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tv   Retirement Board  SFGTV  November 12, 2022 4:00pm-6:30pm PST

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thanks to all staff who are aware of everything this is helping in [inaudible] provided inputs to this presentation. and specific things to presidentric lee our investment officer and public equity [inaudible] touched almost every [inaudible] and provided support for this review. >> so i will start sharing. hopeful low that works. i will start with an over view of [inaudible] risk management
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framework for sfers this is the comprehensive framework to review risk management which are all connected. last time i will start with [inaudible] reviewed the management [inaudible] september board pacing plans [inaudible] [inaudible] leverage. credit facilities, collateral management and long are forecasts for our liabilities. that is part of the over all risk management framework that we put together. on the right, you have [inaudible] allocations. [inaudible] are to provide liability studies to accept allocations, [inaudible] and it is our we are about it start
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out -- 3 year review of [inaudible] liabilities. and that is what steps our risk tolerance [inaudible] [inaudible] allocation review continuous. we are doing rebeens the exposure management as markets move and cash moves. almost daily. >> as a result, we look to work with our lucrative assets to have plans and risk mitigation actions on the markets. [inaudible] similar to when feeds them to the liability studies. >> today we will focus [inaudible] risk management, which is bottom up, what do we have in the [inaudible] and how does it come per se to
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allocation and -- where we compensate for the risks we are talk. we will review expose urs, review risk objectives. performance. i wanted to reminds you that each class has a deep dive with internally to when we call risk and strategy reviews and the outcome [inaudible] are in presentation to the board. by each. remember that -- our last investment community meetings bh we reviewed. markets and sensitivity it and stress upon analysis.
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today we will framework, we worked close low with each class to understandow to manage risk management and [inaudible] construction. >> and last, you look at the bottom the grounds work is done by a lot of analytical tools. i would like to thank the board and to support us to have access to multiple analytical plat forms. use over 2 dozen analytic providers research platforms to analyze risks that are specific to the [inaudible] but that [inaudible] and that's what we [inaudible]. again i mentioned today we will review risk adjusted performance, asset allocation.
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review the exposures and active risk and where it is taken and how it has been compensated and the stress test [inaudible] analysis. [inaudible] let's start on page 7. here, over time we introduced with the support of board consultants and the board, market different asset classes, that lead to diversified [inaudible] and also increased the complexity of this portfolio. and we need to be much more experienced and well versed in more strategies, we will be investment operations and
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investment risk support ton likewise and monitor those strategies. >> where do we stands today? we have [inaudible] and private equity and [inaudible] and public equity competence public fixed income. you see the allocations to raise public equity competence fixed income to other asset classes. this is the importance when i would like to spend time here this is this slide on the top left -- shows the allocation by capitol. or here i showed the policy weight to each asset class. on the top right you see risk
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allocation. or risk contribution by each asset class. if you see the public equity allocation 37%, it contributes more than half to the risk allocation. on policy portfolio. that is parent part why we feel the resip kigz is important. look at our private the other number is the black bottom will black behalf 13.3 this it is an estimate using [inaudible] and
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analytics of our policy volatility. we sometimed call that number risk appetite. what is the expected volatility of returns annual volatileivity returns. to put in context if we expect 7% return on average, then 2 thirds of the time we expect our returns to be minus 6% less 20%. it entail and as you see on the tail risk minus 20% is the 2 [inaudible] not an expected return. and that's why we daul, risk appetite. that is [inaudible] by the strategic asset allocation of the policy portfolio. >> i like to draw your attention
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to how you think about asset class and improve them and let larger groups [inaudible] the macro asset classes. do you expect the bulk of return from gross assets. we allocate most of [inaudible] to gross assets which is public equity and he fixed income this is 60% in capitol but more 85% risk defined. provide the stain return stroll and as you see, the risk contribution is less than half of the asset weight. and income assets. public and private credit as well as treasuries are expected
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to vice president about 25% of the risk contribution of their capitol allocation. this is the policy portfolio and i'd like to conclude with similar analysis for the current portfolio. private equity and he public equitiet total is 60/61% in gross assets and similar allocation to both risks. 85%. we are overly diversified and absolutely trim [inaudible] and the bottom of the page, if you review, this is our estimate of the total allocated to our risk which is higher than policy but
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in low end with the general guidelines of 12 to 14% and we do expect heightened volatility going forward. so, how did we deal with the diversifying allocations and did than i help? >> this is the longer term view of annual fiscal returns. and you will see that new efforts helped in this fiscal year. the absolutely return provided a good buffer as compared to public equity struggling this fiscal year. good to comper se this return this fiscal of 22 to gfc to 200ave you saw nothing helped.
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and these are actual allocations and actual returns. we did not have large are allocations to more than diversifying assets back then. il skip quarter low returns now to risk adjusted returns. when are we looking at here in first, we try to see how did we do returns and volatility, this year and we will see if it is longer term. and we provide estimates of thenual volatility and returns. we chose 1730 equity bob bench is simple to implement and in line [inaudible] about 12% annual volatility in year. >> we are compared to pierce.
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we see that volatility this year while elevated, was below the 1730 [inaudible] and the [inaudible] was [inaudible] also to 7030 [inaudible] you see it more. comprehensive -- you receive the longer term 1730 delivered volatility of 30. one %. while sfers volatility was 8.3 and cumulative 20%. similar results over 5 years and -- they do conform. i like to dru your attention to
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the longer term since inception. there is simple low much more complexity in sfers funds however this paid off was in terms ofville tillity and -- out performing the returns. the policy before you see that through the -- 12 year returns and was conspire to the bench marks we compare to. and these are going to be simple bench marks as well as peers. this is compared to pop3. and here we could see the one the policy portfolio -- did out
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policy as well. the volunteer and as well as return over -- 1 year the year again and -- longer term and 10 year is when we are plotting not only the returns are superior and volatility is but almost the classes what stands out is the private equity the volatility submit is 47 we delivered close to 8. the return is closer to 60 and which is you know it is -- its immrierd 300 over the -- the market e 85 lent and the equity
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as well. in general you see that almost each class moved up and to the left. left less volatility and higher returns. i like to conclude this section with the performance contribution. we are look at fully return versus policy return. and where that -- additional return come from? so then did it come from allocation or selection. manage selection or within our strategic. tactical allocation away from policy or strategic asset allocation, you see over 5 year
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its is 310 points over performance most is from manager selection and 19 from allocation. i love to point out this our policy is challenging to beat. the return and volatility. the returns you could see here imply 300 basis points premium for private equity. 150 for private credit and absolute rethaurn is the policy is 90 day treasure plus 500 and the treasure don't have much volatility. over 5 years we have low volatility estimates for [inaudible]. this is the challenging bench
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america to beat. on return and risk profile. this contribution concludes the first section. risk and performance. this is exposure by geography for total and you can see we are [inaudible] in margins? slightly in europe on the total bond. if we open up where we are china and um under weight. canada and -- um -- japan. next we look at the sector.
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industry allocation on the total bond. we are over weight information technology. more than 10% but our cross efforts the private and public equity in health care. more than -- 2.6 -- 6%. but over real estate because we have a real estate allocation in energy. you see over the last 5 to 7 years. increase to information, technology and health care and decreasing allingcasion to energy and industrial and financials and real estate. how have we compensated.
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i like to start with this graph provided by one of our managers in general that is taking public markets which you are look at the performance of 2005 technology index. this is the back dromotropic second largest drop and will you see that prior to that, the biotech was down 85% over 3 year period. that puts perspective in our concern performance.
