April 26, 2005 – Board Agenda

Call to Order: Ms. Salas, Chair, called the Public Session of the Board of Retirement to order at 1:02 p.m. April 26, 2005, in SamCERA’s Board Room, Suite 125, 100 Marine Parkway, Redwood Shores.

0504.2

Roll Call: Ms. Salas, Mr. Bryan, Ms. Tashman, Ms. Stuart & Mr. Hooley. Excused: Mr. Lewis, Ms. Colson & Mr. Buffington. The second seat on the Board is currently vacant. Board Alternate: None. Staff: Mr. Bailey, Mr. Clifton, Ms. Lamica & Ms. Dames. Counsel: Ms. Carlson. Consultants: Dr. Fracchia & Ms. Jadallah. Retirees: 1, County: 2.

0504.3

Approval of the Minutes: Motion by Bryan, second by Stuart, carried unanimously to approve the board meeting minutes of March 22, 2005, as submitted.

0504.4.1

Oral Communications From the Board: Mr. Bryan noted the early adjournment of the March 22, 2005, board meeting due to the departure of a trustee and resulting in a lack of a quorum. He opined that a trustee’s conscious decision to leave and close a meeting solely due to the decisions made on the board was inappropriate and unprofessional. Mr. Bryan suggested that the trustee consider resigning from her seat on the board. Ms. Stuart concurred with Mr. Bryan’s statements. Ms. Tashman noted that each individual trustee on the board should maintain a high level of professionalism and respect for one another. She further noted that there are two sides to every story.

0504.4.2

Oral Communications From the Public: None.

0504.5

Benefit & Actuarial Services

0504.5.1

Adoption of Consent Calendar: Mr. Bailey informed the board that Loretta Keenan asked that the board remove her disability matter from the day’s consent calendar for consideration at a later meeting. Motion by Bryan, second by Hooley, carried unanimously to adopt the Consent Calendar, as amended, as follows:

Disability Retirements:

The Board finds that Jill Lutz is disabled from performing her usual and customary duties as a painter, and GRANTS her application for a service-connected disability retirement.

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

Service Retirements:

Ford, George

03/13/2005

San Mateo Medical Center

Blum, Pamela

03/31/2005

Department of Mental Health

Jones, Charles

03/31/2005 (from deferred)

Superior Court

Brasher, Ned

04/01/2005

Department of Mental Health

Maggy, Bradley

04/01/2005 (from deferred)

Employee Public Service Department

McCausland, Sidney (Sid)

04/01/2005

Retirement Department

McGrath, Martin

04/01/2005 (Date Change)

Controller’s Office

Sawyers, Claudette

04/01/2005 (Date Change)

San Mateo Medical Center

McCloud, Kathleen

04/04/2005 (from deferred)

Department of Social Services

Shaw, Marcelia (Marcy)

04/01/2005

District Attorney’s Office

Shockley, Nancy

04/01/2005

Employee and Public Services

Youngdahl, Raynor (Ray)

04/01/2005

Probation Department

Kirkpatrick, William

04/14/2005

Human Services Agency

Colson, Kathleen

04/23/2005 (from deferred)

District Attorney’s Office

Boles, Stephen

04/27/2005

Employee and Public Services

Gutierrez, Rick

04/30/05

Sheriff’s Department

Seisa, Roy

04/30/2005

San Mateo Medical Center

Continuance of Benefits:

Hallock, James

Beneficiary of Maria

Deferred Retirements:

Bortolussi, Sara M.

G4 vested

Ndegwa, Tom

G4 vested

Davis, Lourdes

G2 vested

Sami, Dan B.

G2 Vested

Udo, Bernarde M.

G4 Vested

Gonzalez, Yvonne

G4 non vested

Reciprocity

Green, Kelly P.

G4 non vested

Reciprocity

Tulett, Linda R.

