BOARD OF ADMINISTRATION AGENDA

FRIDAY, DECEMBER 19, 2008 – 8:30 A.M.

401 WEST A STREET SDCERS BOARDROOM, THIRD FLOOR

SAN DIEGO, CA 92101

(DISABILITY ACCESSIBLE)

SDCERS MISSION

The mission of the San Diego City Employees’ Retirement System is to deliver accurate and timely benefits to its members, retirees and beneficiaries

and ensure the Trust Fund’s safety, integrity and growth.

SDCERS TRUSTEES

Thomas C. Hebrank – President, Mark C. Sullivan – Vice President, Raymond G. Ellis, Susan S. Gonick, David A. Hall, V. Wayne Kennedy, Franklin R. Lamberth, Steven W. Meyer, Mark E. Oemcke, Peter E. Preovolos, Jo Anne SawyerKnoll, William J. Sheffler and John G. Thomson

CALIFORNIA GOVERNMENT CODE SECTION 1090: INTEREST DISCLOSURE

Pursuant to California Government Code Section 1091.5(a)(9), a city officer or employee does not have a financial interest in a city contract if these conditions are satisfied: (i) his or her interest is that of a person receiving a salary, per diem or reimbursement for expenses from a government entity; (ii) the contract does not directly impact the department of the government entity that employs him or her; and (iii) the interest is disclosed to his or her body or board at the time the contract is considered and is noted in its official record. In accordance with this statute, the following Board members request that the Board note in its official records that they receive a salary, per diem or reimbursement for expenses from the City of San Diego: Franklin Lamberth, Steven Meyer, Jo Anne SawyerKnoll, Mark Sullivan and John Thomson. John Thomson is also a Board member of Local 145, International Association of Fire Fighters, AFL-CIO. Steven Meyer, John Thomson and Mark Sullivan are DROP participants. Mark Sullivan is also a Board member of the San Diego Police Officers Association. Board Member, JoAnne SawyerKnoll; SDCERS’ Administrator, David Wescoe and SDCERS’ Associate General Counsel, Sheila Jacobs, have a potential financial interest in the pricing of future PSC contracts and have recused themselves from participation on this issue. Gov. Code §54957.5 Notice: Any public documents distributed to the Trustees of the Board of Administration less than 72 hours prior to the meeting are available for public inspection at SDCERS’ offices located at 401 West A Street, Suite 400, San Diego, CA 92101. Contact Michelle London at 619/525-3655 to arrange for inspection.

SDCERS BOARD MEETING FRIDAY, DECEMBER 19, 2008 AGENDA PAGE 2

I. NON-AGENDA PUBLIC COMMENT This portion of the agenda is for members of the public to address the Board of Administration on any subject within the Board’s jurisdiction that is not on today’s agenda. To address the Board during Non-Agenda Public Comment, you must complete a Request to Speak form and submit it to the Board Secretary before the meeting begins. To address the Board on a subject that is on today’s agenda, you must submit a Request to Speak form before the item is called. These forms are located in the back of the Board Room. The chairperson will call your name to address the Board during Non-Agenda Public Comment or when your item is to be heard. Non-agenda Public Comment is limited to 3 minutes per speaker and 15 minutes per topic. Public testimony on an item on the agenda is limited to 3 minutes per speaker and 15 minutes per side.

II. APPROVAL OF CONSENT AGENDA ITEMS A-F A. SERVICE RETIREMENTS

CITY OF SAN DIEGO 1. Gerald Chiles, Personnel. Assistant Personnel Director. 34.65 years creditable

service. Effective date 12/10/2008. 2. Orrie Irwin, Metropolitan Wastewater. Senior Management Analyst. 24.35

years creditable service. Effective date 12/27/2008. 3. Franklyn Parker, Water. Senior Water Utility Supervisor. 20.00 years creditable

service. Effective date 12/31/2008. (Reciprocity) 4. Cynthia Potts, Storm Water. Parking Enforcement Officer. 27.40 years

creditable service. Effective date 11/12/2008. 5. Lois Stowell, Planning. Executive Secretary. 25.02 years creditable service.

Effective date 12/13/2008.

B. DEFERRED RETIREMENT OPTION CITY OF SAN DIEGO 1. Frances Cavanaugh, Police. Police Dispatcher. 31.32 years creditable service.

