OFTEN MISUNDERSTOOD.
MOST OF THE TEACHERS IN
CALIFORNIA GET ZERO FINANCIAL
ASSISTANCE IN RETIREMENT FOR FOR
HEALTH CARE.
IT IS NOT LIKE STATE EMPLOYEES
OR OTHER LOCAL GOVERNMENT
WORKERS SO THEY MUST TAKE THAT
INTO CONSIDERATION.
AND THEN FINALLY I TALKED OUR
TEACHERS ALL THE TIME INTO OUR
RETIREES AND I WOULD TELL YOU
THERE'S TO TAKE AWAYS FROM THAT
I THINK.
AGAIN WE HAVE TO HEAR THE VOICE
OF THESE PEOPLE ONE THING IS
THEY STILL WORRIED IS THE
PENSION GOING TO BE THERE FOR
THEM I STILL HEAR THAT BECAUSE
THEY READ THESE NEWSPAPER
STORIES ABOUT THE POLITICAL
ISSUES THE CONFLICT ISSUES.
AND THEY STILL WANT TO KNOW IS
THAT PENSION GOING TO BE THERE
FOR THEM AND THE SECOND THING IS
THEY WANT TO TEACH THEY DON'T
WANT TO BE FINANCIAL EXPERTS.
THEY DON'T WANT TO UNDERSTAND
HOW TO MANAGE THEIR PORTFOLIO
WORD REDO ASSET ALLOCATION FOR
M. SS MANAGER FEES THEY WANT CAL
STIRS TO DO THAT FOR THEM SO.
THOSE ARE TWO VERY IMPORTANT
THINGS WE ARE VERY HIGH TOUCH
ORGANIZATION WE ABSOLUTELY
BELIEVE THAT IF YOU'RE GONNA
RETIRE AND MANAGER*
SUCCESSFULLY YOU CAN'T DO IT BY
READING A WEB PAGE TO GET ALL
THAT INFORMATION NOW WE ALL HAVE
THAT WONDERFUL STUFF.
ON THE WEB BUT WE HAVE A VERY
EXTENSIVE COUNSELLING SYSTEM WE
CONDUCT OVER. 230-002-3000 ONE
ON ONE SESSIONS AND WORKSHOPS
WITH TEACHERS TEN THOUSAND OF
GROUP SESSIONS THIRTEEN THOUSAND
COUNTER LOCAL FRONT COUNTER
CONVERSATION SO THERE ARE
THOUSANDS AND THOUSANDS PERSON
TO PERSON.
SERVICE OPPORTUNITIES THAT WE DO
WITH OUR MEMBERSHIP TO MAKE SURE
THEY WERE TAKING CARE OF THEM.
I DID WANT TO TOUCH ON THE
FUNDING STATUS BECAUSE WE WERE
ABSOLUTELY HEADING TOWARD
INSOLVENCY BEFORE THE FUNDING
BILLS PASSED IN --
TWO THOUSAND FOURTEEN AND THAT
WAS A TERRIBLE MESSAGE FOR A
YOUNG TEACHER HERE STARTING
SCHOOL WHAT HOW WILL THIS HAPPEN
SO.
THE FUNDING BILL THAT PASSED WAS
ABSOLUTELY WHAT WAS NEEDED IT'S
A VERY.
AS THE LA A WAS A POINTED OUT A
NUMBER OF TIMES IT'S A VERY
COMPLICATED FUNDING PLANNED
UNDERSTAND --
BUT WE DO THINK IT'S DOING THE
JOB AND WHAT IT'S IN THE HOW
IT'S DEVELOPED.
IT PROVIDES FOR SEVEN YEARS OF
INCREASE SCHOOL CONTRIBUTIONS
WHICH RAISE THEIR RATES FROM
EIGHT AND A QUARTER PERCENT TO
NINETEEN POINT 1%.
WE'RE IN YEAR FIVE OF THAT NOW
THE CONCERNS RAISED AROUND THAT
AND SCHOOL BUDGETS AND WE
APPRECIATE THAT VERY MUCH THAT
WAS IN FACT THE REASON WHY.
THE LEGISLATION PROVIDED A RAMP
UP AND WAS NOT SOME IMMEDIATE --
SIGNIFICANT JUMP IN THEIR
CONTRIBUTION REQUIRED.
OUR FIRST FORMAL REPORT IS DUE
TO YOU ON JULY FIRST OF THIS
FUNDING PLAN.
NOW IT WHERE WE ARE AND DAVID WE
JUST READ A FEW MINUTES AGO WILL
BE ONE OF THE PRIME AUTHORS OF
THAT ALONG WITH RICK READER
CHIEF ACTUARY.
BUT I CAN TELL YOU RIGHT NOW THE
REPORT WILL SAY.
WE'RE DOING OKAY.
WE'RE DOING OKAY BUT THERE ARE
RISKS AROUND THIS IN THE WRIST
ALWAYS AROUND LONG TERM
INVESTMENT PERFORMANCE.
THAT'S WHY THE GOVERNOR'S
PROPOSAL WAS SO WELCOME TO
BECAUSE AGAIN A PROVIDES JUST A
BIT MORE EDGE. TO HELP ON THE
FUNDING PLAN OF WHAT WE NEED AND
AGAIN VERY VERY PLEASED TO SEE --
THE EARLY --
UP OFFERING OF THAT IN THE
BUDGET PROCESS.
ON THE INVESTMENT SIDE OF THE S.
MARCY PUT SAID WITH CALPERS
THERE IT'S 7% WE'RE AT 7%.
YOU KNOW THIS NUMBERS BANDIED
ABOUT LOTS OF PEOPLE HAVE
OPINIONS ONTHIS INVESTMENT SOME
SHOULD I WANT IT BANNED THAT FOR
YOU SO WE GET.
SOME SENSE OF ITS NORMALCY --
LET BUSINESS OPTION SO I WENT
INTO THE DATABASE FOR THE TOP
ONE HUNDRED PRIVATE SECTOR
PENSION FUNDS.
IS SOMETIMES THIS IS CONSTRUED
AS SOME PUBLIC SECTOR DRAMA
AROUND THIS ASSUMPTION IF YOU
TAKE THE TOP ONE HUNDRED PRIVATE
SECTOR PENSION FUNDS.
THEIR CURRENT INVESTMENT
ASSUMPTION IS SIX POINT 8% ON
AVERAGE.
IF YOU TAKE THE BODY A PUBLIC
PENSION PLANS IN AMERICA THEY
JUST RELEASED THAT.
OUR TRADE ASSOCIATION JUST
RELEASED THAT STUDY THIS WEEK
THAT AVERAGES ABOUT SEVEN POINT
25%.
SO YOU CAN KIND OF SEE THE
BOOKENDS TO THAT NUMBER.
AND AGAIN REMEMBER.
EVEN IN THE ABSTRACT THIS NUMBER
IS IT'S A PRECARIOUS THING TO
COMPARE.
HOW YOU INVEST YOUR MONEY WOULD
PROBABLY BE DIFFERENT THAN HOW I
INVEST MY MONEY SO THIS NUMBER
HAS TO BE A REFLECTION?
OF THE ASSET ALLOCATION AND
CAN'T BE SOME NUMBER WE PULL OUT
OF THIN AIR AND SAY OH IT'S 7% --
NO IT'S 8% DON'T KNOW IT'S 5%.
IT HAS TO STEP BE STEM BASICALLY
FROM THE CONSTRUCTION OF YOUR
INVESTMENT PORTFOLIO SO WILL BE
GOING TO THAT EXERCISE AGAIN
THIS YEAR AN ASSET ALLOCATION
PROCESS WITH OUR BOARD.
AND AT THE END OF THE YEAR WE
WILL LOOK AT THE INVESTMENT
ASSUMPTION AND IN PLACE OF AN
ASSUMPTION IN THE MORTALITY
ASSUMPTIONS THAT WE USE IN THE
PLAN WE DO THAT EVERY FOUR YEARS.
TO MAKE SURE WE'RE ON TRACK.
LAST COUPLE ISSUES I MENTIONED I
DO WANT HAVE INVESTMENT COSTS.
BECAUSE THE NUMBERS FOR SYSTEM
OUR SIZE OUR CALPERS ARE.
TREMENDOUS.
ALL WE WERE ONE OF THREE TO
DEVELOP A PUBLIC COST REPORT
THAT'S ON OUR WEBSITE.
THE DETAILS ACROSS EVERY ASSET
CLASS NOT JUST PRIVATE EQUITY.
BUT EVERY ASSET CLASSES WHAT
WE'RE PAYING OUT AND FEES AS
WELL WORTH WORKING LOOKING AT
RIGHT NOW OF THE PORTFOLIO COSTS
FEES FOR THE OUT EXTERNAL
MANAGERS EXCEED A BILLION
DOLLARS AND IF WE ADDED IN WHAT
WE CALL CARRIED INTERESTS AND
PRIVATE EQUITY THAT NUMBER GOES
TO A ONE POINT. EIGHT BILLION
DOLLARS.
SO IT'S A LOT OF MONEY THAT WE
HAVE TO SPEND TO MANAGE TWO
HUNDRED TWENTY BILLION DOLLARS.
97% OF ALL OF OUR PORTFOLIO
COSTS ARE WITH THOSE EXTERNAL
MANAGERS SO 97%. 3% OF THE COSTS
ARE FOR OUR STAFF.
YET THEY ONLY MANAGE 56% OF THE
ASSETS I WANNA MAKE SURE YOU SEE
THAT.
THAT CONCEPTUAL CONTRADICTION
THERE.
SO OUR OWN STAFF IS MANAGING 44%
OF THE ASSETS.
BUT TAKING UP ONLY 3% OF THE
COST.
THAT'S THE COST EQUATION WE
GOTTA START STRUGGLING WITH ALL
OF US IN RECOGNIZE.
THE EASIEST WAY TO MAKE MONEY
HERE IS NOT MAKING BEST BETS ON
THE MARKET IS SAVING ON FEES
ALWAYS I MEAN WE SHOULD DO THAT
OUR PERSONAL LIFE YOU SHOULD
ALWAYS LOOK FIRST TO FEES.
THAT IS WHERE THE SWEET SPOT
HERE IS FOR CHANGE FOR ALL OF US.
NOW I WOULD NEVER SAY TO YOU
WE'RE GOING TO BE EXPERTS HERE
IN PICKING A PRIVATE EQUITY
INVESTMENT IN CHINA.
BUT THERE'S A LOT MORE WE CAN DO
DIFFERENTLY AND THAT'S WHAT OUR
BOARD IN OUR BEST AND STAFF FOR
PURSUING NOW IS HOW COULD WE
PUSH IT THIS MODEL.
AND THINK DIFFERENTLY.
THERE IS A LEGEND BACK TO YOU
WITH THIS TO THE MORE WE PUSH ON
THAT MODEL THE MORE WE THINK
MORE.
LIKE A PRIVATE SECTOR ENTITY.
CAN WE SUCCESSFULLY MANAGE THIS
WELL WITH SOME OF THE GOVERNMENT
APPARATUS AROUND US.
THERE ARE MANY PURCHASING HUMAN
RESOURCE ISSUES THAT SURROUND
WORKING IN STATE GOVERNMENT AND
THERE WAS MAY NOT ALWAYS FIT A
COMMERCIAL MODEL AND THOSE ARE
THINGS WE HAVE TO THINK ABOUT
BECAUSE YOU CAN SEE. FOR EVERY
TEN DOLLARS I PAY X. Y. Z. ON
WALL STREET I'M GONNA PAY ONE
DOLLAR.
DO CAL STIRS EMPLOY SO IF WE CAN
PUSH ON THAT SUCCESSFULLY IN IT
IS THE BE ALL OF IT YOU CAN SAY
POTENTIALLY HUNDREDS OF MILLIONS
OF DOLLARS HERE.
IN THIS EQUATION.
