April 22, 2003 – Board Minutes, as amended
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0304.1
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Call to Order: Mr. Bryan,
Chair, called the Public Session of the Board
of Retirement to order at 1:00 p.m., April 22, 2003 in SamCERA’s Board Room, Suite 125, 100 Marine Parkway, Redwood Shores.
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0304.2
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Roll Call: Mr. Bryan, Ms. Colson, Mr. Cottle,
Mr. Lewis, Mr. McMahon, Ms. Salas, Ms. Stuart & Ms.
Tonsfeldt. Ms. Arnott for Mr. Buffington. Staff: Mr. McCausland, Mr. Hood, Mr. Clifton & Ms. Lamica. Counsel: Ms. Carlson. Consultants: Ms. Chapman, Dr. Fracchia, Mr. Gessell, Ms. Jadallah & Mr. Yeung. Custodian: 4, Retirees: 1, County:
2.
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0304.3
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Approval of the Minutes: Ms. Arnott submitted
the following corrections: 0303.5.4 ¶6 L1: “Ms. Salas noted
that the transfer…”; 0303.8.4¶1L3&4: “…access
from the web. He also noted, but that he
had heard…” Motion by Cottle, second by Colson, carried unanimously, to
approve the Minutes of the meeting of March 25, 2003, as corrected.
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0304.4.1
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Oral Communications From the Board: Ms. Stuart reported
that she and members of SCORPA have been attending the meetings
of the Board of Supervisors and are meeting with individual
Supervisors to inform them of the importance of SamCERA’s
Medicare Part-B Premium Reimbursement Program and to ask
for the Supervisors’ support for its continuation.
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0304.4.2
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Oral Communications From the Public: None.
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0304.5
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Benefit & Actuarial Services
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0304.5.1
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Adoption of Consent Calendar: Without
objection, Mr. Bryan removed the application of Shiri Ram from the Consent
Calendar (Mr.Lewis). Motion by Stuart, second by Salas, carried unanimously,
to adopt the Consent Calendar as amended, as follows:
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Disability Retirements: The
Board (a) finds
that Colleen Morales is unable to perform the duties of a Custodian,
(b) finds that her disability is Service-connected
and (c) GRANTS her application for Service-connected Disability.
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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:
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Service
Retirements:
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Floyd, Evelyn
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G2 (from deferred)
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Crystal Springs Rehabilitation Ctr.
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Cannon, Helen
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G2 (from deferred)
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San Mateo County Medical Center
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Rescinded
Retirements:
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Tolani, Kam
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March 29, 2003
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Department of Public
Works
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Deferred
Retirements:
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Aguilar, Duliamaria
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G4 non vested
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Reciprocity
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Bastidas, Leticia
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G4 non vested
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Reciprocity
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Cox, Melissa
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G4 non vested
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Reciprocity
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Fattah, Hala
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G4 non vested
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Reciprocity
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Ferrick, George
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G4 non vested
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Reciprocity
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Gabriel, Matthew
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G4 non vested
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Reciprocity
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Jimenez, Lorayne
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G4 non vested
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Reciprocity
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Miller, Richard
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G4 non vested
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Reciprocity
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Rothberg, Jill
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G4 non vested
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Reciprocity
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Soriano, Rommel
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G4 non vested
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Reciprocity
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Wilson, Jean
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G4 non vested
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Reciprocity
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Parsad, Shamarlata
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G4 non vested
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Reciprocity
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Peck, Julie
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G2 vested w/reciprocity
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Vail, Mary
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G2 vested
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Khelawan, Praveen
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G2 vested
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Refunds for March 2003
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Amador, Olga
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G4 non vested
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$3,414.11
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Bender, Leslie
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G4 non vested
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$17,677.91
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Bhan, Chandra
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G4 non vested
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$1,992.88
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Johnson, Brandy
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G4 non vested
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$4,836.69
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Zanetti-Hardest, Rebecca
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G4 non vested
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$11,048.17
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Total Refunds
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$38,969.76
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Rollovers for March 2003
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Krijger, Lisa
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G4 non vested
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$7,913.66
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Teal, Robert
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G4 non vested
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$3,710.44
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Total Rollovers
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$11,624.01
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0304.5.2
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Consideration of items removed from Consent Calendar: Dr. Fracchia reviewed new medical reports that had been submitted
to Counsel just prior to the Hearing on Mr. Ram’s
appeal of the Board’s August 28, 2001 denial of his application. Dr. Fracchia reversed his earlier recommendation to the Board
based on the additional evidence in the new medical reports. Dr. Fracchia recommended
that the Board grant Mr. Ram’s application. Motion by Lewis, second by Salas, carried unanimously,
(1) to rescind the Board’s action of August 28, 2001 that denied Shiri Ram’s application for Service-connected Disability
and granted him a Non-Service Connected Disability Retirement
and (2) (a) to find that Shiri Ram is
unable to perform the duties of a Storekeeper, (b) to find
that his disability is service-connected and (c) to GRANT his
application for Service-Connected Disability.