Effective date 12/13/2008. 2. Walter Cooke, Water. Water Production Superintendent. 23.13 years

creditable service. Effective date 12/27/2028. 3. Toni Grant, Development Services. Public Information Clerk. 21.56 years

creditable service. Effective date 11/29/2008.

SDCERS BOARD MEETING FRIDAY, DECEMBER 19, 2008 AGENDA PAGE 3

4. Richard D. Hayes, Environmental Services. Heavy Truck Driver. 26.56 years

creditable service. Effective date 12/22/2008. 5. Mark Keyser, Police. Police Office II/ Detective. 22.98 years creditable service.

Effective date 11/29/2008. 6. Darrell Kyler, Police. Police Officer II. 24.76 years creditable service. Effective

date 12/13/2008. 7. Darrell Little, Police. Police Officer. 16.44 years creditable service. Effective

date 12/27/2008. 8. Ida Molina, General Services. Financial Analyst. 17.71 years creditable

service. Effective date 12/19/2008. 9. Thomas Morris, Fire-Rescue. Captain. 27.85 years creditable service.

Effective date 12/13/2008. 10. George Muren, Police. Sergeant. 28.64 years creditable service. Effective

date 12/13/2008. 11. Robert Sandoval, Environmental Services. Driver II. 32.93 years creditable

service. Effective date 12/27/2008. 12. Robert Shands, Police. Police Office II. 27.29 years creditable service.

Effective date 12/27/2008. 13. Michael Springer, Police. Police Office II. 20.00 years creditable service.

Effective date 12/31/2008. 14. Vance Widholm, Environmental Services. Driver II. 33.64 years creditable

service. Effective date 12/27/2008. 15. Scott Wilkinson, Police. Police Officer II. 24.06 years creditable service.

Effective date 11/29/2008. 16. Wing Woo, Park & Recreation/ Golf. Greens Keeper. 17.98 years creditable

service. Effective date 11/29/2008. 17. David Wood, Park & Recreation. Seven Gang Mower Operator. 20.22 years

creditable service. Effective date 12/13/2008.

SDCERS BOARD MEETING FRIDAY, DECEMBER 19, 2008 AGENDA PAGE 4

UNIFIED PORT DISTRICT 1. Jeffrey Mc Entee, Treasurer's Office. CFO/ Treasurer. 25.13 years

creditable service. Effective date 11/21/2008. C. STATEMENTS OF MEMBERSHIP THROUGH NOVEMBER 30, 2008

Retired (including DROP’s)

1981 Pension

Plan Continuance DRO’s Active Retired

Deaths Active Member Deaths (paid)

Enrolled Deferred / Inactive

6083 2 962 173 9729 7 0 27 2895

D. ACTIVE DROP TO RETIRED DROP Katherine Adams Public Information Specialist 12/31/2008Ralph Adamos Associate Civil Engineer 11/29/2008James Arthur Sergeant 12/31/2008Robert Blaisdell Parking Enforcement Officer II 12/26/2008Marilyn Bradford Associate Management Analyst 12/31/2008John Byrne Marine Biologist II 12/31/2008Jeffrey Cable Detective Sergeant 12/10/2008Miguel Castillo Fire Captain 12/31/2008Tyrone Crosby Detective 12/31/2008Ronald DeFreitas Firefighter 12/26/2008Judith Dolnick Librarian 12/01/2008Ronald Edrozo Fire Captain 11/29/2008R. David Flesh Senior Planner 12/31/2008Juan Gonzales Detective Sergeant 12/31/2008Emmitt Henderson Jr. Detective 12/31/2008Robert Irwin Harbor Police Sergeant 12/19/2008Elizabeth Kulka Sergeant 12/19/2008Evelyn La Grone Supervising Cal-ID Technician 12/27/2008Brenda Love Word Processing Operator 12/18/2008Linell Maloney Information Systems Analyst III 12/13/2008Paul Marino Police Office II/ Detective 12/30/2008Jeffrey Maruhn Water System Technician IV 12/26/2008Douglas McCalla Chief Investment Officer 12/31/2008Paul Nauta Fire Engineer 12/08/2008Priscilla Quirk Associate Department Human Resource Analyst 12/20/2008Michael Rias Fire (ARFF) Fighter 11/14/2008Rosalina Riego Associate Management Analyst 12/31/2008Andrea Scott Police Officer II/ Detective 12/31/2008Marvin Shaw Lieutenant 12/27/2008Manuel Smith Sergeant 12/31/2008Leah Tombleson Senior Clerk Typist 12/31/2008Scott White Police Office II 12/27/2008Charles Zimmerman Firefighter 12/31/2008

