January 27, 2004 – Board Agenda

* The Investment Committee will review all semi-finalists in detail and make a recommendation to the Board. Selection of the finalists will be at the Board.

Board & Management Support Services

7.1

Acceptance of Monthly Financial Reports

7.2

Acceptance of Second Quarter 2003-2004 Administrative & Professional Budget Reports

7.3

Approval of Contract with Linea Solutions, Inc for an Analysis of Electronic Document Management Systems (EDMS) and Vendors

7.4

Annual Review of SamCERA's Mission, Goals & Objectives

7.5

Annual Review and Revision of Code of Fiduciary Conduct

7.6

Annual Review & Revision of SamCERA’s Education Policy

7.7

Annual Review and Revision of Conflict of Interest Code

7.8

Annual Review and Revision of SamCERA's Strategic Services Resolution

7.9

Annual Review and Revision of Internal Controls Policy

7.10

Adoption of Strategic Objectives Schedule for Fiscal Year 2004/2005

7.11

Public Hearing on Proposed Changes to the Regulations of the Board of Retirement

Approval or Acceptance of Reports

8.1

Chief Executive Officer's Report

8.2

Assistant Executive Officers’ Report

8.3

Investment & Finance Manager’s Report

8.4

County Counsel's Report

8.5

Report on Actions taken in Closed Session

Adjournment

January 27, 2004 – Board Minutes

0401.1

Call to Order: Ms. Colson, Chair, called the Public Session of the Board of Retirement to order at 1:02 p.m., January 27, 2004 in SamCERA’s Board Room, Suite 125, 100 Marine Parkway, Redwood Shores.

0401.2

Roll Call: Mr. Bryan, Ms. Colson, Mr. Hooley, Mr. McMahon (1:08), Ms. Salas, Ms. Stuart & Ms. Tashman. Ms. Arnott for Mr. Buffington. Excused: Mr. Lewis. Staff: Mr. McCausland, Mr. Hood, Mr. Clifton & Ms. Lamica. Counsel: Ms. Carlson. Consultants: Ms. Chapman, Dr. Fracchia & Ms. Jadallah. Custodian: Ms. Azfar. Retirees: 3, County: 2.

0401.3

Approval of the Minutes: Ms. Arnott submitted the following correction to the Minutes: 0311.6.3 ¶3 L1: “~~Following the departure of Mr. Anderson and Mr. Kelly~~, Mr. Bryan reported…”. Motion by Stuart, second by Salas, carried unanimously, to approve the Minutes of November 25, 2003 as corrected.

0401.4.1

Oral Communications From the Board: Ms. Salas requested that members in the audience during the Investment Committee meeting refrain from side conversations, as it is very distracting. Mr. McCausland added that unnecessary chatter interferes with the audio recording of the meeting.

0401.4.2

Oral Communications From the Public: John Murphy 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. Secondly, Mr. Murphy reported that there would be a large appeal to the Board of Supervisors and possibly to the Public about the escalating costs of retirees’ medical care. Mr. Murphy then submitted personal documents illustrating the rising expenses for his health insurance for future Board discussion.

0401.5

Benefit & Actuarial Services

0401.5.1

Adoption of Consent Calendar: Motion by Mr. Bryan, second by Ms. Salas, carried unanimously, to adopt the Consent Calendar as submitted, as follows:

Disability Retirements:

The Board finds that Gary Devine is unable to perform his duties as a Park Ranger III, finds that his disability is Service connected and, GRANTS his application for a Service connected disability.

The Board finds that Robert Marsh Sr. is unable to perform his duties as a Road Equipment Operator, finds that his disability is Service connected and GRANTS his application for a Service connected disability.

The Board finds that Jerry Sezgen is unable to perform his duties as a Deputy Sheriff, finds that his disability is Service connected and, GRANTS his application for a Service connected disability.

The Board finds that Nida Duma is unable to perform her duties as a Licensed Vocational Nurse, finds that her disability is not Service connected, DENIES her application for a Service connected disability and GRANTS her a Non-Service connected disability retirement.

The Board finds that Christie Vigo is unable to perform her duties as a Senior Library Assistant and GRANTS her application for a Non-Service connected disability.

