March 25, 2003 – Board Agenda

March 25, 2003 – Board Agenda

Public Session
1.	Call to Order
2.	Roll Call
3.	Approval of the Minutes
4.	Oral Communications
	4.1	Oral Communications From the Board – None
	4.2	Oral Communications From the Public
5.	Benefit & Actuarial Services
	5.1	Adoption of Consent Calendar
	5.2	Consideration of items removed from Consent Calendar – None
	5.3	Acceptance of Overview of Upcoming Changes to SamCERA Benefits & Costs
	5.4	Approval to Continue Medicare Part-B Premium Reimbursement Program
	5.5	Authorization to Transfer Fiscal Year 2003-2004 Medicare Part-B Premium Reimbursement Program Appropriation from the Ventura Contingency Reserve to the 401(h) Account – Over
	5.6	Adoption of Contribution Rates & 401(h) Reserve Contribution for Fiscal Year 2003/2004 – Over
6.	Investment Services
	6.1	Acceptance of Monthly Portfolio Performance Report
	6.2	Approval of Assumptions and Parameters for Asset / Liability Modeling Study
	6.3	Acceptance of the 2003/2004 Strategic Plan
	6.4	Approval of extension to Bank of Ireland Asset Management's Contract
	6.5	Approval of Written Consents of Sole Stockholder/Shareholder in Lieu of Annual Meeting
	6.6	Acceptance of INVESCO Realty Management’s Compliance Certification Statement
	6.7	Approval of Topics for Global Custodian Review – State Street Bank & Trust Company
7.	Board & Management Support Services
	7.01		Acceptance of Monthly Financial Reports
	7.02		Adoption of Amendments to SamCERA’s Fiscal Year 2002/2003 Budget
	7.03		Annual Review & Revision of SamCERA’s Code of Fiduciary Conduct
	7.04		Annual Review & Revision of SamCERA’s Education Policy
	7.05		Annual Review & Revision of SamCERA’s Conflict of Interest Code
	7.06		Introduction of SamCERA’s Fiscal Year 2003/2004 Budget
	7.07		Approval of SamCERA's Application for a Public Sector Corporate Master Card
	7.08		Acceptance of the Report of the Ad Hoc Committee on Amendments to Mercer Contract
	7.09		Appointment of Ad Hoc Chief Executive Officer Performance Review Committee
	7.10		Nomination of Officers for the State Association of County Retirement Systems
	7.11		Appointment of Ad Hoc Review Committee for Audit Services Request for Proposal
	7.12		Acceptance of Report on the Prepayment of the County’s Contribution for FY 2002-2003
8.	Approval or Acceptance of Reports
	8.1	Chief Executive Officer's Report
	8.2	County Counsel's Report – None
	8.3	Investment & Finance Manager’s Report
	8.4	Assistant Executive Officers’ Report
9.	Adjournment

March 25, 2003 – Board Minutes, as corrected

0303.1		Call to Order: Mr. Bryan, Chair, called the Public Session of the Board of Retirement to order at 1:00 p.m., March 25, 2003 in SamCERA’s Board Room, Suite 125, 100 Marine Parkway, Redwood Shores.

0303.2		Roll Call: Mr. Bryan, Mr. Buffington, Ms. Colson (1:05), Mr. Cottle, Mr. Lewis (1:10), Mr. McMahon (1:05), Ms. Salas & Ms. Stuart. Excused: Ms. Tonsfeldt. Staff: Mr. McCausland, Mr. Hood, Mr. Clifton & Ms. Lamica. Counsel: Ms. Carlson. Consultant: Ms. Jadallah. Retirees: 3, Actives: 2, County: 2.

0303.3		Approval of the Minutes: Mr. McCausland noted that Ms. Arnott had submitted the following correction to the Minutes: 0302.6.3 ¶6 L1: “…bring this item back to the Board…”. Motion by Buffington, second by Stuart, carried unanimously, to approve the Minutes of February 25, 2003 as corrected.

0303.4.1		Oral Communications From the Board: None.

0303.4.2		Oral Communications From the Public: Mr. Murphy, on behalf of SCORPA, complimented staff on the comprehensive nature of the reports submitted to the Board for its consideration.