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because as you mentioned we have a strategic tilt toward health care. and that these are the numbers. the over weight in health care. and technology. over -- one, three and 5 year. for several years. they are less and this is just public equityys the other total [inaudible] number compensated. this analysis come from analytic and uses seckor performance. >> [inaudible] if you know this performance is over first quarter 2022, we are concluding
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evaluations for second quarter for private portfolio. you can see that, yes, of the biotech third and health care is was adding to the total performance over longer periods. and information technology contributed to the total performance. and -- [inaudible] next large exposure strategic to china. this slide shows the allocation percentage exposure as well as [inaudible] exposure.
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your total 9.sick % of the upon bond allocated to exposure in china through private and public equity or the tune of 3 billion dollars. however that -- this is since most of the exposure come through public and private equity. we like to review that is a different picture. you simply over low china in public equity helped long returns. china managers delivered [inaudible] and versus 8.4 global index. was not additive over long-term.
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it was challenging over this year. you could see the china manages performed 16 opinion 9%. versus 17%. 17.1% of bench mark and total performance, 17%. next we will move to -- the next long large exposure our active risk. you see in our risk and performance distribution that most of the performance kim from manager selection. and so we are look here public equity. due to manage the amount active risk and over the last 5 years we increased the active risk and portfolio and tripled it.
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>> and -- half of this risk is coming from the strategic plan and half of this coming from manager specific situated selection. i'd like to note and this highlights that while we next active risk, the total risk of public equity performance is in line with policy index. [inaudible] we will see this is these are realized risk over 1 in 10 years. we looked at active risk. we look at not only we trip
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tele. we see that the bulk of this portfolio active risk is coming from u.s. but allocating more to china. and this is the introduction by sector. we do have strong tails toward it and health care. these are if active risks and taking active risk across all sectors. next the exposure analysis of reviewing our close and net. this is a little bit apples and oranges but it is important to manage and review it. however, the gross can be summing up equity exposure which is volatile and some of the short term ways or contracts
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quite a bit -- you know not that volatile and can contribute the most to the absolutely return gross exposure. we want to make sure we understands where it is coming from and expected, most of the time we gross exposure coming from absolute return portfolio. i'm going to skip through public equity and -- other asset classes. each class presents deeper details again to highlight 10% of public equity allocated to china. have china, hong kong and [inaudible] and japan and uk and canada.
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large over weights to health care and it to the tune 6 to 7% and other way in financials, staples and energy. >> i would like treasury portfolio is tracking our index tightly you can see. liquid credits we changed our bench mark policy bench mark to what i call a third bench mark. third allocated to investment groups, high yield and emerging markets global diversified index. this is the new liquid policy bench mark. blue is the portfolio. you see highlights we are
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shorter duration. risk than the bench mark. i have the duration [inaudible] the quality the average credit quality is higher than the bench mark. as well as the dwreeld maturity is higher. we are getting a bit on the complexity and a key point. wonderful review in july i see -- you could see -- the exposure here that the team reviewed it as they were all the way to asia. and technology. versus cambridge bench america.
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credit to asia. one thing i would like to highlight here in our private equity credit portfolio that we take much less risk than cambridge bench mark. capitol preservation is highway for our performance. and get this allocation and often allocate new things separate managed where we save it and guidelines for our managers compared to fund allocation.
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and different other risk triggers. this help us reduce the risk of credit risk in our credit portfolio. reduce the risk of our private credit. >> real estate this is one portfolio we have over in europe and asia and others if you can see we are well diversified across different property types. well presented by our team and well diversified. exposure review return these are not apples and oranges. all funds hedge funds where take
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much less equity risk and wield that androus it further as well as credit risk. knowing our private forteverportfolio is mature and reduce exposure in absolute returns as well. and i will conclude this analysis. there are 2 types of [inaudible] they will present. we do many, many more. some of them are macro top driven we use priority techniques but view with negotiate about -- when we do our are technical as well as portfolio construction. they are general things. and -- general of portfolio to shock and equity which is here
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by msci. [inaudible] and we look at how we sensitivity to currency. as well as correct, sir [inaudible]. energy and interest rate shocks. >> quickly open it up 40% downturn in global equity. [inaudible] and projected result in 25% -- downturn for portfolio most from public equity because of -- quite high correlation. to -- world global equity. but allocations to all the
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classes are projected to support the downturn. we open up further if you have questions help to go through that in detail. public equity and he fixed income. >> any questions? and -- okay. >> just final conclusion here on the historical stress tests. obviously, the mother of all is the [inaudible] crisis. left year we added stress test and the this year biotech stress test.
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upon almost 31% downturn. and preclude -- [inaudible]. they -- put it over here. to make sure we review the framework of the asset allocation and risk management today the risk and performance strong risk adjustd and long-term performance and elevated risk. reviewed expose urs substantial of all the way to health care in china. upon concluded with stress tested should help our portfolio
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on the stress that we considered. with this, i'm happy to take questions. i have a couple questions. >> commissioner driscoll. i wanted to obviously loaded report you must have worked on it for many hours thank you for doing hard work. this the most important victim function that needs to be performed. thank you. trying to explain it all. you said risks throughout this report you mean volatility? >> excellent question, commissioner driscoll. everybody who worked with mow and staff now knows me i never use one measure of risk. now for the policy, risk define
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volatility but throughout the report we look at mull pull stress tempt actual exposures and active stress tests and total risk. volatility is one measure and important measure but frg frequently we never limit our risk analysis boy one measure. go to page 15. 7030 portfolio when we are not. the 6, 30, 10 put in a year ago to represent a portfolio this is more liquid we are a high plea
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ill liquid portfolio. compared to 7030. >> right. so it is fir it i this there is ill liquidity premium and we are commending the 1730 is an easy to implement portfolio. you need a staff of 3 people. versus 23 people we have to implement when we very much it is also the same level. the alpha that come from what staff does is best measures against the policies not 7030 or 60, 30, 10 y. allocations to
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private equity and he fixed income and credit. returns. which i am not. which allocate to bench americas that are not investable. investable with an index we find people to take the money? absolutely. right. >> but -- starting to go ill liquid how much that relates to over the policy decisions. >> that's a good question that's why we have if 5 page in conformance to the policy. page 25, the change in total
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funds for the 10 years are -- volatility was not higher than the policy number. this is obviously change nothing the 5 and 3 that shows improve am based on the allocation mix or recommend agsz for managers. it is i positive change i want to understand it looks significant. was that clear the difference with page 25 and 23 and 22? says the previous 5 years helped. where the chinks we know have return in private credit i'm trying to attribute. >> absolute than i are i big pos. policy change reduced volatility. difference with volatility and the other risks. why you are correct commissioner, driscoll y. in therms of china, it is on page
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38. what is significant of when i'm reading. you said -- all the subclasses where about 9.3% exposed to china? most of the expose urs are coming from public equity competence private equity. >> it is 9% of the total in china. >> of the total, yes. >> i'm trying to allocate risk weapon don't do normal risk budget on page 38 it shows a quarter of our public equity risk is china versus the u.s. i'm wondering is that because of a tilt. will is that when we wanted to occur? >> that is simple low the strategic tilt. um -- and as you see that is the
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result of allocation high allocation to china the upon bench mark has about 5.6 allocation to china. that active risk come forth from the active risk in security selection. go to page 36 am public equity active risk increase from 85 to 343, and that 5 year performed was that a result of -- the allocations the manager selection? is it acceptable ownership something we did not want on happen.
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it is intended increase in active risk. and allocation to -- technology china and biotech. yes it is within the acceptable ranges we target about 3% with a range of up to 5% of active risk which is in this february public equity define as -- [inaudible] the volatility exempts the bench mark. thank you. . i know a year ago that -- this number was around 3% and
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climbing but did in the set the range. never voted on it. you are raising it. i wonder photocopy now is the time specify what the range will be. it worked out. whether or not we need to state so you know what guard rails the team is allowed to function in. it is set up and you mentioned we are reviewing investment policies but it it is in current version in investment policy >> states the 5% number you said? >> yes. up to 5%. why xouz me for not noticing it. why thank you. this concludes my questions. >> any further questions. excellent report. excellent. thank you.