Routine Actions: The Board ratifies the following actions taken by staff pursuant to the Board’s Delegation of Authority and the Regulations of the Board of Retirement:

Service Retirements:

Newell, Frank

November 8, 2003

Assessor’s Office

Pham, Baonogoc

November 27, 2003

Human Services Agency

Pieretti, Gary

December 1, 2003

Department of Public Works

Bautista, Celia

Rescinded Change – 12/2/03

Controllers’ Office

Hollenbeck, Luzviminda

Rescinded Change – 12/2/03

Department of Public Health

Ash, Mary

December 7, 2003

Office of County Counsel

Vinay, John

December 18, 2003

Sheriff’s Department

Hunter, Johnny

December 19, 2003

San Mateo County Medical Center

Mullane, Joseph

December 20, 2003

Sheriff’s Department

Gamble, Michael

December 27, 2003 (from deferred)

Sheriff’s Department

Grinnell, George

January 3, 2004

Assessor’s Office

Amoroso, Marjorie

January 17, 2004

Probation Department

Scannell, Paul

January 17, 2004

County Manager’s Office

Salinas, Gerard

January 21, 2004

Information Services Department

Pedro, Ronald

January 30, 2004

Department of Public Works

Continuance of Benefits:

Middleton, Irene

Beneficiary of Richard

Vazquez, Miriam

Beneficiary of Francisco

Mekediak, Naomi

Beneficiary of William

Deferred Retirements:

Bergara, Jose

G2 Vested

Reciprocity

Gibbs, Mark

G4 Non vested

Reciprocity

Sanchez, John

G4 Non vested

Reciprocity

Shehee, Terry

G4 Non vested

Reciprocity

Warburton, Alfred

G4 Non vested

Reciprocity

Haley, Lisa

G2 Vested

Leddy, Linda

G2 Vested

Meitl, Stephanie

G2 Vested

Reddy, Praveenjali

G2 Vested

Russell, Teresa

G2 Vested

Refunds for December 2003:

Alcazar, Delicia

G4 Non vested

$1,443.28

Clark, Brian

G4 Non vested

$1,137.73

De leon, Doris

G4 Non vested

$335.20

Ilang, Dorothy

G4 Non vested

$2,150.32

Martinez, George

G4 Non vested

$1,023.62

Moret-Hoeske, Gina

G4 Non vested

$1,017.65

Total Refunds for December 2003

$7,107.80

Rollovers for December 2003:

Bermudez, Marisela

G4 Vested

$12,516.33

Bundang, Jeniffer

G4 Non vested

$5,668.96

Capili, Elena

G4 Non vested

$990.28

Farwick, Britt

G4 Non vested

$10,137.21

Kim, Lawrence

G4 Non vested

$8,876.59

Leet, Melissa

G4 Non vested

$1,668.18

Lopez, Rocio

G4 Non vested

$2,449.10

Montana, Susan

G2 Vested

$40,369.73

Navarro, Monica

G4 Non vested

$1,485.75

Total Rollovers for December 2003

$84,162.13

Refunds for January 2004:

Day, Yvette

G4 Non-vested

$2,130.19

Fielding, Roger

G4 Non-vested

$16,249.88

Mendoza, Grace

G4 Non-vested

$221.35

Moon, Stephen

G4 Non-vested

$4,453.86

Nelson, Jennifer

G4 Non-vested

$1,365.20

Paredes, Judith

G4 Non-vested

$205.45

Vargas, Grethel

G4 Non-vested

$5,048.78

Yun, Sarah

G4 Non-vested

$3,815.97

Total Refunds for January 2004

$33,490.68

Rollovers for January 2004:

Doherty, Martha

G4 Non-vested

$7,510.30

Khan Pereira, Saira

G4 Non-vested

$508.74

Narayan, Parveen

G4 Non-vested

$1,446.29

Nunnery, Mary

G4 Non-vested

$14,684.53

Reyes, Veronica

G4 Non-vested

$2,856.68

Rodriguez, Anthony

G4 Non-vested

$4,135.89

Ryan, Linda

G4 Non-vested

$355.34

Total Rollovers for January 2004

$31,497.77

0401.5.2

Consideration of items removed from Consent Calendar: None.

0401.5.3

Acceptance of Oral Status Report on Actuarial Services Request for Proposal Process: Mr. Hood reported that the Staff has received five responses to the Actuarial Services Request for Proposals. Following a general discussion, without objection, Ms. Colson instructed staff to schedule all five actuarial candidates for interviews beginning at 9:00 a.m. on February 24^th.

