Update from Ann M. Smith Regarding the Purchase of Service Credit Case

Dear All:

This message is in follow-up to my last e-mail messages in late June related to the Fourth District Court of Appeal’s decision in the case between the City and SDCERS over service credits actually purchased or for which an application for purchase was submitted during the period of August 15, 2003, through November 1, 2003.

At its July 9^th meeting, the SDCERS Board decided to form an ad hoc committee of three Board Members to work with SDCERS staff in determining what corrective steps to take in order to comply with the Court’s ruling.  This Ad Hoc Committee consists of Board Members Ray Ellis, Alan Arrollado, and Dave Hall.  As SDCERS sees it, these “corrective” steps may involve unwinding or re-doing the affected purchase of service credit contracts to eliminate the “underfunding” in the price charged for these service credits because the Court ruled that SDCERS may not lawfully charge the amount of this “underfunded” cost to the City.  SDCERS’ present plan is for this Ad Hoc Committee to arrive at a series of “correction” recommendations which it will make to the full SDCERS Board for a public hearing and action on August 20, 2010.

I have conferred with SDCERS General Counsel Elaine Reagan on multiple occasions about this situation and its distressing consequences – most recently this week in the wake of the SDCERS Board’s decisions on July 9^th.  I have urged Ms. Reagan to consider taking the following additional steps to allow for the maximum opportunity for impacted employees to be heard (directly or through their union representatives) regarding this issue, its adverse consequences, and their concerns related to any “correction” recommendations:

1. Hold one or more adequately-noticed public hearings before the Ad Hoc Committee so that employees’ concerns, questions and other input can be taken into consideration before the Committee formulates its final recommendations for Board action;
1. Hold at least two public hearings before the full SDCERS Board so that employees have adequate opportunity to be heard on the actual recommendations being considered for adoption – especially because the one meeting presently scheduled for August 20^th will fall at a time when many employees will be unavailable due to pre-planned vacations.

Ms. Reagan assures me that these suggestions will be considered.  She has also informed me that SDCERS will be issuing a comprehensive written communication to retirees and employees explaining what has happened in this Court case, what it means and why, how SDCERS plans to proceed and when.

I will let you know what SDCERS decides regarding additional hearings by its Ad Hoc Committee and full Board – and I will keep you informed of other developments.  Meanwhile, you will certainly wish to mark your calendars about the August 20^th Board Meeting scheduled for 8:30 a.m. in SDCERS’ Board Room at 401 West A Street, 3^rd Floor.

Best regards, Ann Smith