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>> and thank you the team who touched almost every number here. [laughter]. okay. what? you think after a couple of years on zoom i would figure it out >> express my gratitude to the staff this is the item i spent most time reviewing i appreciate the presentation it answered all questions. >> this was an informational item only. public comment. >> okay.
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>> no in person comment at this time. reminder to callers to press star 3 to be added to the queue. do we have any callers. public comment is closed. >> okay. -- next item. item 13 no 12. item 12, discussion item san francisco deferred compensation community report. >> hi. >> >> the deferred compensation committee met on september 22nd of 2022. the meeting covered the minutes the important piece of approval
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to retain vice chair [inaudible] the funds manager [inaudible]. this item forwarded to the board today for approval. and i will turn over to our director [inaudible] for [inaudible] discuss item reporting for approval. >> this is you took the committee report? this is going to the rfp? now we are going in the -- they are 2 items. >> correct. >> so -- you made your report. item then you want to call the item together. >> make public comment, first. >> no in person public at this
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time. callers press story 3. moderator, do we have callers? >> there are no callers. >> thank you. public comment is closed. are we call thing then and 14 together or just 13. >> no, both. no. we did 12. it is now then and 14 together. they are separate it is discussion items. >> right. >> i don't know which we were doing. >> item 13ful action item. target date for manager rf p final recommendation.
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thank you. thank you for your time. chair bridges mention this is to vote to the recommendation to the selected rfp panelling new target date for manager. over the last 12 mons staff working tierls low on a pdfrfp. with the existing contract that expires the end of this year. the proposes rfp was approved on john 9 and posted the following day. the plan received 8 response in july. identifies the top 3 in august and conducted semi final introduce in early september. appreciated upper at the meeting including mr. kershawens who miss said his preschooler's first day of school as noted all 3 which were price, bernstein
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and [inaudible] were qualified for the mandate. [inaudible] did in the make the list due to the uncertainty of the future and growth in the targeted business. the plan appreciated working with russell the manager since 2011. after the together date finalists staff brought the recommendation to the deferred compensation committee on december 22 the committee voted to forward the recommendation with approval to the retirement board. discuss difference in more detail. >> a little less flexible in prop and did not e will beerate on allocation, nor demonstrate much experiences and
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alternatives. bernal teen largest tried get [inaudible]ing grew faster then and there they could handle tried to balance customizations for each client. they are more expensive but qualify exclude did submit the best and final offer. in the event the plan decide instead future, costs would be higher. that well price the upon front runner and firm who dem strited success in active management, tactical allocation and dedication to the business and submitted a very compelling bid with competitive pricing. most bidders proicide schedules a flat 2-1/2 bits or flat 3 bit with technical allocation.
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and offered reimbursement for marketing and communications. staff conducted an on site headquarters on september 20 in baltimore and completed a positive reference check. i will turn it over to mr. tailor for an over view of the process approximate provide details on the scoring of the semi finalists. and discuss the removal of russell and the recommendation. mr. taylor. can you please give mr. tailor control? please, begin. >> i can't dot presentation yet. there we g. i will see if i can share.
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the summary of the respondents we received and the specifics. [inaudible] the commissioners want top go in depth in the rehave you of the process. in short, in this press we wanted to understand i now things about the bidders. challenges with russell owner help and growth with a small number of clients. we wanted to make sure they had a well resourced system for providing this service. so wanted have consistent client base. detailed plans for growth. tenure, property employee base and robust system for providing the service. so look for manage a durable partner for the plan.
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we wanted people to be vpnsive to the nature of public sector targeted funds requires anning of the details of the tiers of pension benefits all the things that go to that from capitol modeling stand point as well. when we reviewed the response from this open rfp we have the following comments for the responding. we have from nfp. state street, jp morgan. russell and, lines and bernal sdpeen price. propoedz 3 [inaudible] not what we were looking for here. russell had challenges. we appreciate russell's service history but there were challenges that have related
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staff turn over and number of positions in the combined through the years. team is getting loner this happened the same time they were in the fifth year of an 8 year fund. and therefore selected turn over at the firm or turmoil and change. observed during the course of the contract. in addition, there are senior level turn over. with the departure of the ceo for these reasons are what quality is in the service team and the capitol of the organization, it was deemed they would be a reliable partner going forward than i were e lim nitted. jp morgan provided a response they offer off the shelf funds and a couple of shortcomings.
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but there is a >> reporter: if you use alternatives liquid real estate woad be on the table for this mandate, you would have to use their requirement not manage we remember look forward to. in addition their pass was not customized. the international equity [inaudible]. small number of acounsels and intellectual frame w for analysis that would like low lead to changes relative to the concern based case that would be destructive. and last 56 million [inaudible] had a learning mandate before the assets we looked put them in accomplice were dated 3/31 this terminated 4/1oid they would
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everwere not responsive we went to a lives strong list of add sunrisors price and bernstein. when we revowed the response as well [inaudible] we have infleck abltd will with state street a difference is combination of team usa there are several team usa working.
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we had draft comment from the sfga and the draft commentary did in the delve in the specifics as other bernstein or price. then with respect to alliance bernstein, we had the same complexity of engagement we got from price. but still republican in the same can't answers in which after reviewing the demographics and data provided, they said, well, this may have schedule changes for the income replace am target san francisco is expensive i would stick with off the shelf. the same point the case for th baseline assumption. so manied to be inadequate responsive to the complexities
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of the plan and lead to differences in the risk prosecute file and steepness of glide path. and lastly price was [inaudible] price was the least expensive. of the providers in the bid this remained. the one to support the communications is robustly financial low and with other communication materials, and they have not lost the cline for men yers and have a stable base and invest nothing this business. further price had authored a series of 4 papers. on the complexities of offering targeted funds in the context of a public sector dc plan and how to optimize the paths around risk preference of the cline and also the tiers of benefit from the defined benefit plan.
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the solution we were looking. they have a clear architecture for how to provide these services. in addition to that, there have been interests in tactical asset allocation. and that is manage had process does as an organization. and over 3, five or 10 year period from sense they have been doo this an add multieye asset portfolios over time 4 times the fee. that asset allocation process is in the specific to the custom target fund but a firm ware press this draws from many resources within the firm. and that prop is implemented firm wide. and as a result, this is in the something resourced but would be
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the primary engine applies to awful rose multiasset portfolio. so as a result we saw a partner that would be inexpensive. add robust way. and also have a kin architecture for providing a glide path which did not 32ed a single solution but a range of solutions that being be arrived at in consultation with staff and working with [inaudible] as well. for those reasons we have the i deal winner of the process. will and they are appropriateed address comments here today. open for questions and if you want to refer to the potential glide path they are awful drafts and not final. other asspecific process i can entertain questions.
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commissioners? >> about the glide path design i don't have a page and what was submitted. not trying to negotiating the fees that is sprit low that is not what this is about. . the glide path is an out put. i'm concerned about the input meaning the asset all of the classes that we willment them to consider. there were alternatives used the multiple conference which is may be a convenient word but, lot of confusion if we want to include alternatives in the glide path which i do. so. the question is which alternative. it it is a broad word. >> do you have doubts what price
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is able to do in >> i don't know if i would phrase it in terms of doubts buoy say i have cal braid expectations which is it say when you controversy alternatives i think we are most low concerning ourselves with things like liquid class and that could be hedge funds or private investments. private real estate. when making investments i say that met of the providers in the space that had implementation of a targeted fund with access to anything other than private real estate. private equity or hedge fund it is an existing per foal i don't of investments. either a big organization this has a robust staff. a pension such as yourself. in general, there is very few examples.
