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Purchase of Service Credit Update from Ann Smith

Dear ALL:

Attached is a copy of the letter which SDCERS CEO Mark Hovey sent to Mayor Sanders upon receipt of City Attorney Jan Goldsmith’s 1/25/11 letter to SDCERS rejecting any proposed adjustments to SDCERS’ PSC “corrections” plan (as presented to the City Council on 11/29/10) — other than the potential for a clarification of the judgment entered by Judge Nevitt to establish that those employees who were already in DROP as of 11/20/07 (when the City filed its writ petition) were in fact “retired” and thus should be excluded from the “corrections” process altogether.

Those in DROP as of 11/20/07

SDCERS’ outside counsel is taking the necessary steps to return to Judge Nevitt for a clarification of the writ he previously issued in the City’s favor, which the Court of Appeal upheld.  Since the City limited its writ relief to those who were not “retired” at the time the City filed its petition on 11/20/07, SDCERS will ask Judge Nevitt to confirm the correctness of SDCERS’ intended action to exclude those employees who were already in DROP as of 11/20/07 as “retired” for purposes of the Court’s writ of mandate.  If Judge Nevitt agrees with this proposed clarification, this group of DROP participants would be excluded from the proposed “correction process” because the City had in fact intended to exclude them as “retirees” in the first place.  I will update you when I learn more about SDCERS’ filing and any related hearing date for a determination.

Those Currently in DROP

As to those employees who are currently in DROP, Mr. Goldsmith informed SDCERS that the decision whether or not to allow an employee to rescind a DROP contract is SDCERS to make; however, the decision whether or not to permit an employee to extend the term of his/her employment beyond the current DROP contract period is a decision which can only be made by the “executive branch of the City’s government.”  Accordingly, SDCERS has directed this question to Mayor Sanders and asked for a response by February 18th.  This pending question does not involve any exclusion of those in Active DROP from the proposed PSC “correction” process; it only asks whether or not the City will agree that any employee who otherwise establishes the criteria for rescinding his/her DROP contract to SDCERS’ satisfaction – i.e., the employee can affirm that but for the lack of information regarding the impact of the affected PSC contract, he or she would not have entered DROP – may continue to work beyond the current DROP period.  MEA has asked the Mayor’s office for an opportunity to be “heard” regarding this request.

All Others: Two Letters Will Be Coming

# 1 — A “Notice” Letter

As you may remember, SDCERS sent letters to nearly 5,500 active and retired City employees last summer to alert them that they may be adversely affected by the Fourth District Court of Appeal’s decision filed in June 2010.  Many of those who received letters will not ultimately be affected at all and this determination has now been made.  Thus, likely by the end of this week or at the start of next week, every person who received a letter last summer will receive a “notice” letter to say that they are “safe” and will not be affected by this PSC decision after all or to say that they will be affected.   Those who were in DROP as of 11/20/07 will receive a letter explaining that they are affected by the decision but may be spared if Judge Nevitt clarifies the judgment as noted above.

# 2 — An “Options” Letter

Those who receive a letter advising that they are affected, will be told that an “Options Letter” will arrive within 4 to 6 weeks thereafter.  This “Options Letter” will identify the actual dollar amount involved with each correction option the SDCERS Board has approved and how your service credits will be affected.  These “Options Letters” will go out to all affected plan participants at approximately the same time.  The letter will also advise of a schedule of seminars to be held at Balboa Park Club to provide additional information on a group basis – i.e., there will be a seminar for affected retirees; another for affected active employees, etc.  There will likely be more than one seminar for each group so that everyone who wishes to attend a seminar has a reasonable opportunity to do so.

These “Options Letters” will also inform each affected plan participant that he or she has 60 days from the date of the letter to select an option.  If a plan participant fails to do so, there will be limited follow-up by SDCERS to encourage action and then an imposition of the default rescind/refund option on or near the 90th day after the date of the “Options Letter.”

Next Steps at MEA

I continue to update MEA’s Board regarding these on-going developments.  I am also conferring with other attorneys representing other City employee unions regarding these issues and their impact on represented employees with affected PSC contracts.  You have likely read one or more of the letters I have sent since last August raising various legal issues related to this proposed “correction process.”

I intend to update the MEA Board at its next regularly scheduled meeting on March 9th which will be in advance of the projected mailing date for the “Options Letters.”   I also anticipate that additional information will be available before that time related to the (1) Mayor’s response to Mr. Hovey’s letter re extending the DROP work period for those currently in DROP who wish to rescind due to the PSC issue; and (2) the timing of SDCERS’ motion before Judge Nevitt to clarify the judgment related to those in DROP as of 11/20/07.

Meanwhile, take care . . . Best regards, Ann Smith

Hovey Ltr to Sanders Re PSC Issues 2-3-11