SDCERS BOARD MEETING FRIDAY, DECEMBER 19, 2008 AGENDA PAGE 5 E. DROP ACTIVITY THROUGH NOVEMBER 30, 2008

TOTAL ACCOUNTS: DROP ACTIVE AND RETIRED, FUNDS LEFT ON ACCOUNT 1,755 TOTAL DEPOSITS: DROP ACTIVE AND RETIRED, FUNDS LEFT ON ACCOUNT $328,775,764.95

DROP ACTIVE MEMBERS DROP RETIRED MEMBERS, FUNDS LEFT ON ACCOUNT

PLAN COUNT BALANCE PLAN COUNT BALANCE

LEGISLATURE 0 $0.00 LEGISLATURE 1 $42,050.84

GENERAL 585 $62,546,478.60 GENERAL 393 $60,516,918.31 SAFETY

LIFEGUARD 6 $1,535,639.38 SAFETY

LIFEGUARD 4 $678,009.94 SAFETY POLICE 226 $46,590,623.39 SAFETY POLICE 162 $48,101,633.87

SAFETY FIRE 161 $43,008,764.31 SAFETY FIRE 162 $58,189,631.42

UPD SAFETY 8 $1,276,876.34 UPD SAFETY 2 $377,105.57

UPD GENERAL 29 $4,588,883.38 UPD GENERAL 9 $640,162.93

APA GENERAL 6 $534,448.20 APA GENERAL 1 $148,538.47 TOTAL

DROP ACTIVE 1,021 $160,081,713.60 TOTAL

DROP RETIRED 734 $168,694,051.35 F. TERMINATIONS/WITHDRAWALS OF CONTRIBUTIONS FOR THE MONTH OF

NOVEMBER 2008

NAME MEMBERSHIP BOSTETER, DANA General MURILLO, GERMAN General SVIRIDOV, ALEKSEI Safety Police BRYANT, CHARLES General CARSER, DAVID General HOWARD, LISA General IONESCU, FLORIN General PATZMAN, MARK General PERRY, VALERIE General ROGERS, APRIL General TOTAL WITHDRAWAL OF CONTRIBUTIONS: $272,580.78

SDCERS BOARD MEETING FRIDAY, DECEMBER 19, 2008 AGENDA PAGE 6 III. CONSIDERATION AND ACTION OF ITEMS PULLED FROM CONSENT AGENDA

IV. BUSINESS OPERATIONS

A. NEW BUSINESS NO ACTION REQUESTED

1. Presentation and discussion of the June 30, 2008 Actuarial Valuation Report for the City of San Diego. Gene Kalwarski – Cheiron (TAB 1)

2. Presentation and discussion of the June 30, 2008 Actuarial Valuation Report for

the San Diego Unified Port District. Gene Kalwarski – Cheiron (TAB 2) 3. Presentation and discussion of the June 30, 2008 Actuarial Valuation Report for

the San Diego County Regional Airport Authority. Gene Kalwarski – Cheiron (TAB 3)

4. Presentation by Fiduciary Counsel – Effective Date of Change in PSC Pricing.

Ashley Dunning – Manatt, Phelps & Phillips ACTION REQUESTED

5. Recommended Methodology for Pricing of Future PSC Contracts. Gene

Kalwarski – Cheiron (TAB 4)

V. TRAINING A. NEW BUSINESS

ACTION REQUESTED

1. Public Funds Summit, January 7, 2009, Phoenix, AZ. Elaine Reagan (TAB 5) 2. Directors Forum 2009, January 25-27, 2009, San Diego, CA. Elaine Reagan

(TAB 6)

SDCERS BOARD MEETING FRIDAY, DECEMBER 19, 2008 AGENDA PAGE 7

3. Callan Investments Institute, The Twenty-Ninth National Conference, January

26-28, 2009, San Francisco, CA. Elaine Reagan (TAB 7) 4. IFEBP Trustees and Administrators Institutes Conference, February 9-11, 2009,

Lake Buena Vista, FL. Elaine Reagan (TAB 8) 5. Planning Calendar. Elaine Reagan (TAB 9)

