>> we are be gib the retirement board meeting of february 9, 2022 at this sometime. >> thank you. i will call the meeting to order with a quorum waiting for commissioner safai. here he is. good. i was going to take something off your schedule. you are on, man. >> thank you, everyone. thank you, darlene. do you want to read the opening comment regarding covid-19 health emergency. >> due to covid-19 health emergency and given the public health recommendation issued by the san francisco department of public health governor newsom and mayor breed lifted restrictions ontelli conference. this meeting is held virtually with all members and staff

participating by teleconference to ensure the safety of the board, staff and members of the public. this allows us to hold the meetings via teleconference. mute yourselves when not providing comment to minimize background noise. president safai. >> thank you, madam secretary. roll call, please. >> commissioner bridges. >> present. commissioner driscoll. >> present. >> commissioner gandhi is absent. commissioner hell fond. >> commissioner safai.

>> present. >> commissioner stansbury. >> we have a quorum. >> do we need to make a motion to excuse commissioner gandhi? is she absent all day today? >> i have not heard back from her. i can't answer that. >> we generally don't take motion. everyone understands why she is absent. she would still be marked as absent from the meeting. >> we don't be do motions to excuse? >> the city attorney in the past has advised us not to. former commissioner carmen chu asked the same thing. the advice at the time was from the city attorney's office we don't do the motions to excuse. >> okay. we do that on the board. >> i am familiar with that process. when the former commissioner chu asked about it we considered it.

>> thank you. madam secretary please call next item. >> item 2. communications. due to covid-19 health emergency and to protect board members to the employees and public, san francisco employees retirement system is closed. members will be participating remotely. precaution is taken pursuant to various local, state, federal orders and directives. board members will attends through video conference and participate to the same extent as if physically present. public comment is available on each item on the agenda. each speaker is allowed two minutes to speak. opportunities to speak during public comment period are available via phone by calling 415-655-0001. access code 24854346321-pound

and pound again. when connected you will hear the meeting discussions but you will be muted and in listening mode only. when your item of interest comes up, press star 3 to be added to the speaker line. best practices call from a quiet location, speak clearly and slowly and turn down the tv or radio. president safai. >> thank you, madam secretary. we will take public comment at this time. >> thank you. callers please press star 3 to be added the queue. for those on hold continue to wait until your system indicates you are unmuted. do we have any callers on the line? >> madam secretary, no callers are on the line. >> thank you. no calls. public comment is now closed.

>> madam secretary please call next item. >> item 3. action item. review approval of february 20, 2022 board resolution to meet remotely 549538 code section. >> this is the standard renewal for additional 30-days under state law. the board is required to approve this at least once every 30-days to continue meeting remotely. staff urges that you adopt the resolution to carry us into march. >> may i have a motion to adopt this motion? >> this resolution. >> so moved. >> second. >> motion was made by commissioner driscoll and seconded by commissioner

bridges. can we take a vote on that? do we need roll call? >> we need public comment then roll call. >> let's take public comment at this time. please open the phone lines for public comment. >> thank you. callers, press star 3 to be added the queue. do we have any callers on the line? >> madam secretary there are no callers on the line. >> thank you. public comment is now closed. >> thank you, madam secretary. the motion has been made by commissioner driscoll and seconded by commissioner bridges. madam secretary. roll call vote, please. (roll call).

>> thank you we have five ayes, motion passes. >> thank you, madam secretary. next item, please. >> 4. closed session. >> wonderful. at this time the board will move to closed session. item 4a public employees hiring. after closed action we will move to 4b investments. please open the phone lines for public comment. >> any callers press star 3 to be added the queue. are there any callers? >> madam secretary, there are no callers on the line. >> thank you. public comment is now closed. president safai. >> thank you.

commissioners, please end this open meeting and join close >> commissioner stansbury. >> not in attendance. [technical difficulties] >> i second. >> i remove that we don't disclose a or b either of the closed sessions. >> great. motion made by commissioner heldfond seconded by commissioner bridges.

did we need a roll call or is that enough? >> clerk: public comment and then roll call. >> commissioner: we'll take public comment at this time. open the phone lines. >> clerk: members of the public who wish to provide public comment on this item should call 1-415-655-0001 access code 2485 434 6321 and pound and pound. if you not have done so, president star 3 to speak. please wait until the system indicates you have been unmuted and you may begin your comments. state your name and make your comments. you'll have the standard two minutes to provide comments. moderator, let us know if they're comments at this time. >> there are no callers on the line. >> clerk: thank you.

hearing no calls, public health is now closed. >> commissioner: great. a motion has been made by commissioner heldfond seconded by commissioner bridges. madame secretary roll call vote, please. >> clerk: commissioner bridges. >> aye. >> clerk: commissioner driscoll. >> aye. >> clerk: thank you. commissioner heldfond. >> aye. >> clerk: commissioner safai. >> aye. >> clerk: and i believe commissioner stansbury had to drop off. we have four ayes. the motion passes. >> commissioner: great, madame secretary next public comment. >> we received one email the

member requested we enter into public comment and i'll read it now. it's from john stenson. hedge fund joke, warren buffett asked do the it million dollar yachts in new york harbor belong to hedge fund investors. no, they belong to hedge fund managers. ps, warren buffet once said anyone who knows how to do simple path would not invest in hedge funds. with best regards from john senson a 48 member of sfers. that was the only e-mail public comment we received. >> commissioner: great. thank you, madame secretary. can we open the phone lines for general public comment. >> a reminder to callers if you have not already done so to suppress star 3 to be added to the queue. for those on hold continue to wait until the system indicates

you have unmuted. do we have callers on the line? >> we have none. >> commissioner: next item. >> clerk: item 6 the approval of the minutes of the last retirement board meeting. >> commissioner: motion made by commissioner heldfond, seconded by commissioner bridges. >> clerk: moderator do we have

callers on the line? >> madame secretary, there are no callers on the line. >> clerk: thank you. public comment is now closed. >> commissioner: greater. motion's been made by commissioner bridges seconded by commissioner heldfond. roll call vote, please. >> clerk: commissioner bridges. >> aye. >> clerk: commissioner driscoll. >> aye. >> clerk: commissioner heldfond. >> aye. >> clerk: commissioner safai. >> aye. >> clerk: you have four ayes. motion passes. >> commissioner: next item please. >> clerk: action item, 7, consent calendar. >> commissioner: great. is there a motion to approve? >> so moved. >> commissioner: moved by

commissioner heldfond, seconded by commissioner driscoll. we'll take public comment at this time. madame secretary open the phone lines. >> clerk: callers press star 3 to be added to the queue. are there any callers? >> there are no callers on the line. >> clerk: thank you, public comment is now closed. commissioner safai. >> excuse me, can i ask a quick question. i don't mean to interrupt the meeting but i understand that president safai will have to leave the meeting at around 3:00. >> yeah. >> clerk: and my question so the city attorney is with three board members do we have a quorum of a six-person board? >> we don't. we have to count it as a seven member board so i think we'll

lose our quorum if we use the president for an hour or however long it will be. >> so perhaps we have to recess the meeting until president safai was able to rejoin in order to get the quorum or contact commissioner stansbury. >> he just advised he wouldn't be able to rejoin for an hour. i didn't know before the meeting. i note i'd have to step away. seems like we'll have to recess the meeting when i have to step away unfortunately. >> i wanted to make sure if we lose a quorum that we would just do a recess and come back >> that's what we'll do.

