June 22, 2004 – Board Agenda

Closed Session – None.

Public Session – The Board will meet in Public Session at 8:00 a.m.

1.

Call to Order

2.

Roll Call

3.

Approval of the Minutes

4.

Oral Communications

4.1

Oral Communications From the Board

4.2

Oral Communications From the Public

Matters Set for a Time Certain

Times listed under this section are approximate. The Board will make every effort to adhere to the times listed, but in some cases, items may not be heard precisely at the time scheduled. In no case will any item be heard before the time it is scheduled.

8:00 am

Undistributed Earnings Workshop (Item 5.5)

9:15am

Selection of Large Cap & Small Cap Equity Enhanced Index Managers (Item 6.3)

1:00 pm

Adoption of Consent Calendar (Item 5.1)

2:00 pm

Approval of Employee and Public Service’s Recruitment Plan for Chief Executive Officer (Item 7.4)

5.

Benefit & Actuarial Services

5.1

Adoption of Consent Calendar  (Special Order at 1:00 p.m.)

5.2

Consideration of items removed from Consent Calendar

5.3

Adoption of Interest Crediting Policy

5.4

Undistributed Earnings Workshop (Special Order at 8:00 a.m.)

5.5

Consideration and Adoption of Undistributed Earnings Policy

6.

Investment Services*

6.1

Acceptance of Monthly Portfolio Performance Report

6.2

Selection of Large Cap & Small Cap Equity Enhanced Index Managers

6.3

Adoption of Criteria to be Employed in SamCERA’s Core Plus Fixed Income Manager Search

6.4

Approval of the Manager Structure for SamCERA’s Real Estate Allocation – Consideration of Release of Request For Information/Request For Proposal

6.5

Annual Investment Consultant Review – Strategic Investment Solutions

*

The Investment Committee will meet at 3:00 p.m. June 21^st .

7.

Board & Management Support Services

7.1

Acceptance of Monthly Financial Reports

7.2

Acceptance of Report on the 2004/2005 Property Value Optimization Plans

7.3

Appointment of Ad Hoc Nominating Committee

7.4

Approval of Employee and Public Service’s Recruitment Plan for Chief Executive Officer
(Special Order at 2:00 p.m.)

8.

Approval or Acceptance of Reports

8.1

Chief Executive Officer's Report

8.2

Assistant Executive Officer’s Report

8.3

Investment & Finance Manager’s Report

8.4

County Counsel's Report

9.

Adjournment

June 22, 2004 –  Board Minutes, as corrected

0406.1

Call to Order:  Ms. Colson, Chair, called the Public Session of the Board of Retirement to order at 8:03 a.m., June 22, 2004 in SamCERA’s Board Room, Suite 125, 100 Marine Parkway, Redwood Shores.

0406.2

Roll Call:  Mr. Bryan, Ms. Colson, Mr. Hooley, Mr. Lewis (arr 8:17 am, dep 10:52am, arr 1:30 pm), Mr. McMahon, Ms. Salas (dep 3:20) & Ms. Stuart.  Ms. Arnott for Mr. Buffington.  Absent: Ms. Tashman.  Staff:  Mr. McCausland. Mr. Hood, Mr. Clifton & Ms. Lamica.  Counsel:  Ms. Carlson.  Consultants:  Dr. Fracchia, Mr. Summer, Ms. Jadallah & Mr. Thomas.  Retirees: 3, County: 1.

0406.3

Approval of the Minutes:  Ms. Colson asked that the Investment Committee Minutes be amended to clarify the screening steps for both the Large and Small Cap Enhanced Index Manager Searches.  Motion by Bryan, second by Arnott, carried unanimously to approve the Investment Committee Minutes of May 24^th as corrected.

Ms. Arnott submitted the following corrections to the Board Minutes:  0405.7.3 ¶2: “carried unanimously (7/0) to adopte adopt Resolution 03-04-16…”;  0405.8.1 ¶2:  “the County had been accumulating reserves during the dot.com boom…”.  Motion by Salas, second by Stuart, carried unanimously to approve the May Board Meeting Minutes as corrected.

0406.4.1

Oral Communications From the Board:  None.

0406.4.2

Oral Communications From the Public:  John Murphy offered his congratulations to Bette Perroton Stuart and Tom Bryan on their re-elections to the Board.

