HomeMy WebLinkAbout05.b.2) (Handout) Response to Contra Costa County Employees’ Retirement Association (CCCERA) February 23. March -1 2011
Mr. Jerry Telles
Chairperson of the Board
Contra Costa. County Employees'
Retirement Association
1355 Willow Way, Suite 221
Concord, CA 94520
RE: CCCERA'S ACTIONS ON DE- POOLING
Dear I\ir. Telles:
We received Marilyn Leedom's letter of January 25, 2011. We thank you for that response,
however the Central Contra Costa Sanitary District ( "District ") is not satisfied that it fully
addressed the issues raised in our letter of December 27, 2010 or the current circumstances
facing public agencies.
Initially, we recognize that both the County Employees Retirement Law ( "CERL ") and the
California Constitution, as amended by Proposition 162 in 1992, do provide substantial
authority to the CCCERA Board for the administration of the retirement system. We accept
that CCCERA has the "sole and exclusive power to provide for actuarial services in order to
assure competency of the assets of the public pension or retirement system ", as well as other
enumerated responsibilities (California Constitution Article XVI, section 17). However, we
do not believe pension boards are exempt from the scope of judicial review, nor from the
careful scrutiny by impacted member agencies and the constituents that ultimately pay the
bills. We do not accept the implication that CCCERA's authority is essentially unrestricted
or not subject to traditional legal limitations. Separately, we question CCCERA's authority
to act in a manner based on a "retroactive" approach' when responsible member agencies
made financial decisions relying on your prior policies and contribution rates. If this were
the case, future CCCERA decisions could create or eliminate additional financial obligations
i Ms. Leedom's letter of January 25, 2011 attempts to suggest that the effect of the de- pooling decision of the Board
of Retirement was not retroactive because it only impacts future contribution rates. However, common sense and
your actuary recognize your actions in fact adopted a "retroactive" approach. (Segal Company Letter dated August
31, 2010 at pg. 5).
Jerry Telles, Chairperson of the Board
February 23 March-?-4, 2011
Page 2
on publically funded agencies without restriction, even when these decisions might offend
the basic legal principles such as those related to retroactivity and detrimental reliance. We
question if CCCERA's records had been relatively complete for the past 50 years, would
CCCERA have no limitation on taking a retroactive approach dating back 50 years? We
think not!
Notwithstanding the District's substantial concern with CCCERA's contention that it has
unchecked authority on retirement policy decisions, including the right to take actions
through a retroactive approach, we want to clarify that the District does not seek to take
legal action to reverse CCCERA's de- pooling decisions. Our reluctance to consider
litigation is based on the simple proposition that the District does not seek for any other
member agency to subsidize any of the costs of retirement of its employees. Therefore, the
District will pay appropriate amounts to cover all of its costs resulting from de- pooling and
the delay of CCCERA to change its "Policy" in response to the clarification on final
compensation resulting from the In re Retirement cases (2003) 110 Cal.App.4th 426. The
District, does, however, seek procedural changes to prevent similar unfortunate
circumstances from occurring in the future.
The District strongly suggests one of several courses of actions should be pursued. The
intent is to provide for meaningful input from member agencies and minimize the potential
for future decisions that result in unfortunate instances of detrimental reliance or missed
opportunities to react to favorable changes in the law. The District strongly requests that
CCCERA promptly adopt new formal bylaws or regulations that mandate a formal notice
and right to comment by member agencies on important policy changes t
substantially affecting their finances. These regulations should provide for written responses
from CCCERA to member agency comments and a realistic avenue for lodging formal
objections, including an administrative appeal procedure.
Separately, the District requests a joint meeting of a Board Committee of CCCERA with a
District Board Committee to initiate consideration of these formal bylaw or regulation
changes and address the appropriate roles of CCCERA vis a vis its member agencies. The
subject of discussion should be to address the nature of reforms that may eliminate similar
controversies in the future and enhance responsiveness to the financial realities of member
agencies and the public.
The current financial difficulties of governmental entities throughout California and the
nation highlight the need for new approaches, greater transparency and closer attention to
the impact of the increasing cost of public services. Taking no action at this time does not
appear to be an acceptable alternative.
In closing, our December 27, 2010 letter appears to have been handled in a manner intended
to deflect public attention or Board consideration of our concerns. It is the intent of
this letter that these issues receive thoughtful public consideration and to that end we are
reattaching our letter of December 27, 2010 and providing copies of both to each CCCERA
member agency.
Jerry Telles, Chairperson of the Board
February 23 March? 2011
Page 3
Sincerely,
Barbara D. Hockett
Board President
Attachment
Cc (with attachment):
CCCERA Board of Directors
Marilyn 1.,eedom, CCCER.\ I?zecutivc Director
All CCCER.A Member Agencies (with attachment)
Daniel Borenstein, Contra Costa Times
CCCSD Board of Directors