>> perfect. >> commissioner: moving on. >> clerk: item 7 doing roll call vote for the consent calendar. commissioner bridges. >> aye. >> clerk: commissioner driscoll. >> mr. heldfond >> aye. >> clerk: commissioner safai. >> aye. >> clerk: we have four ayes. the motion passes. >> commissioner: madame secretary go to item number 8. >> clerk: action item. voting guidelines, 2022. >> this begins the investment portion five of which are action items. given the discussion that we just had, i don't want us necessarily to rush or for you to feel compromised but it would be ideal if we can get some of

these approvals done in respect to the action items. we have voting guidelines to be updated we have a recommendation within our fixed income portfolio and within our public equity portfolio. we'll start with -- >> commissioner: will each take five minutes or less? >> let's see what we get. >> commissioner: lets start with the voting one. >> sounds good. >> presenting here recommended updates to our proxy voting guidelines as a reminder these are the set of guidelines that we use as staff to cast votes on shareholder votes in accounts where we're the beneficial owner

of the shares and take into account in corporate governance practices and evolutions and expectations around the way boards are formed. we're recommending 14 updates to the guidelines. this year they are detailed in the memo in a table format. we've also included two versions of the guidelines. one is in track changes where you can see the specific changes we're recommending and then the other is a clean version of the guidelines that if approved we would implement beginning next week in our shareholder voting. not going go through all the updates but just want to highlight i think three areas. one is around our expectations with respect to board composition and this includes the racial ethnic and gender

diversity of those board members. we're recommending an update here that we set the expectation that u.s. companies have at least 30% gender diversity on their board. currently we have a 20% threshold but given nominations with gender diversity we're seeing aggregate diversity across the s&p 500 and we think this is a reasonable threshold and updating voting guidelines for large cap companies on racial and ethnic diversity and introducing a guidelines that require a disclosure of the racial, ethnic composition of the board [no audio]

>> it says no bandwidth. >> can you hear me? >> yes. >> so i think just to recap quickly, updating our gender diversity voting guidelines for directors we're also raising the expects around racial and ethnic diversity of directors as well as the disclosure of the racial and ethnic composition of the board. the second area of updates is around the increasing different routes that companies use to become publicly traded entities. we've seen an increase in direct listings and combinations with

special purpose acquisitions and staff and we are clarifying through our voting guidelines we expect similar corporate governance practices regardless of the route that a company goes to become publicly traded. so we want to reclarify those in our guidelines. and the third area is around expectations that boards have directors on those boards with qualifications and skills to assess and navigate the risks those companies are facing and these include risks related to climate change. so we're recommending introducing a provision that holds boards accountable where they may fail to appropriately manage esg risks and opportunities for those companies. so here's a highlight. i'm happy to answer questions on

any of the specific updates but will pass it back to the board at this time. >> commissioner: real quick, andrew, good job. if you are looking at this as a red, yellow or green meter, are terms with green being the most responsible and within strict rails and where black, yellow and red would be nothing. where are we? andrew? >> are you asking him to comment? >> commissioner: yes, where would the needle be? are we at the most responsible? >> andrew may have dropped off. i'll offer my perspective which

is i don't know that we're quite as far as perhaps our european pension plans but with most north american pension plans we're ahead and very progressive. >> >> commissioner: thank you. >> commissioner: i was going agree with mr. heldfond but i like the fact that andrew has increased and it's in line with the other recommendations and seeking the threshold of 30% and other sectors. i think when i like at the others they're struggling to get to where we are. >> andrew the question was asked

on the continuum of less progress where is sfers relative to others? >> progressive is the right term and we hold thresholds on these matters and they're among the highest expectations particularly with respect to diversity. >> commissioner: i agree. >> commissioner: is this an action item? >> commissioner: it is. >> commissioner: are there amendments to this and i'll move to approve. >> clerk: we need public

comment. >> commissioner: we'll make a motion and second and then we'll take public comment. can i have a second? >> commissioner: i'm ready to ask questions. >> commissioner: i do. is there a notion on the floor to adopt all the changes because there's at least seven changes in this document. are we going go one by one? >> i move motion to approve all the recommendations. >> i'll start the questions one by one. >> commissioner driscoll, i'm sorry. we'll have to recess. i let everyone know in advance. so i'm going to have to recess this meeting until at least 3:30

and we can come back to your question so do i need to make a motion to recess or can we just recess? >> as president you can announce you're recessing the meeting and we'll reconvene at 3:30. hopefully i'll be done by then. i'm sorry, i didn't know commissioner stansbury would not be >> clerk: commissioner driscoll hasn't arrived. >> clerk: commissioner heldfond. >> yes. >> clerk: commissioner stansbury. >> yes. >> commissioner: we were in the middle of item 8.

>> we were in the middle and broke right as commissioner disk noted we had a few questions and noted there are 14 changes. we can go through them individually or as suggested we can take the entire document. >> commissioner: i made my motion to include all those. >> the 14 are the voting guidelines and there's a large volume of changes to the document

>> does someone have questions on the updated guidelines. you haven't gone to the specificity of everything that, correct? >> correct. i summarized the three areas relevant to highlight and the document board memo has items including the rationale that we've established for making that change so that's a reference point and starting point and then can discuss any of those in more detail. >> commissioner: okay. why don't we move on and if commissioner driscoll wants to revisit it we can make a motion to rescind and bring it back up later in the meeting but it seems there's a motion on the floor by commissioner heldfond to adopt the new proxy. is there a second?

>> i seconded before i'll second it again. >> commissioner: seconded by commissioner bridges. we'll take public comment at this time. madame secretary open comment -- >> excuse me, i still don't know why you would want me to answer the questions now? >> we didn't know you were here, sir. we were waiting for you to acknowledge yourself and we called roll and you did not respond so if you're here now have you ask your questions. please go ahead. >> thank you. andrew, the thing about the more significant changes in the red ink, you did it in one or two other places before but singling not the nominating committee chair or governing committee chair serve an either/or issue.

why are you focussing on that particular section? >> i can speak in general given the chair of the nominating committee is relevant for matters related to what that committee oversees which is the governance documents of the company as well as the nomination of new directors to the board. the relevant individual that we would have to select to have an against vote for but depending on the egregiousness of an issue we can vote against all members of that committee and vote against the full board. we do have latitude in our guidelines to do that on a case by case basis.

>> commissioner driscoll? >> i believe you're on mute commissioner driscoll. >> maybe it's a bandwidth issue. how are you going determine the chair had control of the action that we would want to vote against him on? >> so for a particular item that is related to the matter concerning the nominating governance committee, our practice and the practice of a proxy voting as well as the other proxy adviser and other

shareholders is to hold the chair of the committee as the first person accountable if you were going cast an against vote on an item. so the rationale being the individual that chairs the committee directs the agenda and actions of that committee. that said, there is latitude to vote against other members of that committee and in other cases or other specific directors if we determine there's a particular director that warrants an against vote. >> the assumption is with the chair is responsible for whatever action we do not want to support. >> that's correct. >> i have an issue about making assumptions when it comes to singling somebody out.

that's a difficulty with that issue and there's an expansion in one place but not in other places. it's not the russel 500 versus the 5000 but we do allow the mangers to invest in the russell and is that too broad for this policy or are we getting to far or is it relevant. >> another good question. the way we think about certain voting provisions is that we expect larger cap companies typically to uphold the most rigorous of the governance standards initially and then we would begin to apply those down cap to a broader set of the market and so depending on the particular item in our voting guidelines, that's how we've

begun to introduce that set of standards. and this aligns with the practices of our proxy adviser which typically begins research and provides us recommendations and data that facilitate those votes and so for certain items currently they do not even cover a broader set of the market down to the russell 3000 or a broader universe in terms of the data they're generating for those votes. it's sort of dual and purpose. one is holding larger cap companies accountable. two is access and availability to data for us to make decisions in applying these votes. >> and the person could be referred to if someone were to ask why we voted an company that

was not in the 1000 contrary to our policy and in issue we described in the 1000 or 5000 and some may perceive it as an attack point. just making sure we're ready to explain why and carry policies and we can execute where we think we can have some affect. on page 11 it's not about an age issue but there's an issue where holding the nominating chairman where it should be the chairman of the board we're generally prefer split seats but that's where i think it's singling out a chair versus the whole board or the chairman of the board is a more appropriate person to start with. >> the point just in general.

i don't know how common it is across all the boards as you try to follow and track with our proxy consulting firm. if a director is an independent director and that word is used in this policy, sometimes the word director is independent and sometimes not but i want to focus on the word independent. the way this is written in any of those categories if the director also happened to be independent the way the policy is written is to vote against that person. is that correct? >> is there a specific provision you're referring to? >> independent affiliated and what's the third class?