0303.5		Benefit & Actuarial Services

0303.5.1		Adoption of Consent Calendar: Motion by Salas, second by Stuart, carried unanimously, to adopt the Consent Calendar as submitted, as follows:
		Disability Retirements: The Board: (1) (a) Finds that Olivia Shirley is unable to perform the duties of a Court Reporter, (b) finds that her disability is Service-connected and, (c) GRANTS her application for Service-connected Disability (2) (a) Finds that Paul Feyling is capable of performing the duties of a Sheriff’s Captain and, (b) DENIES his application for Service-connected Disability. Routine Actions: The Board ratifies the following routine actions taken by staff pursuant to the Board's Delegation of Authority and the Regulations of the Board of Retirement:
		Service Retirements:
		Ayon, Alexander		March 1, 2003	Assessor’s Office
		Ebel, Barbara		March 14, 2003 (deferred)	Board of Supervisors’
		Dirickson, Michael		March 17, 2003	District Attorney’s Office
		Herbinaux, Myrna		March 28, 2003	Dept. of Aging and Adult Services
		Puglisi, Frank Jr.		March 28, 2003 (deferred)	San Mateo County Medical Center
		Li, Nancy		March 29, 2003	Sheriffs’ Department
		Estrada, Luis		March 29, 2003	Sheriffs’ Department
		Moses, S. Raymond		March 29, 2003	San Mateo County Medical Center
		Pang, Mitsue		March 29, 2003	Southern Municipal Court
		Rhein, Thomas		March 29, 2003	San Mateo County Medical Center
		Robinson, Ronald		March 29, 2003	San Mateo County Medical Center
		Tolani, Kam		March 29, 2003	Department of Public Works
		McCoy, Frank		March 31, 2003	Coroners’ Office
		Morgan, James		March 31, 2003	Parks and Recreation Department

		Continuance of Benefits
		Liukkonen, Mary P.			Beneficiary of Reino
		Peoples, Jane			Beneficiary of Paul
		Yarnway, Tinniziee			Beneficiary of Lonbaye

Extended Redeposit

Miller, Abbie

7years 8 months 6.367 days

$41,876.15 @ 130 payments

Deferred Retirements:

Goldsby, Stacy

G2 vested

Hroziencik, Michael

G2 vested

Peck, Julie

G2 vested w/reciprocity

Refunds for March 2003

Chu, Ebby

G4 non-vested

$3,222.34

Groves, Shana

G2/3 vested

$21,551.22

Lewis, Robert

G4 non-vested

$29,451.46

Lindsey, Matthew

G4 non-vested

$6,001.59

Pangilinan, Panfilo

G4 non-vested

$2,295.19

Rivera, Wilfredo

G4 non-vested

$1,170.16

Total Refunds

$63.691.96

Rollovers for March 2003

Del Castillo, Caroline

G4 non-vested

$3,898.72

Frias, Cynthia

G4 non-vested

$3,267.87

Yee, Christina F.

G4 non-vested

$6,991.22

Total Rollovers

$14,157.81

0303.5.2

Consideration of items removed from Consent Calendar: None.

0303.5.3

Acceptance of Overview of Upcoming Changes to SamCERA Benefits & Costs: Mr. McCausland reviewed the benefit enhancements that AFSCME, SEIU and BCTC negotiated with the County. He reported that the proposed implementation of 2% @ 55 in September 2003 and 2% @ 55.5 in March 2005, when combined with other probable actuarial funding issues, will have the following impact on the estimated aggregate County contribution rates for General Members: Current Fiscal Year – 10.3%, Fiscal Year 2003/2004 – 15.2% and Fiscal Year 2004/2005 – 18.6%. [The full Overview can be viewed on SamCERA’s website.]

Mr. Cottle and Ms. Colson commented on the challenges the Board will face as SamCERA’s liabilities are reshaped over the next two years. Mr. Buffington commented on the fact that SamCERA will soon have more retirees than active members at the very time that new benefit enhancements will be exacerbating the liabilities. Mr. McCausland predicted that unless the Board of Supervisors raises taxes or finds new sources of revenue, the County will find it necessary to close these plans to new hires within five years.

Ms. Stuart asked why Member Accounts are still being credited with interest at the 8.25% actuarial interest assumption rate. Mr. McCausland reviewed the history of the Board’s interest crediting policy, highlighting the fact that the decision was made at a time when the Retirement Fund was generating double-digit returns and the County had balked at the Board’s crediting at the earnings rate in 1997, which that year had been ~16%. The agreement had been reached that Member Accounts would be credited at the actuarial interest assumption and all other earnings or losses would be credited to Employer Reserves.

