Transcripts For SFGTV Retirement Board 12915 20151213

Afternoon, we will go aled and get started. Welcome you tathe regular scheduled meeting of inSan Francisco eployment retirement system. I [inaudible] cohen [inaudible] vice president. Are there any announcements . No. Could you call roll, please . Commissioner cohen, aye. Commissioner [inaudible] on the way. Commissioner makras, here. Commissioner meiberger [inaudible] all are present. Lets rise and say the pledge of allegiance. I pledge allegiance to the flag of the United States of america and to the republic, for which it stands, one nation, under god, indivisible, with liberty and justice for all. Thank you. Could you please call the next item . [inaudible] thank you very much. Ladies and gentlemen, well go into closed session at this time. We will resume with our agenda at 2 30. Thank you. Before we go into closed session, we will take Public Comment. Im so glad to be redirected. I and others have strongly objected to the board going into closed session to start your meetings forcing active City Employees to wait several hours in the lobby to reconvene in open session. Using benefited vocation time to be here. As far as i know no other board or commission starts their meetings by rudely going into closed session. This board appears to be the only commission doing so. Fortunately i officially retired from my city employment on halloween and have received and deposited my first retirement check, so i no longer have to take vacation or floating Holiday Hours to come remeend you to be more transparent with the 60 thousand active and retired members of our system. What you do with my money, our Retirement Fund is now much more personal. Please stop going into closed session at the start of your meetings and go back to doing it midmeeting. Thank you, any other members of the public that would like totake a moment and share their views . I would weremiss and also advocate you move closed sessions to your regular time. I am using vacation hours to be here. I they think it would be very poloit of you totake that into consideration. Any other for Public Comment . Public comment is closed at this time. I want to remind that in concession to what i heard, the desire to have Public Comment at the end of the agenda, the reason i asked we move for the beginning because we were in jeopardy of losing a quarm so what i asked to be respectful of members time is we have a time certain when people can come back and that time certain for this meeting is published and it is 2 30 today. I also want to announce item number 7, the discussion item which was going to be an informational presentation on the down Payment Loan Program is no longer on the calendar and at this time is not rescheduled or recalendared. I think we are ready to go into closed session now. Thank you. Sorry. [inaudible] you are out of order. We need to go into closed session. I made the announcement, everyone can come back at 2 30. Thank you. Thank you for joining us. We are going to take a vote not to disclose what was discussed in closed session. Actually mr. Clark clerk if you can announce that. Take a motion not to disclose what we discussed in closed session. Is there a second to the motion . Without objection the motion passes unanimously. Thank you. Also, want to just make another announcement that item number 8 is also pulled off the calendar and will notthere is no future date to when that item will be calendared again. I dont know. Mr. Clerk can you call the next item the next item is general Public Comment. Perfect, my favorite time of the day and hear from all my favorite people in the world. I do want to make a announcement, our microphone is not working, you have to go near the clerks desk to speak and if that is too far you can borrow the microphone on the staffs desk. One more thing, 2 minutes for Public Comment. I want to make sure everyone is heard today patrick [inaudible] and so please today here im now in your favorite persons category. The city controllers pay roll data base shows the june 30, 2015 [inaudible] highest paid City Employee at 388, 988 dollar including 82,000 in other pay that infact was , ret row active regular pay. Given the dismal investment returns and foot dragging on the hedge fund invesment the question is has mr. Cokeer earned his keep at this salary level . Please dont forget mike ceebal is a attorney writing poa union articles. [inaudible] present a cherry pick data comparing the [inaudible] returns between 2011 and 2015, but creatively neglected mentioning 2008 to 2009. Dont forget ers outperformed the yale [inaudible] yale hasnt sur passed the peak in assets 7 years later and geren dean [inaudible] reported in the New York Times on september 14 that yale lost 24. 6 percent while [inaudible] only lost 22 percent in 2009. Donot support hedge funds. Thank you. I have a list of cards i will call. I have first, [inaudible] fallowed by alex [inaudible] fallowed by ruddy soltis. Good afternoon. President cohen and commissioners. A little hard to speak this way. So, i have come to speak about the downpayment assistance loan program. I see it is pulled from the agenda, but most of us are here about that program so mine as well speak with you about that at this point. We are concerned sorryi just want to double check, if it isnt on the calendar do we take Public Comment . Fantastic. It is 3 minutes, right . No it is 2. So the issue is one, we believe our understanding is that the staff has not vetted this program and that is not from our understanding the general procedure, the process in which the retirement board takes investment items. It is our understanding that in general Investment Opportunities come up and the staff vet it or the contractors, the consultants vet it, the staff vet it and it comes to the board. This piece of invesment item has come around the general process and directly the Mayors Office after a press conference or press release. Thats disconcerning to a lot of us because we believe we trust the commission to exercise Due Diligence in your vetting of investment because you are the guardians of our pension fund and think you should continue to utilize the process you normally have and not invest in something unless it has gone through had regular vetting process rather than take a political move as suggested and encouraged by the city or Mayors Office. Thank you, next speaker. Good afternoon. My name is alex [inaudible] im the direct r of Field Services for ifpt. We represent 4500 city workers and a member of the Public Employee committee representing all the city unions. Local 21 and all unions do not support the use of Retirement Funds for any purpose other than supporting the retirement system. This means opportunities that maximize the growth of the fund with reducing the cities and our members contribution. Political and social endeavors have no place in the retirement system. The fiduciary duty bis towed on the commission and requirements under the california constitution require you to put the fund ahead of any outside force, political, person or otherwise. [inaudible] every issue we face. We demand this commission adhere to good guv rns principles and that means using all means to analyze and scrut synchronize environment opportunities. [inaudible] given the challenges of returning the fund to a fully fund level. Thank you for your time thank you very much for your comments. Roody you are up next. I will call a couple people, if we can queue up that will be helpful to move this quickly. Elmer car. Robert [inaudible] now its on. [inaudible] vice chair of united educators of San Francisco retired division. Im a retired teacher and member of the retirement system. As i retired in 2010, not effected by the Court Decision which will reduce the pensions of teachers and professional who retired before 1996, november 1996. As you are probably aware, all the teachers and professionals that worked in the San Francisco, San Francisco Unified School District were members the city retirement system until the 70s. Early 70s teachers were forced to make a choice between the state and sate retirement system. At that time most moved into the state retirement system. The teachers that remained were people that had a lot of longevity in the system. Now those are elderly and retired before 1996. Those like me are few and far between at this point. The other thing around this, professionals removaled from the system by a vote of the city folks also in the 70s. They had no other option so they remained part of Social Security [inaudible] these people are the most velinable and have difficulty keeping windup the cost of libing and are the folks that have educated children in the city for a lot of years. It is very important we do not throw them off. They need that 1 and a half percent, more than most of us. It is morally wrong and a violation of the city charter and urge you strongly to support them and keep this [inaudible] going for them as well as the rest of us. It is your duty [inaudible] thank you. Homer car. Good afternoon. My name is [inaudible] retired employee for 32 years and a member of the pob, protect our benefits board. You received a lot of information from people, joe asaro giving a chronological explanation. I just want to highlight a couple things, there is no preexistingfully funded in any of those propositions. [inaudible] going out and past pacts is to pay and that is always that way and now we yank those away from the people that need it the most. Im post 96 and here for them because they are too old and vulnerable to get down here and plead not to dothis. Legally we fought a long battle and the advusary is the City Attorneys office. They will gichb you advice. That might be a conflict of interest. We strongly recommend you get outside council. See what the charter says and see what [inaudible] it went to appeal and we law. Con contractual law was violated. We want to get over this and dont want anyone to be treat [inaudible] we want you to continue what you have been doing paying the people on the edges of Society Ready to drown. [inaudible] follow your Mission Statement. If you read the Mission Statement that is what you are supposed to do and hope you take that path. Thank you very much. Thank you, next speaker. Robert. Robert cuton. Retired San Francisco Fire Department for 30 years service. Im here speaking on behalf of several people retired. I have a brother retired prior to the cut off date. Im also speaking for a couple world war ii vets. One is my brother in law. He is 90 years old and worked with city and county of San Francisco and he construction and department of public works with regards to concrete and brick work. He is in a rest home and also another gentlemen who retired at world war ii vet and retired from the [inaudible] department. Department of public works and his wife is a widow in a rest home kwr they depend on the [inaudible] that helped them out the last part of their years. These are people that work hard for the city and county of San Francisco thick and in the and did what they had to do without complaints and exspect to have the continueiation of the contract they signed. I am only giving a few examples, there is a lot more out there barely getting by and it is extremely important we do not cut out the people before. The city and county of San Francisco cannot work without the police and fire and department of public works and everything else. It is extremely important and something i hope this will be remembered throughout the years to come. Thank you for letting me speak. Thank you. Next speaker is [inaudible] and herbt wineer. [inaudible] thank you, next speaker. There is a microphone over there you can use, marti. Good afternoon. My name is [inaudible] president of San Francisco Police Officers association. Im here to exspess our opinion in regards to the [inaudible] program. I know it is removed from the ajnda. Primarily this will set a dangerous precedent for the retirement board. Pursuant to 16, section 17 och the california constitution. [inaudible] obligations to plan participants thmpt assets of public pension or retirement system are trust funds and held for exclusive purposes of providing benefits to participants. The retirement boards duty shall take precedent over any other duties. Based on these obligations it appears using Retirement Fund for external purpose for low Income Housing violates the state constitution subjecting the retirement board and city to court. According to the courts the purpose of 16, section 17, is insulate the admin stateive retirement system from oversight and controlled by legislative and executive authorities. Using plan funds for the purpose set forth by the executive authority such as the mayor with regard such utilization will benefit participants will violate the letter and spirit the constitution provisions. Again, isthe sets up a potential civil liability for the courts. The poa objects to the use of the funds for the retirement system