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they stand alone contribution flan it is investing in those classes. likely if you go down this action with success as pertains to hedge funds tell be with the design pension. and the existing managers and prove challenging from sourcing and robustness of investment and
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time view standpoint. with this said i think it is less a commentary on [inaudible] and more on the asset classes. [inaudible] they would be a capable organization of doing that work. in part their organization has experienced with each classes. it is a question of how tell be implement exclude will implement this after engagement. >> we are capable. glad to hear that. not because i'm for or against. i'm concerned in members individual for 57 issue counts not what this conversation is b.
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improvements made to the glide path and cape okay of doing it we are able to vote and tell them, the adjustments and risk this is come with it and i don't mean just about issues but not the risk of implementation. requires a board vote to [inaudible] and you to incorporate those negotiations but it is the design plan to be conducted with [inaudible] to --
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so that was more but you need instructions or plan to do that anyway? my understanding is that potential is known and it is -- shared as an interest by price. and so with or without an instruction would be my expectation that process would ask the question upon being engaged wlo that is feasible. and under when conditions it would be and from that would flow a series of further discussions with staff to astain approximate terrible cooperation with those classes more brood low or the decisions that would exist without this coprescription and present the range of alternatives and the trade off subsequent to defining the final path. we would like to if we can. but we are not going to do so if it is in the prudent. and so the quell be asked, i
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know. already with or without direction. yes. board decision. the matter we are voting on is the 2 earlier once hi are on board the design the specific [inaudible] this will be part of in the first discussion about the in the opportunity implement this over time of we know this is something. >> the vote today >> this is correct i was going to piggyback the target date we would absolutelies work with the compensation committee for your approval and under lying asset classes.
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we seat end you understand incorporate those in the design phase before than i come become to the board. >> understood. it is something we be part of the conversation than i will execute quickly on on this given you heard in some cases they include alternatives. that is a complicated process that requires work. they will do it in a prudent manner and incorporating the discussion and debate is something we'll have a long staff and [inaudible] with you. >> well and i just [inaudible] the commissioner.
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involved discussion of this potential. it was a through line throughout the process. it has been top of minds along with tactical and custom to your wagz and a partner throughout. so it would be a huge surprise to mow if we ignored that potential any stage of the design process. . why are we having unnecessary meeting if you are thinking without designful any ahead and do it without the final decision made by board. we don't need a meeting to tell you to do it. that's what i'm trying to avoid. i think -- my understanding of the process is is upon engage am we would then have fact finding
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meetings with price at which point we have an knowing of the exact dill jenls they need to conduct to astain the decision and report become on the outcome of this process as soon as possible to layout in more information engage am they need with the system. and oaf00 what is possible and when. and so00 eye think that is a natural process i don't think can be shortened because we would not to seek approval to evaluate the classes we begin work. to evaluate the asset classes. okay. i'm assuming you have been and -- greg diane, you will start approximate any
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improvements made [inaudible]. yes. >> yes. my understanding and has been my expectation issue commissioner. any other comments? i wanted it say [inaudible] i feel comfortable make the motion to adopt the staff recommendation. >> second. >> can we take public comment. >> yes. we have no in person comment at this time of moderator, do we have callers on the line? >> there are no callers on the line jovm thank you. hearing no calls public comment is closed. >> great. roll call vote. >> commissioner bridges. >> aye. >> commissioner driscoll.
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>> aye. commissioner gandhi. >> aye. >> commissioner heldfond. >> aye >> commissioner safai. >> aye >> commissioner thomas. >> aye. >> motion passes. >> great. next item is month low report. >> discussion item the compensation plan monthly report. >> had a lot of conversation about that you can keep it thank you. >> absolutely. commissioners buffer is the plans month low report. at the value fund increased the crediting rate from 24 to 34 bits 2 envelope % rate it is guaranteed for the full quarter and reset in 2-1. a good example that value is
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doing intended do preservation of capitol with the steady, positive market return over time. it is good time to point out in a rising rate environment, value crediting rates will lag current rates. like when rates drop significant cantz low in twenty twenty crediting rates were higher than current rates because of this lag. the under line portfolio increased quarter over quarter. rising from 3 and a half % to 4.07%. they raised rates. bonds have an inverse relationship. who i we saw a year of increase the bond market saw negative returns over all when a 3 month period the crediting rate is left. the other item to report on is nrsm this . is october, october
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is national retirement security month. we had a great campaign thus for and executed our first in person accept near in 2019. we brought the live seminar back do you to popular demand and pleased with the turn outism believe the board will be pleased, too. had near low 60 attendees. >> and i think before covid we had 80 this is rable considering our existing week low web nears we have. we have louised in person schedules to 3 days a week. staff is red to answer kwees more details and the campaign
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samples included in the next quarter low report. i want to thank steve for spearheading the efforts and investigation on organizing a vehicleful accept near. he has been working behind the scenes making relationships to help spread word. >> and left low the machining low activity report covers the asset, performance and participate demographics. i'm happy to answer questions on any items at this time. >> >> thank you. call the next item. >> public comment, first. >> public comment on that. >> thank you. go right ahead. call public comment. >> there is in in person public comment. immediateerator. do we have callers on the line? >> there are no callers on the line. >> thank you. public comment is closed.
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okay. thank you. i don't think there was a vote it is a discussion item. next item? >> item 15, discussion item chief executive officer report. >> thank you. um -- this is brief. there are 2 items one standards and materials including the packet in terms of conference and trainings. i don't see a community and i would like to -- emphasize that i have in the put on the calendar the committee meetings that we need to schedule. the chairs were deciding that sends letter to assist all the communities in setting update meetings and ask if there are you city [inaudible] committee in particular [inaudible] reach oust to me [inaudible] they will need to get those calendared.
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secondly i will talk about the proposed special trust ordinance. >> sure. >> good afternoon, commissioners. the special needs trust ordinance would permit all employees to designate as an option beneficiary a special need's trust. those are trusts this are credited for the benefit of an adult dependant child and the advantage of having a special need's trust as an option for beneficiary is the adult child who received a benefit through a trust like this one, would not have that income counted against for public aid purposes. they would not be disqualified from public housing or other public aid programs as a result of getting this income through a special need's trust.
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>> great. >> great. why do we have -- questions? >> yes. commissioner driscoll. >> yes. >> not because what was said earlier. that was an among i asked for issues about the [inaudible]. disability the ido and oid, when they are. new we used to get it i thought it was coming become not every month but a couple times a year? there is a reason we need to do it and apiece the public comment we had a couple hours ago but something i asked for, for a couple years. >> what i'm seeking, is it clear? >> thank you. >> great. anything else. >> no. >> public comment on this item?