LAST POINT ON DIVEST BUT IF I
COULD RESTATEMENT THAT IT'S
WITHOUT THAT WAS GOING TO BE MY
QUESTION YEAH THAT --
MISTER O'DONNELL REYES DID AND I
WANT TO SAY THE OLDER MAN DID I
I THINK WE ALL SHOULD LOOK HERE
THIS LEARN IT AND HOPEFULLY
THOSE ARE WATCHING.
OF CAN UNDERSTAND IT IS WELL IT
AND I WANNA I WANNA SETTLE
DIFFERENTLY THAT'S BEEN CHAD
ABOUT SO FAR TODAY IT IS I'D
LOOK AT INVESTMENT PORTFOLIO
THIS IS A GLOBALLY DIVERSE
PORTFOLIO ACROSS THE ENTIRE
WORLD.
IN EVERY INDUSTRY SECTOR.
THERE IS WE HAVE TO BE
RECOGNIZED FOR SOMETHING BAD
GOING ON ALWAYS SOMEWHERE IN
BUSINESS.
WHETHER IT'S A DAMN THAT BREAKS
OF BRAZIL.
A PHARMACEUTICAL PRODUCT THAT
TURNS OUT TO BE DANGEROUS CHILD
LABOR TO MAKE A CLOTHING PRODUCT.
OF COAL.
EMISSIONS THESE ARE RISKS THE
PERVADE THE ENTIRE PORTFOLIO.
SO WE CAN'T LOOK AT THIS
HAPHAZARDLY AND SAY MY GOSH
HERE'S AN ISSUE CERTAINLY LET'S
JUMP ON THIS ISSUE.
AND AND TAKE THAT OUT OF THE
PORTFOLIO IF BE NOTHING LEFT IF
WE LOOK AT RISK AND AGAIN I'M
GONNA GOT MY INSURANCE.
MINDSET ON THIS BECAUSE RISK PER
FADES ALL THE PORTFOLIO THIS IS
ABOUT HOW TO MANAGE THAT RISK
AND HOW TO DO THAT INTELLIGENTLY.
SO THERE THERE ARE ISSUES AT
TIMES THAT DESERVE THAT LEVEL OF
ANALYSIS WHETHER AT WELL WITH
THEIR SERVICING THE PORTFOLIO
WELL AND BRINGING VALUE.
AND THEN WHAT TO DO WITH IT.
SO WE AND AND AS AS CALPERS WE
HAVE EXTENSIVE STAFF NOW THAT
OUR ENGAGEMENT BASED EMPLOYEES.
THAT REALLY ARE USING THOSE
TECHNIQUES TO ENGAGE A COMPANY
AND DISCUSSED BUSINESS STRATEGY
AROUND THOSE ISSUES WHETHER IT'S
SAFE WORKING PRACTICES WORKING
CONDITIONS LABOR PRACTICES --
DIVERSITY ON A BOARD IS A HUGE
ISSUE RIGHT NOW --
THOSE ARE THE THINGS THAT
COULDN'T WHERE WE CAN MAKE A
DIFFERENCE AND WE'VE GOT A TRACK
RECORD DOING IT AND WE PROVIDE A
SMALL HAND OUT IN YOUR FOLDER
AROUND AS OF THE VARIOUS
ENGAGEMENTS THAT WE HAVE GOING
ON WHERE WE HAVE IN FACT MOVE
THE BALL FOR THIS.
ISN'T JUST ABOUT LOVE WRITING A
LETTER TO ACCOMPANY THIS IS
ACTUALLY SITTING DOWN WITH
SENIOR MANAGEMENT IN TALKING
ABOUT THESE ISSUES.
BUT I I ENCOURAGE YOU WHEN
SOMETHING IS OF CONCERN TO YOU
WE'D LET THAT PROCESS HAPPEN.
IN EXTREME SITUATIONS MMHM
DIVESTMENT MIGHT HAPPEN OUR OWN
BOARD HAS IN FACT MADE THAT
DECISION SEVERAL TIMES SO I
DON'T WANT TO TELL YOU IT'S IT'S
NOT NECESSARILY AN OUTCOME THAT
WOULD WORK.
BUT SOMETIMES BUT TO GET TO THAT
PROCESS IT SHOULD BE AFTER A
VERY LENGTHY FIDUCIARY PROCESS
NOT POLITICAL WOULD BE OUR VIEW --
BUT IT IS ONE OF THE GREATEST
IT'S IN MY EIGHTEEN YEARS AT CAL
STIRS OUR BOARD MEETINGS USED TO
BE VERY QUIET --
ENDEAVORS AND INDICT GOT A
SHARON HENDRIX RIGHT BEHIND ME
HERE AND IN A DILLON FOR MY
BOARD AT THE BOOK BOARD CHAIR
AND VICE CHAIR AND EVERY SINGLE.
BOARD MEETING WE HAVE NOW WE
HAVE PROTESTERS OVER SOCIAL
ISSUE OF SOME TYPE AND WE TRIED
MANAGE IT BUT IT'S PART OF THE
DISCUSSION VERY GOOD THANK YOU
WAS BANISHED I APPRECIATE YOUR
OTHER QUESTIONS AT ALL I'D LIKE
TO KEEP THEM TO A VERY MINIMUM
IF WE CAN'T WE'RE RUNNING.
OUT OF TIME.
I THANK YOU.
DID THAT YOU MADE YOU ALLUDED TO
IT -- AND I
KNOW THE SOMETHING COMES UP
BEFORE --
THIS COMMITTEE FREQUENTLY THE
ISSUE AROUND --
THE CIVIL SERVICE AND SERVE THE
COMPENSATION RESTRICTIONS AND SO
FORTH AND ONE EXPLORE ALL OF
THAT.
RIGHT NOW BUT I JUST WANTED A
MARKER ON THAT SINCE YOU
MENTIONED IT'S BUT I DO THINK
AND THIS ACTUALLY DOESN'T JUST
AFFECT STIRS AND PURRS ALL THAT
YOU WERE HERE AT SO WE RIGHT NOW
HAVE EXCEPTIONS.
FOR I THINK YOURSELF CO THE
INVESTMENT OFFICERS NOW THE
OPERATING OFFICERS ETCETERA I
THINK WE DO NEED TO LOOK AT
BECAUSE IT'S ACTUALLY THIS
COMMITTEE BECAUSE WERE ALSO THE
PUBLIC EMPLOYMENT COMMITTEE. TO
LOOK AT THE OVERALL STRUCTURE
WHERE INSTEAD OF TRYING TO DO.
FRANKLY END RUNS AROUND AND I
RECOGNIZE THE OVERALL STRUCTURE
OF COMPENSATION AND THE TYPE OF
RECRUITMENT WE CAN DO FOR OUR
CIVIL SERVICE BOTH IN OUR
RETIREMENT SYSTEMS AND ALSO IN
OUR PUBLIC EMPLOYMENT.
AS WELL I APPRECIATE YOU SAYING
THAT WE YOU WE WORK TOGETHER ON
THIS CONVERSATION MANY TIMES.
AND AND BUT I DO THINK I GIVEN
THE SIZE OF THESE VENTURE FEES
WE'VE GOT TO GET SERIOUS ABOUT
CUTTING COSTS NOW THEY ARE.
IT IS SOMETHING DEFINITELY TO
RECOGNIZE YOU KNOW QUESTIONS
THANK YOU HOURS INGRATIATED
YOU'LL GET FREE TO THE UPDATE.
ITEM NUMBER SIX STATE
ASSOCIATION OF COUNTY RETIREMENT
SYSTEMS [inaudible]
MR STERN [inaudible]
THANK YOU.
GOOD TO SEE CHIEF EXECUTIVE
OFFICER SACRAMENTO COUNTY
RETIREMENT SYSTEMS.
AND THE CO CHAIR OF THE
LEGISLATIVE COMMITTEE FOR THE
STATUS OF HIM COUNTY RETIREMENT
SYSTEMS IN TOTAL SO THANK YOU
WELCOME.
GOOD MORNING.
THANK YOU FOR HAVING ME HERE --
TO DISCUSS HOW THE COUNTY
EMPLOYEES RETIREMENT LAW OF
NINETEEN THIRTY SEVEN ACT --
WORKS --
AGAIN AMERICA STERN I'M THE CEO
OF THE SACRAMENTO COUNTY
EMPLOYEES RETIREMENT SYSTEM I
ALSO CO CHAIR THE LEGISLATIVE
COMMITTEE OF THE STATE
ASSOCIATION OF COUNTY RETIREMENT
SYSTEMS WHICH IS OUR EDUCATION
ORGANIZATION FOR THE SYSTEMS.
SO WHAT I WANT TO TALK ABOUT
THIS FOR A MINUTE IS A LITTLE
BIT HISTORY AND WHEN I'M WHEN
I'M DOING HERE WHAT IS NINETEEN
THIRTY SEVEN WHAT'S SPECIAL
ABOUT THAT YEAR.
CERRO --
LET'S GO BACK TO THE GREAT
DEPRESSION THE TIME OF OBVIOUSLY
TREMENDOUS INCOME SECURITY
ESPECIALLY.
FOR OLDER WORKERS WHO HAD NO --
SAFETY THAT ALL THE TIMESO
CALPERS WAS FORMED IN NINETEEN
THIRTY TWO BUT THAT --
WAS ONLY FOR STATE EMPLOYEES AT
THE TIME.
IT WASN'T UNTIL NINETEEN THIRTY
NINE ABOUT SEVEN YEARS LATER
THAT THE LEGISLATURE AUTHORIZED
LOCAL GOVERNMENTS. TO
PARTICIPATE --
IN CALPERS.
AND SO SECURITY CAME AROUND IN
NINETEEN THIRTY FIVE BUT THAT
WAS ONLY FOR PRIVATE SECTOR
WORKERS SO ABOUT GOVERNMENT
EMPLOYEES WERE ALLOWED TO JOIN
SO SECURITY UNTIL THE NINETEEN
FIFTIES --
SO AT THE TIME IN THE NINETEEN
THIRTIES THERE IS THERE IS A
SMALL NUMBER OF LOCAL.
INDEPENDENT ON PENSION SYSTEMS
MOSTLY AT THE CITY LEVEL FOR
POLICE AND FIREFIGHTERS AND
OBVIOUSLY CASTERS AT THE
TEACHERS FUND WAS AROUND THAT
TIME.
AS WELL SO LEGISLATURE CREATED
AN OPPORTUNITY FOR CALIFORNIA
COUNTIES TO ESTABLISH THEIR OWN
INDEPENDENT LOCALLY MANAGED
RETIREMENT SYSTEMS OFFER COUNTY
SYSTEMS UNDER A UNIFORM SET OF
RULES AND SO.
THAT WAS NINETEEN THIRTY SEVEN
IN THE NINETEEN THIRTY SEVEN
ACTON TODAY.
WE HAVE TWENTY COUNTIES THAT
OPERATE UNDER THE PARAMETERS OF
THAT -- OF
THAT LEGISLATION MOST OF THE
SYSTEMS REFORM THE NINETEEN
FORTIES AT A TIME WHEN
GOVERNMENT --
WAS GROWING INTO A INTO A MORE
ROBUST FIRST AND RETIREMENT
BENEFITS WERE BECOMING A
STANDARD PART OF THE
COMPENSATION PACKAGE.
SO THE TWENTY COUNTY SYSTEMS
TODAY MANAGE APPROXIMATELY A
HUNDRED AND TEN BILLION DOLLARS
IN ASSETS.
ON BEHALF OF MORE THAN FIVE
HUNDRED THOUSAND PUBLIC
EMPLOYEES RETIREES AND OUR
BENEFICIARIES RANGE IN SIZE FROM
LOS ANGELES COUNTY RETIREMENT
SYSTEM WHICH HAS ABOUT HALF OF
THE ASSETS DOWN TO THE MENDOCINO
COUNTY RETIREMENT SYSTEM WHICH
IS ABOUT A HALF BILLION DOLLARS
IN ASSETS.