>> inside director. >> group one the independent is the one i'm asking about. you're recommending we would vote against the independent director filling either one of those positions if there was something that or actually there are cases where it would be all directors i assume. you would also vote to or not elect that independent director if they crossed the line or broke one of the policy rules we're in favor of? >> that is correct. so we have certain standards and expectations around board independence. we expect the chair of each committee to be an independent director and for instance where we have a vote at a specific committees or members whether

they're independent or affiliated or insider according to our definitions, the vote is targeted at the committee they chair or serve upon there's not an exemption because there's a lack of independence on the board. >> and you're able to determine whether they're outvoted by the rest of their board and are you able to discover at that level? >> we would not have access -- we would not be privy to internal conversations and decision making at the board and why typically shareholders

hold the chair of a committee accountable for the ac -- actions of that committee or the chair of the board or the lead independent director of that board accountable. again, in analogy of a sports team if the team loses season after season the coach is held accountable even though he or she was not playing on the team. that's the rationale in terms of applying the corporate governance practices is accountability for the person in charge. >> i see the connection if the independent director is the chair of a committee and we'll hold that person responsible but if there is an independent director who not in that role some of the actions also call for us to vote against that independent director.

am i interpreting directly? >> can you reframe the question? >> if an independent director is amongst a group that is recommended to vote against or not vote for, excuse me, but that independent director is not holding down one of the committee chair assignments you identified, that is responsible for whatever action we're objecting to, must we still vote or must we still vote against that independent director or must we not vote for that independent director? >> there's status as an independent director -- their status as an independent

director does not change the application of the vote. it's not something we currently look at in terms of how we're directing a vote. >> is that without exception? >> without exception except when it's related to the percentage of the board and percentage of directors we have an expectation it's two-thirds independent directors therefore we would cast votes against the non-in dependent directors in that case but for others we would not look at the director's independent affiliation or insider status. >> sometimes independent directors are effective and sometimes not and are window

dressing. this is a step in the right direction far away which we achieve protecting our interests. thanks again for your thorough work and some parts were not perfectly clear about how effective it will totally be. thank you. >> thank you. and happy to follow-up, commissioner driscoll with additional provisions around director independence. >> there's an esg conference coming up that will perhaps look at this issue because esg governance and this issue go hand in hand. thank you. that concludes my question, chairman. >> commissioner: great. it seems as though all the

questions have been answered and there was a motion made by commissioner heldfond seconded by commissioner bridges. i think we can nove public health at this time. madame secretary, open public comment. >> clerk: moderator, do we have any callers? >> madame secretary there are no callers on the line >> clerk: thank you, hearing no callers, public comment is now closed. >> commissioner: madame secretary please call the roll. >> clerk: commissioner bridges. >> aye. >> clerk: commissioner driscoll. >> aye. >> clerk: commissioner heldfond. >> aye. >> clerk: commissioner safai. >> aye. >> clerk: commissioner stansbury.

>> commissioner: aye. >> clerk: thank you. we have five ayes. the motion passes. >> commissioner: great. madame secretary please call item number 9. >> clerk: action item, recommend to invest up to $400 million infidelity tactical bond separate account. >> commissioner: i believe we have a presentation. >> no presentation just a brief discussion and a memo i believe you all have. a little bit of background you may recall in the summer of 2020 we recommended and the board approved an investment with the pimco fixed income strategy and at the time we noted our intent to involve the liquid portion to what accounts to a core satellite type approach with the core being a handful of multi-sector managers who can

lean in and out from and in and out of different investments and we had a change of leadership vicky owens and left and albert martin has since picked up the responsibility and april at our asset class update we stated we have pimco as a stake in the ground, as you will and pimco had emphasis on emerging market data in the higher yielding strategies and we're looking for compliment to that stake in the ground which leads us to our recommendation today for fidelities,tact cal bond strategy. with that i'll turn it over for

further description. >> thank you, good afternoon, commissioners. we're recommending an investment of up to $400 infidelity tactical bond strategy. and i'll first provide a refresher on our overall strategy on public fixed income and proved provide an overview of our process as related to this investment and introduce the firm and the investment strategy before passing it over to dennis to talk about key portfolio characteristic and high level performance and then conclude with what makes it compelling for us and passing it over. and we'll have time at the end to ask questions but also feel free to interrupt as we go along. so to start at a high level, our goal for the public fixed income asset class so to act as a store

of liquidity. we have a target allocation at the plan level to fixed income of 30%. after 30% we target 8% towards u.s. treasuries and 3 to synthetic treasuries. they're a great source of liquidity but with rates of inflation it's experiencing negative yield we allocate 5% of the 13% to sectors such as investment grade and bank loans, sector credits and emerging market debt. these credit centers are riskier than u.s. treasuries but we are compensated with a higher yield.

importantly, we're part of the liquid and actively traded capital markets. and within the allocation we have a barbell approach. with like a soccer team you have defenders asset grade managers and attacking strategies to high yield, bank loans and emerging market debt. the problem with that portfolio structure is defenders are not so great at playing up the field and the attackers are not so great at playing don the field when it comes to this and as further mentioned, at our investment committee review last april and as we will detail again, the portfolio structure we're migrating towards has a core allocation. we believe it would allow the

portfolio to be more tactical and opportunistic and in many cases we're not able to be as tactical as we'd like to be and facing our constraints against being tactful. and our recommendation to invest up to $400 million to fidelity bond strategy is the continuation of our portfolio evolution. where pimco is a bit of an attacking midfielder and fidelity is more for defensive midfielder to go to 55 to 45. in terms of the diligence process it's a search that has begun by vicky owens back in 2019. pimco was selected after the search and included an rfi that covered 19 strategies and in

october/november of 2020 pimco was on board in the portfolio. we started with a deep dive in pimco given the latest addition to our portfolio and got off on all existing strategies and we looked at other promising strategies. resourced ideas for other strategies from a list and in talking to other consultants and other allocations and in 2021 we conducted about 100 meetings. we created the short list with about 18 strategies and asking for more information from those 18 strategies and towards the end of 2021 we narrowed our openings and started digging deeper on fidelity tactical bonds. diligence was done virtually

with the exception of an onsite visit by by vicky in 2019. we do expect additional recommendations to come out of this search. however, at the firm was founded in 1976 and the ceo of the firm and the johnson family effectively controls it. outside of fixed income fidelity have a competitive advantage. their equity team collaborates with their credit team to perform holistic views of the condition and benefit from the broader infrastructure provide the fidelity organization. the firm has had an ongoing relationship for over 20 years and have a strategy going back to 1997.

the team is led by jeffery who has 36 years in the investment industry. and mr. moore has been working with strategies and michael was hired as a co-portfolio manager in 2016. [please stand by] .

>> the exposure of comprised of bonds. followed by debt. in terms of credit quality, the team has an average quality above. it's currently sitting at triple b plus. the portfolio has dipped below triple b minus. this was during broad market weakness when the team lightened up on exposures and added high yield bank loans and market debt. on a geographic basis, the majority of exposures has been to north america.

it has average of 0 to 2% historically. it's used as a flexible option. the strategy have generated a net since inception of over 6% with volatility of 4.6%. generally speaking, the strategy has generated higher return than the investment grade with similar volatility and similar return with a fraction of the volatility. a strategy has outperformed benchmark over the time period including many strategies with significant higher risk return profile.

[ indiscernible ] >> other key risk, fidelity has a reputation has an investment firm. there's nothing wrong with that. in addition, if there are large retail flows -- we think it represents a large option.

team created a return stream and we believe that the strategy will be a compelling addition. >> let me comment just before alex speaks up. alex is head of fixed income at nepc he's doing work with staff. talking about the board's long-term strategy, everyone is aware, interest rates are at incredibly low level now. we're in 2% rate. the markets have not discounted that yet. primary risk to the portfolio which we've identified is rising interest rates. you acted wisely to reduce your

public fixed income exposure to 23%, ten of which is in private debt, which is largely floating. you have protection against rising rates and the opportunity to do more rigorous research on the underlining holding. in the public markets you have 13%, 8 which i will describe are treasuries. they are there to anchor leverage. they are there to protect against extreme draw downs which leaves you with this 5% in multistrategy credit. to put that with individual dedicated managers and high yield and converts, those subsets operate under very short-term conditions. the high yield you can go from high interest to spreads to low interest spreads, make a lot of money and then reverse it. trying to have a manager who does that is very difficult.

the structural argument is to find someone who has the expertise to get into and out of these market much more quickly than our governance would permit us to do. that background is the strategic underpinning of this. alex, who is head of fixed income -- >> you may have muted yourself, alan. >> alan, you're still muted. >> staff has worked off the manager list to identify the best managers to be able to do that. they tend to be little larger because they have to have expertise across sub-segments. alex is on the phone to talk to

you specifically about the merits of fidelity for this search. >> thanks, alan. thank you commissioners for your time this afternoon. i want to say you're supportive to look at the fidelity bond strategy. we're very supportive and positive about the work that they've done as well as the strategy that fidelity is offering. >> i think we can now take questions from the board.

>> question, where is the money coming from? gross assets, it's over the target. my question is, what do we have a rather bullish, successful allocation mixed as well as the selection. where will the 200 or 400 come from since the liquid credit is under the target? do you plan on taking money from other fixed income managers? >> there are two responses to that question. first, as we anticipate the city's contribution towards end of the fiscal year, we will use

some of that capital to make up what you noted as we're under way in the liquid credit. that will be one source of funding. the other is that we expect over time, over the next couple of months, we will be making some changes to the lineup of our managers that will come internally with the liquid credit portfolio. two assistances to your question, it will come from the current composition of liquid credit portfolio in addition to additional capital of the plan we'll receive in july. >> commissioner driscoll: i will take that understandably vague answer that you do not plan on recommending a change to our risk profile. >> that's correct. this is not an allocation change. we're just evolving the composition of liquid credit portfolio.

to improve our possibilities for alpha as well as mitigate risks. this is an implementation change. alan noted, there will be one other recommendation of a similar type of manager. >> commissioner driscoll: thank you for the answer. thank you. >> do i went believe we have any other questions from commissioners. motion in order? >> i would move staff recommendation. >> i'll second it. >> can we take public comment on this item? >> clerk: callers please press star 3 to be added to the queue. >> there are no callers on the line. >> clerk: hearing no calls, public comment is closed.