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0304.5.3
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Introduction of Amendments to the Regulations of the Board of Retirement implementing
the new rights of non-vested terminated members granted
per Chapter 883 Statutes of 2002: Mr. McCausland introduced
the amendments to the Regulations and noted that they
would be set for a Public Hearing on May 27th. He
noted that the amendments would be revised to terminate
the crediting of interest to the accounts of non-vested,
non-reciprocal terminated members per GC§31591. Without objection, Mr. Bryan set
the amendments for Public Hearing on May 27th.
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0304.5.4
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Whereas, Government Code §31591 states, in part,
that regular interest
shall be credited semiannually on June 30th and December
31st to all contributions in the retirement fund which have
been on deposit for six months immediately prior to such
date...; &
Whereas, Government Code §31592 provides that earnings of the retirement fund during any year in
excess of the total interest credited to contributions
and reserves during such year shall remain in the
fund as a reserve against deficiencies in interest
earnings in other years, losses on investments and
other contingencies...; &
Whereas, Government Code §31453 provides that with respect to the rates of interest to be credited
to members and to the county or district, the board
may, in its sound discretion, recommend a rate which
is higher or lower than the interest assumption rate
established by the actuarial survey; &
Whereas, The May 23, 1996 Board Minutes, provide for the implementation
of Governmental Accounting Standard #25, as follows:
(1) to use the fair market value
of assets for the Statement of Net Plan Assets, (2) to
use the actuarial value of assets as the accounting basis
for the '37 Act mandated reserves included in the required GAS 25 footnote, (3) to
add a Market Stabilization item to the reserves footnote
to balance with the fair market value of assets, (4)
to set aside 1% of the fair market value of assets as
the Unallocated Fund Balance at the end of each fiscal
year, (5) to use the net earnings on the actuarial value
of assets for the purpose of recommending to the Board
the amount available for the crediting of "interest" to
the reserves and (6) to credit all "interest" to
all reserves on a dollar weighted basis; &
Whereas, the Board wishes to amend clarify its
interest crediting policy as set forth in Resolution 97-98-21. Therefore,
be it
Resolved that the Board hereby authorizes the
Chief Executive Officer to calculate the net earnings of
the Retirement Fund based upon the actuarially smoothed
market value of assets as of June 30th of each fiscal year. Be
it further
Resolved that the Board hereby credits the net
earnings of the Retirement Fund to the Reserves of the Association
in the following order:
(a) First on June 30th and December 31st, to Member Reserves, interest at the lesser
of (1) the average rate on six-month US Treasury Bills
sold at the last auction prior to the date of interest
crediting or (2) one-half of the per annum actuarial
interest rate on contributions and interest on deposit
for the preceding six months, except that such credit
shall be suspended during periods in which the estimated
semi-annual return on the actuarially smoothed market
value of assets is less than one-half of the per annum
actuarial interest rate.
(b) Second on June 30th, to the Reserve for Deficiencies in Interest Earnings and
Other Contingencies, established pursuant
to GC§31592, the positive or negative amount necessary
to maintain such Reserve at 1% of the fair market
value of the assets in the Retirement Fund.
(c) Third on June 30th, to the Reserve for Deficiencies in Interest Earnings and
Other Contingencies, the amount necessary
when added to the balance of the current fiscal year's
allocation to equal the employer contributions estimated
by the actuary for Medicare Part-B Premium Reimbursements pursuant
to Resolution 97-98-11, as amended, in the coming
fiscal year.
(d) Fourth on December 31st, to Employer Reserves, interest at one-half
of the per annum actuarial interest rate on contributions
and interest on deposit for the preceding six months, except
that such credit shall be suspended during periods in which
the estimated semi-annual return on the actuarially smoothed
market value of assets is less than one-half of the per
annum actuarial interest rate.
(e) Fifth on June 30th, to Employer Reserves, the positive or negative
balance of net earnings. Be it further
Resolved that the Board hereby authorizes the
Chief Executive Officer to implement the provisions of this
resolution and to report semi-annually on the amounts so
credited.