SO WHERE MEMBERS ARE YOUR
SHERIFF'S DEPUTIES LOCAL
PROSECUTORS AND PUBLIC DEFENDERS
ARE COUNTY ASSESSORS AND TAX
COLLECTORS COUNTY SOCIAL WORKERS
HEALTHCARE WORKERS --
OTHER DEDICATED PUBLIC SERVANTS.
VERY SIMILAR TO THE STATEWIDE
SYSTEMS THAT CALPERS AND CAL
STIRS --
JUST LET'S IN THE SENSE THAT WE
WE OPERATE UNDER --
UNDER THE SAME CONSTITUTIONAL
STANDARDS AS FIGHTING SHERRY'S.
WE PROVIDE A LIFETIME GUARANTEE
PENSION BENEFITS BASED ON
FORMULA AT YOUR SERVICE AGE.
OUR OUR MEMBERS OF THE COUNTY
SYSTEM ARE SUBJECT TO THE OUT TO
PEPPER THE PENSION REFORM ACT OF
TWO THOUSAND THIRTEEN ON FOR TWO
SINCE.
TWO THOUSAND THIRTEEN THE LEGACY
MEMBERS THOSE WHO CAME BEFORE
TWO THOUSAND THIRTEEN ARE
SUBJECT --
TO TO TO A SIMILAR SET OF
BENEFITS AS CALPERS MEMBERS THE
PERSON WHO WANTS IS DEALING WITH
WHAT COUNTS TOWARDS COMPENSATION
BUT OVERALL IT'S IT'S CHEN WITH
THE SAME --
THE SAME FRAMEWORK.
WE OPERATE AS A TRUST FUND
SEPARATE FROM THE COUNTY --
SUBJECT OPEN MEETINGS LAWS.
ANNUAL ACTUARIAL VALUATIONS
AUDITS THE BIGGEST DIFFERENCE
THOUGH BETWEEN THE COUNTY
SYSTEMS AND THIS BIG STATEWIDE
SYSTEMS IS THAT WE THE EACH
SYSTEM IS REALLY THE IS IT'S
IT'S THE ON THE GOVERNANCE
STRUCTURE SO EACH SYSTEM HAS A
LOCAL RETIREMENT BOARD.
AND WE DON'T HAVE ONE RETIREMENT
FOR THE A TWENTY INDEPENDENT
RETIREMENT BOARD'S.
LIMIT ABOVE ELECTED EMPLOYEES A
RETIREE BOARD OF SUPERVISORS
APPOINTEES AND THE COUNTY
TREASURER.
AND LOCAL CONTROL --
MEANS LOCAL ACCOUNTABILITY --
PLAN MEMBERS THE STAKEHOLDERS
HAVE A LOT OF A LOT MORE ACCESS
TO ON TO US.
AND I THINK A STRONGER
RELATIONSHIP.
TO THE THE BIGGEST THAT PART ONE
OF THE BIGGER DIFFERENCE IS ALSO
IS THAT --
SO CALPERS HAS THREE THOUSAND
EMPLOYERS SAID ROUGHLY --
INTO A THIRD THE STATE A THIRD
SO SCHOOL DISTRICTS IN A THIRD --
LOCAL GOVERNMENTS AND THE COUNTY
SYSTEMS THE COUNTY IS THE
DOMINANT MAIN EMPLOYER --
IT'S USUALLY ABOUT 90% OF THE
ENTIRE MEMBERSHIP.
OR MORE SO WE HAVE A REALLY
REALLY CLOSE RELATIONSHIP WITH --
WITH THE COUNTY.
AND WHAT WE HAVE SORT OF A LOWER
PROFILE IN THE BIG STATES
SYSTEMS WE DO AS STRIVE TO BE A
GOOD RESOURCE FOR STAKEHOLDERS
IN THE LEGISLATURE SERVICE AN
HONEST BROKER OF INFORMATION TO
HELP YOU.
MAKE DECISIONS UNDERSTAND
LEGISLATION THE COME I COME YOUR
WAY AFFECTING US.
THAT'S ABOUT IT VERY GOOD THANK
YOU UP COUPLE QUESTIONS ONE AND
WHAT'S THE BIGGEST CHALLENGE
TODAY FACING THE THIRTY SEVEN
ACT.
COUNTIES IN THE RETIREMENT
SYSTEMS.
I THINK THE BIGGEST CHALLENGE
TODAY IS REALLY --
THE TRANSITION TO FOR A IN
DEALING WITH WHAT COUNTS AS
COMPENSATION. FOR THE LEGACY
MEMBERS AND THIS IS WHERE YOU'RE
SEEING ALL THE LITIGATION THAT'S
FOR THE BEFORE THE STATE SUPREME
COURT RIGHT NOW THAT WE'RE ALL
WATCHING REALLY CLOSELY.
SO -- IN THE
COUNTY AND THE COUNTY WORLD.
WE BASED ON A LONG HISTORY OF OF
COURT DECISIONS AND AND
SETTLEMENTS OF AGE COUNTY SYSTEM.
TO CRAFTED THEIR OWN SET OF
RULES ABOUT WHAT COUNTS TOWARDS
COMPENSATION --
THEY CAN BE USED TO CALCULATE
YOUR PENSION BENEFITS FOR THESE
LEGACY MEMBERS.
AND TAPPARA ESTABLISHED --
A LOT STRICTER RULES ABOUT THAT
ON A AND A MUCH TIGHTER STANDARD
AND ALSO GAVE DIRECTION TO THE
KIND RETIREMENT SYSTEMS --
TO TO GO BACK AND MAKE SURE THAT
NO ONE WAS IN AN APPROPRIATELY
ENHANCING PENSION BENEFITS.
AND WHAT THAT MEANS REALLY KIND
OF OPENS A PANDORA'S BOX OF WHAT
LITTLE NUANCES OF YOUR
COMPENSATION COUNT AND WHAT TOWN
AND THAT GETS VERY HOT LEGALLY
AND WE HAVE A LOT OF CASES THAT.
HAVE --
SINCE TWO THOUSAND THIRTEEN OF I
THINK IT'S PRO BIGGEST ISSUES OF
IF THE COURT GIVES US DIRECTION
HOW WE ON WINE SOME OF THOSE OR
WHERE WE KIND OF GOT MOVED GOING
FORWARD AND WHAT THE LEGISLATURE
MIGHT BE CONFRONTED WITH AT THAT
POINT.
TWO INTERESTED IN IS MISTER
MISTER STERN WHEN YOU HAVE THAT.
THE TWENTY DIFFERENT. THREE
SEVEN ACT COUNTIES IN THERE
INDEPENDENT RETIREMENT SYSTEMS
WE TALKED ABOUT THE RATE OF
RETURN OR THE RETURN THAT WE'RE
GETTING FROM THE LARGER SYSTEMS
OR IS THERE A OF WHICH THE RANGE
THAT SURE YEAH YET SO IT SO
BECAUSE THERE'S TWENTY SYSTEMS
YOU'RE GONNA HAVE A LITTLE BIT.
OF DEVIATION --
I WOULD SAY GENERALLY THE THE
ASSUME RIGHT OF RETURN FOR MOUSE
THE SYSTEMS IS ABOUT 7% BUT IT
CAN RANGE ON SAM CEREBUS US A
MATTEO --
COUNTY EMPLOYEES RETIREMENT
SATIATION HAS I THINK IT'S SIX
POINT 75% INVESTMENT ASSUMPTION
BUT SOME SYSTEMS ARE STILL ABOUT
SEVEN A QUARTER BUT THEY'RE ALL
TRENDING TRENDING DOWN BECAUSE
WE WE HAVE THOSE TRY ANY OLDER.
QUADRENNIAL REVIEWS OF OTHER OF
ASSUMPTIONS THAT IT'S THEIR SORT
OF A MAYBE A LAG BUT I THINK
YOU'RE SAYING EVERYONE COME DOWN
AT THAT 7% LEVEL BUT REALLY
LOOKING TO THE FEW KNOWS
CHARACTERS OTHER SORT OF LOOKING
AT THE NEXT SET OF ASSUMPTIONS
WHAT YOUR WAY FROM LOOKING.
RIVER RE REVIEWING THAT.
INTEREST INTEREST RATE AND
INTEREST OUR INFLATION
ASSUMPTION IS REALLY THE BIG ONE
THAT EVERYONE'S KIND OF WATCHING
THAT'S WHAT'S REALLY BEEN SORT
OF PUSHING DOWN THE THE OVERALL
ASSUMPTION RIGHT OR THAT THOSE
THAT ARE ACTUALLY GETTING A RATE
OF RETURN IT'S MUCH LOWER THAN
THAT OR MUCH HIGHER.
INTERVIEW THE ACTUAL ACTUAL
RHETORIC TURNS.
SURE I MEAN YOU CAN DEVIATE ON A
YEAR TO YEAR BASIS AT SACRAMENTO
COUNTY WE HAD A 10% RETURN THE
LAST FISCAL YEAR BUT THIS YEAR
JUST BASED ON THE VOLATILITY
MARKETS IT'S IT'S NOT GONNA AT
10% IN.
WILL BE LUCKY TO HEAD --
IN OUR 7% ASSUMPTIONS HERE.
INTERESTING SO YOU HELP THE
HIGHS OUTWEIGH THE LOWS YET NO
ABSOLUTELY UNTRUE A QUESTIONS.
VERY GOOD THANK YOU MISTER STERN
CREATED VERY MUCH.
COMMENTS WILL NOW GO TO THE
CALIFORNIA DEPARTMENT OF HUMAN
RESOURCES FOR SAVINGS PLUS
PROGRAM.
STRENGTHENED JONES AND MISS.
RECKLESS IT SHOULD SAID POSSIBLE
THANK YOU [inaudible]
WELCOME.
THANK YOU.
GREETINGS CHAIRMAN HILL AN
ASSEMBLY MEMBER RODRIGUEZ AND
THE MEMBERS OF THE COMMITTEE I
MAJOR JINKINS TOWNS AND I AM THE
ACTING DIRECTOR OF THEIR POP IN
HUMAN RESOURCES CALLIE CHAR --
WE THANK YOU FOR THIS
OPPORTUNITY TO BE HERE TODAY SO
WE CAN GIVE YOU AN OVERVIEW OF
OUR SECOND PLUS PROGRAM THAT IS
ADMINISTERED BY COUNTY CHAR --
DISABLED PLUS PROGRAM IS A FOUR
ONE K. AND FOUR FIFTY SEVEN P.
PLANS AVAILABLE TO MOST STATE.
OF CALIFORNIA EMPLOYEES
INCLUDING EMPLOYEES OF THE
LEGISLATURE.
JUDICIAL CALIFORNIA STATE YOU
PROGRAM IS 1100% VOLUNTARY --
WITH THE MINIMUM.
PAY ROLL ON TO MAKE DEDUCTION OF
TWENTY FIVE DOLLARS A MONTH AN
EMPLOYEE CAN START A SAVINGS
PLUS PROGRM.
ACCOUNT UP.
AS OF JANUARY --
TWENTY NINETEEN THE PROGRAM HAS
APPROXIMATELY TWO HUNDRED AND
NINETEEN THOUSAND PARTICIPANTS
AND THEY COMBINED ASSETS OF
ABOUT FOURTEEN BILLION DOLLARS --
AS MY WORLD IS ACTING DIRECTOR
FOR CALAIS CHAR I AM STILL
FIDUCIARY FOR THE SAVINGS PLUS
PROGRAM.
I HAVE HERE WITH ME TODAY
MICHELLE THE CAGES WHO IS OUR
ADMINISTRATOR OF THE SAVINGS
PLUS PROGRAM AND SHE WILL GIVE
YOU A LITTLE BIT MORE DETAIL
ABOUT THE PROGRAM GREAT THANK
YOU.