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>> thank you we have no in person comment. do we have callers on the line. >> no we have no callers. >> public comment is now closed. >> great. so -- we can go to the final item of the day i think or next to final. member good of the order. commissioner thomas. >> thank you, commissioners, we heard some concerning testimony today during public comment regarding sfers investments. cim, i like to ask staff to provide data to the commissioners regarding our scope of investment with cim and assess am of any liability risks in light of when we learn
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exclude some assess am of esg risk with emphasis on the social. >> thank you. >> anything else? nope. all right. i guess we can go to the final item. or do we do? call public comment. why thank you. no in person comment. moderator, are there callers on the line? >> we don't have callers on the line. >> thank you. public comment is closed. of >> great. i think we move to the final which is adjournment. yes. adjourned. thank you, everyone. clear clear
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>> driver, bye. >> hi. i'm will b. mixture weltake a walk with me. >> i just love taking strolls in san francisco. they are so many cool and exciting things to see. like -- what is that there? what is that for? hi. buddy. how are you. >> what is that for. >> i'm firefighter with the san
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francisco fire department havings a great day, thank you for asking. this is a dry sand pipe. dry sand pipes are multilevel building in san francisco and the world. they are a piping system to facilitate the fire engineaire ability to pump water in a buildings that is on fire. >> a fire truck shows up and does what? >> the fire engine will pull up to the upon front of the building do, spotting the building. you get an engine in the area that is safe. firefighters then take the hose lyoning line it a hydrant and that give us an endsless supply of water. >> wow, cool. i don't see water, where does it come from and where does it go? >> the firefighters take a hose from the fire engine to the dry sand pipe and plug it in this
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inlet. they are able to adjust the pressure of water going in the inlet. to facilitate the pressure needed for any one of the floors on this building. firefighters take the hose bunked and he will take that homes upon bundle to the floor the fire is on. plug it into similar to this an outlet and they have water to put the fire out. it is a cool system that we see in a lot of buildings. i personal low use federal on multiple fires in san francisco to safely put a fire out. >> i thought that was a great question that is cool of you to ask. have a great day and nice meeting you. >> thank you for letting us know what that is for. thanks, everybody for watching! bye! [music]
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>> you're watching san francisco rising with chris manors. today's special guest is mary chu. >> hi. i'm chris manors, and you're rising on san francisco rising. the show that's focused on rebuilding, reimagining, and restarting our city. our guest today is mary chu, and she's here to talk with us about art and the san francisco art commission. well come, miss chu. >> thanks for having me. >> it's great to have you. let's talk about art in the city and how art installations are funded. >> the arts committee was
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funded in 1932 and support civic review, design investments and art galleries. projects we have are funded by the city's art enrichment ordinance which provides 2% of construction costs for public art. >> so art is tied to construction. there's been a great deal in the southwest of the city. can you talk about some of the projects there? >> sure. our city has some exciting projected in the bayview-hunters point coming up. one artist created a photo
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collage. in the picture pavilion, one artist formed a collage of her one-year residency coming together with residents, and anchoring the new center is a landmark bronze sculpture, inspired by traditional ivory coast currency which the artists significantly enlarges to mark that it's a predominantly african american community in bayview hunters point. >> are there any art installations around town that uses light as a medium? >> yes. the first is on van ness
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between o'farrell and geary. it's funded with the m.t.a.s van ness geary street project. another project is for the central subway. it is one of ten artworks commissioned for the new line. it's over 650 feet long, consists of 550 l.e.d. panels between the powell street station and the union street station. it's called lucy in the sky, and the lights are patterned with unique sequences so that commuters can experience a unique pattern each time they pass through. >> perfect. what about the early day
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sculpture that was removed from the civic center? >> this is a question that cities have been grappling with nationwide. following the removal of early days in 2018, there was a toppling of statues in golden gate park as well as the removal of the christopher columbus statue. we are partnering with the parks department as well as the community to engage with the public to develop guidelines to evaluate the existing monuments and memorials in the civic arts collection and evaluate the removal of a monument or statue but also installing new ones. >> finally, it seems like the weather might be nice this weekend. if i fancy taking a walk and
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seeing some outdoor art, where would you suggest i go? >> well, i would suggest the embarcadero. this work was commissioned with funds from the fire station 35. this suggests the bow of a boat and the glass panel surrounding the structure depict the history of fireboats in the bay area. >> and where can i go from there? >> then, i would walk up to the justin herman plaza to check out the work of the art vendors. then check out the monuments like the mechanics monument. also, be sure to check out the poster series, installed in bus
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kiosks along market street, which features four artists each year. >> well, thank you. i appreciate you coming on the show, miss chu. thank you for your time today. >> thank you, chris. >> that's it for this episode. we'll be back with another show shortly. for san francisco t.v., i'm chris manors. thanks for watching. learned a it across the city. [♪♪] the tenderloin is home to families, immigrants, seniors, merchants, workers, and the housed and unhoused who all deserve a thriving neighborhood to call home. the tenderloin emergency initiative was launched to improve safety, reduce crime, connect people to services, and increase investments in the neighborhood. >> the department of homelessness and supportive housing is responsible for
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providing resources to people living on the streets. we can do assessments on the streets to see what people are eligible for as far as permanent housing. we also link people with shelter that's available. it could be congregate shelter, the navigation center, the homeless outreach team links those people with those resources and the tenderloin needs that more than anywhere else in the city. >> they're staffing a variety of our street teams, our street crisis response team, our street overdose response team, and our newly launched wellness response team. we have received feedback from community members, from residents, community organizations that we need an extra level and an extra level of impact and more impactful care to serve this community's needs and that's what the fire department and the community's paramedics are bringing today to this issue. >> the staff at san francisco community health center has really taken up the initiative of providing a community-based outreach for the neighborhood.
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so we're out there at this point monday through saturday letting residents know this is a service they can access really just describing the service, you know, the shower, the laundry, the food, all the different resources and referrals that can be made and really just providing the neighborhood with a face, this is something that we've seen work and something you can trust. >> together, city and community-based teams work daily to connect people to services, this meeting will come to order welcome stot november third issue 2022 the government audit
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and oversight committee of the board of supervisors i'm supervisor preston joined by vice chair connie chan and soon to be joined by supervisor mandelman. the committee clerk is stefani cabrera and want to thank the team at sfgovtv. do you have announcements. jot board of proirzs and committee are convening hybrid meeting allowing in person attendance and public comment and also via phone. equal access is essential. first public comment taken on each item on the agenda of those in person allowed to speak then those on the phone line for those watching 26, 28, 78 or 99 and the public comment number is streaming across the
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stream it is 415-655-0001 >> again, 415-655-0001. enter access code: 2493 481 7808 ##. when connected you will be in listening mode only and you will hear a notice saying you are in listening mode only. when your item come up and public comment is called those in person should line up and on the phone dial star 3 to be added to the line. if youor your phone turn down your tvr and listening devices you may be using. we'll take public comment from those in person first then to those on the phone line. you may submit public comment in writing e mail them to mis the stefani. cabrera
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if you submit it i have e mail tell be forwarded to the proirzs and part of the official file. you may sends u.s. postal city hall at 1 dr. carlton b. goodlett place room 244 san francisco, california. items acted on today will appear on the agenda of november 15th unless otherwise stated. >> thank you. call item one >> a hearing on the ethic's department audit process for committees receiving financing and the audit process for lobbyist disclosure and the performance of the audit process including necessary enhancements of the process to ensure the timely auditing of campaigns and public right to review report. members of the public had wish it comment on this item should call 415-655-0001 then access code: 2493 481 7808 ##.
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please dial star 3 to line up to speak the system will indicate you raised your hand. wait until you have been unmuted you may begin when we go to public comment. >> thank you. this hearing request is sponsored by supervisor peskin who is with us. it it is cosponsored by our vice chair supervisor chan. i will turn it over to supervisor peskin thank you for your leadership and the floor is yours for remarks and introduce our speakers. thank you chair preston when i ran for the board supervisors 22 years ago, there was no public financing and there was no mandatory audits that were right-handom audits.