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0304.5.5.1
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0304.5.5.2
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Whereas, Resolution 97-98-11 as amended sets
forth the policy & procedures for SamCERA's Medicare
Part-B Reimbursement Program; and
Whereas, Resolution 98-99-20 as amended provides
excess earnings as defined in GC§31592.2 & §31592.4
for the purpose of funding SamCERA’s Medicare Part-B Reimbursement
Program; and
Whereas, the Board has received, reviewed and
approved the reports and recommendations from its actuary,
Mercer, and the Chief Executive Officer setting forth the
changes necessary to assure the actuarial soundness of the
Retirement Fund and to continue the Medicare Part-B Premium
Reimbursement Program. Therefore, be it
Resolved that the Board, pursuant to Resolutions
97-98-11 and 98-99-20, hereby
(a) certifies that the actuarial funding ratio as
of June
30, 2002 exceeded 80%;
(b) appropriates $1,435,000 to the Medicare Part-B
Premium Reimbursement Program from excess earnings;
(c) requests that the Board of Supervisors contribute
$1,435,000 to
the 401(h) Reserve for the continuation of the Medicare
Part-B Premium Reimbursement Program through Fiscal Year 2003-2004;
(d) requests that the Board of Supervisors instruct
the Controller to make such contribution as a one-time lump
sum deduction from the first biweekly employer contributions
paid in accordance with the contribution rates set forth
above, in an amount equal to the difference between $1,435,000 and
the balance remaining in the 401(h) Reserve on July
1, 2003, as certified by the Chief Executive Officer;
(e) requests that the Board of Supervisors instruct
the Controller to specifically designate in writing at the
time of such contribution that it is being made only to
the 401(h) Reserve;
(f) instructs the Chief Executive Officer to transfer
to the County Advance Reserve from excess earnings in the Reserve for Deficiencies in Interest Earnings and
Other Contingencies an amount equal to the net
amount contributed to the 401(h) Reserve by the Board of
Supervisors per Resolution 98-99-20 as amended;
(g) certifies to the Board of Supervisors that the
provisions of Resolution 97-98-11 as amended shall govern
the management of SamCERA's 401(h) Reserve program and all
County contributions thereto. Be it further
Resolved that the Chief Executive Officer is
hereby authorized to transmit these requests and certifications
to the Board of Supervisors and to take all actions necessary
to provide for their implementation effective July 1, 2003. Be it further
Resolved that the Chief Executive Officer is
hereby instructed to place this matter on the next Board
Agenda for further debate in the event that the Board of
Supervisors fails to contribute to the 401(h) reserve prior
to the July payment of SamCERA benefits.
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0304.5.5.3
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0304.5.5.4
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0304.5.5.5
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Whereas, Government Code §31453 mandates the
periodic actuarial valuation of the Retirement Fund and
requires that the Board...shall,
at least 45 days prior to the beginning of the succeeding
fiscal year, recommend to the Board of Supervisors such
changes in the rates of interest, in the rates of contributions
of members, and in the county and district appropriations
as are necessary...; and
Whereas, the County of San Mateo has entered
into agreements to implement new General Member, Safety
Member & Probation Member benefit formulas in Fiscal
Year 2003-2004; and
Whereas, the Board has received, reviewed and
approved the reports and recommendations from its actuary,
Mercer, and the Chief Executive Officer setting forth the
changes necessary to assure the actuarial soundness of the
Retirement Fund. Therefore, be it
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Plan
1
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Plan
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Plan
3
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Plan
4
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effective July
6, 2003:
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General Member Rates:
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Normal Cost
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11.58%
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10.67%
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6.70%
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8.95%
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Contribution to Unfunded Accrued Actuarial Liability
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6.43%
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2.46%
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2.00%
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1.56%
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Total General Member Rates
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18.01%
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13.13%
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8.70%
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10.51%
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Safety Member Rates:
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Normal Cost
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21.64%
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18.02%
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None
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16.23%
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Contribution to Unfunded Accrued Actuarial Liability
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10.04%
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4.79%
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None
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3.49%
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Total Safety Member Rates
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31.68%
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22.81%
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19.72%
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Probation Member Rates:
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Normal Cost
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27.06%
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17.02%
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None
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14.45%
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Contribution to Unfunded Accrued Actuarial Liability
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4.23%
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4.40%
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None
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2.99%
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Total Probation Member Rates
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31.29%
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21.42%
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17.44%
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effective
upon implementation of GC§31676.16 (2% @ 55):
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General Member Rates:
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Normal Cost
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13.56%
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11.80%
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6.70%
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9.77%
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Contribution to Unfunded Accrued Actuarial Liability
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8.51%
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4.54%
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4.08%
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3.64%
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Total General Member Rates
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22.07%
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16.34%
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10.78%
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13.41%
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effective
upon implementation of GC§31664.2 (3% @ 55):
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Safety Member Rates:
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Normal Cost
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25.06%
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21.91%
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None
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20.14%
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Contribution to Unfunded Accrued Actuarial Liability
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17.37%
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12.12%
