welcome let's rise for the mrimgz please place your raise your hand and to the republic for which it stands, one nation under god, indivisible, with liberty and justice for all. >> all right. welcome to the this is the regular meeting of the meeting the retirement board my name is malia cohen the president to my left is brian stance beggar mr. clerk call roll. >> commissioner cohen commissioner bridges commissioner bonilla commissioner makras is not connected commissioner meiberger commissioner stansbury a we have quorum clerk as a president of order a vote to excuse mr. mark reduces.

>> not that i'm aware of. >> leakage it is customary we go into inclusion and come out in 2:30 if you're not here for the agenda welt need to take public comment first before we do that anyone that wants to come and speak on whether or not we'll go into closed session yes, we'll have general public comment after closed session and again closed session that be at 2:30 everyone will have an opportunity to speak this is only on the item whether or not we'll go into 2:30 thank you. >> thank you for your patience okay may i have it motion not to disclose what we discussed in closed session please is that a

motion. >> motion by commissioner driscoll and seconded by sdmgz let the record reflect that commissioner stansbury is not here next time item. >> public comment. >> ladies and gentlemen, this is the time for general public comment to speak on anyone i have one comment card mr. herbert wiener is here in a boo and everybody else will be able to speak. >> herbert wiener we want to pubically commend commissioner meiberger on the services to the public and also to us retirees 24 years of service and i want to express my presentation of it i'm sure other people feel as well thank you. >> thank you just a point of information for those who are unfamiliar with the process you

have an opportunity to speak on anything you like in general public comment and an opportunity to speak on the specific item so it would be two opportunities for you to speak if you're heart deserves and my name is john a two year member of p,z&e, finance governance and thank you, very much. all the things you did on hedge funds saved us hundreds of millions of dollars you convinced everyone to go from $3 billion to one billion dollars and i think all the members appreciate that now i'd like to talk about my favorite subject hedge funds last year commissioner meiberger asked the hedge fund sale man to

give us 3 reasons to buy hedge funds the various reasons were everyone says it is from bryan a few months ago is the best is the protection in the sound market the second reason given to reduce- the third reason given was that they attract the best management the best and bring out it and anyway 2008 was a big down market all the hedge funds don't in 2008, in that year global multi strategy hedge funds dropped 23 percent equities hedge funds dropped 25 percent the. >> to seconds. >> the hedge funds when it comes to volatility hundreds of

hedge funds from 2008 they ran act out of business hundreds of them when it comes to talent and investing they retain the highest performance and use - past for the past 15 years that's why pension funds like expressing and new york city to name a few digested strong. >> thank you. >> i only have a few more things to say. >> i only have a few things. >> hi, i'm so on you don't i can't forgive i'm an organizer and recently, i came to find out there exists is security and

challenge with prohibits the investment advisors to public pension funds in the next two years from don't ask, don't tell to the campaigns of you know commitments candidates to use them so that really includes all supervisors and potential supervisors this is interesting and i went to go look out who the investment advisors are for san francisco pension funds and he found i couldn't find the list so my request is to make that list public and if it is public i don't know if more easily discoverable that will further the intent of law and prevent you know candidates

from potentially you know soliciting donations in potential donors and help me do the same thing and help actually catch if there is you know a violation of law because the fcc is not - >> give it a second. >> jake can you respond to her questions. >> it is pubically available in reports we've presented to the board boards on a quarreling basis we'll insure you get a copy of the list. >> that would be great and norman is our board secretary. >> you want to know the hedge funds management. >> that's not what i heard the fcc determines that is an advisor heavier that refers to. >> the investment black stone

has been - >> just to be clear this is public comment. so q and a thank you very much nice to see you, we can get the information next speaker. >> i - >> you will be able to speak before the vote artists presentation go to public comment and take a vote no problem anyone else seeing none, public comment is closed. thank you very much please continue. >> clerking. >> item 5 approval of the minutes of january willfully board meeting. >> is there my corrections to the minutes no all right. can i have a motion to accept. >> commissioner bridges is there a second to the motion seconded by commissioner

driscoll i'm sorry public comment on that item public comment is closed. is there a- without objection that that item passes unanimously please note the house has changed commissioner stansbury is here. >> next item consent calendar. >> my discussions on the consent calendar if not public comment. discussion from the public on the consent calendar seeing none, public comment is closed. is there a motion to accept the consent calendar. >> all right. moved by commissioner stansbury and seconded by commissioner paskin-jordan without objection the motion passing unanimously next item. >> 7 a proxy voting for the calendar year 2016 thank you, madam chair and bob i'll ask you to make a brief summary. >> commissioners every year at that time we present to you with a discussion item that goes over

how the retirement system voted the proximate i didn't see in the preceding year in this case 2016 our consultant will give you a brief summary of proxy thank you. >> thank you all right. perfect, thank you. as thank you for having me. back again this year i'm highlighting a couple of tops on the proxy the proxy assess clefks board of directors and on proxy assess as you may know that is the ability for digesters to nominate their eaten corporate candidates this set a record with 200 proposals in the u.s.

and as you recall 2016 was the break-out year for the topic for new york city funds leading the charge with companies ask them to have access rules their bylaws allow stakeholders to nominate corporate candidates and more than half of the proposals are withdrawn if the new york city fund because companies have agreed that is assess rules and their bylaws in 2013 one half of one percent of '75 companies offered assess in 2016 a whooping 52 percent of the firms have that with that said, with all the process as 95 hundred of large companies a jogger drop off on can be companies with 4 percent of one thousand companies having assess rules that allow the

stakeholders to nominate the candidates on climatic change 2016 was really the water shed moment in the climatic change proposals and a record number of proposals were filing 91 in u.s. corporations and 2016 up from 68 in 2014-2015 56 proposals made it to the ballot and one for the first time received majority support in 2016 about 50 percent support 51 support on emissions the x p x energy cloud core get 5 is percent with the sustainable including the limiting emissions so climatic change and vital

proposals are gaining a lot of transaction and i 2016 was a water shed moment for that topic looking at board related items on corporate directors rained high levels we've seen during the financial country's obviously was significantly lower the average lower is 96 percent and the concerns as well board refreshments and are focus areas for investment on compensation remains high about 91 percent relative to what we've seen in the past with fewer failed votes since 2014 we've seen failed votes drop off >> what do you mean.

>> that means their rejected the share packages. >> so shareholders are strshldz are accepting the packages. >> their supporting those packages. >> there is a movement happening nationally to address low pay. >> actually some of that moment movement is bearing fruit in 2011 when votes were instituted 74 at 5 hundred companies were equity awards and 53 percent of equity awards dropped an increase in 28 percent 4 years ago to 53 percent. >> so what you're saying i'm

hearing this is a trend for now times ceo pay based on their pay no longer are we departure from ceo's making astronomical amounts of pay and equity awards to ceo's 72 percent were awards invests now the majority are meaning the executive has to achieve a performance to get access to the equity awards that's why the companies have decreased on that topic for the focus will be to look at how rigorous the performance requirements are that will be the area focus for a lot of

investors. >> those are the 4 topics of areas in 2014. >> wlats the focus for 2017 you have 4 tops for 2016 what about this year. >> i can see in 2017 the access will be one of the leading tops like i said a significant number of 5 hundred companies a majority are assess rules shareholders to nominate the boards. >> particularly down market looking at the cap and the mid cap companies and encouraging them to adopt this provision and enable shareholders to nominate the candidates of their own and climatic change will be a key area of focus we're expecting

another record number of related proposals whether that is climate competent boards we heard exxon mobil it nominated avery to their board a scientist recently about a week ago or so to climate is an area of focus in 2017 the two degree scenarios proposals are going to be another area of focus and also linking pay environmental metrics for the metrics will be another area of focuses, of course, on board elections that continues to be an important topic for investors and we're expecting a lot of focus on the

behavioral types of issues track record to make sure that the directors track record reflects when you know shareholders are looking for. >> does that include diversity. >> yes. >> ethnic diversity. >> that includes the diversity a lot of. >> i thought you meant snacks. >>. (laughter) new thinking and fresh blood with diversity where gender or racial or background >> and the compensation like i said the focus will be now that companies with moving forward towards the awards people will be interested in looking at how rigorous those performance metrics and performance requirements are that will be the area of focus on 2015 and

beyond talk about what about the international issues. >> on the international high school side again, the compensation is a key area of focus for investors and investors scrutiny has increased and in europe for example, for the compensation pay where we've seen failed votes meaning the investors reject the - scheduling and paid packages will be an important package in 2016 another. >> telling me about russia russia is moving towards privatization and board of directors. >> there are some governor changes i don't have the details of those new developments specifically and focused on

those but i i'll have to get back with you. >> in your report as you've discussed. >> sure. >> i don't want to take you, you're on a role. >> the next topic is diversity your mentioning the issue has mauchtd in france and bat out of hell yum they're expecting their thresholds that's put in a theodore roosevelt high school of - their. expecting to have the corporate boards 40 percent of in and bat out of hell yum is 32 percent we expect expect those markets to hit and this is close but 2017 to hit the flerldz and others are including you know soft regulations asking

corporate boards to look at including more women to the board to try a reach the majority thresholds in those market but also seeing continue to focus on stewardship where denmark has realized a market zone a focus on stewardship asking the investors to be active investors body camera also focused on proxy voting and reporting the on the negative side we've seen some market value having loyalty shared for example, france and italy they're put in royalty shares where a few shareholders for a couple of years were entitled to get votes for every share that is obviously against the one share one vote principle and that is

an area that is concerning and i think that there are a lot of investors working only creating you know kind of a one share one vote principle including in the u.s. there is a movement against dual class structure. >> okay quick question on page 10 in the packet there is saying city and county of san francisco 2016 proxy voting report the annual embarrasses to the equity compensation issues you've detailed the last 2016, 2014-2015 i'm curious to know and i think this is because i don't understand how that works who is our proxy who is vote on these boards how does that work i don't know bob if you can. >> walk you through part of next item the general process over the last 20 plus years

we've developed a very detailed policy all the policies have gone for the board for the next item so the policy recommends or decisions of the board are implemented through they receive a fee of the holdings from north trust so san francisco the retirement folks are phone call but implementing the policy decisions of the board with regards to all the proxy voting policies in place for example, i want to say that was last year when we implemented the decision to vote for shareholders proposals on page 2 of this memorandum and once we once that vote was confirmed through the board that was all that was implemented you'll see the results in the bottom of table so policy decisions by the board