VI. DISABILITY COMMITTEE – WILLIAM SHEFFLER, CHAIR (TAB 10)

A. STATUS REPORTS B. APPROVAL OF DISABILITY CONSENT AGENDA ITEMS 1-5

ACTION REQUESTED 1. Staff’s recommendation to approve the industrial disability retirement application

of Deborah Borders. (TAB 11) 2. Staff’s recommendation to refer to hearing the industrial disability retirement

application of Barbara Harden. (TAB 12) 3. Staff’s recommendation to refer to hearing the industrial disability retirement

application of Jacqueline Lindsay. (TAB 13) 4. Staff’s recommendation to refer to hearing the industrial disability retirement

application of Kendra Merck. (TAB 14) 5. Staff’s recommendation to deny the industrial disability retirement application of

Wayne Allison. (TAB 15) D. CONSIDERATION AND ACTION OF ITEMS PULLED FROM DISABILITY

CONSENT AGENDA E. AFFIDAVIT AND RE-EXAMINATION PROJECT

ACTION REQUESTED 1. Recommendation to authorize medical re-examination. (TAB 16)

SDCERS BOARD MEETING FRIDAY, DECEMBER 19, 2008 AGENDA PAGE 8

NO ACTION REQUESTED

2. Affidavit and Re-Examination Project Chart. (TAB 17)

3. Disability-Related Legal Services Report. (TAB 18)

VII. BUSINESS AND GOVERNANCE COMMITTEE – MARK SULLIVAN, CHAIR

(TAB 19) A. OLD BUSINESS

ACTION REQUESTED 1. Repeal Board Rule 7.20 and adopt the Outside Counsel/Consultants Opinions

Policy. (TAB 20) B. NEW BUSINESS

ACTION REQUESTED 1. Repeal Board Rule 7.70 and Adopt the Contracting Policy for Goods and

Services (Other than Asset Managers). (TAB 21) 2. Adopt Revised Rule 1.00 (Purpose and Intent of the Board Rules). (TAB 22) 3. Adopt Rule 1.10 (Rules Part of Plan Document) (New). (TAB 23)

4. Approve to repeal and reenact Rule 8.00, with amendments, and transfer to

Division 2 of the Board Rules as Rule 2.00 (Additional Contributions). (TAB 24) 5. Approve to repeal and reenact Rule 8.10, with amendments, and transfer to

Division 2 of the Board Rules as Rule 2.10 (Retirement Benefits for Part-Time Employees). (TAB 25)

6. Approve to repeal and reenact Rule 8.20, with amendments, and transfer to

Division 2 of the Board Rules as Rule 2.20 (Transfer of Deceased Member’s Contributions). (TAB 26)

7. Approve to repeal and reenact Rule 8.40, with amendments, and transfer to

Division 2 of the Board Rules as Rule 2.40 (Crediting Annual Interest to Accounts). (TAB 27)

SDCERS BOARD MEETING FRIDAY, DECEMBER 19, 2008 AGENDA PAGE 9

8. Approve to repeal and reenact Rule 8.41, with amendments, and transfer to

Division 2 of the Board Rules as Rule 2.41 (Amount of Interest Credited Annually to Accounts). (TAB 28)

9. Approve to repeal and reenact Rule 8.50, with amendments, and transfer to

Division 2 of the Board Rules as Rule 2.50 (Contribution Rates for Re-Activated Members). (TAB 29)

10. Adopt Board Rule 9.04 (No Overlapping Service Credit). (TAB 30) 11. Adopt Revised Board Rules 12.20 and 12.21 (Addressing DROP Community

Property Issues). (TAB 31) 12. Authorize transfers to Reserves for Employer Contributions from the

Undistributed Earnings Reserve for FY2006. (TAB 32) C. STATUS REPORTS

NO ACTION REQUESTED 1. Review and discuss Board Policy on Fraud, Criminal Acts and Internal

Investigations. (TAB 33) 2. Staff Reports by Division.

● Benefits Administration. (TAB 34) ● Compliance. (TAB 35) ● Information Technology. (TAB 36) ● Legal Services. (TAB 37) ● Member Services. (TAB 38) ● Finance and Administration. (TAB 39)

3. October 2008 Financial Statements. (TAB 40)

VIII. INVESTMENT COMMITTEE – STEVEN MEYER, CHAIR (TAB 41)

A. NEW BUSINESS

ACTION REQUESTED 1. Private Equity Advisor Presentations and Selection. (TAB 42) 2. Commission Callan to conduct a Market Neutral Manager Search. (TAB 43)

SDCERS BOARD MEETING FRIDAY, DECEMBER 19, 2008 AGENDA PAGE 10 B. STATUS REPORTS

NO ACTION REQUESTED

1. Securities Lending Review and Results through October 2008. (TAB 44) 2. Staff Reports – Executive Summary. (TAB 45)

● Investment Division Status Report and Proxy Voting Activity through October 2008. ● Year-To-Date Realized Gains Chart through October 31, 2008. ● Managers’ Watch List. ● SDCERS’ Asset Allocation Status. ● Top 25 holdings in equities and fixed income.