G2 Vested

Reciprocity

Refunds For April 2005:

Blair, Cheryl

G4 non vested

$1,352.02

Bready, Catherine

G4 non vested

$1,915.42

Dimatulac, Jonathan

G4 non vested

$29.90

Gonzalez, Encarnacion

G4 non vested

$10,896.59

Kandil, Wendy

G4 non vested

$5,903.03

Kim, Faith

G4 non vested

$1,673.62

Le, Toan

G4 non vested

$11,305.38

Mariano, Rosemarie

G4 non vested

$2,516.03

Nino, Ester

G4 non vested

$1,313.29

Obermeyer, Sarai

G4 non vested

$22,631.28

Murphy, Seamus

G4 non vested

$8,090.76

Rodriguez, Heroe

G4 non vested

$1,444.75

Total Refunds April 2005:

$69,072.07

Rollovers for April 2005:

Abellar, Ronald

G4 non vested

$6,330.87

Benavente, Helliene

G4 non vested

$3,082.39

Bogosian, Christine

G4 non vested

$8,491.98

Ednacot, Edgar

G4 non vested

$6,537.89

Ernst, Pam

G4 non vested

$24,014.26

Granick, Lawrence

G4 non vested

$19,825.14

Hazen, Melissa

G4 non vested

$5,458.43

King, Nichelle

QDRO distribution

$20,094.65

Lau, Mark

G4 non vested

$1,493.44

Mason, Kurt

G4 non vested

$3,627.26

McDougall, Jonathan

G4 non vested

$25,468.90

Naguit, Milagros

G4 non vested

$16,369.28

O’Malley, Tanya

G4 non vested

$16,164.43

Roman, Carmen

G4 non vested

$14,792.79

Villacorta, Manuel

G4 non vested

$11,287.54

Total Rollovers April 2005:

$183,039.23

0504.5.2

Consideration of items removed from Consent Calendar: None.

0504.6

Investment Services

0504.6.1

Acceptance of Monthly Portfolio Performance Report: Mr. Clifton presented the monthly performance report for the period ending March 31, 2005.

Asset Class

Market Value

1-Month

1-year TTWRR

5-year TTWRR

Domestic Equity

$801,746,963

-1.60%

8.35%

-1.86%

International Equity

258,549,284

-3.21%

14.27%

-1.25%

Total Equity

1,060,296,248

-1.99%

9.70%

-1.56%

Fixed Income

456,681,322

-0.54%

1.86%

7.44%

Real Estate Aggregate

57,079,121

5.41%

20.45%

11.51%

Cash Equivalents

1,963,600

0.22%

2.84%

3.35%

Total Fund

$1,576,020,290

-1.31%

7.79%

2.62%

Benchmark

-1.19%

7.26%

2.22%

Without objection, Ms. Salas accepted the report.

0504.6.2

Approval of Amendment to Julius Baer’s Investment Management Agreement: Mr. Clifton noted that Julius Baer was in technical violation of Section D of Exhibit C of their Investment Management Agreement. JBIM had informed SamCERA of the violation in which they had built positions in stocks that exceeded the five percent ownership of one corporation limitation SamCERA has imposed on their portfolio. Mr. Clifton reported that the Investment Committee recommends that the board approve the amendment to the IMA permitting JBIM to “exceed the five percent ceiling provided that, in aggregate, those investments do not exceed three percent at cost of the assets of SamCERA’s portfolio.”

Motion byBryan, second by Stuart, carried unanimously toamend Julius Baer’s Investment Management Agreement as recommended.

0504.6.3

Approval of Shareholder Written Consent Form: Motion by Stuart, second by Hooley, carried unanimously to authorize the Chair to execute the Written Consent of Sole Stockholders in Lieu of Special Meeting documentation for Tyson’s Office Center, Inc. and Hunter’s Creek Plaza, Inc.

0504.6.4

Approval of Investment Committee Plan for Fiscal Year 2005/2006: Mr. Clifton presented the Investment Committee Plan for the next fiscal year. He noted that the annual manager reviews will now be grouped by asset class with multiple interviews at one meeting.

Motion by Bryan, second by Stuart, carried unanimously to adopt the Investment Committee Plan for fiscal year 2005/2006.

0504.6.5

Approval of Amendments to Part One & Part Two of SamCERA's Investment Plan: Mr. Clifton presented and reviewed a redline version of the amendments to Part One and Two of SamCERA’s Investment Plan.