implemented by. >> as a body have taken a couple of voted around fossil fuel and members of the public have come to this body not this year but indicating that our proxy of taking votes that against the direction we've given is my recollection correct. >> your recognition is partly correct i'm trying to say i want to say 2015 the policy was in place prior we attempted to get the proxy to us such we can bring the item before the board for a vote that's paw frustrating process the timing didn't work as a result we brought if overarching policy to vote for around climatic change

emissions, etc. the issue the time of the announcement on the proxy didn't necessarily coordinate with the board meeting. >> how do we sync things up. >> what happened we were presented we joined i nc r in investment network and it was appointment under the existing policy were voting against proposals that were submitted by other i nc r so we basically said this board will vote in favor of my proposal related to climatic change by an i nc r member we tracked those and found out the series the other organizations we belong to tracks those so we insured that going forward from that policy change that anyone el any thing

sure we didn't get on the other side of the votes that's probably a year and a half clearly an in effect for all of 2016. >> that's correct. >> in 2017 i want to make sure we're not we're consistent wishful. >> we continue to track all there i nc r we intentionally track the proposals introduced nation wide by all maybe so just judge scombertd the 2017 and entered the proximate i didn't see the voting i think extends through june. >> thank you. >> all right. thank you if you are all right mr. michael is that the end of your presentation or more. >> sound good colleagu

colleagues comments or questions. >> commissioner driscoll. >> sometimes the policies are brought to the board one this data you're able to see the total turn out; correct? all the shareholders votes that's an interesting piece of information two can you tell us how many or assume all the management proposals passed no not necessarily. >> therefore i can't tell if we're voting with management likewise whether it passed with the short-term rentals. >> turn to the page 5 of the memorandum the data is there sorry. >> that's it the width whether

these things passed or not. >> we can skip the data in agreeing gas stations. >> it is from the report or not. >> not. >> have i asked this question before. >> i don't recall. >> this the the one or two year i've asked this question was this contracting assigned to us or extraordinary. >> we do have the data. >> when will you include the report or do i need to get a vote to require talk about we'll include it. >> thank you

>> the report is actually available we track the results and provide that information so we can send to the staff pass on the board and present it next month as a discussion item and include that information for your. >> this is a discussion item also; right? any more discussion on this item no okay member of the public want to speak on this item please do so. >> if you can save the astronomical amount of money starts are the ceo of the hedge funds manages if we're invested one billions of dollars is invested in hedge funds for 10 years i predicament a 5 percent and mr. coaker i how much it mr. pay in management

fees but the hundreds of million dollars and thank you commissioner meiberger you've saved us hundreds of thousands of dollars. >> any public comment public comment is closed. >> thank you, mr. michael for the presentation and mr. shaw call the next item. >> >> presidential. >> this is sometime we just want and a number of items we're recommending changes to with that, i'll hand it over to my colleague. >> thank you robert so we're presenting 3 changes this year the first one is we're looking to strengthen existing policy

respect ipo and currently as an ipo comes to the market with the clarified board and no amendments you know do away with the structures then a vote against that boards is cast now we're going to add the structure of items we'll be concerned about putting oversee types of structures in place prevents us from being able to have a with only share one vote principle and uc davis this locks in the negative provisions so what we're doing augmenting the policies by adding the dual class structure as part of the companies and this issue of dial class

structure it getting momentum a group is pushing for the eliminations of dual class structure like vanishing guard and others, etc. have formed a group asking u.s. corporations and global corporations to do dual class structures this i p policy will strengthen you know corporate governs in those newly listed companies by streamlining their govern structure the second chance we're requesting here is to adopt the policy to vote against boards that restrict shareholders availability in the bylaws by the shoulder process and fcc rule shareholders are allowed to

put out proposals changing bylaws and some companies have tried to restrict this ability of shareholders to put up a proposal and bylaws by isn't it true more requirements etc. we think this is detrimental to the investors we're proposing voting against such boards if they put restrictive provisions to not allow the shareholders regarding the bylaws and the third one looking to add policy to cover a newly ratification of non-employees there's been a number of high profile lawsuits that reflects the shareholders topic facebook was sued based on this non-employee direct pay

packages that has been prepared and in response some companies put forward advisory groups on the direct pay we're proposing a new policy on this topic looking at it on a case by case basis making sure that shareholders transfer is limited and comparing relative magnitude of company pay appears not out of line and requiring and other investing provision and factors and you know making vote decisions based on those types of factors those are the changes we recommend >> thank you. any other discussion colleagues. >> nothing all right. public comment on this item. >> public comment is closed.

thank you all right. next item, please. >> we need an - >> excuse me - i thought that was a discussion item all right. colleagues the recommendation is to the retirement board agree with staff and i n s recommendation a motion it is required that motion to move forward that san francisco employees retirement approve the proxy guidelines and he articulated the key changes of the policy anyone have my questions. >> just a clarification that means it is brought to us no policy. >> the 3 are the changes in the policy and their enumerated how it is you'll follow that. >> correct. >> two or three i guess. >> okay i particularly like the change to the direct proposal voting on

nominees and i like that change i'll make the motion to move that we approve the proxy guidelines for 2015 is there a second. >> commissioner meiberger has seconded by and without objection that passes. >> next. >> item 9 approve for the capital improvement plan equity and madam chair we have a guest time for public comment or. >> we'll call for public comment. >> staff has a presentation and then to public comment and then vote. >> is al in the room. >> oh, there he is. >> about the avenues any comments. >> capital international is one of the longest serving manages having retained by the system if 198 six the primary

reasons we're bringing it for determination are a memorandum i want to cover a couple of them part of it is the recent turnover and they operate in misrepresent payment process and capital guardian it is difficult with our responsibilities to determine who is responsible for decisions so each of them runs their portfolio so getting individual manages is very, very difficult these are some of the dominant reasons we are putting forward this the performance is very strong but a memorandum of understanding this has fallen off but comes down to the quality active issues i'm going

to turn it over to hahn for comments. >> thank you bob. >> just a reminder about capital groups international that is the one we're recommending terminating the non- u.s. strategy right now as a 1231, $20,162,900,000,000 and we first hired him and under review since 2016 and this capital group we hired him several decades this is a seat a shift to retail and bob said it is a high turnover if you look at chart the capital group had a strong performance from 1986 to 99, however, it went down in the earlier period

affordable housing face was hired and suggested returns as by the sharp ratio we're hired all the metrics have deteriorated next we'd like to highlight the a u m for the group is $3 billion to one point plus trillion during this time the retail from 58 percent to 95 percent and despite the growth at the firm level we're recommending terminating the national equities to solve the $9 billion last year this firm to limit the manages ability to add a numeral in a volatility market this adds to the complexity and focuses on the firm and lastly i want to reiterate what bob said the

capital has a multi manage approach no single p.m. runs the entire portfolio but the p.m. is very hard for staff to affect the impact of the changes in the turnover for the reasons i've highlighted and recommending termination we'll right the employees assets is passively managed this will amount in lower fees and i'm going to turn it over to allen. >> we have been involved for a while in discussion with staff on this matter and procurement the recommendation and are in concurrence with staff's recommendation our research team has the manages that who is product is newly and the action is whole we can't use them in

searchers the reason for this follows along the lines that staff described are dpivent fold the size of the enemy of performance and unfortunately that is a firm that is successful in attracting lots of assets we're very, very larger versus the investment opportunities set we in general don't like institutional manages that have high catalysts of retail investors it can cause huge out fleeing flow that compromises the abilities the managers and the portfolio structure frustrates the ability to attribute and analysis performance i remember firing a manager because you don't think they'll perform in the future

has to do with with the philosophy people and the ability to understand that process and be able to be confident of its application going forward is important we don't think that is the case turnover 19 is high the element i'll add to staff is in our 1231 report you've not had the comparison in the top they've had a good recovery but on the 3 year basis in the 79 dial of the best alliance and a 5 year base 64 meaning our chances of finding

selection othe retail has been long time. >> out of step with the deterioration. >> it is one it is one of the

things i guess to find them in the last two years if they're in conversations about that. >> allens comment we'll prefer manages that have a significant sole institution. >> that's retail. >> and then a drop in- your recommendations and make sure we get that coming forth in your packet of strategy. >> at least for now. >> for now. >> thank you commissioner bonilla. >> you've given information how they've done relative to the peers whether a one year is better than a 3 year can say argued a couple of ways let's say we're familiar with the multiple portfolio managers that didn't cater in their line up

is that true. >> that's true they have an individual assigned team i believe the terminal is portfolio correspond but don't play a role in determining what holdings a manager may hold as a portfolio part of it ♪ the guidelines we don't go outside of the guidelines but the individual p.m.s run their sleeves >> no one is deciding whether portfolio manager 51, 2, 3, 4 how many are involved in the account. >> we don't know the breakdown of the allocation. >> that's a significant thing if we're pga for that we like the chris's choice or not like the group to understand our

preferences how we concentrate. >> okay always only issue troibl performance to that allocation. >> again the antenna manager structure is one of the main pieces. >> i understand i am focusing. >> the antenna manager approach i've seen that a few times it's been successful and seen those instances it is not. >> again, thank you. >> my other discussion oh. >> have the scene the. >> that's a good question commissioner because i'm thinking of one instance it has two instances where it's been successful they're both 100 percent institutional money and that's an interesting distinction. >> anyone else commissioner meiberger. >> madam chair first of all, i

remember what we hired capital guardian in 1986 i was in a staff position they've been here a loaned or long time that was in japan because japan ran to up to the peek so the managers were like in japan they operated for a long time we changed that might not see it in the benchmark so i want to say over the long run i'm looking on page 3 showing the early period 1986 to 1999 the cumulative return is 16 versus 10.95 the sharp rational gigantic 6.9 percent meaning the benchmark is 6 percent per year for the 13 year period this the

outstanding i see on page the numbers are a little bit less than the more recent period not significantly less that is capital underperformed benchmark by only 6 for the last 16 and obviously i'm saying only 6 they're out performed by 5 hundred base points who knows what the future holds by the one smart bet that capital guardian placed bet was japan that was tremendous if you have found in benchmarks you'll not have that opportunity there is an vantage and disadvantage i see the numbers i understand staffs strategy about the change in the composition. >> i don't on the case has been made in you look at the early years i don't think the

case was made who know what the future holds but one bet the light in japan a tremendous impact on the future returns a tremendous numbers of dollars to the fund so i don't think that the case has been made i know we have our preferences for institutional or not but the purpose in a benchmark where i just don't see that as added value. >> let me ask a question or two in terms of the number of holders in portfolio give me a number how many names are in capital guardian.