Ms. Colson then took up agenda item 5.6.

0401.5.4

Acceptance of Status Report from the Ad Hoc Medicare Part-B Premium Reimbursement Program Review Committee, including discussion of Interest Crediting Policy and retention of consultant: Ms. Colson reminded the Board that the Board of Supervisors approval of the Medicare Part-B Reimbursement Program required that SamCERA’s Funding Ratio exceed 80%. Ms. Colson noted that, come July, the Medicare Part-B Reimbursement Program will most likely end because of SamCERA’s 75% Funding Ratio [see 0401.5.6]. Mr. McCausland noted that, unless the Board of Supervisors changes the 80% Funding Ratio, it is a legal certainty that tax-exempt funding for the program will end on June 30^th.

Ms. Stuart noted that one of the major reasons the Funding Ratio has declined below 80% is because of the County’s generous benefit improvements for active employees. She noted that retirees are now going to be left out because of the enhancements for actives. Ms. Stuart expressed her desire for the continuation of the program and pointed out the fact that the Board of Supervisors did not indicate that the funding ratio limit could not be lowered if Retirees request that they do so.

Mr. Bryan noted that it is his sense that the trustees are not prepared to ask the Board of Supervisors to lower the 80% Funding Ratio requirement. He noted that it is his desire to make an early decision regarding the fate of the Medicare Part-B Reimbursement Program in order to allow retirees time to prepare for the loss in benefits. Following further discussion, without objection, Ms. Colson authorized staff to place a resolution on the February 24^th agenda to find that the 80% Funding Ratio requirement was not met in the June 30, 2003 actuarial valuation and, therefore, to terminate the Medicare Part-B Premium Reimbursement Program effective June 30, 2003.

Mr. McCausland noted that staff had distributed a workbook that reviews the law, the issues and the history of the Board’s preparation for the June 30, 2003 utilization of cash income to fund the Medicare Part-B program for the current year. He noted that the Board had spent two years preparing a contingency plan for what actually happened on June 30, 2003. He noted that the workbook should be saved so that trustees can refer to it in the coming months as the Board addresses each of the issues. Ms. Stuart and Mr. Hooley expressed appreciation for the comprehensive nature of the workbook. Ms. Colson asked the trustees how they would like the review to proceed. Mr. Hooley noted that the Board has some basic policy decisions to make regarding the granting of ad hoc benefits before it addresses the interest crediting policy.

Ms. Arnott requested that the Board arrange a workshop regarding the granting of ad hoc benefits, interest crediting and SamCERA’s Interest Crediting Policy with an independent consultant, Ira Summer. Ms. Carlson indicated that the Board needs a contract with Mr. Summer for the workshop. Motion by Ms. Stuart, second by Mr. Hooley, carried unanimously, to instruct Staff to set up a workshop with Mr. Summer for April’s meeting, discussing ’37 Act ad hoc benefits, SamCERA’s Interest Crediting Policy, alternate types of policies and their impact on the various parties, under various scenarios, as well as comparisons with other ’37 Act systems.

0401.5.5

Adoption of Resolution Authorizing Voluntary Deduction From Member Benefit Payments For Donations To Charitable Organizations: Mr. Hood reported that SamCERA has been approached by the San Mateo County’s Children’s Fund to permit retirees to make charitable contributions through their benefit payments. In response to Mr. Hooley’s concern regarding administrative overhead, Mr. Hood mentioned that this feature could be added to a deduction process that already exists. He added that active employees currently are allowed to make contributions via payroll deductions to the charity of their choice and that this Resolution simply gives employees an opportunity for the continuation of such donations when they retire. Ms. Carlson reminded the Board that it could always rescind the decision if this program becomes administratively costly. Motion by Ms. Salas, second by Mr. Bryan, carried seven ayes (Arnott, Bryan, Colson, Hooley, McMahon, Salas and Tashman) to one no (Stuart), to adopt Resolution 03-04-08 permitting retirees to take part in voluntary deductions from their benefit payments for charitable donations.