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None
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10.82%
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Total Safety Member Rates
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42.43%
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34.03%
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30.96%
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Probation Member Rates:
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Normal Cost
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32.70%
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25.12%
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None
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19.51%
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Contribution to Unfunded Accrued Actuarial Liability
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8.61%
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8.78%
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None
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7.37%
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Total Probation Member Rates
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41.31%
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33.90%
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26.88%
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Be it further
Resolved that the Board hereby adopts the actuary's
recommended Entry Age
Member Contribution Rates for the County and
Mosquito Abatement District in accordance with the schedule
set forth in the Attachment entitled Member Contribution Rates, [per page 86
of the Revised Actuarial Valuation Report as submitted April
17, 2003] as a percentage of covered salaries, effective July
6, 2003. Be it further
Resolved that the Board hereby adopts the 15%
Adjusted Probation Entry Age Member Contribution Rates in
accordance with the Memorandum of Understanding, effective October 12, 2003. Be it further
Resolved that the Board hereby adopts the 1%
of covered payroll Cost
Sharing Member Contribution for General
Members as set forth in the ratified County Memorandums of
Understanding or Mosquito Abatement District enabling resolution
payable without regard to any other provision of law, effective August
30, 2003. Be it further
Resolved that the Board hereby adopts the 2%
of covered payroll Cost
Sharing Member Contribution for Safety
Members as set forth in the ratified County Memorandums
of Understanding payable without regard to any other provision
of law, effective upon implementation of GC§31644.2 (3%
@ 55). Be it further
Resolved that the Board hereby adopts the additional
1% of covered payroll Cost
Sharing Member Contribution for Safety
Members as set forth in the ratified County Memorandums of
Understanding payable without regard to any other provision
of law, effective January
4, 2004. Be
it further
Resolved that the Board hereby adopts the 1.5%
of covered payroll Cost
Sharing Member Contribution for Probation
Members as set forth in the ratified County Memorandums of
Understanding payable without regard to any other provision
of law, effective October
12, 2003. Be
it further
Resolved that the Board hereby adopts the additional
1% of covered payroll Cost
Sharing Member Contribution for Probation
Members as set forth in the ratified County Memorandums of
Understanding payable without regard to any other provision
of law, effective January
4, 2004. Be
it further
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0304.6
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0304.6.1
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Acceptance of Monthly Portfolio Performance
Report: Mr. Clifton reported that this is the first month that the five-year
total time-weighted rate-of-return has dipped into negative
territory. He noted that during the Investment Committee
meeting Mr. Buffington had
highlighted the fact that benefit payments exceeded contributions
and investment income for the past two years, a situation
which warrants concern for any open system.
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Asset
Class
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Market
Value
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1-Month
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1-year
TTWRR
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5-year
TTWRR
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Domestic Equity
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$ 536,810,569
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1.09%
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-25.05%
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-4.49%
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International Equity
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150,511,997
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-1.80%
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-25.94%
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-5.37%
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Total Equity
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$ 687,322,566
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0.44%
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-25.35%
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-5.54%
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Fixed Income
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357,812,434
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0%
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11.58%
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7.61%
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Real Estate Aggregate
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64,836,536
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3.74%
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14.45%
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7.95%
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Cash Equivalents
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6,339,876
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0.15%
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2.61%
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Total Fund
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$1,116,311,413
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0.48%
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-12.07%
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-0.27%
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Benchmark
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0.33%
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-12.94%
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-0.35%
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Without objection, Mr. Bryan accepted
the report.
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0304.6.2
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Review & Selection
of Optimal Portfolios for the Asset / Liability Modeling
Study: Ms. Jadallah and Mr. Gesell reported that Strategic Investment Solutions had
generated an array of five potential asset allocations
using the parameters set by the Board. The array covered
a range of allocations, from conservative to aggressive. She
reported that the Investment Committee engaged in extensive
discussions of the allocations that included consideration
of what has been transpiring in the investment markets.
At the conclusion of the discussion, the Committee instructed
SIS to prepare a broader array of conservative asset
allocations. In addition, the Committee instructed SIS
to do an additional array that considers core-plus and
high-yield allocations. Ms. Colson noted
that if the Board tilts the allocation toward fixed income,
then it would likely be necessary to incorporate core-plus
and high-yield components. Mr. Cottle noted that the new studies would be presented to
the Committee in May. Without
objection, Mr. Bryan accepted the report.
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0304.6.3
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Acceptance of Barclay Global Investors Compliance
Certification Statement: Mr. Clifton noted
that BGI continues to manage 65% of the Retirement Fund. He
noted that BGI has a new Chief Operating Officer and
a new Chief Investment Officer for active equity products. He
noted that there was nothing else out of the ordinary
in the Compliance Certification Statement. Without objection, Mr. Bryan accepted
Barclay Global Investors Compliance Certification Statement.
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0304.6.4
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Annual Global Custodian Review –
State Street Bank & Trust Company: Karen Jacobs, Director & Senior Vice President,
introduced Bernie McCrossan, Vice President; Asim Azfar,
Client Service Officer and Lisa Massena, State Street
Analytics. She noted that Peter Gleason is
stationed in Kuwait where he is doing well.