>> can we get you that information. >> i always ask that question it is important to make a decision commissioner driscoll you should be prepared it show the systemic and how many names in the benchmark in the one benchmark. >> roughly around 5 hundred. >> 5 hundred names. >> roughly. >> yeah. >> commissioner the tracking error the strategy is quite low meaning that is anchored to the benchmark. >> if i might since i'm not getting an answer through the chair ask a representative if capital guardian a simple number how many names in the portfolio.

>> if i - >> please answer the question. >> beg your pardon. >> how many in overview if a. >> in fact, the c you are superficial. >> stop commissioner meiberger. >> i asked that one question. >> you answered my question lipped 200 and 59 names versus a benchmark that's a little bit of difference in return but versus the benchmark so that's where the active strategy the decision here is a very, very clear passage so in terms of what staff is recommending we put this in a

benchmark where there is no security selection and passed all the shares so i think that i think this is worthy repeating like i said going though the numbers i say case has not been made we can look forward to the molecules decision they've added value to the portfolio those are nets also so the numbers we're seeing and generally speaking i think this is a challenge against the headwind to invest in active strategies but those were fees they've still come out head long run he i think it make sense like the one decision like the light in japan that having a profound effect if we have a benchmark they'll buy japan in the way that japan it is 1989 japan was

half of the benchmarks it was a waste but japan was overvalued and that was one decision had a profound affect on the next decade in the year. >> one decision to me is earning the right to do there one of the longest term manage if so a motion i recommend we keep capital guardian. >> to your point the example was over 20 years ago so how is that relevant to where we are today. >> in the past will not in you invest in the 15e7 this buys the securities in the marketplace and in 1989 japan was large

whereas if we give it to an active manage they'll be in the position to make that kind of decision. >> commissioner paskin-jordan. >> in that era i remember the benchmark of japan was really large. >> go ahead. >> so ask the manages if their given the benchmark they can greatly out perform was much easier than today where japan is the smaller percentage of this benchmark what it it today that's kind of changing the environment i think you have less managers out performing the benchmark. >> commissioner back in the 80's through the 90s a large percentage active international managers outperformed by large amounts but japan was 60, 65, 70

percent of the benchmarks and rose that all the way down to less 20 it is somewhere now in the high teens i think something like that. >> a huge difference i mean, we know of one manager it is pbo we have a weight in japan they're out performance was ridiculously high that strategy has had a hard time over the last 10 or 15 years. >> thank you thank you you commissioner stansbury has a couple of questions. >> when they were - >> before 2014. >> and the racial at that moment in time i know. >> all the same reasons you see here you know as the size of the firm

the significant decline in strategy i want to come back to that and questions about the uncertainty of value added of the misrepresent manage structure and all the others i'd like to comment. >> before you do that i have a question if you, you go back and look at that presentation to the board that was the entry all the issues you've all the way down u outlined are the same issues you've outlined a few years ago. >> turn to page 5 back in 2000 the strategy at 65 an a u n if all 65 had remained in the strategy today that number would be one and $40 billion instead in you turn back to page 4 it has $9 billion more than 90 percent of the money in strategy

has left and - in the last couple of years i see that you know 2016 outperformed the index but the year prior underperformed and the year before that was more or less even what happened in the last two years sort of a concentrated year to have the names of index why do they perform better than 2015 versus 2016. >> part of it was allocation so the benchmarks against overview if a but outside of that hope in canada and brazil for example, the brazilian holdings were up 90 percent last year that's not part of benchmark. >> so too is more of a coffee

strategy than a passive. >> no, this name has 200 and 50 stokes not contained. >> a difference active manager not a passive strategy. >> how many names would you say the manager has classic. >> portfolio management therapies assess if you have thirty well divided stokes meaning some consumers discretionary technology and thirty stokes is all you need then everything after that classic you know portfolio theory says you are not reducing your risk teller beyond that stock. >> thank you

my other questions if not colleagues i'd like to exercise the wanted of order we have a representative here and give him 5 minutes to speak 5 minutes only al. >> i'll keep the 5 minutes. >> i'm sorry quick for the record. >> i'm what the capital group thank you for your continued partnership i want to address a couple of things for staff their concern because the staff recommend we terminate i'm asking the board to delay until we get more information i think that is a lot questions and a lot of lo have to have the portfolio manager and people from the staff the person that the staff thoughtful results and the multi manager are too big and

internationally two small we talked about the growth in retail assets what you're clarifying have not retail their institutional assets look no further than across the hall with the assets you're talking about pr those assets in the mutual funds that is where the assets are going the san francisco to plus billion dollars on the corporate side shrunk our assets look like are clients clients assets define assets have grown and look no further than the plan we have 200 and $60 million in the puc and 200 plus here so, yes, the

assets contributions by the same staff and participants and the strategies are the same board oversight we bang our head against the table because you choose a different vehicle lance county the same thing the contributions side is 3 times not visible work but our classes asked you to have assets in the contribution the defense is the international assets versus international the same just a different vehicle that's the first thing and the second the misrepresent manager approach we've had 17 managers managing the that time did only way to have a portfolio that outperformed that different people have - i look at this board around thirty years i only

see two members that started years ago the only way to have a system when board members leave or leave themselves you have new people to come in that's exactly what we do in capital i'd like to pass this around. >> thank you. >> (inaudible). >> after 15, thirty, 18 years those are years request capitals i can't ask someone to outlive anytime you have a system that works for thirty years that's what happened i love we pictured 1999 and joe brought up this one verse 3 years we've outperformed 5 hundred times by last year. >> 5 hundred base points when you have $5 billion that is 5 percent $15 million as it is now

$10 million you want to go an overview if a will innovate give you that extra $10 million if it was passed to what we do in the process we have a system that worked for thirty years 200 plus base points and outperformed by 5 hundred base points and managed fine contributions and i'm asking you to please take a pause more information and that's what we're managing the money and since 1986 i don't know when you were in 1986 that's how long we've been managing money and we'll do it we think we're going a great job

please continue the purpose get all the information and have us talk and ask us the hard questions please i'll be the first person to say. >> 30 seconds. >> look at what we did in the last seven years $700 million $700 million if you look at the out performs with the crazy index and never put our people in the index be creative we've never put your eggs in one basket thank you. >> colleagues i don't know if you have my questions you want to follow up on is there anything yes, sir. >> this is a perfect opportunity to ask a question i respect staffs work those are

equal active issues we don't hiefrp people on a one or three or four year basis same system the question the opportunity causes time and effect we duo do that with due diligence or study. >> commissioners we've done due diligence on this strategy for thirty years. >> they've changed their programs. >> i'm not trying to set of retail or not retail is that a good set up or not. >> there is nothing said is from our colleague if capital guardian today, we don't already know and considered the comments about taking $700 million owner over the last 10 years they're less than not able performances over the last

10 years it is zero. >> again, we don't hire people for one year. >> we need to make a more strident effort to build a partnership with the managers on the go forward basis and need to be more selective i'll be for every public equity manager let me contrast we've fired more than 40 percent of the managers in the portfolio that's when they come back to fund 2, 3, 4 whatever we simple don't react one approached the public equity should be the religious freedom automatically sunsets and end after 5 or 7 or 10 years and staff rather than trying to

terminate a strategy it strategy sunset and if it can be renewed needs to be presented to the board a complete flip-flop and nothing conveyed we've not heard. >> this is i want to say - >> sorry. >> i think the chair didn't want to debate. >> thank you >> actually, one thing we - >> you're on thin ice okay. >> yes. and i want to make one point i feel like the decision to terminate a manager shouldn't be an desire reunderwriting of the process by the board i think this is a wrong way to go about it we're not equipped

to do that kind of work what we have staff has laid out a case with a key issues a couple years ago those are brought forth the exact emissions i'm saying no change in the issues we wanted to terminate now board members feel like they need more time and more information not opposed to that but be mindful we need to caution of that. >> that's all. >> commissioner driscoll i'm curious the 10 year performance notice thirty years and 10 years how do they standing against their peers in terms of what you want to go total net performance. >> that's the point i want to make you're not hiring them to bet the index but hiring them to

do better than manages in the 5 years 64 percent of the - >> the reason i asked for the 10 year number you told us. >> 10 is in the same order. >> it won't be 634 but lower. >> - ) multiple voices). >> it sounds like a lot of questions questions period could a we continue this item so we're not putting staff on the spot would you do support a continuance. >> i can. >> commissioner stansbury. >> that's fine. >> you need to come back there are more facets because this decision not just about capital group but whether we have

another manager and what's the future are we moving a hiring things like that i'll be for putting this off another month and getting more information. >> wyoming you like. >> the in terms of the information there's a question we'll start with you commissioner driscoll have. >> articulated. >> i'll make a list of questions. >> qualitative issues. >> we'll get the information and we'll we were caught off gaud let's entertain a motion and calendar it for next month addendum. >> motion by commissioner meiberger and safeguard commissioner bridges let's take public comment. >> oh, coi wanted everyone on

the record laura i'm covering myself over here sew, sir let's take public comment on this item. >> when it comes to devesting the one you should put on the top of list is hedge funds when you make an investment you should look at past performance and future exception let's start with past performance in you invested in an index manages in the english language when you mention the word index it is global misrepresent strategy hedge funds if you invested from january 2005 to 2015 would have lost one percent in 10 years if

you invested ♪ an index of hedge funds you would have lost 70 percent and he a traditional investment with the 15e7 an index would have been 2 percent and next 92 percent so a moderate risk investment over the motorist but let's call it a modest risk i can't understand how 7 intelligent people including mr. coaker can invest in hedge funds i'd like to leave with a quote from one person said when he gives a presentation to a hedge funds manages he explained the

math and the consultant and goes out and buys bonds >> 30 seconds. >> thank you anyone else for public comment. >> public comment is closed. >> thank you all right. let's carry that item over i don't think we need to take a vote all right. see you guys next month and get the questions our next item. >> >> next item. >> k406r9 were mr. coaker. >> on the first page a good month one point plus percent the international equity market are strong if we go to the narrative on for the first seven months of year up 68 plus a good on the up-to-date i summarize that as

job growth continues to be good and acceptable and other things not in the memo household debt a reasonable and housing starts is good and credit quality is good the concerns with evaluations in the u.s. market and the sheer amount of debt in the world and sub par economic growth global warming as well as in the u.s. turning to items that were previously approved in closed session the board approved two months ago aubrey for $50 million we only got - the board approved for 95 million only got $40 million ss g asked for two strategies of $50 million each in december both of those closes

