Association of Retired Seattle City Employees Non-Profit Organization P.O. Box 75385 U.S. Postage Seattle, WA 98175-0385 PAID ARSCE Seattle, WA www.arsce.org Permit No. 1100 News Your retirement advocate since 1973 March/April, 2012 The Association of Retired Seattle City Employees Volume 39, No. 5 OUR PRESIDENT’S MESSAGE ATTENTION ALL ELIGIBLE ARSCE MEMBERS: your ballot to elect members By Merle Overland to the ARSCE Executive Board is included ur annual ARSCE elections are upon us – amazing in this issue of the paper. Please vote for how quickly the year flies by. This edition includes the six (6) representatives of your choice your ballot for choosing members of the Executive O Board. I encourage all members to read the profiles and return your marked ballot by the of these people willing to join the Board – the profiles are on our web- March 14th deadline. Thank you. site and in this edition of ARSCE News . I sincerely appreciate the cur- rent Board members who are willing to serve another term and greatly appreciate the new volunteers who are interested in joining the Board. Also, thanks to Edie Jorgensen and the Election Committee for their work in managing this annual process. At our Christmas Luncheon we expressed our appreciation to CONFIDENTIAL four correspondents who regularly contribute articles for the ARSCE INFORMATION… News . Many people periodically contribute material for the paper but we wanted to highlight Loris Garratt (Library), Jerry Robertson (MTD/ YOUR e-mail address DAS/ESD), Alan Hovland (Parks), and Paul Pioli (Seattle/METRO ARSCE is endeavoring to stay in touch with its membership, to Transit). They are unique in that they are not Board members and have stay in touch with you. To be effective we must keep pace with tech- never served on the Board, but are consistent in producing six columns nology and we must keep our records current. Please take this oppor- each year, They bring us information we would not otherwise receive, tunity to visit our website’s home page at www.arsce.org to provide us and we appreciate their support and contributions to the newspaper. your e-mail address. Here you can update your other contact infor- Also, in connection with ARSCE News , we welcome Lee Sat- mation as well. tler as our new Assistant Editor for the paper. Producing six issues a Your e-mail address will be kept confidential. It will never be year is a huge task and we value all the time, effort, detail coordination shared with anyone outside of the ARSCE organization. Examples of and consistency that Judy Flemings contributes to ARSCE as the Edi- when ARSCE will use your electronic address include, but are not lim- tor. Lee is a most welcome addition to assist Judy and we thank her for ited to: advising you of upcoming elections, luncheons, trips, or the her willingness to take on this role. need for a “call to action.” ARSCE WILL always respect your priva- If you follow news articles about pension plans, you are no cy. doubt aware that throughout the nation, legislatures and local govern- Please visit our website now to provide us the means to reach ments are turning to employee pension plans as a means of reducing you quickly. Thank you. long-term costs. Some states, including Alaska, have legislation under evaluation to return to a defined-benefit plan after a twelve year period of a 401(k) style contribution plan. But many others are considering changes to their current plans by changing retirement contribution rates, eligibility changes for years of service, and retirement age, and Inside this Issue other limitations. The Washington Legislature is also considering for- mula changes as a means to reduce long term costs. One such bill cre- ates a new plan which will reduce the monthly benefit by half and add a Page 3 .......... Opportunities 401(k)-type investment account. And, the Seattle City Council current- Page 4 .......... Always Beneficial ly has a study underway to consider the long-term affects on our system Page 6 .......... Ken’s Perspective and the potential options for change. Now none of these efforts affect Page 7 .......... ARSCE Executive Board Candidate Biographies us as current system retirees, but it is important to follow the trends and Page 9 .......... Lifelong Recreation Program understand what lies ahead for new generations of government employ- ees. Page 10 ......... Internet Schminternet Page 10 ......... Cartoons and Puzzles th Join us for the Spring Luncheon on March 14 (see pg. 12) Page 12 ......... Spring Luncheon Reservation Form and enjoy the spring season ahead! Page 12 ......... Membership Application Form Contact Mr. Overland at [email protected] Page 2 — ARSCE NEWS — March/April, 2012 Your Pension Have lunch with us on March 14th at the Wedgewood Broiler. News See pg. 12 for your reservation form. By Lou Walter, Retired Employee Member Of the Seattle