Motion by Tashman, second by Bryan, carried unanimously to approve the amendments to Part One and Two of SamCERA’s Investment Plan.

0504.6.6

Introduction of Amendments to Part Three & Four of SamCERA's Investment Plan: Mr. Clifton reported that the Investment Committee had reviewed and generated suggested amendments to Parts Three and Four of SamCERA’s Investment Plan earlier in the day. A redline version of both sections will be presented at the subsequent board meeting.

0504.6.7

Introduction to Review of SamCERA’s Investment Management Agreement (IMA): Mr. Clifton reported that the introduction to the review of SamCERA’s Investment Management Agreement will be deferred to a later date, approximately at the August board meeting, following the filling of the second seat on the board.

0504.6.8

Approval of Topics for Deutsche Asset Management’s Annual Review: Mr. Clifton presented the investment manager questionnaire for Deutsche Asset Management’s annual review to the board.

Motion by Bryan, second by Stuart, carried unanimously to approve the list of questions for Deutsche Asset Management which will be forwarded to them prior to their annual review.

0504.6.9

Approval of Topics for Western Asset Management’s Annual Review: Mr. Clifton presented the investment manager questionnaire for Western Asset Management’s annual review to the board.

Motion by Bryan, second by Hooley, carried unanimously to approve the list of questions for Western Asset Management which will be forwarded to them prior to the annual review.

0504.7

Board & Management Support Services

0504.7.1

Monthly Financial Reports: Mr. Clifton presented the preliminary monthly financial report for the period ending March 31, 2005. He noted that SamCERA’s Net Assets Held in Trust for Pension Benefits totaled $1,572,197,900 for the month.

0504.7.2

Quarterly Budget Report for Period Ended March 31, 2005: Mr. Clifton performed a brief overview of the professional, administrative and Ventura budget reports for the quarter. Professional expenses, aside from actuarial services, corresponded well with what the board had anticipated last year. Mr. Clifton also reported that SamCERA was well under budget in all categories in the administrative budget. In response to a question from Ms. Tashman, Mr. Clifton indicated that in a typical fiscal year, SamCERA expends approximately 90% of the allocated salaries and benefits budget.

0504.7.3

Acceptance of KPMG's Audited Financial Statements for SamCERA's Real Estate Portfolio: Mr. Clifton reported that KPMG had performed an audit for the fifteenth-month period from June 30, 2003 to September 30, 2004 for SamCERA’s separate properties to be contributed into INVESCO’s Core Real Estate Fund. He indicated that KPMG’s financial audits of the properties found everything in order.

Motion by Stuart, second by Bryan, carried unanimously to accept KPMG’s September 30, 2004 Independent Audit of SamCERA’s separate properties.

0504.7.4

Report on the Ventura Project: Mr. Bailey reported on the close of the Ventura Project and that all members that are due payments are currently receiving them or are scheduled to do so. He noted that the final cost of the Retroactive Ventura Implementation was $11,944,753. As such, approximately $20 million is available in the Ventura Contingency Reserve that can be transferred into the County Employer Reserves.

Ms. Stuart opined that the board should consider the balance of the Ventura Contingency Reserve to help fund the Medicare Part-B reimbursement program. Mr. Bailey indicated that, by agreement with the Board of Supervisors, the Fund must be at least 80% funded and by law must attain “excess earnings” in order to provide the ad hoc benefits associated with the Medicare Part-B reimbursement program. He opined that SamCERA should delay any action until the next actuarial valuation to see where the Fund stands. Mr. Clifton noted that the Fund is trailing the actuarial assumption rate and opined that there will not be excess earnings this year.

In response to a question from Ms. Carlson, Mr. Bailey noted that the net present value of future monthly benefits will be transferred to the retiree benefits reserve. Mr. Bryan then commended staff and counsel for their efforts in completing this extensive project.