Ms. Jacobs reported
that the acquisition of Deutsche Bank’s custody operations
fit well with State
Street’s focus and gives the organization a
much stronger global presence. She noted that State Street now provides custody services for 42% of US pension funds over $10 million. 85% of State Street’s revenues are derived from custody
related services. She reviewed the roles of the 100 State Street employees servicing clients out of the Alameda operations center.
Mr. McCrossan reviewed Insight, State Street’s current technology platform that Mr. Clifton uses
regularly, and the expanded benefits and features of the
firm’s new web-based my.statestreet.com, that
is currently in beta testing.
Ms. Massena reported
that she manages the analytics group that provides SamCERA’s
monthly performance and analytics reports. She and her
team of 18 service 32 clients from the Alameda office. She noted that State Street can also provide performance comparisons
against their $1.2 trillion universe. She described State Street’s ability to provide performance, attribution
and risk measurement services through both Insight and my. statestreet.com. In response to a question from Ms. Colson, Mr. McCausland noted
that the current version of statestreet.com contains a great
deal of information of general interest and that there should
be no problem with providing view-only access to my.statestreet.com.
Ms. Jacobs noted
that State
Street has
been on time, every time since entering into its contract
with the Board. In response to a question from Mr. Cottle, Ms. Jacobs noted
that State
Street keeps
staff informed on all pending litigation relevant to SamCERA’s
assets in State Street’s custody.
In response to a question from Mr. Cottle, Ms. Jacobs
reported that State Street (1) has no plans to revise fees
when it is time to renew the contract, (2) however fees
would change for actively managed portfolios and (3) a new
securities lending program would incur new fees, (4) while
the current fee related to the absence of a securities lending
program would then be rescinded.
Mr. Cottle stated
that the trustees would like State Street to revisit the potential for a Securities Lending
program and its fees with the Investment Committee. Ms. Jacobs noted
that State
Street would
be pleased to bring a Securities Lending expert to meet
with the Board. In response to a question from Ms. Colson, Ms. Jacobs stated
that a typical securities lending split is 60/40, but it
depends on the securities in the program and the level of
activity. Without objection, Mr. Bryan accepted
the report.
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0304.6.5
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Investment Manager Interim Review
– Bank of Ireland Asset Management: Ms. Colson reported
that Padraig Connolly, Vice President Client Services, and John Forde, Senior Equity Manager, provided the Investment Committee
with an update on BIAM. She reported that the firm is
stable and that their investment process remains focused
on “bottoms up”. She reported that the Committee reviewed
BIAM’s emphasis on thematic investing, noting that the
Committee believes that careful stock selection is critical
in the current market environment. The forward price
earnings ratio on SamCERA’s BIAM portfolio is 14, which
is the lowest any of those stocks have been since around
1997. She reported that the Committee found that (1)
there is nothing terribly wrong with the organization
and the investment approach, (2) BIAM’s style has been
out of favor, (3) the stocks in the portfolio are cheap
right now and (4) the investment management team has
been stable. The Committee recommends continuing as
is until the asset allocation study is completed. She
reported that the Committed concluded that it is not
necessary to place BIAM on a watch list at this time. Without
objection, Mr. Bryan accepted the report.
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0304.7
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0304.7.1
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Acceptance of Monthly Financial Reports: Mr. Clifton submitted
the Monthly Financial Reports.
The Fair Market Value of the Retirement Fund declined
$102.4 million between June 30, 2002 and March 31, 2003. This decline reflects the net of a
decline of (1) $105.7 million in the Market Value of the
Investment Portfolio, (2) $52.4 million in Benefit Payments
and (3) $4.0 in Professional and Administrative Expenses
versus income of (4) $32.9 million in Employer Contributions,
(5) $15.1 million in Member Contributions and (6) $11.7
million in Interest and Dividends. Without
objection, Mr. Bryan accepted the report.
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0304.7.2
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Acceptance of the Third Quarter Budget
Report: Mr. Clifton reported that with 75% of the fiscal year completed,
Administrative expenditures to date represented 61.3%
of the total $2,055,000 appropriated for the fiscal year,
as augmented April 22nd.
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Category
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Expended
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% Expended
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Salaries & Benefits
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$658,764
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63.2%
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Services & Supplies
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600,145
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59.2%
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Fixed Assets
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0
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Total Budget
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$1,258,909
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61.3%
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Professional Expenses accrued year-to-date
total $1,752,328, or 71% of the estimated total for the
year. Mr. Clifton noted
that expenditures for actuarial services had more than
doubled as a result of the numerous actuarial studies
required with the analysis of alternative actuarial assumptions
and the various new benefit formulas.
The budget reports also included a review of education
expenses year-to-date and status reports on SamCERA’s Budget
Initiatives and Risk Management Matrix. Without objection, Mr. Bryan accepted
the report.