>> motion made by commissioner driscoll seconded by commissioner heldfond, roll call please. [roll call vote] >> clerk: we have five ayes. motion passes. >> president safai: please call the next item. >> clerk: item 10, action time, recommendation to invest up to $200 million in the impactive capital fund. >> over the past several years, we've noted one of our initiatives within the public equity portfolio is to explore the landscape of so called

activist strategies. personally i have quite attractive active strategies can influence outcomes which i think is a very important attribute in market such as what we're experiencing today which are monetary policies or geopolitical risks. activists can make change within the company. over the last couple of years, we've been introduced to a number of activist strategies who employ their activist techniques through an e.s.g. lens. sole of you are aware of these in the last couple of years with activist strategies focused on exxon, for example. which showed some of the merits of engagement. we done a formal search of activist strategies within e.s.g. lens which lead us to our

recommendation today. >> thank you, kirk. today we're recommending an investment up to $200 million in capital. it insist of a concentrated portfolio of 8 to 12 high quality businesses with opportunities to increase their shareholder values. we first met in 2019 as they were just launching. it's too early for us to invest so we continue to keep a

dialogue with them. we continue to monitor them. a number of leading investment managers have activist esp strategies over the last couple of years. institutional investors have become focused on addressing issues around diversity and climate change. all these managers have been very proactive reaching out to us over the last couple of years. as a result, we wanted to do more work on this space. we reviewed over 10 active i.s.g. strategies.

in addition to the investment, the firm has process of vendors. they want customer activism to demand more diversity, equity and inclusion. they demonstrated their effectiveness approach. they are exceptional historical performance since insensation o- inception march 2019.

this represents returns 12.9%. [ indiscernible ] staff is recommending class e with three-year lockup, and high water mark.

we expected discount due to the size of our investment. in summary, we're recommending $200 million in impactive capital. i will turn it over to nepc to provide their thoughts on this investment. >> thank you, hahn. nepc is supportive of this. recommendation. it's part of our initial investment with blue harbor. we feel these two individuals they have structured and set up to successfully execute the strategies that they outlined here in both memos. thank you. >> clerk: we'll turn it back to the board for any questions. >> president safai: any questions for commissioners?

>> commissioner driscoll: more than willing to support this recommendation. it will not be the earliest or the youngest management group we've ever backed. i say that for a reason. since hahn, you said when you first met them it was too early for us. based on all the wonderful improvement and changes being made by the investment team, obviously, public equity became one of the larger successes, did you ever see us and or team as qualifying to become seed capital manager? >> if we had experience with them at blue harbor, we would

invest. i hadn't had experience with blue harbor. i met them in the office and i had calls with them. i didn't have experience with them as an investor. i had a lot of transparency on the investments that lauren and kristin did. >> commissioner driscoll: i'll take that as a yes with the qualifying term long-term relationship, whatever that means. thanks for the answer. back over to the president. >> president safai: entertain a motion on this item? >> move to accept staff's recommendation. >> second. >> president safai: moved by commissioner heldfond seconded by commissioner driscoll. public comment on this item.

>> clerk: callers please press star 3 to be added to the queue. are there any callers on the line? >> there are no callers on the line. >> clerk: thank you. public comment is now closed. >> president safai: roll call please. [roll call vote] we have five ayes. motion passes. >> president safai: great. please call item number 11 and mr. vice president, i will hand this over to you for a couple of minutes. i need to go downstairs and congratulate the state champion balboa buccaneer football team for winning the state

championship. i will return in a couple of minutes. >> clerk: item 11, discussion item, proxy voting report for calendar year 2021. >> vice president heldfond: is this something that we can take as taken as presented with any questions by the commissioners? >> the answer is yes. i can't comment on process. this is a discussion item and can be accepted as submitted. >> vice president heldfond: proc ess is fine. we can do that? commissioners, anybody center any questions on this

presentation? we have all the information. well, this is a discussion item. i'm going to confess here -- [ indiscernible ] >> clerk: reminder to any callers to press star 3 to be added to the queue. >> there are no callers on the line >> clerk: public comment is closed. >> vice president heldfond: call item 12 please. >> clerk: item 12, discussion item, chief investment officer >> vice president heldfond: kirk over to you. >> this can be taken as

submitted. however, there's one caveat. i do have a responsibility to update the board on board approved discussions during closed session. >> vice president heldfond: plea se do. put in anything that you want to highlight. >> let me focus on the required matters. within the submitted c.i.o. report. there are two item. there were three more that closed following the publication of the c.i.o. report. the retirement board approved a closed session investment up to $30 million into caramel partners fund 8. commitment is classified as real estate investment within sfers

real asset portfolio and sfers third investment with cornell partners. at its meeting on november 10, 2021 the retirement board approved three investments of up to $200 million in aggregate. explore fund 2 is classified as medium investment and represents sfers 13th and 14th commitments to the equity fund.

two things i will make mention, january was an incredibly difficult month in the capital markets, stocks and bonds were down. which is down. sfers assets were down 3.44%. i want to highlight as it's important. next wednesday, week from today, february 16th, we'll have our next investment committee meeting. which will focus on digital assets. staff will be joined by joe marinda to provide us all with an intro to digital assets. i will pause there and happy to answer any questions. >> vice president heldfond: any questions? january was a bad month.

also, i appreciate -- i do encourage -- i have learned a lot. that's the purpose we're doing investment committee. anybody have any questions? this is a discussion item. public comment, please. >> clerk: thank you. reminder to any callers to press star 3 to be added to the queue. >> we have one caller on the line. >> clerk: please state your name and your two minutes begin when you speak. >> caller: this is fred sanchez with protect our benefits. i don't know if this is the

appropriate time, we just trying to find out it was my understanding they were close to coming out with the cost of funding what the cost to be the sfers on paying the people who retired before 1996. i'm trying to -- i thought i would have that information last week. i'm trying to find out is it something coming out very soon? thank you. >> clerk: thank you for your call. do we have any further callers? >> we don't have any additional callers. >> clerk: hearing no further calls, public comment is now closed. >> vice president heldfond: than k you for your report. call item 13 please. >> clerk: discussion item.

san francisco deferred compensation plan quarterly report, q4, '21. >> good afternoon commissioners. thank you very much. i know that we have a quorum situation. i want to go over this as quickly as i can. i'm delighted to share some highlights with you today to cover the four main pillars of our quarterly report. first up with the investment. that targeted fund changes were present the to the board last month for implementation at the end of january. i'm happy to report that it executed accordingly. details breakdown on on page 3 of the memorandum. crediting rate is 1.67. this rate is guaranteed for the quarter. we recently were informed of a

decrease in contract cost which results in lower cost for our participants. finally on the investment side, you probably notice recent market movement. i asked our investment consultant to quickly cover in a minute or so, last quarter strong performance with the board. mr. ungerman can you share your screen? >> just quickly. in terms of the orientation on the page, you'll see four columns in bold is quarter returns under the 1231 fund performance. rake next to it is the appropriate benchmark. also turn your attention to the

year to date ended 2021 december return in benchmark. i'm pleased to report, all the funds relative to their passive alternatives, out performed with the two exceptions. it was a year and particularly fourth quarter of mega caps outperforming. in the real state fund was the other under performinger. bottom line, when you look at the target date funds, you will see performances all the underlying four options that are built and make up the target data assets to absolute and relative outperformance and very strong fashion. i'm happy to answer any questions. i covered a shored order.

>> thank you, greg. as a reminder, next month, the board will receive a semiannual performance up date. if there are no more questions. we can move on to the marketing section. outreach has never ceases in our area. we recently updated some webinars with timely topics to inform our participants about taxes and roth. we have seen as in uptick in january after a direct outreach to promote these webinars. samples of those e-mails are on page 5 in the memo. we can move on to operations. as noted, i.r.s. contribution limits has increased for the first time in two years.

staff is working to provide interdepartmental messaging to inform all city employees of this change. limits is 20,500 for under 50 earning 41,000 for those who qualify for special catchup which is special provision only for government plan like the sfdcp. this ruling allows administrators to use electronic delivery as a default to provide information to participants. this includes beneficiaries. if a participant e-mail address is on file and the participant has been provided an opportunity to opt out of edelivery service. edelivery communication will include account statements, privacy notices, correspondence, transactional confirmations and

planned disclosures. any bad e-mail addresses will revert back to the mail. the client experience can be found on page 7 of the memo. last is our record keeper. of note is our counselor department realignment. we have five retirement counselors that are assigned specific departments. would be in the field visit and providing service to those departments. they are ensured they have equal access who has the capacity to demands. you may recall last quarter, we shared with the board a quarterly plan review which is designed to provide an extensive look into the nuts and bolts of how our plan operate, showcase

important metrics and participant trends. mr. merritt, can you hear me?

