February 22, 2005 – Board Agenda

Call to Order: Ms. Colson, serving as Chair, called the Public Session of the Board of Retirement to order at 1:05 p.m. February 22, 2005, in SamCERA’s Board Room, Suite 125, 100 Marine Parkway, Redwood Shores. Mr. Lewis, Vice Chair, assumed the role of Chair, upon his arrival at 1:15 p.m.

0502.2

Roll Call: Mr. Bryan, Mr. Buffington, Ms. Tashman, Ms. Stuart, Ms. Colson, Mr. Hooley & Mr. Lewis (1:15 p.m.). Ms. Arnott was also in attendance. Excused: Mr. McMahon & Ms. Salas. Staff: Mr. Bailey, Mr. Hood, Mr. Clifton, & Ms. Lamica Counsel: Ms. Carlson. Consultants: Dr. Fracchia, Mr. Summer, Ms. Jadallah & Mr. Thomas. Retirees: 1, County: 1.

0503.3

Approval of the Minutes: Ms. Arnott submitted the following corrections to the Minutes: 0501.2: Alternate Board Member:None.; 0501.9: ~~NAPOLI, HOPE NOVEMBER 26, 2004 DEPARTMENT OF SOCIAL SERVICES~~

Motion by Stuart, second by Buffington, carried unanimously to approve the Board Meeting Minutes of January 25, 2005, as corrected.

0502.4.1

Oral Communications From the Board: None.

0502.4.2

Oral Communications From the Public: John Murphy, on behalf of SCORPA, extended his sympathy to Mr. McMahon’s family and friends, and is saddened by his untimely death.

Secondly, regarding his request for a list of eligible voters for the June 2004 Board election, he reported that it was a consensus by SCORPA not to pursue the request. In response to Mr. Murphy’s concern, Mr. Hood stated that SamCERA will not be able to provide the list due to the confidentiality of records.

Mr. Lewis, Vice Chair, then assumed the role of Chair.

0502.5

Benefit & Actuarial Services

0502.5.1

Adoption of Consent Calendar: Without objection, Mr. Lewis removed the application of Gloria Prater from the Consent Calendar for consideration under Agenda Item 5.2. Motion by Colson, second by Lewis, carried unanimously to adopt the Consent Calendar, as amended, as follows:

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

Service Retirements:

Zirelli, Jody

February 1, 2005

Sheriff’s Department

Continuance of Benefits:

None

Deferred Retirements:

Cutchin, Patricia

G2 Vested

Depalmo, Daniel

G2 Vested

McBride, Kim

G2 Vested

Milinovich, Tina

G2 Vested

Shutton, Steven

G2 Vested

Yoch, Maria

G2 Vested

Beard, Janine

G2 vested

Reciprocity

Camarillo, Paul

G2 vested

Reciprocity

Garcia, Maria

G4 non vested

Reciprocity

Lehrer, Justin

G4 non vested

Reciprocity

Miller, Richard

G2 vested

Reciprocity

Morineau, Michelle

G4 non vested

Reciprocity

Pavao, Rachelle

G4 non vested

Reciprocity

Welch, Carolyn

G4 non vested

Reciprocity

Refunds For February 2005:

Ashton, Rebecca

G4 non vested

$8,725.58

Cabrera, Eduardo

G4 non vested

$129.47

Crotty, Joanna

G4 non vested

$4,188.01

Fritz, Sara

G4 non vested

$6,187.66

Grima, Anthony

S2 vested

$41,197.65

Hartanto, Heruawan

G4 non vested

$639.55

Laranang, Chona

G4 non vested

$205.18

Maravelias, Gina

G4 non vested

$1,365.53

Peirce, Heidi

G4 non vested

$6,187.09

Woodruff, Kandace

G4 non vested

$10,595.63

Total Refunds February 2005:

$79,421.35

Rollovers for February 2005

Covey, Jennifer

G2 vested

$55,494.14

Eden, Deana

G4 non vested

$12,769.22

Malebranche, Chantal

G4 non vested

$2,150.17

Roberts, Sonja

G4 non vested

$1,485.51

Rogers, Stephen

G4 non vested

$15,370.01

Total Rollovers February 2005:

$87,269.05

0502.5.2

Consideration of items removed from Consent Calendar: Ms. Lamica summarized the medical finding that Ms. Prater is unable to perform her duties as a Hospital Unit Coordinator. However, staff recommends that Ms. Prater undergo an independent orthopedic evaluation in order to determine whether or not her disability is service-connected.