Ms. Colson then took up agenda item 6.1.

0406.5

Benefit & Actuarial Services

0406.5.1

Adoption of Consent Calendar:  Without objection, Ms. Colson removed the application of Debbie Estrada (Mr. McMahon) from the Consent Calendar for consideration under Agenda Item 5.2.  Motion by Salas, second by Bryan, carried unanimously to adopt the Consent Calendar as amended, as follows:

Disability Retirements:

The Board finds that Christine Mountain is unable to perform her duties as a Sheriff’s Correctional Officer, finds that her disability is Service-connected, and GRANTS her application for a Service-connected disability.

The Board finds that Craig Finlayson is unable to perform his duties as a Sheriff’s Sergeant, finds that his disability is Service-connected, and GRANTS his application for a Service-connected disability.

The Board finds that Teresa Robinson is unable to perform her duties as a Social Worker III, finds that her disability is Service-connected, and GRANTS her application for a Service-connected disability.

Routine Actions taken by staff pursuant to the Board's Delegation of Authority and the Regulations of the Board of Retirement:

Service Retirements:

Pedrini, William

June 5, 2004

Sheriff’s Department

Ishikawa, Daniel

June 12, 2004 (from deferred)

Probation Department

Dalporto, Frank

June 13, 2004

Sheriff’s Department

Julien, Keith

June 20, 2004

Sheriff’s Department

Nomura, Mariko

June 26, 2004 (from deferred)

Department of Health Services

Lopez, Michael

June 30, 2004

Sheriff’s Department

Continuance of Benefits:

Allen, Yvonne

Beneficiary of Donald

Johnson, Ida

Beneficiary of Esau

Deferred Retirements:

June  2004

Bevans, Janice

G4 vested

Espinoza, Peggy

G4 vested

Tran, Bach

G4 vested

Wilson, Diane

G4 vested

Boesseneker, Mark

G2 vested

Reciprocity

Clements, Jeffrey

G4 non vested

Reciprocity

Guier, Holly

G4 non vested

Reciprocity

Jetke, Emily

G4 non vested

Reciprocity

Refunds For June 2004:

Aguilar, Marco

G4 non vested

$9,283.54

Archer, Victoria

G4 non vested

$797.56

Azich, Barbara

G4 non vested

$2,037.81

Deleon, Alicia

G4 non vested

$3,003.84

Gipson-Brock, Rachel

G4 non vested

$13,237.52

Tinapay, Disandra

G4 non vested

$10,176.44

Yancey, Jamie

G4 non vested

$2,761.41

Total Refunds June 2004:

$41,298.12

Rollovers For June 2004:

Blakely, Kimberly

G4 non vested

$11,155.24

Schiffman, David

G4 non vested

$379.51

Sunde, Lisa

G4 non vested

$1,312.66

Velado, Ivonne

G4 non vested

$9,424.91

Total Rollovers June 2004:

$22,272.32

0406.5.2

Consideration of items removed from Consent Calendar:  Dr. Fracchia described the manner in which  Debbie Estrada experienced the onset of a frozen right shoulder with tendonitis.  He noted that Ms. Estrada’s regular job duties included a large amount of data entry and handwriting and explained that an abrupt onset of problems following gradual tendonitis symptoms was not unusual.  Dr. Fracchia opined that Ms. Estrada’s present condition would preclude her from ever returning to her previous work activities.  Ms. Stuart opined that the Board should re-examine Ms. Estrada’s case in one year to obtain an update on her physical status.  Ms. Lamica stated that she will place a reminder in Ms. Estrada’s file to bring her back  for review in one year.

Motion by Bryan, second by Salas, seven ayes (Colson, Bryan, Salas, Lewis, Hooley, Arnott, and Stuart) to one no (McMahon) to find that Debbie Estrada is unable to perform her duties as an Administrative Secretary II, find that her disability is Service-connected, and GRANT her application for a Service-connected disability.

Ms. Colson then revisited agenda item 6.2.

0406.5.3

Adoption of Interest Crediting Policy:  Ira Summer from Public Pension Professionals reviewed two proposed versions of the interest crediting policy with the Board, highlighted the refinements made since the last Board meeting and distinguished the differences between the two versions.  The version adopted reflects the refinements made to the policy at the May 25, 2004 meeting, but credits interest to the Contingency Reserve before crediting interest to the Supplemental Benefits Reserve.