WHEREAS, this Board has been requested to authorize members to make voluntary deductions from their benefit payments for contributions to charitable contributions; and

WHEREAS, since 1973, the County of San Mateo has authorized employees to make voluntary payroll deductions to contribute to certain charitable organizations; and

WHEREAS, annually, the County ensures that deduction privileges are only granted to organizations that meet the criteria, which includes but is not limited to: (a) the organization represents a group of bona fide community agencies, providing direct services to a substantial segment of the population of the County of San Mateo in need of such services; or is a public agency which administers a specifically designed fund to meet the special needs of a unique population served by that agency; (b) the organization presents satisfactory evidence that the Federal Internal Revenue Service has determined that contributions to the organization, and to each of its component agencies, if any, are tax deductible as charitable contributions; and (c) there must be a sign- up of at least 50 employees if payroll deduction privileges are to be granted;

WHEREAS,this Board desires to allow its members to make voluntary deductions for contributions to charitable organizations from their benefit payments and the Board has determined that the best manner to implement such a program would be to have SamCERA direct that such deductions be handled through the Office of the County Controller;

NOW THEREFORE IT IS HEREBY DETERMINED AND ORDER THAT:

1. Subject to capability of the existing pension benefit system of SamCERA to accommodate deductions from benefit payments, the Chief Executive Officer is authorized to implement a charitable deduction program in concert with the County of San Mateo’s charitable contribution program.

2. The Chief Executive Officer is authorized to collect the contributions on behalf of the charity selected by the member from the list of approved charitable organizations as determined annually by the County and is further authorized to forward said contributions to the County Controller to distribute to the organizations.

0401.5.6

Acceptance of Actuary’s Report on the Projected Impact of Smoothing on Future Contribution Rates: Ms. Chapman presented a report on the aggregate employer contribution rate and funding ratio. Her report included historical data as well as projections under different scenarios.

The analysis assumes that all of SamCERA’s demographic assumptions are met and that inflation and investment return vary by scenario. Three of the four scenarios are summarized below:

Stagflation

Meet All Assumptions

Ideal Growth

~Year

Rate

Ratio

Rate

Ratio

Rate

Ratio

2005

22.84

2006

24.16

24.11

23.90

2007

25.87

25.14

24.40

2008

28.70

26.12

24.49

2009

31.46

27.06

24.50

2010

33.20

27.21

24.19

Ms. Chapman noted that under the most probable scenarios the long-term impact of the smoothing of actuarial investment gains and losses over five-years will cause the employer contribution rate to trend upward and the Funding Ratio to remain below 80% for the remainder of the decade. Without objection, Ms. Colson accepted the report.

0401.6

Investment Services

0401.6.1

Acceptance of Monthly Portfolio Performance Report: Mr. Clifton reported on periods ending December 31, 2003:

Asset Class

Market Value

1-Month

1-year TTWRR

5-year TTWRR

Domestic Equity

$754,710,583

4.17%

33.12%

1.20%

International Equity

220,456,815

7.29%

30.50%

1.55%

Total Equity

$975,167,399

4.86%

32.48%

1.16%

Fixed Income

379,512,874

1.01%

4.52%

6.34%

Real Estate Aggregate

58,073,782

1.45%

11.68%

9.80%

Cash Equivalents

7,092,167

0.19%

2.14%

Total Fund

$1,419,846,222

3.62%

22.68%

4.05%

Benchmark

3.68%

23.94%

3.13%

Without objection, Ms. Colson accepted the report.

0401.6.2

Adoption of SamCERA’s Investment Manager Structure – International Equity: Mr. Clifton reported that the Investment Committee considered several alternatives before settling a recommendation that the Board employ an international value-style equity manager and an international growth-style equity manager. Motion by Bryan, second by Stuart, carried seven ayes (Arnott, Bryan, Colson, Hooley, Salas, Stuart and Tashman) to one no (McMahon) to adopt an equally weighted (1) value-style equity manager and (2) growth-style equity manager structure for the management of SamCERA’s International Equity Asset Allocation.