Motion by Buffington, second by Stuart, carried unanimously to find that Gloria Prater is unable to perform her duties as a Hospital Unit Coordinator, finds that her disability is not Service-connected and DENIES her application for a Service-connected disability and GRANTS her a Non-service Connected Disabilitypending the receipt of an independent orthopedic evaluation report.

0502.5.3

Adoption of Cost of Living Allowance Resolution: Ira Summer, from Public Pension Professionals, provided a brief overview of the Cost of Living Allowance, its provisions in the 1937 Act, the COLA Bank, and the manner in which it is calculated prior to revealing PPP’s COLA recommendation.

Motion by Colson, second by Hooley, carried unanimously to adopt Resolution 04-05-22, as follows:

“Whereas, Government Code §31870.1, §31870.2 and §31874.4 empower the Board to grant cost of living adjustments on an annual basis to recipients of SamCERA benefits; and

“Whereas, the Board has retained Public Pension Professionals, Inc. to provide actuarial services to the Board; and

“Whereas, Public Pension Professionals, Inc., by its letter dated February 15, 2005, has reported that the appropriate annual cost of living adjustment to be effective April 1, 2005, is 1.0%; and

“Whereas, Public Pension Professionals, Inc. has transmitted exhibits dated February 15, 2005, which set forth a schedule of cost of living adjustments based upon applicable plan, date of retirement and the accumulated carry-over and changes thereto for those eligible: Therefore, be it

“Resolved, that the Board hereby adopts a 1.0% cost of living adjustment effective April 1, 2005, Be it further

“Resolved, that the Board adopts the schedule of cost of living adjustments set forth in the Public Pension Professionals, Inc. exhibits transmitted February 15, 2005, and entitled Plan 1 COLA Bank Accumulations General and Safety and Plan 1 COLA Bank Accumulations Probation. Be it further

“Resolved, that the Chief Executive Officer is hereby empowered to take all actions necessary to provide for the payment of cost of living adjustments in accordance with the adopted schedule effective April 1, 2005.”

0502.6

Investment Services

0502.6.1

Acceptance of Monthly Portfolio Performance Report: Mr. Clifton presented the monthly performance for the period ending January 31, 2005. He noted that SamCERA’s Total Fund Return of -1.38% for the month slightly out-performed the Total Plan Policy Benchmark return of -1.50%. He also noted that the Fund’s Fiscal Year to Date return, 7.08%, is 249 basis points ahead of the Actuarial Discount Rate, 4.59%, and 26 basis points ahead of SamCERA’s Total Plan Policy Benchmark, 6.82%.

Asset Class

Market Value

1-Month

1-year TTWRR

5-year TTWRR

Domestic Equity

$808,239,496

-2.65%

8.17%

0.11%

International Equity

253,663,558

-1.58%

12.55%

-0.13%

Total Equity

1,061,903,054

-2.40%

9.17%

0.06%

Fixed Income

460,880,483

0.85%

4.81%

8.18%

Real Estate Aggregate

54,967,034

0.00%

17.80%

11.30%

Cash Equivalents

-26,961

0.22%

2.34%

3.38%

Total Fund

$1,577,723,610

-1.38%

8.23%

3.93%

Benchmark

-1.50%

8.25%

3.38%

Without objection, Mr. Lewis accepted the report.

0502.6.2

Acceptance of Quarterly Investment Performance Analysis for periods ending December 31, 2004: Without objection, Mr. Lewis deferred the discussion of this agenda item until the March board meeting.

0502.6.3

Review of SamCERA’s Real Estate Manager Structure: Mr. Clifton indicated that SamCERA’s real estate allocation has been kept under target until the completion of the Fund’s manager restructure. He presented core, value added and opportunistic real estate investment options. Ms. Colson recommended that the Association consider investing to full real estate allocation with INVESCO and begin real estate investment structure analysis in the mean time. After extensive discussion, motion by Lewis, second by Hooley, to instruct staff to return to the next board meeting with more information regarding the steps to invest in INVESCO’s Core Fund to meet full real estate target allocation.

0502.6.4

Approval of Futures Agreement – Goldman Sachs Asset Management: Mr. Clifton reported that Staff forwarded the GSAM Futures Agreement to Western Asset Management’s compliance department for review who agreed that the documentation was industry standard.