Motion by Lewis, second by Arnott, carried unanimously, to adopt Resolution 03-04-17 adopting a new Interest Crediting Policy, as follows:

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.  Therefore be  it

Resolved that the Board hereby rescinds resolution 97-98-21, as amended and adopts the attached Interest Crediting Policy.  Be it further

Resolved that the Board hereby authorizes the Chief Executive Officer to implement the provisions of the following Interest Crediting Policy and to report semi-annually on the amounts so credited.

Interest Crediting Policy

I.                   Overview

The San Mateo County Employees’ Retirement Association (SamCERA) Board (Board) establishes this policy to govern the crediting of interest to reserves under the County Employees’ Retirement Law of 1937 (CERL) subject to the requirements specified in Article 5 of the CERL.

II.                Objectives

In the development and adoption of this policy, the Board has balanced the interests of the active members and the retired members and has determined that the policy set forth below best serves the interests of the membership as a whole. In addition, this policy has been developed with the following objectives:

• To comply with appropriate legal and regulatory requirements.
• To assure the prompt delivery of benefits and related services to the participants and their beneficiaries.
• To limit, to the extent possible, the volatility of interest crediting from period to period.
• To limit, to the extent possible, the charging of short-term losses to reserves.
• To maintain consistency between the reserve structure and the actuarial funding of SamCERA.
• To assure that the reserve values track the market value of assets over the long term.

III.             General Concepts

This policy deals with the determination of Regular Interest as defined by Section 31472.1 of the CERL and the allocation of that interest to appropriate accounts and reserves.  While the details for this allocation are provided below, this determination is based on several general concepts:

• As a whole, Valuation and Non-Valuation Reserves will be credited at the assumed interest rate.
• Individual member’s contribution accounts will be credited at the lesser of the actual earnings rate or the assumed interest rate, but the rate credited cannot be less than zero.  If the actual earnings for the period are less than the assumed interest rate, the difference between the amount credited and the amount that would have been credited using the assumed interest rate will be credited to other Valuation Reserves.
• The Contingency Reserve will be targeted at 3% of assets, but will be used to credit interest to Valuation and Non-Valuation Reserves as needed.
• If the Contingency Reserve falls below 3% of assets, earnings in future periods not needed to credit interest will be used to increase the Contingency Reserve to 3% of assets before amounts are allocated to Undistributed Earnings.
• The Contingency Reserve may be less than zero.  This represents the amount that earnings fell short of the desired interest crediting levels.  A Contingency Reserve less than zero will be subtracted from Valuation Reserves for the purpose of determining the required employer contributions.

IV.              Adoption and Amendment

This policy has been adopted by a majority vote of the SamCERA Board, and can be amended by the SamCERA Board by a majority vote.  It shall be effective for interest crediting on or after January 1, 2004.

V.                 Definition of Reserves

For the purpose of allocating earnings, all SamCERA Reserves will fall into one of three major categories:

(1)   Valuation Reserves.  These reserves are used to pay for those benefits which are guaranteed by the County, the Mosquito Abatement District, and any other participating employer.  Guaranteed benefits include both Basic and Cost of Living benefits for both General and Safety members.  Valuation Reserves are used to determine the employers’ contribution rates. 

The following reserves are considered Valuation Reserves:

a)                Members Reserve.  This is the reserve into which member contributions are credited.

b)               County Advance Reserve.  This is the reserve into which employer Basic contributions are credited.

c)                Retiree Reserves.  These are the reserves into which amounts are transferred from the Member Reserve and the County Advance Reserve when a member retires.

• Retirees – Annuity Reserve,
• Retirees – Current Service Pension Reserve,
• Retirees – Survivors Death Benefit Reserve, and

d)               Cost of Living Reserve.  This is the reserve into which any employer or member Cost of Living contributions are credited.

