>> commissioner cohen is expected later. commissioner meiberger. commissioner bridges is on her way. commissioner driscoll, exhibitioner makras, commissioner stansbury. a quorum is present. >> thank you mr. secretary. first on the agenda is a private session regarding investments. the chair will entertain -- do you want public comment first? how do you want it? first we'll talk public comment to go into private session. members of the public, shall have the opportunity to address the board on this item. the items are investment items to be discussed in closed session. any member of the public like to address the board at this time? hearing none, the chair will entertain a motion to go into closed session. >> second. >> moved and seconded in closed session. all in favor say aye. any opposed? the aye have it. so >> with that note, i raise the quorum. we've already done the pledge of allegiance. we've have a quorum here. let me call the meeting into session. we'll start with item number four, which is general public comment. here are the procedures during general comment, members of the public will have an opportunity -- >> commissioner before we take that step, why don't we vote whether or not to disclose closed session. >> i thought we continue that to the end. >> i beg your pardon. >> thank you. >> let me start over, public comment. members of the public shall have the opportunity to address the retirement board on items of interest to the public that subject matter jurisdiction of the retirement board. in addition, members of the public shall have the opportunity to speak on each item on the agenda when public comment is called for. members of the public wishing to when on a matter not on the agenda may address the board now. public comment is limited to three minutes per speaker unless the chair specifies a different time. members of the public are encouraged to complete a speaker card. i will honor that the order that they are presented. if anyone would also like to speak as the course of the meeting comes up, i'll be glad to accommodate them. all right. the chair like to recognize sharon johnson former commissioner of the health services member and member of protect our benefit. welcome. >> thank you commissioner. good afternoon commissioners. we are here in force protect our benefits. we are here in strength and confidence. i'm sorry that supervisor malia cohen can't be here. in her as being chair and you commissioner meiberger are flexible to press our concerns for a preretirees and attention to this concern. he is seeking independent council. on your behalf to clarify who have the authority to pay our pre1996 retirement sub limit cola. we trust that the independent council is that and independent. city charter knowledgeable. we hope that this will happen in a timely fashion. through the public records process, pob members requested pre1996 retirees demographics in order to ensure pob is on the same page. there are a number of inquiries that were not addressed and our speakers spoke to address this concern. you will hear from many individuals and representatives and organizations in support of our pre1996 retirees. as you listen to our concerns, i hope you'll keep in mind that even our minority leader nancy pelosi, often speaks to the principles of justice and equal treatment. the retiree population we are representing is our retired family. who is in need of these principles of justice and equal treatment. in closing, as the great fred ross said, a good organizer is a social arsonist who goes around setting people on fire. it is our intent to set you on fire. thank you again for your respectful ears and heart and we hope that you will be in support of our pre-1996 retirees. thank you. >> [applause]. >> thank you very much sharon. next speaker is clare, also a former member of the health services board wells the -- -- >> thank you very much good afternoon commissioners and colleagues. i am also representing seiu retirees as i am their vice president. we just organized retiree group. we have at least one other member joining us today. i'm sort of wearing several hats and we're all in solidarity with pob who led the fight. dexter didn't take it personally, he is waiting for that dog day. so this he can have his day. even though people think many days are dog days. he doesn't think so. you know the statistics are a bit overwhelming a number of our colleagues are dying every month, every week. we know who they are. you're going to hear about some of them today. the surviving -- i get e-mails in my office everyday from a lot of the survivors and also pre pre-'96ers nancy is not able to make it today. she's in her late 80s. her health is beginning to fail. she's a very energetic retiree. it's a problem for us. we see them going before our very eyes. we're not wanting their estates to get this money. we want them to get their money. they tell us that the survivors tell us that little bit of money would have made a difference in their quality of life if they have received it before they passed. even $20 a month can make a difference. for those of us that have worked on the health side, that might mean a prescription or two that they might have thought twice about and maybe they're giving up something else. that may meet some other type of food. most of these people are making a very little amount of money. i know some of the figures sound like a lot but when you take out all the tax and costs for even the medicare advantage, you find that people are living on very little. probably living on what amounts to that $1500 a month. commissioner driscoll asked the city attorney to give us an answer to give you an answer as to who they actually represent. it has been many months since we heard that comment. we've told you, there's a conflict of interest. we like to hear the answer. we've given you chapter and verse what the issues are. this is our money. all assets and liability and the trust fund belong to the members. the pre-96 members are every bit members as much as the rest of us. there should not be a bifurcation of their benefits. they are deserving. we want to get that before they die. we're now at 88.9% of funding. there's not going to be another opportunity for supplement alc al -- cola in their lifetime. it's time, please pay us, thank you. [applause]. >> thank you, next speaker is james mccoy. who is a member of the retired firefighters association. thank you for your service. you have the floor. >> good afternoon commissioners. my name is jim mccoy i'm president of the retired association of the san francisco fire department. we are approximately 1300 strong. over half of that in retired since before 1996. i myself retired in '96. so, we urge you to grant this supplemental cola to all these pre96 retirees. thank you. >> thank you mr. mccoy. our next speaker is rudy, retired rudy, would you like to speak? >> the floor. >> i'm rudy i'm the vice chair of united educators of 46 retired. i'm urging you to please do the right thing. make sure that our pre996 retirees do receive what the rest of us have received. i wanted to mention, i don't think i have before, my father was a teacher in the system. also part of city retirement system. we retired way back, maybe 1970. my mom lived on his half pension for the rest of her life. she was 92 when she died in 2003. anyway, i also member of the retired system. most teachers are not. i do represent the 900 teachers that are members of the retired division and all the the other retired teachers. you're going to hear from hopefully at least one of us today. we're hoping that you do the right thing. make sure that people get what they deserve and what they worked for all these years. the children of san francisco are depending on the teachers work hard to make sure they get well educated and do great things in this town. hopefully please do the right thing and make people whole are the most elderly of us and who need the most support. thank you. [applause] >> thank you, next speaker will be larry and following him will be richard hack and then donna. you have the floor. >> thank you commissioner. good afternoon commission. i'm larry i'm the chair of the protect our benefits. i'm also the executive secretary for san francisco veteran police officer's association. my remarks today are in memory of soul weiner. one of the founders of preob and pre1996 police officer. who recently passed away. he will never see the resolution, the question you've been able to answer. based on charter sections 12.100 and -- the retirement board is required to implement supplemental cola for the years 2013 and 2014. the amended judgment does not excuse the retirement board from this duty. the mandate does not excuse the retirement board from this duty. charter section aa.526-3d does not excuse the retirement board from this decision. the city attorney, has no authority over the retirement board on this issue. the retirement board has a fiduciary duty to pay the cola. i know you will do the right thing. thank you. [applause] >> next speaker is richard, followed by donna and mike murry. >> i also support the payment of the supplemental through the pre96 employees hedge fund. the board cannot carry out its fiduciary duty if it invest in the retirement money. the recommendation of self-interest hedge fund outsiders will pay on pension fund or negative results going out almost an decade now. most of you are chosen for your financial knowledge and experience. you know how to make investments. it seems like you're hiring a lot of people to make your hedge fund evaluations for you. what they don't say, you need to make 10% return to overcome the impact of their fees. just like paying a lone shark without getting the loan. i see a lot of fears read by financial people. our investments going up and down but the fund continue to make its payments and doesn't panic. panic runs the market down and depresses the economy. i see quiet fear being spread here. john vogel of vanguard and his index fund outperformed the hedge fund for the last 10 years. i'll leave it there, thank you. >> next speaker is donna followed by michael murry and followed by herbert wiener. >> i'm here just to urge you support the matter in front of you. just last week, one of my fellow workers passed away. his widow would love to have this. it's very important to these people who worked for muny and all the other organizations for 20, 30, 40 years. please do the right thing. [applause] >> our next speaker, michael murry from the fire department. >> i will pass on mine. thank you for your service to the city. i see herbert wiener. >> i retired from the department of human services as social worker 2003. now, many of my coworkers and they keep increasing in my memory, retired prior to 1996. they were my coworkers, they were my teachers. i really want to see them to receive the same benefits that i am receiving. it's reflecting one tendency as a whole. this really represents age itch. senior citizens are being pushed into the shadows and potential visibility. this is not correct. we contributed much to the city. we deserve our just due. so please do the right thing and restore the cost of living benefits to the pre1996 retirees. thank you. >> next speaker is john bettencourt, retired from the san francisco fire denied, followed by john. followed by joe. >> retired san francisco fire department. this last week i talked to a widow of one of the pre96 retired. his name was tony rodriguez. she was shocked to hear that she didn't equal for the supplemental cola. she didn't know anything about it. i told her this group, protect our benefits, were fighting for her and all the other widows of i'm going to say the greatest generation. when i came in 1974, the fire department, there were a lot of firemen that came from world war ii. they taught me how to be a fireman. i think they, it's not that many of them left. their spouses and i think they deserve the supplemental cola just like from what i understand, they were receiving the supplemental cola before proposition c came in a few years back. i think there's a precedence there, if they receive the supplemental cola for proposition c, was ruled proposition c part d was ruled invalid, now that decision has been made, all retirees should qualify for the supplemental cola that they deserve. thank you. >> next speaker is john, followed by joe. >> these are helmets my uncle and my dad. they were firefighters in san francisco. i'm here to represent them. and my uncle's widow who cola benefits have stopped. she's in dire need of that. he quit st. james high school, joined the navy for the war. he enlisted in the marine corps my dad. they won the war, know came back to san francisco to serve. i would like you to do the right thing for the people out there. they're comrades. they're no longer here but their comrades are here. the greatest generation. this means to some of them, dying alone. it means they may die alone at night, around the clock care. again, please thank you and do the right thing. [applause] >> thank you for your service to the city and country as well. next speaker is joe scanell. >> my name is joe scanell i'm a retired assistant chief at the san francisco fire department. many of us, as they spoke before here, came out in world war ii. which i did. i spent six years in the navy. came out and went to work in the fire department. greatest job, wonderful place to work. and then, you don't give us this benefit, this benefit pertains for the service men, all of the world war ii veterans and then the korean veterans. they're all cut off because we -- retired in 1978 with 30 years. i don't see why we should be cut off. we gave our best and that was it. thank you. [applause] >> thank you and thank you for your service to the sunda country and. tom followed by bob. >> there are a number of retiree who are here who do not want to speak. we asked them to sign the green card so you would have them on record. but they are here. >> thank you for that clarification. >> i'm bob fessler. i am one of the folks who got the cola until after prop c. i retired in '94. i'm astonished that mr. scanell. clearly, it really is your responsibility. i hope that you carry it out promptly and effectively. thank you. >> thank you as well. pansy waller followed by mike peru. pansy, you have the floor. >> thank you very much. it's great to be here again to speak on behalf of the 1996 retirees. i did everything that has already been said. thank you very much. >> mike pera. we want to acknowledge your presence here. san francisco fire department. thank you very much for coming. elmer cart. >> 32 years fire department. 