THANK YOU GOOD MORNING --
AS A DRESS SAID I'M MICHELLE
BERKELEY SUCH THE ADMINISTRATOR
OF THE PROGRAM --
WE DO ADMINISTER A FOUR FIFTY
SEVEN AND A FOUR ONE K. DEFINED
CONTRIBUTION PLAN.
I'M AS SHE INDICATED IT'S NOT
COMPLETELY VOLUNTARY --
BUT OUR PURPOSE IS TO SUPPLEMENT
THAT PENSION PROGRAM FOR STATE
EMPLOYEES --
OUR ULTIMATE PURPOSE IS TO HELP --
EMPOWER THE CALIFORNIA STATE
EMPLOYEES.
TO BY OFFERING THEM SIMPLE
THINKING SOLUTIONS --
THE FOUR FIFTY SEVEN PLAN WAS
FIRST OFFERED IN NINETEEN
SEVENTY FOUR SO THIS WILL BE OUR
FORTY FIFTH ANNIVERSARY --
THE FOUR ONE K. PLAN WAS ADDED
IN --
NINETEEN NINETY NINE SO STUDIES
SHOW THAT THE REPLACEMENT RATIO
FOR EMPLOYEES WHEN THEY RETIRE
I'M BEING THE PERCENTAGE OF
THEIR CURRENT INCOME THAT
THEY'LL NEED TO LIVE THE SAME
LIFESTYLE IN RETIREMENT IS
APPROXIMATELY 8290% --
WHAT WE FOUND IS STATE EMPLOYEES --
ON AVERAGE RETIRE AT THE AGE OF
SIXTY WITH ABOUT 50% OF THEIR
CURRENT INCOME.
LEAVING A GAP OF 3240% --
SO THAT'S WHERE WE COME INTO
PLAY -- SOME
FOLKS DO RECEIVES OF SECURITY
BENEFIT BUT AS YOU HEARD EARLIER
NOT ALL OF OUR EMPLOYEES --
TO SO WE OFFER --
TAX ADVANTAGED --
OPPORTUNITIES FOR THE EMPLOYEES
TO TO SAVE FOR THEIR RETIREMENT
WE HAVE BOTH THE PRE TAX OPTION --
WHERE THEY CAN PUT THEIR MONEY
IN BEFORE TAXES ARE TAKEN --
WHICH SERVES TO LOWER THEIR
TAXABLE INCOME FOR THE YEAR --
AND THEN ALSO IN TWO THOUSAND
AND THIRTEEN IT WE OFFERED A
ROTH AFTER TAX OPTION.
ON AND THE SICK AS INDICATED
THEY ON THE DEDUCTION OF COME
OUT AFTER TAXES BUT THE
EMPLOYEES WILL RECEIVE A TAX
FREE DISTRIBUTION RETIREMENT --
WE FIND THAT'S REALLY HELPFUL
FOR INDIVIDUALS WHO FEEL AS
THOUGH THEY'RE GONNA BE IN A
HIGHER TAX BRACKET OR TERMINATE
OR IF.
LIKE THE ATTACKS RATES WILL
INCREASE --
BY THE TIME THAT THEY RETIRE.
WE CURRENTLY HAVE 7% OF OUR
INCOMING CONTRIBUTIONS GOING
INTO THE ROCK FEATURE SO IT'S
IT'S PICKING UP INTEREST --
UNLIKELY PENSION STRUCTURE --
OUR GOVERNANCE STRUCTURE IS MUCH
DIFFERENT WERE NOT GOVERNED BY A
BOARD STRUCTURE --
AS EAGER INDICATED THE DIRECTOR
OF CAL H. R. SERVICES SOLD AN
* FIDUCIARY --
AND DELEGATES THE
RESPONSIBILITIES TO ADMINISTER
MINISTER THE PROGRAM --
TO SECONDS PLUS.
SO WE SERVICE FOR THE SHARES AS
WELL -- AND
OUR MAIN GOAL IS IS TO
ADMINISTER THE PROGRAM --
FOR THE THE BEST INTEREST OF OUR
PARTICIPANTS AND THEIR
BENEFICIARIES.
I'M WE GOVERN THE PROGRAM IN
ACCORDANCE WITH THE INTERNAL
REVENUE CODE --
OUR OUR PLAN DOCUMENT WHICH
BASICALLY DESCRIBES HOW WE WILL
ADMINISTER THE PROGRAM IN
ACCORDANCE WITH THE INTERNAL
REVENUE CODE --
THOSE KIND DOCUMENTS ARE
SUBMITTED TO THE IRS TO REVIEW --
TO AFFIRM THAT WE ARE
MINISTERING THE PLAN IN
ACCORDANCE WITH THEIR THE RULES.
OUR WE ARE NOT SUBJECT TO A RISA --
AS A GOVERNMENTAL PLAN HOWEVER
WE DO USE IRIS THE GUIDELINES TO
KIND OF HELP --
GUIDE THE PLAN AND USE IT AS
BEST -- WE
DO HAVE AN ADMIN AND INVESTMENT
COMMITTEE ON THE INVESTMENT
COMMITTEE IS RESPONSIBLE FOR
DEVELOPING THE FUND STRUCTURE --
OF OUR PORTFOLIO AND MONITORING
ALL INVESTMENT PROVIDERS.
ENSURING THAT WE ARE FOLLOWING
OUR INVESTMENT POLICY STATEMENT --
FUNDING THERE'S BEEN A LOT OF
DISCUSSION THIS MORNING ABOUT
FUNDING --
OUR PROGRAM IS SELF FUNDED WE DO
NOT RECEIVE ANY GOVERNMENTAL
FUNDS TO HELP US ADMINISTERED
PLAN -- TORE
REVENUE SOURCES ARE OUR
PARTICIPANTS --
WE CHARGE AN ADMINISTRATIVE FEE
OF A DOLLAR FIFTY PER MONTH PER
PLAN --
PARTICIPANTS CAN HAVE BOTH A FOR
FIFTY SEVEN AND A FOUR ONE K.
PLAN -- WE
ALSO --
RECEIVE FIVE BASIS POINTS AND
REVENUE SHARING FROM ALL OF OUR
INVESTMENTS.
AND WE ADMINISTER A SECURITIES
LENDING PROGRAM IT'S CUT FIXING
THE CONSERVATIVE SO WE RECEIVED
JUST I'M A LITTLE BIT OF
ADDITIONAL REVENUE FROM THAT
PROGRAM.
HOW WE OPERATE IN AN UNBUNDLED
STRUCTURE --
WHICH MEANS THAT WE CONTRACT --
FOR INDIVIDUAL SERVICES WE HAVE --
THIRD PARTY ADMINISTRATOR THAT
DOES OUR RECORD KEEPING --
THEY RUN OUR WEBSITE --
A CALL CENTER --
WE WORK WITH ANOTHER
ORGANIZATION WHO PROVIDES
TRUSTEE CUSTODIAL SERVICES --
WE HAVE TWO CONSULTANTS THAT WE
WORK WITH WHEN CONSULTANT IS
RESPONSIBLE THERE --
THEY'RE BOTH ON RETAINER ONES
RESPONSIBLE FOR ESTABLISHING OUR
PORTFOLIO LINE UP.
AND HELPING US WITH OTHER PLAN
DESIGN DECISIONS.
AND ALL OF OUR PROVIDER SEARCHES.
AND THE OTHER FIRM IS
RESPONSIBLE FOR PERFORMANCE
MONITORING.
WE FELT LIKE IT WAS IMPORTANT TO
HAVE THOSE TWO ROLE SEPARATE --
OUR INVESTMENT STRUCTURE --
WERE A TEE A THREE TIERED
STRUCTURE --
OUR FIRST HERE IS --
CONSISTS OF FOURTEEN INDIVIDUAL
INVESTMENT OPTIONS --
IT CONSISTS OF BOTH INDEX
PASSIVELY MANAGED FUNDS AS WELL
AS ACTIVELY MANAGED FUNDS --
OUR NEXT TIER IS TARGET DATE
FUNDS.
I'M SURE YOU HEAR A LOT ABOUT
TARGET DATE FUNDS --
OUR CUSTOMIZE FUNDS WE DON'T USE
OFF THE SHELF FUNDS.
THEIR COMPRISED OF OUR AND
DRILLING CORE FUNDS --
AND WE WORK WITH OUR CONSULTANTS
TO DEVELOP OUR OUR GLIDE PATH
AND THE STRUCTURE OF THOSE FUNDS --
THEN THE THIRD TIER IS A
BROKERAGE OPTION --
WE WORK WITH CHARLES SCHWAB TO
PROVIDE US OUR BROKERS OPTION
AND THIS PROVIDES AN OPPORTUNITY
FOR PARTICIPANTS EMPLOYEES THAT
WANT TO INVEST OUTSIDE OF OUR
PORTFOLIO LINEUP --
AND THEY HAVE THE OPPORTUNITY TO
PURCHASE SECURITIES BONDS
ADDITIONAL MUTUAL FUNDS --
SOME OPTIONS SO GIVE THEM A LOT
OF YOU'VE HEARD A LOT ABOUT COST
AYE JACK WAS POINTING OUT THE
IMPORTANCE OF COSTS THAT
SOMETHING THAT'S EXTREMELY
IMPORTANT TO US AS WELL --
WHEN WE GOT FOR BED FOR OUR
INVESTMENT MANAGERS --
WE SCRUTINIZE THAT THE COST --
OF THOSE OF PROVIDERS.
AND AS A LARGE PLAN WE HAVE THE
OPPORTUNITY TO TO USE A VEHICLE
THAT'S REFER TO A SEPARATE
ACCOUNTS --
WHICH PROVIDES THIS YEAR FOR TO
ME TO PROVIDE AND INVESTMENT
OPTION AT A MUCH LOWER COST THAN
YOU WOULD FROM A RETAIL MUTUAL
FUND -- JUST
TO KIND OF GIVE YOU AN IDEA OF
OUR RANGE OF COSTS --
ARE INDEX FUNDS RANGE FROM SIX
BASIS POINTS TO TWELVE BASIS
POINTS.
ARE ACTIVELY MANAGED FUNDS RANGE
FROM ELEVEN BASIS POINTS TO
SIXTY TWO BASIS POINTS --
AND THEN OUR TARGET DATE FUNDS --
RANGE FROM NINETEEN BASIS POINTS
TO THIRTY BASIS POINTS --
AND AND THE MOST OF OUR
CONTRACTS WE HAVE A MOST FAVORED
NATIONS CLAUSE IN OUR CONTRACTS
WHICH MEANS.
THAT IF THE PROVIDER WERE TO
PROVIDE THE SAME STRATEGY TO
ANOTHER AB PLAN --
AT A LOWER COST THAT THEY WOULD
HAVE TO PASS AT LOWER COST ON TO
US AS WELL --
OUR PROGRAM IS A SELF DIRECTED
PROGRAM WHICH MEANS THAT THE
INDIVIDUALS --
I RESPONSIBLE FOR ELECTING HOW
MUCH THEY WANNA TO CONTRIBUTE TO
THE PLAN AND WHERE THEY WANT
INVEST THEIR ASSETS --
WE OFFER BOTH --
THE OPPORTUNITY TO CONTRIBUTE ON
THE SET DOT --
AND THEN JUST IN THE PAST COUPLE
YEARS TWO THOUSAND SEVENTEEN WE
OFFER THE OPPORTUNITY TO INVEST
ON A PERCENTAGE OF THEIR INCOME --
THANKS TO OUR PARTNERS AT STATE
COMPTROLLER'S OFFICE --
WE FEEL LIKE THAT'S A REAL
BENEFIT BECAUSE AS INDIVIDUALS
INCOME INCREASES THEIR
CONTRIBUTIONS WILL AUTOMATICALLY
INCREASE ALONG WITH THAT --
AS YOU WELL KNOW CALIFORNIA AND
HAS A VERY DIVERSE POPULATION --
AND WE RECOGNIZE THAT WE HAVE
DIVERSITY AND GEOGRAPHIC
LOCATION.