(2)   Non-Valuation Reserves.  These reserves have not been set aside to pay for benefits which are guaranteed by the County, the Mosquito Abatement District, or any other participating employer.  Neither the benefits paid from these reserves nor the assets in the reserves themselves are included in the annual valuation to calculate the required employer contribution rate. 

a)                   Contingency Reserve.  This is an account set aside as a reserve against deficiencies in interest earnings, losses on investments or other contingencies under Section 31592.2 of the CERL.

b)                  Supplemental Benefit Reserves.  These are reserves set aside to provide additional benefits for retired members and beneficiaries as determined by the Board.  These additional benefits are ad hoc under CERL and are not guaranteed by SamCERA, the County or any other participating employer.  Supplemental Benefit Reserves include the

• Medicare B Reserve, and
• 401(h) Reimbursement Reserve.

c)                   Other Specified Non-Valuation Reserves.  These are other reserves created from Undistributed Earnings which have been designated by the Board for a specified purpose.  Designation of these reserves do not create any vested rights for benefit payment.  Other Specified Non-Valuation Reserves include the

• Ventura Reserve.

d)                  Undistributed Earnings Reserve.  This reserve is for monies which have not been credited to other reserves.

(3)   Financial Statement Reserves.  These reserves are shown in the financial statements but are not a part of the annual valuation and are not included in the interest crediting process.

a)                  Market Stabilization Account.  This is the difference between the current market value of assets and the actuarial value of assets used to establish the Valuation and Non-Valuation Reserves.

VI.              Timing of Interest Crediting

SamCERA will credit Regular Interest twice each year to all Valuation and Non-Valuation Reserves (other than the Contingency Reserve and the Undistributed Earnings Reserve) that have been on deposit for six months, in accordance with Section 31591 of the CERL.  The crediting of interest will take effect on June 30 and December 31 of each year.

VII.           Determination of Allocable Earnings

The SamCERA Board will credit Regular Interest, in accordance with Section 31427.1 of the CERL, based on the amount of earnings that are available to be allocated for that purpose (Allocable Earnings).  Allocable Earnings will be the sum of the following amounts:

(1)   Actual Earnings for the current six-month period.  The amount of earnings, whether positive or negative, to be allocated to SamCERA Reserves will be calculated using the asset smoothing method adopted by the SamCERA Board in the actuarial valuation for calculating the employer contribution rates for the Plan Year in which the allocation is taking place.  The Actual Earnings Rate for the six-month period will be the Actual Earnings for that period, calculated using the asset smoothing method, divided by the average value of assets during the same period determined using the same asset smoothing method.

(2)   Undistributed Earnings.  The amount, if any, in the Undistributed Earnings Reserve.

The crediting of Regular Interest from these Allocable Earnings will take place in accordance with Section VIII of this Statement.

VIII.        Crediting of Regular Interest

The Retirement Board will credit Regular Interest to the Valuation and Non-Valuation Reserves based on the amount of Allocable Earnings determined under Section VII of this Statement.  The allocation will be done in the following order until all earnings have been allocated, or the allocation process has been suspended as described below.

1)   Members Reserve.  Members Reserve accounts will be credited at a rate equal to the lesser of one-half of the assumed interest rate adopted by the SamCERA Board in the actuarial valuation used to determine employer contribution rates for the Plan Year in which the allocation is taking place, or the Actual Earnings Rate, but the rate credited shall not be less than zero.

2)   Other Valuation Reserves.  The Valuation Reserves other than the Members Reserve will be credited with earnings at a rate of one-half of the assumed interest rate adopted by the SamCERA Board in the actuarial valuation used to determine employer contribution rates for the Plan Year in which the allocation is taking place.

3)   Additional Credit to Valuation Reserves.  If the actual earnings rate for the period is less than the assumed interest rate, the difference between the amount that would have been credited to the Members Reserve at a rate of one-half of the assumed interest rate, and the amount that was actually credited to the Members Reserve in step one above, will be credited to the County Advance Reserve.

     The purpose of making the additional allocation is to produce a total amount credited to all Valuation Reserves that is equal to the amount that would have been credited to the Valuation Reserves, in aggregate, if all Valuation Reserves were credited with one-half of the assumed interest rate.

4)   Contingency Reserve.  If there are still Allocable Earnings to be distributed after the allocations in steps (1) through (3) above have been completed, the Contingency Reserve will be allocated earnings until the value of the Contingency Reserves is equal to 3% of the Market Value of Assets, or until all Allocable Earnings have been exhausted.