and we got $50 million and the tourist finance strategy asked for $50 million no november the board approved that we got the $50 million on item 7 i'm pleased to announce the promotion of ellen to managing director with management and invasive seclusions ellen is a fantastic team member she was nominated to the board of supervisors for the institutional society of the professionals you can read in item 7 with the mandate of the i s rp and the distinguished peers that are part of that group and investment committee we have next week a week from today allen martin and a colleague of his still bill nelson will

present on allocation and the capital assumptions the asset allocation is what the process is for the asset allocation through the rest of years no numbers an important part will be laying out what the exceptions are we have to presentations from one from microsoft and another from dry capital one the partners sequoia capital that is an artificial intelligence and colleague if dry capital will be talking about futuristic things in the future and a colleague from microsoft will be able to talk about how they're used to

present economic activity and security prices outstanding commitments commissioner mazzuco last month asked for a chart on the change in our outstanding commitments our outstanding capital calls and that is provided in a chart at the end of this chart grown from 1.5 to $4.6 billion over the last 3 years there are two things that puts us in a better position to achieve our to death weights of return 18 to private equity and 17 to real assets we were not going to get under the previous funding schedule we're now in much better position to do that the other thing to weigh the liquidity we've been discussing and holding liquidity meeting monthly and we've also as indicated last

month analyzed our liquid assets and in very, very good position to meet the capital calls whenever they happen on portfolio 10 is off to a strong start almost 2 housing unit 4 percent in the first quarter in the meanwhile the global equity market up less than one percent and bonds down 3 percent the custodial change we continue make process it is inch by inch the first number of months lastly is foot by foot so we are beginning to move downhill and have an agreement here within a pretty reasonable he period of time and the rest initiatives the delay in the custodial didn't impact the dmriefrz for this report that is on case to be at the may or june board meeting for the quarter end of

march i'm going to turn it over to the board. >> can you speak to the transportation. >> not good at all the bond yields are in the mid twos and 10 year future bond returns are closely co-related to existing 10 year treasury returns expect around it and a half or 3 percent that's not good if interest rates rise bond returns will be even worse for some number of years years probably about three or four years before edging higher than they'll be higher than they are now the only way that bond returns actually, two ways one, if we have an out right awful

recession and the bond yields meaning the prices go up a lot but that will think an awful outcome for the rest of the portfolio the only other way to get good bond returns is what where we live got in the yields they're one 7, 8, 9 range but the liquidity for doing that so that's the trade off in the bonds. >> will we be talking about our fixed income portion in the portfolio over the next say several months we talk about allocations. >> yes. we've changed we're in the midst of changing the fixed income to have liquidity and higher quality we need more the capital commitments and protection in case there is a

recession still to sign off one on the other part of the strategy to go into private debt the yields are nicely attractive but, yes we'll be talking about them. >> obviously something we've been talking about for years and i think we know your closely watch thinking about this strategy because obviously we are in a unique situation stock prices and bonds may be different in the past start looking forward to how we'll deal with that. >> will do. >> anyone else commissioner driscoll. >> our section 8 about talking about invested uncommitted i'm confused about you talked about the 3 and both into a 5.7 and

defining private market value as private equity reality and private saetsz i'm trying to figure out the total number versus the significant issue of how much money we must commit to get to the allocation the allocation is what driving our rate of return something about that chart needs work okay. >> okay. >> i mean it is a clarification issue. >> what you're trying to show us is great i didn't read it couldn't figure it out. >> so let's work on that, please. >> anyone else. >> i want to address john's favorite issue the hedge funds on the performance chart that you showed at the beginning the cover page you show the returns

market-rate was $500 million i don't see your performance number next to that in the body of your report the number you're showing for the performance numbers that is you show on your page 5 of your report where do they come from. >> from the north. >> david would be speak to them. >> may i ask thank you. i appreciate. >> i can answer the question about the returns feel free to do the same go ahead. >> they come from north trust but the reason they're not shown is because they're lagging a thirty day lag they're not shown for the same period of time as well as this is where reporting a period of time that is just for months not

consistent with the year to date period of time that is shown for the other aspects so that's why it is disclosed separately. >> it lags the most recent numbers on page 5 december 31st and the numbers on the cover page have january 31st. >> that's correct. >> that's your point. >> can you tell us i understand the private equity but why are the hedge funds lagged. >> for the same reason for the strategy that are investing in less liquid assets takes more time for the for example, the bond marks the number of weeks after the period and it it takes time for the fund managers and the administrators to finalize those performance numbers. >> thank you. >> that concludes my

questions. >> thank you. >> all right. thank you let's go ahead and take public comment anyone? >> when it comes to assets allocation in my opinion only 3 assets you need that's been good for the past had recalled years san francisco reality, bonds and stock exchange 10 years ago thirty percent in bond and thirty percent in the stock exchange and the pension funds is over one hundred million dollars so you can past performance didn't mean future performance but similar assets in the next couple hundreds of years no necessary to go all

over the world and timbuktu you'll loss money number one you don't know enough about them and one profits and don't invest in nothing you don't know nothing about and saying that is in front of your nose and you can see it just invest simplely i think no jake and peter lynch they were all agree with everything i'm saying ask any of the people especially, if you should invest in hedge funds. >> thank you anyone wish to comment seeing none, public comment is closed. colleagues, any other business i want to thank the staff for your presentation and it's been

worth - an action item. >> thank you so much a discussion item. >> please call item 11. >> item 11 discussion the per conversation manager's report. >> thank you thank you good afternoon, commissioners before you is the monthly performance report or the activity report you'll notice that the report has been given a little bit of a facelift and reassigned the information to make that more users friendly in addition consolidated information that may have been represented twice in the report just to streamline it with that, i'm going to turn it over to the board to see if there are any questions to answer at this time. >> we seem to be without a

chair and cove but is a quorum do we have a volunteer to share until bryan or commissioner stansbury or commissioner cohen returns. >> past the president that will be wendy commissioner paskin-jordan okay. >> do i have a motion to accept all the items? no, it's a discussion on we're asking if any questions from the board >> thank you. >> thank you we let you off easy. >> we need public comment. >> okay. >> you have to call for public comment. >> okay. >> acting chair commissioner paskin-jordan. >> can we ask for public comment. >> open no public comment public comment is closed. >> next action item.

>> item 12 review and approval of a 2 percent cola under the charter 2017. >> thank you and good afternoon, commissioners the cpi for 2016 that needed 3 and a half percent we're asking the board to approve at maximum 2 percent cola for the retirees who receive a cola under chapter section 526 section 2. >> you'll notice it round up we'll residential housing up to 4 we get the additional 2 percent earned into the cola banks. >> are we looking for a motion madam chair. >> we have vice chair commissioner stansbury back.

>> item 12. >> the basic cola the two percent cola need a motion. >> second. >> we had public comment on this yet. >> no call for public comment. >> members of the public public comment is closed. any discussion on this item before we vote. >> i have a question about the amount over the two percent i understand rounding up and bank the excess for for lack of a better word but saying the exact same thing happened we'll bank another two and go after the next year if you go back and look at the cola you'll spend closer to 3. >> correct so do we have a rule.

>> no sometimes, it goes the other way so over time. >> okay want to make sure i have it thank you. >> all right. >> there's a they've and been second. >> earn the two percent cola for retirees effect july 2017. >> under charter section 8 danish 8 point plus thank you very much okay so the motion is made and is there my objection to the motion no did we take public comment. >> we did. >> accept this motion as unanimous. >> this the continued 4 percent credit rates for

2017-2018. >> the monthly average remained the same as .75 percent according to the policy we look at the 57 yield data from bank rate.com and remain at for the coming fiscal effect july one 2017 a okay. thank you colleagues. >> all right. let's take public comment any public comment on this item? public comment is closed. motion made and seconded by commissioner driscoll thank you. >> the adoption of the july one evaluation report. >> this is our annual evaluation provides this to you

and look at the audited financial statements and they measure our liability and tells you houchl how much we need this is my colleague to present. >> good afternoon, commissioners we're here to present the results of 2016 evaluation we used it to remedy the contribution rates for the fiscal fend 2018 the employer contribution rate applies to the cost sharing to approximately 23.5 percent in september when we were doing our analysis of the supplemental cola's we estimated a contribution of 24 percent we're come in very close to the estimates and projections we saw

at a time after applying the cost-share we expect the rate to increase inform 21 point plus and the aggregate employee contribution increased from 11 percent. >> the funded status of plan, which is the ratio the assets o liability that's due to the investment return for the year that is 0.7 percent compared to the assumed return of 7 and a half percent and an, an actuary basis fell due to asset performance and an, an actuary

value was 7.3 percent and the reason it is much higher than the market there were deferred gains that were recognized this year for the actual evaluation the impact is smoothly. >> recognizing a 20 percent of past performance every year so an actual value we came close. >> thank you, thank you going smoothly, huh? >> discussions colleagues. >> we're not done. >> oh, i'm sorry. >> i thought that it was. >> and just to reiterate that is the first evaluation we're incorporating the supplemental cola's were granted for 2014-2015 to those post 97 retirees and no change in the estimates we gave you from last

fall those benefits increase the unfunded liability by 4 hundred plus million dollars and the liabilitys are not paid all at once financed over years the board adapted a policy in 2016 to amortize the supplemental cola over 5 years the rational those number of years were pretty much in line with the cola's in 2014-2015 those will be the same amortization period to be consistent with the funding policy the impact the supplemental cola's increased the employer rates by 2.25 percent summarizing some of the

liabilities and assets it increased into 22 - $23 billion to $24.4 billion not teller different from what we anticipated when you include the supplemental cola's and the actual values increased by one billion dollars that's what we expected and the market assets fell 200 and $75 million a flat return plus your plan in a policeman of. >> what return in what year. >> fiscal year 2016 on a market value that was 0.7 percent that was a little bit different than the investment consultants anyway on the u a l in the

actuary values there is an increased about $430 million actual value that's what we used to determine the contribution rate in the plan and then on a market-rate to $4.3 billion. >> the unfunded the increase was - >> $430 million less. >> that's primarily the supplemental cola's yeah. >> this slide shows the make up of the san francisco membership a total membership increased by 3 thousand participant or 4.6 percent and more than half of those increases were in the active population for a growth rate there, there are no dropped members this is something to note and this is the second year in the row the active membership

growth rate was higher than the retirees people on paid status that's true important strengthening the contributions relevant to the incentives our paying out. >> all that is new hires in the year. >> that wouldn't include temporary employees not eligible members. >> in one year you - >> yeah. yep. >> but the chair the finance committee we heard good news with active employees that pay future benefits for retirees but and the payroll went up like $3 billion was before the results in expecting for like 2.8. >> yeah. 3.75 percent so the active payroll went up from