AGE INCOME --
IT'S OF COMMUNICATION --
AND SO IT'S REALLY IMPORTANT FOR
US TO TRAIN AND DRESS --
ALL OF THOSE DEMOGRAPHICS --
ONE OF CHARACTERS CORE.
VALUES IS DIVERSITY AND
INCLUSION --
AND SO WE TAKE THAT VERY
SERIOUSLY WITH OUR PROGRAM.
I WANT TO MAKE SURE THAT
EVERYBODY IS --
TAKING ADVANTAGE OF THE
OPPORTUNITY TO SAVE MONEY FOR
THEIR RETIREMENT --
SO WITH THAT WE RECOGNIZE THAT
INVESTING IS A DIFFICULT
DECISION --
A LOT OF PEOPLE ARE INTIMIDATED.
BY THE FACT OF TRYING TO SELECT
HOW TO INVEST THEIR ASSETS.
SO WITH OUR INVESTMENT PORTFOLIO
WE WE KIND OF BUCKET INTO THREE
DIFFERENT WAYS TO INVEST --
THE FIRST ONE IS TO THE AND
THAT'S WHERE WE PUSH OUR TARGET
DATE FUNDS --
THE TARGET DATE FUNDS AGAIN ARE.
AN ASSET ALLOCATION FIND THAT'S
DEVELOPED FROM MARK CORE FUNDS --
YOU BASICALLY JUST NEED TO KNOW
AT WHAT POINT TIME YOU FEEL LIKE
YOU'RE GONNA START HAVING TO TAP
INTO YOUR ASSETS.
AND YOU PICK THE TARGET DATE
THAT PLACE TO THAT --
THE RE BALANCE ON AN ANNUAL
BASIS AND THEY BECOME MORE
CONSERVATIVE AS YOU REACH THE
TARGET DATE.
WITH A LIKE THAT'S A REALLY GOOD
OPPORTUNITY FOR A LOT OF
INDIVIDUALS THAT.
ARE INVESTMENT SAVVY AND ARE
KIND OF FEARFUL OF HAVING TO
MAKE THOSE DECISIONS --
THE SECOND IS THE MANAGE IT FOR
ME SO WE HAVE A MANAGED ACCOUNT
OPTION --
WHICH IS REFERRED TO AS THE PRO
ACCOUNT --
AND THAT BASICALLY IF YOU'RE
PAYING US A SEPARATE FEE --
IT'S A TIERED STRUCTURE STARTING
AT FIFTY BASIS POINTS AND IT
GOES DOWN TO THIRTY FIVE
DEPENDING UPON THE AMOUNT OF
ASSETS THAT YOU HAVE --
AND YOU'RE TURNING OVER THE
MANAGEMENT OF YOUR ACCOUNT TO BE
A PROFESSIONAL MANAGERS WHO WILL
DO THE WORK FOR YOU --
AND THEN THE THIRD IS FOR THOSE
THAT WANT TO MANAGE THEIR OWN
MONEY --
THAT THE DO IT YOURSELF --
THEY HAVE THE OPPORTUNITY TO AS
INDICATED SELECT FROM OUR CORE
FUNDS AS WELL AS UTILIZE OUR
BROKERAGE ACCOUNT --
WE CURRENTLY HAVE FIVE PER AND
THAT UTILIZE THE BROKERAGE
ACCOUNT.
AND 4% THAT USE THE PRO ACCOUNT
MINCED MANAGE FEATURE --
ANOTHER THING THAT WE HAVE
IMPLEMENTED TO TRY AND HELP
ENCOURAGE OUR PARTICIPANTS TO TO
SAVE AN INCREASE THEIR SAVINGS
AND IS IMPLEMENTED SOME AUTO
FEATURES --
IN TWO THOUSAND SEVENTEEN WE
ROLLED OUT --
AN AUTOMATIC INCREASE FUTURE SO.
AN EMPLOYEE CAN GO IN AND AND
I'M AT THIS SELECT A MONTH
STATES JULY. TO EVERY JULY THEY
WANT THEIR CONTRIBUTIONS TO
AUTOMATICALLY INCREASE BY A
SPECIFIC PERCENTAGE OR A DOLLAR
AMOUNT.
THEN THEY CAN KIND OF SET IT AND
FORGET IT AND GO OFTEN AND TAKE
CARE OF OTHER BUSINESS --
WE ALSO HAVE AN AUTO REBALANCE
FEATURE --
SO FOR PRINCE PARTICIPANTS THAT
ELECT TO SELECT THEIR OWN FUND
LINEUP -- ON
A QUARTERLY BASIS OUR SYSTEM
WILL AUTOMATICALLY GO IN AND RE
BALANCE IT BACK TO THE ORIGINAL
ALLOCATION --
WE UTILIZE OUR TARGET DATE FUNDS
AS A DEFAULT OPTION SO.
FOR EMPLOYEES THAT ENROLL USING
OUR ON ONLINE --
OUR ENROLLMENT FORM --
THEY DON'T HAVE TO DECIDE WHERE
TO PUT THEIR MANY WILL
AUTOMATICALLY DEFAULT THEM INTO
THE TARGET DATE FUND --
SOAKED SO THAT'S KIND OF
ADDRESSING --
A LITTLE BIT ABOUT THAT.
THAT DIVERSITY WE ALSO TAKE THAT
INTO ACCOUNT WHEN WE TALK ABOUT
COMMUNICATION AND OUTREACH --
YOU KNOW THAT THERE'S
INDIVIDUALS THAT STILL WANT THAT
PERSONALIZED SERVICE AND THERE
SOME THAT.
JUST WANT TO BE INDEPENDENT DO
ON THEIR OWN.
SO WE PROVIDE OPTIONS FOR BOTH --
WE HAVE A CALL CENTER THAT IS
OPEN -- FROM
FIVE AM IN THE MORNING TO EIGHT
PM AT NIGHT MONDAY THROUGH
FRIDAY -- TO
ANSWER QUESTIONS HELP
PARTICIPANTS AB TRANSACTIONS
TRANSACTIONS --
AND THEN WE ALSO HAVE FOR
INDIVIDUALS THAT WENT THAT ONE
TO ONE ON ONE FACE TO FACED.
WE HAVE SEVEN LICENSED --
RETIREMENT SPECIALISTS.
THROUGHOUT CALIFORNIA THERE EACH
HAVE A DESIGNATED REGION WITH IN
CALIFORNIA --
AND THEY MEET ONE ON ONE WITH
OUR PARTICIPANTS TO REVIEW THEIR
ACCOUNTS ANSWER THEIR QUESTIONS --
THEY ALSO PROVIDE WORKSHOPS --
THROUGHOUT THE STATE --
IN ADDITION IN SACRAMENTO WE
HAVE A WALK IN CENTER --
WHERE PARTICIPANTS CAN COME IN
AND HAVE THEIR QUESTIONS
ANSWERED WE ALSO HAVE A LICENSE
REP THERE SO THEY CAN SET UP A
ONE ON ONE APPOINTMENT WITH THEM?
WE SERVICE ABOUT THREE HUNDRED
AND FIFTY EMPLOYEES --
I'M GOING TO ASK IF YOU COULD
WRAP IT UP PLEASE CERTAINLY I
FINAL POINTED WE'RE OUT IN THE
LAST.
CERTAINLY SO A BIG BASS I JUST
WANTED TO GIVE YOU AN OVERVIEW
OF OUR PROGRAM --
THE SERVICES THAT WE PROVIDE WE
WE FOCUS A LOT ON EDUCATION OUT
REACH BECAUSE IT IS A VOLUNTARY
PLAN -- AND
WE JUST WILL DO EVERYTHING WE
CAN TO ENCOURAGE PEOPLE TO
PARTICIPATE.
A WE HAVE A CURRENT 59%
PARTICIPATION OF STATE EMPLOYEE
IN PLACE THAT'S VERY NICE.
VERY GOOD THANK YOU THINK AND
I'M ONE OF THOSE.
AND IT'S A WONDERFUL PLANS VERY
EASY TO USE AND TO TO THE ONLINE
FEATURES OF EXTRAORDINARY SO
THANK YOU FOR THINK YOU.
VERY CONVENIENT QUESTION.
GOT VERY GOOD THANK YOU SO MUCH
FOR THE PRESENTATION.
WE'RE NOW GOING TO OUR FINAL
PANEL OF THE RETIREMENT SECURITY
SO THOSE WHO.
ARE ON THE PANEL PLEASE COME
FORWARD AND WE WILL KIND OF MOVE
DOWN THE THE LINE IN AND IT
REALLY HEAR FROM.
THOSE WHO.
DISSIPATE IN THE PROGRAM THOSE
WHO BENEFIT FROM THE PROGRAM AND
AND THOSE WHO HAVE --
I I BELIEVE THE THE BEST
KNOWLEDGE OF THE THE BENEFIT OF
OUR STATE RETIREMENT SYSTEM AND
HOW IT WORKS SO WELL --
GIVEN.
THANK YOU --
THE CHAIR AND THE MEMBERS OF THE
COMMITTEE --
FORTY SPECIAL DISTRICTS
ASSOCIATION THANKS FOR HAVING ME
HERE TODAY THANK YOU --
GONNA TALK BRIEFLY ABOUT OUR
ASSOCIATION LITTLE BIT ABOUT
SPECIAL DISTRICTS AS A WHOLE THE
BENEFITS OF DEFINED BENEFIT
PENSION PLANS --
AS WELL AS RESPOND TO A COUPLE
EVEN IF I COULD IS THERE WERE
JUST A LITTLE.
BIT ABOUT. TWENTY MINUTES LEFT
AND SO IF WE COULD KIND OF FIT
THAT IN GREAT I WILL MAKE IT I
WILL MAKE.
THIS POSSIBLE AND CALIFORNIA
SPECIAL DISTRICTS ASSOCIATION
WE'RE A NONPROFIT ASSOCIATION
REPRESENTING --
THE TWO THOUSAND SPECIAL
DISTRICTS THROUGHOUT THE STATE.
WE PROVIDE.
LEGISLATIVE ADVOCACY
PROFESSIONAL DEVELOPMENT --
INSURANCE --
A NUMBER OF OTHER SERVICES FOR
THOSE DISTRICTS WE REPRESENT.
FIRE DISTRICTS WATER DISTRICTS
UTILITY DISTRICTS COMMUNITY
SERVICE DISTRICTS ARE PRETTY
MUCH ANYTHING ELSE THAT INTO THE
WORD DISTRICT OTHER THAN SCHOOL
DISTRICT --
WE PROVIDE A FIRE PROTECTION FOR
MORE THAN ELEVEN MILLION PEOPLE --
WE PROVIDE WATER AND WASTEWATER --
OPERATE MORE THAN HALF OF
CALIFORNIA'S CRITICAL ACCESS
HEALTH CARE FACILITIES.
AND EMPLOYEE OVER NINETY
THOUSAND PEOPLE IN THE STATE OF
CALIFORNIA --
THE MAJORITY OF WHICH ARE
RECEIVING A DEFINED BENEFIT
PENSION.
WITH REGARD TO THE PENSIONS --
SIMILAR TO WHAT WE'VE HEARD FROM
OTHER PRESENTERS --
DIVIDE BUT IF IT PENSIONS --
TO PROVIDE A SIGNIFICANT TOOL
WHEN IT COMES TO ATTRACTING AND
RETAINING EMPLOYEES --
WHEN IT COMES TO ATTRACTING
EMPLOYEES WE'RE COMPETING WITH
THE PRIVATE SECTOR?