5)   Supplemental Benefit Reserves.  If there are still Allocable Earnings to be distributed after the allocations in steps (1) through (4) above have been completed, the Supplemental Benefit Reserves will be credited at a rate of one-half of the assumed interest rate adopted by the SamCERA Board in the actuarial valuation used to determine employer contribution rates for the Plan Year in which the allocation is taking place, or until all Allocable Earnings have been exhausted, whichever comes first.

6)   Undistributed Earnings.  If there are still Allocable Earnings to be distributed after the allocations in steps (1), (2), (3), (4) and (5) above have been completed, all remaining Allocable Earnings will be credited to the Undistributed Earnings Reserve.  The use of Undistributed Earnings will be subject to the Undistributed Earnings policy, as modified from time to time by the Board.

7)   Suspension of Crediting Process.  If there are insufficient Allocable Earnings to credit the Reserves as specified in steps (1) through (5) above, the Contingency Reserve will be debited by the amount required to complete steps (1), (2), (3) and (4) with the following restrictions.

a)  The crediting specified in step (1) will not be less than zero, no matter how far the Contingency Reserve is required to drop in order to make this occur.

b) It is possible that the Contingency Reserve may reflect a negative balance.  However, in no event may the total of the Non-Valuation Reserves be allowed to drop lower than 1% of the Market Value of Assets.  In the unlikely event that the allocation specified under Steps (2) through (5) above would produce this situation, the allocation process shall be suspended at the point in which the total of the Non-Valuation Reserves reaches 1% of the Market Value of Assets until the Board adopts an alternative allocation.

IX.       Review of Policy

This policy is subject to review and may be modified from time to time by the Board, pursuant to Section IV of this statement.

0406.5.4

Undistributed Earnings Workshop:  Mr. Summer examined the three general ways in which he felt the Board wished to utilize undistributed earnings: (1) Supplemental Benefits such as the Medicare Part-B Reimbursement Program, (2) funding regular guaranteed benefits and, (3) maintaining a “rainy day fund” allowing the ability to have extra funds should an unexpected issue such as Ventura arise.  Mr. Summer then discussed a draft undistributed earnings policy structure to initiate and promote Board discussion. 

0406.5.5

Consideration and Adoption of Undistributed Earnings Policy:  Following Mr. Summer’s Undistributed Earnings Workshop, Ms. Colson instructed Mr. Summer to document the topics discussed in policy format.  Without objection, Ms. Colson deferred the further consideration and adoption of an undistributed earnings policy to a future Board meeting.

Ms. Colson then took up agenda item 6.2

0406.6

Investment Services

0406.6.1

Acceptance of Monthly Portfolio Performance Report:  Mr. Clifton presented the monthly performance review for the period ending May 31, 2004.  He noted SamCERA’s Total Plan Return increased 0.71% for the month following a poor performing March and April.  He stated that the markets were also performing well in June.  Mr. Clifton also noted a handout illustrating the current versus proposed allocation with the hiring of new portfolio managers.  In response to a question from Ms. Colson, Mr. Clifton estimated that SamCERA will close the Fiscal Year with a return of approximately 13.5%-14%. 

Asset Class

Market Value

1-Month

1-year TTWRR

5-year TTWRR

$757,873,006

1.48%

21.13%

0.69%

International Equity

       223,473,611

0.17%

25.73%

1.08%

Total Equity

981,346,616

1.18%

22.14%

0.55%

Fixed Income

379,497,817

-0.43%

0.17%

6.87%

Real Estate Aggregate

59,163,261

0.35%

9.62%

10.41%

Cash Equivalents

1,494,072

0.19%

2.31%

Total Fund

$1,421,501,767

0.71%

14.86%

3.79%

Benchmark

0.67%

15.60%

3.11%

Without objection, Ms. Colson accepted the report. 

Ms. Colson then took up agenda item 5.3.

0406.6.2

Selection of Large Cap & Small Cap Equity Enhanced Index Managers:  The Board conducted interviews of the finalists in the Large Cap & Small Cap Equity Enhanced Index Manager searches.  Each firm provided a 30-minute overview of their proposal and then responded to 15 minutes of questions. 

Scott W. Clifford and Trey Heiskell represented Barclays Global Investors.