$2.8 billion up to 3. >> however, i wanted to note it is a mature plan they're due to the in active members. >> you're sure the numbers of employees went up 4.6 from the payroll went up almost twice that so what do you infer. >> some are merit and pay step increases but 5 point one percent is to be active to the growth rate none that of that is pay increases. >> you can see there's a number of actives went up and the average pay went up 3.3 percent that gets you close. >> i have a question when our looking active pay there any way

to compare that throughout the country the top 5 percent what is that when you look at active pay. >> the average active pay i know that san francisco is near the top. >> but, yeah great to put it if you take the 5 top in the country. >> okay yeah, we can do that. >> we don't want the chair the finance committee to be involved in that. >> she won't okay turning the focus to the contribution rate on the next slide as bill mentioned the employer contribution rate before cost sharing increased from 23 from

21.4 and the active employee rate is 7.5 percent so total rate of 31 percent and before cost sharing after cost sharing based on the 23.46 percent of employer contribution rates the cost sharing threshold is 3.5 percent so this means the employer rates has been reduced by that amount in the amount now is 20 point zero 7 percent for employer after the cost and the employee to 11 percent. >> i have one question. >> just to put this in my brain here. >> put that in dollars how much is the city contributing in that year in total. >> i think that is $3 billion. >> wait that is sorry all employers not just the city.

>> so. >> the majority of it. >> and before cost sharing they would be contributing $745 million in after cost sharing reduced to $638 million. >> is that with the employees. >> the employee is picking up that difference i don't know we have the dollar amounts out. >> but you're right not on - >> and the maximum employer employee contribution rate to 11 and a half percent for the folks go making the equal of one million dollars. >> so to come up with $640 million to pay for the benefits. >> compared to 551 in the prior year. >> and then we have the

employee numbers in the appendix of our power point and it is so before the cost sharing employees will be 200 and $41 million and after $348 million 348. >> as a reminder to the board we have instituted over the last 3 years the ability for the city to prepay their employer contributes at a discount they've taken us up on for two years. >> and so we anticipate they'll probably do that again going forward. >> one - >> yeah. yeah. >> hold on a minute you guys have questions. >> only comments the difference i'm sorry madam president the difference in employer

contribution is 8 point plus million dollars than last year. >> i - >> a tentative employer rate that will cost why we're going from 225. >> (multiple voices) it went up a whole percent we crossed that threshold the components of the rates are at the bottom of this chart the cost rate in the administrator expenses that stated flat year by year and the other rate increased to 11.9 percent and of not the interest on the u a l on the market-rate u a l is 10 percent of your contribution so about a third is going to the

plan are paying off the interest on the unopportunity unfunded liability. >> it is just point of privilege that debt based on the seemed interest rate of plan is 7 and a half percent so in layman's terms one and a half percent unfunded liability for the year. >> that money we'll be making if we are fully funded and getting 7 and a half percent. >> the amount you have to contribute if all assumptions are met to keep the u a l at the

same dollar amount. >> as we fall farther and farther behind the numbers will increase. >> exactly. >> this grateful shows the plans and gains over the last 10 years in gains and losses come about when the plan de8s from the assumption did yellow bars the asset gain and lose values based on our actual assets eased he liabilitys are the gray bars and the net experience so the combinations i want to point out two things with that graph it is obvious the net experience with the plan is driven by your assets gains and losses and also that in 2016 the gains

and losses were negotiable - this is the change in contribution the employer contribution is prior to the cost adjustment to reiterate that back in september we had anticipated it will ambassador tdr by 2 that the 6 percent and increased by 2 point one percent the one item to point out which is the cause of that decrease from what we're expecting the payroll increasing by more than expected you have more active members the main reason it increased by more than

anticipated by 8.6 so as a percentage of payroll that u a l has decreased all of the other items here again in the projections in the fall the two supplemental cola's in 2014-2015 increased the rate by zero 55 and one .7 percent respectfully the reason the 2014 supplemental cola is the larger cost to the plan that is amortized over 5 years the other 2013 is over 17 years. >> and as you remember in 2016 the assumptions changes increased the unfunded accrued liability and the board phased that cost this is the set year

the phase in so seeing the phase in of that liability that increases that by 0.6 percent and they offset with the impact on the plan contribution contribution for the year and two proscriptions back oriented in 2006 have been paid that decreased it by zero 33 percent. >> we've got to number of scenarios we show but start with the baseline projections and for the baseline projections we're

showing this is showing the actuary liabilities in the purple and dark gray bars and the assets are the lines the green is the market-rate of assets and the before you shows the smooth assets showing historical years and project by project into the future at historical bars are purple and projected in the future their gray if we think we're not expecting a cola to be paid black if they are the one thing new other than 2016 the projections and exception of a supplemental cola that's to be paid to the first 96 retirees and no longer requires them to the fund to be fully funded to fund a supplemental cola we're assuming half the time a

supplemental cola paid so we're just project by project half of p a supplemental cola every year the way we're handling it in the projection. >> okay this slide shows the projected contributions prior with the cost sharing adjustment and showing historical figures as well as other figures and see the pattern following the 2008, 2009 great recession we built up the rates gradually to reflect those losses and then some of the better investment experience kicked in and starting going down and we've now turned that pattern back and we're expecting contribution rates to climb again g for the next four or

five years before that levels and has a gradual decline going forward that change is driven primarily but the recreation restoration and the investment losses prepared. >> over 5 years and also the phase in of the assumption changes as a future for next year the pattern from what we presented last year has changed we projected the decline that changed our baseline projections we have the emergency active model i'll run have not scenarios so for several years we've presented a number of economic scenarios both positive and negative to get a sense of

the sensitivity of those projects to your actual returns in we've followed a similar pattern in developing those scenarios this year we took the capitalized market signages we are basically developing 5 year scenarios that where they had an expected return of 7.1 and determined in the upper chart on the right as you can see the distribution of one year returns and 5 year returns based on that set of assumptions we set up them and do a positive and first-degree the one year shot uses the 5th percentile and a one year piece and as soon as

we get the assumptions after that the 5 year moderate use the 75th percentile for 5 years and the 5 years significant it the fist and 95th percentile that's what we represent they're not predictions but get those returns in give you a sense of the sensitivity >> and we've paired the scenarios you get the positive and negative of the same scenario on the same slides here the impacts on the funding ratio projections a positive one year or negative with only year shot and as you can see just that one year will generate several years of supplemental cola's and at the same time bringing it

up to 100 percent funding fair quickly. >> when have we've seen a one year shot of 25 plus percent. >> in the 90s for sure. >> we did. >> coming back right. >> we have 5 positive years we're looking at now after we had the two severe negative years we had. >> thank you and the 2008, 9 i believe was negative 20 percent. >> so 19 percent so we're showing the negative shot is negative and do that would drop our funded ratio initially to the mid 60s and

with contribution continued with investment returns your funding status will increase. >> on the contribution graph we put a red line to show our baseline projections as you can see how far the contribution rates move from the baseline projections and a one year positive return has a substantial impact as well as the nebraska negative in one year a dramatic impact and move through the others more quickly and come back with questions but the patterns are similar different levels 5 year moderate projections on the positive side you get to 100 percent and

similarly on the one year not as far the contribution rate continues to be a similar effect there a positive and negative if you have 5 years with significant returns we're project by project up to one hundred and 28 percent funded where 5 years of bad returns brings you down into the mid 50's the point here is really that the investment returns the system is pretty sensitive to what the actual returns are those projections can vary significantly doesn't make sense what the actual returns are may i ask a question i'm looking slide 14 the negative one year hock that simulates a moderate recession

we've seen worse than 13 but comparing that to the negative 3.4 on slide 16 i see the funding values essentially end up in the snapshot correct me if i am wrong i see a one year moderate recession the same impact on the long run of 5 years of mediocre returns. >> the impact investment returns is reflected in our contribution patterns if and looking at 20 years out for 5 years we'll get to a similar plays we do that by essentially changing the contributions we're trying to get back to 100 percent fund and adjust is one year shot we're going to deal

with that more quickly than 5 years of negative returns because we won't recognition them for 10 years. >> i'm with you will to drawing your attention correct me if i am wrong a one year moderate recession is the same as 5 years of medicine criteria returns. >> i want the board to remember for you will have us to remember. >> thank you sorry. >> that's fine. >> go ahead. >> so going back a little bit on page 6 to put that the 215, $2.8 billion and 2016 was that billion dollars 62, and then you

said through 17 estimated 2.9. >> look on page 6 and page 7. >> okay so a difference in evaluation that was confuse i apologize for that the columns laudable july one from the 2016 evaluation and the other one from the july one, 2015 when you go to the next page from those evaluations but then we're project by project payroll forward so the 2017 column is from the july one,

2015 evaluation projected to the fiscal end 2015 a i think that is an accurate projection. >> not now but what we projected at that evaluation. >> can you get us the the 3 years and or readjust 2017 now you know that 2016 is $3 billion to 2015 will not be $249 billion. >> the $3 billion is our updated estimate in fiscal year end 2017 a you believe that. >> based on the data. >> payroll information and they have an assumption it increases. >> to how will that go down to 2015 a what is happening was a

surprise to us that payroll increased as a greater percentage than we anticipated so that helps on the percentage side you have a larger pool of money to collect the money but every year they get actual data as ever july 2016 their projecting forward bans their assumptions what they assume payroll will be july 1st, 2015, a but in reality you really think that also less than the year before. >> no, no. >> so you're going to then. >> $3.2 billion. >> it is 2018. >> that's fiscal year year ending 2018 that's july 1st, 2015, the fiscal year starts this year. >> (multiple voices).