Motion by Buffington, second by Colson, carried unanimously to adopt Resolution 04-05-23, as follows:

“Whereas, Article XVI, §17 of the Constitution of the State of California vests the Board with "plenary authority and fiduciary responsibility for the investment of moneys and the administration of the system"; and

“Whereas, Government Code §31595 vests in the Board ". . . exclusive control of the investment of the employees retirement fund."; and

“Whereas, Government Code §31596.1(d) authorizes the Board to retain investment managers ". . . in connection with administration of the Board's investment program . . . "; and

“Whereas, on October 26, 2004, the Board adopted Resolution 04-05-11, which authorized the Chair to execute an Investment Management Agreement between the Board and Goldman Sachs Asset Management; and

“Whereas, In Exhibit C, Equity Investment Objectives, Guidelines, Restrictions and Fee Agreement, investment in certain types of securities are specifically permitted.; and

“Whereas, The Agreement states, “When deemed appropriate by the Investment Manager, the Investment Manager may invest a portion of the Assets in futures contracts for the purpose of acting as a temporary substitute for investment in common stocks. GSAM will not engage in speculative futures transactions.” Therefore, be it

“Resolved that the Board hereby approves the documentation between the Board and Goldman Sachs Asset Management that authorizes futures transactions as a temporary substitute for investment in common stocks. Be it further

“Resolved that the Board hereby delegates full discretionary investment authority consistent with the provisions of SamCERA’s Investment Plan to Goldman Sachs Asset Management to manage this type of security when in their judgment it is advisable. Be it further

“Resolved that the Board hereby authorizes the Chair, to execute the documentation on behalf of the Board. Be it further

“Resolved that the Board hereby designates the Investment & Finance Manager as its designee to perform those functions so identified in the documentation and hereby authorizes the Investment & Finance Manager to take all actions necessary to initiate, implement and monitor assignments, approve payments and provide the Board with timely reports regarding the progress and satisfactory completion of the assignments authorized pursuant to the contract.”

0502.6.5

Introduction of Amendments to SamCERA’s Investment Plan Parts One & Two: Mr. Clifton reviewed the proposed amendments to the first two parts to SamCERA’s Investment Plan. Staff will incorporate Board comments and return to the March board meeting with an amended version for Board review. The Board will be scheduled to approve the first two sections in April.

0502.6.6

Approval of Investment Committee Plan for Fiscal year 2005/2006: Mr. Clifton, due to the usual volume on the Board’s agenda, recommended that the bulk of the manager interviews occur during the Investment Committee with an additional brief presentation before the full Board. Ms. Tashman suggested that similar class manager interviews occur on the same day. Ms. Jadallah concurred with Mr. Hooley’s comment that more than 4 investment manager interviews at any given time might be too much. Mr. Clifton indicated he will return to the next Board meeting with an updated Investment Committee Plan schedule.

Michael McMahon’s family was present at the close of this agenda item. Mr. Lewis expressed his condolences on behalf of the board and staff. Mr. Bailey read ceremonial Resolution 04-05-24 in honor of Michael E. McMahon, as follows:

“RESOLVED, by the Board of Retirement of the San Mateo County Employees’ Retirement Association , that

“Whereas, Michael E. McMahon, elected general member filling the Second Seat on the Board of Retirement passed away on February 14, 2005; and

“Whereas, Mr. McMahon served as an elected member of the board beginning in October 1993; and

“Whereas, Mr. McMahon served continuously since first elected; and

“Whereas, Mr. McMahon was a diligent and faithful fiduciary to the plan and its members; and

“WHEREAS, this Board desires to call special attention to his years of forthright service and his high level of dedication:

“NOW, THEREFORE, IT IS HEREBY DECLARED THAT:

“Michael E. McMahon has the deepest thanks of his fellow retirement board members for his eleven plus years of commitment to seeing that SamCERA was administered following the highest standards of fiduciary conduct.

“His energy and insight will be missed by all who knew and worked with him and the retirement board is lessened by his passing.”

Mr. Lewis then took up agenda item 7.11.

0502.6.7

Approval of Topics for BGI’s Annual Investment Manager Review: Ms. Colson noted a few suggested amendments to the list of questions for Barclays Global Investors Annual Review. Ms. Tashman suggested incorporating a question regarding their proxy voting philosophy and a clarification regarding the status of Patricia Dunn. Mr. Clifton indicated that BGI’s Review is scheduled for March with the review of the other two fixed income managers (Deutsche Asset Management and Western Asset Management) in May.

Without objection, Mr. Lewis approved the topics for BGI’s Annual Investment Manager Review.