Tom Dempsey, Melissa Brown, and Tom Straw represented Goldman Sachs Asset Management.

Darren Rabenou and Joel Damon represented JPMorgan Fleming Asset Management.

Ms. Colson then took up agenda item 5.1.

Ms. Colson revisited this agenda item for action.  Patrick Thomas and Margaret Jadallah from Strategic Investment Solutions briefly discussed the pros and cons for each of the 3 final candidates.  After extensive discussion, motion by Arnott, second by Salas, carried unanimously to select Goldman Sachs Asset Management for SamCERA’s Small Cap Equity Enhanced Index mandate subject to further fee negotiation. 

Following extensive discussion, motion by Arnott, second by Stuart, carried five ayes (Arnott, Stuart, Bryan, Lewis and Hooley) to three noes (Colson, McMahon and Salas) to select Barclays Global Investors for SamCERA’s Large Cap Equity Enhanced Index mandate.

0406.6.3

Adoption of Criteria to be Employed in SamCERA’s Core Plus Fixed Income Manager Search:  Ms. Jadallah reviewed the Core Plus Fixed Income Manager Search draft screening steps to the Board.  Motion by Bryan, second by Arnott, carried unanimously to adopt the criteria to be employed in SamCERA’s Core Plus Fixed Income Manager Search.

0406.6.4

Approval of the Manager Structure for SamCERA’s Real Estate Allocation – Consideration of Release of Request For Information/Request For Proposal:  Mr. Clifton discussed the advantages and disadvantages of an open- versus closed-fund citing liquidity and diversity issues.  He then reported on the current status of INVESCO’s Core Commingled Fund.  Mr. Clifton stated that three Plans voted to participate in the initial opening to the Fund (Arkansas Public Employees’ Retirement System, City of Boston Retirement System, and North Dakota State Investment Board) and two Plans were still performing due diligence (Los Angeles City Employees’ Retirement System and SamCERA).  He reported that INVESCO had hosted a conference call for the founding investors on June 10^th to discuss outstanding issues.  Mr. Clifton then stated that he and Ms. Carlson also had other conversations with the founding investors separate from the conference call hosted by INVESCO.  He reported that most of the Plans did not find any distressing issues with the INVESCO’s private placement memorandum documentation and most found it more liberal than other relative documents.  He also indicated that the other Plans were hesitant to engage in a common counsel to represent all founding investors due to the fact that it seemed that each Plan had its own separate agenda.   Mr. Clifton also reported that INVESCO had selected Chadwick Saylor Capital Management as their independent fiduciary.  Mr. Clifton then reviewed other commingled core real estate funds. 

Motion by Bryan, second by Arnott, five ayes (Bryan, Arnott, Hooley, Stuart, and Salas) to three noes (Colson, McMahon, and Lewis) to commit that portion of SamCERA’s real estate allocation that is currently invested in separate properties to INVESCO’s open-end commingled core real estate fund and to authorize Staff to enter into a contract with Chadwick Saylor Capital Management as independent fiduciary for the commingled fund. 

Ms. Colson then took up agenda item 7.4.

0406.6.5

Annual Investment Consultant Review – Strategic Investment Solutions:  The Board reviewed the completed Annual Investment Consultant Questionnaire and Performance Review with Margaret Jadallah and Patrick Thomas.  Ms. Jadallah stated that she was very pleased with SIS’ relationship with the trustees and assisting them during their asset allocation deliberations and investment manager searches.  She opined that the Board has made prudent investment strategy decisions.  In response to a question from Ms. Colson, Mr. Thomas gave the Board an update regarding its merger with Frank Russell.  He reported that SIS integrated a number of consulting processes with Russell’s during the past year.  He indicated that there is still a lot to be done going forward, specifically regarding an increase in equity ownership by Russell.  Mr. Thomas noted that he too was pleased with SIS’ relationship with the Board and noted that he felt as if he now understands the needs of each Board member much better.

Ms. Salas departed during Agenda Item 6.5.

0406.7

Board & Management Support Services

0406.7.1

Acceptance of Monthly Financial Reports:  Mr. Clifton presented the Preliminary Monthly Financial Report for the Period ending May 31, 2004.  He reported that SamCERA’s Net Assets increased slightly by $10,795,426 in May.  He also reminded the Board that the County would pay an additional $6,000,000 in employer contributions because of the underestimation of the County payroll made 16 months ago.  Without objection, Ms. Colson accepted the report. 