>> the plan has been growing. participation rates has been increasing and we done pretty good job with customer service and through our local education. i will highlight that here in our report. i will skip ahead a few pages. it's 30 pages. i will highlight the key parts. you can see on this page, overall, the number of plan participants has been increasing pretty steadily, quarter over quarter. we have nearly 33,000 planned participants overall as of december 31, 2021. you can see the slide here on page 5, overall assets has been increasing. partly because of net cash and more money coming in than going out.

i will skip ahead and talk about overall stages within the plan as a participant level. up to page 14 here. we highlighted this slide last time. what we can see on the left, historically about 75% of planned participants contribute to the plan on a dollar basis. about 25% on percent basis. for new enrollees it's more reversed. contributions will rise as a result. certainly something that's beneficial to plan participants. partly as a result of that to get more and more people to

enroll, the number of eligible city employee, city and county san francisco employees has been decreasing the last couple of years, 35,012 as end of 2021. the total number of participating employees has been increasing. the result of that, overall participation rate has been increasing fairly steadily over the last several quarters. that's good news. last couple of things i will highlight here in the spirit of time is around from a customer service standpoint. last couple of slides -- i will jump to this slide 27. we've seen a steady decline in the average speed.

around our local counselor teams. obviously with covid, we have not been able to get out and meet in-person as we like to. there's been peaks and valleys there. nonetheless, over the course of 2021, we've seen more opportunities to increase our outreach and engagement whether it's virtual on on site. really take advantage of events where you can see a big spike in october. we hosted some events and tried to encourage some engagement.

all of these tie to things we're trying to focus on growing the plan, try to encourage more people to take advantage of the plan by enrolling and stave -- saving more. i'll stop and see if there's any questions or comments from any of the commissioners or attendees. >> i have a quick question. you were saying that the turnout

with covid, has the virtual meeting -- do you think they've been productive? trying to get a sense of people taking advantage of it. >> i think more and more so, virtual generally it becomes more way of life. we didn't see quite as much reaction to that. i think over the course of the past year, certainly, we try to find more creative ways to promote the availability and plan participants gotten more comfortable engaging with us that way. our preference is to do more in person. for those who can't and in the environment we can't, still able to help them. we can see screens at the same time that planned participants are. we can help them with paper work

and help coach them through whatever activity they need to engage in. it's probably not as ideal in person. it's easier to promote the plan in person. we still able to assist people one-on-one in the phone calls and virtual meetings. >> that's good. i think that's important, particularly to people that are retiring sooner than later to get the assistance they need. that's why i was curious. >> thank you commissioners. that concludes our quarterly report. if -- i'm open to answer any more questions at this time. if not that concludes it. >> vice president heldfond: than k you. appreciate it.

commissioners, any questions? >> clerk: reminder to any callers to press star 3 to be added to the queue. do we have any callers? >> there are no callers on the line. >> clerk: thank you. public comment is closed. >> vice president heldfond: grea t. thank you and let's call item number 14. >> clerk: discussion item. retirement system conference expense report for the period beginning october 1, 2021 through december 31, 2021. >> there's a report that you can take as submitted. still reflects the fact that not a lot of travel.

>> vice president heldfond: sinc e discussion item noted. open the phone lines for public comment. >> clerk: any callers press star 3 to be added to the queue. >> there are no callers on the line. >> clerk: thank you, public comment is closed. >> vice president heldfond: we'l l take this item as noted. item 15. >> clerk: item 15 is action item, review and approval of basic cola effective july 1, 2022. >> basic cola has inflation exceeded our 2% cap. this is the cola for the majority of our retirees. we ask that the board approve this.

>> i move to accept the recommendation to pay the basic cola as recommended. >> i second. >> vice president heldfond: can we have public comment? >> clerk: callers, press star 3 to be added to the queue. >> there are no callers on the line. >> clerk: public comment is now closed. >> vice president heldfond: comm issioners we have the motion and that's been moved by commissioner driscoll and seconded by commissioner bridges. can you call the roll please. [roll call vote]

you have four ayes. motion passes. >> vice president heldfond: call item 16. >> president safai: vice president heldfond, i'm back now. >> clerk: item 16 is an action item. >> did we get a vote from president safai on that last item? >> clerk: he just arrived. item 16, action item. determination and approval of credited interest rate for fiscal year 2022-23.

>> president safai: is there a presentation for this item? >> this is an item you could accept as submitted. it's pretty straightforward. >> i'll move to accept as presented. >> second. >> president safai: moved by commissioner heldfond and seconded by commissioner driscoll. please call public comment. >> clerk: any callers, please press star 3 to be added to the queue. >> there are no callers on theline. >> clerk: thank you, public comment is closed. [roll call

vote] we have five ayes. motion passes. >> president safai: next item. >> clerk: item 17, action item. review and approval of the revised actualial funding and methods. >> so moved. >> president safai: moved by commissioner heldfond and seconded by commissioner bridge. please call public comment for this item.

>> clerk: callers press star 3 to be added to the queue. >> there are no callers on the line. >> the change back to the rolling amortization practice, the last paragraph of the changes page 3 or 4. it doesn't make a difference. i remember the discussion we had when we changed away from the rolling to the fixed amount. i'm trying to figure out is the roll considered a best practice and whether or not there's any significant effect on the contributions if we do either one. >> commissioner driscoll this is a recommended practice for surpluses only. than is how we are applying it. you are correct, it is a bad

practice to do a rolling amortization of and unfunded. just like a credit card, you're never going to reach the end. this is a recommended practice for a surplus situation to maintain even funding for the plan and for the members. >> commissioner driscoll: thank you. i did not pick up on the distinctions. thank you. ready to vote. >> president safai: please call public comment for this item. >> clerk: reminder to any callers price star 3 to be added to the queue.

>> president safai: roll call please. [roll call vote] >> clerk: motion passes. next item. >> clerk: item 18, action item, level and adoption of july 1, 2021 actuarial valuation report and presentation of employer contribution rate stress test projections. >> good afternoon commissioners.

we're here to present the final results of the actuarial valuation. we will move through this fairly quickly. the big news was still the investment portfolio. that resulted in the plan going from about 90% funded to 94% if we use our smooth actuarial assets or 112% based on the market value of the assets. that's about a $5.6 billion difference in the amount of assets recognized. that's a significant thing in terms of what's going to happen with future contribution rates.

we'll talk about that briefly as we go through. contribution rates or fiscal year end 2023, which are based on this valuation, are going down by about 3% of pay for the employer before cost sharing. after cost sharing, they are going down about 2% of paying for the employer and members that we would go down 1% of pay. going through some of the changes we've had since last valuation and i'll come back for some projections. >> on the left hand side of the slide, you can see the changes in the unfunded approved liability from last year to this year.

that's a $942 million decrease in the unfunded liability. that's primarily due to the exceptional asset return which decreased the unfunded by about $1.75 billion and that was offset by the discount rate change going from 7.4 to 7.2%. moving over to the employer contribution rate changes, the employer contribution rate change about 3% of pay. that's before the cost sharing adjustment. the main factor there was the exceptional asset return which decreased contribution rate.

contribution rate is little over 2% that policy change that was just approved decreased the contributions by about the same amount. just one thing to note here is these are sources of liability gains over the last five years. the main impact on these liability gains and losses have been stellar increases over the years. those liability losses which is

represented by the gray bars, has been the smallest impact on the ual over the last 10 years. focusing now on 2021, you can see that the impact of that asset gain is by far the biggest we've seen in the last 10 years. you're going to see the same magnitude of actuarial gains over the next four years because the gains and losses on assets are recognized over 5-year period. this is just 20% of that asset gain that we're recognizing in

the u.a.l. this year and the contribution rates. just to touch on this, this is the funded ratio projections and the historical and future projections. we are currently now at 112% on market value basis. we are anticipated to raise 100% funding and stay above 100% in the next 10 years. finally, here we're looking at the projections of the contribution rate. we also have the historical contribution rates. the future is looking much brighter and is represented by the colorful bar on the right-hand side of the slide. on the top, we are showing the employer rates and the bottom bars and purple are represented