20 of which in the fire investigation unit. i am not here to put you on fire. however, i do have some other issues. you listening to a lot of new people here today. not the ones that were here before. this is probably going to keep going on because there are a lot of people out there who is a hard time getting down here. we're going to get them down here. this is a legal matter. this has to do with a great amount of really fine people that you know, teachers, nurses, everyone. it's not just about the fire and police. their widows. i am just overwhelmed by e-mail you last four years. remember, this started in 1996, when the supplemental cola was put in to protect these people. in 2002, it was upgraded by the people of this city. in 2008, it was again bumped up a half percent because of a political situation. now in 2011, it disappeared because of advisory comment by a judge. what you, the commissioners have to realize, this has to be examined by someone who is knowledgeable in charter and advise you about what was going on. the city attorney has been ionogens us foon -- has been against us for four years. we want you to make infiel informed and impartial decision. thank you very much. >> our next speaker is joe, followed by judy collins, followed by tony d. geovany. >> thank you for coming. >> my name is joe, i'm retired city employee. few weeks back a member of the pob made a public record request to sfers. we were unable to get all the information. i like to run a couple of of those. we requested the number of pr pre1996 retirees that passed away since july 1, 2012, beginning date of prop c. instead your staff provided us with a number for july 1, 2013. these numbers are still compelling. the number of retirees that have passed away since that time is 1522. for the past 45 months, we have lost an average of 34 members of a month. that's more than one member a day. your staff also provided us with the average age of the 1996 retirees and continuance. retirees average age is 84.2. continuance average age is 84 84.1. according to the data a man reaching the age of 65 can expect to live on average until age 84.3. a woman turning 85, 65 today can expect to live on average until the age 86.6. these numbers would be less for the free 1996 retirees who turned 65 almost 20 years ago. as you are aware, the pre1996 retirees is a fixed group of retirees who's number will increased with each passing month. time is you have the essence. every month you delay providing these retirees a riteful benefits we lose another handful of members. as a soul authority and just and consistent with the charter, you and only you have the ability and the authority to write this wrong. thank you. >> thanks. the next speaker will be july collins, followed by tony geovany. followed by mary ann mcguire hickey. julie, you have the floor. >> thank you very much. good afternoon. this is lucy flaherty. i am here today not to appeal to your sympathies, clearly you have heard us enough in the past on that level. i am working to put a face on all of the widows of the free 1996 retirees but in in particular to those who were members of the fire department and who i have been fortunate to know personally. they in their men and women, they were a part of the greatest generation as we have alluded to all ready by some of the previous speakers. these women and their families made sacrifices, willingly, trusting the promises made would be promises kept. there are more of these names in the audience today. these are the names of the widows who are currently anticipating their cola. their husband's retired pre1996. these women were for the most part, not employed outside of their homes. they were the generation that stayed home, took care of their children and their homes while their husbands were at war, while their husbands came home from the war, they were employed thankfully by the fire department. these women, like their husbands, did not pay into the social security system. they do not get social security benefits, a paycheck. one of these widows worked in her early life and today, she received the sum in social security of $88 a month. she relies on her husband's pension and the cola. these faces do not include retired teacher friend. or the police widows or so many others. i spent yesterday, mother's day, online, going over obituaries from san francisco chronicles. i looked at all the names of men that we knew and have died who had retired before '96. i came up with these 26 widow's fame who are -- name who are still waiting. you know there are hundreds more. your position on this board either elected or appointed or as i understand it, your mission statement reminds us that you're dedicated to protecting, administering and providing our promised benefits. a position of privilege as i see it. whether you're elected or appointed. i've always reminded my growing son, along with the privilege comes the responsibility. it's not always easy to do what you are responsible for doing, but it is imperative, always a you do the right thing. especially for those whom you have dedicated yourselves to. we earned it, we fade for it and we want it before we die. >> next speaker is tony. next is mary ann mcguire. carol gamble. you work with the fire department. thank you for your service to our city as well. >> my name is carol gamble. i'm a retired r.n. i'm here to represent with a face, my aunt, evelyn desmond. she's a widow of jimmy desmond who died in the line of fire an arson fire on castton street in 1978. my aunt, i want to put not just a name but a face to who's here. all of these people are my family. my father, jimmy desmond, mel a police also. only ones that are left in this picture, my aunt evelyn who is 95 easier old. -- years old. she's in a home now. as a nurse, all know that things are expensive and so she would really use your support right now. especially to support her husband that died in the line of fire. please keep your promises. i appreciate it. thank you. >> next speaker is al marco followed by parrisha followed by lois scott. you have the floor. >> tough to add to anything to every that's been said here. it's kind of personal with me. my best friend of 45 years and 25 years in the fire department just passed away. he was retired in 1994 because of a heart attack. his widow could use that cup settlemental cola. every little dollar helps. >> next speaker is patricia followed by lois scott. thank you for coming. o'connor. thank you. >> i'm in low voice today. i won't make much of a speech. i want to tell you, i was with the group who retired on the 1992. we appreciate the cola. >> lois scott, welcome. you have the floor followed by carol painter, followed by terrence. >> good afternoon commissioners. i'm lois scott. 2009 retirees from the city planning department. i'm the immediate past president of ispte21 and now part of their retirees. i'm also the convener of a group called forum, generation of retired union members, which is affiliated with the san francisco labor counsel. i believe that there are strong legal and miranda rul moral reasons not to give benefits to cola retirees. legally, our city charter does not differentiate those elders. 75 to 103 years old who generally have much smaller pensions and lower life expectancies than the most recent city retirees. morally, and spiritually, i want to remind you, how many. over 1500 of these elders have died while the disputed supplemental cola were in advance. in many religious traditions, the 23rd psalm was read at their memorials. i am sure most of you know and have heard that psalm. i would like to read from another psalm on behalf of the frail elderly who are still surviving. this is psalm 71 verse 9. do not cast me off at the time of old age. forsake me not when my strength is spent. you have a legal and moral imperative to act with fairness and compassion. thank you. >> thank you lois. next speaker will be carol painter followed by terrence. followed by robert cuetone, followed by richard costa. richard? >> my name is robert c. cuetone. i had the turn to work for some of the greatest people you ever think of. their experience is something beyond the manue imagination. things falling down, next thing you know they're walking through it. according to the chart of the city county of san francisco, i was informed when i first was interviewed as far as the gentleman that was given the information of the benefits at city hall. he stated that after working your yearer years for retirement age, i worked just about 30 years, we received a retirement income. you have a salary and indicated salary, vacation time, medical insurance and retirement pension according to a pay formula, the city county of san francisco charter. there are many retirees and widows in assisted living and with the cost of living today, pay increases, it's needed for them for the cola. i have a brother who is 91 years old. he put his whole career in the navy in the pacific. he worked for city county of san francisco and the department of public works. he's in a rest home. that cola will help him out. he the pleasure of going to a birthday party with a widow, former worker in the city and county. the son-in-law and the daughter ask us to join them. she's in a home be she's 96 years home. that cola comes in handy very much. proposition c was passed in 2011 as we know. it was written to deceive the voters with the intent to reduce employees retirement employees their wage increases according to a formula that was changed to the charter. they changed the charter. it's a formula in there. it's extremely important that we follow the charter and realize there's a state constitution and city and county charter that we've got to follow. fiduciary operation to see that it's delivered. extremely important that all of us here to protect all our benefits. thank you. >> next speaker is costa. >> good afternoon gentlemen and the ladies an ladies and ladies an lady. we're here again. am i angry? you bet i am. more than that, i'm disappointed and i'm saddened by the broken promises and the ongoing lack of compassion for these dedicated individuals that gave everything they had everyday for the city. so they have a good retirement, that they could live on that their spouses can live on. now they're going away. they're going away quickly. joe said 1500 is closer to 2000. put another year on that, four years we've been doing this. why have we been done this for four years? to save the bottom line? the average monthly income for these people is less than $3000 a month. i think that's below the poverty line. giving them a cola is $45 extra a month on their check. that's church -- chump change for a lot of people. these people are not chumps. there's a cause and effect here. because you're holding out, these retirees are living too close to the poverty line here. they can't live in the city that they work in. what's this really all about? you can say i grew the fund from $20 billion to $30 billion? look at me. i can do that. is that why you're here? afraid i'm going to be sued by the city. i know you're here to take public comments and not answer questions. i think if you were at the public forum, why you're holding out on these people, you couldn't give us a concrete answer why. individually. if you had to do it, i don't think you could. you're being told to do this. by who? you're being told by the mayor. that's obvious. that cat came out of the bag last month with his comment. i can only describe as a devine revelation, that's done a 180 and represent an outside counsel which we've been asking for. i don't believe it. i think it's just another stall in the meantime, more people, more pre96ers will die. their widows will die. pretty soon you won't have to give them the $45 because they'll all be dead. despite what you've been told, you do have the power to put this to bed. you do have the power to vote on this and give these people their money. i suggest you do it. i really do. god bless you. >> thank you mr. costa. thank you for your service as well. linda costa, would you like to speak as well? followed i about eugene and susan. eugene spake. >> good afternoon. my name is jew gene. thi-- eugene spake. this is a personal matter. i'm 8 win and still -- 81 and still standing. i have a lot of medical issues. very difficult job. it was literally a life and death situation. it takes its toll on those of us who have to deal with it. i retired early. at my doctor's advice. i had a heart condition and other condition, and had two heart attacks since then. i feel like i paid my dues. i don't feel like paying for something that should be perfectly obvious. the people here have done a magnificent job of laying out moral and logical and legal aspects of this. to me it's not so important. it is important but i don't want to talk about it. this personal stuff. i'm trying to figure out how i'm going to pay for my burial. they're very expensive these days. i'm not saying -- i hope not. nobody knows how many more years you have on this earth. i feel like somebody needs to look at the people and not just the statistics and not just legal arguments. these are real people here. it's like you're real people. also this is a one time thing i should say. this is something that doesn't go on and on. just catching up and all of us will go bye bye and that will be the end. again, i don't think money is so important as the morality of the situation. thank you very much. >> next speaker is susan morrow. if there's any spikers like to come -- speakers like to come up, please let us know. >> good afternoon commissioners. i'm retired from [can't hear] i was budget director. i urge you to please give us our supplemental cola. we deserve it. we earned it. this is also personal for me because my father was head of the municipal railway retirees association back in the day. he was a conductor. they used to have motor men and conductors on the streetcars. he fought for benefits for the muny railway people. they were treated quite nicely. they helped my mother raise my myself and my brothers. here i am, 50 years later, asking you to please give us consideration and i support all of the previous speakers. i thought they were eloquent. they were on point. i urge you to please do the right thing. thank you. >> thank you susan. those are all the cards that i have. i like to ask ms. costa to speak. >> thank you so much for allowing me to speak. i r.fully ask you -- respectfully ask you to look at these people. just glance at these people and look at them. look at the works that they've