SBCERA General Subsidy

Status of the General Subsidy

November 17, 2009

At a Special Board Meeting on November 16, 2009, the SBCERA Board of Retirement made the following decisions on the status of the General Subsidy:

Granted General Subsidy payments for another year, through 2010. The Board of Trustees voted to continue General Subsidy payments from November 1, 2009 to October 31, 2010 with no changes to the existing payment structure. The maximum General Subsidy will remain $230 based on 20 years of County or district service, and will decrease incrementally per year of service equaling a minimum payment of $115 for those members with 10 years of service. Eligible surviving spouses of a deceased retiree will automatically receive 60 percent of the amount the retiree received. In addition, service-connected disability retirees with less than ten years of service will automatically receive 50% of the subsidy.
Approved amendments to General Subsidy Policy. The Board of Trustees reviewed and approved revisions to the Discretionary Retiree Subsidy Policy, awarding a General Subsidy for members who retire from SBCERA on or before April 1, 2010. Based on the revisions, any member who retires after
April 1, 2010 will no longer receive a General Subsidy award.

August 7, 2009

On August 6, 2009, the SBCERA Board of Retirement reviewed proposed changes to the General Subsidy Policy. The Board voted not to make any changes to the existing policy at this time.

As customary, the General Subsidy will come back before the Board of Retirement for review in November 2009.

November 17, 2008

At a Special Board Meeting on November 17, 2008, the SBCERA Board of Retirement made the following decision on the status of the General Subsidy:

There is no change to the current General Subsidy payment structure. The Board of Trustees approved a motion to continue the maximum General Subsidy payment of $230 based on 20 years of County or district service reduced incrementally per year of service, equaling a minimum payment of $115 for those members with 10 years of County or district service. The eligible spouse of a deceased retiree will automatically receive 60% of the amount the retiree received.
No excess earnings were credited to the General Subsidy benefit. The Board of Trustees reviewed and discussed the allocation of $68.5 million of excess earnings. Based on the investment results of the June 30, 2008 valuation, and the first four months of the current fiscal year, the SBCERA Board felt the most prudent decision was to allocate the excess earnings to offset prior investment losses in the Contra Account. The Contra Account balance is approximately $118 million dollars and tracks investment losses since July 1, 2003. An allocation to the Contra Account reduces the plan’s unfunded liability by offsetting the negative impact of prior years’ recognized investment losses. Allocating the excess earnings to the Contra Account contributes towards the full funding of statutory, vested plan benefits.

November 6, 2008

The Board of Retirement will hold a special meeting on Monday, November 17, 2008, to discuss and vote on the General Subsidy for 2008-2009. The status of this non-vested benefit is reviewed each year by the Board of Retirement. The public is invited to this meeting, as well as any other open session meeting held by the Board of Retirement. The meeting will be held at the SBCERA Board Chambers at 348 W. Hospitality Lane, First Floor, San Bernardino, CA 92415. It begins promptly at 9 a.m.

For more detailed information about the origin and details of this benefit, please see the following Frequently Asked Questions (FAQ) General Subsidy brochure prepared by SBCERA Counsel: http://www.sbcera.org/pdf_files/brochures/FAQ_General_Subsidy.pdf

November 19, 2007

At a special meeting on Monday, November 19, 2007, the SBCERA Board of Retirement made the following decision on the status of the General Subsidy:

The General Subsidy has been approved for one year. The Board of Trustees approved a motion to continue the maximum General Subsidy payment of $230 based on 20 years of County or district service reduced incrementally per year of service, equaling a minimum payment of $115 for those members with 10 years of County or district service. This motion is in effect November 1, 2007 through October 31, 2008.
A portion of $8.5 million in excess earnings will be allocated to the General Subsidy. The Board approved a motion that would split $8.5 million of excess earnings realized as of June 30, 2007. A 50% allocation will be made to the General Subsidy; the other 50% will go to pay down investment losses from previous years. The General Subsidy has been actuarially evaluated to be sustainable over the next six years. Based on the facts of the Plan today, the additional funds would only continue the subsidy for about a quarter of a year.