Motion by Bryan, second by Hooley, carried unanimously to adopt Resolution 04-05-27, closing out the Ventura Contingency Reserve and transferring its funds to Employer Reserves, as follows:

“Whereas, Board Resolution 99-00-08 established the Ventura Contingency Reserve, as follows:

“Resolved that the Board hereby establishes a Litigation Contingency Reserve to receive any employer contributions received in excess of those required to actuarially fund the system as determined utilizing the actuarial assumptions adopted herein; such excess contributions to be credited against the actuarial liability incurred pursuant to the final judgment in Teamsters Local 856 vs. the Board of Retirement.” and

“Whereas, William M. Mercer initiated the Ventura Contingency Reserve with a transfer of $32,145,000 effective with the June 30, 1999 Actuarial Valuation; and

“Whereas, the $32,145,000 transferred to the Ventura Contingency Reserve was investment income that would have otherwise been credited as interest to employer reserves per Resolution 98-99-20; and

“Whereas, the Board reaffirmed in Resolution 01-02-03 that the Ventura Contingency Reserve is reserved for the exclusive purpose of providing funding for the payment of expenses and enhanced benefits resulting from compensation issues that remained unresolved following the Supreme Court’s decision in Ventura County Deputy Sheriffs’ Association v. Board of Retirement of Ventura County; and

“Whereas, the Chief Executive Officer has reported to the Board that the project to provide payment of enhanced benefits mandated under the Teamsters Local 856 vs. Board of Retirement, San Mateo County is complete; and

“Whereas, the reported cost of the project was $11,944,753, which includes: implementation expense of $158,960; litigation expense of $724,700; and present value of enhanced benefits of $14,135,911 offset by member contributions of $3,074,818. Therefore, be it

“Resolved that on May 31, 2005, the Board authorizes the transfer of $20,200,247 from the Ventura Contingency Reserve to the Retirees Current Service Pension Reserve. Be it further

“Resolved that the Retirees Current Service Pension Reserve may be charged for Ventura related expenses should additional members or beneficiaries due a Ventura enhancement come to SamCERA’s attention or additional costs for implementation be incurred. Be it further

“Resolved that the Board hereby authorizes the Investment & Finance Manager to implement the provisions of this resolution.”

0504.7.5

Approval of SamCERA’s Strategic Services Resolution: Mr. Clifton reviewed the amendments to SamCERA’s Strategic Services Resolution proposed by the board at the Febuary 22, 2005, board meeting. Motion by Stuart, second by Bryan, to amend Resolution 95-96-06, as follows:

“Whereas, Government Code 31520 vests the management of SamCERA in the Board; &

“Whereas, Resolution 95-96-05 defines the Board's mission and goals; &

“Whereas, the Board wishes to direct its efforts and the efforts of its staff in concert with the spirit of the law and the Board's Mission and Goals. Now, therefore, be it

“Resolved, that the Board hereby adopts the following:

Board Responsibilities

o ~~Grant Earned~~ Determine Eligibility for Benefits & Provide for the Disbursement of those Benefits

o Provide for the Investment & Safekeeping of Retirement Fund Assets

o Assure the Actuarial Soundness of the System

o Establish & Arrange for the Collection of Contributions

o Manage the Association & System in accordance with the Law

o Define Fiduciary & Ministerial Responsibilities and Effectively Delegate them to Designated Fiduciaries

o Select & Monitor the Performance of Designated Fiduciaries, including but not limited to chief executive officer, investment managers, consultants and other advisors

o Approve & Monitor Policies, Internal Controls & Audit Programs

Strategic Staff Services

Member Benefit & Actuarial Services

o Implement the Benefit Services Plan, including individual member counseling

o Establish Eligibility & Process Applications for Membership & Benefits

o Provide for & Monitor Payment of Benefits & Refunds

o Accurately Maintain & Monitor Member & Benefit Databases

o Provide Timely, Accurate & Useful Services, Reports & Recommendations for Members, Retirees, Beneficiaries & the Board

Investment Management Services

o Implement the Investment Plan

o Monitor Manager & Custodial Activity

o Project & Monitor Retirement Fund Cash Flows

o Provide Timely, Accurate & Useful Reports & Recommendations to the Board

Board Support Services

o Faithfully execute the Duties & Responsibilities Delegated by the Board

o Support the Board in its execution of its Powers & Duties

o Provide Timely, Accurate & Useful Information & Recommendations to the Board

o Direct the Benefits, Investments & Management Services Programs

o Provide Member Education, Public Information & Inter-Agency Services

o Propose, Implement & Monitor Internal Control Systems

Management Services

o Implement the Management Services Plan, including Human Resources, Information Systems, Fiscal, Accounting, Analytical, Facilities & Support Services

o Manage Contracts

o Maintain liaison with providers of County support services

o Direct Catastrophe Recovery Planning

“Be it further

“Resolved, that the Board hereby expresses its intent to review annually the responsibilities and strategic services set forth herein.”