done. the fire eaters, the firemen that went in san francisco to mostly wooden structures, structures that collapsed on them. these people, men and women who clean toilets in san francisco, the school system without rubber gloves and had no masks to wear when they were using these different products. i remember these guys jackhammering. they're probably all deaf now. none of them had anything in their ears to protect them. we all know that you can right now, today, give these people the money that they earned. every single one of them. and the people that can't be here, that are 80, 90 and 100 years old, that have given 50 and 40 years of their lives to their jobs. especially the fire and the cops. i don't understand it. i don't understand why we're going on here for years. i don't understand why you can't say give them their money with their heart and their hands. they gave you this money so that it would be there for them when they needed it. now, because you've had if for so long, i think that you think the money belongs to you. the money does not belong to you. the money belongs to these people. they earned it. look at their faces. their sick, their fragile, the ones that can't be here. mike hogan was here last here. he's got one leg and a funky wheelchair. he can't even make it to the bathroom in time because he can't afford a proper prosthesis and an electric wheelchair. this guy works -- worked for over 30 years in the fire department. what's the problem here? aren't we supposed to take care of elders? i'm a native san franciscan. these guys came back for more. this lady holding up her picture. look. what do you see? don't you see these people. don't you see what they've given? what they've done. my mouth is getting dry because i'm nervous. i'm taking up my three minutes. i'm looking at these guys that ran into every fire, eating the smoke. they had no packs. here they are. they're asking you please, give me my money. please do the right thing for yourselves so you can look in the mirror, so your kids can say my parents did the right thing. do it. do it now! do it before they're dead. please do it. [applause] >> thank you. any other members of the public like to address the board at this time? public comment is closed. let me ask the executive director, we did once -- there was a request to calendar this during the last meeting for the up and down vote. can you address that? >> i was directed by the president of the board to not calendar it until we've been able to engage outside council to advise the board >> do you have some idea what the time line that is? gri would say that we're hoping that the independent legal counsel could be available to advise the board after june board meeting. most likely, since this will be the first time that the board will be advised, it will be calendared as closed session with action item after the closed session. i take detective direction from the calendar. they understand that this retirement board give advice of legal counsel before they would make a decision. that's why we're pursuing the independent counsel. she understands that mostly board members understand f you're going to receive legal advice from counsel, generally speaking, it is done in closed session. that is not precluded being calendar as an action item and open session at the same meeting. >> thank you for that clarification. thank you all for coming. let's have a ten minute recession and we shall come back to have the continuation of our meeting. i did want to continue item seven, eight and nine to the next meeting. we'll take a ten or 15 minute recess. we'll come back so we are in recess. >> mr. secretary pleases call the item >> action item approval of the meetings of april 13, 2016 retirement board meeting. >> members of the commission, we have the minutes out in front of purpose mike made a suggestion to modify part of it regarding the discussion during the deferred comp plan. i recommend that the minutes be amended to recommend that. >> can you explain that amendment to the board? >> i made a copy of the e-mail. all he wanted added to item 12, is commissioner meiberger cited d.c. contract dated 5/5/10. verifying different standards of care that the d.c. is not a fiduciary. that's what he's asking to be added to the minutes. which were his characterization of his comments. >> i did cite the contract directly and provided that in the attachment. >> it's been added his comments. >> right, commissioner meiberger cited and quoted. it's all attributable to what he said at the meeting. >> you deny that that the d.c. is not a fiduciary? >> do i not that, however, they are fiduciary. >> for the next meeting, could we bring the actual contract? they're very clearly different between the contract of the deferred comp plan which is not a fiduciary and the plan that does have a standing of fiduciary. it's obvious from the language, i think that would clarify mr. driscoll's issue. >> i believe beyond difference in the language, staff as well as legal counsel, believes that based on other warranties and the contribution of contract, they are in fact, fiduciary to the plan. you can through the good the order, request that that be calendar, we will take direction from the board. >> i think there's a minor spelling change. mr. stinson spelled his name, correct that spelling. item nine, i don't believe rudy hopkins attended the meeting. which is on page 11 of 19. >> he was part of the report. he was no attendance. he was part of the written report. it says those following folks would provide an oral and written report. he was part of the written report. but not here as part of the oral presentation. >> it says oral. if it's both, you have to be here to be an oral and written. if you're not there you can't present an oral report. like the minutes to reflect that rudy was not here. >> okay. >> he did not present an oral report since he wasn't here. if you read this, the and, says you were there. >> there's a group of five folks who provided and oral and written report on this item. you need to us to clarify that only four were present to provide the oral report. we can clarify that for whatever substance that is. i will be happy to do. >> i'm happy to make the change if the board approves that. i don't understand the significance of the difference. i'll be happy to do it. >> just for clarification. >> the board approves those amendments. >> any other board member have an issue? chair will entertain the motion to adopt as minutes. i like to move that the minutes be adopted as amended. anyone like to second the moti motion? >> second. >> moved and seconded to adopt the minutes. all of those in se aye. >> aye. >> any opposed? the ayes have it. public comment. would anyone like to make a public comment regarding the minutes? seeing no members of the public. public comment is closed. we have a motion on the floor. seconded. all of those in favor say aye. >> aye. >> any opposed? the so ordered. item number four. moving on to item number six. which is the consent calendar. plaza call the item. >> consent calendar. >> we have a consent calendar in front of us. for action item. anyone like to make a motion. >> i'll move the consent calendar. >> second. >> all of those in favor, any public comment regarding the consent calendar? the public comment is closed. any members of the commission like to address or ask any questions? all in favor in adopting the consent calendar say aye. all of those opposed? so ordered. moving on to item number 11, which is the headquarters. >> i was told by president cohen she has requested that we continue item number seven. we do need to address publicly how we're dealing with seven, eight and nine. i'm assuming you have no problem with president cohen's request that we continue item seven. >> yes, indeed >> next one will be item eight. >> i have a question. i thought this was continue time certain. if this will continue to time certain again or not? >> item seven? >> my book shows rfp -- >> the president's direction, we issued an amended agenda replacing the rfp item seven with a single topic item. which is whether to play northern trust on the watch list. that is new item that was raised last thursday or last friday. this is never been an item before this board. however, you're correct, the one that replaced was the rfp. which we intend to bring back in june. the recommendation on the rfp. sorry for the confusion. we did send out and we published the amended agenda before the deadline for changing the agenda at the request of the president. >> thank you. >> do we need public comment or anything on this? >> how does that work? >> we talk about seven or what are we talking about? >> seven at this point. >> would you like public comment on item seven? >> it's been continued. normally we don't take public comment on continuation. >> i would like to talk about item nine while those are being pulled from the agenda. >> the chair requested that they be continued. >> these already been continued once before. at least eight has been continued once before, why are we continuing again? >> call the chair to continue this to the subsequent meeting. >> why? >> the call of the chair continue to subsequent meeting. >> this seems to me like one of those things where you get a lawyer before you and they won't give you an answer. i think it's important for good working order of the system to be able to have items come up before us on regular basis and not continue them all the time. items before us, staff is prepared to make a recommendation. this is after postponing it previously. i'm looking for an answer to why we would postpone an investment item. >> i don't think we have enough information to make a legitimate decision. that's why it will be continued to a later date. i think we'll have a chance to address the issue here. this is a new investment for us. i think it behooves us to have enough information. to recall the chair extended the same curtesy to the hedge fund when you requested several different continuations as well. it's that kind of concept. >> it's not quite the same thing. this has been continued from march. i think it's presumptionous of you to determine if the board have enough information for the issue. that's up to the board. you're taking away the power of the board to even functions. >> i'm not. i'm deferring it to one month. i think there's enough important issues. i don't want to delay the time on this. we have a full calendar. i think we can continue this to the next meeting. for everyone that's listening, this to invest in the unlisted a-shares in chyna. this is the -- china. this the first time we've done this. i don't think we have enough information to make that decision. i'm deferring it one month. i think one month is not going to turn on this issue. >> that's my original question. why are you deferring it? >> i state that. i've stated it. >> [inaudible]. will we get additional information in a month? >> are you holding for a vote? you're hoping someone else will be here? what's your real desire to hold this for another month? >> this is a very important decision. if i can clarify to everyone there's a lot of people to listen. the investment is to invest $400 million in the unlisted chinese ashares. this is something we've never done before. these are regulated by different organizations. there's also a nondisclosure agreement which came up the last meeting. nondisclosure agreement. i think there's at the love issues that we have to work out. i think prudence requires that we should spend time on this and make a prudent decision. i think one month is a reasonable amount of time to delay on this. regarding the hedge funds, we waited quite a long time. i thinks prudent to do so. i think the chinese a-shares will last another month. it gives the commissioners time to ask questions. major issues on this, -- among them is we don't hold titles to these shares. i think these are the prudent things to go through. i think we should continue this to the next meeting at the call of the chair and the discussion is closed. that's item number 10 and 11. >> i like to add, i think my desire to table hedge funds was not -- i think that mischaracterization of the fact. it wasn't me desire entire board. when you make investment decisions, you take away power from the board. you haven't given the board the chance to ask staff questions. how do they know what to come back. you highlighted a lot of issues. i let you speak. you highlighted a bunch of issues. if for -- if you're a member and you're sitting in the room, you might think, this sounds terrible. we haven't given any direction to staff in terms of what we want them to? back. if you're going to highlight a bunch of issue and you will make it sound like an albatross. maybe you should give your questions to staff. maybe they come back next month, they kow what questions you need answers to. >> i will be delighted to follow up on that. i have given several questions to staff. let me share those with you. i have given them quite a few number of question and staff has been forthcoming in terms of coming up with some of the fees and other issues. i will be delighted to share those with the other board members as well as offer the opportunity for board members to ask any additional questions that they would like. >> that's the whole point what the last two months have been about. we got the questions answered and move on. now you want to pull it off the calendar. >> out of order. this will continue to the next meeting. you're out of order. item number 12. mr. secretary call item number 11. which is -- >> i have the same feelings about item nine. when you pull item from the agenda that the president had calendared, it's out of order. >> mr. secretary call item number 11. >> president of the board is in the room. maybe he wants to take the gavel back. >> thank you. >> i've continued item number eight also continued items number 10 and 11. which are to invest -- beg your pardon, eight and nine to invest in unlisted a-shares in china. >> why can't we have comments from consulcomments from consultants who are paying money for on this item? why we pass it off for another month. i want to hear if we're going to have any additional information from staff and our consultants. i would like you to address this item and how you feel about it. our president only wanted to pull number seven, item seven. not eight and nine. >> okay, we're going to take a five minute break. five minutes. we're >> our discussion. my apologies for having miss part of the meeting today. as you know, this is not our regularly scheduled