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campaigns. but now with the add vents of public financing requires audits on every campaign that seek and obtain public financing. the number of audits that fall upon the ethic's department to perform has invest low increased. as a candidate, successful for office. that believes in public upon financing which had positive results and diminishing outside spending in local candidate race and leveled the playing field. i have partaken of public financing and did so a couple years ago in the 2020 election. and i share a similar experience as that of the coexperience in this hearing supervisor chan, which is now 2 years after that
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election the audit yet to be performed. i am one of those elected official who is has never liked open campaign accounts and when all debts are paid, and thank you letters written, i filed the appropriate forms to terminate the committee. which in the old days people did not do because left over funds could be used for office holder expenses now public financing left over funds are returned the city treasury. and so i inquired the last couple of years as to the status of the 2020 audits and 91 of them have been performed. and i have been unable to obtain an audit schedule for one day will be performed and i thought this was a matter of broader
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concern to the government audit and oversight committee about where ethics is in their audit processes at large. i was hopeful we would receive from the department an will actual report prior to this hearing we could see where 2018 audits and 2016 audits. obviously there are next week a number of campaigns including that 've our clothe from district 8 public financing has been involved in the even numbered district races. i did recall that there was a period earlier where the ethics department had fallen behind on their audits and i contacted the controller of the city and county of san francisco ben rosenfield at this time had offered controller service to help reduce the backlog of
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audits at the ethic's department. the controller has informed me that he has made that offer again to -- the ethic's department to help them reduce or eliminate their backlog and create an audit schedule i think is on any department to have. my understanding was that the department had not taken the controller up on that generous offer. with that,ly an pelum the department head of the ethic 'department and here to report and i would like to welcome her to the hearing this morning. >> thank you mr. peskin and committee members. i appreciate the opportunity to be with you this morning. i had intended be live but i need to be remote. i appreciate the opportunity to talk with you about this issue.
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it is something that the committee the members of the public and ethic's commission shares a deep concern b. regarding one of our core functions at the ethic's commission. let me see if i might just start with context and perhaps setting the record straight and regarding mr. peskin's understanding of where the audit process is. we have been in touch with the controller's office. we are working on a contract the ethic's commission can own the contract for external services this is something we used over time now with that opportunity is available we are proceeding with that but in terms of where we are with our audits. it is the case that here we near november 22. and there are 2 audits from 2019 that remain to be completed.
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as we have in prior months we have been public with our commission at our meetings to report on progress and delays of our audit program. there are a number of factors this lead to the delay. including the pandemic and including staffing vacancies and how long it takes to fill them. as well as responding to incorporating recommendations made by the bla performance audit we embrace the recommendations in august of 2020. and some of those recommendations including ensuring that we have strong procedure in place for our audits. they are consistent procedures. they are applied objective low and transparent about our work. we have been making progress in terms of time frames for commreeth them. that was drilled a bit with the confluence of the activities the bottom line is, we are excited
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have an audit manager and currently 3 audit staff who with supplemental work by our external audits we expect to put together with office of contract administration support and working with the controller's office now there you temp refer resources available. i think we will make practice as the bla audit envisiond and we were making progress prior. it is in the the case we denied working or resources from the controller in the past. the issue was one of timing that resources we had used in the controller's office were not available at the time we needed to secure them that is the case the controller has been supportive and taken advantage at every opportunity as we are now. we are appreciative of that. but a larger perspective members of the committee know, our audit function is a core function at the commission. it is a manualed torrey
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requirement we provide oversight and audits of public financing resource. they're important to campaigns and candidates. and we are very much in front of ensure the stewardship of the funds. during the audit cycle and campaign cycle we do a front end audit to ensure contributors and claims submitted are embedded and that the appropriate qualifications and disbursements are made. we do preauditing during this election cycle that is something our team is responsible for. they wear many hats. we have an authority and requirement to the audits of public finance candidates. we have a >> reporter: to do audits of lobbyists registered with the city. because of our resources at the commission that is not something we did for a number of years. we did not have the ability. we started on track to complete
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the lobby audits of 6 by end of this calendar year as well. separately, we are also doing oversight recommended by the controller in the wake of city scandals, to do a post compliance review of financial disclosure statements that are file boyd city employees. our audit division is drivewaying that process to put together had that will electric like to provide eyes and oversight afternoon the filing of the statements and that's a process under way. we have been in conversation with the controller's office because we know there are to thes that office is likely to have we will do part inning making the post filing review process form 7 huh human best as possible. an oversight process at the commission call it audit its is shorthand for mandatory publicly audits and lobby audit.
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post filing review process for statement economic interests and in addition, we have the ability to do discretionary audits or select audits for other objective standards we apply. so we odd and i prosecute void oversight to other types of campaigns active that not have received public funds. last time we did a discretionary audit was 2018. we had at this time, we were able to use the external auditing resources we did do some during that election cycle to conduct reviews of financialsed committees. to the point that mr. peskin and the committee is interested in. public financing is cristal. i mentioned we have 2 from the 2019 election cycle that are completed in december. we have also neighborhood 2 of.
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the 14 required audits of public low financed candidates from the 2020 election cycle. and then we will anticipate starting audits of the 2022 election cycle there will be 5 required to be audited. we participate we the start those in 2023 and with the assumption we will have those temp refer or a bridge of resources with external auditing resources available. there are a number of factors and resources we need to juggle to do this. we do have every election cycle when the commission audits, begins the audits. we report to the commission public low about what committees are audits what is the basis for the audit when is we do discretionary the basis for the selection we want it to be clear we are not selecting with
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subjective reasons to be audited and in the behalf we looks where the public interest is greatest candidates receive the most in financing or most in the election campaigns, for the 2020 audit. we reported to the commission when we discussed those that cycle process that we were going to start auditing candidates received the most in public finance. no audio. candidates received less in public financing will be later in the queue. we will work with external auditors to move that process forward quickly. we continue is most helpful not just from a public accountability standpoint to provide information how well committees did in comply with applicable rules. it is important to committees
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first time candidates to get information how will they did in complying. we know first time candidates are peek candidate its is a tremendous learning opportunity to talk about the rules and how they apply and make audits smooth and to result in less now are findings. one last note i have happy to answer questions i'm sure there are many from members. but as we within in the bla's audit in february of 2020, when the audit was issued in august of 2020; as a point of information, the bla noted that the time frame for completing audits was -- had the 2016 election, had been 21 months. i don't think anyone of us is satisfied with is that time
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frame. we also saw in that property the bla noteded at that time going in the audit, had been reducing the time frame from the beginning to the send to 10 months to the completion. that to me is a better time frame. we cannot starch a public low financed audit until after all of the disclosure statements for the election come in the door. in practice means 60 days after january 31st. early spring of the year following the election is the date that will be earliest to start an audit. i think there were signs before the bla we were faking progress the factors during the pandemic was hiring and retention issues was a challenge for departments to secure positions. we asked for a senior auditor position that was the mayor wanted not to include that as a
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budget recommendation. we have not been shy about asking for resource as we need them. and will plan to do that going forward as we need to as well. again, very committed as a department as a commission i'm sure i speak for them we want to make sure our audit function effectively provides stewardship for the public financing and that it provides account act for folks running for office and provides the opportunity for people to learn as well. we are continuing to make our internal process improve ams clear and resource every opportunity which we have and will continue to do. and know that our current status is not sufficient we are work to improve that and making progress to get rus. i am happy to answer questions you may have about where we are. i'm happy to provide with the
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specific summary of the time frame the committees under way and the time frames we expect to see them completed at this state. >> thank you. thank you h. i would appreciate and would have appreciated having this information in writing prior to this meeting given the informational will be forthcoming am i correct in having astained there are 21 publicly financed campaigns that do not yet have completed audits? is this when i heard? >> i'm looking at the list that i have. >>, 19, i believe. >> 2 for 2019.