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0304.7.3
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Public Hearing on SamCERA’s Fiscal
Year 2003/2004 Budgets: Mr. Clifton noted that the Budget was more or less unchanged
from the April submission, with the exception of the
revisions proposed by Mr. Cottle. He noted that final premium proposals have not
yet been received for fiduciary liability insurance. He
indicated that some trustees submitted education requests
that exceed the Board’s approved limit. He made note
of the fact that the Chairman does not have the authority
to approve educational expenditures that exceed the Board’s
approved limit. Mr. Clifton noted
that the budget would be set for approval on May 27th. Without objection, Mr. Bryan accepted
the report.
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0304.7.4
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Annual Review and Revision of SamCERA’s Internal Controls Policy: Mr. McCausland noted
that the Board reviews its Internal Controls Policy each
year. He proposed amendments to the policies as set forth
below.
In response to a question from Mr. Cottle, Mr. McCausland
reported that the ’37 Act requires that SamCERA’s financial
statements be submitted to the Board of Supervisors no later
than October 31st and that staff had been submitting
the unaudited financial statements because the auditor has
had to wait for the actuarial valuation before issuing the
final audit opinion for the statements. Mr. Lewis noted
that the Board has had a preference for incorporating current
actuarial data into the financial reports. Mr. Clifton noted
that the only thing missing on October 31st is
the actuarial data. Motion by
Arnott, second by Lewis, carried unanimously, to amend Resolution 95-96-15, as follows:
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Whereas, Section 17 of Article XVI of the Constitution
of the State of California states that the retirement board of a public pension or retirement
system shall have plenary authority and fiduciary responsibility
for the investment of monies and administration of the system;
and
Whereas, Chapter 584, Statutes of 1995 (Assembly
Bill 1021), empowers the Board to delegate functions to the treasurer or other entity authorized by the board. Therefore,
be it
Resolved that the Board hereby designates the
financial records of SamCERA to
be the official books of record for the functions specified
in Government Code §§31588, 31589 & 31599. Be it further
Resolved that the Board hereby delegates signature
authority to the Chief Executive Officer Administrator,
Board Secretary & Controller and designates the County's
paying agent bank as paying agent for the functions specified
in §31590. Be it further
Resolved that the Board hereby designates the
fiduciaries under contract to SamCERA and
the California Local Agency Investment Fund, to carry out
the functions specified in §§31595.1 & 31596, subject
to coordination of their activities by the Chief Executive
Officer Retirement Administrator pursuant to
his Delegation of Authority. The Board designates the Treasurer
to safely keep and invest funds on deposit with the County,
pending transfer by the Chief Executive Officer Retirement
Administrator to one of the Board's contract fiduciaries
or the Local Agency Investment Fund pursuant to his Delegation
of Authority. Be it further
Resolved that the Board hereby delegates reserves
unto itself responsibility for filing annual financial
statements with the county auditor and board of supervisors,
for the relevant functions specified in §§31597, 31597.1 & 31597.2 to
the Chief Executive Officer. Be it further
Resolved that the Board hereby designates the Chief
Executive Officer Retirement Administrator as the other entity authorized by the board for
the functions specified in §§31452.5, 31452.6, 31452.65,
31485.6 and 31628.
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Motion by Arnott, second by Lewis, carried
unanimously, to amend Resolution
95-96-16, as follows:
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Whereas, Government Code §31520 vests the management
of the Association in the Board; and §31525 empowers the
Board to adopt regulations; and
Whereas, Government Code §31590 provides specific
guidance for disbursements from the Retirement Fund; and
Whereas, Section 17 of Article XVI of the Constitution
of the State of California states that the retirement board of a public pension or retirement
system shall have plenary authority and fiduciary responsibility
for the...administration of the system; and
Whereas, The Board has appointed a Chief Executive
Officer pursuant to Government Code §31522.2 & has resolved
to delegate specific powers and duties to the Chief Executive
Officer, including the duty to provide for an effective
system of internal controls; and
Whereas, The Chief Executive Officer has recommended
the following controls to help assure that the assets of
the Fund cannot be compromised. Therefore be it
Resolved that the Chief Executive Officer will
implement the following internal controls for the disbursement
of moneys from the Retirement Fund.
6.6. The Board delegates safekeeping
of the blank check stock to the Investment & Finance Manager. The
Investment & Finance Manager is hereby prohibited from initiating
or granting final approval for retirement disbursements via check
stock. Blank check stock shall not be released to a staff member
authorized to approve disbursements. The Investment & Finance
Manager shall maintain a log which documents inventory released,
date, amount, stated intent of the disbursement and require a
signature or initial from the staff member receiving the blank
stock.
7.7. The County Controller shall not
honor any Journal Entries, Claims, Purchase Orders, Transmittals,
Appropriation Transfer Requests, or other charges against the
Retirement Fund without the written or electronic approval
of the Chief Executive Officer or, in his absence, his designee.