Mr. McCausland noted that it is time to review the interest crediting policy because of the enactment of a new law that gives non-vested terminated members the right to leave their contributions on deposit and for non-vested terminated Safety Members to redeposit their contributions at any time. That legislation recasts SamCERA as an alternative to an Individual Retirement Account. Consequently, he concluded that it is time to revisit the interest crediting policy. Mr. McCausland noted that Marin CERA is considering crediting all accounts at the rate paid by their credit union and letting all other returns flow into the excess earnings reserve.

Mr. Cottle, Mr. Buffington and Ms. Colson noted the problems associated with granting interest in years when the Retirement Fund is losing money. In response to a question from Mr. Cottle, Mr. McCausland noted that the Board can review its interest crediting policy during its April meeting. Without objection, Mr. Bryan instructed staff to conduct a SACRS survey of interest crediting policies and to bring SamCERA’s policy to the Board for review on the April agenda.

0303.5.4

Approval to Continue Medicare Part-B Premium Reimbursement Program: John Murphy, on behalf of SCORPA, reminded the Board that current retirees will not benefit from the generous benefit enhancements the County has granted to its future retirees. Mr. Murphy prayed that the Board not turn its back on those who are already retired, since they do not have a seat at the bargaining table with the County and their needs have been totally ignored by all parties throughout the current collective bargaining process.

Mr. McCausland reviewed the history of the Medicare Part-B Premium Reimbursement Program, noting that it was to be funded from “excess earnings” as defined in GC§§ 31592.2 & 31592.4. He noted that since the Retirement Fund is now in its third year of negative returns, the County is concerned with Mr. McCausland’s proposal to fund Medicare Part-B out of “excess earnings” in the Ventura Contingency Reserve. In response to a question from Mr. Buffington, Mr. McCausland reviewed the history behind the creation of the Ventura Contingency Reserve. Mr. Buffington noted that the reserve is a part of Employer Reserves.

Mr. McCausland noted that the County Manager has indicated that the County might not have supported the creation of the Ventura Contingency Reserve if it had been known that the funds therein might later be diverted for the payment of other benefits. He also noted that the County Manager has expressed a desire to have the Board of Supervisors consider the Medicare Part-B appropriation during the County budget process. Paul Scannell, Assistant County Manager, reiterated the County Manager’s concerns, reviewed the Board’s deliberations in the Spring of 2002 and noted that the Board of Retirement’s resolution states that the “Ventura Contingency Reserve is reserved for the exclusive purpose of providing funding for the payment of expenses and enhanced benefits resulting from [Ventura] compensation issues…” He stated that now is not the time to divert funds from the intended purpose. Mr. McCausland noted that it was Mr. Scannell who had argued eloquently in 2002 that the Board should not create a multi-year funding source for Medicare Part-B, so it may be disingenuous of him to chastise the Board in 2003 for considering one of the major options left for funding the program.

Mr. Scannell reiterated the County Manager’s request that this matter be cast so that the Board of Supervisors can consider it in the context of the County’s total fiscal situation. Mr. McCausland noted that he had told the County Manager that the Medicare Part-B appropriation would be forwarded to the Board of Supervisors in a standalone resolution.

Mr. Scannell stated that the County desperately needs any relief that any excess Ventura Contingency Reserve balance might provide to help ameliorate the County’s budget deficits. He stated that the County would like to be able to look forward to using excess Ventura Contingency Reserve funds to reduce the impact of the new retirement benefit formulas and to provide relief for programs that have come to the Board of Supervisors pleading for relief. He cited financial crises facing the County’s Alcohol & Drug programs and the Burlingame Health Care Center as examples of the appeals being made to the Board of Supervisors each time they meet. He noted that the County is being asked to take over management of the Center so that the 166 residents would not wind up being farmed out to homes around the State.

Ms. Salas noted that the transfer of $1.4 million for Medicare Part-B funding from the Ventura Contingency Reserve will have no measurable impact on County departmental budgets, since the actuary has said the Reserve is not available for direct employer contribution relief. [The actuary recommends that any excess be credited to Employer Advance Reserves, thereby reducing the Unfunded Liability.] Mr. Scannell reacted by stating that the Chief Probation Officer has indicated that he will have to lay off 200 Probation Officers.

