Greg Cox, San Diego County Board of Supervisors - Establishment of Selection Process for Board of Supervisors Appointments

DATE: February 10, 2004
TO: Board of Supervisors
SUBJECT: Establishment of Selection Process for Board of Supervisors Appointments to the San Diego County Employees Retirement Association (SDCERA) Board of Retirement

SUMMARY:
The governance of a public retirement fund is critically important to the County’s taxpayers, employees, and retirees. The Board of the San Diego County Employees Retirement Association (SDCERA) exercises fiduciary responsibility over five billion dollars of retirement funds. It is absolutely essential that highly qualified persons competently, efficiently, and prudently govern this very important asset. The process by which our own Board of Supervisors makes appointments to the Retirement Board should reflect the formality and seriousness of duties associated with it. Our Board can set in County policy the selection process of the SDCERA Retirement Board appointments that are approved by the Board of Supervisors.

The State laws governing the San Diego County Employees Retirement Association (SDCERA) provide for a nine (9) member Board of Retirement, and further provide that the Board of Supervisors is authorized to appoint four (4) members to the Board of Retirement. As the two Supervisors who have served on the Board of Retirement, we understand firsthand the type of experience and skills that are necessary to competently discharge the fiduciary duties expected of a Retirement Board member. If approved, this proposed process will establish high standards, in terms of qualifications, experiences, and skills that each candidate must demonstrate in order to be considered for appointment to the Board of Retirement overseeing a $5.1 billion investment portfolio.

This proposal will improve the quality of the selection process and will ensure the appointment of qualified candidates to serve as members of the Retirement Board. In summary, the proposed process would do the following: (a) establish qualifications and preferred experience and skills for candidates, and (b) authorize the Chairperson and Vice-Chairperson of the Board of Supervisors to receive and screen applications, and to interview qualified candidates for purposes of recommending the most qualified candidate to the Board of Supervisors for appointment to the Retirement Board.

RECOMMENDATION:
Supervisors Cox and Roberts:
Approve the attached proposed Board of Supervisors Policy relating to the appointment of persons to vacancies on the Board of Retirement.

BACKGROUND:
Given the recent revelations about questionable practices surrounding the City of San Diego's pension system and issues regarding the state's pension plan, public scrutiny of government Retirement Board members and the decisions made by them has seldom been more intense. We are proud of the fact that the San Diego County Employees Association and the nine member Board of Retirement does not suffer those allegations of deficiencies. In spite of the severe downturns in the market in recent years, the County retirement system's portfolio is healthy. There was a time within the last decade however, that some Retirement Board members took advantage of their authority to have personal travel and entertainment expenses covered that were considered questionable when brought to the attention of the Board of Supervisors.

We consider the sober duty of the members of the San Diego County Retirement Board to be of the utmost importance and merit the highest possible scrutiny consistent with their role as fiduciaries over a $5.1 billion investment portfolio that guarantees retirees of the County the security in retirement years that they have earned. The process governing our own Board of Supervisors' appointments to the Retirement Board should reflect the formality and seriousness of the duties associated with it.

Up until now the appointment of Retirement Board members by the Board of Supervisors was not set in County policy. Applicants filled out an application and Supervisors gave serious consideration to candidate qualifications before nominations were made, but it was somewhat individual and informal given the high level of responsibility assumed by appointees. Adoption of these recommendations would establish a more formal and elevated selection process.

As the two Supervisors who have served on the Board of Retirement, we understand firsthand the type of experience and skills that are necessary to competently discharge the fiduciary duties expected of a Retirement Board member. If approved, this proposed process will establish high standards, in terms of qualifications, experiences, and skills and unquestionable ethical behavior that each candidate must demonstrate in order to be considered for appointment to the Board of Retirement.

This proposal will improve the quality of the selection process and will ensure the appointment of qualified candidates to serve as members of the Retirement Board. In summary, the proposed process will accomplish the following:

Establish qualifications and preferred experiences and skills for candidates to be considered for appointment to the Board of Retirement.
Establish the application process and duties of the Clerk of the Board of Supervisors.
Establish an ad hoc Board Committee, consisting of the Chairperson and Vice-Chairperson of the Board of Supervisors, to initiate the selection process each time a vacancy occurs on the Retirement Board that the Board of Supervisors is authorized to fill by appointment.
Authorize the Chairperson and Vice-Chairperson of the Board of Supervisors to do the following:
1. Receive and screen applications from candidates interested in serving on the Retirement Board.
2. Interview the qualified candidates from among the pool of applicants, who best demonstrate the ability to competently perform the duties of a Retirement Board member.
3. Recommend the most qualified candidate to the Board of Supervisors for appointment to the Retirement Board.

We urge your support.

Respectfully submitted,

GREG COX
Supervisor, First District

RON ROBERTS
Supervisor, Fourth District