City Employees GO ONLINE Retirement System to www.arsce.org and click on “Events and Discounts” to learn about discounts PRIVATE EQUITY you may be eligible Well, 2011 is now gone and it looks like it will probably be a flat year on the Seattle City Employees Retirement System (SCERS) portfolio performance. What the system was faced with is considered a very volatile economic period. The first half of 2011 the portfolio was enjoying an annu- alized performance gain of 23%. The second half volatility wiped out all those gains and produced little or no gain. The S&P 500 basically ended Essential Telephone Numbers 2011 in the same place that it began 2011 (the 1265 range level). Similarly, the SCERS portfolio basically ended 2011 in the same place that it began And Web Addresses 2011 (approximately $1.8 billion). It’s being reported that the worst economic recession that America ARSCE: 206.992.7311 has ever experienced since the Great Depression is slowly improving. I know many of you are wondering if this is true. I believe it is. (Change of Address/Membership Questions) E-mail: [email protected] The good news is that the Federal Reserve thinks the economy is improving. The bad news is the Fed says the GNP — Gross National Prod- Website: www.arsce.org uct — and employment won’t improve as much as earlier thought. But, con- sumer spending is up, businesses are purchasing equipment and software Mayor’s Office for Senior Citizens: 206.684.0500 upgrades, Interest rates continue to stay low, and energy costs have made (Information on available programs/services) modest reductions. Housing inventories continue to decline. E-mail: [email protected] The recovery will continue, but, at a slow pace. Volatility in the markets will be with us for a while. That creates a very challenging environ- Website: www.seattle.gov/human_services/ ment for SCERS’s investment performance. Your Board of Administrators seniorsdisabled.mosc has been restructuring the investment portfolio in a manner to minimize the risk, yet seek return and capitalize on the risk return rewards. The Asset Personnel Department: 206.615.1340 Liability Study that SCERS underwent was intended to provide a mecha- nism for the Board to review all of our asset allocations to determine the (Benefits) appropriate structure and “return to risk” ratio and still permit the plan to E-mail: [email protected] meet its long-term liability. The 2012 target restructuring of asset classes Website: www.seattle.gov/Personnel/ now will contain: Retirement Office: 206.386.1293 or US Equity 25% 1.877.865.0079 Non US Equity 27% Covered Calls 6% (Retirement Checks/Health & Dental Benefits/ Gen- US Fixed Income20% eral Questions/Change of Address/Tax Withholding) Real Return 5% E-mail: [email protected] Private Equity 5% Real Estate 12% Website: www.seattle.gov/retirement The most interesting asset class SCERS is considering is Private Equity asset class. If you have been paying attention to the Republican Presidential Debates you’ll know that that Mitt Romney worked with Bain Capital a Private Equity firm. SCERS has been investing in forms of Private Equity (i.e., Mezza- Statement of Ownership nine and Buyout funds) since 2005. The private equity returns (as of June And Management 30, 2011) have been – for every dollar invested, SCERS has received $1.16 straight cash on cash. The Asset Liability study would require SCERS to 1) Owner and Publisher: The Association of Retired Seattle City Employees diversify into other types of Private Equity funds. Address: P.O. Box 75385 Seattle, WA. 98175-0385 “Private Equity” is a catchall for the private markets asset class. 2) Title of Publication: ARSCE News The asset class can include a sundry of styles within the asset class (i.e., 3) Frequency of issues: Six (6) issues each year. venture capital, buyouts, etc.) They provide working capital to a target com- 4) Merle Overland, President pany to nurture expansion, new product development, or restructuring of the Barbara Graham, Vice President company’s operations, management, or ownership. Unlike Public Equity, Joanne Kinsella, Secretary which is traded in regulated markets or exchanges, Private Equity has less Robert Sugden, Treasurer transparency and is not regulated to the extent of Public Equity. Judith Flemings, Editor Lee Sattler, Assistant Editor Among the most common investment strategies in Private Equity 5) Bondholders, Mortgages and Security Holders: None are: leveraged buyouts, venture capital, growth capital, distressed invest- 6) The Association of Retired Seattle City Employees (ARSCE) is a non-profit ments and mezzanine capital. In a typical leveraged buyout transaction, a organization for educational purposes according to section 501c(3) of the Internal Revenue Code. Contributions are tax deductible. private equity firm buys majority control of an existing or mature company.