for the dol program. Thank you. Thank you. Jeff [inaudible] followed by herbert wineer. Good afternoon, jeff [inaudible] with union of America Physicians and dentists. Represents the doctors and management and supervisery positions. Im here to oppose the board investing Retirement Funds in the dol program. The dol program is of great solsh value, never the less, people who spoke before mentioned the fiduciary obligations of this board and the expectation of our members is the board exercise fiduciary responsibilities in the most rigorous manner possible as prescribed under the law. We as a union, are joining with the other constituent members the Public Employees committee and unanimously opposing not only the invesment of retirement board funds into doll but also the process by which this seems to be happening where the normal procedures are being circumvented in order to have a item directly presented to the board without the appropriate vetting and analysis. Thank you. Thank you. Mr. Wineer. Herbert wineer. I feel protected by the police and physicians and basically i really oppose the idea of raising our Retirement Fund for projects for the mayor. I think this is sending a very dangerous precedent. If they do it once, they will do it again. We talk about the precariousness the Retirement Fund. We talk about all sorts of proposals for protecting it and yet we allow it to be invaded. This is a version of Home Invasion as far as im concerned. So, very glad the police are protecting us on this and i want to way in support of that. Also, i really think that the pre1996 retireee need to get their just increase. They sacrificed a lot for the city and preceded me in employment, they were my supervisors and coworkers and we owe it to them. It is a tremendous amount of disrecept not to do this. More and more i think about i think the people who were next to me in employment and who retired before 1996. By all means give them their just due. Thank you. Thank you. Next speaker is dean coat from local 21. He is no longer here . Okay. Is there anyone else that would like to speak . Please, come on up. Good afternoon commissioners. Sharon johnson from pob. I have written letters and i know you have a very astute excellent letter written to wow by mr. Joe asaro who is here but because he was going be in court he asked me to give testimony to his letter. I dont know if you dont have copies of the letter i have extra ones here and happy to see they are distributed. Joe pointed out and gave the best outline about the history, the charter and history of fairness given to all retireees at any given time and there are many points mentioned in joes letter in the history of it, but it in the conclusion which is on page 4 if you have that letter, it is very clear the city in the attempt to direct the retirement board to allow the fully funded requirement to be apply today the pre1996 retireees are overstepping their boundaries by [inaudible] retirement board in order to satisfy private interest of the city. Not only are they in violation of the charter, but the california state constitution as well, article 16, section 17 of the california state constitution states the retirement board and not the city has the sole and exclusive fiduciary responsibility. [inaudible] with the care, skill prudence and diligence cunsitutionally required of the [inaudible] and i just want you toremind and pob back in 2011 met with every board of the supervieer squz met with the mayor 3 times and try today meet with unions to express concerns about the right of our sep lltal colea. It fell on deaf airs and sued and the court agreed we are entitled to it. You use the word may [inaudible] all our retireies. Thank you. [inaudible] from local 21, representative organizer. It appears the commissioners are using the alternative Asset Allocation as leverage to achieve approval of [inaudible] that is a direct threat to the functionality of the commission and invites infection the commission without outside political influence. [inaudible] less than a year ago. The staff are moving forward and hiring a newmanjure for this program. Without the hedge Fund Allocation the board will have done nothing to protect the fund from a down turn and abandoned the advise of the cio and others is a violation of your duty. [inaudible] demand this commission do something to protect our members Retirement Funds. Thank you. Did i understand you say the hedge fund item is not on the ajnda . That is correct. I had a nice 6 minute speech and now i have to boil it down. [inaudible] if it isnt on this agenda i hope it isnt on the agenda in the future because that will create uncertainty that will slow down the hiring the key asset manager that is necessary to make this go forward. I suggest that this thing be permanently removed. The 6 members who voted for the hedge Fund Allocation you can only change your vote against that now. You lost all confidence in the staff to find hedge fund members or came windup a better plan. I have seen evidence that either of those 2 things have taken place. I propose a compromise, herb, i love you and and[inaudible] i love you both. If your concern is [inaudible] slowness of the hedge fund, work with the staff. This board can dothis board and staff can do great things if they Work Together. That is shown in the private equity field and it be done in the hedge fund field. Herb, i love you. If you are concerned call me. My compromise is staff expedite this [inaudible] and look into quick spreads and the type of things [inaudible] in their attachment as other ways of hedging the fund. Am i out of time already . [inaudible] okay, folks. There are no other members that would like to speaksorry, i didnt see you jack [inaudible] with [inaudible] know there is item number 10. I want to make a broader point about [inaudible] fossil fuels. I want to thank the people who reminded us of your fiduciary duty is consider the benefits of [inaudible] the question i have for you is to really seriously consider what benefit is it to us as retireees if our investments are actively part of what is destroying the climate . The science is clear. A life long member of [inaudible] we are engineer and apply science and the science is clear. The unit nationerize trying to figure how to leave 80 percent of the fossil fuels in the ground. Not only is it the right thing to do, it is a bad investment to invest in fossil fuels so for all those reason weez urge you to [inaudible] fossil fuels. Okay. Thank you. Anyone else like to speak in general Public Comment . Public comment is closed. Can you call the next item . Approval of minutes of november 18, 2015 minutes. We need to take Public Comment on this item as well . Thank you. Lets take Public Comment before we [inaudible] thank you president cohen. The november 18 is very worry some. Most notablebly the minutes on page 15. Report commissioner makras requested the dullp investment is calendared for action at today ed meeting but turned into a discussion only ajnda item in a brazenly political move. You have been analyzing the dullp loan proposal for well over a year and the Background Materials today do not provide a new Due Diligence report by bob shah analyzing any of the 3 options, moa, ced is now advancing. You shouldnt take action on this until and unless mr. Shah presents you with a new dull diligence analysis. Commissioner makras also requested on november 18, a report of Northern Trusts to this full board and the report on vacant staff positions. Is director huish stalling on providing a vacant staff report . Where is the report about the 15 questions involving Northern Trust of which mr. Huish answered, only one. Commissioner makras is [inaudible] all 14 questions before you decide whether to reissue this rfp. Without it you will not perform your Due Diligence. Anyone else like to speak on item 5 . Public comment is closed. Motion is made and seconded already. Without objection accept the minutes . Alright. So moved. Item 6, consent calendar action item. Move adoption. Move adoption. Is there is a second . Second. Thank you. Adoption made by meiberger and second by paskin jordan. Without objection this motion passes unanimously. Item 7 is continue to call the chair. Item 8 no. Item 7 is removed from the agenda. Item 8. Not rescheduled. 8 is removaled as well. Item 9. Action item approval commit 40 Million Pounds to [inaudible] thank norm. Uk real estate and art and craig are on their way. Thank you bill and good afternoon commissions and members of thepublic. We are here to make a commitment to barackton capital. They are active in london and the uk. London is considered a world class city in the same class as newuric, toqueia and hong kong and a popular city to make investments. It seems the entire world is trying to [inaudible] that isnt a strategy we recommend. They are paying very high [inaudible] at very low cap rates and we do not want to participate in that game. We wish we had some assets to sell today but our core assets are not quite of that quality. On the other hand is a [inaudible] real estate manager. They buy understabilized assets in these markets and build and reposition and improve these assets to core. We do like and one they do very well. As i mentioned brockten capital [inaudible] across residential, office, industrial and Retail Properties in london and other major uk city. Drive net Income Growth by focus on active management [inaudible] they have construction in Assets Management inhouse and use this to take a hands on approach to [inaudible] putting in a couple expenditures and [inaudible] sell toog the large number of core buyers that have come to the london area. [inaudible] across ininvestment cycle. [inaudible] very difficult 2006 returned a 9. 3 rr in pounds and fund 2 returned a 16. 6 pound. Both these returns are top quartile. In u. S. Dollars is 6. 9 rr and fund 2, 15. 5 rr. Still strong but [inaudible] what is considered a strenthen dollar environment. Bock on has a team of Real Estate Professionals that represent 25 experience in the industry. There are deep connections [inaudible] off market that gives them a strong competitive advantage compared to their competitors. The uk [inaudible] hands on invesment strategy, inhouse execution and successful track record give [inaudible] tend to be a little smaller. They will not be in core london. [inaudible] unique compared to the assets we are currently pursuing there. [inaudible] i agree with everything art and edsaid. They are a experience Resource Team and they are reinvesting profits into the plat form. They do operate in the greaterlenden area so think of putting a pin in the west end and drawing a 40 mile circle around london, that is their main opportunity set. They do smaller assets outside of the west end and london so they operate in micro markets that are different. As such they can buy those assets at generally cheaper [inaudible] and a lot assets need a lot more hand holding, repositioning and rehabilitation so they can really do drive rents through that value at hand on management with their plat form lets start and decide ifyes, captain driscoll this group play be very strong about finding the right price and refurbishing and back on the market but there question is the london market. What is our expectation for how much london will grow that drives the demand for real estate . We feel good. We think there will be [inaudible] the Economic Activity is a strong and Economic Growth we think will exceed the u. S. In terms of gdp growth. The uk is a large economy, ranking 10 in the world and london is the world class city so by real estate rankings i say in the top 5. Large market, one that is growing and benefit from the recovery in europe and [inaudible] and so we see london as similar to what we see in new york. Everyone thinks so and so these assets are in high demand and quite expensive so this is why we like brock ton who can go in and reposition and refurbing them and sell to the core demand. That is extremely strong today. Just want to know you have a economic forcast over the next 10 year. Next 3 to 5 years. Buying in the next 3 to 5 years and selling we feel good about our Downside Protection in the market such as london. Thank you supervisor cohen. Just a couple questions on the property types. Can you tell residential, office, those type of things . [inaudible] 4 main types will go outside of that and do hotel type deals, they have done pubs in the past. We expect the vast majority to focus around office and residential. However we expect [inaudible] form the core [inaudible] everything but mostly office and residential. How many pounds to the dollar . One and a half roughly. This investment is roughly 60 million u. S. Thats it. Thank you. Anyone elsecommissioner bridges. I move the item. For all the reasons that were shared. London with a 40 mile radius, london is similar to new york. I believe that San Francisco in our region has identical qualities to this calendar item and everything supporting it, so i would hope that the commitment to london could be equally viewed to hear if we can see a calendar item with the best real estate people looking for the best bargains and best 40 mile radius and benefiting. If it is not there, maybe staff could send a memo saying why they dont think this region pins up to this calendar item and this 60 Million Dollars we are putting forward. Okay. Motion is made and seconded. We need to take Public Comment on this item. Public comment anyone . No . Okay. Public comment is closed. Motion is made and seconded. Without objection this motion passes unanimously. Thank you. Next. Item 10 action item update relate today sb 185 thermal Coal Companies. Alright. Here we go. Afterbobs presentation in appendix b i have [inaudible] if the board would like that information. Thank you mr. Shah at the boards request and given the recent passage of the california state law sb 185 we have done a prelim nar analysis of our thermal Coal Holdings and want to emphasis the preliminary based on a list [inaudible] you see the level of investments from public equitys and [inaudible] with that background we are here to address any questions you may have. Alright. Does anyone have questions . Like to point out at [inaudible] there is proposed resolution and we provided the information provided in that motion. Thank you. Commissioner meiberger. Thank you very much. I have drafted a resolution to [inaudible] thermal coal stocks in favor of renewable. There is roughly 18. 