0401.6.3

Selection of finalist for SamCERA’s Domestic Equity Manager Structure: Mr. Clifton reported that the Investment Committee directed SIS to amend the client books and reschedule the domestic equity manager search presentations. Ms. Jadallah noted that SIS recommends that the Board begin with the searches for small-capitalization-value and small capitalization-growth active equity managers in February. Large-capitalization equity manager screens would then be presented in March. Mr. McMahon asked for an improved format and the inclusion of additional material on the finalists. Mr. McMahon expressed his preference for a request for proposals process, rather than SIS’ process that is based on the consultants’ database. Motion by Colson, second by Bryan, carried unanimously, to approve the Investment Committee’s recommendation that the Board adopt the following schedule for the selection of Domestic Equity Managers: (1) February: adopt criteria for the selection of finalists for small-capitalization-value and small capitalization-growth active domestic equity managers; (2) March: (a) interview the small capitalization finalists and (b) adopt criteria for the selection of finalists for small-capitalization and large-capitalization enhanced index equity managers; (3) April: interview enhanced index equity managers.

0401.6.4

Adoption of Strategic Objectives Schedule for Fiscal Year 2004/2005: Mr. Clifton presented the Investment Committee’s work plan for the next fiscal year. He noted that SIS is scheduled to provide educational seminars throughout the year. He noted that the schedule would be revised over time. Without objection, Mr. Bryan accepted the Investment Committee’s Strategic Objectives Schedule for Fiscal Year 2004/2005.

0401.6.5

Approval of Change of Committee Meeting Date from February 24 to February 18: Motion by Mr. Bryan, second by Ms. Colson, carried unanimously, to change the date of the Investment Committee meeting from February 24 to February 18, 2003.

0401.7

Board & Management Support Services

0401.7.1

Acceptance of Monthly Financial Reports: Mr. Clifton reported that the market value increase of domestic and international equities has fueled SamCERA’s assets growth to over $1.4 billion as of December 31^st, a level that is approximately $260 million greater than December 2002. Without objection, Ms. Colson accepted the report.

0401.7.2

Acceptance of Second Quarter 2003-2004 Administrative & Professional Budget Reports: Mr. Clifton reported that, with 50% of the fiscal year completed, Administrative expenditures to date represented 37.7% of the total $1,994,500 appropriated for the fiscal year.

Category

Expended

% Expended

Salaries & Benefits

$481,360

42.7%

Services & Supplies

270,932

32.4%

Fixed Assets

Total Budget

$752,292

37.7%

Professional expenses accrued year-to-date total $1,127,594, or 48.8% of the estimated total for the year. 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, Ms. Colson accepted the report.

0401.7.3

Approval of Contract with Linea Solutions, Inc for an Analysis of Electronic Document Management Systems (EDMS) and Vendors: Mr. Hood reminded the Board that Staff has been considering the possibility of document imaging for quite some time. He noted that SamCERA’s current vendor, Levi, Ray, and Shoup (LRS) has entered the EDMS market and is likely the strongest candidate. Mr. Hood requested that the Board authorize the Staff to contract with Linea Solutions, Inc. to study the EDMS market and conduct a detailed analysis in order to generate a recommendation to the Staff as an impartial third party. Motion by Mr. Bryan, second by Ms. Salas, carried unanimously, to authorize the Chief Executive Officer to enter an agreement with Linea Solutions to conduct SamCERA’s EDMS analysis for an amount not to exceed $9,600.

0401.7.4

Annual Review of SamCERA's Mission, Goals & Objectives: Mr. Clifton presented the annual review of SamCERA's Mission, Goals & Objectives. Without objection, Ms. Colson reaffirmed Resolution 95-96-05, as amended February 26, 2002, setting forth SamCERA's Mission, Goals & Objectives.

0401.7.5

Annual Review and Revision of Code of Fiduciary Conduct: Mr. Clifton presented the annual review and Revision of SamCERA’s Code of Fiduciary Conduct, with a special request that all trustees review the document. Without objection, Ms. Colson reaffirmed Resolution 96-97-02, as amended July 23, 2002, setting forth SamCERA’s Code of Fiduciary Conduct.