0502.7

Board & Management Support Services

0502.7.1

Acceptance of Monthly Financial Reports: Mr. Clifton presented the preliminary monthly financial report for the period ending January 31, 2005. He noted that, due to the Ventura enhanced benefits, the retiree payroll reached to levels of approximately $7 million, however, is returning back to normal to the $6.5 million range. Mr. Clifton then reported that SamCERA’s Net Assets are down to $1,576,165,321.

Without objection, Mr. Lewis accepted the report.

0502.7.2

Annual Review of SamCERA’s Mission, Goals and Objectives: Mr. Clifton presented the annual review of SamCERA’s Mission, Goals & Objectives. Motion by Colson, second by Tashman, carried unanimously to reaffirm Resolution 95-96-05, as amended February 26, 2002, setting forth SamCERA's Mission, Goals & Objectives.

0502.7.3

Annual Review of SamCERA’s Strategic Services Resolution: Mr. Clifton presented the annual review of SamCERA's Strategic Services Resolution. Ms. Tashman recommended several amendments to the document under “Board Responsibilities.” Without objection, Mr. Lewis instructed Mr. Clifton to incorporate these changes into the resolution and return the document to the board at the following board meeting.

0502.7.4

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 Colson, second by Buffington, 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 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 in the 3^rd Resolve Clause prior to participation in the following: Fiduciary Institute @ Stanford, IFEBP Public Funds Annual Conference, GFOA Annual Conference, 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, the Information Management Network, Opal Financial Group, Frank Russell Company, Milliman USA, and Callan Associates, to the extent that the budget provides funds for such participation. Be it further

“Resolved, that participants ~~shall~~ may 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. Be it further

“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. 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. 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.”

0502.7.5

Annual Review & Revision of SamCERA’s 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. Motion by Lewis, second by Stuart, carried unanimously to reaffirm Resolution 96-97-02, as amended July 27, 2004, setting forth SamCERA’s Code of Fiduciary Conduct.

0502.7.6

Annual Review & Revision of SamCERA’s Conflict of Interest Code: Mr. Clifton presented the annual review of SamCERA's Conflict of Interest Code. Motion by Hooley, second by Colson, carried unanimously to amend Resolution 98-99-15, as follows:

“Whereas, the Board has adopted a Code of Fiduciary Conduct which requires among other things, that trustees, the chief executive officer, consultants, investment managers and other professionals retained by the board and SamCERA staff shall comply with the provisions of the California Constitution; the Political Reform Act of 1974, as amended...and all other laws pertinent to the conduct of public pension fund fiduciaries; and

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

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

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

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

“List of Designated Individuals and Applicable Disclosure Categories

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

Designated Positions

Trustees & designated alternate trustees	1, 2, 3, 4
Chief Executive Officer	1, 2, 3, 4
Assistant Executive Officer	1, 2, 3, 4
Investment and Finance Manager	1, 2, 3, 4
Consultants specifically identified to file by the Board of Retirement	1, 3, 4
Real estate consultants specifically identified to file by the Board of Retirement	1, 2, 3, 4

Be it further

“Resolved that the board hereby adopts the following

Description of Financial Disclosure Categories

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

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

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

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

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

“Resolved that the board hereby authorizes the chief executive officer to instruct the following firms to identify employees and principals who meet the definition of consultant set forth above: Barclays Global Investors, ~~Bank of Ireland Asset Management,~~ Brandes Investment Partners, Chartwell Investment Partners, Deutsche Asset Management, Goldman Sachs Asset Management, INVESCO Realty Advisors, Julius Baer Investment Management, Mondrian Investment Partners, Strategic Investment Solutions, and Western Asset Management. Be it further

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

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

“Resolved that the board hereby instructs the chief executive officer to supply the necessary forms and manuals, to monitor timely and complete filing compliance, to take action regarding late filings and to report apparent violations of the Conflict of Interest Code to the board.”

0502.7.7

Annual Review & Reaffirmation of SamCERA’s Internal Controls Policy: Mr. Clifton presented the annual review of SamCERA’s Internal Controls Policy. Motion by Hooley, second by Buffington, carried unanimously to reaffirm Resolution 95-96-16, as amended April 22, 2003, setting forth SamCERA’s Internal Controls Policy.

