TO: HONORABLE MAYOR FROM: Jennifer Schembri
AND CITY COUNCIL
SUBJECT: SEE BELOW DATE: January 31, 2022
Approved Date
2/2/2022
SUBJECT: COUNCIL POLICY FOR NON-VOTING MEMBERS OF THE
RETIREMENT BOARDS
RECOMMENDATION
Adopt a resolution establishing a new City Council Policy entitled, “Non-Voting Retirement Board Member Roles and Expectations”.
OUTCOME
The adoption of the new City Council policy will clarify the roles and expectations of the Council members who are appointed as a Non-Voting Member of the City’s two independent retirement Boards of Administration.
BACKGROUND
The City has two independent retirement systems that administer the pension and post- employment healthcare benefits to retired City employees: the Federated City Employees’ Retirement System and the Police and Fire Department Retirement Plan. Each of these retirement plans has a Council representative that is appointed to the respective system’s Board of Administration to advise the Board of any policies, procedures, or decisions that may impact Board decisions. Additionally, the Council representative’s role is to report back to Council any background or reasons behind decisions of the Board during the Boards’ monthly meetings.
These representatives may participate in open session discussions, but they do not hold any voting rights. This role is codified in Municipal Code Section 2.08.170. Currently, Councilmember Dev Davis is the Council representative to the Federated City Employees’ Retirement System Board, and Councilmember Pam Foley is the Council representative to the Police and Fire Department Retirement Plan Board.
COUNCIL AGENDA: 2/15/2022
FILE: 22-154
ITEM: 2.9
HONORABLE MAYOR AND CITY COUNCIL
January 31, 2022
Subject: Council Policy for Non-Voting Members of the Retirement Boards
The City Auditor’s October 2017 Report titled, “Audit of Retirement Services: Greater Transparency Needed in the Budgeting Process, Interactions Among Stakeholders, Investment Policies, and Plan Administration” found that there could be improved communications between the Retirement Boards and the plans’ sponsor, and that one of the ways to improve communications would be for the Council to clarify their expectations of the Council representative including the type and frequency of the reports from the Council representative.
This was designated as Recommendation #11 in the Auditor’s Report:
ANALYSIS
The proposed Council policy (attached) outlines the expectations for the Council representative in light of the recommendations made by the Auditor’s report. In addition to providing the details of their responsibilities to both the Council and the Boards the Council representative sits on, the Council Policy also specifies the types of reports that should be brought to the City Council and Board’s attention. The Council policy clarifies that the Council representative should report to the Council quarterly on important actions taken by the Board, including actions taken on actuarial and investment reports. Further, the Council policy sets the expectation that Council representatives should continue to bring other updates to the Council during the regularly scheduled item on the Council’s consent calendar.
Each Board currently has a dedicated agenda item for the Council representatives’ updates, and the Council policy clarifies which types of reports and updates should be brought to the attention of the Boards. The Council Policy also specifies that the Council representatives should continue to provide the Boards with monthly updates on service-level reports, annual financial reports, and updates, and any staffing changing during the regularly scheduled monthly Board meetings.
CONCLUSION
The impact of this Council policy will be enhanced clarity to the Council representatives regarding their roles and expectations as non-voting members of the Boards.
HONORABLE MAYOR AND CITY COUNCIL
January 31, 2022
Subject: Council Policy for Non-Voting Members of the Retirement Boards
EVALUATION AND FOLLOW-UP
The Council representatives will follow-up with the Council through their quarterly reports on important actions taken by the Boards and through any additional consent calendar updates. The Council representatives will follow-up with the Boards through their monthly Board meeting updates.
CLIMATE SMART SAN JOSE
The recommendation in this memorandum has no effect on Climate Smart San José energy, water, or mobility goals.
PUBLIC OUTREACH
This memorandum will be posted on the City’s Council Agenda website for February 15, 2022 Council Meeting.