9 Million Dollars in equities in the Coal Companies included[inaudible] total market value as of [inaudible] fixed income securities. Sun cook energy partners. Market value of 2. 1 million u. S. Dollars. Round numbers, about 21 Million Dollars. The sb 185 man dates public funds invested in coal stocks. I heard testimony from members of 450. Org and specifically 450350. Org. Sorry. Inflation. I am mindful and respectful of that, but up to this point, the members of 350. Org have not stated where to put the proceeds. Also, Something Else is iin terms of lowering the rirfck i dont buy. [inaudible] maybe 10 percent the oil stocks or 10 percent the market value equities. If we sell the oil stocks [inaudible] unbalanced in the portfolio. What concerned me the most is inflation protection. We heard testimony from many retire ease and have a cost of livering adjustment indexed to inflation. Oil stocks are the biggest inflation protection followed by natural minerals, so if we sell up socstocks we give up inflation protection. [inaudible] where do we put the proceeds which is troubling to me. So, that is a issue. So, what i think makes a lot of sense is to find out where should we put the proceeds. Also if we sell the oil stocks, tell me how that will impact on Global Warming . If we sell the oil stocks others will buy our oil stocks and be in less favorable hands, so i see no effect on the Global Warming impact by selling the oil stocks. What i learned over the years being a mb of this board is what will it take for me to get an affirmative vote . At first when i came on i was always right and didnt have to consider that but as i get older i figure what will it take to get my vote and thever is renewable. That is the future. For those of 350. Org that talked about the stranded assets for the coal company squz why you dont they think are good investments, tell me what is a good investment and how do we get to the inflation protection and account for that and think that is with renewable. Renewables are renewable is a energy derivered from natural processes such as sunlight and wind that replenished to a higher rate than they are consumed. Renewables include but not limited to, solar, wind, geo thermal, hide ropower, bioenergy, fusion and ocean power. That is what we should consider to invest in those kind of investments. What i suggest with my colleagues is consider investing in those type of investments. How do we do that . Maybe that is the challenge because they are not economically feasible. We see china invested [inaudible] china actually had a red day where they are actually lessening because of the pollution where they limit the amount of buses, [inaudible] those kind of things. If you have seen a picture of what is going on in beijing, it is sad. The answer is invest in renewables, so how do we do it . Ill tell you how. I move [inaudible] permanently and that we invest the money in renewables. Ill put that in a form of a motion. Second that motion we do something similar, we have a clean air day. Clean air day. San francisco does for our way of dealing with if i address implementation, it isnt as easy as it seems. I leave the implementation up to staff. Look at the private equity portfolio. We have a relationship through arts diligent efforts and [inaudible] the boards investing in limited part numberships, we have partners that invest in these investments, so what i suggest to staff is to come up with some of the invesments that are inmanaged by our general partners in our existing portfolio because we have to address the risk. We had long term [inaudible] with many general partners up to 30 years so these are known entities where we can invest and direct investments in the renewable arena. I ink that is the best place to lower risk. You wont see these in public securities market. That is the challenge of this kind of investment, you dont see renewables listed on the stock exchange. Particularly the kinds we should invest in. The private equity portfolio has done well. Let me think the executive director of supplying the list of the renewables and many gps have invested renewables so that is what i suggest and recommend to staff to bring to us various investments of renewable. I would like to brink that to the forfront where we can listen to these investments because it is new uncharted tear tow. I think we do have to think outside the box. If we do nuckting i think the Global Warming will get worse. Commissioners could i address the motion quickly . Sb 185, in that bill the legislature did direct cal pers and calsters to devest from thermal Coal Companies from public traded companies. [inaudible] until 2017 to implement. It also allows those boards to look individually at each thermal coal Company Investment and decide whether it is prudent or not to make that investment and if the boards decide in a particular thermal coal company it isnt prudent to invest they dont have to invest. They decide whether to deivist from a particular coal investment. I want the board to just consider the process you are going through here in making a blanket deivistment rather than considering the coal investment the system has on a case by case basis and deciding if it is prudent to devest. That has given something to talk about. Do invest in renewables is a wise thing to do for environmental reasons as well if it can be done successfully meaning make aggood rate of return for the money, we should do it. To follow a shall sell on the Public Market and shall invest in the private market isnt how it is crossing allocation mixes because it does say putting general partners. I think that is a step that is more difficult to execute than necessary. We can ask the private equity team to focus on trying to findi think they are doing it already. It has to be here. It will cause confusion to measure how the public portfolio is doing. [inaudible] did you amend it or make the motion . I think commissioner makras fell one [inaudible] i understood commissioner meiberger to be a strong suggestion and not a motion. We will have commissioner makras clarify. My motion had to work prudently to allow staff and my mugz clearly said they would bring back to renewables so want to empower them on the program to it. I specifically did not mention the state because i dont like their definition and our holdings are roughly 21 Million Dollars so we are making a 21 Million Dollar judgment call and statement to pull out and i think it is wiser for us to put our attention into the renewable area then fight over which of these thermal Coal Companies is the bigger polluter or smaller polluter. As far as im concerned, dumping them all is the right thing to do. Commissioner stansbury. [inaudible] committee had a session on thermal coal or coal in general or the Clean Air Act or the largest polluters . No. Why did we form the [inaudible] committee . Maybe someone can speak to this. [inaudible] last recommendation was nob nub be to implement design and implement a strategic esg policy that will not focus on bad behavior of people we already invested in but is from the start of a consideration of a investment, so we wanted it to be a more comprehensive. We had one meeting of the esg committee and anticipate another meeting in the next month or so. Is very difficult to get people in december and actually in january to get there is 4 members of the committee and requires 3 people to be in attend toons have a quarm and have been unable to get the committee to commit to a date where we have a quarm i know there are scheduling conflnts with the esg committee. I think it is important that we convene on a more regular basis. It is important the esg committee have a strategy. At this time we have no strategy, none. We are shooting from the hip. I think that the proper place for this is in the esg committee to evaluate what are considered maybe some of the dpraitest polluters. How do we go after it . As a board we said we are going engage in level 2 which is actively lobby companies and take a role in other bodies dephrineed to lobby companies and practices. To date we havent done any of that. We havent done anything. We do a great job talking about these things but when it comes to execution we dont do. Taking general questions, i dont expect anybody to have the answer. What is the outlook for coal . Can anyone tell what Energy Percentage is coal . When do they exspect coal to be replaced . [inaudible] what is contribution of coal to co 2 versus other forms of energy. I dont think we have those answers because we havent looked at it comp hence ivly and dont have a strategy. Can anybody on the board tell me how far any of these stocks have plummeted since october 8 . The public equities. Since oct8 these Coal Companies the stock prices have gone down, some as much as 40 percent so why would we want to sell now . If we want today do something it should have been before this was enacted. If you go to the stocks for these companies, the innuckz point is the day this law was passed, october 8 so while are we looking into this 2 months later . It is reactionary and dont have a strategy. I agree we need to do something and look at alternatives but we dont have a strategy. I think we need to work on developing the strategy and look sfr alternative squz maybe we can talk about replacing some of these companies with others and maybe in some instances we can do advocacy and actually make a difference but selling does nothing, it doesnt change anything. Today i wouldnt be able to support any motion to devest anything. I think it is a little too soon. I think it may be the right motion but think we have leg work to do. I know from time to time we ask for more time to evaluate something. I think the esg committee can take up coal at the next meeting i think we should come back to full board with more information and make a strategy. Let me ask director huish, which is the next esg Committee Meeting scheduled . We attempted to schedule it for december and also for weeks in january and have not been able to come to 3 of the members being available any of the first 3 weeks in january. So, it looks like the realty is it is scheduled sometime in february. [inaudible] picking a date sooner than later. It is easier to iron out now than through a third party like the commission secretary. Im committed get toog a esg committee sooner than later. I agrew. That was a interesting article in the wall street journal today or yesterday that said the most effective way to work on the issue isnt by taking out the vendors in mass but to go after the banks who lend to them. That is the most effective way because the banks because all these companies have needed money. They are big users of loans so by lobbying the banks they cut off the spigot and it is the most effective way to freeze up these companiesism. I think we can think of other ways to do this and that is level 2 of advocacy. Im not opposed to taking the most agregious offenders if through the committee it identify those. Staff meeting and recommendation on who the offenders are. [inaudible] identifying largest holders of in the ground assets that [inaudible] with the different approaches are there one or two or 3 companies that still go to the top . They dont all make the same list. We had a report present today the full board that indicated we know who the most resistants energy or fossil fuel companies are in changes through resolutions urging more transparency and actually including the possibility of assets. We know who those are, they