0504.7.6

Approval of SamCERA’s Sources, Uses & Budget for Fiscal Year 2005/2006: Mr. Clifton provided a brief overview on the progress of the budget process for fiscal year 2005/2006. He requested trustee suggestions and input and will return with a refined budget document at the following board meeting. In response to a question from Mr. Hooley regarding the process of the budget initiatives, Mr. Bailey noted that staff shall be embarking on a strategic planning process to be held at staff meetings as a more formal method to develop the budget initiative process as well as better outline the plans for the future.

0504.7.7

Authorization to Acquire Fiduciary Liability Insurance: Mr. Clifton reported that the current fiduciary liability insurance policy is set to expire May 27, 2005. He noted the increase in fiduciary liability insurance premium from $72,000 to $75,000. He reported that this is primarily due to the decreasing funding level of the plan.

Motion by Hooley, second by Stuart, carried unanimously to approve payment of $75,000 for fiduciary liability insurance coverage for the one-year period beginning on May 27, 2005.

0504.7.8

Approval of Auditor’s Engagement Letter for the June 30, 2005, Financial Audit: Motion by Stuart, second by Hooley, carried unanimously to authorize the Audit Committee Chair, Ms. Colson, to execute the Audit Engagement Letter for the June 30, 2004, Financial Statement Audit.

0504.7.9

Approval of Extension of Technical Writing Contract: Mr. Clifton indicated that MaryAnn Gutoff, SamCERA’s technical writer, has significantly assisted staff with their emergency procedure manuals which have been well touted by the Association’s auditor, Brown Armstrong. Mr. Clifton further noted that Ms. Gutoff has also helped with the creation of member booklets and brochures.

Motion by Bryan, second by Tashman, carried unanimously to extend the length of the contract between SamCERA and Ms. MaryAnn Gutoff until June 30, 2008, and increase the not-to-exceed amount from $75,000 to $100,000.

0504.7.10

Approval of Amendment to Chief Executive Officer Agreement: Mr. Bailey reported that Sid McCausland’s retirement agreement provided the payment of six additional months of compensation for CEO consulting services at the rate of $2,000 per month. Mr. Bailey reported that Mr. McCausland had agreed to extend the length of his consulting contract to one year while reducing the monthly rate in half to $1,000 a month. Mr. Bailey noted that the total cost of the contract will remain the same.

Motion by Bryan, second by Tashman, carried unanimously to approve a revision to the personal services contract with Mr. McCausland for twelve months of consulting services at the rate of $1,000 per month.

0504.7.11

Nomination of State Association of County Retirement Systems Officers; Approval of SACRS Voting Delegate and Alternates; and board direction on SACRS Initiatives: Mr. Bailey provided a brief overview of SACRS-related matters requiring action.

Motion by Bryan, second by Tashman to endorse the candidates nominated by SACRS nominating committee for the upcoming year.

Motion by Bryan, second by Tashman to authorize the SamCERA Board’s voting delegate and alternates as noted on the SACRS form.

Motion by Bryan, second by Stuart, to support LACERA’s SACRS initiative opposing the closure of the Defined Benefit plans within the state.

0504.7.12

Approval of Staff Compensation Recommendation (Time Certain 2:00 p.m.): Mr. Bailey provided a brief overview of the recommended salary ranges for three positions on SamCERA’s staff (Retirement Benefits Manager, Assistant Executive Officer and Investment & Finance Manager). He further discussed issues brought forth at the previous board meeting. Mary Welch, from Employee and Public Services, was also present to discuss the staff compensation recommendations.