0502.7.8

Approval of Audit Committee Plan for Fiscal Year 2005/2006: Mr. Clifton briefly reviewed the Audit Committee Plan for the Board. Ms. Colson suggested that the consideration of an Internal Controls Audit be added to the Audit Committee Plan. Motion by Buffington, second by Colson, carried unanimously to approve the Audit Committee Plan for fiscal year 2005-2006.

0502.7.9

Progress Report on Development of SamCERA’s Sources, Uses & Budget for Fiscal Year 2005/2006: Mr. Clifton presented a draft version of SamCERA’s budget initiativesfor the next fiscal year. He requested that the trustees review the document and inform him of any additional budget initiatives. He will return with final version of the document in March.

0502.7.10

Acceptance of Report on Prepayment of the County’s Contribution for FY 2005/2006: Mr. Clifton presented the report on the county’s prepayment of $74,721,583 in County’s Contributions for Fiscal Year 2005-2006. He noted the salary increases in Safety and General Membership payroll. Motion by Colson, second by Stuart, carried unanimously to accept the report.

0502.7.11	Authorization to Obtain Fiduciary Liability Insurance Upon Expiration of Current Policy: Mr. Clifton indicated that the current fiduciary liability insurance policy is scheduled to expire on May 27, 2005, and is set to protect each individual trustee. Motion by Colson, second Hooley, carried unanimously to authorize the Investment & Finance Manager to work with the County Risk Manager to arrange for fiduciary liability insurance coverage effective upon expiration of the current policy. Mr. Lewis then took up agenda item 7.14.

0502.7.12	Approval of Reclassification of Retirement Analyst Position: Mr. Bailey reminded the Board of Mr. Hood’s mobilization as an Army Reservist in the Middle East commencing in April. Mr. Bailey opined that Mr. Hood’s leave of absence will result in a significant challenge in conducting the daily operations of the office. He indicated that some of Mr. Hood’s duties will be delegated to other staff members but feels that Mr. Hood’s role as a benefits manager requires the hiring of an additional employee to fill those responsibilities in his absence as well as upon his return. Looking ahead in the near future, Mr. Bailey believes that the number of retirements will gradually increase due to demographics. In response to a question from Mr. Buffington, Paul Hackleman, from Employee and Public Services, indicated that his department has assessed that more than 50% of management will be leaving County employment within the next 5 years. Motion by Buffington, second by Hooley, carried unanimously to approve the reclassification of the currently vacant Retirement Analyst position to serve as a Retirement Benefits Manager.

0502.7.13	Approval of Chief Executive Officer Performance Appraisal Plan: Mr. Bailey presented a proposed CEO Evaluation schedule to the Board. Mr. Lewis appointed Mr. Hooley, Chair; Ms. Stuart, Mr. Buffington and Ms. Colson to the Ad Hoc Chief Executive Officer Performance Evaluation Committee.

0502.7.14	Adoption of Resolution Authorizing a Special Election for the Second Seat on the Board of Retirement: Mr. Baileypresented two dates (May 16, 2005, or June 13, 2005) to the Board to hold a special election to fill the Second Seat of the Board due to the vacancy created with the death of board member Michael McMahon. Mr. Hood stated that the winner of the election will have a one-year term set to expire June 30, 2006. After extensive discussion, motion by Colson, second by Stuart, carried unanimously to hold the special election on Monday, June 13, 2005, and adopt Resolution 04-05-25, as follows:

	“RESOLVED, by the Board of Retirement of the San Mateo County Employees’ Retirement Association , that “Whereas, Michael McMahon, elected general member of the Second Seat of the Board of Retirement passed away on February 14, 2005; and “Whereas, the term for the Second Seat of the Board of Retirement expires on June 30, 2006: and “Whereas the Board of Retirement Regulation 3.21 of provides that if there is a vacancy that occurs more than nine months prior to the end of the term, the Board shall call a Special Election, which shall be held not less than 90 nor more than 120 days from the date the seat was vacated; and “Whereas, the Special Election shall be conducted in conformance with the provisions of the Article for Regular Elections, except that the schedule shall be adjusted by the Elections Officer to comply with the date of the Special Election set by the Board; and “WHEREAS, this Board desires to call a special election to fill the vacancy on the Board of Retirement for the Second Seat and to hold that special election: “NOW, THEREFORE, IT IS HEREBY DETERMINED AND ORDERED as follows: 1. Pursuant to Regulation 3.21 of the Regulations of the Board of Retirement, the Board hereby calls a special election to fill the vacancy on the Board of Retirement for the Second Seat resulting from the passing of Michael McMahon. 2. The special election to fill this vacancy shall be held on June 13, 2005. 3. The Elections Officer shall publish a notice of this special election in accordance with the Regulations of the Board of Retirement. 4. (a) The special election shall be held and conducted, the returns canvassed, and the result declared in accordance with Regulations of the Board of Retirement. (b) The schedule of the posting of the notice of election and the conduct of the election may be adjusted by the Elections Officer to comply with the date of the Special Election set by the Board.”