are very large firms that could be considered one criteria. Ia gree the esg committee has to decide what criteria they choose to use. This was the definition in the state law most of the companies position themselves not to meet that criteria of getting 50 percent of assets. They all know this was coming and positioned themselves. This will be level 3, restriction and again, staff would be more than happy if that is the boards decision to bring back a plan and a timeline how to do it. Thank you. To add on to that, one component would be agregious afundered, a second is long term, that stock isnt a good stock anyway. We wouldnt want it in our portfolio in any event. We can have different criteria, whatever negative impact they are carrying for performance standpoints. [inaudible] a lot of people agree [inaudible] especially see it in china and think we should try it get that on the next esg committee, talk about coal. Have a education session and talk about actions people have taken and actually tackle this. The third could be renewable. Absolutely. I have been trying to convene a committee and some dates were not available to you, so if you can put this as a priority to attend the committee i think it is helpful to move forward because we do need at least 3 members to do so i the dates i provided didnt work out. If i can ask that you prioritize that i thipg it is helpful Going Forward. [inaudible] we all have scheduling conflicts and we provide a range of dates and you choose not to do something during the range of dates, there isnt a lot we can do but maybe professionly we can discuss this offline after the meeting and agree on a date we can come up as a group. That would be nice. The other issue is the october 8 date [inaudible] it isnt just because this is on the agenda for divestment, oil and coal is weak so is a it is a general decline october 8 is the Inflection Point for all these stocks. You are welcome to see my phone t is very clear. If can finish that since the chairman gave me the floor. The oil is very weak which is while the oil stocks have been declining. So there are many factor squz there is a pension fund, we have a long horizon, it is over quite a long period of time which is a reason i think renewables is a way to look at because that is a long period of time and the answer to the Global Warming. If we can Work Together to come up with a time we can get together and convene the esg committee that is very constructive Going Forward. Thank you for your cooperation is anyone down here have anything to share . Okay. So, there was a motion that was made and there was a second for this motion. Would you mind restating the motion . My motion is to devest our holdings in thermal Coal Companies [inaudible] and reinvest in like amount of money in renewables. Is there a way that you could amend your motion to incorporate some of the things commissioner stansbury raised in terms of Due Diligence . I would probably say yes and probably turn to the executive director and say, [inaudible] maybe they come back with a sense of what investments we would have and how long it may take, then we would be able to answer the question of prudently moving it. Okay, commissioner stansbury. That is a great compromise. We need to bring this back to the board. We have a aminded motion. Do we need to take a second or is that Still Standing . Ill second again as well. Of course, Public Comment. The City Attorney brought up the legislation, should this board go to the board of supervisors with similar language would that be appropriate . The board of supervisors doesnt have authority over the investment of the retirement system. [inaudible] it is supporting affirming or de9ing what you are saying. It is a opinion. Also as part the staff report we would like to bring back a briefing by the City Attorneys office on the new department of labor standard, fiduciary standard and their statement how a board like this can make these type of decisions. It is roughly 4 or 5 weeks since it was issued so want to make sure it provides a guide toonts the board like this on how to make these decisions, so we would like a briefing on that also. Ill include that in the motion that is part lets go to Public Comment and hear what the public has to say. I dont have speaker cardsi do. Bret fliseman, jack fleck and jed [inaudible] and anybody else that would like to speak, come on up after these 3 gentlemen have spoken. [inaudible] turn your mic on. Hello, [inaudible] i just wanted to expand on a discrepancy between sb 185 the state legislation and how it defines coal and what we are looking at in the third portfolio. The legislation defines coal companywise a 50 pert thresh hold for revenue of cole mining. Under your saerfb or 8 companies that would allow one company to be devested. We shouldi think the motion doesnt include that definition but want to be clire you are holdingit is in your top 3 largest holdings, Coal Companies with the largest reserves land within the 25 largest reserve holders in the world in the Public Market. That is significant amount of asset value and possible destruction to the planet. The other thing i want to mention was, that for the last 5 years the Coal Companies on your portfolio have wildly under performed [inaudible] lost 61 percent of value in the last 5 years. [inaudible] 55 percent. Vali 91 percent. Black hill, 21 in the last year. [inaudible] in august. This is a industry in decline and these holders are a drag on the portfolio and you have all the fiduciary [inaudible] you need including the new dol announcement to make this divestment of a tiny portion of your portfolio. Then i would like to quickly prespond to commissioner meibergers request for response to inflation protection issue. We helped you all hold a information session where we brought the number 1 statusstition from uc berkeley to talk about inflation and there was a slide dedicated to that issue and the answer is the type of inflation, what is causing the inflation. It isnt a easy answer when you get into the weeds. You exceeded your 2 minutes [inaudible] there is no [inaudible] of time. I just want to understand the amendment. It sounds like your proposal is to devest and ask staff to help explain how long it will take in a few details. I would support the proposal. If the proposal is to not devest and wait for some other staff report then i oppose the proposal, so think you need it make sure you areknow whout you are voting on. I hear from this board quite often is the phrase, worst of the worst and coal is the worst of the worst. The other thing how you measure that, fortunately the epa in paris now has a plan to specifically limit coal fired powerplants to limit all electrical power plants to less than 1 thousand grams of co 2 per kilo watt hour and coal cant meet that and that is why the u. S. Epa has a policy that excludes all future coal power plants and shut down of existing plants. I think the policy is very clear from the United States in paris right now and we are asking there board to implement something that is very consistants with your worst of the worst line of thinking. Again, i support devesting from coal, support staff explaining how todo that, but not to delay. Thank you. Jed holtman. Hello president cohen and commissioners. I feel i should try to sell you something. We support moving forward on divestment today and bringing anothermaking another procedural so we have 4 more months to get a staff report on to take another vote is completely unnecessary. The definition of coal is key. 50 percent revenue thresh hold [inaudible] that is less than 300 thousand dollars. A 10 percent revenue thresh hold will add 2 more companies and takes it to under 6 million of the 20 billion we are talking about. If one of these companies owns tons of coal and slaughter housing or tons of cars or tons of baby seal clubic factories, is that any less coal . No it is the same amount of coal, it is just less revenue. What we are talking about with the scientific and financial aspects why we ask you to devest from coal or prudent to devest from coal and why hundreds of institutions around the world have already taken the step is the amount of coal in the ground, not the money they are making from coal any time you look at their record. Basically the problem is the amount of coal the Companies Hold. What we ask you to do and it is very unclear from the motion, we ask the amount of coal reserves the Companies Hold be use today define as Coal Companies not how much money they are making at the time. The carbon [inaudible] for level one and 2, 100 of that 200 is the top Coal Companies in the world which is 98 percent of coal reserves. What we ask is use that as the definition to devest from the top 100 Coal Companies. We are talking. 1 percent of your portfolio. You moved more than that in the last item. 433 institutions have already taken this exact approach just under a quarter of those are pension funds, they are not all endowments. Again, it is folly when these Companies Lose 50 to 90 percent of value over 5 years for us to argue about this. The companies are taking on their own and your managers should have devested already but ask you to take this step today. Thank you thank you. Turn your mic on because i cant hear you. I support commissioner macros motion. I love them both. I support this motion as introduced to devest from the thermal Coal Companies and invest in renewables but dont this goes far enough. As oil and gas continue the tumble, the retirement board should devest from all fossil fuels, not just to stop Global Warming which concerns me but to avoid further loss to investments during inevable fossil fuel down markets, particularly now that im retired and this is all about me, i mean mine money. Pleased to see robin [inaudible] article, pension fund invest in dirty fossil fuels in the San Francisco examiner, in which she clearly argued that this board should remove j huish as executive director. He doesnt do his job. That is a mouth full that many have been saying for quite some time. As [inaudible] wrote, huish fails to respond to board member information requests, it is way past time for your Personnel Committee to terminate mr. Huish as a embarrassment to this pension fund. I support the blanket [inaudible] and agree with 350. Org position that you should do it today. If you need the staff to come back with step by step guidance, so be it but pass this motion today and begin this long overdue divestment. I dont have children, but i dont want to leave this planet with dirty coal or dirty fossil fuels. Thank you. Mr. [inaudible] i hardly speak on social issues, social investment issues and dont have the expertise that a few of the previous speakers set, but i thought i heard when herb read his list of renewables i think said fusion in the list. The only reason i want to say, i think the esg does do the studying of this issue that i hope it would look into the issues of next generation fission and fusion. I know those are not politically corrects compared to solar and wind but hope they will be looked at. Bill gates is heavily investing in that area private equity and fission and so is sam [inaudible] probably the leading angle investing fund in San Francisco. Thank you. Anyone else that would like to speak . Okay. You can line up or use that microphone over there. Well call on you next. Sliding chairs. [inaudible] who is the chair of our Climate Change fossil fuel Divestment Committee [inaudible] our union has taken policy through the board that woe would like all our retirement boards to devest in fossil fuels. I would like to think this motion is consistent with that. She is actually currently in paris and has been monitoring and active in attending all the climate talks and getting a daily blog from her. I agree with the speaker who questioned what the motion is because the initial [inaudible] in terms of thethis action is accurate but when you start to water it down and say put it back in committee and continue to look at it, my concern is if not now, when . [inaudible] put down the road which doesnt alter anything in terms of the immediateancy of Climate Change. The temperature is rising, 2 degrees isnt that far off. Likewise, in terms of well, if we devest and take the money out, we wont have a impact because someone else will invest it in instead of us. I think you can be a leader and model and think someone else investing doesnt make them the good guys. [inaudible] the more people devest and get out, the fewer people want to go in. That is how this works. [inaudible] how it worked in sedan and south africa. We finallyif the stacks stocks are going down to 40 percent and beyond, isnt it time to maybe cut our losses . Thank you. Next speaker. [inaudible] director of investment with series [inaudible] i want to applaud your efforts to reduce the carbon holdings, change the carbon profile, the carbon ringe of your port foal ye. I think moves in that direction are critical. The new dol guidance puts