AND JUST JUST LIKE THEM WE WERE
ABLE TO PROVIDE A COMBINATION OF
BENEFITS WHETHER IT'S JOB
OPPORTUNITIES.
PAY OR BENEFITS AND WHERE WE MAY
NOT BE ABLE TO COMPETE AS WELL
WITH THEM.
ON THE PAY.
THE AND HELPS LEVEL THAT THAT
PLAYING GROUND --
THE MAJORITY OF PRIVATE SECTOR
EMPLOYERS YOU'RE OFFERING A
VEHICLE SUCH AS A FOUR OH ONE K.
PLAN.
AND THE FUNDING OF THOSE PLANS
ARE OFTEN SUBJECT TO ECONOMIC
CHANGES.
AS THE EMPLOYERS HAVE THE
ABILITY CHANGE OR EVEN STOP --
THEIR CONTRIBUTIONS THE
STABILITY OF A DEFINED BENEFIT
PENSION FOR PUBLIC EMPLOYEES
PROVIDES GOVERNMENT EMPLOYEES --
IN ADDED LEVEL OF SECURITY WHEN
IT COMES TO FUNDING THEIR
RETIREMENT --
WE FOUND EMPLOYEES DROPPED MORE
WILLING TO WORK FOR A LITTLE
LESS.
MONEY IN THE FRONT AND WITH THAT
SECURITY OF A PREDICTABLE
RETIREMENT --
AT IN THE FUTURE.
AND WHILE THE FIVE BENEFIT PLANS
ARE HELPFUL IN ATTRACTING
EMPLOYEES THEY PLAY AN EVEN MORE
IMPORTANT ROLE IN RETAINING
EMPLOYEES --
AS AN EMPLOYEE'S AGE THEY
TYPICALLY BEGIN TO FOCUS ON
THEIR FINANCIAL FUTURE AND LESS
ON THEIR IMMEDIATE FINANCIAL
NEEDS.
DEFINED BENEFIT PLANS PROVIDE
EMPLOYEES WITH A PREDICTABLE AGE
OF RETIREMENT --
THAT COMES WITH THE FORECAST
BULL AND PERMANENT SOURCE OF
INCOME --
THIS PREDICTABILITY PROVIDE
SECURITY TO ALLOW EMPLOYEES THE
OPPORTUNITY TO RETIRE WITH
DIGNITY.
AS THEY ENTER THEIR GOLDEN YEARS --
THE SECURE WORK FORCES PROVIDING
YOU CENTRAL CORE SERVICES TO THE
PUBLIC --
WHEN THEY DIDN'T PUT THE SWITCH
ON THE EXPECTED LIGHTS TO BE ANA
WHEN THEY IN TURN ON THE FAUCET
THEY EXPECT CLEAN WATER TO COME
OUT -- A LOT
OF THE WORK IS DONE BY OUR
SPECIAL DISTRICT EMPLOYEES IS
HIGHLY TECHNICAL IN NATURE.
REQUIRES SIGNIFICANT AMOUNT OF
TRAINING AND IN MANY CASES
REQUIRES.
STATE CERTIFICATION AND
LICENSING --
AS AS A FOR A FOR EXAMPLE OUR
MOSQUITO VECTOR CONTROL
DISTRICTS --
PROVIDE CRITICAL SERVICES
THROUGHOUT THE STATE OF
CALIFORNIA --
THE WEST VALLEY MISKITO VECTOR
CONTROL DISTRICT AND ASSEMBLYMAN
RODRIGUEZ DISTRICT PROVIDE
SERVICE FOR OVER --
SIX HUNDRED THOUSAND RESIDENTS.
AND THE IN PEAK SEASON IF
EMPLOYEES WERE.
TO LEAVE --
THERE COULD BE SICK VIRUS AS A
RESULT OF EMPLOYEES NOT STAYING
IN THEIR POSITION WAS SCRATCHING
GO.
RIGHT.
OF SO.
MY MY POINT IS A DEFINED BENEFIT
PENSIONS NOT ONLY BENEFIT THE
EMPLOYEES THAT RECEIVE THEM --
BUT THE PUBLIC AS WELL WHO
RECEIVING THE THE BENEFITS FROM
THESE EMPLOYEES --
MORE BRIEFLY TOUCH ON A COUPLE
OF COMMENTS FROM FROM EARLIER
EDGE AND JUST --
ONE TO REITERATE THE POINTS ON
DIVEST MEANT THAT THAT
SIGNIFICANT WHEN IT COMES TO THE
DISCOUNT RATE --
IT IS VERY IMPORTANT FOR US THAT
THE DISCOUNT RATE IS ACCURATE.
THAT IT NOT BE ARBITRARILY SET
AT A HIGHER LEVEL TO SAVE OUR
EMPLOYERS MONEY --
WHAT HAPPENS IF THE DISCOUNT
RATE IS NOT MET?
IS THAT --
FUNDED LIABILITY GOES UP AND
THAT THAT THE TOTAL COST OF THAT
UNFUNDED LIABILITY AT THIS TIME
IS BORED BY THE EMPLOYER.
SO IT'S IMPORTANT FOR US THAT
THAT AT THAT NUMBER WE'RE FACING
A LOT OF CHALLENGES WITH WITH
RATES GOING UP WE BELIEVE THAT
THE PLANS THAT ARE IN PLACE --
AT WILL PROVIDE THE STABILITY IN
THE FUTURE AND WE BELIEVE THAT
THOSE HIGHER COSTS ARE OFFSET BY
THE BENEFIT OF BEING ABLE --
TO KEEP IN RETAIN THOSE
EMPLOYEES.
PRETTY GOOD THANK YOU VERY MUCH.
GOOD MORNING MORNING JEFF NEAL
WITH CALIFORNIA STATE
ASSOCIATION OF COUNTIES THINK
INVITING US PROVIDING US TO
PARTICIPATE IN THE DISCUSSION
TODAY -- AT
SEA TAC OBVIOUSLY WE REPRESENT
ALL FIFTY EIGHT COUNTIES IN THE
IN THE STATE.
ANY OF THOSE ABOUT THIRTY SEVEN
OF THEM ARE.
ARE IN CALPERS THE OTHERS AS YOU
AS YOU HEARD EARLIER ARE IN
INDEPENDENT RETIREMENT SYSTEMS
AND ABOUT HALF OF OUR COUNTIES --
PARTICIPATE IN THE CALPERS
HEALTH PLAN AS WELL.
AS JUST WON A SECOND A LOT OF
THINGS THAT --
DILLON AT GIVEN SAID IS --
YOU KNOW THAT PENSIONS ARE KEY
TO RECRUITMENT AND RETENTION WAS
BEING COUNTIES HAVE A WIDE
VARIETY OF EMPLOYEES FROM --
SOCIAL WORKERS TO SHERIFF'S
DEPUTIES TO OBVIOUSLY OF THE
PEOPLE THAT THAT MANAGE AND RUN
THE THE FACILITIES THAT COUNTIES
HAVE.
OR PROVIDE --
PROVIDE PROGRAM THE SECURITY
THAT THE DEFINED BENEFIT --
PROGRAMS PROVIDE IS IS KEY AND
YOU KNOW WHEN IMPORTANT TO BOTH
THE THE SUPERVISORS AND THE
EMPLOYEES --
BUT AGAIN WE'RE SENSITIVE TO THE
COSTS JUST LIKE EVERYONE ELSE
AND AND AS THE AS STONE SAID
ABOUT THE YOU KNOW THE THE
UNFUNDED COSTS BEING BORNE BY.
BY THE EMPLOYERS IS --
YOU KNOW IS IT SOMETHING THAT
WARRANTS CLOSE ATTENTION BUT
GIVEN THE TIME CONSTRAINTS HELD
AND MY COMMENTS THANK YOU VERY
MUCH APPRECIATE THAT.
GOOD MORNING.
GOOD MORNING CHAIRMAN --
HELEN CHAIRMAN EVERY GUEST --
MY NAME IS RANDY CHICKEN ON THE
LEGISLATIVE DIRECTOR FOR OUR PA
WHICH IS THE RETIRED PUBLIC AND
SO HE'S HE'S --
PLOYS ASSOCIATION AND I AM ONE
OF THOSE WHO RECEIVED A CALPERS
AT PENSION AND VERY THANKFUL TO
RECEIVE WHAT I GOT OVER TWENTY
FOUR THOUSAND FORMER PUBLIC
SERVANTS.
RETIRED STATE WORKERS CITY
WORKERS COUNTY WORKERS SPECIAL
DISTRICTS.
RETIREES OF FROM FORMER TEACHERS
POLICE OFFICERS NURSES COLLEGE
PROFESSIONALS.
AND MANY MORE PUBLIC EMPLOYEES
WHO RECEIVE A CALPERS PENSION.
OUR MISSION IS TO PRESERVE THE
THREE LEGGED RETIREMENT STILL
PURRS SO SECURITY AND OF COURSE
SAVINGS.
WE WORK WITH CALPERS AND HOW TO
IMPROVE THEIR PRODUCTS AND WE
LET THEM KNOW WHEN WE ARE
CONCERNED ABOUT.
SOME OF THEIR ACTIONS AS MARCY
WILL TELL YOU WE WERE VERY VOCAL --
WE KEEP TRACK OF WHAT IS GOING
ON WITH SO SECURITY AND WE
LETTER LEGISLATORS KNOW IF THERE
ARE ISSUES WITH.
THE SOCIAL SECURITY ISSUES.
AND TO HELP OUR MEMBERS SAVE
MONEY --
THEM WILL LET YOU KNOW THAT THE
MAJORITY OF OUR CHARACTER WAS
RETIREES ONLY SEE FOR ABOUT
THIRTY SIX THOUSAND DOLLARS A
YEAR.
IN RETIREMENT FROM CALPERS
THAT'S THE AVERAGE.
SO WE OFFER.
SUPPLEMENTAL --
PROGRAMS FOR DENTAL AND IN A
VISION CARE.
FOR THOSE MEMBERS WHO ARE FROM
LOCAL AGENCIES THAT DON'T
PROVIDE.
A VISION AND DENTAL SO THAT'S
ONE OF OUR BIG PRODUCT THAT WE
OFFER A LOT OF THE AND RETIREES.
IN AS GOVERNOR NEWS AND NOTED IN
HIS STATE OF THE STATE.
THE SENIOR POPULATION.
WE BABY BOOMERS.
IS -- IS
INCREASING AND GROWING MORE AND
MORE.
SO WE APPRECIATE WHAT CALPERS
DOES FOR US AND ARE PAYS GOALS
IS TO SEE THAT.
ALL RETIREES RETIRE AND DIGNITY.
SO I THANK YOU FOR YOUR THANK
ALLOWING A LADY HERE AND WE ARE.
HERE YOUR SERVICE IN THE PAST
SERVICE AT YOUR HEAD IS
CALIFORNIA TEACHERS ASSOCIATION
APPRECIATE THE OPPORTUNITY TO
PROVIDE SOME CONTEXT. FOR
RETIREMENT AS IT RELATES TO
EDUCATORS --
I WAS VERY PLEASED THAT --
THAT CHECKING IS WITHOUT CAL
STAR HEAD IS NOTED THAT 72% OF
CALPERS MEMBERS ARE WOMEN SO
THIS IS A WOMEN'S ISSUE IN THAT
OFTEN GETS LEFT OUT OF THE
DISCUSSION AS WE TALK ABOUT
DOLLARS AND CENTS IT'S A VERY
IMPORTANT TO MAKE SURE THAT
WE'RE PUTTING UP PHASE SO.
WE CAN ACCURATELY REFLECT THE
MYRIAD OF ISSUES THAT ARE
MEMBERS FACE IT'S ALSO IMPORTANT
TO KNOW --
THAT IS A JACKET SAID
ADDITIONALLY OUT MOST REMEMBERS
DON'T HAVE RETIREE HEALTH AFTER
EACH SIXTY FIVE SO WHEN THE
REPLACEMENT RATIO WHICH IS THE
THAT TOTAL DOLLARS THAT OUR
MEMBERS ARE GETTING FOR THEIR
CAL STIRS BENEFIT OVERALL.