0406.7.2

Acceptance of Report on the 2004/2005 Property Value Optimization Plans:  Mr. Clifton reviewed the next fiscal year’s Property Value Optimization Plan and indicated that there was nothing irregular to point out.  Mr. Lewis opined that a table listing the Properties and their respective information would make it easier to compare and contrast the Properties.  Without objection, Ms. Colson accepted the report.   

0406.7.3

Appointment of Ad Hoc Nominating Committee:  Ms. Colson appointed an Ad Hoc Nominating Committee of Ms. Stuart, Mr. Bryan, Ms. Arnott, and Ms. Colson.

0406.7.4

Approval of Employee and Public Service’s Recruitment Plan for Chief Executive Officer:  Mary Welch, Director of San Mateo County’s Employee and Public Services, discussed the proposed work plan for the recruitment of SamCERA’s next Chief Executive Officer.  Ms. Welch went over the draft recruitment schedule, cover letter and brochure.  After extensive discussion, Ms. Welch stated that she will return to the Board with final materials taking into account their comments and suggestions.

Ms. Colson then took up agenda item 6.5.

0406.8

Approval or Acceptance of Reports

0406.8.1

Chief Executive Officer's Report:  Mr. McCausland reported that the Staff is moving along quite well with the VenturaImplementation Plan.  He indicated that Staff has had a difficult time getting the landlord to provide office space within the building for the Ventura project, but he reported that SamCERA had an opportunity to sublease 3 workstations and a conference room in the office adjacent to SamCERA’s Board Room for approximately 6 months to accommodate the Ventura research staff.  In response to a question from Mr. Hooley, Mr. Clifton indicated that the cost of subleasing the space would be well under budget.  Mr. McCausland reported that, if there were no objections, he would sign an interim agreement with LPS, SamCERA’s neighbor for the space.  No objection was noted. 

Mr. McCausland then reported that the Board of Supervisors had passed a resolution that extends the County’s commitment to pay the salary differential and benefit costs for reservists called to active military duty through December 31, 2004.

0406.8.2

Assistant Executive Officers’ Report:  With the re-elections of Tom Bryan and Bette Stuart to the Board, Mr. Hood indicated that they will be sworn in at the July Board meeting.  Ms. Colson noted that Mr. Lewis and her terms on the Board were up at the end of the month and that the trustee appointments made by Board of Supervisors will need to be sworn in at the next Board meeting as well. 

Mr. Hood then reported that he will return with an amendment to the actuarial services contract with Public Pension Professionals at next month’s Board meeting to include Mr. Summer’s estimate for the additional cost of insurance.  He stated that Mr. Summer is still discussing it with his carrier. 

Mr. Hood stated that, if there were no objections, SamCERA will begin granting interest to terminated non-vested members.  Staff has determined that SamCERA may be the only 1937 Act system not doing so.  No objection was noted.  He will return in July with a proposed amendment to the Board Regulations to reflect the change. 

Mr. Hood also reported that he attended the Wharton School the week prior to the Board meeting and found the information very valuable. 

0406.8.3

Investment & Finance Manager’s Report:  Mr. Clifton reported that he was in receipt of Brown Armstrong’s letter of engagement and requested that Mr. Lewis, Chair of the Ad Hoc Audit Committee, sign the document.  Mr. Clifton then encouraged the Board to attend the Milliman Investment Educational Conference previously known as the City of Fresno Educational Conference.  He noted that he will return with an amendment to the Educational Policy taking the name change into account. 

0406.8.4

County Counsel's Report: None.

0406.9

Adjournment in Memory of the following Deceased Members:  There being no further business, Ms. Colson adjourned the meeting at 3:43pm in memory of the following deceased members:

Kurtz, Lloyd

February 28, 2004 (Pbi)

Department Of Public Works

Brousseau, Angela

March 23, 2004

Chope Hospital

Tiernan, Carroll

May 11, 2004

Department Of Social Services

Johnson, Esau

May 13, 2004

General Services Department

Allen, Donald

May 21, 2004

Department Of Civil Defense

Sinclair, Dorothy

June 4, 2004

Library Department