that within the realm of your fiduciary duty and how you do it. There are many options see we stand to support. The move towards renewables will reduce the carbon footprints of your portfolio, but encourage a range of options which include engaging with all the [inaudible] tolic at their Capital Expenditures are going and put money into new alternative forms of energy and moving money away from fracing kwr the dangerous ways of exploiting our current resources. You also have opportunities to look at green bonds and new Infrastructure Investments that will hedge inflationary risk and begin to move toward a lower carbon future. If we can be of assistance we are happy to do that. You are part of a net recollect with of many investors wrestaling with these questions how to [inaudible] throughout the portfolio and applaud your effort today. Thank you. Good afternoon commissioners, president cohen. Germy [inaudible] legislative aid to john avalos. I will reiterate the comments that requested to clarify the motion and to be strictly devest from the Coal Holdings. Supervisor avalos agrees face thg divestment on the size of reserves makes more sense on the e revenue thresh hold. You cant overstate how [inaudible] companies lost 50, 60, 90 percent it seems it is the right move and morally correct decision to make. Urge you to do that as quickly as possible and make that divestment final today and then look forward to work at the e sg committee or full board as soon as it is moved on the [inaudible] a lot of institutions devested from coal and [inaudible] it would be to take a look at your tar san holdings as well. Thank you for your time. Next speaker. Cathy season. I want to reiterate, i think it is good if the makers the motion would clarify that what you are talking about using is the Carbon Underground list, the top 100 Coal Companies for the reasons state, which is the only meaningful way of gelting at the coal company holdings. You heard the statistic but think it should be clarified in the motion. You are use thg list for level one and 2 engagement so those are the stocks tanking now and think we can do a smarter job devesting from those Coal Companies than what is in the state sponsored bill any other members [inaudible] for the purpose of this item i speak the San Francisco police association. [inaudible] asking not to devest fossil fuel and i want to say now that for the purposes at this point we are changing our mind. We agree that these should go because everything i heard and said today we agree with. However, i want to agree with what commissioner stansbury says, be careful, this is our retirement money. Whatever you do make sure you make the greatest amount of money you can for us, that is your job. Social things are fine and dont disgree with this want i want to breathe clean air but want to be able to pay my rent while i breathe the clean air. Thank you. Any other members that would like to speak on this item . Seeing none Public Comment is closed at this time. Director huish. Request an amendment to your motion so we can clarify that the decision is to devest of our thermal Coal Holdings. I ask that you say consistent with the boards social investment policy which allows when staff brings back our Implementation Plan the ability to basically dublt the rational for the decision to devest. And to bring back a plan to prudently reinvest those resources to include renewable energy. I want tothe motion is to devest, but we have todevelop a policy for staff soia can decide what can devested . Within our existing policy that will provide staff will bring back the rational. This doesnt have all the information, this says the holdings we have. It was tied to the definition of senate bill 185 rsh but that is not the nature of this motion, this motion is not to say, any companies are the one or two companies that meet the definition under state law, this is to prudently devest from these hold squgz reinvest and have staff bring back a reinvestment plan and want to make sure it is within and consistent with the board essential investment policy because this really is level 3. This is the step into level 3, it is restriction on our hold ings and it is something we will plan to devest we restrict managers from investing Going Forward in these companies or any thermal Coal Companies, so i want to make sure we have a full briefing on what level 3 means so when we bring the plan back and the board accepts it is consistent with board policies it was the companies i specifically mentioned not the 100. It is the spinge companies, and what is the board policy . We move from level 2 to3 and bring back the impact of level 3. Some may bein indexes so we need special indexes of these companies. These will entail fees to do custom indexes. I think we are very close to investing 100 million in fossil fuel which is the carbon 200 index, 100 million in that, i believe we finalized or close to finalizing the agreement with the provider so we want to make sure this is passed within the boards current policy. Staff has never taken and not the position of staff to take a recommendation position on these type of social policy decisions, all we want to do is create the record upon which we can proceed to execute what you are telling us to do today. Im not suggesting we change the motion to not be a divestment, just allow us to come up within your policy and present to the board the full plan. Just quickly to piggy back on what the director said, i do recommend that if you are devesting that the decision divestment included need to be based on a sound investment rational. With the new deal [inaudible] which im happy to briefout at the next meeting, that can be considered a factorment you cant make a decision based on the policy good, it has to be viewed in connection with the invesment. If Coal Companies go down in value that is a investment relate td decision because it effects the return of the invesment. So, i do think it is important that you build a record around each divestment that will be made and you may wish to consider something in the state law which is a opportunity for staff if they feel a particular divestment is prudent for one reason or aortto come back and and present that to the board because at the thofend day you want a solidrecord. I think there is conversations and more information that needs to be provided. My preference rather than voting to devest today based on future rational is why dont we table this for 60 days. Let the esg dive into it more and make a decision with good information. I know it feels good to have instant gratification but the sound thing to do is get more at the issue here. It isnt just the people in the audience. If i understand what is on the table is that staff needs to tell all the managers involved sell tomorrow. It has to be coupled where the money shall be reinvested which is part of what commissioner meiberger was getting on. [inaudible] there is the issue if the unmy sits in cash for who knows how many months that is a different problem. In my association i said we bring back a plan to prudently devest. We bring back a plan how to devest and reinvestlike i said, we also want to concurrent with the policy we have a list of 10 companies and want to bring back the justification for why we are devesting from these companies and then at the same time why we intend to reinvest. It is the case by case which covers the City Attorneys attorneys and the signal that you want to devest from these companies. If there is one thatstuff staff to make a case we want to hold on to it is within the judgment of this board to decide not to devest of that company and keep it but that isnt something we assume will happen. I think the motion is devest, come back with a prudent methodology and timeline as well as a plan what we intend to look at as we reinvest the money and as we devest from each company we bring back to you where we recommend you reinvest. We tie them together and see the money and where it goes to commissioner driscoll i understand that but that does want preclude the managers from selling because they center the normalthat is why the 5 year numbers may be wrong. I understand the and conditions which doesnt effect the current operations. Great. [inaudible] a motion is made, it is accepted rkts we have taken Public Comment. Lets do a roll call vote on this item. Commissioner cohen, aye. Driscoll, aye. Meiberger,i. Makras, yes. Paskin jordsen, yes. Stansbury, no. Motion passes. Could you please call the next item. Item 11 report on Investment Performance of the Retirement Fund for the Quarter Ended september 30, 2015. Thank you madam chair. If we can turn i think it is to page 11no, page 18. Item number 11. Page 18, in item 11. My mistake. You look on the lower left column, you see a rough quarter. Just a tad over 4 percent for the quarter. That did compare favorable relative to the bench mark which was down 5. Public equity, solidly outperformed by 40 basis points. Tough market. Public equity [inaudible] 9. 59 for the quarter. Importantly in fixed income is that it is not the diversifying we hope it tobe because there is so much credit risk and the high yield market now isnt a good functioning market. It is a very illiquid market, it is hard to sell things and when they sell they sell at shockingly large declines relative to the recent bid. In fixed income we did not do well nor have we done well over the last year. We lagged by 1. 35 percent. We had a strategy to change that and that is part of our recommendation that is coming firth here in a couple more items to create more of a bar bell structure to our fixed income strategy where we take more priferbt debt with high yield, shorter j curve on the oneened and a more conservative approach on the other end of sth spectrum. Real assets and private equity solidly outperform for the quarter. If we turn to page 23, looking at peer returns, you see that for the quarter we were just outside the top quaur tile we were above the midpoint of our peers. You see over a 1 year, a 3 year, a 5 year and 10 year, we are all well within the top quartile. Only in the 15 year period are we outside, but we are in the top half so that is a measure of continued good relative performance. This is a tough part is that you look over in the 15 year period is we only earned 5. 7 percent and a good portion of that because the equity market is a major disappoint in the time. Over the last 15 years, the [inaudible] is only up about [inaudible] ill turn and ask bob if he has quick comments . I have a couple brief anecdotals. Quh i go through the quota, we were down 4. 1, but it is a tale of 2 quarters. In early august the chinese [inaudible] up to the that point we were in positive territory, not greatly about 40 basis points. The portfolio fell 4 and a half percent over the remaining portion the quarter and this is commentary on the fact china is a very strong emerging economy. The size and access we cant get yet is very large. China is start toog have the same impact in the Global Economy the u. S. Does which it used to be when the u. S. Sneezes the rest of the world catch as cold and see the same with the chinese market. Anything with a equity flavor be it credit risk and high yield underperformed. This was a very solid Downside Protection quarter in Public Market. The vast majority of the managers on the active side strongly outperfirmed. I would like to make a comment and invite [inaudible] within private equity i really like the strategy Going Forward. The strategy previously has been very buy out centric and that is very additive and done amazing well in vercher capital and section 8 returns are 22. 