8.8. The Treasurer shall not honor
any Claims, Transmittals, or other charges against the Retirement
Fund without the approval of Chief Executive Officer or, in his
absence, his designee.
9.9. The Chief Executive Officer's
or, in his absence, his designee's approval shall be evidenced
by his signature or initials on the document initiating the transaction. The
document may be any standard form, including, but not limited
to, a register authorizing electronic funds transfers.
10. Pursuant to his
Delegation of Authority, the Chief Executive Officer shall
delegate to staff the task of preparing the documents & transactions
referred to above, and shall supervise & audit staff's
work.
14.14. The Chief Executive Officer
may delegate disbursement approval and check signing authority
to one employee of the Association, who may act only in the absence
of the Chief Executive Officer. That employee is prohibited from
having access to the blank check stock. In acting for the Chief
Executive Officer the employee agrees to all responsibilities
and prohibitions stated above.
15. Pursuant to his Delegation of Authority, the
Chief Executive Officer shall report to the Board regularly
on matters of significance related to the Association's
Internal Controls.
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0304.7.5
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Annual Legal Services Review: Tom Casey, County Counsel,
and Brenda Carlson, Deputy County Counsel, were present for the review. Mr. Clifton reviewed the Board’s policy of undertaking annual
reviews of each of its service providers. He noted that
each trustee had been asked to complete a rating form.
Mr. Clifton reported
that County Counsel’s self-appraisal was consistent with the trustees’
and staff evaluations. He reported that the only significant
variance was in regards to the view of some trustees and
staff that County Counsel sometimes
seems to fail to distinguish between her duty to the Board
and her duty to the County. Ms. Colson made it a point to state that she disagreed with
that observation. Mr. Clifton reported that the overall assessment was very positive
and complimentary.
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In response to questions from Mr. Cottle, Mr. Casey reported
that Milton Mares had retired and SamCERA’s disability appeals
will now be handled by Raymond Swope; Ms. Carlson noted that her recommendation to use outside counsel
for tax issues, real estate transactions and securities
litigation reflected the need for special expertise in those
areas. Ms. Carlson noted
that she spends far more time assisting staff than she does
assisting the Board.
Mr. Casey noted
that Ms. Carlson’s work on the Ventura
II case has been extraordinary. He stated that
her work on the briefs is superior to the work of the team
of private attorneys working on the case. He and the Board
can be very proud of Ms. Carlson’s
highly professional and exemplary work. Ms. Colson noted
that in her career she has observed many board counsels
at work and she is singularly impressed with Ms. Carlson’s
competence.
Mr. Bryan expressed
the Board’s appreciation to Ms. Carlson for
her advice and counsel.
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0304.7.6
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Acceptance of the Report of the Ad Hoc Committee on
Amendments to Mercer Contract: Ms. Salas reported
that Mr. Bryan had appointed Ms. Salas, Ms. Tonsfeldt and
himself to the Committee. The Committee considered Mercer’s
request for fee increases and reached the following recommendations: (1) The Committee recommends that the Board deny Mercer
Human Resource Consulting's request for fee increases. (2)
The Committee notes that the actuary has requested $2,000
to upgrade the smoothed value of assets spreadsheets. The
Committee recommends that the Board approve the expenditure
for the spreadsheet upgrade. (3) The Committee notes
that the Board approved a special study to provide a
Supplemental Valuation as of June
30, 2002 for all Safety & Probation
Plans. The Committee notes that staff should proceed
with the execution of that special study.
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Ms. Chapman stated that Mercer remains committed to maintaining
its public sector practice and looks forward to continuing
its work for the Board. She also stated that at this point
Mercer will not ask for any limitations of liability.
Without objection, Mr. Bryan accepted
the recommendations of the Ad Hoc Committee.
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0304.7.7
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Acceptance of the Recommendations of the Ad Hoc Audit
Services Request for Proposals Review Committee & Selection
of Auditor: Mr.
Lewis reported that the Board issued five requests for
proposals for audit services and that four firms responded
with one firm significantly overestimating the hours
and cost. The Ad Hoc Committee interviewed (1) Macias,
Gini & Company, (2) Brown Armstrong Accountancy Corporation
and (3) the County Auditor. Mr. Lewis noted that the Committee was unanimous in its preference
for
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Brown Armstrong, though the Committee
does want the offer contingent upon the Board gaining
a clear understanding of the firm’s staffing pattern
for LACERA and SamCERA, both new clients. He noted that
the fees would be approximately $10,000 per year higher
than the County’s over the three years, but that the
fee includes all travel related to the audit.