meeting. our meeting is the third week of the month. the majo majority of board is interested in attending a conference. i moved the meeting so the majority of the board meeting can go to a conference. direct conflict of my own committee that i chair the board of supervisors. that is what happened. mr. clerk, we've already called item number eight? could you please call number eight just for the record. >> item number eight, action item recommendation to engage capital for public equity manager. >> where we left off there seems to be dissension on the board. it's important to hear the item, air out the questions. there are members on this body that have ask questions for the consultant. let's listen to the staff recommendations and presentation and you can fill in as need be. >> go ahead. >> we're bringing back the -- today we're bringing back the managers that we originally recommended at the march board meeting. our investment on these managers remain the same. we were able to provide updated return analysis in the memo. at the march board meeting we talked about the investment opportunity in china. it's now the largest country based on gdp approaching power. these dedicated managers to take care of the complexity and the size of the market. today we like to focus our comments on the two managers we are recommending. we like to recommend c5 capital. we recommending investment up to $200 million. it was founded in 2006 to manage the account for stanford university. they mainly have two products. first is the return products. that's the one we're recommending for san francisco today. it targets net annual return of more than 12% on a three year rolling basis. it's a concentrated portfolio of about 20 to 40 spots. this is a strategy they launched in 2007. in contrast their second product is enhanced index strategy. this was launched later in 2009 to more diversified product and it targeted 200 to 300 over the difference. in terms of investment velocity, absolutely return strategy as i said is invested predominantly in china. it can invest up to 50% in cash and fixed income. it tends to invest in large stocks because are the market leader. they feel are attracted for their portfolio. these companies can provide liquidity for the portfolio in times of market volatility. we were able to provide additional return analysis in the memo. since inception, very strong annualized return of 17%. relative to the benchmark this were upless than 10% over this time period. if you turn to page seven, you can see the chart that illustrates the outside return to c5 since inception. it has been able to do this with about half the volatility of benchmark. resulting in strong and suggested returns. relative to a china managers database, it ranks in the top quar tile. it has the lowest volatility and highest suggested returns relative to the database. we would note all returns are net of the standard fee structure. we expect to get more stable returns for san francisco and we outlined some of the details of the new negotiations in the memo. we think c5 has a very strong management team. good investment discipline and excellent performance. we're recommending an investment up to $200 million with this manager. i'll pause now to take any questions before we move on to the next manager. >> any comment? >> we did conduct due diligence on both springs and c5. that diligence involved phone discussion with each manager. we have not visited them on site. we reviewed their performance data and independently calculated the performance results. normally, when we look at a manager, we look at what are called the five ps, philosophy by which the manager expects to create value going forward. the process they employ to implement that philosophy exactly how do they choose stocks, how do they build portfolios. the people who are making those decisions, do they have the experience, the seniority, the depth of knowledge of a particular area to add value and are they locked in. they look at performance not to see whether it's good or bad. to see if that performance is consistent with those upper elements. a manager that tells you he's going to have high tracking error and very few stocks in the portfolio, is not going to track an index fund for example. lastly, we look at pricing. that manager being compensated fairly for what they're doing. we did in the case of c5 and springs conduct data analysis. we talked to their team. we looked at their numbers and their people. >> do that mean you went to visit? >> i said we did it by phone. we did not visit them on site. that is something we would intend to do at a moment in time. we did all the interviews on phone with data being provided by the manager. >> thank you. >> i will say in the five to seven year horizon with limited return potential in domestic equity market, we as a firm, non-u.s. developed and emerging market strategically going forward. although, in the latter case with respect to emerging markets, which today are selling at about the lowest p.e. ratio they have in recent history. they have been under performers. when something goes down, the attractiveness going forward becomes higher in cyclical market. we are a believer in emerging markets in the longer term. there are a number of issues challenging emerging markets like the strength of the u.s. dollar, the commodity cycle, the pricing of oil. we think emerging markets bring with them more volatility risks but in the long term, ewe think emerging market attract potential. we did develop a forward-looking forward for chinese equities. chinese equities and china itself are half of the emerging market. they're a significant portion we think china is a challenging point in its economic history. they are shifting from a manufacturing export oriented economy to a consumer oriented economy. there are concerns about that and the ability to sustain their growth. you're look at an economy that is the second largest economy in the world. they have been embarked on an program of stimulating investments particularly in technology, you read that everyday. the educational infrastructure is strong, the access to educated labor is strong. their currency has been stable over time. we do think in the long term, china is an attractive place to invest. more importantly, it isn't just the market attractsiveness of china. it is the ability of managers active managers in a less efficient market to add value above and beyond the index. as we looked at c5 and spring, both of these managers within this context of a less efficient market with good people who been doing this for a while, much longer than the average manager in china has, they've generated a track record that is outstanding. that ability to do better than the index combined with the belief over time, would cause us to support the staff recommendation to allocate money to spring. subject to, there are some questions that have been raised about perfecting your ownership interest in the securities that have to do with some of the csuty operations that are being explored. we are supportive of a recommendation to invest in these two managers. >> mr >> take a note on page six, the returns of this strategy is cumulative returns is three times of the index. you'll note on the next page, in terms of the chart on standard deviation it's about half that of the local china benchmark. if you look on the graph, you will see in 2008, a much shallower decline relative to the china benchmark. i add that on, i did visit with the team on site. we met with them a number of times. our total number of meetings is probably at least ten. i'm not sure i know. i met with lee in prior. including here at san francisco before han started. >> previously coming to san francisco, i worked at m mckenna. i knew dr. lee from my time at mckenna. >> we know this strategy really well. >> thank you. i know commissioner, question? any questions? >> in terms of performance data, i understand they provide it, how do we independently verify performance data? >> i don't think we usually verify. their main fund is audited. earlier years were separate accounts. those returns are owned by the owners like stanford. they did launch a fund in 2013. >> how long have stanford been since 2007? almost a decade? >> yes. >> stanford still with them? >> yes. >> there is no standard for these kinds of assets. we did get monthly numbers from them. we looked at them from reasonableness test. they were validated with stanford. you have an organization that is looking at the transactional activity. lastly, they did an audit of the financial report. it does give you an idea of what the annual data is and the monthly numbers are consistent with that. we do not get to -- we do not get the same level of transparency and validatio validation of the individual monthly numbers >> standard for managers in the space? >> not really. >> no. >> the calculation methodology is standardized but the auditing of the number is not. it's an international standard. >> you're saying that the standard is not audit but they do audit? >> they don't audit the monthly performance numbers as would be the case with gips and the united states. they do an annual audit, it has cash flow in and out. it gives you an understanding what the annual audit ought to be. >> are there any concerns with annual reporting? >> i think in in case, where you had a third party like stanford and another institutional investor that does this month in and month out and the numbers that we receive from the match, those numbers, closely match them, is sufficient. >> would we still have interest in them if there wasn't a another well established endowment that has such a track record of history with them? >> i would say the answer to that would be no. then you're saying three year track record without a premier institution, no. probably not. >> since 2013 is not much of a record. there's other history there. >> in this part of the world, how you do business is important. it is anywhere, particularly in china. we did a lot of reference checking back with the principles of the firm. they are the highest standard of people. just spotless track record in terms of integrity. >> this would not be separate account. >> it would be a separate account. >> we would have transparency then? >> we would have transparency. >> that's a big detail. >> let's see here. anyone, the floor is yours. >> [inaudible] >> we have to use their local custodians in china. northern trust provide reporting. >> is written in here about their discipline. the positions they hold. they don't go over any limits. can we verify that they apply those rules? >> i looked at their holdings over the last year, they didn't violate any restrictions over the last year. didn't go through every single holding over the last since inception. >> performance numbers are very strong in terms of sharp total returns. number i'm concerned about, is there upside, downside capture ratios? it's not as compelling as strength. you tell me -- >> if you were to pick one manager, i think, we didn't discuss this, i think spring is the manager you'd pick. >> [inaudible]. >> you said relative to the other manager. they have the ability to go to 50% in cash. if you look at their maximum draw down history, they protected best in the maximum draw down. over time, spring has always been a good downside protector. we don't see it as built in their process. we're a little bit more comfortable that on the maximum draw down. but spring has provided better upside, downside capture as you point out. it is a new space and the ability to go in with two managers slightly different rather than have a single manager we find makes some since. >> you did put in your footnote here about hopefully, getting fee, better term for us. the issue is then, we've been looking at china for many years. we have some small investments there. i suppose we believe news about china is positive. that came up earlier today. we should try to do it with the best and the issues that came up about the class a and class b shares. >> those issues are semiunique to china. >> it's about managing risk and not about getting wonderful green numbers in our face. sounds like you've been raising all the right questions. thank you. >> many of my questions i've shared with executive director and staff. they've been forthcoming in answering many of my questions. i did meet with bill and his staff on friday. in terms of going through these issues, this is new on chartered ground for us. to invest in these unlisted a-shares. commissioner driscoll is correct. that was the nature for doing that. later on, i will tell you the reason why it's superior wave of investment. let me share the macro discussion. i'm fully on board of the macro discussion. china is or is the largest or second largest economy in the world. growing as a faster pace than we are. making some tremendous inroads. i'm bullish on china. probably among the most bullish on china at this table now. i think it's a tremendously innovative society and culture. very much in favor of that. also, on this specific recommendation c5, i have met with some of the principles. i met with some of the principles and i'm impressed with them. i want to make it clear, in terms of my perceptions on the players in this, i think they're fantastic. i think they are among the best that i seen. the disthree i have is due diligence by staff and consultant. number two is the ownership of the share, number three are the fees. those are the three ones. fix go through the consultant recommendation, napc is our consultant. have you been to china to visit these members? >> i have not. our people traveled to china. they have not met with these managers. they will do on their next trip. >> you have my vote today. if that's the case, that's why i wanted to delay the vote. you speak mandarin? do any of you speak mandarin? >> is the business being conducted in mandarin or english? i think we can disagree on that. that's the due diligence. do i have apprehension our consultant they do agree with this. when you talk about the advantages in your memo, page four of any pc memo, discussing a qc allocation with the direct application where you have and owned the shares. if we use another manager, we don't own the share. do you think that's a disadvantage when you do not own title to the share? >> it depend on what they permit you to do that. that is a disadvantage on the surface. >> i'm talking about ownership of the shares. we don't own the shares if we follow this recommendation. >> you have an allocation, an allocated shares from the manager. >> we do not own the shares if we go through the recommendation. we might think we have the standing of and everything else, we do not directly own the shares with this recommendation. >> what does that mean you don't own the shares? >> it's substantive. >> it's customary when clients qc. it will be in agreement with san francisco and local custodian. the custodian recognizes that san francisco is the owner of the shares. if anything were to happen, they would liquidate it and give us the cash. we have the proxy right for the companies in our portfolio. >> does stanford own the shares? >> they have their own qc. >> they did start -- they do have their own? i don't know if they will do a qp now. >> the landscape has changed significantly over the last few years. we'll have additional options to the a-share market. >> commissioners in 2012, you my away call, rudy said we started the qc process. i was the one that advocated for that. right now at uc, one member of their team will no longer do that. they did get their qc license last year. it's now four years old and it's still not funded. right now the reason i would not do that now and why i would do it four years ago, things have changed significantly in those four years. the hong kong stock exchange did not exist in 2012. that makes a very large percentage of the a-shares market available to institutional investors. the shanghai stock exchange will further make that such that i think something like 96% of the total listed a-shares will be available to a manager who has their own qc license. the bottom line is that qc license is northern necessary for foreign investors to invest in the a-shares market. you have 299 current a-share qc license holders. 