2. In particular i was meeting with tonia a while back and tonia said the quality of the [inaudible] available to us in vercher capital has never been better. I think increasing our exposure in asia makes a ton of sense. Asia is a growing economy, it is a very inefficient part the well and can do well for a state owned enterprise to for profit, private enterprises. The quality the teams we have met in the Public Markets and private markets in china and throughout asia im very optimistic these will deliver really attractive returns. That is tempered somewhatmore than somewhat in private equity be evaluations. Particularly tin later stage vercher and also by the fact that we are significantly ramping up. We commitmented a little over 1 billion dollars in private equity in the past year so we will be experiencing a new level of j curve that we have not experienced since the early days when we were ramping up this program. You could see negative impact on private equities on our returns as we experience the j curve. On the orebt hand the team is diligent and put a great deal of effort in negotiateating favorable terms and fees the best we can. Those are the highlights i wanted to give regarding private equity. I would like to ask unis and vicky if they have comments. I think this is the first time the board has a chance to hear from [inaudible] and vicky and you will hear more from them at the ic meeting. I dont have much to add other than we did see a [inaudible] the [inaudible] 3 percent during the quarter. There was mixed messaging whether we [inaudible] concern about the health of the u. S. Economy but it has come back somewhat more but they are still wide versus where we were a year ago. That is all i add for fixed income. On the equity side the story for q 3 is china. It caused a lot of [inaudible] china fts down 22 percent. Also, concerns about slowing down economy sparked by china continued to cause concern about a slow down in energy and materials. Brazils markets were down 33 percent. In terms of Sector Energy were down close to 20 percent. [inaudible] the ones that out performed have a [inaudible] they also have a underweight in energy in the quarter. Just a al on what bill said. [inaudible] earlier in november and met really good managers that had great returns and great Institutional Investor backing and wecontinue to do Due Diligence and are trying to negotiate fees with them also. Potential we could bring investment for [inaudible] february or march. Vicky, anything to add . Board members. Thank you. Commissioner makras. On page 19, 20 and 21 if you look at the footnotes the returns are reported net of manager fees. Page 23 at the bottom it says gross of fees. I thought what we received is net of fees. With the exception of the [inaudible] which is the trust universe comparison service. The universe of funds is recorded gross, so the only fair comparison is report our performance gross. [inaudible] [inaudible] does not have returns net. We can do our on attributions like on pages 19 and 20 but tux is only gross. Anyone else . Seeing there is little discussion lets go to Public Comment. Please, come on up. You have 2 minutes. [inaudible] staff could give a sense of the risks involved to the portfolio. Especially in terms of the public equity. If they could comment on their opinions about evaluation levels in particular compared to historical averages. I am trying to get a sense ofthis goes back to the hedge fund thing to some extent, what the staff believes is the most loickly and the worst possible Downside Risks over the 1 to 3 years. You want them stress test thg port folia . I would like to see in general, do they think the market is widely over valued or maderately, is there a huge risk. The bottom line is i think the fund can live through a 20 or 25 percent [inaudible] i dont think it can be easily survived in a 50 percent market and trying to get a sense how much speed has to be done to try to hedge that or whatever allocation strategies athis is Historical Perspective they gave, but they must have opinions. They are talk toog managers all the time, is this is this a wildly over valued market or normally over valued market . Chair, can i make a comment . Jes yes ver quickly, the one year return to the plan is 0. 7 percent. Very very low. We have been saying for a while we expected that we are in a low return environment and in fact, that has happened. The news i have is not any better. If i had to modify the message it would be Going Forward expect a low return environment and higher volatility. We are coming off a change inabout to embark in a change on policy and we can have additional volatility on that. We are very long in the tooth. World markets dont die necessarily because of age, about they die because of detearating fundamentals and sentiment. So far fundamentals are okay, they are not great but okay. Sentiment is also still okay. I still think that we are in a low return environment and good [inaudible] is crit to in good returns i will have to stop you there and moving forward but thank you for the explungz. Public comment is closed. Mr. Clerk we took a motion on this . No, not yet. We discussed item 12, discussion item. Report on managers and review. I will ask bob to make a quick review comment and and haun and unis to briefly and quickly update on the Due Diligence conducted recently. My comment will be quick. There are no additions however, if you look at the staff memo at the bottom dependent on the results the core plus higher recommendation, 2 products [inaudible] aberdeen is under review. Should the board agree with staff recommendations those 2 managers would be terminated and removed from this list. I dont have much to add besides a comment on [inaudible] made a lot of improvements and we recommend review for 6 months but they made a lot of improvements. We are fine tuning the ima. [inaudible] i also vezted pem co early october and were prepared to take them off and heard about the lawsuit so want to keep on review for another quarter and monitor things. Thank you. Did you mention prima . I visited prima late october and we recommend keeping a manager on review for 6 months which is why we are still in review of q 3 but noticed improvements. What improvements . They are submitting reports in a timely manner and responsive to our requests. I thought we discussed there was a change in personnel which is why the reports the other reason they were undeer review is organizational [inaudible] we will continue to monitor that at this time. Also waiting on any [inaudible] complete Due Diligence. ; you have are saying 6 months no, we usually keep a manager for a minimum 6 months. Q 2 i believe we started so this is q 3, so it has been 3 months, so judging what happens through the end of the year the earliest we can take them off is q 4. [inaudible] more of a question. You asked [inaudible] that seems to have worked out. I can tell great things about capital guardian. We have been with them a long time. They are a great firm [inaudible] is there somethingi think we should [inaudible] maybe you have a big review coming and jumping the gun. [inaudible] unlike our other managers they have a [inaudible] several managers own a chunk of the portfolio [inaudible] i think from our perspective it is hard to analyze all these different manager approaches and also look in the emerging market portfolio, in terms oftheir positions in china, having a dedicated local based china manager has value. They understand the value and [inaudible] they have someone who is retiring this year so that is a concern we are monitoring. Ill get to the question, would you hire them together for this part the portfolio, either the emerging or [inaudible] i went through this with intech, staff was right about [inaudible] the board was wrong, but it is capital guardian. How long should i wait for a answer, next quarter . I do need to wait because i dont want to say in public, but what i say is we are about in the 7th maybe 8th inning of completing Due Diligence in china. [inaudible] the money has tocome from somewhere. No questions . I do have one. This is for vivian the emerging manager. And looked at the performance in here and is it that performance is so thatwe dont have emerging managers [inaudible] and how did you complete the Due Diligence. Let you know what the Due Diligence and what you found out. In terms of emerging manager they are one of the 2 or 3 out there. They had very serious organizational issues and it really comes down to they tend to be very Market Neutral when you look at thestruck chur but it comes down to Stock Selection among the managers and their selection of managers over the last 2 years isnt tupe par of what we expect from them. Can you comment on your Due Diligence . Can comment. Our recent Due Diligence several [inaudible] there were a few factors that were seem more positive. They have reduced the number of managers from 9 to 7 and they are more High Conviction choices. They are hiring more seasoned staff instead of hiring just out of under graduate or soon after. They are looking to hire more at the midlevel. Performance is a issue and it continues to be something that is monitored. In the last quarter they have improved somewhat i would say. [inaudible] maybe this is a manager that is under review since i started here in july. [inaudible] soon after she started earlier this year in march. I conducted Due Diligence along with mark and vicky in july. [inaudible] conducted further Due Diligence on site in november. I think things have improved. Their staff turnover is stabilized. Vicky mentionedthey hired a lot of people in 08, 09 and 2010 during the crisis where people didnt have a lot of opportunities or alternative opportunity in the financial industry. They hired [inaudible] as soon as the market picked up they had other opportunities. [inaudible] that was a personal decision. They were a husband i wife team that moved back to chicago. I hear stories because i never interacted with them but it seemed it was a personal issue and had nothing to do with the firm. They hired a Consultant Firm out here and she unexpectedly left last year. More recently her firm is bought out. It is hard to understand what is behind the scenes but that [inaudible] that may have been a personal decision. Another quick comment or two on this is that we can understand people taking advantage of opportunity in the market place but it also speaks to the organizations capability of keeping good people, so the bottom line is this is under careful watch. You heard numerous site visits that have taken place in the last year. [inaudible] they reduced the manager count and the 2 managers [inaudible] have been under performing and it was a smart decision [inaudible] i cant hear you. Like to continue to see the information to do the Due Diligence. I have questions. Aberdeen says nob nub no reg yelltory activity and it is highlighted red. Is it just a call out that it is no or severe warning because [inaudible] but it is isnt highlighted red. It is highlighted red under vivian. [inaudible] there is pem co emerging market 25 local and 35 percent corp. It is lauls labeled no. What does that mean . What are these companies lacking in . Pem co if you recall unis made a comment about bill gross. That was the Organization Issue and he departed from pem co 2014. He was a founder of the organization, ran the largest fund but had no involvement in this projeskt project. Organization can get dinged with a new even if they go through a natural reorganization that organizations naturally go through . Absolutely. The president of a organization decides to retire we put them under review out of caution. Anymore discussion on this item . Take Public Comment. Who want s to comment on item 12 . No one. Are you getting up to comment . Public comment is closed. Bring on the next item. Item 13, action item, core plus fixed income request for proposal of hire recommendations for baird advisors. Dan works closely with alan at nepc. This is recommendation that accomplishes part of our objective in fix td income, which is to create a larger pool of Higher Quality safer assets in fixed income. That is the part that you see. Previously you had seen private debt investment and that is the part where we get higher yield, shallow j curve and the like. Very good income but in a different way from the past. Ill turn it over to bob and unis. I will pass to unis. We also have colleagues here to present to you. Good evening. At the december 2015 retirement Board Meeting the board approved a [inaudible] fixed income rfp which welcomes [inaudible] at the august 2015 meeting staff presented the finalist which the board approved and it included the 3 incumbent managers, aberdeen portfolio [inaudible] baird, [inaudible] sthins august bourd meeting staff conducted Due Diligence which includes reference calls on former and current clients and these calls were conducted by myself and joshua man. [inaudible] after completing Due Diligence and examining the characteristic of a fixed Income Portfolio or recommendation is hire baird [inaudible] 700 million and Income Research and manage also known as irm to manage a government portfolio with 600 million. Allocate roughly 530 million to the [inaudible] this is a fund managed [inaudible] the board retained [inaudible] in 2012 and our investment is 340 Million Dollars [inaudible] both firms and teams are very stable and have experienced low to modest turn over [inaudible] competitive Management Fees and both products had relatively stable performance track records. The funding for baird [inaudible] will come from the termination of the 3 income bnt managers. [inaudible] aberdeen, [inaudible] we recommend termination due to organizational concerns. Aberdeen made a series of oppositions. [inaudible] most occurred over the past year. We are concerned about the firm said commitment to the fixed income business. [inaudible] finally, as we look [inaudible] concerned about the amount of credit risk. [inaudible] stone harbor is not on the review list at the moment and have no concerns about the organization or team sh someof which are very stable [inaudible] however, [inaudible] we are concerned about the amont of credit risk associated with [inaudible] our recommendation is [inaudible] so this portion the portfolio will provide Downside Protection in the event of a economic downturn [inaudible] we expect to see improvement in the overall credit quality of the portfolio. Page 16 and 17 show the characteristics of a current portfolio and 17 shows the recommended managers. From there you can see while the yield slight decreased the credit policy improved. Pages 18 and 19 those charts try to estimate the credit quality of San Franciscos total fixed income including [inaudible] we assigned a b minus credit rating. That would not be rated and think a b minus is conservative estimate given those strategys are in non distress. Replacing the incumbence with recommendation will improve the credit quality. One last comment on fees on page 20 shows the [inaudible] along with the final fee proposals. I did go back to irm and [inaudible] successful getting lower fees for San Francisco so grateful for them for partnering with San Francisco on this recommend. On page 20 when you compare what they currently pay the incumbent versing the recommended manager we see San Francisco will save at least 1. 