COORDINATION
This memorandum was coordinated with two current Council representatives and the Director of Retirement Services on the proposed Council policy.
COMMISSION RECOMMENDATION/INPUT
No commission recommendation or input is associated with this action.
CEQA
Not a Project, File No. PP17-010, City Organizational and Administrative Activities resulting in no changes to the physical environment.
JENNIFER SCHEMBRI
Director of the City Manager’s Office of
Employee Relations/Director of Human
Resources
For questions, please contact Cheryl Parkman, Assistant to the City Manager, at (408) 535-8152.
Attachment: Non-Voting Retirement Board Member Roles and Expectations
City of San José, California
COUNCIL POLICY
TITLE NON-VOTING RETIREMENT BOARD
MEMBER ROLES AND
EXPECTATIONS
PAGE
1 of 2
POLICY NUMBER
EFFECTIVE DATE MARCH 1, 2022 REVISED DATE
APPROVED BY COUNCIL ACTION
PURPOSE AND SCOPE
The Federated City Employees’ Retirement System and the Police and Fire Department Retirement Plan each require that a City of San Jose Councilmember to act as a non-voting non-fiduciary member of the boards of administration (Municipal Code Section 2.08.170), As a non-voting board member, the Councilmember appointed to the board participates in the discussions of the board and advises the board of policies, procedures, and decisions of the City Council that may be relevant to the matters discussed by the board.
While the non-voting member can participate in discussions at the board level, they cannot vote on any matter before the board. This policy is meant to clarify the responsibilities of the non-voting members to the City Council and the retirement board.
POLICY
1. Responsibilities of Non-voting Members
City Council members appointed to the retirement boards as the non-voting members may attend each monthly board meeting. During the board meeting, the non-voting member shall provide the Trustees with information related to important Council decisions and priorities as the iss ues relate to Council actions. Should any requests for more information or additional communication to or from the Council come from the board, the non-voting member will act as the conduit of information between the two governing bodies.
The non-voting members are responsible for advising the board of any upcoming Council actions that may have an impact on the items taking place during that board meeting. The non-voting members may fully participate in the discussion and answer questions on most topics before the board. The non-voting member cannot participate in quasi-adjudicatory decisions (such as disability retirement hearings) or closed sessions.
2. Responsibility of Board to Non-voting Members
The board will provide the non-voting member with the upcoming meeting’s agenda in advance of the board meeting. Should the board need the input or information on a certain agenda item, the board or designee shall inform the non-voting member before the board meeting to ensure the non-voting member has been sufficiently prepared for the discussion.
3. Reports to City Council
Each non-voting member has the responsibility to keep the other City Councilmembers informed of any important updates related to the actions being taken by the boards. The non-voting member should endeavor to provide the City Council with periodic reports that include written documentation or presentations so that the City Councilmembers can learn more about the decisions being made at the board level.
Examples of the reports to be brought to City Council include, but are not lim ited to:
1. Asset allocation studies
TITLE NON-VOTING RETIREMENT BOARD MEMBER
ROLES AND EXPECTATIONS
PAGE
2 of 2
POLICY NUMBER
2. Actuarial valuation reports
3. Annual fee Reports
4. Plan Risk Analysis Reports
The reports/presentations will be delivered to the Council during the standing City Council agenda item titled, “Report from Council Liaison to the Retirement Boards”. These brief updates to the Council should be made on a quarterly basis. If the non-voting member has additional updates for the Council, those can be made during the regularly scheduled item on the consent calendar.
4. Reports to the Retirement Boards
Each non-voting members has the additional responsibility to ensure that the board they serve has the most up -to-date information on Council decisions and priorities that may be relevant to board decision. The non-voting member should provide periodic reports to the board on Council decisions.
Examples of the reports and updates to be brought before the board include, but are not limited to:
1. Service level reports
2. Annual financial reports and updates
3. Staffing changes
Each board will provide the non-voting member with an agenda item during the monthly board meeting so that the non-voting member may provide periodic updates and reports.