	Mr. Lewis then took up agenda item 8.4.


0502.8	Approval or Acceptance of Reports

0502.8.1	Chief Executive Officer's Report: Mr. Bailey said that implementing a comprehensive information technology plan will prove beneficial to the SamCERA office prior to engaging in any new IT developments such as the Electronic Document Management System project. He hopes that an independent contractor will be able to assess and produce a five to ten-year information technology plan to evaluate feasibility, costs and productivity gains from possible IT projects and purchases. He will return to the board at a future meeting with additional information regarding the hiring of an independent consultant. Mr. Bailey then made note of an article in The Daily News dated Feburary 15, 2005, and written by former Clerk of the Board of Supervisors and retiree, Richard Silver. Mr. Bailey noted that some of Mr. Silver’s data was inaccurate and sought the board’s direction regarding the clarification of errors made in outside publications. The board felt that no aggressive action should be made in correcting such facts, however, staff should clarify the information should a member ask. In accordance with the article, Ms. Stuart reminded the board of the high standard of living and escalating costs of medical insurance in San Mateo County. Mr. Bailey then reported on the success of the staff’s annual retreat held at the end of January. He reported that several ideas were generated from the planning workshop. He then made mention of another meeting he attended with John Maltbie, county manager, regarding pension obligation bonds. There was preliminary discussion regarding the purchase of bonds to increase the funding ratio level to ninety percent. The Board of Supervisors may request the involvement of the Board of Retirement regarding the matter. Finally, Mr. Bailey, reported that AB55 will be discussed at the March 1st meeting in front of the Board of Supervisors.

0502.8.2	Assistant Executive Officers’ Report: Mr. Hood provided a brief overview of SamCERA’s monthly processing statistics. He attributed the 16 retirements in January, much larger than usual, to the January 3^rd implementation of the 3% at 50 formula negotiated for Safety members. He expects there to be 117+ retirements in March with the implementation of the enhanced formula for general members. Mr. Hood then reviewed the VenturaEnhancement Summary as of the February benefit payroll. Staff is in the process of locating family members of 144 deceased members who are entitled to Venturaretroactive benefits.

0502.8.3	Investment & Finance Manager’s Report: Mr. Clifton reported that the staff credited interest of 3.45% on December 31, 2004, the actuarial earnings rate for that 6-month period. Members received 3.45%, and all reserves received 4% per the interest crediting policy. He noted that staff received a letter from Brandes regarding some changes regarding junior staff members. He then reported that Julius Baer may be in violation of an investment strategy restriction imposed by SamCERA. Mr. Clifton will return to the board with additional information. Mr. Clifton then reported that, Amanda Wilson of Brown Armstrong, has left the firm. Connie Perez will replace Ms. Wilson as the engagement manager between Brown Armstrong and SamCERA.

0502.8.4	County Counsel's Report: Ms. Carlson reported that a new issue has developed in Kern County regarding a KCERA staff member’s ability to run for the general member seat on the Kern County Board of Retirement. Ms. Carlson indicated that it was determined that a staff member of a county retirement system is not eligible to run for a seat on the Board of Retirement. She also noted that she will be working with Mr. Bailey and David Tom, of the Elections department, to ensure that the special election for the Second Seat on the Board will run smoothly. Mr. Lewis then took up agenda item 6.7.


0502.9	Adjournment in Memory of Deceased Members: There being no further business, Mr. Lewis adjourned the meeting at 4:55 p.m. in memory of the following deceased members:

	Bracciotti, Rita	November 5, 2004	Chope Hospital
	Allen, Yvonne	December 28, 2004	Beneficiary Of Donald
	Meals, Lillian	January 5, 2005	Crystal Springs Rehabilitation Center
	Parker, Lillian	January 12, 2005	Probation Department
	Coughlin, John	January 13, 2005	Beneficiary Of Shirley
	Bonney, Helen	January 18, 2005	Library Department
	Bates, Earl	January 22, 2005	Crystal Springs Rehabilitation Center

Kenneth A. Lewis, Vice Chair

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