>> let me make sure we're clear the 2015 evaluation we projected end $20,172,900,000,000 this evaluation for the same year 3 point plus billion dollars that's larger. >> it is confusing. >> i agree. >> i wish again, you see compare the differences between unfunded market-rate and actuary value 2016 and move up. >> we've been through the periods that payroll pays out after 2009 with a tight budget we laid people off compared to with was going to grow so at the adjust that's why every year the snapshot of what happens versus

what they anticipated and never matches. >> what you go back and get me 2008 i want to see a 10 year progression. >> get me an actual and then we can kind of look at this to show a trend allotments we're asked this and people are looking at trend in cities where they're moving we want to understand that for ourselves and understand for the rest of the country so because it is some point it is going to be important when the numbers get tight and performance is not there it matters. >> right we have that data we can get that. >> that would be great thank you. >> so this slide puts the

scenarios under one slide as you can see the range this slide is prior to cost sharing adjustment you'll see do full range given the scenarios as you can see pushing out 10 years - the employer ranges from about zero percent to 42 or 43 percent. >> so that's a fairly significant range given the scenarios although i have a number of plans for the ranges much wider. >> subject of supplemental cola you said earlier, you projection forward the average supplemental cola almost 50/50. >> the question then is for that supplemental cola are you using one half one, two and a

half, three or 3 and a half average. >> right so for the baseline it is just want to step to clarify for the baseline projections we're that and for the formulas calculating to your point the baseline we're assuming there is a basic cola of 23 percent and always so then half the supplemental cost will on .75 on top of that. >> because the supplemental cola is 3 and a half must the basic cola for some of the old safety groups they get different cola's it varies but for the main group. >> in the high side not the average kind of thank you. >> was it the old safety

group. >> the get the ether the percent or dollar increase in active pay for the class in which they retired from years ago years they've gotten zero and the new members get a crip cola but years the dlvr increases in active pay has been greater than 3 and a half under the supplemental cola so over the years i believe that we've looked at the i think the old plan we call them pre76 folks we believe they've maid on average than the historical cpi and supplemental cola for miscellaneous. >> so our assumes is higher than the supplemental cola levels they were under the

summaries not getting the supplemental cola but in reality the basic cola is lower and the payroll. >> commissioner driscolls point in a year no cpi and a supplemental cola some - let's say no pay increase for active employees the supplemental will pay the folks 3 and a half percent rather than between 3 and a half and a basic cola of 2 when we pay the retroactive cola's i don't know if in into years but no pay increases for the active employees and so the old plan safety folks from the post 97 group they have a full 3 and a half compounded over the two years. >> i'd like to say there are 26 hundred retirees in that old plan safety group yeah. there are still 26

hundred. >> we have two actives in the old plan safety. >> any more discussion no. >> are you done with our presentation. >> yeah. just to say that you know the main changes since we've met last time well - the main changes in the system are we have presented the restorations of supplemental cola and going forward the significant returns i'd like point out on page 5 we've cropped into a condition we escaped a few years ago the actuary assumes we have $21.6 billion invested and in

fact, we only had 20.1.5 we are in a position the actuary assumes we're earning a larger fund basis so we have to make even better than that 7 and a half to meet their exceptions for the four or five years in reverse much more money they've assumed we have meet the requirement by making less than 7 and a half we're crossed over by the four and a half million dollars they assume we're investing $400 million more than we actually have to invest. >> is that why the interest on the market has increased. >> it looks like a smaller percentage of the number. >> well the reason it is

increased because of the poor returns on the market-rate so only getting .7 percent on the market-rate for that year increase the market value u a l. >> we're saying the same thing. >> i wasn't sure. >> i'm saying that a different way the. >> the difference between the actuary value is one of the reasons for the next 4 years we're seeing projected increases. >> colleagues. >> anyone else anyone else thank you go to public comment all right. leaning public comment is open. >> imagine the obtain of every

pension fund in this country now there is a lot of pension funds only 40 and 50 percent on the - one the main reasons the consultants put the pg&e's into high-risk investments that's not necessary to be become a fully pension funds only one get the contributions from the employers and the concrete amount of from the employee and invest in low and moderate investments if you keep the investments in investing in low and moderate investments that means you good thing going to have to take an high-risk investments you found that you should insure the city

- hedge funds the best year but eventually loss a lot of money in hedge funds but in performance and management fees so my suggestion is to go along without the investment of 40 percent bonds and 50 percent stock and 10 percent san francisco real estate and just that investment will get you 10 percent of stocks and bonds 7 and a half percentage not take on my high-risk investments to get - >> 30 seconds. >> thank you herbert wiener. >> herbert wiener one question about high-risk investments and other securities is that you know it has been

stated that the hedge funds have had very good returns for the last year's but wondering if there are other regular sfokz that have better wurnz returns and what i'm also concerned about is you're really placing yourselves hostage when you invest in high-risk the all-or-nothing if you get a negative return you are going to have an impact throughout the city the city will have to cut back on services in order to meet the obligations for the p,z&e, finance governance and this happened in orange county you want to pursue the culture of this board this has been investment

this has been the heritage of the this retirement system and should remain that and pays off it pays off because we're one the best funds in the country basically it is keep up the good work and don't listen to the lure thought how is it the sirens on the rock eventually the ship crashes that will be disastrous. >> public comment is closed. at this time all right. this is an action item. >> so my action. >> i'll move to safeguard commissioner driscoll discussions. >> yes. one comment i want to make one quick comment to address that on page 14 we

were nervous about the one year shock and how it effects the funding god to the - if this scares you protect that have a foot on the portfolio there are ways yes. you have to pay money to buy a foot it will go up in price if you're worried about this shock on the equity side modernize on the bond side high yields will don't poorly in terms of the funding of plan the increased employer contribution i mean increased employee contribution hedge that by buying a protective foot if this squares you there are ways to protect against this i wanted to

put that on the table for future considerations. >> anyone else all right. there is a motion that has been seconded and let's take that without objection that item passes unanimously thank you item 15 after information adoption of employee retails for the 2017-2018. >> all right. >> based on is actual evaluations and the policy the board the employer contribution rate and like the board to now approve the recommended contribution rate of 22.46 for fiscal year 2017-2018. >> thank you all right. is there my discussion on nothing no. >> yes. >> one comment that is the last time i address you in terms of the employer contribution rate the question i have is we're still assuming 7 and a half percent; right? i want to

put calpers is low as several other funds have lowered their contribution rate we're still at the 7 and a half can you address that in terms of what you are seeing in terms of planned sponsors lower the expected returns for the portfolio since we're accepting half. >> yeah. there's been a trend towards lowering the discount rate reflecting what your know-it-alls are through the exception of the fire chief when we presented the review of confirmation assumptions we showed survey data of what is happening and i think we noted at that time that our assumptions are right in the middle of what everyone is doing in california

we're seeing those fund those assumptions are down so next year we'll have to look at the data again. >> thank you anyone else colleagues if not public comment. all right. open up for public comment for this item. >> public comment is closed. thank you. >> all right. is there a motion. >> i move. >> moved by the commissioner stansbury and seconded by commissioner meiberger without objection that item passes. >> next item. >> you said finance committee report. >> all right. thank you this is discussions item if there is nothing specific to take a report as submitted colleagues is that okay with you i don't know if there is a discussion. >> i did have a question and comment and a recommendation for this

i was reading the website observer about the deferred copying plan with the audit and is there money available or for an audit for the deferred compensation plan. >> is there money available. >> so the money in the budget. >> this the finance committee report the money will have to be funded directly with the money it is not anticipated in this budget as submitted there will be money for an c pa audit. >> i'll veto to have the money available for the audit. >> that's the next item and okay. i'll bring it up. >> with the finance. >> okay. we're going to go

and go to public comment open up for public comment on the finance committee report seeing none, public comment is closed. thank you very much this is a discussions item no action is needed next item an action item mr. clerk >> review and approval for the budget year 2017-2018 a new we're talking all right. jay why don't you share with you a little bit about what was discussed the changes to the budget >> okay actually this bucket we've updated with some better numbers this budget is different from the budget we submitted to the finance committee and reflects a nearly 6 percent decrease from this current years budget and mostly from sexual harassment in the investment resources areas but i live on page 2 of my report highlight how each of the

divisions we have 5 budget divisions and you'll see that out of $5.4 million reduction $5.8 million came from the investment budget as far as new initiatives last year the finance committee and this year requested a public relations manager be added to deal with the public and the press and so that has been added back in it was deleted from last year's budget by the mayor's office we've also as part of the strategic plan karen and her group proposed an in house training and education position so that is a new position that will be in her area in the investment division as i've indicated in the past a request into the retiree

trusting board they met earlier this week and anticipate they'll be transferring the administration investment of their trust tote retirement system so we're requesting a person to work on that as an assignment and will be partially funded by the controller's office or unclear if their trust is written the same way the expenses related to this position comes from the retiree health care trust but hopefully in the controllers budget in the program we are requesting and reflection of what we've introduced that will be a loan program manager a permanent position so we could officially roll out the loan program and deal with the communications as well as the administration so and then we've added one clerk to support the additional

traffic associated with the roll out of the loan program to contrary to the mayor's office budget direction we're supposed to be position newly in our budget but building strongly that because of - the trust fund i've talked with the mayor's office their poster of those positions and will strongly defend the other 3 positions we are requesting. >> from that, we also from the committee we had had some money one and $15,000 we put in the investment division in relation to commissioner stansbury positions that he requested and

through the committee as well as the board last year potentially a twitter fellow so what the committee requested and staff supports we've increased that 200 and 50 thousand which if you understand those are part time paid positions so we believe that will support up to 4 if not 5 interns and twitter fellows for the coming year. >> and then the only other thing that is new we have not out grown our space but certainly in anticipation of growing would need to have budgeted some money to potentially reconfigure some of the places in the building we budgeted $500,000 and add that to the budget once we realized our moved to a new location was not as imminent we have a

contingency there the budget from the department of public works to reconfigure the space and built out more offices and divide office the money is in the trust not general fund not from the city and the money stays in the trust until we spend it so we generally because we assume that our assets will grow we calculate what we need to have for manager fees assuming our assets grow we appears to be turn back money, money not left the trust in the carried forward and not leaving the trust to the city i say comping site to support their program comes from participants and we keep the books completely

separate and apart and certainly could not expend the trust money to support my activity there so to commissioner meibergers point from the board wants to increase the requested budget in the deferred comp program under professional services is where we'll normally put in money for the - under the professional services. >> i'll be happy to answer any questions you may have. >> anyone has regarding the budget. >> oh, sorry go ahead. >> yes. commissioner driscoll. >> i'm trying to see adding two positions i can't tell highway this is reflected in

