Tuesday, March 07, 2006 | Contrary to what you might think, the San Diego City Employees’ Retirement System (SDCERS) Board members are not waiting for the Kroll Group or the U.S. attorney to complete their investigations before initiating reforms at the retirement system. In fact, our reform efforts began on January 20, 2006 with the release of the Navigant Report and the formation of the Navigant Report Committee (NRC).

This new committee was spawned following the work of Navigant Consulting, Inc., who was hired by SDCERS in August 2005 to conduct an independent investigation into illegal acts and other improprieties that may have occurred with respect to past practices.

Navigant’s five-month investigation described a series of actions, taken over a period of years by previous board members and staff, which were profoundly troubling. The report made numerous recommendations to address these problems and to strengthen the future operations of SDCERS. In order to fully analyze these recommendations and to ensure their swift implementation, the board created the Navigant Report Committee and charged it with achieving reform.

My colleagues on the committee and I take this responsibility very seriously. We are determined to address each and every issue raised by Navigant in a timely and effective manner. We have invited the stakeholder groups of the pension system to actively participate in the discussions and have allotted them special time on each agenda to present their views and ideas.

Moving quickly on reform, our committee held its first meeting on Feb. 15, less than 30 days after the release of the report. During this meeting we dealt with tax compliance issues and concerns raised within the report. The message was loud and clear: We must preserve the tax-exempt status of the plan by demonstrating to the Internal Revenue Service that we have taken the necessary steps to acknowledging and rectifying past mistakes.

Fortunately, work is well under way to address many issues. The board has undertaken a voluntary compliance effort with the IRS and has forwarded to the mayor and City Council recommended changes to the city’s municipal code that are needed to bring the city and SDCERS into compliance.

The board is on track to complete its IRS compliance efforts by June 2006, with a final stamp of approval from the IRS expected by the end of the year.

The committee will continue meeting for the next six to eight months to address not just the IRS issues, but also contingency planning in the event of city bankruptcy; governance and educational issues, restoring the funding level and achieving actuarial soundness; retiree health insurance; and safeguarding and maintaining the Trust’s independence.

The continuing debate about past actions and problems is likely to go on for some time and some issues may only be resolved in court. But the Navigant Report Committee is not content to wait and see. We are asking the tough questions, addressing the critical issues, and taking action now.

We welcome public participation in this process. The next meeting of the Navigant Report Committee, which will review issues associated with the possibility of city bankruptcy, will be held on March 8, 2006, at 1:00 p.m., at SDCERS, 401 B Street.

Mark Sullivan is a trustee on the board that oversees SDCERS administration. He was elected to the post by police officers. Do you agree with him? No? Send a letter to the editor here.

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