299. averaged about 27 or 28 a year up until the past year. with the advantage of hong kong stock exchange. the advantage is going away. in the last year, 11 institutions have gotten it. not all 11, who are they? they are stock pickers. we are not stock pickers. their institutions like fidelity or whatever money manager in taiwan, they're stock pickers. we pick money managers. here we have money managers who have the q fee license. why do we need to get a license when we have a manager who has their own? there's no need to do that. the q fee license is going away. you can instruct us to do that, you will bury us with bureaucracy. we have to be at the beck and call of the chinese authorities whenever they change their regulations. which is frequent. how deep is our public equity team. two people. i hope han is here ten years. if she leaves, how long does it take to hire somebody here? it takes a year. if the beck and call comes, give us whatever information we have to do our own reporting -- >> i think we understand now. >> very good. >> commissioner bridges is doctor anything you wanted to add? >> let me answer your question. to me that's worth it. to the beneficial owner of the share. if i can give you a metaphor, yes, it is the early bird that gets the worm. but it's the second mouth that gets the cheese. i am worried about what could go wrong with this. there's a lot of thing that could go wrong if we're not the beneficial owner of these shares. it's worth having a vetting like we are briefly doing here. i think it's important to have the ownership, beneficial ownership. here's where the culture comes in, i don't want to litigate this in a foreign court, or foreign country where i don't understand the language. i think we have to vet these kinds of things. it's been two years and not four years that we did this. i know rudy hobson started the process along. i know he hasn't invested. i think work learn from -- i think we can learn from this. but to me, the issue of fact whether or not we own the beneficial terms to me. number three is fees. i do want to discuss fees. i think staff has been forthcoming with the fees. just so we're clear, it's a performance based fee versus performing the manager. we were discussing a previous incentive fee that we didn't think was reasonable. staff did send these in terms of the gains where they get 20% of the profits. it's president-based fee. we're subject to a nondisclosure agreement. i want to be very careful with that. the short answer we get a percentage of the fee. if the fund loses 20%, do you want to pay a $6.4 million management fee? when asset have gone down 20% to pay a $6.4 million management fee? it's those kinds of questions that we have to deal with in terms of what under circumstances we want to pay these fees. i'm not sure if this is the correct way to do it. i think the board has to have some feeling that they're willing to pay fairly high fees if they lose money. which i'm not at this point prepared to do. i would suggest, i think we have to vet the q fee versus nonq fee. it's worth delaying. one more month until we can come up with answers. it's far too risk. far too much risk if we don't own these shares and we have to be in the courts for the next so many years. we have to be careful about what could go wrong. i know we're looking at the performance. i have confidence in these managers. that's not what's issued. i also have utmost confidence in the chinese economy. we have some issues to resolve in terms of whether we go forward. this is only the second time this has been in front of the board. it was two months ago we deferred it to this date. i don't think it's been a long delay, it's prudent that we resolve these issues. it does give me some concerns that our general consultant hasn't visited china. there's so much you can do over the phone. i know your reasons and we didn't synchronize with regular trip this china. the importance and the culture, you have to sit down face to face with these people. that's the way it ss. >> i think we'll call the question if there's any further discussion, we need to take care of it now. please. >> my question is on the -- you stated they will be using their custodians. i know that all u.s. custodians have their own approved custodians in every country. is their custodians northern trust custodians >> it will be china construction bank. just a couple of comments on foreign investors, chyn china a-shares. one is hong kong shan high the second is china construction bank. i had a conversation that is not our custody bank regarding who they favored in terms of -- they had a client who wanted china a-shares. who they preference will be for the custody. those were the two names in question. hong kong, shanghai, china construction bank is local. >> my question still remains, we've contract with northern trust as our main custodian. in the event that anything happens, that's still our custodian correct? my question is, when there's a problem, we go to northern and northern goes to various countries. do you feel confident with their custodians that you be negotiating them directly and not through northern? not northern trust's relationship, correct? who will be negotiating with this custodian? >> i don't have an answer. >> i'm not sure i understand the nature of the question. i do know that we have complete look through to the portfolio. doctor you do, you're in the u.s. when you're trying to -- when you talking about interest and security, if you don't have that relationship with that custodian, that presents a problem. that's why you have a master custodian. that's why you hire them. so they can talk to the local securities settlement teams. that's the question i'm asking. because you don't have the perfected interest, who will be your person on the ground this that custody bank to work on your behalf? >> that is with the manager's custodian. >> i understand that. >> just so you know, if we did happen to get our own qc, we'll have to get our own local custodian, own local broker and attorney. >> i understand that part. it still goes back to csuty settlement issue i'm asking. >> we have talked to quite a number of institutional investors who are invested with springs and with c5 and others. who are using local managers who have their own a-share q fee license. nobody ever had an issue, yet. it's been ten years. who's to say if you do have your own q fee license, there hasn't been a problem yet. it is a communist country. you don't know that's a q fee license will be your holy grail that we own the shares. you don't know that in private equity. >> we're going to have the keep conversation moving more efficiently. it's 5:00 and we're only on item eight. captain, you had your hand up? >> staff did visit these managers in china so you know who they are? >> met with them in beijing and hong kong. >> nuances of language are unique. we do invest in every country around the world correct? we have language problems there? >> we invest in many. >> these people that you met with, with their ability to communicate in english satisfactory? >> men do not speak english. every one else spoke perfect english. at springs, the lead pm, james, does not speak english. help understands. he's forming his reply. you can see that he understands it. everyone else spoke perfect english. >> call a vote. motion has been made. let's do a roll call vote. excuse me, you're right. my apologies. let's take public comment before we take the vote. any member of the public like to come up and comment on item eight, please come up. >> this has been rather challenging to follow. i'm not sure that my comments are quite in any order. it seem to me we have seven ps and not five. adding phone as number six and purchasing taking a poke as number seven. i am not convinced from the discussion that this would be a prudent investment for a pension fund. endowments are different and i think that we should not be following the trend of endowment investments. they don't have the long term necessity to provide pension funds into the future. endowments operate on a different level. we should not necessarily compare. one of the problems i had when i first heard about this potential investment was the nondisclosure issue. that i believe that there was a nondisclosure agreement. i don't believe that staff or anyone else has the authority to give -- to sign a nondisclosure on behalf of the board. there is a lot of information that's not coming through the board. that might be fine for the staff but i don't believe it's sufficient for you as commissioner. i don't see the transparency here. i also heard northern trust name being mentioned significantly and yet, the item we have continue talks about putting northern trust on an under review list. which has me quite nervous. china does frequently change their regulations. i believe the reason i handed out the website observer, there's an article in there that directly impacts this. it says that chinese law requires that chinese shares cannot be titled in an american name. you don't hold titles to those shares. i think that's highly problematic. as was pointed out in your discussion, not owning those shares, i think puts us as a significant disadvantage. if something happens who do you deal with. you looking at putting together a legal agreement to you can have some rights to those shares. i i think you never have full rights. i am concerned about the fees. it is known these days, just as we've talking about, hedge fund and everybody who's bailing out of them because the performance is not justified. that we're looking at investing in china and there's a lot of controversy over what kinds of funds is there. you said you met with some of the managers but you also said you haven't visited these guys directly. you're looking to do it on your next round. i worry when you haven't basically met with them. is it an empty office more, is it just a bunch of people who put something together. they're telling you by telephone how great they are. there have been a number of exposes with regards to investments in china. i think there's a lot of potential there. i think we haven't done the due diligence that is necessary to really establish these as viable for $200 million worth of our funds. we're looking to see what that happens down in the future. if we take heavy losses on this, we're still paying out fees and what impact will that have if you move it up to $400 million on our pension fund. i think this is not a prudent move at this time. thank you. >> anyone else? motion has been made and accepted. let's do a roll call vote please. >> i will vote no on this. >> no. >> no. >> aye. >> aye. >> i don't know about this one. i will have to go with no. >> i just like to add a little discussion. i think there's been a gross mischaracterization of the facts here. first, our staff has visited on site in china the manager. only consultants hasn't visited on site. our staff has visited with the manager. it's no different than all our other investments in chyna. we don't own the shares in china. it's the same. is it any different? >> no. i think really, what we're looking at here, the same investment traits that we have with the other investments in china. there's no difference structurally. only difference it's public market and not private market. >> that brings back to commissioners. an embarrassment to the institution. it's a waste of our time. >> thank you for your work on the item. could you please call the next one. >> item number nine, give this to the board and ask questions. it's the same issues. >> item number nine, different than any -- excuse me, when we make investments in china, as we have done through other companies investment firms, the way we invest and how the investments are held, is it any different for springs? >> no. >> the issues surrounding how the investments are held are no different for this than any of our other investments in china. >> no. >> we've all voted to put money into china for all other investments, none of these issue have ever come up. >> right. >> but they came up today. >> yes. >> how does this investment differ from all eight. >> different manager. there's two different managers. they're both to invest in china. but they're two different managers. >> how much work have you been doing on this? >> since hahn started here in july. >> this has been 50% of our time. maybe more. >> you've been working on this since september? >> july. >> since july. >> we're talking ten months. >> correct. >> are there any issues that you want to bring to our attention? >> only thing i'll mention is that it's very rare to find a market where you have the potential to earn 10, 15,% access returns over a benchmark. the china market is the leading market to do that. because it is extremely inefficient market. there's a good information. which means the value of good information can pay off handsomely. c5 