CalPERS Official Clarifies Presentation on Retiree Health Benefits
CalPERS Assistant Division Chief John Swedensky spoke in response to a SCTA post about retiree health benefits at the November 3 Board of Education meeting.
The following is a transcript of his remarks:
“Good evening. My name is John Swedensky and I am the Assistant Division Chief at CalPERS with oversight responsibility of our Prefunding Programs. One of those programs is the California Employers’ Retiree Benefit Trust, or the CERBT, which is the irrevocable trust fund, dedicated to prefunding OPEB liabilities. The Sacramento City Unified School District participates in this trust.
“I would like to take this time to clarify what I believe was a misunderstanding of information presented in part by CalPERS at your October 20, 2016 Board Meeting, just two weeks ago.
“Matt Goss, the CERBT Program Outreach and Support Manager who presented that information to this Board, was referred to in a Sacramento City Teachers Association post on the SCTA website and in an email which was distributed to SCTA membership on October 21, as ‘the CalPERS expert who manages the finances for the District’s retiree health fund trust.’ Mr. Goss does not manage the District’s CERBT assets, nor did he claim to do so at the October 20 Board meeting.
“The management of the District’s CERBT assets have been delegated by the District’s Board to the CalPERS Board of Administration. On a daily basis, the District’s CERBT assets are managed by the CalPERS investment office and their diverse team of investment professionals.
“Also according to the SCTA website Mr. Goss directed a comment toward the District’s unfunded liability and was quoted as saying, ‘You’re doing OK.’ What he actually said was ‘You’re doing OK but you’d like to do a lot better as you move forward.’ Focusing only, on the ‘You’re doing OK’ portion of his comment changed the context of Mr. Goss’ statement considerably.
“And finally, a slide was presented that showed the collective funded status of all 52 school employers who participated as of June 30, 2016 in the CERBT as 3 percent funded. This collective funded status included Community College Districts, County Offices of Education and K-12 districts.
“Of the 52 school employers 31 of them are specifically K-12 districts. Included in those 31 K-12 districts are three districts who have liabilities so large that they skew the numbers considerably.
“If in fact you were to focus only on these 31 K-12 districts their funded status would only be 1.8 percent.
“If I exclude the one district with the largest AAL, the funded status of the remaining 30 K-12 districts increases to 6.6 percent.
“If I exclude the two districts with the largest AAL, the funded status of the remaining 29 K-12 districts increases to 9.1 percent.
“And the third largest AAL from the K-12 districts participating in the CERBT is SCUSD. If I exclude SCUSD along with the other two the funded status of the remaining 29 districts grows to 14.5 percent. This information should have been made available at the October 20 Board meeting to provide the most complete picture. For that I apologize.
“The CERBT program was asked to present this information to this Board for the purpose of sharing the District’s participation experience in the OPEB trust. It was not our desire or intent to become involved in any negotiations surrounding the OPEB funding policies for the District moving forward. CERBT staff are not financial or investment advisors. Instead, we aim to share the objective data that summarizes the District’s OPEB prefunding progress in an effort to provide this Board, and it’s staff an opportunity to make informed decisions.
“Thank you for affording me the opportunity to clarify these details.”