5 million in fees. [inaudible] baird we have a cio [inaudible] along with Warren Pearson and from irm we have Portfolio Manager bill [inaudible] i will turn it over to [inaudible] for additional comments. Ill start by saying we are 100 percent supportive of staffs recommendation and know both these managers [inaudible] we are at the end of a 30 year period of declining Interest Rates and we have been looking to reduce the exposure within the fixed income and anticipated rising rate of environment and reduce the risk profile within the fixed income allocation that the plus portions the managers are below Investment Grade risk than we prefer and think there is juice to get there but the way the existing managers were doing it is a little riskier. Our view of [inaudible] is 0 to 50 basis points and maybe 50 to 100 [inaudible] we think you identified managers who have consistently done so hist orically. I want to think about this from a portfolio standpoint, the goal is reduce the credit risk and core allocation and do we meet the goal. The simplest form is on page 7 where there is a chart describing what the risk profile of the current allocation versus the proposed allocation. Now thrks core managers so the existing [inaudible] account for more than 50 percent the risks taken within the fixed income allocation, that is a large number for your core managers. The new proposed allocation drops to around 20 percent. That is something we are much more comfortable with as we look at the hol istic fixed income profile anyone where do you get alfa . That include abry [inaudible] i would say San Francisco has a strong advantage and successful getting in like bar bell. Yes are you expecting the market Going Forward to have credit issues . They already have had credit issues, do you expect more of that . We have to be mindful. I wish i could predict when that will happen. We do know it is coming just dont know when. [inaudible] i get it. I agrow with that. I dont know if it is 16 or 17 but there will be volatility. I support it. Do you need a motion . That is a action item motion to [inaudible] is there a second to that . I second motion made and seconded. One question, it is about baird. I see the comp tension they were bidding gans mpts among all the bond managers are they one of the best . I think so in terms of core plus i thipg so and they are the best where fr what this portfolio needs, what is the duration . Around 5 years that is intermediate . Yeah, we also use baird in the differed comp area. Yes we got complaints from baird saying they are inferior from others. I am trying to understand what that gentlemen is sum plaining about if you are looking for a safe investment it is a good investment. If you look for equity returns it is disappointing. I want good bonds. I want to talk about credit risk. I look at the staffs report, this is page 29 and 47. You show the at buttes of the different managers. Im seeing a lot of Corporate Bonds for baird with lower credit ratings. For example, 21 percent [inaudible] 22 percent [inaudible] and 10 percent junk which is below Investment Grade. These are higher than the bench mark, so this will run a credit risk so if the economy goes south, this will behave poor performance. Can you reconcile the fact that if this can be [inaudible] this looks agreessive to me. So, out of all the core plus you compare against others and are one of the more conservative ones. Our incumbents go up to 15 percent [inaudible] also, baird will focus on the e double [inaudible] who focus on [inaudible] they are sticking to the Higher Quality. [inaudible] they are conservative relative to peers and conservative to the incumbents. Yes. But in the case of a weak bond market and higher credit spreads, this will have poor performance. Commissioner, our bond portfolio lost about 15 percent in 2008, this wont lose anything close tothat. We may lose single digits. Okay. They lost 1. 58. You are comfortable one [inaudible] thalities thats it. Lets take Public Comment. Item 13. No public common. Comment. Thank you. The motion is made as well as accepted. We take this same house same call. Thank you. Motion passes unanimously. Please call the next item [inaudible] request approval to [inaudible] global custied securities lending. Thank you. Letsin the interest of time i assume that we have read the materials and just dive into our questions. Absolutely. No questions on this . Did you have any questions . I think it will be quick. [inaudible] questions forwarded to [inaudible] herb meiberger. What im concerned about is if we issue this rfp will those questions be answered because there is a black out period so if we approve that will that effect the outstanding questions regarding these [inaudible] absolutely not. They are a existing vendor and request from commissioner makras Detailed Services they provided in the past so it wont impact. Okay. Lets take Public Comment. You just cant accept the invitation [inaudible] because the black out period starts today. Yes. [inaudible] from Northern Trust to attend theirtheir[inaudible] i want to remind the board, we can have a better discussion on this, but during the black out period with existing vendor there are certain things you can engage them while a rfp is pending. It doesnt shut you from dealing or answering questions for a vendor in this case Northern Trust but we need tomake sure both sides are aware nothing is set our exchanged during the black out period that somehow benefit them or give them information relate today the rfp. Just to clarify, it isnt a black out to existing vendors in the normal course of business a board or staff member needs to deal with them regarding the current contract. I got a invitation from Northern Trust inviting in terms of invitation to arrange a on site visit to [inaudible] trading and lending [inaudible] is that permissible . Absolutely, that is a service they are providing to us and if you are interested going to their training to see how they execute trade on our behalf i dont believe that is a violation. It is a genuine offer . He didnt make the offer so we dont qualify [inaudible] we are happy to arrange a trip but you need to limit your discussion to the services they are currently providing and not answer anything relate d to the status or [inaudible] of the rfp. The board mb can not discuss any other vendors other vendors no. Thank you anyone wants to go and kthey talk to the exectev director and [inaudible] on [inaudible] it is bidding on both [inaudible] it is broken into 2 and they can voteasking them to bid on custied and security lendings. This goes back to the 36 years we had 2 years ago. We are back to that point lets take Public Comment. Thank you president cohen. Patrick shah. Opposing the staff recommendation to issue this rfp now. [inaudible] the securities lending and Cash Management [inaudible] black swan [inaudible] commissioner meiberger served with me revealed Northern Trust had frozen our cash account in 2008 and [inaudible] be able to pay pensions. In the process the [inaudible] at least 27 million. October 14 commissioner makras submitted the questions to [inaudible] regarding Northern Trust. On october 23 mr. Coolish responded only to question h. The other 14 questions appeared to have been unanswered to date. Commissioner makras most important question, question g, involved actual realized losses and projected unrealized losses, which losses may involve at least 71 million, not 27 million. Some observers shared they suspect losses may involve over 150 million. A new black out period may not matter, mr. Huish must answer the other 14 questions. Until then please vote against issuing this rfp today and return the mat toor the call the chair until and unless mr. Huish finishes answering those questions. It shouldnt take months and months to respond to a information request from one of your Board Members. The examiner reported this morning. Public comment is closed. This is a action item. The house changed, so i would like to record to note that commissioner paskin jordan is not here but we can take this item without objection. There was a motion made. No, okay. Is there a motion on item to accept staff recommendations . No motion . I would like to make a motion. Is there a second . Second by mr. Driscoll. Without objection this motion passes unanimously. You can ask a question on item 15. We passed it without objection. Thank you. Mr. Clerk can you call the next one . Information item chief investment report if you look on the curve page for the month we essentially broke even up 3 basis point and we are down fiscal your to date down 45 points. [inaudible] calendar year we are [inaudible] fixed income returns are very very low. Throughout and International Equity in particular had a tough year and that is primarily related to currency. If we do hurry back to the memorandum on item number 2, madam chair asked for diversity of overership have management report and that is included. Item 3, arcadeious, this was brought to the board 2 months ago. It closed on last day of november. We got 35 of our 50 Million Dollar allocation. Total bravo was brought to the board last month and closed a week later and asked for 50 million and got 35 million. Indicative of the competitive nature for capital with top tear managers. A important event took place on november 30 and that was the chinese wan currency was approved as a reserve currency by the imf and there are a couple articles referring to that for it boards pleasure if they would like to learn more about that. Ill turn it over to the board for questions or comments. Any questions . Ime are not sure if it is a question or [inaudible] only 13 of the 18 managers provided information. On a fixed income, only 1 out of 9. I can explain and may need alans help on this, but this is taking data that they already captured and so in their Data Collection for nepc is they are asking for owner ship. They only had one of those 9 and it isnt that just 1 of 9 had a diversity in fixed income, but only 1 of the 9 reported. [inaudible] thats correct. We would have to reach out individually to find out more about the other 8. How long did we give them to respond . I cant see how someone woulden respond to a inquiry if we are asking a simple question and they are a manager. I clear up this isnt a inquiry from [inaudible] this is what nepc tracks for their other clients including us and would invite alan to come up and clarify that just to make it very clear [inaudible] this is data that cambridge has and [inaudible] you may want to expand on the efforts you made to get the information from the other 8 managers. [inaudible] jay stated it accurately, we have data on managers where we developed the data. When this came up we didnt have time to go back and request the same information. It is something we will plan to Going Forward. That information gets into [inaudible] so it is a little less useful. I think when you talk about private Companies Fix td income managers are publicly traded [inaudible] thank you. Anyone else . Is there anything else in your report . Highlight. Those were the keyclosure of the couple private market deals we discussed in closed session. The continued difficulty in the returned environment and the diversity report i want to say thank you for calendar the items that i made the request for, the report on diversity and management. It isnt what i was looking for but snds the constraints. What is presented it indicates there is a lot of work that needs to be done in this finance field. I thipg with that well take Public Comment on item 15. Please, if you like to come and talk about item 15, now is your time. Okay, Public Comment is closed. Nis this is a discussion item. Lets call the next item. Item 16, discussion item. Differ defered comp manager report. You have before you the monthly activity report. Given the time i wont go into details, but i do want to let you know we are happy to