has outperformed nasa fees by 8% annualized. in addition to that, the fees that hahn negotiated for us are amazing. they're really good. >> one of the things we heard today from retiree, they wanted to pay the pre96 retirement cola. in order to pay any benefit, we have to earn an investment return. what is our outlook for investment returns in the u.s.? is it as good as china? >> you saw it on any pcs previous recommendation, 6% annualized. >> we can't earn enough money based upon expectations based own here in the u.s. market? >> it's very unlikely that the u.s. investment market will earn 7.5% in the next five or ten years. >> we're look into other markets to try to be at the front of the curve to get with the best managers that we can make those monthly payments. >> correct. >> i mentioned here in my first month here, a forecast of a low return environment. that has happened. equity markets is flat over two years. bond market hasn't done much better than that. these two managers have earned significant access returns in that time. as they have through their history. >> my perspective, we wouldn't be going and looking at other markets outside the u.s., the fact is we cannot. >> if the u.s. treasury market bond yield were trading at 10% annualized, i would say let's put 100% of our money in u.s. treasuries for the next 30 years and cancel our board meetings for 30 years. >> after that 30 years, we can meet again and decide what to do with our 250% fund status. >> i think that we really need to be making these investments. they're top managers. there's a track record of success. staff has spent at the do of time working on them. it's not something they picked up last month. i support this item. i defer other members for questions or comment. >> as i said, very constructive on china is the fact that we don't own the shares which is why i wanted this to continue. i think it's a superb manager that's not the issue. the issue is we must have a comfort level with owning the shares. as well as the fees. that to me is what the issue turns out. that's why i suggested we continue. because of that. regarding to commissioner stansbury point, that's why we have a private equity portfolio in terms of earning higher returns. that's what that's all about. we have a lot of things on the gent. i'm willing to rediscuss this at a future date. discussing the advantages and disadvantages. we haven't done this. >> commissioner meiberger you voted for private equity investment in capital and china. you supported those but you never brought up these issues. i'm wondering how you can reconcile those two issues. >> private equity is different from public companies. private equity you actually own the shares. it's a different kind of thing -- >> structurally -- >> you ask me and let me finish. we have a lot to discuss here. we have discuss this offline unless your purpose is to criticize me. these are pieces of paper that we're trading. there's a big difference between trading pieces of paper as share and being the control position in owning a company. there's a big difference to me in that. this because among other things, in pieces of paper, there's a difference in terms of past performance indicating future returns. in the private equity arena, these managers have a role in developing the company, growing the company, putting staff in in many other things. private equity, the historic relationship is indicative of the future. paper not as much. i think we're belaboring the point. we have other issues. >> is there any difference in how the investments are held structurally? >> no. in addition to that, i'll remind the board, in the past year, there's not a single plan sponsor that has thought and gotten approval for a q fee license. because the need for it is going away. one member of the senior team at uc told us a couple months ago, if they had to do it over again, they wouldn't do it over again. they wouldn't apply for the qc license. here it is, four years after they started with their q fee license, they haven't funded it yet. what do you think is going to be our experience in doing the same thing? they have three times the size of the staff that we do. why is our experience going to be any better than theirs? >> i agree. >> i agree as well. >> captain. >> question. to your knowledge, any other pension funds are any of them investing in public security from china? the university of california had three different totally -- >> i'm sure they all do. >> is there a public pension fund money? >> i'm sure they all do. >> anyone else? commissioner bridges. >> as a board should we not be investing in china. we all voted to put money into china. we're all backing up saying, there's this issue. there's a little -- las there's a lack of consistency on the part of the board. i move the item. >> before we go any further, we need it take public comment. my question is, the fact that win -- when we don't have -- when you don't hold stock. i don't understand how we recover if there's any discrepancy. if that's the case for all of the investments that we make in china, i too now question -- >> ellen, could you please try to clarify for the board, the difference between public equity investments in china and private and why they would be any different in terms of custodial and ownership? >> there is a basic difference between public equity and private equity. private equity you have a bunch of contracts. public equity, public debt, you're holding securities, securities are traded. at that level, they are different. in terms of legal protection of ownership rights, the underlying companies involved that you might invest in, privately, are no different in the nature of the way the company operates. some of them have public ownership and some have private ownership. by buying them public ownership, you actually get the advantage of having a third party, a custodian who's holding on to those securities. you have the manager who's looking at the securities. you have a emerging regulations which isn't fully perfected yet. that doesn't exist in the private market. one, i don't think the underlying operation of the companies is different. whether they're public or private. in terms of how you hold them, i generally thought in public markets, you're better protected than you are in private market. because you have third parties. this is a manager that you've hired that has the ownership right. it's a reputable mor manager. they've been around a long time. there are other investors. i thought there's opportunity for fraud. they're trying to expand their presence into the united states and attract additional assets. i don't see the particular if we perfect this third party legal agreement to have total transparency to the securities themselves. that the manager is there and we do have to contract with the manager. it's not what the underlying company. i actually find that the public market security holding is a better vehicle from a transparency perspective this wrinkle of where the ownership is actually held. you know the security. you know the manager. if there's anything going wrong, you can sell those securities. i'm back to -- i just don't find that there's a material difference in terms of protection with regard to the public market as a private market structure. >> commissioners, i agree with all of that. just to let you know, one upon next due diligent efforts was going to be complete the d.d. on the manager who invest in asia and china. this manager has the most amazing alignment of interest i've ever come across in my career. zero percent management fee. a 15% access on the return over six. if you earn six, we get all six. if they earn 16, we get 14-5, they get 1.5. they have no incentive to raise money. like every other manager that charges a management fee has an interest in raising money. if they can just raise the money, they get more money. they don't have to perform. this manager has to perform to earn a nickel. that due diligence effort will stop. because that manager also -- >> this is off topic of the item. >> any other discussions? we'll go to public comment? public comment is open. please come up to the front. share your thoughts. >> just like to remind the board that one of the ways that we have maintained the good reputation and sustained the retirement system over the years is by more conservative investing than really taking high risks. there has been other pension plans that taken high risk and suffered problems as a result. i think that i'm hearing some very interesting comments. i think you haven't seen that legal agreement you don't know what it's going to say. being conservative and waiting to get more information before you make that initial investment is what needed. it's conservatism that has sustained us over the long run. thank you. >> commissioners, representing the san francisco police officers association. i don't fully understand some of the nuances of this conversation. i do fully understand one part. the part that i fully understand that is to do contribution rates that police officers, firefighters and other city clears make. -- employees make. the other part is the yearning and earning and striving of retired members for that supplemental cola. i also understand that it is going to be very difficult to bring down the contribution rates for police officers, firefighters other city employees as well as to bring down the contribution rates for the citizens of the city and county of san francisco. unless, we're capable of earning in this trust fund. i am not certain, you have more information than i do. but this seems to be a reasonable approach and i'm now very disappointed that the board did not decide to put this over for one month in order to collect the vote or at least get the information that you need so that you can get a majority. 3-3 on something this important? wow. thank you. >> thank you. any other member of the public? let's take a motion that's been made by stansbury. i think it was seconded by -- [inaudible]. let's call a roll call vote. >> cohen. >> no. >> my berger. >> no. >> commissioner stansbury, aye. >> 3-3 vote, motion fails. >> it passes? >> failed. >> next item. >> can i ask clarification. if no vote because you want more information or you don't want them to come back with china recommendations? >> for me the no vote is still an uncomfortable place of not fully understanding basic principals of public equity and versus private equity and owning the stock. for me, i like to continue entertain conversations about investments in china. >> that's helpful. what about the other commissioners? >> for me, [inaudible] i need more information. >> i'm in favor of this. it's just the ownership of the shares. let's not forget our custody search is in influx. we have this whole custody issue. which is why i suggested we defer this to a future meeting. i don't think we needed to discuss all of this publicly. >> i am not against investing in china. >> i respect the fact that some members of the board like more time. i respect that. the way interpret the no vote today, it's not a no vote forever. it's a no now because i want more information. i'm willing to evaluate my decision. >> you said you will not be bringing this back. is that a personal decision on the staff level? >> we don't have any new information to give you. the only thing i can conceive, i will huddle back with alan and with hahn and custodians and see we can answer some of your questions better about ownership and underlying rights to the investments. we'll do our best. that's it. if that's the issue that i hear, then we're going to? back and answer that. if there's anything relatedded to the investment, we have nothing new to share with you. >> fair enough. i want to make sure you have enough direction. you did hear a willingness. all right. >> we have our instructions. >> perfect. item number 11. >> discussion item update on the directive to look for in headquarters building in san francisco. >> another controversial topic. looking forward to it. how you guys doing out there? dead crowd, okay. hey dexter. you still alive? dexter is there. we have 11. >> we are given instruction to update the board on director for headquarters building in san francisco staff has been working our real estate partners to identify the direct real estate in san francisco. that could double the plan. today, staff has reviewed number of opportunities but we have not found that building that meets the requirements placed around the next steps to pursue investment. at this time, we haven't made bid or offers or special investment in the city of san francisco. we'll continue to search. real estate partners advised us to be patient looking far headquarters building. for a number of reasons. they still feel that real estate services is expensive. right now looking back towards history. there's some reasons to believe that the market might be slowing down. for example, report, talking about increase in subletting that's been going on in the office market in san francisco. with the subletting space trading 10 to 15% discount market space. based on information with that, caution us to be patient while we continue our search going forward. >> okay. what was that? i'm not trying to be funny. but seriously. >> i will tell you that, when we first presented this to the board, the board made the decision that we would hold the building in which we had our headquarters as part of our investment portfolio. so that direction provided to staff that we needed to find a building here in san francisco that would meet all of the investment objectives of our real estate portfolio. what this report basically said, we have looked at a number of buildings over the years since this directive was given to us. we've not been able to locate in this market a building here in san francisco that would be suitable for our headquarters and would meet our investment goals in our real estate portfolio. >> right, thank you. don't look so stone-faced. thank you jay. that wasn't that hard. not personal. i'm just teasing. any comments? you're up. >> thank you very much. can you tell us which site you looked atw >> short list, 400 montgomery, 3 355 to 275 market. [inaudible] >> in terms of cap rate, what kind of cap rates have you seen? what kind of cap rates are you looking at going in? >> going in cap rates have been in low. lower what we looked at. i can't pull what each one is off the top of my head. >> can you follow up with that. there's some interest in they weres of why they're not suitable. just for those five buildings, can you give us idea on cap