0401.7.6

Annual Review & Revision of SamCERA’s Education Policy: Mr. Clifton presented the annual review of SamCERA's Education Policy. Following a general discussion, motion by Mr. Bryan, second by Mr. McMahon, carried unanimously, to amend Resolution 98-99-12 as follows:

Whereas, Article XVI, §17(c) of the Constitution of the State of California states in part that

The members of the retirement board...shall discharge their duties with respect to the system with the care, skill, prudence, and diligence...that a prudent person acting in like capacity and familiar with these matters would use in the conduct of an enterprise of like character and with like aims; and

Whereas, Government Code §31520 vests the management of SamCERA in the Board; and

Whereas, the Board acknowledges the vital importance of making informed judgments on all matters which come before it and has adopted a Code of Fiduciary Conduct to guide its actions; and

Whereas, Associations and institutes exist which offer specialized training for pension fund trustees and staff; and

Whereas, the Board wishes to encourage its trustees and staff to become as expert as is cost-effective in the matters of pension fund investments, service and disability retirements and plan administration. Now, therefore, be it

Resolved, that the Board hereby stipulates that all trustees and staff shall participate to the fullest extent possible in approved educational activities, and that each trustee and staff member shall be expected to complete at least three endorsed educational activities each year. Be it further

Resolved, that the Board hereby authorizes the participation of trustees and staff in the educational activities of the State Association of County Retirement Systems (SACRS), the California Association of Public Retirement Systems (CALAPRS), the Government Finance Officers Association (GFOA), the Institute for Fiduciary Education (IFE), International Foundation of Employee Benefit Plans (IFEBP), The City of Fresno Retirement Systems’ Education Conference, the California Retired County Employees’ Association, the Pacific Pension Institute (PPI) and the Wharton program for pension fiduciaries, to the extent that the budget provides funds for such participation. Be it further

Resolved, that the Board hereby approves the following recommended progression of courses for new trustees to complete within their first three-year term: (1) SACRS Fall or Spring Conference &/or CALAPRS General Assembly, (2) CALAPRS’ Trustee Roundtables, (3) CALAPRS @ Stanford Principles of Pension Management, (4) IFEBP Certificates of Achievement in Public Plan Policy and (5) Wharton Pension Fund and Investment Management Program. Be it further

Resolved, that the Board hereby also approves the following programs for trustees with the recommendation that trustees complete the programs listed above prior to participation in the following: Fiduciary Institute @ Stanford, IFEBP Public Funds Annual Conference, GFOA Annual Conference, Frank Russell, and US-based programs of IFE & PPI. Be it further

Resolved, that the Board hereby authorizes the participation of trustees and staff in the educational activities of the Institute for International Research, the Public Pension Fund Forum, Investors Press, the Investment Risk Institute, the Institutional Investor Institute, Opal Financial Group and the Information Management Network, ~~when such activities are conducted in California~~, to the extent that the budget provides funds for such participation. Be it further

Resolved, that participants shall provide the Board with a summary oral report on the content of educational activities, including a recommendation regarding SamCERA's participation in future activities offered by the same sponsor. Be it further

Resolved, that, in addition to the organizations listed above, other educational activities which may be counted toward the Board's educational requirement are subscriptions to Pensions & Investments, the Public Retirement Journal, or other pension, investment or financial publications; completion of recommended readings from SACRS or SamCERA reading lists; participation in due diligence activities to meet with and monitor service providers; and/or participation in SACRS or SamCERA sponsored mentoring programs. Be it further,

Resolved, that the Board authorizes the Chief Executive Officer to enroll SamCERA as a pension fund member of the organizations set forth above and the National Conference of Public Employees Retirement Systems and to submit recommendations to the Board for additional educational activities, to the extent that the budget provides funds for such activities. Be it further,

Resolved, that the Board hereby authorizes the Chief Executive Officer to allocate $10,000 for each new trustee’s education during each of his or her first two years in office and $5,000 for each trustee’s education during each subsequent year. Trustees who wish to exceed these allocations may request Board approval for their participation in additional educational activities when placed on the agenda of a public meeting of the Board. The Board reserves unto itself sole authority to authorize expenditures in excess of the annual expenditure limits. Be it further

Resolved, that each Trustee and Staff member shall submit his or her list of proposed educational activities to the Investment & Finance Manager during the annual budget process on a form provided by the Investment & Finance Manager. The Chief Executive Officer shall assure that the proposed activities as included in the budget do not exceed the annual expenditure limits set forth above. Be it further

Resolved, that, if subsequent to adoption of the budget, a Trustee or Staff member wishes to participate in an educational activity that was not included in the list submitted during the budget process, an Education Request Form provided by the Investment & Finance Manager shall be completed by the Trustee or Staff member. The Education Request Form shall be submitted to the Investment & Finance Manager, who shall certify that the request does not exceed the annual expenditure limit. The Investment & Finance Manager shall forward the completed Education Request Form to the Chief Executive Officer, who shall submit a Trustee request to the Chair for approval or denial. If the request would exceed the annual limit, the Chief Executive Officer shall so advise the Trustee, who may request that the matter be set for Board consideration.