report we hired a newmanger who will start next week. She has 10 years of experience in the financial industry in the private sector with investment and Product Management background. Thank you. Colleagues do you have questions about the report presented before us . Stansbury. I want to saw thank you for taking on the differ comp time. I you have a regular day job and this is in addition to that so want to say thank you. Lets go to Public Comment. Public comment on item 16, managers report, defer comp. Seeing none Public Comment is dlozeed closed. Item 17, executive director rorts you have 22 days to complete your harassment training on the line which is a requirement of all Board Members and if you have a difficulty accessing it via a laptop or i pad you can come here, we have a pc on the floor. [inaudible] also reminder this friday we are having our Holiday Party down the street at the cadillac bar and grill starting at 2 oclock. I also included letters that president cohen received from 2 judges who are currently active judges who have become members the cal pers system and request that we investigate ways to provide them limited reciprocity in order tobe placed in what cal per cals the classes of member system which means it would be not the most recent pension reform plan. What we are doing is we are working towards drafting an ordinance that president cohen indicated she is willing to sponsor through the board of supervisors that we believe will provide a resolution for this issue, meaning that for those active judges who were members of our system, if they can currently retire with the judges retirement system and our plan we recognize the salary they earned as judges which we believe will meet the cal pers requirement. Also we provided you 2016 Board Meetings date and want to point out that the january Board Meeting will not be the 2 wednesday, it will be the third wednesday of january , cl is january 20 at the request of president s cohen and all the rest of them will be the second wednesday of the month. That is my report. I would also like tobecause the new defered comp manager is showing up monday doesnt mean karen is finished, she is transition but do want to recognize the good work she has done while trying to recruit. It was a difficult position to recruit and confident we found someone that is very well qualified and look forward to you all meeting her. I have a question for you, this goes to the judges request regard thg limited reciprocity. What is thehow long do you think the process would be . [inaudible] the language, by the ofend this week or monday i may be able to introduce it tuesday, which is our last Board Meeting of the yeerd and we can put go into 2016 with this behind us. We are wait toog get clarification in writing from the judging retirement system. That is what we propose will fix it for these judges. We asked the City Attorney to begin drafting the ordance so if it can be done in the next few days we will get that over to ayorks but we are waiting for before we proceed down this path we want to make sure it is something that will be helpful fair enough, do you have any other questions . A couple follow ups. At the october Board Meeting, october 14 there was issues of lending. I think 2 months is enough time so ask they be answered regarding the freezing the cash account. The cash account was frozen in the Second Quarter 2008 and benefits to pay and so the question is where was that money to raise the benefits . I guess patrick is not here but he sited the black swan report which is a report by one of my master students. Fisdle year 2009 [inaudible] benefit payments of 7 [inaudible] since the cash accounts was frozen, 14 percent used for benefits were lots [inaudible] other assets were sold [inaudible] the question is, it is 2 month, mr. Shah was asked how do we make those payments . I believe mr. Shah answered. We did set assets to pay benefits. We did sell assets. I can get the list. It was a mix of u. S. [inaudible] which were relatively liquid and you were correct that we did at that time have an emerging market [inaudible] it is 2 months. We need process here. The board is in public session, these are questions raised in public session, 2 months nothing happens, i would like it a written response. Can i get it in the next 2 weeks . Well do our best. I speak for the entire staff i think that is plent a time. That way we wont get criticisms i read in the paper about staffs lack of responsiveness which i think is poor. Ologist also i want to address responsiveness to the members request. I will give a specific, this was a member has written 3 memoes, come to 2 Board Meetings, never got a response. This is mr. [inaudible] he represents a [inaudible] let me be specific and i brought this up the last time, he dissevers a response. He has written several memoes, one dated april 6, 2015. October 2, 2015. September 7, 2015 and wrote another december 8, 2015. This is 4 emails. He asked questions regard thg defered Compensation Plan and not got a response. He came to public [inaudible] he came to 2 Board Meetings and defer compensation meeting and no response. We have tohave policy if a member writes a request or on the phone he get a response. I was at those defer comp meetings, what request is he asking for . He talked about fees and the blended funds and had concerns about the expenses. Many concerns in writing. I talked with him after defer compensation meetings and no other members have as well. A lot of his questions have been answered. I think that what he is actually pushing for is he wants a different fund in the line up at the ofend the day but we are not in a position to grant his wish, there is a process. You are misinterpreting. You were copied on this. This is dated decemberathy, this is someone who represents a member. Dear norm, please cc to all Board Members. I urged the board to review the hedge funds for a year and my comments are mostly ignoreed [inaudible] the hedge funds. Give 5 reasons to invest in hedge funds. Let me finish. Number 2, for our dc plan talks about blended funds and perfornl ance, he talks about why need a active fund when they cannot perform a index fund. What is your cash position. These are lujtimate questions he hasnt got a response to. I think we have need a policy. And dont think it is appropriate to smile and laugh. What is not appropriate is chastise. I think it is inappropriate when i talk about responsiveness to members. This is a bad reflection on us that we condone this kine of behavior and dont want enable our staff to respond to lujtimate questions. It is poor reflection on us and also a poor reflection is when we burr at and belittle or Staff Members. We will continue to move forward. [inaudible] have you complighted your report . I have we will take Public Comment now. Anyone want to comment on the report . Okay, Public Comment is closed. Thank you for giving us something to talk about, jay. Next item. [inaudible] no reports this month. Lets take Public Comment on the fact there is no report. No Public Comment. Closed. Next item [inaudible] our favorite time of the day. Second favorite. Hold on. I will finish with you. Anyone on this end . Meiberger. We serve the members. The members are our customers. We have to have a way of responding to our customers requests, oralally and in writing. We must have policy. I would like to have executive director bring home some kind of policies. If a customer writes a email, how many days to get a response . If a customer has a phone call, how many day tooz get a response . If a board member make as request, how long does it take to get a request. I dont say this lightly. I had public records request thereat require response in a certain period of time and not responded to. That is wrong. I dont know how to say it any other way. If by law the executive director must respond and there isnt a response that is wrong and our board to do nothing enables this policy. What i suggest is simple, for the executive direct toor come back, how men adays to respond to email or telephone request to serve the customers that elected me to sit at this table and serve the members as well as [inaudible] we are here to serve the customers and i do not think we are beingthe customers are being served by a lethargic responses. Mr. Makras. [inaudible] turn it into a positive. Maybe we can be presented with what our communication policy is across the board. Im sure it is different for a letter that asks lots of questions versus, i want to retire or will you give me a status of my account i am thinking of retiring. We have a multitude of information that comes in including a phone call of where is your address so maybe the general manager could share what his communication policy is to his team and we can review that. That is a starting point. Im sure Staff Members have guidelines on a response and goals and sure the Investment Team is different and have a personal interest knowing how people that want to do business with us and send in their material, how that is logged as a example if a person says i want to be a manager of yours and we are not putting a rfp. Do we keep those letters and reach out and say you inquired about it and here is our rfp, please bid. There is a lot of Good Management we can put into communications. Thank you. That is a positive. Any other good of the orderseeing none lets take Public Comment on this. [inaudible] many members inquiry with many different kind of questions and go back to to the fact several point in my career i had the responsibility to answer these question and among the types of programs that we worked out is there were some requests that came in, if they are sunshine ordinance there are a number of deadlines that must be met and had those logged and calendared and there was a process to make those responses. Some we had a log where all communication came in and it was logged and assigned and there was follow up to see if those responses were given. If nothing else the first thing should be a note or call that acknowledges the receipt of the question or inquiry. That is the First Response and that tells that individual that their request is being considered and they have been heard and something will happen. You might indicate that we need extra time to get this information and cant give it in a week or 2, it make take a month but at least that acknowledge and think it is reasonable to request. When those calls come into the office or i get the emails or the phone calls from our members we do our best to respond right away. I will comp lment norm every time he gets a call, he forwards that instantly and we get that opportunity to then respond to those members. I think it is really really important. You are here to serve us. I have been on a benefits board and always responded as quickly as possible to the members in Health Service and think as constituents and members the system we have a right to expect some type of response and acknowledgment and it isnt that difficult to work out a program internally that will have a falloy up and track all the responses so we know the different kind. I cumind your commissioner meiberger, thank you very much and hope you come up with that policy and procedure for this request. Thank you, next speaker, please. Herbert wineer. One thing about responding in a timely way reflects the overall perfirm ons och a agency. It strengthens the agency and enhances performance. Ill give a example of a agency that isnt working and that is muni. Trying to get a response from them, try to get some insited into their internal operation. They are concealed. All they do is focus on external performance instead of internal operation. Everything should be transapparent with a publicancy. I think this is very important. This problem is was an example and may be the tip of the ice burgism i say this as a person who has a stack in the retirement system and want to serve everyone at the Public Agency and think everyone in the room shares that common purpose. Having rapid responses , being honest in the responses is all to the good and think what commissioner meiberger and makras sited it strengthens the system. Thank you. Anyone else . Seeing none Public Comment is closed. What is next . Legal briefing. Thank you. We are not done yet. We need it take Public Comment. We are going back to closed session ladies and gentlemen. Anyone want to comment on that . Please do larry bar settee, this time as chair of protect or benefits, first of all i want to say, we at pob have nothing personal gaest the City Attorneys office. We bloobelieve they are competent people and have the best interest of the city and county of San Francisco at heart, however in this case we dont believe that they have the best interest of the members of the employees retirement system at heart. We cant know what the City Attorney will advise, but we do very strongly urge you to obtain outside unbiased council on this question because we are talking about things where the city