rate. developmental onlyup options. -- options have you considered developing a piece of property as well? >> yes. >> with our partners? >> yes. >> can you give us a flavor for the development aspect? >> similarly, it is a land in development across san francisco. there's opportunity at this point in the cycle, it will make a lot more sense. it's a little more complex from an operational point of view. we want to make sure that we're closely tied with our partners going in on it. at this point, we've identified and able to execute -- [inaudible] >> approached the city in terms of surplus that the city have? >> i have not. >> i look forward to the follow-up regarding the cap rates and the buildings that you looked at. >> actually, meiberger has a good idea to visit with the city and the department of real estate just earlier today. we were talking about surplus property. there's a list. i'm happy to connect you to the director of real estate where you can begin to review identified space that the city has gone through a process to identify that is considered surplus. i will fill you in more about that process and what it looks like. i think i can make that connection for you. that might be a little bit easier. >> we should be pursuing a trophy. want to do that it's fine. we have expected rate of return. i did bring up the fact that if you take it out of the concept of our investment fund, think about operationally what we need. we have a long list of things have been stated in terms of locations, accessibility, nice place to visit and work. if we think of it operationally with dot no -- we do not need that high rate of return requirement. if you look at it that way as well, you might come up with a different set of solutions an opportunities. please consider that. this is just one commissioner talking. don't think you have to find something that cap rate return doze has to compete with other returns. >> it's the consensus of the board that we can look in both places because when we originally presented and it was before edward came on board, he was not privy to discussion, we provided the board the number of funds in california that have it as an operational asset versus portfolio asset. this board told us to pursue it as a portfolio asset. if you're opening it up that we could use something to offset operationally or rent that we're paying to whoever we're paying to as an operational asset, that would bring forward a different hurdle for us to meet. we've not received the direction from the board on that. >> it would said, consensus quoting the former president the board who said that. accessible for members and staff. i like this location. it does not have to be here. we should expand our definition we want staff to find. >> i would echo commissioner driscoll's point. you're looking at it from an operational standpoint. >> i think it's irresponsible. in respect to return epilepsie less than our target rate. we're under funded by at least 10%. i think we need to see some numbers in terms of what start adding back rent and reimbursments if we're going to take money from the pension trust and we're going to invest it less than our target rate of return, i think that's a very serious topic of conversation. not taken lightly. >> okay. any questions? let's go to public comment. any member of the public like to comment? >> as you may have realized from previous comments, this is one of my pet peeves since it was the topic that i heard in 1973 when i started my first day of work at the retirement system. i think you can't limit your options. would appreciate it if you open your options to a set of possibilities as you can. i think what you also -- i would like to see since it has been an issue for many of us that the health service board and health service system also be available in the same building because that is serving all of our members both active and retirees at the best possible rate. the other thing is that if you were to invest in a building that could be the administrative building for the city, so that other city offices could in fact, share that address, i think it would not only bring in a greater rate of return, it would be very cost effective for many departments. it would save the city a lot of money. it would bring in a nice revenue stream to the retirement system. it would be probably one of the best moves that the city has made in a very long time since the main library took over the homed planning property, which some of us hoped might have been used. the aaa building is gone. i'm looking at all the other buildings around in the immediate area that could have been potential sites for such a building. please don't narrow your scope of -- your scope in looking for the opportunity. please expand them as much as possible. >> any other members? >> mr. wiener. >> one thought that comes to mind, if we own the building, half the building would never be evicted. positive thing though, this is a stable investment and we're not subject to the margin or anything like that. this is a good tangible asset for the city to have. that's my own immediate reaction to this. thank you. >> thank you. seeing there's no more further public comment. we'll close public comment at this time. this is a discussion item. clerk? please call item number 12. >> chief investment officer report. >> i'll start on the narrative on page three. gateway fund, which we know is capital closed on april 12th in the amount that we requested, $100 million. we got our full allocation of $15 million. the two mayfield funds that we requested, a total of $30 million. she's going to be making a presentation to the board to the investment committee on june 15th. the update on personnel, we have leadership team in place. we do need more analysts. we currently have a search for four. we hope to start an internship program as soon as we get those permanent positions filled as well. i do want to come back to the front page. that is that we had a good month. we earned a little over 1% in the month of april. we're now in positive territory for the first time in a while. fiscal year to date, we're now 89 basis points in the positive. i do want to make a couple of disclosures here. if you turn to the asset allocation on the next page. go over to the current month, section one, that whole section if you go off to the far right side of section one, you go to compliance, you will see the word no. we're not in compliance. that is cash. we have a cash limit of 1%. we're currently at 1.7%. this isn't intentional decision on our part now. we just don't think that it's a good time to be long on stocks or bonds. there's a whole array of reasons for that. declining profit growth, the longevity of the current market, the longevity of the economic cycle, evaluations in both stocks and bonds. unless the board directs us, we continue to late that be the case. also the public market's team met this morning. we're going to take another $400 million out of public equity and put it in safe bonds as well as cash. that 1.7% will probably rise a little bit. with that, i'll turn it over to the board and ask if there are any questions or comments. >> in terms of the cash, what percentage is in u.s. treasury? >> it's in money markets. none in treasuries. we do have pretty good treasury exposure. if you go to the index and the core u.s. bonds. core u.s. bonds is all treasuries. between those two, we might have $600 million for about 3% in treasuries. >> the reason why i bring it up in terms of the cash, let's not forget our cash account was frozen before. there's a big advantage for having u.s. treasury. even though the yields are less. you'll earn zero on treasury, which is zero on the pure cash if you will. that -- i would just say, if you do have anxiety about freeze in the marks, our cash didn't help us in the past. probably not help us in the future. it is treasury. >> i would say in the intermediate term, that cash would in the be where it is. that will be in long term treasuries. >> thank you for your report. >> anyone else comment. now public comment. >> as long as you're within the range that has been approved. discretion goes beyond the range? i've been visiting all of these risk platforms, you did this to reduce risk. these moves. one particular risk you trying to reduce? >> risk of large lofts? >> okay, thank you. >> if there was one, that would be it. >> public comment. anyone want to comment on this cio report? thank you very much. this is -- [inaudible]. we will move on. >> item 13, compensation committee report. commissioner driscoll. >> item 14, which is the recommendation to the full board prior to consultant target date. we talked about that shortly. staff recommendation is a person who will be a fiduciary consultant [inaudible] consultant for the whole program. we hoped before the full board this month. now our goal is to get to next month. there's more due diligence and request information that the staff is following up. those candidates are all qualified as fiduciaries just like our current consultant is. because they are registered investment advisors. we're looking at different performance and abilities. being fiduciary is a basic requirement. >> thank you commissioner. >> we're still on the committee report. >> this is the item. >> okay, perfect, thank you. public comment. seeing none. public comment closed. thank you. next item. >> item 14, action item approval final enter into contract negotiations of the target date of fund investment manager. >> thank you. commissioners as you know, their five year contract expires at the end of june. for that reason, rfp was issued last october that was approved by the board. several responses was received in early january of this year. the response was weighted based on the qualification, fees and the performance. 60, 30, 10 respectively. we had seven responses received. you can see, four semifinalist have moved on to the semifinalist round. the four semifinalist presented to the rfp committee which includes myself as a staff and a consultant on march 1st. it was a very good meeting. we had very good presentations. after the meeting, we deliberated for quite a while. we discussed some things such as potential contract issues, some feedback on fiduciary uncertainty around 321 versus 328 as well as high fees and some lack of transparency on some of the bidders. based on those meetings and due diligence that we did which consisted of reference calls, we had deliberated and considered all of these things to recommend retaining the incumbent. the recommendation to retain target date on manager, are for reasons. the five p.s are people, philosophy, process, performance and price. for the people, the assigned day-to-day team had the most targeted date. averaging nearly 14 years per individual. russell is oldest managers of multiasset portfolios and launched their first target date in 2014. the philosophy, russell is an academic power house that values investment research. it believed in qualitative modeling. for process, they use a research-based approach combining optimization of different techniques as well as risk models and class behaviors. they also factor in the demographics of our participants. performance, the primary goal for targeted goal was in placement. minimize significant loss. this global emphasis is also in line with investment allocation. as a result, performance has lagged over the years but has been improving. finally price, price proposal is the most competitive. their fees, fees are important consideration given this additional costs on top of the weighted oers of the underlying funds. staff and consultant, made this recommendation to the committee on march 16th. the committee continued this recommendation to request some additional information on performance. that said, angela russell worked on additional analysis in parallel, their finding both confirms has lagged due do a larger allocation. it's primarily off the shelf targeted fund. angela conducted a bench market analysis which explains suitability of benchmark over others. highlighted that our target date funds have not experienced the full martin cycle yet. more details can be found in the attachment. given this additional analysis and the fact that russell did meet the target date objectives that were established at the launch of these funds in 2011, the deferred compensation committee voted as commissioner driscoll mentioned voted to retain as target date. today we actually have our consultant who is ready to provide a brief presentation to the committee regarding the recommendation. we've also asked russell to come as well. they will either provide a brief presentation or answer any questions they may have. >> might i recommend to the chair, those are on a different compensation committee, we heard a couple times now. better use of the committee time if there maybe any questions after a very brief presentation. just a suggestion. >> commissioner meiberger. >> it was the exposure to the international market. i guess the european market. was that part of the benchmark. that to me would fall out in the wash if you will. good to see you. >> the under performance that is the attributal to the equity portfolio is it's relative to pure fund. the global exposure is encompass in both the simple and the composite benchmarks. most peers have like a third or so of their public equity portfolio in nonu.s. markets who definitive home country bias. those funds are globally oriented with about half. >> appropriate benchmark just to see what it looks like. who knows. they might have done well in those markets and have better symptom -- stock performance. >> other things that factor into the comparisons. that's probably the biggest one. some the other things regarding manager selection and other allocation such as what we've grouped specialty as classes. the impact of those is captured in some of the other benchmarks like the simple benchmark for example. >> thank you very much. >> anyone else? captain? >> i will ask to the answer. we did not allow the consultant to pick the managers. manager selection was done by us and not by them. for stabilization reasons we agreed to select commodity. that was a negative number. we were down there, we had allocation mix. we did not change our allocation mix. we have now come back up. this asset allocation mix is very large. reason why the committee recommended to stay with russell. all of these questions were asked. >> thank you for that clarification. >> thank you. anyone else? let's go ahead and move to public comment. thank you. please come up. no need to stand and