Resolved, that the Board hereby authorizes the Chairman to approve the participation and associated travel for Trustees, the Treasurer’s Constitutional Alternate and the Chief Executive Officer in the educational activities of the organizations set forth above, to the extent that the budget provides funds for such activities. Such approval must be solicited and granted prior to participation in the educational activity. Be it further,

Resolved, that the Board hereby authorizes the Chief Executive Officer to approve a progression of courses for staff, to approve the participation and associated travel of staff in the educational activities of the organizations set forth above, to the extent that the Chief Executive Officer finds that such participation will contribute to the staff member’s ability to perform her or his duties and the budget provides funds for such activities. Such approval must be solicited and granted prior to participation in the educational activity. Be it further,

Resolved, that the Board may approve participation in additional educational activities when placed on the agenda of a public meeting of the Board.

0401.7.7

Annual Review and Revision of Conflict of Interest Code: Mr. Clifton presented the annual review of SamCERA's Conflict of Interest Code. Without objection, Ms. Colson reaffirmed Resolution 98-99-15, as amended March 25, 2003, setting forth SamCERA's Conflict of Interest Code.

0401.7.8

Annual Review and Revision of SamCERA's Strategic Services Resolution: Mr. Clifton presented the annual review of SamCERA's Strategic Services Resolution. Without objection, Ms. Colson reaffirmed Resolution 95-96-06, as amended February 26, 2002, setting forth SamCERA's strategic services.

0401.7.9

Annual Review and Revision of Internal Controls Policy: Mr. Clifton reported that SamCERA’s Internal Controls Policy may require amendments, since the Controller’s Office wishes to eliminate the issuance of any SamCERA manual checks. Ms. Colson noted that the policy should also be amended to include provisions governing the transfer of funds between the County, custodian and investment managers. Without objection, Ms. Colson put the item over to a subsequent agenda.

0401.7.10

Adoption of Strategic Objectives Schedule for Fiscal Year 2004/2005: Mr. Clifton presented the Board a list of preliminary agenda items for the next fiscal year. Without objection, Ms. Colson accepted the report.

0401.7.11

Public Hearing on Proposed Changes to the Regulations of the Board of Retirement: Mr. Hood presented proposed amendments to the Regulations of the Board of Retirement. The amendments are as follows: (1) implement mandatory provisions of amendments to GC§31520.1 enacted by the Legislature in 2003 making Probation Officers eligible for service as the Alternate Safety Member; (2) clarify that interest will not be credited to the accounts of non-vested terminated members unless they have established reciprocity; (3) provide the Chair with the authority to approve the Board’s agenda prior to publication; (4) Change the title of Regulation 3.8 to read Fewer ~~Less~~ than two Qualified Candidates.

Mr. McCausland noted that the law has been amended to make Probation Officers eligible for the Alternate Safety Member role. That means that if there is a candidate in the next Safety Member election from the Sheriff’s Department and another candidate from the Probation Department, the candidate with the highest votes will be the Safety Member Trustee and the candidate from the other department with the highest number of votes will be the Alternate Safety Member. He reported that GC§31520.1 empowers the Alternate Safety Member to serve as a trustee anytime any of the elected members of the Board (other than the Treasurer) is absent or their seat is vacant.

Ms. Colson opened the Public Hearing. In light of the new mandatory Alternate Safety Member provision in the law, Mr. Murphy requested that the Board re-consider its earlier denial of SCORPA’s request that the Board implement GC§31520.5’s permissive Alternate Retiree Member provisions. Without objection, Ms. Colson closed the Public Hearing.

Motion by Ms. Stuart, failed for lack of a second, to re-consider the Board’s denial of SCORPA’s request that the Board implement GC§31520.5’s permissive Alternate Retiree Member provisions.

Without objection, Ms. Colson instructed staff to set the amendments for adoption on February 24, 2004.