Mr. Bryan expressed disbelief that the County would oppose continuation of the Medicare Part-B program in the year the County has so generously enhanced retirement benefits for current employees and increased compensation for elected officials and the County Manager. He noted that the majority of ’37 Act counties use excess earnings for ad hoc benefits reserves, whereas SamCERA’s Board has consistently credited those excess earnings to Employer Reserves to help reduce the unfunded liability. He opined that this is not the year to abandon SamCERA’s existing retirees. Mr. Bryan noted that if the Board of Retirement votes to fund Medicare Part-B, then the Board of Supervisors can decide whether or not that benefit will be taxed or tax-free.

Mr. Bryan highlighted the fact that the Board already saved the County 1.6% of payroll by extending the funding period to 20-years.

In response to a question from Ms. Colson, Mr. McCausland opined that the Board could suspend the crediting of interest to all accounts and then use available coupon, dividend and property income and realized gains to generate sufficient excess earnings to fund the Medicare Part-B program. Mr. Cottle and Mr. Buffington noted that that alternative could be considered during the review of SamCERA’s interest crediting policy in April. Mr. McCausland noted that a final decision on Medicare Part-B can be made as late as the May meeting. Without objection, Mr. Bryan instructed staff to place this matter on the April agenda for further consideration.

0303.5.5

Authorization to Transfer Fiscal Year 2003-2004 Medicare Part-B Premium Reimbursement Program Appropriation from the Ventura Contingency Reserve to the 401(h) Account: Over

0303.5.6

Adoption of Contribution Rates & 401(h) Reserve Contribution for Fiscal Year 2003/2004: Over

0303.6

Investment Services

0303.6.1

Acceptance of Monthly Portfolio Performance Report: Mr. Cottle reported that the Fund has underperformed its benchmark, which means that the active managers are not adding value. He noted that the Committee has asked Bank of Ireland Asset Management to attend the April Committee meeting. After asking for trustee input, without objection, Mr. Bryan ruled that the Bank of Ireland interim review be conducted by the Investment Committee, not the full Board.

Asset Class

Market Value

1-Month

1-year TTWRR

5-year TTWRR

Domestic Equity

$ 531,025,853

-1.82%

-22.17%

-3.84%

International Equity

153,273,546

-3.96%

-20.57%

-4.25%

Total Equity

$ 684,299,400

-2.31%

-21.93%

-4.81%

Fixed Income

357,814,047

1.41%

9.73%

7.61%

Real Estate Aggregate

63,128,039

0.71%

3.21%

7.75%

Cash Equivalents

10,648,479

0.12%

2.66%

Total Fund

$1,115,889,965

-0.95%

-10.68%

0.21%

Benchmark

-0.82%

-10.78%

0.06%

Without objection, Mr. Bryan accepted the report.

0303.6.2

Approval of Assumptions and Parameters for Asset / Liability Modeling Study: Mr. Cottle reviewed the parameters discussed by the Investment Committee and its recommendation to the Board. The Board reviewed its concerns regarding SamCERA’s real estate portfolio and the management thereof. Motion by Cottle, second by Colson, carried unanimously to adopt the assumptions and parameters for the Asset / Liability Modeling Study set forth in the Strategic Investment Solutions memorandum of February 20, 2003 as modified by the Investment Committee. [See March 25, 2003 Investment Committee Minutes for details.]

0303.6.3

Acceptance of the 2003/2004 Strategic Plan: Mr. Cottle reported that the Investment Committee adopted its work plan for the year. He noted that the Committee will be developing a Due Diligence Policy and Program. Without objection, Mr. Bryan accepted the report.

0303.6.4

Approval of extension to Bank of Ireland Asset Management's Contract: Mr. Cottle reported that the Investment Committee recommends that the BIAM contract be extended through October, so that the Board can consider the results of the Asset / Liability Modeling Study before deciding what to do with its international equity allocation. Motion by Cottle, second by Salas, carried unanimously to authorize the Chair to execute an amendment to the contract between the Board and Bank of Ireland Asset Management, which amendment shall extend the term of the contract from its current expiration date of June 30, 2003 through October 31, 2003.

0303.6.5

Approval of Written Consents of Sole Stockholder/Shareholder in Lieu of Annual Meeting: Mr. Clifton reminded the Board that SamCERA is the single shareholder in six corporations holding title to SamCERA’s real estate investments and that each year the Board is asked to waive the requirement for an annual meeting. Motion by Stuart, second by Colson, carried unanimously, to authorize the Chair to execute all corporate compliance documents required for the Annual Meetings of those corporations holding title to real estate owned by SamCERA.