-- are the member rates. one last thing to clear the graph, that line, that dark blue line is 2020 contribution rate projection. you can see it's 4.2%. we are showing contributions well below what we have been projecting last year. that's due to the asset returns and also the changes in your funding policy. you can see there's a significant decline in the next four years and that is due to phasing in those great gains we saw in fiscal year 2021. also, looking at the member rates. we can see, the weighted average

member contribution rate decrease by 1%. we're expecting another decrease of another 1% next year and continuing trend downward to the employer contribution rate pattern. lastly, i want to touch on the green bars. if you recall those are the retiree healthcare trust fund contributions that are mandated by the target code. that represents the difference in the normal cost rate in that a.d.c. that will be going to the retiree healthcare trust fund. with that, i will turn it over to bill to talk about stress testing. >> all of those projections the sooner we get our assumes 7.2% return. what happens if we don't?

getting exactly 7.2 is unlikely.

very good outlook of continued decreasing contribution rates. we create these scenarios every year. we'll go through the details here. i wanted to summarize the projection. detailed projections for each scenario in our appendix that you can look at. the main message is just about regardless of the scenario, we're going to see decreases in contributions over the next few years. it is possible for contributions to go up.

we are looking at a positive outlooks. with that, we'll take any questions you may have. we do have the model available if you're curious. i think the positive outlook is clear. >> i have four sets of questions. may i start? >> commissioner driscoll: let me go to page 8. two questions. the additional city retiree healthcare trust fund rate, that

is money that would come transferred from sfers to that trust fund based on all the other requirements, correct? >> no. it's not a transfer between the trust funds. it's direct city contribution to the trust fund that's triggered by how low the contributions will be. >> commissioner driscoll: that is how the charter read how much they match the employee's contribution? >> that would be each pay period as additional contributions above and beyond what the city's obligation for retiree healthcare trust is. say it's 1%. when this gets triggered, the city will transfer to the retiree healthcare trust fund directly from the city be additional money that will be going into the trust. it's not a transfer between sfers at all. we never get the money.

once the city doesn't have spend that money at the retirement system, they transmit it directly to the retiree healthcare trust fund. >> commissioner driscoll: enthus --regarding page 8. page 12. the most probable base case. that's on the assumption that

and our amortization is moving techniques what occur over the next 10 years. just most probable. >> it's our assumed rate of return. >> commissioner driscoll: just a moment. i'll go back to page 8. the purple, the member's rate. that is also what will occur assuming all our assumptions in current policies, and techniques continue. >> yes. this chart is showing after cost sharing and the chart on page 12 just shows the employer rate before cost sharing.

>> commissioner driscoll: i'm focused on purple. some people are already forecasting that the employee's rate will go to zero in five years. that's what i'm trying to make. >> no. we're not forecasting the member rates going to zero. we are forecasting to go down. >> hopefully that story or rumor will stop. the next goes back to page 3 which shows good news immediately, plan to go into effect. that in the middle of the average cost sharing for the member's rate. this would apply to somewhere between 80% and 100% of the

members. this is a time cost of living gone up. this is a time they mae want to consider continuing saving that money in their own deferred compensation program. i'm hoping she'll understand why i'm bringing this oour attention now.

>> president safai: i was waiting to see any other commissions have any other questions. we can have a motion to adopt this actuarial valuation. moved by commissioner heldfond seconded by commissioner driscoll. please take public comment. >> clerk: callers, reminder to press star 3 to be added to the

queue. >> there are no callers on the line. >> president safai: please call the roll. [roll call vote]. we have five ayes. >> president safai: please call 19. >> clerk: action item. adoption of employer contribution rate of 21.35% for fiscal year 2022-23.

>> president safai: presentation for this item? >> this item is held separately. it follows directly from the previous item where the discussion was held. >> president safai: we have a motion to approve the recommended employer contribution rate of 21-35% of fiscal year 2022-23. moved by commissioner bridges inseconded by commissioner driscoll. please take public comment. >> clerk: reminder to any callers to press star 3 to be added to the queue. >> president safai: please call the roll. [roll call vote].

we have five ayes. motion passes. >> president safai: thank you. please call item 20. >> clerk: review and approval of the department budget fiscal year 2022-23 and fiscal 2023-24. >> commissioners, the division leaders have prepared a drop budget proposed budget that were

presented last week. operations oversight committee. the proposed budget includes some positions, new positions in the budget that were approved for this year even though they were approved through last budget cycle. budget represents a 7% increase over the current year budget. that 7% nearly 5% of that increase is due to increase investment management fees to due assets under management. so the way we budget, we have to assume there's a growth we assets. we budget for higher investment fees. roughly $2 million of the increase in the budget is due to new positions. there are four investment positions that were approved as i mentioned for the coming year in last year's budget process.

there are four positions in administration, new positions and one in retirement services and two new positions in the deferred comp budget. the total cost based on current salaries over those positions is less than $2 million. that being said, we really wanted to stress the priorities that this budget represents. the mayor issued her budget instructions back in december. at the time, she was very happy to announce that since 1998, this is the first year that the city, not just the mayor's office but the controller office and board of supervisors analysts are projecting a surplus in both the coming year's budget and the following year's budget. first tim in over 20 years that's the case. the mayor has recognized that part of that is due to the

returns, the extraordinary returns that we had in the retirement system. that's going to be $50 million or $60 million that our budget savingses for the mayor. i was very happy that the mayor did recognize that we played an important part in having the good financial news or the strength of city. as far as from a budget perspective, it's the first time in my recollection there have not been instructions to all departments to propose cuts. cuts sometimes in just general fund, allocation, sometimes cuts in more general regardless of

the funding source. this is the first year of her instructions are not specific directions to proposed cuts. the city finds itself lot of vacant positions and lot of it has to do with the pandemic and the uncertainty of what work really looks like. certainly the front line workers have been working overtime and working extraordinarily long hours. there's been shortages of those. for the most part, we find the city across the city department find themselves with a lot of vacant positions. we're no different. we have quite a few vacant positions in our retirement services, retirement operations division. what we did, we took a look why we have those vacancies and why we struggle to find qualified

candidates it fill those positions. part of this budget and important part of the budget is creating a new career path for the retirement services, the technical and the analytical positions. over the years we lost quite few staff, probably six or seven in the last five years to promotional opportunities outside the department by going and applying for these h.r. analyst positions. we like to sort of deal with that issue by making them parallel in pay. so there's not an incentive to leave our department to go get

higher money in another department with the hopes that would help us retain qualified employees and staff members. what we done, we are proposing a new set of positions to replace our retirement services, technical and analytical staff and that would not just impact the retirement services area but it would also impact the deferred comp air. diane and her team use the same analytical and technical staff that the retirement system does. we're also including in this budget, although, there's no additional cost in it. we are using the budget to introduce something that we're starting and prepared to start within the next few weeks. which is an intern internship i. we had a very difficult time

filling our baseline sort of first level technical staffing for the retirement services area. over the years, over the last 10 years, we conducted 11 recruitments for this position. we have not been able to attract a strong enough pool to even fill those positions that we currently have like seven vacancies among probably 16 budget positions in this one classification.

we would be able to train people on the job in order to qualify for what we found to be historically a very difficult position to fill. we're very excited. that's not a necessarily tied to the budget. we're asking for recognition of the new trainee positions to be in the budget. we are prepared to at least start our first recruitment for

six of these interns that we hope to hire over the next few months to bring on board. from my perspective, the staff has done an excellent job in transitioning. once the pandemic began, almost transitioning seemlessly to continuing to provide a level of service to our members that the members were expecting of us. the stress and strain is, we have positions and people having to do other people's work. what we really want to do is solve the problem. bring new job classes that break down potential barriers for hiring people. we're looking for a diverse life, diverse education, diverse experience, background, qualified pool of candidates to

bring in. we're counting on someone come from social security background, that's great. we are hoping this prove to be long-term successful and being able to retain our qualified staff. most importantly, bring on staff to help with the workload and try to get us over this new transition into a return to work and coming back fully staffed. those are the two initiatives that we're most excited about. the repositioning or substituting of the analytical level and technical level positions to more protect us from being able to -- protecting us to keep folks because they really would not have a monetary incentive necessarily to leave us to go to work for another

department. then also, the internship program which we believe will bring more qualified and more diverse group of qualified staff into the department and we have ertz that -- efforts that we made through the budget to plan this internship program and deliver the training. i will turn it over to karen. i want to give diane an opportunity to speak.