0401.8

Approval or Acceptance of Reports

0401.8.1

Chief Executive Officer's Report: Mr. McCausland encouraged the members of the Board to register for Stanford’s CALAPRS Conference as it provides an outstanding overview of materials. He noted that he received a letter from Mercer, dated January 5^th, indicating that they had lost their account with Alameda County Employee’s Retirement Association (ACERA). Mr. McCausland then reported that the Board of Supervisors had worked on the County budget for the 2004-2005 fiscal year and that the preliminary budget deficit was approximately $80 million. He also reported that the Board of Supervisors was scheduled to adopt a resolution implementing the 2% at 55.5 formula for General Members.

0401.8.2

Assistant Executive Officers’ Report: Mr. Hood reminded the Board that elections would be held on June 14^th for the 3^rd and 8^th seats on the Board, currently held by Mr. Bryan and Ms. Stuart. Pertaining to member education, he reported that he had contacted Lindsay Mills whose firm has been used by the City of San Jose, the County of San Diego and other organizations to provide member education services. Mr. Hood noted that there has been an email virus named MYDOOM that has been spreading throughout the County, however, is being well contained and thus far has done no harm to SamCERA.

0401.8.3

Investment & Finance Manager’s Report: Mr. Clifton distributed the Bank of Ireland’s quarterly report for review. He also mentioned that he had sent out emails on 1/13/04 and 1/14/04 to the trustees regarding noteworthy information concerning Strategic Investment Solutions (SIS) and Deutsche Asset Management. Mr. Clifton also reported that SIS had sent him a letter regarding the fact that the SEC had requested the firm to complete a questionnaire. He noted that SIS had attached a copy of the SEC questionnaire to the letter in order for SamCERA to gain a better understanding of the process.

0401.8.4

County Counsel's Report: None.

0401.8.5

Report on Actions taken in Closed Session: Mr. McCausland reported that Ms. Colson convened the Board in Closed Session at 3:42 p.m. with all trustees present for roll call in attendance. The Board conferred with Counsel on Teamsters Local 856 vs. Board of Retirement (Coordinated Proceedings JCCP4049). There being no further business, Ms. Colson adjourned the Closed Session at 4:03 p.m.

0401.9

Adjournment in Memory of the following Deceased Members: There being no further business, Ms. Colson adjourned the meeting at 4:03pm, in memory of the following deceased members:

Ochi, Shige

June 26, 2003

Department of Social Services

Tarratt, Mary

November 4, 2003

Beneficiary of Henry

Brown, Helen

November 7, 2003

Business Administration

Nerli, Barbara

November 10, 2003

Department of Public Works

Borick, Armand

November 13, 2003

Chope Hospital

Woodworth, Frances

November 13, 2003

Department of Public Works

Middleton, Richard

November 15, 2003

Sheriff’s Department

Vazquez, Francisco

November 16, 2003

probation Department

Yost, Betty

November 18, 2003

Department of Social Services

Mekediak, William

November 19, 2003

Department of Public Works

Pittz, Hedwig

November 19, 2003

Office of Building Inspection

Polk, John

November 19, 2003

Beneficiary of Hermine

Fanzone, John

November 22, 2003

Engineer and Roads Department

Williams, Beatrice

November 23, 2003

Chope Hospital

Crawford, Katherine

December 7, 2003

Department of Social Services

Sullivan, Frances

December 7, 2003

Department of Health & Welfare

Feitelberg, Allen

December 12, 2003

Sheriff’s Department

Lindstrom, Cecelia

December 13, 2003

Beneficiary of Harold

Rath, Lester

December 13, 2003

Beneficiary of Irma

Losee, Marilyn

December 14, 2003

Municipal Court Central Division

Laine, Edward

December 17, 2003

Sheriff’s Department

De Boskey, Ross

January 9, 2004

Department of Mental Health

Hull, jacques

january 9, 2004

Beneficiary of Dorothy

Oliver, Constance

january 16, 2004

Beneficiary of Emile

Torgeson, Ruth

january 16, 2004

District Attorney’s Office

Donna Wills Colson, Chair

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The information in SamCERA's web site is general in nature and is not considered a legally binding interpretation, enlargement or amendment of the provisions contained in the County Employee's Retirement Law of 1937 or by-laws of the Board of Retirement. Although considered accurate, information within the site is limited and, should there be an inconsistency between the web site and the governing law, the law will govern.

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