IX. AUDIT COMMITTEE – MICHAEL COLLINS, CHAIR (TAB 46)

A. NEW BUSINESS

ACTION REQUESTED 1. Acknowledgement and Receipt of the Fiscal Year 2008 Independent Audit. 2. Acknowledgement and Receipt of the Independent Auditors Fiscal Year 2008

Report to the Audit Committee. 3. Adopt 2009 Audit Plan. (TAB 47) NO ACTION REQUESTED 4. Review and discuss Board Policy on Fraud, Criminal Acts and Internal

Investigations. (TAB 33) 5. Sloan Settlement Audit Report. (TAB 48) 6. Fire 112-Hour Work Standard Contributions Audit Report. (TAB 49)

B. STATUS REPORTS

NO ACTION REQUESTED 1. Chief Compliance Officer Status Report. (TAB 35)

SDCERS BOARD MEETING FRIDAY, DECEMBER 19, 2008 AGENDA PAGE 11

2. October 2008 Financial Statements. (TAB 40) 3. Internal Auditor Status Report. (TAB 50)

X. QUESTIONS AND COMMENTS FROM PRESIDENT, TRUSTEES AND STAFF

XI. FIDUCIARY COUNSEL PRESENTATION

1. Potential Conflicts of Interest Under Government Code Section 1090 When

Discussing Possible Settlement of Litigation with the City. Ashley Dunning – Manatt, Phelps & Phillips

XII. CLOSED SESSION

A. CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION (SUBDIVISION

(a) OF SECTION 54956.9, CALIFORNIA GOVERNMENT CODE)

GENERAL LITIGATION 1. San Diego Police Officers Association v. Michael Aguirre, et al., United States

District Court Case No. 05CV1581 2. SDCERS v. City of San Diego & City Attorney Michael Aguirre, San Diego

Superior Court No. 841845 3. San Diego City Employees’ Retirement System v. City of San Diego, San Diego

Superior Court Case No. GIC 851286 4. Erica Aaron et al. v. Mike Aguirre, City of San Diego, San Diego City

Employees’ Retirement System, et al. (aka POA Class Action); Case No. 08CV1451

5. City of San Diego v. San Diego City Employees’ Retirement System, et al.,

Case No. 37-2007-00077604-CU-MC-CTL (MOU effective date) 6. San Diego Police Officers Association v. Michael Aguirre, City of San Diego,

and San Diego City Employees’ Retirement System, et al., Case No. 37-2007-00075432-CU-MC-CTL

SDCERS BOARD MEETING FRIDAY, DECEMBER 19, 2008 AGENDA PAGE 12

7. City of San Diego v. San Diego City Employees’ Retirement System, et al.,

Case No. 37-2007-00081912-CU-WM-CTL (PSC) 8. Annis v. City of San Diego, et al., Case No. 37-2008-00092949-CU-BC-CTL 9. San Diego City Firefighters v. Board of Administration, Case No. 37-2008-

00093217-CU-OE-CTL 10. Aaron v. City of San Diego, Case No. 37-2008-00093078-CU-OE-CTL 11. San Diego MEA vs. SDCERS, Case No. 37-2008-00096145.

B. CONFERENCE WITH LEGAL COUNSEL – EXISTING LITIGATION [Cal. Gov.

Code Section 54956.9 (a)]: ONE CASE 1. City of San Diego vs. Gabriel, Roeder, Smith & Company

C. PUBLIC EMPLOYEE RELEASE/HEARING ON APPLICATION FOR DISABILITY

RETIREMENT [Cal. Gov. Code Sec. 54957(b)]: ONE CASE

1. Application of Harry Eastus. D. PUBLIC EMPLOYEE PERFORMANCE EVALUATION [Gov. Code §54957(b)(1)]:

1. Executive Staff

XIII. NON-DOCKET ITEMS

XIV. NEXT MEETING

Friday, January 16, 2009 - 8:30 A.M. 401 West A Street

SDCERS Boardroom, Third Floor San Diego, CA 92101

XV. ADJOURNMENT