0303.6.6

Acceptance of INVESCO Realty Management’s Compliance Certification Statement: Mr. Clifton noted that the Investment Committee had reviewed and accepted INVESCO’s Compliance Certification Statement. Motion by Lewis, second by Salas, carried unanimously, to accept the Statement.

0303.6.7

Approval of Topics for Global Custodian Review – State Street Bank & Trust Company: Mr. Cottle noted that the Investment Committee had augmented the list of standard topics to include State Street’s fixed income pricing service and prospects for fees. Without objection, Mr. Bryan approved the list of topics.

0303.7

Board & Management Support Services

0303.7.01

Acceptance of Monthly Financial Reports: Mr. Clifton submitted the Monthly Financial Reports. In response to a question from Mr. Buffington, Mr. Clifton noted that Employee Contributions were up because of Plan 3 Upgrade Purchases.

The Fair Market Value of the Retirement Fund declined $100.7 million between June 30, 2002 and February 28, 2003. This decline reflects the net of a decline of (1) $107.9 million in the Market Value of the Investment Portfolio, (2) $46.6 million in Benefit Payments and (3) $2.6 in Professional and Administrative Expenses versus income of (4) $32.0 million in Employer Contributions, (5) $13.6 million in Member Contributions and (6) $10.8 million in Interest and Dividends. Without objection, Mr. Bryan accepted the report.

0303.7.02

Adoption of Amendments to SamCERA’s Fiscal Year 2002/2003 Budget: Mr. McCausland reviewed the items reflected in the budget amendment, noting that the cost of relocation reflected an investment in the future that should encourage the Board to stay for a while. Mr. Cottle noted that the Board and Staff are well satisfied with SamCERA’s new facilities. Mr. Clifton noted that the amendment includes an augmentation for Employee & Public Services related to increased work. Motion by Stuart, second by Salas, carried unanimously, to adopt Resolution 02-03-09, as follows:

Whereas, Resolution 01-02-06 approved SamCERA's Administrative Budget for Fiscal Year 2002-2003; and

Whereas, SamCERA was unable to negotiate a satisfactory new lease with its current landlord; and

Whereas, Resolution 02-03-03 approved the lease for Suite 125, 100 Marine World Parkway, Redwood Shores; and

Whereas, SamCERA's Sources, Uses and Budget Report for the Fiscal Year 2002-2003, at page 46, noted that the budget did not include funds for relocation of SamCERA’s offices; and

Whereas, the Chief Executive Officer, pursuant to authority vested in him by Resolution 02-03-03, has undertaken projects he deemed necessary for SamCERA’s relocation to its new offices; and

Whereas, the Chief Executive Officer has recommended amendments to Resolution 01-02-06 to appropriate monies for the relocation of SamCERA’s offices. Therefore, be it

Resolved that the Board hereby amends Resolution 01-02-06, as follows:

Budget Item

Fiscal Year 2002-2003

Salaries & Benefits

$~~1,042.0~~

$1,042.0

Services & Supplies

~~752.0~~

1,013.0

Fixed Assets

~~40.0~~

0.0

TOTAL

~~$1,834.0~~

$2,055.0

Resolved that the Board hereby authorizes the Chief Executive Officer to implement the provisions of this Resolution, including executing the requisite Appropriation Transfer Requests (ATR). Be it further

Resolved that the Controller is hereby authorized to disburse funds on behalf of the Board for expenditures that are in accordance with this adopted Budget.

0303.7.03

Annual Review & Revision of SamCERA’s Code of Fiduciary Conduct: Mr. McCausland reminded the Board that it reviews its major policies each year. He reminded the Board that Mr. McMahon had recommended that the Board consider incorporating CalPERS’ Corporate Governance Policies into the Code. However, Mr. McCausland recommended that the Board refer the governance policies to the Investment Committee, because they would best be incorporated into SamCERA’s Investment Plan, if the Board decides to pursue a pro-active program.

Mr. McCausland noted that he would make the following editorial corrections to the Code: on page 2 in the Preamble ¶4: “Code ~~of Ethics~~” & page 3, last line: “any contract made by the ~~SamCERA~~ Board.” Without objection, Mr. Bryan reaffirmed the Board’s commitment to SamCERA’s Code of Fiduciary Conduct as reconstituted July 23, 2002.