MAY NOT BE ENOUGH TO COVER THE
TOTAL COSTS IF THEY'RE GONNA
HAVE AS A RETIREE AND COUPLED
WITH THE FACT THAT THEY'RE
LIVING LONGER WHICH MEANS IF
THEY'RE CAL STIRS BENEFIT.
IS THE PRIMARY MECHANISM THAT'S
GOING TO BE THE DIFFERENCE
BETWEEN HAVING A SECURE
RETIREMENT FUTURE AND LIVING IN
POVERTY.
IT'S ALSO IMPORTANT TO NOTE THAT
OUR MEMBERS SINCE THEY'RE
PRIMARILY WOMEN HAVE
DISPROPORTIONATELY A LOWER
AMOUNT OF SERVICE CREDIT THAN
THEIR MALE COUNTERPARTS BECAUSE
CHILDREN. TO CARE FOR OTHER
FAMILY MEMBERS.
ALL OF THIS HELPS THE PAIN TO
REAP A PICTURE SPECIALLY NOTING
THAT OUR MEMBERS DON'T GET
SOCIAL SECURITY AND WE'VE MADE
IT A POINT AS A STATE FOR A FEW
DECADES NOW TO RECRUIT EDUCATORS
AS A SECOND CAREER. TO BRING
PEOPLE IN TO TEACH MATH SCIENCE
A NUMBER OF OTHER ISSUES WITHOUT
HELPING THEM TO UNDERSTAND THAT
THE FEDERAL GOVERNMENT'S WAY OF
THINKING THEM IS TO REDUCE OR
ELIMINATE THE SOCIAL SECURITY
BENEFITS THAT THEY HAD ACTUALLY
PAID INTO. TO THEIR OTHER CAREER
SO THIS APPRECIATIVE OF THE FACT
THAT GOVERNOR NEW SIM CONTINUES
TO BELIEVE RETIREMENT SECURITY
IS IMPORTANT MORE APPRECIATIVE
OF THE RESOURCES THAT HE'S
PROVIDING THAT CERTAINLY GOING
TO BE HELPFUL FOR OUR MEMBERS AS
WELL AS FOR SCHOOL DISTRICTS --
WE JUST WANT TO MAKE SURE THAT --
THAT RETIREMENT SECURITY IS THE
KEY BECAUSE FOR OUR MEMBERS
THAT'S GOING TO BE THE
DIFFERENCE BETWEEN THAT AND
POVERTY WE ALSO NEED TO NOTE
THAT EDUCATION IS REALLY TAKEN A
SIGNIFICANT HITS.
SO DURING THE RECESSION --
PROP NINETY EIGHT HAD SIXTY FIVE
BILLION DOLLARS ELIMINATED --
ESSENTIALLY FUNDS THAT WERE
REDUCE DURING THE RECESSION THAT
WE DID NOT GET PAID BACK FOR AS
OTHER ENTITIES WHEN THEY HAD
MONEY THAT WAS I USE.
THEY RECEIVE THOSE MONIES BACK
WITH INTEREST EDUCATION DIDN'T
SEE THAT WHICH MEANS THAT THE
RECESSION LEFTA WHOLE
GENERATION OF OUR MEMBERS HAVING
FURLOUGHS.
HAVE BEEN STALLED IN FLAT SALARY
RATES FOR A NUMBER OF YEARS
THAT'S ONE OF THE REASONS WHY
YOU'RE SEEING A LOT OF HOT SPOTS
AROUND THE TWO ON AROUND THE
STATE.
YOU THERE'S A LOT OF FOLKS THAT
ARE NOW SAYING YOU KNOW IT'S
TIME TO MAKE SURE THAT WE HAVE --
AN ADEQUATE FUNDING FOR
EDUCATION WERE NOT EVEN
PROVIDING THAT SO THAT ALSO
REFLECTS INTO THE SALARIES THAT
OUR MEMBERS MAKE WHICH MEANS
IT'S GOING TO HAVE A LONG TERM
IMPACT.
ON THE TOTAL PENSION THAT
THEY'RE GOING TO RECIEVE SO WE
ENCOURAGE YOU AS REFLECTING UPON
THE KIND OF LEGISLATION THAT
YOU'RE THINKING ABOUT INTRODUCED
SEEN OR THAT YOU'RE WANT GOING
TO WANT TO RESPOND TO OVER THIS
NEXT TWO YEAR SESSION. TO THINK
ABOUT THE IMPACT THAT THAT'S
GOING TO HAVE BUT THE LONG TERM
RETIREMENT SECURITY OF OUR
MEMBERS ARE MEMBERS DO A LOT FOR
KIDS AROUND THE SIX POINT TWO
MILLION KIDS IN THE STATE THERE
OFTEN PARENTS CARE GIVERS.
THERE LITERALLY HEROES REST
GREEN STUDENTS SUCH AS SAYING.
IN PARADISE --
BUT WE WANT TO MAKE SURE THAT
CALIFORNIA TREATS THEM THE WAY
THEY DESERVE TO BE TREATED NOT
ONLY NOW BUT EVEN WHEN THEY TURN
HUNDRED WHICH MORE OF REALLY ARE
DOING.
SO WE ASK YOU TO BE CONSIDERATE
IN THE DISCUSSION OF THE
LEGISLATION THAT YOU'RE HAVING --
BOTH NOW AND IN THE FUTURE AND
TO MAKE SURE THAT IF YOU'RE
MAKING DECISIONS THAT ARE GOING
TO COST THE SYSTEMS MONEY.
THAT YOU'RE NOT GOING TO ASK OUR
MEMBERS TO PAY FOR IT WE'RE
ASKING THAT YOU MAKE SURE THAT
THE STATE PAYS FOR THE PROMISES
THAT THE STATE KIDS.
NOT BECAUSE OUR MEMBERS ARE
PAYING MORE FOR CAL STIRS AS
PART OF AB FOURTEEN SIXTY NINE
AND R. PEPPER MEMBERS ARE
ACTUALLY PAYING MORE AND GETTING
LESS SO.
WE ENCOURAGE I CONTINUED
CONVERSATION AND LOOK FORWARD TO
WHAT YOU'RE GOING TO BE
DISCUSSING OVER THE NEXT TO YOU
THANK YOU MISS BAKER.
STREET THE COMMENTS MISTER LOW.
THANK YOU CHAIRMAN HELEN
CHAIRMAN RODRIGUEZ --
SINCE I'M THE LAST SPEAKER I
WILL OPEN BY NOTING THAT I DID
TIME MIKE REMARKS AT IT FOR
MINUTES ONLY --
MY NAME IS DAVE LOW AND
EXECUTIVE DIRECTOR THE CSEA
REPRESENTS --
OVER TWO HUNDRED FORTY THOUSAND
CLASSIFIED EMPLOYEES IN K.
TWELVE AND COMMITTEE COLLEGES
80% OF OUR MEMBERS ARE WOMEN AND
THEY ARE THE LOWEST WAGE WORKERS
IN THE PUBLIC SCHOOLS.
CRS REPRESENTS ONE POINT FIVE
MILLION PUBLIC EMPLOYEES
INCLUDING TEACHERS NURSES
FIREFIGHTERS POLICE CLASSIFIED
STATE AND LOCAL EMPLOYEES.
AS THE C. R. S. CHAIR MY PRIMARY
DUTY OVER THE LAST TWENTY YEARS
HAS BEEN.
TO COUNTER THE EXAGGERATIONS AND
DISTORTIONS AND OFTEN OUT LIGHT
OUT RIGHT LIES OF THE FOLKS WHO
ARE TRYING TO TAKE OUR PENSIONS
AWAY.
RETIREMENT SECURITY OPPONENTS
OFTEN TALK ABOUT THE LESS THAN
3% WHO RECEIVE SIX FIGURE
PENSIONS THAT'S WHAT THEY WANT
TO TALK ABOUT THAT'S THAT'S WHAT
THEY WANT TO PUT IN THE PRESS.
THE REALITY IS THAT THE AVERAGE
PENSION FOR CLASSIFIED SCHOOL
EMPLOYEES IS SIXTEEN HUNDRED AND
EIGHTY EIGHT DOLLARS A MONTH
AFTER EIGHTEEN YEARS OF SERVICE.
AND THE AVERAGE PENSION FOR ALL
CALPERS RETIREES IS TWO THOUSAND
NINE HUNDRED SEVENTY NINE
DOLLARS AFTER TWENTY FOUR YEARS
OF SERVICE.
TEACHERS POLICE AND FIREFIGHTERS
AS HAS BEEN NOTED DON'T RECEIVE
SO SECURITY.
SO RETIREMENT SECURITY OPPONENTS
HAVE BEEN ALSO WARNING FOR THE
PAST TWENTY YEARS THAT THERE'S A
PENSION CRISIS DUE TO UNFUNDED
LIABILITIES HE TALKED ABOUT THAT
TODAY.
THE REALITY IS IS THAT UNFUNDED
LIABILITIES OF ALWAYS FLUCTUATED
OVER THE PAST SEVENTY FIVE YEARS
THERE HAVE BEEN PERIODS WHERE
UNFUNDED LIABILITIES HAVE BEEN
FAR WORSE.
AND FAR BETTER THAN TODAY.
THERE WAS A TIME WHEN PENSION
FUNDS WERE UNDER 50% FUNDED AND
IN THE EARLY TWO THOUSANDS
PENSIONS WERE OVER 1100% FUNDED
AS WAS NOTED SUPER FUNDED.
IN THE EARLY TWO THOUSANDS MOST
PENSIONS WERE OVER A 100% FUNDED.
AND THE LOWER FUNDED STATUS
TODAY IS NOT THE FAULT OF PUBLIC
EMPLOYEES AND BENEFITS IT WAS
CAUSED BY WALL STREET REAL
ESTATE ABUSES WHICH WOULD TO
WEAR THAT DEREGULATE DERIVATIVES
TRIGGERED --
THE THE GREAT RECESSION STILL
THE DOOMSDAY PREDICTIONS OF THE
ANTI PENSION ZEALOTS OF THAT
THEY'VE MADE YEAR AFTER YEAR FOR
THE LAST TWENTY YEARS HAVE NOT
COME TRUE.
SINCE THE GREAT RECESSION
UNFUNDED LIVE 580% WHICH IS FAR
ABOVE THE LEVELS OF FUNDED
STATUS IN THE NINETEEN SEVENTIES
AND EARLIER AND IN ADDITION THE
PERCENTAGE OF THE STATE BUDGET
DEDICATED TO PENSIONS.
HAS ACTUALLY GONE DOWN IT'S
LOWER TODAY THAN IT HAS BEEN FOR
THE PAST DECADE.
SO THE RETIREMENT SECURITY
OPPONENTS THEN TELL US THAT THE
SOLUTION IS TO ELIMINATE DOUBT
DEFINED BENEFIT PENSIONS AND PUT
EVERYBODY IN A RISKY FOR ONE
CASE DOUBT PLAN.
WHAT THEY DON'T TELL YOU IS THAT
FOR ONE K. PLANS WERE NEVER
INTENDED AS A REPLACEMENT FOR
PENSIONS THEY WERE CONCEIVED BY
A MAN NAMED TED BENNETT AND?
NINETEEN EIGHTY ONE TED BENNETT
WAS A CONSULTANT FOR THE JOHNSON
COMPANY HIS CLIENT WAS A BANK
PRESIDENT WHO WANTED TO REPLACE
HIS CASH BONUS PLAN WITH THE
DEFERRED RETIREMENT ACCOUNT.
BENNETT DID SOME RESEARCH AND
FOUND A LOOPHOLE IN THE IRS CODE
FOUR OH ONE K..