>> jay stated what our issue has been pain what we supposed to do in order to solve it. i did want to take the time to say how excited we are about this internship program. working with our racial equity working group, we hopefully have removed some of the barriers that we would have to entering the department at this level. we are going to remove the college degree requirement. you can substitute that for work experience. we're hoping that we will be able to recruit people who are smart and capable and hard working. they will show us that they have the attitudes to learn and are willing to work within the department in our training

program. it will be 18 months. it will be three components. there will be self-study components. there will be a classroom component where we will have subject matter experts teach certain subjects. there's on the the job training. we do need the interns to do some work as well. in order to make sure that we have the people that understanding the material and everyone is learning the same thing, there will be evaluations both with respect to the self-study materials and with respect to the classroom materials. this is going to be done in conjunction with the quality assurance and risk management team. we believe that having good quality well-trained staff, all doing the same material is not just important for our employees

but really good quality assurance for the department going forward. that's the program in a nutshell. we're really excited about it. we'll start with recruiting within the next couple of weeks. we're going to be working with the racial equity working group to try to reach out and post the job openings in places that we haven't done in the past. to try a more diverse and more diverse applicant pool. happy to take any questions. >> seems like you're describing more an apprenticeship program

than an internship program. >> i would agree with you. we are working -- our intent is that at the end of the 18 months, they would have rotated throughout the retirement services division that these interns, this is what we're calling them, will be qualified as well situated to take on the entry level position. this is a big highlight headline for sfers management what we are doing in terms of our e.s.g. congratulations.

>> i think certainly major initiative that started taking the backseat. costing us $700,000 for the entirety of nearly 50 employees across the department. this is not significant bump in pay. it's really trying to decentive size people from leaving. all of this for the retirement side is funded through the trust now on the deferred comp side, diane has three employees,

current employees who will be impacted and benefited by the fact that they would have these new classifications that will be available to them. her budget we look at quite differently because it's not funded from the trust. it's funded from participant fees, administration fees. with that, i like to turn it over to diane to sort of talk about how see shes this working out of the deferred comp side. >> we're really excited about this forward-looking budget. as you can see, we have to ask for f.t.e.s. i want to make sure that the board is aware that puts us within our budget. these positions will not result in any increase in cost charged to the participant. the cost remains static. that's primarily because we are so careful with our resources.

as the plan is funded by our participants. the staff is very aware that this is participant's money. we are mindful and prudent with these resources. we are looking for a ways to csu -- cut costs. we have lowered investment costs, equities and e.s.t. now trade at no cost. we offered an unofficial fee holiday where the plan significantly discounted the administrative expenses charged to pair down and any accrual of administrative funds over the prior years. i say that because the plan has been working with the same number of f.t.e. for nearly five years despite the plan growing in assets. we are doing more as staff than

ever before from analyzing legal documents and providing for our constituents, loan processing and qualifying participants for provision. much of this is done in-house.

. >> keep those in mind as you go forthwith this partnering and recruiting. >> thank you, commissioner bridges. i want to echo that to justin

and executive director. we have a lot of work over the years with usf. they pride themselves on one of the most diverse human bodies in the entire california. they would be a great partner. i am happy to connect you with the director of neighborhood services. they can put you in touch with the right people along with the president. that is the one that i have the boast knowledge of and relationship with. >> thank you. that essential is what we want to explore how to get the fact

that we are offering these are full-time jobs for the folks. >> exactly. >> a lot of recruitment and job fair and placement that would be phenomenal to keep the trained work force here. >> it is a career track full-time job at the end of the 18 months. we hope that we will have folks who want to work here for 30 years. >> right. >> we will follow up with you to get the contact information with commissioner bridges, also. >> i will have my staff send darlene and you the present contact information. we will do an introductory e-mail. >> do you have something to say, commissioner bridges. >> i have connections on all three campuses. i will reach out to them.

>> commissioner driscoll. the different divisions is that going to include deferred comp? >> no, we have taker will tash will talked about diane has her own -- diane has her training program 18 months. they will be trained within the functions of the deferred comp program. that is why we are hiring or posting for six folks which will be retirement services and if this new position is approved for diane in the next budget she can approach hiring in that position through the same internship program. >> i know one or two people transferred back tan forth. the answer to my question is no. >> no. absolutely. thank you. >> the problem for this budget

the question was asked during oversight committee. ms. justin was unable to come to the meeting for an important reason. to increase costs in deferred comp i was asking about increases to revenue. i have not received an answer to that question. she talked about holidays i was unaware of that was put into practice. i will not try to tie this up today. it is not wise to vote for cost increase without understanding where revenues are coming from. we have obligation to reduce fees to members. it is different than the general fund. >> there is no fee holiday inn place currently. under the contract based on assets in the trust there is a fee for administration. the money goes to an account.

it belongs to diane and her team and the retirement board to determine what to spend it. what diane was referring to was years back. i don't know how many years back we did a fee holiday because we had accumulated money in that account that was more than we needed to sustain or support the administration and add enough costs. we basically announced a holiday. no good turn goes unpunished. when we ended the holiday, people characterized that as a fee increase. they forgot it was a holiday. we were giving a break from fees they previously paid. when we reinstated because we needed the additional money. what this represents is money in the account to support increase

in staffing without impacts any cost to the purchase without raising fees. we managed it very carefully because we don't want to accumulate a lot of money in the account unused. the other point similar to the retirement side. it could be budgeted $100,000 for legal fees. if we don't spend that it never leaves that account. it is not like it is put out there and we forfeit any money at the end of the budget cycle. we monitor the excess money in the account. we worry if there is not enough money in the account. we have always had money to get reimbursed for our costs. we are comfortable that these new positions and the increase in the budget will not trigger any kind of increase in fees.

through the deferred comp committee we can discuss potentially fee holidays in the future should that account balance warrant that type of an action. >> i thought she was talking currently. i do remember the fee holiday we did years ago. i will come back to the point. i want to know the revenue increase. the members have already paid it. process requires us to bill the city to send money to pay bills. we have a duty to reduce fees, not complete holidays. it has to match the program we plan on running. that is what the questions are about. i will vote for today. if i don't understand where the revenue. if the assets increased 17% last year and 14 or 15% the year before and this is a 19% cost increase, that is why i am

trying to line up to tell members we are not overcharging. they are responsible for 100% of the cost for the administrative side she supervises as well as what we paid. there are price breaks in how voya collects its fees. i am trying to find out how much venues have increases whether or not we have spent it. should we consider a fee reduction? >> can i address that? >> certainly. >> so you are correct, commissioner driscoll. yes, per annum cost mean revenue and as sets are directly correlated. assets under management shifts. yes, over the last year there is an increase in revenue. i would say it would be around 20%, maybe 25%. it shifts every quarter. any sort of surplus we get

belongs into the account. the account belongs to participants. when that reaches a certain level we work with deferred compensation committee to bring options how to pair that down. we had done a fee holiday inn the past. we can discuss those options or even a more general fee reduction overall. those are things i think are definitely something on the docket to talk with the committee. it is the time where the surplus is growing as a result of the assets under management. we are aware and look for ways to bring that down and the addition of two positions does not result in direct cost back to participants.

this is why this should have occurred in deferred compensation before the oversight committee. i tried that last year. it did not occur last year or this year. i told you i will vote for this today. it has to be reviewed to justify and prove why we are collecting those fees from members. we have to justify it. we decided to do a fee holiday as closely to the people who paid it. >> great. thanks, commissioner driscoll. can i entertain a motion to approve this item? >> so moved. >> moved by commissioner. >> somebody is talking about

ordering. please mute. >> motion made by commissioner. seconded by driscoll. madam secretary can you open public comment, please. >> callers if you have not done so press star 3 to be added the queue. do we have callers on the line? >> madam secretary there are no caller on the line. >> thank you. public comment is closed. >> before you call the roll. i want to say i understand there is a lot of position. i also understand a lot of work and effort put into this by staff. we should recognize this is an important program and important conversation to be had. commissioner driscoll seems as though questions had been asked before that hadn't been answered. i don't believe that had anything to do with the presenter today. let's keep that in mind.

these are important conversations. we want to remember to remain respectful. please call the roll. (roll call). >> thank you we have five ayes. motion passes. >> thank you. please call the next item. item 21. discussion item. executive director report. >> briefly i have two items to include here. i also want to have -- to ask a question of the board. back in october the board of supervisors passed an ordinance that provides now parental leave

entitlements to board and commission members across the city. part of that ordinance requires that we incorporate these parental rights into our policy. i provided you a copy of the ordinance. we will make it clear that it is effective now and that we will be referring the ordinance to governance committee with recommendations how to incorporate it into the current board policies. the second item i wanted to update the retirement board on is the current return to work, i believe last month i probably reported we are tentatively scheduled to return to the office next monday the 14th of february. on monday we received guidance strong recommendations from the city that we postpone the return

of any nonessential staff to the office until march 7th. we are taking that guidance. for the most part we have a very small crew who we consider essential to the department. they get the mail, make the bank deposits. they are the only staff here or working at the office. i say here because i happen to be in the office the first time in two weeks. we are still closed to the public. we do not do in-person services. we are planning on march 7th to go back to a partial re-opening for in-person services by appointment. i wanted to give you an update. we expect a new mayoral declaration, the 41st to clarify how boards and commissions can conduct their businesses after february 28th.