raise your hand. >> commissioners representing the san francisco police officer association. unlike the discussion occurred about ten minutes ago where you were talking about the depend fined benefit plan. both the employees and the citizens of the city and county of san francisco contribute, let me again remind you that this plan is only, totally, solely the member's money. we have a great deal of concern about this. i attended the first meeting that the committee held. i formed the impression that i liked russell because they were lower on fees. i start liking a company when they are low on fees. i was concerned in the performance issues. i think the committee at the second hearing flushed those out to its satisfaction, certainly to my satisfaction. i would recommend that you do adopt this and we again, for those of us who contribute, that we get the benefit of the thinking of the process that russell brings us. i think they're a keeper. thank you. >> thank you. anyone else like to comment? call the next item. we need a smoke motion on this? it's an action item. >> [inaudible]. >> second to that motion? >> second. >> thank you very much. without objection, motion passes unanimously. >> thank you. >> okay, time for item number 15. >> discussion item. deferred compensation manager report. >> thank you. >> good evening commissioners. before you is the monthly activity report. as discussed last month, the stable value has increased its crediting rate from 1.31 to 1.45. you can see that reflected on the first page of the report. i like to open this to any questions you may have with regards. >> thank you. >> colleagues, any questions? looks good. okay thank you. we'll go to public comment. item 15. public comment is closed. there's no vote taken on this. mr. clerk, call item 16. >> discussion item. the governance committee report. commissioner stansbury. >> mr. stansbury. >> at the last meeting, we approved the minutes and we also recommended that we forward on to the full board a third party consultant to come in and take a look at how we conduct business as a board compared to governance policies best practices in the industry. we voted on that. it got voted to full board which is item 17. >> there it is. questions anyone? let's go to public comment. public comment on the report. public comment is closed. discussion item. thank you very much mr. stansbury. next item please. >> action item consideration recommendation for engagement of a third party consultant for the 2016 board performance evaluation. >> in 2015, retirement board voting to change what used to be a self-evaluation policy to a performance evaluation policy and the policy now provides that at least every three years, the board engage a third party independent consultant to come in and assist the board in both setting up the process of self-evaluation as well as performing or participating in the performance evaluation. so the committee has recommended that for 2016, we engage the group. they are experts and have done this. i've listed the folks that they worked with and they are currently with la sara and worked with calpers. committee would present that we start with their proposed draft. consulting in order to perform the 2016 board performance evaluation. >> okay. is that it? >> part of the committee discussion was there is some overlap between functions that are performed by our governance consultant as well as the city attorney's office. they have revised proposal so they would work in coordination with both the governs consultant that we hired. as well as city attorney's office on those areas of review. that would be entailed in this. that's all i have. i don't know if the committee chair wants to say anything further. >> i would add in, little background, after calpers had the scandal, in new york they have pension system that have independent boards but contribute to a one pot of money. there's all kinds of issues with operations and stuff like that. they've been involved there. on a national basis, i think they're known for taking a look at policies and providing sort of best practices as compared to the industry. we recommend this. i think they're a good fit. but also it's in accordance with their own policy. >> thank you, this is an action item. let's take public comment first. no member of the public like to speak? public comment is closed. >> one quick question through the chair, what do you expect some of the outcomes for this? the price tag on this is $150,000. i want to make sure we get our money's worth. what are some of the outcomes here? >> at the end of the day, we're looking for them to come in and sit in on board meetings. look at -- still have working knowledge of our policies compare that to how we conduct business. look at other pension system and say this is what other pension systems do. we think this is the best practice. what we're looking for is actual deliverable on their observations. as a board, we have to talk about it. if we decide to make changes going forward, that's on us. >> the outcomes will be to change the policies and approve them? >> not necessarily. we might have really great policy to our best practices. but it's to have another set of eyes to tell us where we are. >> if you look on page three of the proposal, starting with number nine, it describes what their proposing the process. those will be the deliverables. there will be discussion document, there will be interactive workshop if necessary. there needs to be a published performance report that the board would adopt working with this consultant. >> is there a motion? >> aisli'll move the item. >> motion passes unanimously. >> quick question. did this work in tandem with the firm that we hired? >> yes and no. we talked about this in some way. our current governance consultant would be sort of the follow on to the work that is being done by the third party. the third party comes in and putting together a support and give it to us. we can look at it with our own consultant that we have to decide what changes we make. that's not the intent of this. the intent of this isn't to make changes. it's to provide a report and reevaluate. >> but the objective is to improve governance? >> that's the end goal. >> all right. this motion passes unanimously. perfect, thank you. could you call the next item. >> action item approval of application of hayden roberts benefits. >> this is an application for adult dependent chimed benefits. which are available in certain circumstances under the charter. our member, douglas roberts passed in 2009. he had a surviving spouse and when she passed, her adult dependent son, hayden robert applied for these benefits. under your policy, you have to show that to the child, the adult child, is a natural or adoptive child of the member dependent on the member of the support. and partially totally disabled and unable to earn a livelihood on their own. i can tell you that, mr. roberts representatives have submitted documents on his behalf that establish each of those elements. we're recommending that you approve this so that we can provide continuation benefit to hayden robert. >> thank you. any other questions? >> [inaudible] >> it would be retroactive actually to his mother's death? >> yes. >> any other questions? >> if that occurred june 2015, this has been like 11 months. the child needs the month. >> it's not unusual when you're finding in these circumstances, it's a little difficult for the family members to establish that the adult dependent child was depended on their parent on the date of death. usually there's a surviving s spouse. they have tax records. it becomes very difficult. sometimes it's impossible when you have to come up with alternative evidence that's appropriate. >> thank you. we're going to be losing a quorum soon. let's take public comment on this item. public comment is closed. same house same call? motion passes unanimously. please call item number 19. >> discussion item. the executive director report. >> as we promised, level two of the social investment policy engagement of fossil fuel companies. we now have a listing of all incr, which is the group that we joined. all of their sponsored approaches related to carbon risk and climate risk. what we have is we know those that we voted and so far we voted in favor of all of those. we know that the dates that these other resolutions will be heard. you can notice that on the report some of them have been withdrawn. we will continue during the process season. it started last month. we will do this for the next two or three months. other thing i like to brief you on is the status of the supplemental cola payment. to date, we have made, what we believe all retroactive adjustments for folks receiving benefits. we have paid retroactive benefits to approximately members. we have paid a total of nearly $56 million in retroactive payments. we're also -- we anticipate that we'll be able to pay all the interests on all of those retroactive adjustments in the payroll that will be issued on the end of this month. we call the may benefit check. for some folks, that's the one they receive on may 1st. anticipate reporting to the court that we have met our obligation. there's still a group of under 600 folks who have died that we have and have no continuation benefit payable that we're in the process of locating a state or finding out how we can pay those folks. we done the vast majority. also there was earlier mentioned there was a public records request submitted to us. the public record request was spitted to the comptroller and was forwarded to us end. april. we were able to provide how many folks we identified pre1996 folks who will be eligible for an increase. we provided that information to the group. we've discussed it. we're in the process of pursuing independent counsel for the board. we will relate it back to initial request to the board. regarding the board's authority to be able to grant these pensions to the pre96 folks. the other thing that i would like to remind everyone is we have no more committee meetings this month except we have a deferred comp committee meeting on the 25th of may. i would also remind you that five of the seven board members will be attending the same conference. i would ask you to continue to count heads. when you have more than three board members at any function, please reframe from conducting or discussing any retirement board business. that would constitute a little quorum of the board. last thing i'm very pleased to announce, we've been able to successfully recruit a replacement to fill the position. he will be joining us later this month. he comes from a county system in virginia. he has a 20 year career there where he is sort of worked his way up into being a deputy director position. he's in a drop program ready to retire from there and come here and have a second career. we're very excited to have him. i will make sure that we bring him to one the first board meetings to introduce him to you. karen, breathes a sigh of relief more than i do. she's been effectively carrying that level of responsibility. with that, that's the end of my report. >> thank you. public comment. public comment is closed. thank you. thank you for your presentation. mr. meiberger. >> thank you, one quick question, you mentioned the issues -- since five members of the board going to this conference. since it's on hedge fund, it will be some other people there. we have rfp out for hedge fund. are there any issues we should or should not do? >> you should refrain from discussing any status or anything relative to the rfp. the time for submitting responses is passed. we're really just doing with the five finalist that the board presented going forward. i have looked at the folks who we anticipate being there. i don't see they're necessarily going to be there. even one on one, you would refrain from giving them any process as where we are process wise. what i would say is, the real issue is when four of you are at the same table or in the same room or at the same meeting, just make sure that you aren't discussing specific businesses before the board, which includes the rfp. >> thank you for that clarification. >> other managers, they haven't submitted a response. everything should be fine. >> thank you so much. let's take public comment. i did that already. thank you so much. this is a discussion item. let's move to item 20. >> discussion item, retirement member. >> anyone like to discuss anything? seeing none. public comment item 20? >> for good of the order, we anticipate that the issue of the pre96 retirees will be calendared for the next meting. we look forward to seeing that on the agenda. it maybe closed session first, we would expect that you report out and we would be able to have a full vote at that time. also, we would appreciate knowing who the independent counsel is being hired. thank you. >> okay, thank you. anyone else? public comment is closed at this time. item 21. discussion item. retired board member reports. >> i'm going to accept the report as written. move to public comment. public comment is closed. item 22. is there any business left in closed session? >> yes. one investment item. >> okay. thank you ladies and gentlemen. >> the one that says closed session. >> we need to go into closed session. do we need to take a vote? >> yes. >> we recess closed session. we can go ahead and reenter closed session. >> take public comment? >> no. >> we're going to go back boo closed -- into closed session. >> i want to adjourn no memory of saul weiner. >> you can do >> may i have a motion not do disclose what was discussed what was discussed? this motion passes audiencely. mr. clerk, do we need to take public comment on this motion not disclose. public comment is closed. any items before this body? >> motion may be made to adjourn the meeting in the memory of saul weiner. i second that motion. that motion passes unanimously. anyone else mr. clerk? that's it. this meeting is adjourned. [adjourned] push p>> good morni welcome to the subcommittee meeting, and i am joined by our our vice chair, tang. and i want to change, linda. the clerk of the committee as well as sfgtv for covering this meeting. with that madam, clerk do you have any announcements? >> yes, please, silence all chem phones and electronic devices and speaker cards and documents to be included as part of the file should be submitted to the clerk, after will appeared on the may, 17th, board of agenda, unless otherwise stated. >> with that, so, for the members who are here in the audience,

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