0303.7.04

Annual Review & Revision of SamCERA’s Education Policy: Mr. McCausland invited the Board to undertake its annual review of its Education Policy. Mr. McMahon recommended that the Information Management Network be added to the list of educational activities. Mr. McMahon opined that the annual expenditure limitation discriminates against seasoned trustees. Mr. Lewis and Ms. Salas reminded the Board that the limits had been arrived at after extensive deliberations. Without objection, Mr. Bryan reaffirmed the Board’s commitment to SamCERA’s Education Policy and approved the addition of the Information Management Network to the Fifth Resolved Clause.

0303.7.05

Annual Review & Revision of SamCERA’s Conflict of Interest Code: Mr. McCausland recommended that the Board amend the Conflict of Interest Code to consolidate the Information Technology Manager position with the Assistant Executive Officer / Benefits Officer position.

Motion by Cottle, second by Salas, carried unanimously, to amend Resolution 98-99-15, as amended, as follows:

Whereas, the Board has adopted a Code of Fiduciary Conduct which requires among other things, that

Trustees, the Chief Executive Officer, Consultants, Investment Managers and other professionals retained by the Board and SamCERA Staff shall comply with the provisions of the California Constitution; the Political Reform Act of 1974, as amended...and all other laws pertinent to the conduct of public pension fund fiduciaries; and

Whereas, Government Code §87300 mandates the adoption of a Conflict of Interest Code by independent public agencies; and

Whereas, the Board, by Resolution 96-97-03, adopted the Conflict of Interest Code provisions of California Fair Political Practices Commission (FPPC) Regulation 18730; and

Whereas, Government Code §87306.5 mandates that the Board review its designation of employees and disclosure categories from time to time. Therefore, be it

Resolved that the Board hereby redefines SamCERA's List of Designated Individuals and Disclosure Categories per FPPC Regulation 18730, to read as follows:

List of Designated Individuals and Applicable Disclosure Categories

Each individual holding a Designated Position must file FPPC Form 700--Statement of Economic Interests disclosing the applicable financial interests indicated for the position in accordance with Government Code §87200, et seq.

Designated Positions

Applicable Disclosure Categories

Trustees & Designated Alternate Trustee

1, 2, 3, 4

Chief Executive Officer

1, 2, 3, 4

Assistant Executive Officer ~~/Benefits Manager~~

1, 2, 3, 4

Investment and Finance Manager

1, 2, 3, 4

~~Information Technology Manager~~

~~1, 2, 3, 4~~

Consultants specifically identified to file by the Board of Retirement

1, 3, 4

Real Estate Consultants specifically identified to file by the Board of Retirement

1, 2, 3, 4

Be it further

Resolved that the Board hereby adopts the following

Description of Financial Disclosure Categories

Category 1: Investments that may be materially affected by any decision made or participated in by the designated individual must be disclosed on Schedules A-1 &/or A-2 of Form 700.

Category 2: Interests in Real Property that may be materially affected by any decision made or participated in by the designated individual must be disclosed on Schedules B &/or C of Form 700. If the designated individual is a trustee, designated alternate trustee, or SamCERA Staff member, disclosure is only required on real property located in the County of San Mateo.

Category 3: Income that may be materially affected by any decision made or participated in by the designated individual must be disclosed on Schedules C, D, E, &/or F of Form 700.

Category 4: A Business Entity in which the designated individual is a director, officer, partner, trustee, or holds any position of management that may be materially affected by any decision made or participated in by the designated individual must be disclosed on Schedule C of FPPC Form 700. Be it further

Resolved that the Board, in concert with the opinion of the FPPC, defines as consultants specifically identified to file by the Board of Retirement “employees and principals who provide services to the Board, with influence over the investment decisions pertaining to the Retirement Fund and in positions that involve the making or participation in the making of decisions which may foreseeably have a material effect on any reportable financial interest”. Be it further

Resolved that the Board hereby authorizes the Chief Executive Officer to instruct the following firms to identify employees and principals who meet the definition of consultant set forth above: Bank of Ireland Asset Management (U.S.) Limited, Barclays Global Investors, INVESCO Realty Advisors, Deutsche Asset Management and Strategic Investment Solutions. Be it further