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there will be 16 required for the 2020 campaign. that is 18 committee audits that have not been completed. we are in the 2022 election. once completed there will be 5 committees that require auditing from this current election cycle that is 23 by my math unless i have not counselled. >> 2 from 2019 you are in the midst of and wrapping up by. the audit. >> december 31st. and of the -- remaining 16, two are under way and you chose that because they used the most aim of public financing? >> that's correct. >> remaining 14 you don't have a schedule for but are in the process of obtaining outside
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resources to do it? >> we have on target, yes, assuming we have resource we'll start the audits the third quarter of 23 by the end of march. end of march. when we would use our internal odd tors and staff and also use ecsternal auditors to assist with anything that will help us get over the hump. may be the 2020 audits conducted boyar staff as well as external auditors ever we need to do it wrap them up and commolest low as possible and do a timely as possible given the resources we have. >> and you think that you will commence those remaining 14 by the end of march and the time frame for completing them between 10 and 21 months? did i get this right? >> i say the completing them we would expect to complete them
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within 12 mons. 21 months was prior when we did not have external audit support. 10-12 month window [speak very fast] what all is entailed in your long audit process. how comp -- what do you look at in how complicated is this for 2030 campaigns? >> well the answer is depends. on the state of the committee's record. the state of the recordkeeping. the degree to which committees cooperate time low and providing records to us when asked. law provides when we ask for records provide them within 10 days. that does not always happen. but sometime its it is difficult with committees who manipulate multiple candidates. we try to accommodate and hold
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to time frames. i think that when we electric at our audits and talk about procedures it is everything from verifying that the contributions, committees reported came from contributors. verifying the expenditures this committees are reporting. we do look at the public financing. we look to see if other laws are complayed with such as the don tractor contributor bands. so, what the external auditors do is a broad scope of verify whatting is reported on campaign statement system accurate. and also look to see that there are not indications of activities not reported on campaign statements that may have been required to be disclosed. and to look at other various law busy disclosure and disclaimer
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requirements. to look at the host of city luand how correspondidates did in comply congress state laws as well where applicable. >> thank you. one prooes piece i would add after the testing phase is done, there is know opportunity for the auditors ultimate low produce written audit reports posted on the commission's website. the audits once the testing phase is done, if there are material findings that we have seen during the course of our audit testing we provide a draft audit report to the committees to provide their responses and comment this is they might have. than i may have at that time often do, finds new materials they did not provide initial low or have other information or explanations for the information auditors found. and we electric at that information after to see if it
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changes. and it may or may not. there is also a process of going back and forth to ensure we fully understand when do you meanation they have and understand our audit findings are accurate and based on the documentation we have. and information and evidence from the committee. once the draft report is finalized following that process, we provide the committees with a draft report in final form for final comments and provide them and finalize them and post them. the process is can be challenging juggling making sure that committees have every opportunity to responded and making sure that press is not delayed. so we don't have rowels that say you must do this within 10 days or issue the report. but there have been time when is we said to committees we need to issue a report and if not provided by, x, date we can add
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it later. we have committees and audits and other work this have to be completed with our limited staff and resources. that is the over view of the process and of course the left piece is any audit we conduct would be routine forwarded to our enforcement staff for law enforcement agency. than i are reviewed to see if there are findings that were not follow up from i warning letter, no action or potential enforce. if there are findings in the audit. >> and director pelum, in terms of your existing in house not contracted throughout controller or through other third parties how many staff do you have devoted to this function? >> we have an audit manager. which was a new position in april of 2021.
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we have 3 auditors will analysts called 1822. for those who follow us. and as i mentioned we asked for but not received 1823 or senior auditor. you have 3 odd auditors. form 700's and also qualifying and disbersing funds for public financing program which pushes back work as we work through that which is valid by dead lines under the law. >> and director pelum the 4 positions have those been filled or vacant over time? they are both. the audit manager position one
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we secured the year before we hired orbit current manager in 2021. and that when we have we had a vacancy of 10 months in one of the audit positions we were able to fill left november. with somebody had had experience doing the state level. that was tremendous. tremendous resource to bring on board. we have another auditor has prior experience working from the compliance side in the prior life. ful that experience also has been helpful. but the approximate suspicions had they open they are civil service approximate suspicions. and we do find the bla audit note third degree finding unrelated but general low, that the city's hiring process to fill positions can be lengthy
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and add undowely to delays in operational work and completion of priority work. i don't think this is just ethics. but so now we have 3 positions full and hope to retain for a language time all 3 of the positions and public low add to them as well. >> 4 audits under way the 2 from 2019 and 2 from 2020, those are conduct in the house? >> correct. we don't have -- go ahead. >> we are doing those in house the same time we complete the lobby audit and developing the form 700 review press. scientists external audit of the relationship or external audit resources we are work to get we have been meeting with contract
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administration. you may not recall in the budget but in the last year we did secure funds for mem right-handum of provide funds to help develop an external contract the ethics can be the owner of. we are a flat under staffed office as far as administrative functions. we don't have contracting staff like many departments do. when we have a contract we rely on partners to walk throughout press. this is where we are trying to establish a multiyear external audit contract for a financed candidate. we are able to do that with funding from the election campaign fund established by the voters they small percent can be used for administrative services. we are using that portion to property to have an external
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audit vendor relationship where we have an external auditor on board in the regular course of events. that's work we have been starting with office of contract administration. . and as i mentioned w width controller's office. there is a current list reupped since left time we talked. we are not able to use resource there is is a current external audit risk that existed in the controller's office we discussed with the control and has not had a green light a temporary piggybacking on that list. so secure those resources and having our own contract over multiyear period. establishing your own contract in the city can take time. we have the resources and that relationship with the controller's to tap in existing pool of external venders. we doll that to jump start the
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work on the 2020 campaign in the coming month. and once we have those that is a press that takes 3- 4 months i imagine from a prior importance. late spring we may have the external auditor on board. >> your audit manager has been on board for sick months and you still dent have a comprehensive audit plan as to the invest majority at least 14 of the outstanding audits. and will not have this until some time in 2023? >> well, no , i disagree with that statement i don't think this is accurate what i described was a plan that we have given the resources we have the audit manager came on board in 2021 i guess 18 months.