this. >> i don't see any there from 2016-2017 and 2017-2018 budget i'm trying to go got you how much money for the operant who are paying for that. >> the positions are budgeted at .77 that reflects all new positions their assumed to be hired in october we're adding two positions at .77 comes out to a .54 increase from the prior year we have transferred one 1813 senior bust and transferred from the comp would into the retirement services area so it is a decrease in the division but it shows up as an increase of an existing position and doesn't karen's retirement services budget that's the easy

part. >> we have a must one plus two we've end up for 2018-2019 with deferred comp if 5 right now. >> was last year's permanent salary too high. >> the loan position and also a temporary 14 clerk position are funded from temporary salary budget not in the permanent salary the 5 positions in the deferred comp is permanently filled we needed to use the temporary money to hire the loan program manager as well as the support clerk that's why we're trying to make those positions permanent and ongoing it certainly will be ongoing work

for the division that's all we're trying to do we're that's a good question 5 staff and reducing one and transferring that to katrero park area and trying to make permanent two positions that are fund for temporary salary. >> again thanks your explanation i can't tell if you're planning obtain hire for temporary people. >> the temporary we're trying to transfer them to permanent status in the new budget year. >> it was last year's number too high. >> no it is fully staffed too low we had to hire a program manager as well as the 1404 using temporary salaries because of the workload we encountered during it fiscal year we're trying to make those permanent

positions. >> is it for 200 and 51 thousand that's the number of budget last year. >> that's approved for budgets this year along with with one thousand dollars so the salary money available is 4 hundred and 50 told us for this current fiscal year. >> we'll go round and round the credential creates an audit as we have two trust banks they have to confirm every dollar on the outgoing bankbooks gets transferred into the new banks books. >> that was done. >> absolutely. >> yes. >> on mechanical. >> it comes out of trust

during the fiscal year and at the end of the year we submitted a bill to the city. >> the city reimbursements the chart provide all experiences are paid from the trust. >> how does the city have the ability to have oversight of how we spend the trust money. >> we've given it to them over the years and sort of not look different and building the city obviously has systems in place we certainly have allowed ourselves to be put through the process another department would go through i'm not sure there is a legal basis but certainly we've been successful at least getting the board of supervisors to approve what we consider as reasonable but maybe not everything we've asked for but to be successful. >> i'm confused why do we need

approval for a budget they don't pay because of the city contributions in the system. >> because the only mechanism to pay bills invoices and to pay salaries through the city for a condition to be paid and for us to pay our bills we go through the prosecutes of budget approval with the city. >> so an over simplification that's really the where the rubber meets the road if we again go through that process and didn't have a budget that he was approved and entered into the city's system we'll not be able to pay invoices and bills and wasn't have to make arrangements. >> absolutely and historically that's why we - i'm getting on

the spot legal advice i answered the questioning questions as i understand them and we've paid i do payroll our fair share and leads to the clarification of our positions and hiring so you're right operationally we pay all the bills through the city that's the money we do transfer over or lands on the controller to pay the benefits as well as our expenses and have basically abated by their process. >> maybe a topic for future discussion. >> i'd like to do that. >> in terms of public rigs is this creation of new work are shipping and responsibility for existing employees to free them up to focus on other tasks.

>> the committee stresses the idea to be more pro-active with the public we go out and promote ourselves and the success we've had rather than being for defense and only reporting responder to requests from the public to bring in the expertise we currently don't have that expertise in our office not someone that will promote us but put out positive press about you are accomplishment and the plans. >> that if there is an attack on the measure will this public person advocate for the pension system. >> this person will in the be the spokesperson now either the the president or the executive director can delegate or if

we're going to have a standard statement regarding say a chapter proposal this person will have the skills to draft that and we would present it to the board and accepted it is a skill i believe the focus was more on being pro-active and what benefits the retirement board will have to the system in being for pro-active letting them know how important. >> i understand the portions of public relations by until the board has a gage how we'll do that seem the best policy. >> one of the then what happened next items i've talked about in the past people call

members call and get a 6 minute voice project before they get to a beep to leave a message have we incorporated any changes to make it so a call they can get someone on the phone. >> certainly we're not sure today what the answer to that issue is we know we'll take an intermediate step of faulg with the phone tree will be shorter and not be on the phone for 5 minutes for to your question we have bugged i believe on page it

is actually embedded throughout the requirement services biscuit part is on the - an rfp but in software so greg lee you've seen around here he guess make an introduction he confirmed with the folks that the air conditioning is out we having could a survive on the fifth and 6 floor has difficulties but greg lee has incorporated hardware and software an idea for an rfp for what is available as far as telephones and technology if you like. >> it is included not budget. >> okay. the technology is included or the head count. >> no additional head count.

>> this didn't contemplate. >> i'm sorry guys we'll be losing quorum. >> no, i said no. >> i would - >> no specifically no. >> thank you this is a discussion item no it is we need approval. >> we need approval. >> are you ready to vote on that all right. >> i wanted to make an amendment to the budget. >> what is your amendment. >> for the b c plan on. >> hold on before you start even going adopt that route i'm not in favor of doing that i'm open to the idea of an audit but need a little bit more if you're not prepared to vote on that

today that's completely understandable let me take a survey back to committee. >> to the finance committee. >> in the idea of doing an audit. >> i have a lot of things to say about that. >> i agree so i'm sorry i'm going to have to stop i think in the in the interest of time but we can do mr. hewish make sure we send this request and come back for the sake of public comment so we can continue this conversation so let the record reflect the board is directing the fence committee to review a question for an audit if i want to speak to the specifics of this request. >> yes. >> quickly. >> right now. >> makes a lot of sense commissioner driscoll said in

the past we've changed service provides every 5 years with an audit we might keep the incumbents and we have changed provider have to sue because of some consistent consistency that's been concern from the public the short story i think that gives a lot of peace of mind if an audit an $80,000 salary increase for a business consultant for a that was removed if you'll notice it is in the current year budget and taken that out it is not included in the budget. >> page 3, 4, 5.

>> just to conclude one dollar per member i mean, i'll be dlimentd to have an audit you can't find those funds no identification for the fund we have to rely on our service providers so i think i would - if i could find the price that's not the causation we have to rely on them so time well spent and money well spent for the peace of mind. >> so we're clear so finance. >> you want to hear and discuss with the participants money this thanks thing was not an issue by auditing i aremembe that when we've already done

that i'm trying to think of the other issues has nothing to do with with audit the third party administrator offered to change it that's our decision in the information sheet on every single mutual fund and explained to the gentleman that writes the surveys so if we want to spend the money on another audit again and coming out of members the city's pocket not the trust fund. >> i'm not opposed to i think we should take it up and agendize that and how others handle the issue and figure out how to do that i'm okay talking about that. >> i know the issue anothers hand is the budget we need to have a vote.

>> on that budget today. >> or take it up next month and have the financed committee have is request. >> that's a larger issue we should talk at the committee level and not holed up the point. >> we've moved with the budget take public comment on the budgets. >> submit it. >> mr. hewish wants more administrative sprays what you need to do is buy the building and kick out the tenants if you wanted to 10 years ago you could gotten 10 percent and if you voted now only increases the values at the seven years and 10 years this building will be

worth more than twice it is worthwhile saying nancy will agree with me commissioner meiberger if there's an investment it the house and the first office building to buy for new businesses make sense and for the portfolio. >> i again pay john to make that statement one i want to see an audit calendar for the future since you're looking at an annual budget putting this into the budget at some point of consideration and i think that members will knowingly take the salaries they have an audit for peace of mind but my point was to comment and you said you need

for space what happened to that proposition i've been mentioning especially in memory of my first bos stan that we look for a building i've been bringing this up and don't see anything in the budget says we're looking for that maybe the reality department but i'd like to know if we're going to be budgeting the opportunity to really do the research and purchase or build our own city building that is owned by the retirement people and rent to other cities departments i think would be a win-win and i'm going to have john be my frontman thank you. >> (laughter) all right. thank you public comment is closed. do i have a motion to accept the budget as presented.

>> may i have a motion. >> motion by commissioner paskin-jordan and seconded by my commissioner driscoll without objection that that item passes mr. clerk is item 18 next is you call 18 and 19 together. >> excuse me - >> i'm sorry, i didn't hear you mr. clerk. >> (inaudible). >> okay. thank you. >> for item number 19 is item number 19 - excuse me - >> sorry the two items you wish to call together were those the travel and the streets plan

and should be 19 and 20. >> thank you yes 19 and 20 a travel expense report you've already called it you just called it i'd like to opium and accept it as submitted for item 18 okay. >> i have a question. >> justice a minute public comment is closed. the travel expense report i noticed the first time i believe that for the the second column which is no title that just says as manager meeting for the staff for example, chris manager meeting in dallas and houston in san francisco, london and the park and mr. coaker and david

fran cell. (calling names) i've never seen that before have we disclosed the vague manager meeting or in the past been a specific names that was associated with that report. >> we changed the format to match our policy as far as what investments we'll be taking into closed session had been protected under the closed session rule so we basically described those now as manager meetings rather than identifying the manager that we're meeting with that might potentially come through a closed session item to the change. >> this is concerns me greatly you can be a manager because

you're putting the name of the firm didn't imply you'll be doing business with them i want to say for the record that could be a cause of concern we're not stating any of the manager i did not buy our practices. >> we've taken public comment my other further discussion thank you i'm sorry claire are you getting up oh, my apologies. >> you said public comment. >> i thought i did. >> pardon me. >> so claire i i'll be happy to open up for public comment. >> thank you. i appreciate that supervisor cohen e commissioner cohen i want to say that i support what commissioner meiberger says from my

constituent is that the increasing lack of transparency with the regards the businesses report this is well, it may be considered a minor example it is an example of again closing more information and shutting down the transparency and we as members want to see more transparency so we can have a better opportunity to understand what our board is doing with the money and things that are for investors and as members of this system we should have the right for the greater transparency thank you commissioner meiberger for bringing that up and for the record like to see back to reporting out of greater detail with regards to the staff travel definitely staff and commissioner travel thank you.