Resolved that the Board hereby instructs the Chief Executive Officer to provide for annual disclosure by all individuals in the Designated Positions. Each individual holding a Designated Position must file the original Form 700 with the Chief Executive Officer who must make and retain a copy and forward the original to the County Clerk who must make and retain a copy and forward the original to the FPPC. Form 700 must be filed at the times and on the forms prescribed by law. Failure to file statements on time may result in penalties, including but not limited to late fines. Be it further

Resolved that the Board hereby instructs the Chief Executive Officer to implement a program to provide reasonable assurance that foreseeable potential conflict of interest situations will be disclosed and prevented and to provide each affected person with a clear and specific statement of his or her duties under the Conflict of Interest Code. Be it further

Resolved that the Board hereby instructs the Chief Executive Officer to supply the necessary forms and manuals, to monitor timely and complete filing compliance, to take action regarding late filings and to report apparent violations of the Conflict of Interest Code to the Board.

ADOPTED by unanimous vote, February 23, 1999.

Amended by unanimous vote, February 22, 2000.

Amended by unanimous vote, February 27, 2001.

Amended by unanimous vote, February 26, 2002.

Amended by unanimous vote, March 25, 2003.

0303.7.06	Introduction of SamCERA’s Fiscal Year 2003/2004 Budget: Mr. Clifton introduced the draft Sources, Uses and Budget Report for next fiscal year and asked the trustees to provide him with suggestions for improving the document. Mr. Cottle, Ms. Colson and Mr. Buffington submitted suggestions that Mr. Clifton agreed to incorporate into the April version of the report. Mr. Cottle noted for the record that this report and SamCERA’s manager compliance reports and pre-manager review questionnaires exceed anything that he has encountered with any of his pension fund clients. Mr. McCausland noted that Mr. Clifton deserves full credit for following through on the Board’s recommendations and implementing an outstanding set of due diligence documents to help the Board perform its various fiduciary functions. Mr. Clifton noted that the budget would be set for public hearing at the April meeting and adoption at the May meeting of the Board.

0303.7.07	Approval of SamCERA's Application for a Public Sector Corporate Master Card: Mr. Clifton noted that staff and trustees frequently use their personal credit cards to make online reservations for conferences and travel. He recommended that the Board authorize the acquisition of a Public Sector Corporate credit card that would only be used when necessary, primarily for education, conference, travel and disaster recovery expenditures. He recommended that the limit be $50,000 to accommodate the possible need for post-disaster emergencies. In response to concerns raised by several trustees, Mr. Clifton and Mr. McCausland noted that a $25,000 limit would be adequate. Mr. Lewis noted that there are also a number of special purpose cards available. Mr. McCausland noted that SamCERA has consistently complied with standard County policies and practices for purchases and payments, because of their built in internal controls. Mr. Buffington noted that another department had issued credit cards without proper authorization and recommended that Mr. Clifton make certain that SamCERA proceeds with the proper authorization. Motion by Colson, second by Lewis, carried unanimously, to authorize the Chief Executive Officer, Assistant Executive Officer and Investment & Finance Manager to hold public sector corporate credit cards with a combined credit limit of $25,000, with the vendor to be determined after consultation with Mr. Buffington & Ms. Carlson. Staff will bring the agreement to the Board for approval in April.

0303.7.08	Acceptance of the Report of the Ad Hoc Committee on Amendments to Mercer Contract: Mr. McCausland noted that Ms. Chapman had requested that further consideration of Mercer’s request for an increase in fees be put over until the April meeting when she can be present for the discussion. After extensive discussion, without objection, Mr. Bryan put the item over to the April meeting.

0303.7.09	Appointment of Ad Hoc Chief Executive Officer Performance Review Committee: Mr. Bryan asked for volunteers to serve on the Ad Hoc Committee: Without objection, Mr. Bryan appointed Mr. Cottle, Chair; Ms. Colson, Ms. Salas and Ms. Stuart to the Ad Hoc Chief Executive Officer Performance Review Committee.

0303.7.10	Nomination of Officers for the State Association of County Retirement Systems: Mr. McCausland noted that the SACRS bylaws require the submission of nominees by April first. Following a general discussion, without objection, Mr. Bryan accepted the report and noted that Ms. Colson would be SamCERA’s first voting alternate and Ms. Stuart would be the second voting alternate for the Spring SACRS Conference.