AND THAT ALLOWED THAT BANK
PRESIDENT TO DEFERRED HIS
BONUSES ON IT IN A TAX DEFERRED
INCOME BASIS SINCE THAT TIME
MANY EMPLOYERS AND INSTEAD
ELIMINATED PENSIONS AND SWITCHED
A FOUR ONE K. PLANS.
THIS CHANGE HAS BEEN FINANCIALLY
DEVASTATING FOR ALL BUT THE MOST
HIGHLY PAID WORKERS PRIMARILY IN
THE PUBLIC SECTOR.
THE WALL STREET JOURNAL REPORTED
THAT THE AVERAGE WORKER WITH A
FOUR ONE K. RETIRES WITH ONLY
ENOUGH SAVINGS TO LAST 25% INTO
THEIR RETIREMENT.
MANY OF THESE ARE BABY BOOMERS
WHO WILL RETIRE AND END UP ON
PUBLIC ASSISTANCE OR MOVING IN
WITH THEIR CHILDREN ARE BEING
FORCED TO GO BACK TO WORK DURING
THEIR GOLDEN YEARS.
EVEN BENNETT HAS SINCE BEEN
QUOTED AS STATING THAT HE
REGRETS CREATING THE FOUR ONE K.
BECAUSE THEY'VE BEEN APPLIED IN
A MATTER THE BENEFITS WALL
STREET AND HURTS WORKERS.
IN SAN JOSE FORMER MAYOR CHUCK
REED ELIMINATED PENSIONS FOR
POLICE CENTERS THEY COULD NOT
RETAIN A RECRUIT POLICE AS THEY
LEFT IN DROVES AND CRIME
SKYROCKETED THE NEW MAYOR HAS
SINCE NEGOTIATED A NEW DEAL TO
RESTORE PENSIONS.
IN ORDER TO IMPROVE PUBLIC
SAFETY AND SAID FIREFIGHTERS
WITH THEIR LIVES ON THE LINE AND
PLACES LIKE PARADISE.
AND IN THE SAME BREATH PROPOSED
TAKING AWAY THEIR PENSIONS AND
REPLACING THEM WITH FOUR ONE K.
PLANS.
THESE ARE THE WORST TYPE OF
HYPOCRISIES THE FACT IS PENSIONS
AND ARE ARE AN IMPORTANT
RECRUITMENT AND RETENTION TOOL
THEY ALSO INJECT BILLIONS OF
DOLLARS INTO LOCAL ECONOMIES
BECAUSE RETIREE SPEND THEIR
MONEY.
ON FOOD AND HOUSING AND CLOTHING
AND NOT ON PUBLIC AS AND THEY'RE
NOT ON PUBLIC ASSISTANCE PUBLIC
EMPLOYEES CONTRIBUTE FROM THEIR
OWN PAYCHECK TO PAY A SHARE
THEIR PENSIONS.
THEY OFTEN WORK AND DANGEROUS
LIFE THREATENING JOBS AND MANY
OF THE MAKE LESS THAN THEY WOULD
IF THEY WORK IN THE PRIVATE
SECTOR AND THEY'RE NOT ASKING
FOR A HANDOUT.
THEY'RE JUST ASKING FOR A FAIR
SHAKE SO FOR FORMS ARE NEEDED
WE'RE WILLING TO DISCUSS THEM
AND WE HAVE BEEN.
UNIONS HAVE NEGOTIATED OVER
THREE HUNDRED CONTRACTS
STATEWIDE THAT HAVE ALREADY
REDUCED PENSIONS FOR NEW
EMPLOYEES OR INCREASE THE AMOUNT
THAT THE EMPLOYEES PAY TO KEEP
THEIR FAIR SHARE OF THEIR
PENSIONS.
EVERY DAY AN EMPLOYEE WHO
DEDICATED HIS OR HER CAREER STE
TO SERVICING OUR STATE TEACHING
OUR STUDENTS SAVING LIVES ARE
KEEPING OUR AIR AND WATER SAFE
DRIVING OUR KIDS TO AND FROM
SCHOOL.
THEY RETIRE WITH A MODEST
PENSION AND THEIR STORIES NEVER
WRITTEN ABOUT IN THE PAPERS OR
TOLD IN THE FIVE O'CLOCK NEWS.
YET THE LESS THAN 1% OF PENSION
ABUSES USUALLY BY HIGH PAID
MANAGEMENT EMPLOYEES SEEMS TO
ALWAYS GET FRONT PAGE EVERY DAY
IN THE B. AND EVERY NEWSPAPER.
COVERED BY ALL THE NEWSPAPERS
THE FACT IS THE MAJORITY OF
PUBLIC EMPLOYEES THEY LOVE THEIR
JOBS THEY PUT IT THERE FOR A
FAIR DAY'S WORK.
AND ALL THEY WANT TO DO IS
RETIRE WITH DIGNITY SO WE URGE
YOU NOT TO ALLOW THE DAVID
CRANES AND CAR THE MILES AND
CHUCK READS. TO DISTORT THE
FACTS AND DESTROY THE DREAM OF A
FAIR PENSION INSTEAD WE ASK YOUR
TO COMMITTEES TO PROTECT AND
ENHANCE THE GOAL OF RETIREMENT
SECURITY THANK YOU.
THANK YOU DAVID WOULD HEAR THE
CLEANUP HITTER HERE.
I MEAN HOW COULD ANYONE BEAT
THAT YOU REALLY SET THE TONE AND
IN MADE IT WORK --
IN IN I JUST OF WANTED THIS
BECAUSE A COUPLE OF OF THINGS
YOU KNOW WHAT.
DAVID IS NOT JUST THE CHAIR OF
CRS BUT HE'S ALSO THE CO
EXECUTIVE DIRECTOR OF THE
CALIFORNIA SCHOOL EMPLOYEES
ASSOCIATION AND AS WE KNOW
THAT'S THE LARGEST CLASSIFIED
SCHOOL EMPLOYEES UNION IN THE
UNITED STATES.
THE REPRESENTS ABOUT TWO HUNDRED
AND FORTY THOUSAND SUPPORT STAFF --
IN CALIFORNIA HOWEVER FOR
DECADES OF VIGOROUSLY
REPRESENTING CALIFORNIA'S
CLASSIFIED SCHOOL EMPLOYEES HE'S
RETIRED --
SO I I THINK WE WE NEED TO AND
WANT TO AND AND DISTINCT
KNOWLEDGE ALL THE HARD WORK.
IT AND THE DEDICATION AND
COMMITMENT THAT YOU PUT INTO
THOSE MANY YEARS OF SERVICE IN
CALIFORNIA CALIFORNIA'S PUBLIC
EMPLOYEES ESPECIALLY.
ALL THE CONTRIBUTIONS YOU'VE
MADE TO TO PROTECT HEIR
RETIREMENT AND I THINK WE HEARD
THAT PASSION STILL.
TODAY AFTER FORTY YEARS AND IT'S
A WELCOME INTO --
YOUR WISDOM CERTAINLY TO THE
PERS COMMITTEE HAS BEEN FABULOUS
SHOW THANK YOU AND NOW MAY YOU
ENJOY YOUR OWN RETIREMENT.
AS WE MOVE FORWARD DAY THANK YOU.
THE WELL DESERVED RETIREMENT
COMING UP ANY QUESTIONS AT ALL
FROM.
JUST WANTED TO ECHO THE SAME --
WORDS OF THANKS THAT YOU'VE DONE
DAVE AND I THINK YOU CLOSE THAT
WHAT THE GOOD PERSPECTIVE ON
THINGS THAT PEOPLE DON'T REALLY
WANT TO TALK ABOUT THE REALITIES
OF WHAT OUR RETIREES REALLY GET
WHAT THEY DON'T GET.
AND THE TRUE JAPANESE YOURSELF
ONCE AGAIN THANK YOU FOR THE
HARD WORK YOU DOWN FOR ALL THE
FOLKS YOU REPRESENT NOT ONLY.
IN THE PAST BUT IN THE FUTURE.
AND JUST WANT TO SAY THANK YOU
THANK YOU THANK YOU IT'S A GOOD
GOOD WAY TO END IT WITH ANY
FURTHER COMMENTS --
THANK YOU JEFF.
VERY MUCH TOGETHER.
THIS IS AN OPPORTUNITY FOR
MEMBERS OF THE PUBLIC TO TO COME
FORWARD YES SIR.
I THINK I FORGOT IN WHICH IT WAS
WRITTEN RIGHT [inaudible]
GLAD.
PHONE I WOULD TURN THE
MICROPHONE ON ON FOR YOU I DON'T
THINK IT IS.
OR I DON'T KNOW IF I'M SORRY
THANK YOU VERY GOOD NOW HERE YES
MY NAME IS JAMES WILLING ALONG
FOR MOM.
TERRIER CALIFORNIA REPRESENT
MALTA VIEW SCHOOL DISTRICT CAN
MEET OUR RECORDS IS OUR ASSEMBLY
MEMBER NOT AREA.
AND HI EVERYONE EVERYTHING WAS
SAFE HERE.
HOWEVER --
HOW DO YOU REAL REAL WORLD I
THINGS ARE VEGAS HEARD THIS THIS
MORNING OF ROOM WORLD SCHOOL
DISTRICT OF IN THEIR BIG BAY
AREA?
AND THIS TIME OF THE YEAR.
ARE THERE IS SIX A SOME FEET OF
SNOW.
IN EVERYONE BETTER BIG DAUGHTER
RUMER WORLD --
AREA OR THE BIG BEAR AREA ARE
TRYING -- TO
GET CHILDREN BACK AND FORTH TO
SCHOOL WHEN SOME ROLES ARE SLOW.
AS THEY ARE TODAY.
HAVE BEEN CLOSE ALL WEEK BECAUSE
OF THE SNOW.
SO WHAT'S WHAT'S HAPPENING UP
THERE NOW WILL REMAIN A WORLD
SCHOOL DISTRICT IS --
AN THE SCHOOL DISTRICT IS WAS
BUILT IN.
NINETEEN FIFTY SO IT FACILITIES
ARE VERY VERY ALL SO WHENEVER
THEY GET FUNDING THE FUNDING HAS
THE THE SCHOOL DISTRICT HAS TO
MAKE A DECISION.
DO WE RENOVATE.
THE SCHOOL WINDOWS OR WHATEVER
NEED TO BE REALLY THE DAYS THEY
HAVE BALLROOMS WHO HAVE BOUGHT A
ROOMS THESE DAYS BUT THEY HAVE
BORDER PLANES.
BOTTOM BREAKDOWN TECHNOLOGY
DOESN'T EXIST SO ONE OF THE GET
FUNDING THEY HAVE TO MAKE A
DECISION DO WE PUT THE MONEY TO
THE PENSIONS. TO PUT --
DO WE PREPARE THE BOILER ROOMS.
SO -- ALOT
OF SCHOOL DISTRICTS ARE FACED
WITH THE SAME PROBLEMS WHERE DO
WE MOVE THE MONEY SO WHAT SOME
OF THE THINGS SCHOOL DISCUSS
SCHOOL BOARDS LIKE MYSELF FROM
MOUNTAIN VIEW WE HAVE WE HAVE
OFF TREMENDOUS CHALLENGES SO
WHERE YOU MAKE DECISIONS.
JUST THINK ABOUT THE SCHOOL
DISTRICTS THANK YOU VERY MUCH
VERY GOOD THANK YOU FOR THE
COMMENTS APPRECIATE YOUR BEING
HERE TODAY OTHER COMMENTS THE
PUBLIC [inaudible]
SEEN NONE --
THIS WAS A GREAT OPPORTUNITY
TODAY A GREAT EDUCATIONAL
OPPORTUNITY THANK YOU ALL FOR
BEING HERE AND THANK YOU CHAIR
RODRIGUEZ.
WONDERFUL DAY WE'RE ADJOURNED