City and County of San Francisco Office of the Controller Ben Rosenfield Controller

1) That the City’s Retirement System diligently Controller disagree with it, While the Controller's Office finds the Civil Grand Jury's statement regarding protects the retirement-related interests of partially (explanation the health of the Retirement Fund to be overstated, we do share the general the City’s employees and retirees; 2) that the in next column) concern regarding the increase in the system's net pension liability in recent Retirement Board has a majority of members years and its implications for future City costs. We have presented discussion who are also members of the Retirement and analysis in the City's recent Comprehensive Annual Financial Reports System (they receive, or will receive, (CAFR) and in the City's Five-Year Financial Plan on this topic. We believe that pensions); 3) that when it came to retroactive the health of the system needs to be closely monitored and that it is likely to retirement benefit increase propositions create financial pressure for the City in the years ahead absent changes to between 1996 and 2008, the Mayor, Board of benefits. The Controller's Office disagrees with the finding that our office, the Supervisors, Retirement Board, and Controller Mayor, and the Board of Supervisors did not fulfill our responsibilities to did not fulfill their responsibility to watch out watch out for the interest of the City and its residents regarding benefit for the interests of the City and its residents; changes on the ballot between 1996 and 2008. Cost analyses prepared by our and 4) that despite previous Retirement office and the Retirement System were based upon the best available System-related propositions (2010 Proposition information, and were in line with actuarial and economic assumptions in use D and 2011 Proposition C) that reduced future at the time. As noted in those analyses, benefit costs and Retirement Fund pension liabilities, the Retirement System results are highly sensitive to a number of economic assumptions, several of remains seriously underfunded, threatening which were not met in the years following the changes approved by voters. the fiscal status of the City.

That the Voter Information Pamphlets for Controller disagree with it, The Controller's Office cost analyses for measures in these years included retroactive retirement benefit increase partially (explanation estimates based upon actuarial and financial assumptions utilized by the propositions between 1996 and 2008 did not in next column) Retirement System at the time. Our analyses noted the sensitivity of the cost provide voters with complete estimates of the analyses to these assumptions. By necessity, these cost analyses are brief propositions’ costs, who would pay those written statements for the Voter Information Pamphlet, with detailed files costs, how those costs were financed, and maintained for stakeholders or members of the public interested in exploring what the interest rates were. further. We are open to specific comments on ways to improve our ballot cost analyses, including those for future pension measures. We are open to the possibility of providing a section in the Voter Information Pamphlet with background on public pension structures and status, similar to our section regarding debt management and bond financing that is provided when bonds are on the ballot.

The Controller and the Retirement System Controller disagree with it, The Retirement System produces various reports detailing financial, actuarial, provide extensive reports about the partially (explanation and operational issues, including a summary of their financial statements that Retirement System, but they are too complex in next column) are designed for a knowledgable but non-expert audience. The Controller's for the average citizen, employee, or retiree to Office, in the City's Five-Year Financial Plan, reports on the expected future understand. The data in the Retirement retirement costs to the City, and includes discussion of the health of the System reports is not available to the Retirement Fund in the City's Comprehensive Annual Financial Report (CAFR). Retirement System or the public in a dataset, The Controller's Office has made regular public presentations at hearings held making research and analysis more difficult. by the Board of Supervisors on the health of the Retirement System and its implications for the financial health of the City. We welcome comments on specific ways to improve these various products to ensure their ability to be useful to a broad array of audiences interested in this complex topic. 2016-17 Civil Grand Jury The SF Retirement System-Increasing Understanding Adding Voter Oversight: RESPONSES TO CGJ RECOMMENDATIONS Respondent # Recommendations assigned by CGJ 2017 Responses (implementation) 2017 Response Text