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spent 6 to 8 months working on templets and ensure work was consistent and understanding when is consistent. that was important foundational work to make sure we are doing solid audits that was done in the first 6 to 8 months of a manager on board. since then we having doing lobby audit. the 2019 public financed audits. following the pandemic an auditor servedad disaster service worker for over 12 minutes that had impact. i say that what was attempt to describe this is the plan we have. we have a schedule for when we are working on [speaking fast] when we targeted to start when, the resources we will use and anticipate using to start those and complete those. at this point that is perhaps not a plan but in your view with
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respect that is the best plan we have. begin what is known and achievable at this point. i think a piece is to look and see where we need to supplement existing staff with a senior auditor to help with the w and review the work and keep all of the projects on task at the same time. we have multiple competing priorities we are trying to juggle. that is the role of the audit manager as well. why director pelum birch return this to the chair and the other member when wishes to speak, let mow say the following things. thing number one is that you and i agree that auditing is definitely a core function. i have to express my
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disappointment that after many years of this being a core function that the foundations are not there and are being built or recreated. this is a function that at this point in the department's projectary established and i part of the bureaucratic routine and not a game of catch up. and then candidly, i disagree nor have you put in writing despite my repoed requests as a consumer to put in writing when the 2020 audit will be done. you are making high level, broad representations that are not in writing. respectfully, the representations of the controller relative to his
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offers to your department are very different than when he represents but i don't need to get in a game of whether they are offering you resources have you not time low or now timely accepting. the reality is that this is not a function that has been well over seen. nor can you actually provide what you are representing right now, which is a real schedule with real dates. i would love to see temperature i would love to see you furnish this committee and will ask the chair to continue this to the call of the chair a document that says, this is one we get to the audits that exists. this is when we get to the audits going forward this is what our schedule will be and you can rely on it. that is missing from your department. >> thank you for that perspective mr. peskin i'm happy to get that you information and share that with the committee and again i will say that the w this we have done with the
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controller's office in fact has been one where we have taken advantage of every town to use the resources visible to us. the information that i'm happy to provide to this committee for public consumption following this hearing today, will describe as i did what audits we know to be completed and need to be completed. what dates we have currently. scheduled start themful and when we anticipate completing them given the resources we identified to complete that work. and this it is i think our honest depiction and fairest depiction of whf we can and plan to accomplish. i don't agree with those who say the ethic's commission 30 years in the existence should absolutely have an audit program that is running as we all expect it to. i can peek to the left 6 and a half years of attempt to secure
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an audit manager to help with programs run. but clear we share the goal of making sure audits are strong and robust and effective and time low. and i can commit to you on behalf of the staff and the commission that remains the serious and significant prior for our commission. we look forward to working with you the controller's office the oca and other per norse make that happen this is critical to the confidence of the public and trust of the public in both huwe run our campaigns and the work of the ethic's you have our commitment. >> thank you, director pelum and i doment to echo the sentiment of my colleagues around mapping some of this out. it is unusual we have a hearing announced and before [inaudible] and don't get some of this in a power point presentation or in writing before. i want to say, this is an issue
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of great importance and it just the more we can and for future reference for future hearing the more we get some of when we spent time getting verbally. in a presentation prior to the hearing it is helpful for the committee and efficient use of time and the public so they can vow that presentation that is scanned. before i turn it over to supervisor chan, i wanted to ask to get i time frame kwham when that sdringz of the audit schedule will be prosecute voided to the committee? we can provide that the end of week or today if you want further context as my comments indicated by. close of business tomorrow. why thank you very much. voice chair chan. >> certainly. why thank you chair preston. i think for me the question with the audit process i am curious
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about both process and the audit results. and i think in when there is a delay in the audit process then there is a drill in the audit results to be known and made known to the public. and because the delay defeats the purpose if we find violation and i think it is a disservice to the public and san francisco when the known audit result in the case of violations are found is so like 2 years later or 3 years later. it irrelevant is the disservice. the question i have is, as you continue on and try to you know create/khrer your backlog, do you in any way have a different track for violators that already
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found in violation in their previous audit and then now they are coming back for public financing for their come pain committees. and how do you treat them? or do you treat them different low at all? that's know an interesting question . in we don't fast track or treat committees different low because they may have had a finding in thes past related an issue. our goal through the written audit report and engage am in the process is to address findings if needed through enforcement process. assuming that happened. i think we would consider the matter resolved the issue was not material and does not likewise to the level of
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enforcement. we would look at those findings in the normal course of our audit testing and eye on whether pattern is continuing. it adds something worth exploring we want to make sure what steps we take we treat as a committee objective low as possible and with fairness due to them that is an interesting question you are raising something we can put thought and discussion around. >> i would appreciate temperature i think again it is more for the fact that you have to clear the backlog and feels audit result system in the timely. and again. i think that the goal of an audit is to transparency make sure no one is violating the law and approximate the events they do, i think the public has the right to inquire the violations further if need be. i think those other questions i
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have about prosecute untime low violations found is tendses to have no seems to have no consequences at least in sometimes in the public opinion. the court of the public opinion, thank you chair preston that's all the questions i have today. >> thank you vice chair chan. one thing am i'm trying to with respect myin the timing of audits interacts with the closure of the committees. one broader concern that i have and looking back and someone can correct me but -- i believe as a city, become in when i arrive in the san francisco, 93 or there was a ballot measure to ban office holder accounts.
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accounts that were basically flush funds and they are a bad practice. they were banned by voters. and in their place, what emerged was politicians i want to be clear. our mayor was a major user of this loophole and so were other politicians. accounts were held open indefinite low and contributions received and what is surprising is there is virtually no revving ligz on how those monies can be spent. anything is fair game t. is a basically our office holdser accounts under a different name. i have felt that our city should do what los angeles did.
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to thendz practice. than i require campaign ash country its close within sick months of an election. and it was always my intention when i republican for office you than i would do that. only to encounter the reality that if you take public financing, which we encourage as levelling the playing field here, that if you do this and talk to anyone who add voirzs you they will tell when you you don't want to close your account until if the audit is done. i think one of our roles as an audit and oversight committee not looking at what is your audit schedule and how can this you know be accelerated or prioritized but how we reconcile. it seems like it -- i am interesting if you have comments but i'm trying seems like a very
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unintepdzed consequence of delayed audit system this political candidates keep their committees open for years. and i don't see a way to avoid that other than either having the audits accel ritted through the support you need or done boy controller or someone else to be done timely and candidates go ahead and close their electives, supervisor preston. i appreciate that and i don't think you can spend public finance dollars on office holder expenses, i will say another reality director pelum am tell when you she told neechl nothing prevennes you from closing your ash counts and the answer is well, you be an idyet to close it are if the following reason. am which is, that when they
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audit you your -- almost every one of us has a professional cpa firm this runs our campaigns. that is how you don't get in trouble with ethics you don't use voltories. that firm charges money when they audit come they spend time and they charge the come pain money. if you close your ash count that money come out of your personal checking acount there is in come pain account taupe costs money to be audits the reason you keep your excess fund in there is it pay for that. when director pelum says supervisor you can clez your account when you want. this just means that i will be taking money out of my you know paycheck to do it. which is nobody would do that. audit delayed is audit denied. and that's the problem here.
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and to add to that have you candidates like in this cycle who republican with public finance nothing 2020, their audit has not been done they are running gwen inspect 20 twoot voters might have something they should know. but what i'm hearing as the 2020 audit system that -- many of these remaining 14 audits or 16 are not done until 2024 this is outrageous. what i would add supervisor peskin, i think well is more concern also around the what is in the accounts. you are correct that the public financing dollars are flimentd how they spends temperature i don't thank you is trough for the subsequent contributions. i don't think well is anything burglar the practice that has been used for again for 20-30 year miss this building by will
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all political perspectives. nothing that would bar someone keeking a 500 contribution from someone in this ash count sxending that on their trip to meet governor in sacramento, whenever they want. when we locked in this it is rable how broad this is. i think we do have and from an oversight perspective, i just the reason i bring it up. it the importance of closing the audits quickly is that much more heighten the because as a practical matter the reasons peskin is stating these will stay open until the audits are closed and my personal vow is if this is taken more than a year. after an election closes and it sounds like it is taking far
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more than that. no plan on the table that would have audits done within a year after afternoon election. if this is the case i think we need to look how do we get there, right. is it through a robust involvement of the controllers or other support. because otherwise we have what our office holdser ash counts under the name of campaign committee staying open for years. and that's a loophole i hope whon we eventual loam lands on a ballot. do when l.a. did and everyone should close ash counts within a set time. but we can't. director pelum i want to give an opportunity if you want to add to that discussion. thank you. supervisor preston. i share the concerns you are both raising about need to close out audits sooner than we do. i think the one thing i add
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about office holder accounts when i was in los angeles for years, they do have office holder accounts there the office holder accounts are regulated they were specific time frames of contribution and limits applied and purposes which the funds could be spend and not spent. there may be other alternatives down thes road about not allow ing consequence to occur. but to perhaps look more at of an office holder acounsel structure this provides very clear, strict regulation of funds. this is an on going discussion. i proernlt the perspectives you are sharing. >> one last question i had, are there limitations who does the audits? you know do they have to be done by auditors versus controller an
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outside firm. are we under -- is that a policy choice? is there an ordinance or some other guidance as to who does it. why no, the language is mandates the ethic's commission to conduct them. language prosecute voids that upon request the controller shall provide assistance to the commission and we have used that in the past. but a combination of historical practice, i say that the commission has had an audit staff. that the commission used resources with the controller's office in partnership with them and tapped since i believe 2012 or 2014 the first year. the commission tapped the resource of external auditing entity to help. i think with the growing dmanltds that we have in terms of ensure lobby