0303.7.11	Appointment of Ad Hoc Review Committee for Audit Services Request for Proposal: Mr. Clifton reviewed the Audit Services RFP process. Mr. Cottle asked that staff make certain that the proposal has been received by each of the qualified firms. Following a general discussion: Without objection, Mr. Bryan appointed Mr. Lewis, Chair; Ms. Salas, Ms. Stuart and Ms. Tonsfeldt to the Ad Hoc Audit Services Request for Proposals Review Committee. Without objection, Mr. Bryan ruled that the selection process and schedule will be determined by the Committee and that, if the Committee determines that oral interviews are necessary, such interviews will be conducted by the Committee. Without objection, Mr. Bryan instructed the Committee to present its final recommendation to the Board for ratification. Ms. Carlson cautioned trustees, encouraging them to refuse to have any oral communications with prospective auditors.

0303.7.12	Acceptance of Report on the Prepayment of the County’s Contribution for FY 2003-2004: Mr. Clifton reported that the County plans to prepay its Fiscal Year 2003/2004 contribution, which is estimated to be $50,943,786, on July 11^th. In response to a question from Mr. Cottle, Mr. Buffington noted that the prepayment has been planned for in the County’s cash flow projections. Without objection, Mr. Bryan accepted the report.

0303.8	Approval or Acceptance of Reports

0303.8.1	Chief Executive Officer's Report: Mr. McCausland noted that a retiree had recommended that SamCERA stop issuing monthly benefit advices to retirees who use direct deposit as a cost savings measure. Ms. Stuart noted that she likes to receive a monthly advice. John Murphy and William Bullard noted that they would not mind not receiving an advice. Mr. McCausland noted that Social Security no longer issues advices. Mr. Clifton noted that SamCERA performs a regular check of Social Security death records to capture deceased retirees. Mr. Bryan noted that the Board has no objection to having staff explore this issue so long as there is sufficient advance notice to retirees. Mr. McCausland reported that the Attorney General has opined that the Alternate Retiree Trustee provisions of the ’37 Act do not constitute a modification in the selection of retirement board members and therefore do not trigger the Proposition 164 requirement for the approval of the jurisdiction’s electorate. Mr. McCausland reported that LACERA has invited SamCERA to join in a friend of the court letter in support of CalPERS’ request for a Supreme Court review of the Westly vs. Board of Administration appellate court decision. He noted that Ms. Carlson and he concluded that, because of the unfortunate set of facts in the Westly case, SamCERA should not become involved.

0303.8.2	County Counsel's Report: None.

0303.8.3	Investment & Finance Manager’s Report: Mr. Clifton submitted a report on the status of Hunter’s Creek Plaza and Market Commentaries from Deutsche Asset Management and Bank of Ireland Asset Management. He asked trustees to complete their education selections for next fiscal year as soon as possible. He noted that FPPC Form 700 is due to SamCERA today.

0303.8.4	Assistant Executive Officers’ Report: Mr. Hood noted that web member services online benefit estimator was implemented on March 17^th on the County Intranet. Mr. Buffington noted that the estimator works quite well. Mr. Bryan noted that he and most members would like access from the web. Mr. Bryan also noted that he had heard from several members who have found the estimator to be very useful. Mr. Hood expressed his gratitude to Ms. Manning and Mr. Ali for their excellent work in testing the program before it went live. Mr. Hood reported that the Notice of Election has gone to all payroll clerks for posting for Mr. McMahon’s and Ms. Salas’ seats on the Board.

0303.9	Adjournment in Memory of the following Deceased Members: There being no further business, Mr. Bryan adjourned the meeting at 3:22 p.m. in memory of the following deceased members:

		yarnway, lonbay	january 26, 2003	department of public works
		elliott, norman	january 29, 2003	building and grounds
		zaft, la vaughn	january 31, 2003	beneficiary of paul
		alicea, mildred	february 9, 2003	beneficiary of raymond
		nunes, elizabeth	february 14, 2003	beneficiary of clarence
		barnett, helen	february 15, 2003	northern municipal court
		ponciroli, helen	february 17, 2003	beneficary of dionigi
		jackson, doris	february 21, 2003	mental health
		lawson, glen	february 21, 2003	department of social services
		laughrey, mary ellen	february 23, 2003	county general hospital
		mason, angele	february 23, 2003	library
		bridgeman, doris	february 28, 2003	aging and adult services
		hurdal, chris	march 6, 2003	beneficary of irene

Tom E. Bryan, Chair

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