Motion by Bryan, second by Stuart, carried unanimously to (1) approve the salary ranges for all three positions as recommended by Employee and Public Services, (2) to authorize the Chief Executive Officer to forward these ranges to the Board of Supervisors for approval, and (3) to authorize the Chief Executive Officer to set salaries for each position within the respective salary ranges.

0504.7.13

Approval of Amendment to Educational Policy: Mr. Clifton indicated that there is currently no educational forum for SamCERA’s information technology staff included in SamCERA’s Educational Policy and requested that the board allow membership in Public Retirement Information Systems Management (PRISM).

Motion by Stuart, second by Hooley, 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), the Public Retirement Information Systems Management (PRISM) 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 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.”

0504.8

Approval or Acceptance of Reports

0504.8.1

Chief Executive Officer's Report: Mr. Bailey provided a progress report on the Special Election for the second seat on the Board of Retirement. He stated that notices were provided to members and payroll clerks informing them of the vacancy on the board and the special election.

Regarding the March 2005 retirements, Mr. Bailey presented a pie chart of the various retirements by department to the board. He noted that there was a total of 126 retirements in March, approximately twelve times the normal amount in any given month. He commended Janell LeBlanc, Retirement Analyst, and the rest of the staff for the successful preparation, dedication and commitment they put forth with the vast increase in workload.

Mr. Bailey reported that office space for staff is currently barely sufficient. He noted, however, that SamCERA will not likely require additional office space until the return of Mr. Hood from active military duty in the Middle East.

Mr. Bailey then reported on the current status of the issue of pension obligation bonds in the County. He indicated that the matter is currently still in the research phase and that the County is drafting a Request for Proposal (RFP). Mr. Bryan stated that it would be prudent if staff devised a work plan for the possible implementation of pension obligation bonds in order to have its execution run as smoothly as possible.

Mr. Bailey also provided office processing statistics for the month of March to the board.

0504.8.2

Assistant Executive Officer’s Report: n/a

0504.8.3

Investment & Finance Manager’s Report: Mr. Clifton reported that Deutsche Asset Management had relocated. He also noted that staff had met with representatives from Julius Baer and INVESCO during their recent office visits to SamCERA. Mr. Clifton reported that Strategic Investment Solutions had received a letter from the SEC indicating the close of its examination of the firm. He then noted that Brandes Investment Partners, one of the Association’s deep value managers, has been performing below benchmark for the past three months. He asserted that the length of time has been too short to show too much concern regarding Brandes’ underperformance. Mr. Clifton also reported that SamCERA had credited interest for the semi-annual period ending December 31, 2004, at 3.45%, below the actuarial assumption semi-annual rate of 4%. He also reported that the Council of Responsible Investing (CRI) would like to discuss proxy voting and governance with the board and may attend a future board meeting to publicly comment on the issue.

Mr. Bryan requested that staff inform board members of scheduled office visits from the Association’s investment managers as they may wish to also attend the meetings.

0504.8.4

County Counsel's Report: Ms. Carlson reported on a large legal settlement between the San Diego City Employee’s Retirement System and the defendant Hanson, Bridgett, Marcus, Vlahos & Rudy, L.L.P. Ms. Carlson stated that Robert Blum of Hanson Bridgett had given legal/actuarial advice to the City of San Diego’s board of retirement, who were then subsequently sued by retirees. She reported that SDCERS then sued Hanson Bridgett for the erroneous advice presented to their board. The case settled for $15.2 million. More information regarding the settlement can be found on San Diego City Employee’s Retirement System’s website (www.sdcers.org).

0504.9

Adjournment in Memory of Deceased Members: Ms. Salas adjourned the meeting at 2:25 p.m. in memory of the following deceased members:

Wygant, Willis

March 10, 2005

Chope Hospital

Hiram, Patrick

March 14, 2005

Probation Department

Weeth, Patrica

March 17, 2005

Chope Hospital

Fegan, Dorothy

March 27, 2005

County Clerk Recorders Office

Hallock, Maria

March 27, 2005

Department Of Health & Welfare

Celestres, Francis

April 3, 2005

Department Of Roads & Engineers

Dixon, Harry

April 7, 2005

Department Of Business Management

Alma R. Salas, Chair

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