In response to a question from Mr. McMahon, Mr. McCausland reported that he had spoken with the administrators
and Mr. Clifton reported that he had spoken with the accountants
of each of the firms’ ’37 Act clients. They noted that all
clients were very satisfied with the work of both of the firms. Mr. McMahon expressed
his unwillingness to make a decision without reviewing each
of the proposals. Mr. McCausland noted that the Board had discussed the search process
in detail during the April 22nd meeting and had
delegated the selection process to the Ad Hoc Committee. He
indicated that staff would be happy to provide Mr. McMahon with a full set of the documentation if he wished
to review it.
Mr. McCausland noted that staff would need to bring a contract
to the Board for its review. Ms. Carlson noted that the Board may counter the firm’s fee
proposal.
Motion by Lewis, second by Cottle, carried eight ayes (Arnott, Bryan, Colson,
Cottle, Lewis, Salas, Stuart & Tonsfeldt) to one no (McMahon),
(1) to select Brown Armstrong Paulden McCown Starbuck & Keeter
Accountancy Corporation to serve as the Board’s auditor for
three fiscal years, commencing with the June
30, 2003 audit contingent
upon the Board gaining a clear understanding of the firm’s
staffing pattern for LACERA and SamCERA and (2) to instruct
staff to prepare a contract for the Board’s review and approval.
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0304.7.8
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Authorization to file a request for depublication
of Westly vs. California
Public Employees’ Retirement System Board of Administration with
the California Supreme Court: Mr.
McCausland recommended that the Board authorize Ms. Carlson
to petition the Court to depublish the Westly decision
so that it could only be cited as precedent in cases
involving CalPERS, rather than all California public
retirement systems. Motion by Tonsfeldt, second by Lewis,
carried unanimously, to authorize County Counsel to file a request for depublication of Westly vs. California Public Employees’ Retirement
System Board of Administration with the California
Supreme Court.
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0304.7.9
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Authorization to Procure Fiduciary Liability Insurance: Mr. McCausland noted
that the current fiduciary liability insurance policy expires
prior to the next meeting of the Board. He requested authorization
to procure insurance on behalf of the Board. He noted that
the original premium proposal from the current carrier was
$85,000 with a tripling of the deductible, but that the broker
was continuing to survey the industry for interest. Motion by
Colson, second by Lewis, carried unanimously, to authorize the Chief Executive
Officer to procure fiduciary liability insurance on the Board’s
behalf and to report back to the Board at the May 27th meeting.
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0304.8
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0304.8.1
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Chief Executive Officer's Report: Mr. McCausland reported
that the next CALAPRS Trustees’ Round Table will be held
in Costa Mesa on June 6th. He reported that the Board
of Supervisors has invited members of all Boards and Commissions
to a recognition reception in the Supervisors Chambers May
6th.
He reported that the Board of Supervisors will ratify
the last of the Memorandums of Understanding granting the
improved retirement benefit formulas to SamCERA’s General
Members on May 13th. The General Member formulas
are likely to be implemented near the middle of August [subsequently
set for implementation August 17th].
He reported that the Deputy Sheriffs’ Association
has yet to reach agreement with the County on the new Safety
benefit formulas. Consequently, there is no guarantee that
those benefits will be implemented for any Safety or Probation
members. However, the Probation & Detention Association
and Sheriff’s Sergeants’ Memorandums of Understanding tentatively
set July 6th as the date for implementation,
if the Deputy Sheriffs’ resolve their issues in time.
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0304.8.2
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County Counsel's Report: None.
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0304.8.3
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Investment & Finance Manager’s
Report: Mr. Clifton noted
that he had distributed reports from State Street regarding new international electronic filing procedures
for tax reclaims, as well as one report from Deutsche
Asset Management and three reports from Bank of Ireland
Asset Management.
He noted that staff was continuing to consider the
credit card issue. Ms. Arnott suggested that SamCERA use
the same bank used for all other County business. She indicated
that the Treasurer’s Office would be happy to discuss the
issue with Union Bank. Ms. Colson suggested that Mr. Buffington
and Ms. Arnott see what Union Bank is willing to do.
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0304.8.4
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Assistant Executive Officers’ Report: Mr.
Hood reviewed the intra-net real-time on-line Benefits Estimator. He
noted that the phased mailing of personal identification
numbers has been proceeding well. His planned demonstration
of the estimator was foiled by a hung-up server, but the
Board did appreciate the screen-saver designed by Mr. Ali.
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0304.9
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forcier, norma
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march 12, 2003
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department
of social services
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smith, mary
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march 16, 2003
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district
attorney office
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selinger, estelle
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march 19, 2003
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district
attorney office
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steffen, june
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april 2, 2003
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probation
department
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guinasso, frank
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april 6, 2003
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engineer
roads
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flaherty, marie
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april 8, 2003
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department
of mental health
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watkinson, john
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april 9, 2003
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building
inspection
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white, roberta
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april 11, 2003
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beneficiary
of wesley
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