the current declaration, emergency declaration provides that the requirement board and other boards and commissions have to return to in-person meetings after february 28th. we have been told to potentially anticipate that this might be extended maybe for another month, but it is still uncertain as to what the march board meetings will look like. we are prepared technologically to do a hybrid meeting with parties by board members, remote presentations by staff. we potentially would have remote participation by board members. one of the key points of the parental leave is that someone who is off on parental leave can participate remotely. otherwise that would have been

prohibited. it is changing day-to-day. we know the goal is to return and start having in person board meetings and committee meetings and that we are working with both the department of technology and internally to make sure we are prepared for that. the other issue that came up and it could be and you can tell me president safai if this is the good for the order. we have been asked to consider moving the regular board meetings to the second thursday of every month. what i was prepared to announce was darlene will be googling you to find out your availability. does everyone like the meeting starting at 1:00. in when i first started here they started in the morning. we need guidance as to what times darlene should google

people's available for the second thursday of every month. i assume that would be through june of this year at which time the regular election of board officers can take place. >> that is a fair question to ask. i am open to people respond being to different times, beginning at 10:00 or 10:30 or after lunch. how ever you want to approach it. best way to do it rather than discussing now is having madam secretary do a poll with everyone. >> thank you. that is all i have for my report. i will be happy to answer any questions. >> we have to take public

comment on the executive director's report. please open public comment. >> press star 3 to be added the queue. do we have any callers? >> madam secretary, we have one caller on the line. >> thank you. please state your name. your two minutes begin when you speak. are you there, caller? >> madam secretary. the caller has left. >> thank you. do we have any further callers? >> no further callers. >> thank you. hearing no further callers public comment is now closed. >> thank you, madam secretary. please call the next item.

>> item 22. discussion item retirement board members good of the order. >> any commissioners have comments to make? >> yes, one comment. over the last several weeks related to information requesting preparation for the oversight committee, operations oversight committee. demands for service have increased related to covid because more people have planned for retirement and losing key people. the staff has worked their way through it very well. i made a point to ask a question. one of the tools on our website that is very valuable is the calculator.

we talked about that probably 15 or 20 years before it finally appeared. people are comparing to other funds they are familiar with. the reason i say it now, i found out and would like to compliment our executive director is driving the completion with the tremendous help of the service coordinator as well as work performed by kyron. they actually helped develop the calculator and the fact he got it done by pushing is the observation for the good of the order. >> thank you, commissioner driscoll. any other commissioners? let me just say as the new president for the remainder of this term to june. i appreciate the hard work of

staff. thank you executive director for sticking through this additional time and covid crisis we have endured. secretary darlene and the hard work she and the staff is doing. i appreciate that. i know everyone puts in time and energy. i look forward to working with you. you will see i intend to run a much more efficient board meeting. we will do that collectively together. i will work on that with the executive director. i look forward to working with you and i look forward to working with you in an environment of respect for commissioners and staff. thank you everyone. i don't have anything else to say. any other commissioners? doesn't look like it. please call the next item. >> item 23 adjournment.

>> okay. we are adjourned. thank you everyone. >> thank you all.

dev mission's goal is aiming to train young adults, youth so we can be a wealth and disparity in underserved communities like where we are today. my name is leo sosa. i'm the founder and executive director for devmission. we're sitting inside a computer lab where residents come and

get support when they give help about how to set up an e-mail account. how to order prescriptions online. create a résumé. we are also now paying attention to provide tech support. we have collaborated with the san francisco mayor's office and the department of technology to implement a broad band network for the residents here so they can have free internet access. we have partnered with community technology networks to provide computer classes to the seniors and the residents. so this computer lab becomes a hub for the community to learn how to use technology, but that's the parents and the adults. we have been able to identify what we call a stem date. the acronym is science technology engineering and math. kids should be exposed no matter what type of background or ethnicity or income status. that's where we actually create

magic. >> something that the kids are really excited about is science and so the way that we execute that is through making slime. and as fun as it is, it's still a chemical reaction and you start to understand that with the materials that you need to make the slime. >> they love adding their little twists to everything. it's just a place for them to experiment and that's really what we want. >> i see. >> really what the excitement behind that is that you're making something. >> logs, legos, sumo box, art, drawing, computers, mine craft, and really it's just awaking opportunity. >> keeping their attention is like one of the biggest challenges that we do have because, you know, they're kids. they always want to be doing something, be helping with something. so we just let them be themselves. we have our set of rules in place that we have that we want them to follow and live up to.

and we also have our set of expectations that we want them to achieve. this is like my first year officially working with kids. and definitely i've had moments where they're not getting something. they don't really understand it and you're trying to just talk to them in a way that they can make it work teaching them in different ways how they can get the light bulb to go off and i've seen it first-hand and it makes me so happy when it does go off because it's like, wow, i helped them understand this concept. >> i love playing games and i love having fun with my friends playing dodge ball and a lot of things that i like. it's really cool. >> they don't give you a lot of cheese to put on there, do they? you've got like a little bit left. >> we learn programming to make

them work. we do computers and programming. at the bottom here, we talk to them and we press these buttons to make it go. and this is to turn it off. and this is to make it control on its own. if you press this twice, it can do any type of tricks. like you can move it like this and it moves. it actually can go like this. >> like, wow, they're just absorbing everything. so it definitely is a wholehearted moment that i love

experiencing. >> the realities right now, 5.3 latinos working in tech and about 6.7 african americans working in tech. and, of course, those tech companies are funders. so i continue to work really hard with them to close that gap and work with the san francisco unified school district so juniors and seniors come to our program, so kids come to our stem hub and be exposed to all those things. it's a big challenge. >> we have a couple of other providers here on site, but we've all just been trying to work together and let the kids move around from each department. some kids are comfortable with their admission, but if they want to jump in with city of dreams or hunter's point, we just try to collaborate to provide the best opportunity in the community. >> devmission has provided services on westbrook.

they teach you how to code. how to build their own mini robot to providing access for the youth to partnerships with adobe and sony and google and twitter. and so devmission has definitely brought access for our families to resources that our residents may or may not have been able to access in the past. >> the san francisco house and development corporation gave us the grant to implement this program. it hasn't been easy, but we have been able to see now some of the success stories of some of those kids that have been able to take the opportunity and continue to grow within their education and eventually become a very successful citizen. >> so the computer lab, they're doing the backpacks. i don't know if you're going to be able to do the class. you still want to try? .

yeah. go for it. >> we have a young man by the name of ivan mello. he came here two and a half years ago to be part of our digital arts music lab. graduating with natural, fruity loops, rhymes. all of our music lyrics are clean. he came as an intern, and now he's running the program. that just tells you, we are only creating opportunities and there's a young man by the name of eduardo ramirez. he tells the barber, what's that flyer? and he says it's a program that teaches you computers and art. and i still remember the day he walked in there with a baseball cap, full of tattoos. nice clean hair cut. i want to learn how to use computers. graduated from the program and he wanted to work in i.t.. well, eduardo is a dreamer.

right. so trying to find him a job in the tech industry was very challenging, but that didn't stop him. through the effort of the office of economic work force and the grant i reached out to a few folks i know. post mates decided to bring him on board regardless of his legal status. he ended his internship at post mates and now is at hudacity. that is the power of what technology does for young people that want to become part of the tech industry. what we've been doing, it's very innovative. helping kids k-12, transitional age youth, families, parents, communities, understand and to be exposed to stem subjects. imagine if that mission one day can be in every affordable

housing community. the opportunities that we would create and that's what i'm trying to do with this

>> i am so happy. african-americans in the military from the revolutionary

war to the present, even though they have not had the basic civil rights in america. they don't know their history. in the military the most sacrifice as anyone in this country to be willing to lay down your blood and fight. i believe that all african-americans have served because they love this country and the hope that the citizens.

. >> chairman: this meeting will come to order. i'm joined by committee members supervisor safai and supervisor mar. i want to thank chris manners from sfgov tv for broadcasting this meeting. mr. clerk, do you have any announcements? >> clerk: yes, mr. chair, the minutes will reflect that committee members participated in this meeting through video conference. the board recognizes that public access to city services is essential and invite public participation in the following ways. public comment will be available on each item on the agenda. and sfgovtv.org.