>> is there any public comment on item seeing none, public comment is closed. discussion item can we take a 5 minute 5 minutes. >> all right. please call item 19. >> what is item 20. >> 20 is a new strategic plan 19 is the update on the 2011. >> call them together. >> if you have a copy of 20 in your binder. >> it was sent out. >> you know - >> what other items on the agenda mr. secretary. >> the two street plans and the executive director's report,

the retirement board member that concludes my report. and no board member reports and closed session. >> the strategic plan can be- for for the sake of time why don't we table items 19 and 20 and cater forward to another meeting those are the longer discussion and each one p has questions and 21 the executive director's report we sent out the retirement board election al has been re-elected to serve on the board his term starts an february 21st and have notice of passing of dan he's before any time but a legend i believe was general manager for nearly 25 years preceding claire murphy

and met the gentleman many, many times at the retiree meeting will respectfully ask we adjourn the meeting in his memory and send the notice to the families we've done that he was 97 short of 98 years of age and out lived the mortality table i was in the men's room and having a discussion on this and he clearly knew as general manager to outlive them but anyway, was very, very productive up to a late part of his life the other thing i want to remind you there are still two board members not gone online and completed the survey i'll encourage you to take the 10 or 15 minutes to do that we've received a new i believe

yesterday a letter that was sent to me by controller ben rosenfield related to the city's lawsuit against the retirement board and me on the protect our benefits pre1996 folks pension or supplemental cola's so i wanted to point out that and give you a heads-up it's that time of year form seven hundred are due april 3rd and that there are training cigarettes that we will send you notices of but we'll send you the directions you'll having all have to file electronically last week last year that is easier but starts getting the information it together they'll be due and provide you more information prior to the march meeting that is on the way. >> okay. any questions for the executive director.

>> so a question want to make sure we're losing moving the meeting from the 7 to the 24. >> at the request of commissioner cohen have moved the board meeting to the third wednesday in may may 17th we'll find out if the board would want to move the investment committee from the 17 to the 24 in order to accommodate the board meeting to the day that was normally published to occur so okay we're- >> well, that conflicts with me for another board. >> you're the chair of the committee (laughter) so - >> that's what mta did and we have the 31st not having to be on the wednesday but have to

line up speakers so. >> what about the 23. >> the 23 it works for me. >> i'll be around. >> we'll have norman send out a notice of a proposed meeting on tuesday may 23 with the investment committee. >> okay. thank you. >> thank you. >> bill will kill me if i didn't mike pence that thanks the purpose bringing that up. >> my other items for discussion or questions for the executive director seeing none, open up for public comment. >> claire is it possible to get a copy of that letter it is it public. >> yes. we have some here.

>> thank you very much. >> seeing none, public comment is closed. thank you for the report and next item, please. >> next time a discussion item retirement board member. >> my board members have my discussions that concludes my report. >> commissioner meiberger. >> yes. thank you. i have comments to mark here this will be my last board meeting first of all, i want to say a few things about my colleagues starting with malia cohen that was a pleasure to serve with her leo in a a delight you have the warren buffett it is an epitome

of a public servant that serves was compensation and sacrifices her times for the benefits of all the members and very, very polite and i want to thank you very much for partnering on this board and david since i've known you a very, very busy schedule and wendy been a pleasure obviously intelligently curious so it is been a pleasure and plus a little bit of excitement never had a board members placed by the mayor ever discussed that is a little bit of excitement as well and also the third appointees commissioner makras served and showed me the leadership bringing out the best if people a superb and with the

puc and greatest contribution is televising these meetings the members of the public can see those as well retirees 06789d can't come to the meeting that is an important. >> and bryan the nut appointee of the board so i want to give you some advise two reason god gave you two areas and one month and joe in terms of the private equity portfolio adam a lot in terms of the working with the check and the private equity portfolio it has made an influence and congratulate you on the election because i know that is the outcome you desired and talk about a few issues

number one public services and number two my historic perspective on the board for 25 years and the last time i'll address the board members and the public and staff and talk about the retirement board elections and lastly talk about my inside recommendations so let me begin it's been a it's my pleasure serving the city retirees and employees over the last 25 years and overseeing the compensation ban a viern to serve the public and encourage others to share their talents i'm proud of investing in the private equities portfolio and growing it over time and san francisco has one of the best fund pension funds and its members and taxpayers should be proud and predictive of the hard working and collaborative efforts by the board as well as staff i've been here hired in

1986 to manager a portfolio the boss liked that first bonds and 3 months later managing a $3 billion bonds portfolio why have i run for the retirement board obviously i know i can do a better job the incumbent i ran migrants e against used to snore at the board meeting none has snored since i can understand an actuary report late in the afternoon i said you seek and serve on the board or find another job for me it was serving on the retirement board in 1992 with with 25 active members 8 thousand cast ballots i received 3 thousand votes and best to the inputs by one and 59

votes is not a member of a union no union endorsement and won the election in the last election he was endorsed by the seiu that represents the most employees as well as the bay area retirees at the seiu and as well as the are retired employees of the city of san francisco and appreciate many others in terms of helping with the endorsements were very, very key i actively campaigned and talked with the members he received 38 percent and my opponent twice that when the results were known he graced al with the message that heshtd he hover got i'd rather be right than president.

>> it remind me of winston church kill - iron curtain as descended from the beginning of our ceo and the iron occur at an has descent the first time the board approved the budgets have approved equity in texas and oc home. >> commissioner meiberger be mindful be respect but some things were in closed sections. >> however, the dollar amounts

and the names i've not mentioned my specifically. >> i ask you to be mindful at the same time the board invested one hundred millions with a index the move towards secrecy in item 19 staff is not closing the names of managers they've met and this is public dollars paying for the business trips because staff needs a manager didn't mean they'll invest the secrecy will be dealt with in the future the results at 3 founded safety ranges they represent 1 percent of members yet monopolize that's not permitted in my bengs in california the race was published and the staff gave a report contenders turning up the

heat on the sf retirement board that was last week my response stated on monday february 6th was not distributed i'll share some of the points the article 125i9 i quote commissioner meiberger has opposed hedge funds and other alternative investment not accurate since my tenure in 1992 i supported infrastructure and real assets. >> commissioner meiberger going on almost 10 minutes i know you have things to share with the board how much more time. >> please that is my last time a point of privilege. >> that's why i stated 10 minutes. >> commissioner meiberger and hedge funds and other investments not accurate since my tenure is 1992 i supported the private equity and real assets number one private equity

and advocated increasing the allocation to private equities those are 15 percent targets of rates of return and investing in the portfolios they have critically private equity earning 11 plus - these high returns are responsible for our superb findings and number two infrastructure and real assets they have the defying effect and offer the greatest protection and i i don't group hedge funds in the same group they have another same structure the similarity is there they trade piece of paper and they don't serve - the article quotes in

city unions are upset with the dysfunction as p and i recorded the only solution to convert p,z&e, finance governance to a 1937 in the 30s and 40s individual up counties established the retirement system by adapting ordinances 24 counties adopted those and forms the state retirement system that law requires the managed of each community must stipulate two members one safety and one retiree the relevant constituents elect the board member the community board of supervisors has four members and all members serve 3 years term in addition provisions for alternative

alternates providing for succinct the city and county of san francisco is well ahead of its time in the charter in 1972 but with the body the mayor appoints 3 members in san francisco there are no designated seats for active, miscellaneous or active they vote jointly for all 3 members. >> commissioner meiberger can i ask you to wrap up. >> p and index stated argument where why the pens the first time i've heard that the best use of resources to study the conversion board members should be elected by the respected constituencies and one group should monopolize the governor jerry brown body conforming to

the best practices of all democratic groups san francisco was ahead of its time now san franciscans must adapt to a 1937 practices of other california pensions in summary thank you for giving me the privilege thank you for the wishes and thank you all and best wishes to all of you thank you. >> (clapping.) >> i think we can close up the executive order did we call public comment. >> public comment please. commissioner meiberger i would like you to thank you for your work i think regarding our hedge funds i think you were structural in reducing the investments on $3 billion down to one billion dollars and

figuring out we would have paid on the extra $2 billion we would give 3 percent when it comes to transparency i think i agree with a lack of transparency in the last 18 months a very, very bad public rigs what has public relations to do with that if you could read all the negative comments from the opponents that gave us the opinion and everyone that read that was responsible for losing 2 billions it was a share they think that man was responsible for losing the p,z&e, finance governance we know that is not true when you campaign please campaign you do this job voluntarily so no

necessity to launch the xhfrn campaign that was launched against commissioner meiberger so get the public relations in the public thinks your miss marge your bonds won't pistol u put money into that both employer and employee to trust in the public and trust in the members right now that i think that lacking and good luck to you commissioner meiberger in our further endeavors. >> thank you for your speech it was an analogy i think is better world-class 1 secrets were kept from paramount that was secrets of diplomacy this is something the board should not practice commissioner meiberger he say to you as a point of east kwim i quit when our cutting

commissioner meiberger short i saw you asking him to disperse this is the man's last speech he deserves more respect. >> from a commissioner that served 26 years and a chapter amendment to kick my out i wish you well and thank you for 25 years of service i remember when you ran how do i say this you were a much bigger man but grown in esteem and accomplishment and i know that i hear regularly from our members a retirees their grateful for after all of your services and the questioning and intellectual

curiosity with regards to the investments and this is very, very important and encourage all of you to take note of that and continue those kinds of inquires in the future and the best of luck and rsc p.s. and others retirees wish you the best luck in our endeavors and thank you for hearing us the least we can do to respect anyone that put in 25 years give him the time and opportunity to say whatever he needs to say. >> my other members of the public that want to address the board civil right public comment is closed. and no reports were received. >> i submit. >> do we need to take public comment even though no materials. >> zach. >> okay. great

next item. >> closed session do we need a motion no. >> my public comment. only on the item going into closed session. >> is there any public comment? before the board seeing none, public comment is closed. >> the deliberations a decision good decision in the book to commissioner meiberger has made a motion to disclose and the results right. >> is there a second on the table. >> all in favor, say i. >> i. >> opposed? >> all right. prooerldz >> the board voted to authors

legal counsel to appeal and the vote was that to 2 and with commissioner meiberger be commissioner stansbury and commissioner driscoll voted in favor and commissioner paskin-jordan and commissioner bridges voting against. >> we'll report on how we vote. >> you have to. >> that's fine. >> more than happy to for the public. >> where we or are we done or call for public comment. >> no public comment. >> so this item is done next item, please. >> the subject matter to suggest to contact the mayor and the and ben rosenfield. >> i'm sure he'll call me tonight or tomorrow morning.

>> okay. >> thank you any other items. >> i ask we adjourn. >> do we need a second or just the motion itself okay. >> so moved. >> adjourned in the memory of dan

>> good afternoon everyone and welcome to the board of supervisors meeting of tuesday, february 7, 2017, madam clerk madam clerk, please call the roll. >> thank you, madam president supervisor president breed supervisor cohen supervisor farrell supervisor fewer no present supervisor k