LAUSD Retirement Investment Advisory Committee (RAIC)

 

Below is a letter to the subcommittee of RAIC. This committee is charged with advising the chief financial officer or any changes that need to be made with LAUSD 457(b) retirement plan. This plan won a Plan Design award in 2014, but every five or six years, this plan needs to be updated. I wrote this note because several new members recently joined and might need some basic training or an introduction to their responsibilities. 

By Steve Schullo

I threw this post together reflecting Thursday’s subcommittee investing meeting. Forgive me if I have left gaping holes and made unwarranted assumptions. I am using my 16-year experience on the RAIC committee and from what I know, read, and experienced as a consumer with my own 403(b) money.

I think the most troubling part of the meeting was the discussion, with only a few members participating. Talking about major changes to the investment choices needs all hands-on deck.

Twice a year, half-day investment workshops have been scheduled for teachers for over a decade, thanks to Sandy and Leonard. I think we now need to include educational workshops for the specific needs of committee members.

For the last 16 years, we have had a handful of 457(b) academy workshops led by Barbara and Bill. At every National Association of Governmental Defined Contribution Administrators (NAGDCA) conference I have attended, the need, almost demand, for frequent committee education has been repeated endlessly. These workshops have not caught up to the numerous member changes.

We are about to confront the task of making significant changes to the fund lineup while keeping costs low. Here is a suggestion to begin the task of educating ourselves. Let’s dedicate our December 8^th meeting to getting everybody on board with some topics I listed below. Investment decisions can wait. Let’s keep meeting as a subcommittee for the next few months for our internal and informal discussions. To make investment decisions at this point is premature, in my opinion. I cite the lack of adequate discussion, input, and ideas from all parties.

The last NFP’s 457(b) Academy was held right before COVID, January 2020. Unfortunately, their focus is on legal and regulatory issues, and it was conducted during the school day. I propose the December 8^th meeting to focus on the investment process and the basic policy and philosophy of why RAIC exists in support of all LAUSD employees’ best financial interests.

Here are some topics to get us started:

1. Little history of RAIC committee.
2. When?
3. Why? Most important. There are many stories.
4. RAIC comprises volunteer members from each collective bargaining unit, a Member at Large, the CFO, the Board of Education, and the Benefits Administration. Outside non-voting contractors are the committee’s financial consultant and record keeper.
5. What exactly are we supposed to do as individual members?
6. Do members need a financial background?
7. Investment Policy Statement (IPS)
8. Fiduciary definition
9. Roth IRA
10. Auto Enrollment
11. Brown Act
12. ERISA (Employment Retirement Investment Security Act, 1974)
13. Basic Investment Strategies (not much different from CalSTRS) how and why is the 457(b) different from the 403(b).
14. Financial Literacy by Tim Ranzetta of Next Gen Personal Finance NGPF.org.

LAUSD’s massive priorities and other professional culture issues leave Financial Literacy Training with little time and no money. However, with the fresh faces and a new and exciting development from Tim Ranzetta and his generous Financial Literacy grant, training and education may now be possible for all interested LAUSD teachers. I am told that discussions are occurring as we speak between Tim Ranzetta and the district. It is just a matter of time before training will be available for teachers to teach financial literacy to their students, thanks to Tim for his massive support at no cost to LAUSD.

I have always felt privileged to be a volunteer on RAIC. For the record, I have no formal financial training. I taught at LAUSD for 24 years and retired in 2008. I hope that training for committee members will come to fruition so we can make good decisions on behalf of all LAUSD employees to recommend to the CFO. It is long overdue.

Best of fortunes,

Steve

Steve’s BIO

Stephen A. Schullo, Ph.D. (UCLA ’96) taught in the Los Angeles Unified School District (LAUSD) for 24 years and UCLA Extension teaching educational technology to student teachers.

Steve wrote investment articles for the United Teacher-Los Angeles (UTLA) union newspaper for 13 years. Thrice featured retirement plan advocate in the Los Angeles Times and U.S. News and World Report. He co-founded an investor self-help group 403bAware for teacher colleagues and wrote 7,500 posts in three investment forums since 1997. Frequently quoted by the media, he testified at California State legislative hearings and was honored with the “Unsung Hero” award by UTLA for his retirement planning advocacy.

For the last seventeen years, he serves as a volunteer on LAUSD’s Investment Advisory Committee as a “Member-at-Large” and former co-chair. The committee contains collective bargaining reps from the unions and monitors the district’s tax-deferred retirement plans, 457b/403b, of 55,000 former and current LAUSD employees, worth $3.1 billion in total assets.

He started this blog in 2012 to help all PreK-12 public school educators nationwide, especially his Los Angeles Unified School District colleagues. He belongs to a small national group of 403(b) advocates (mostly teachers) who want to bring closer attention to the 403(b). During the last 25 years, over 40 newspaper articles have been published and each one says the same thing, TSAs (Tax Sheltered Annuities) are terrible 403(b) plans. Over and over again, the articles report that the salesperson gets the benefit from lucrative commissions and high costs. Nobody in educational leadership reads these articles NOR talks about the proper place for annuity products publically. We come together at 403bwise.org. Come on over if you want to join us so we can help our colleagues avoid these self-conflicted retirement plans, TSAs.

For a copy of both books, click on my home page and scroll down to the two books. Click on each book and download it FREE. No obligations as I am not a financial adviser.

Email Steve at steve.schullo@latebloomerwealth.com or ask your question after each post.