September 27, 2005 – Board Agenda

  Closed Session – The board may meet in Closed Session prior to adjournment

C1

Consideration of items removed from the Consent Agenda

Public Session – The Board will meet in Public Session at 9:30 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.

9:45 am

Annual Review: Julius Baer Investment Management (Item 6.2)

10:30 am

Annual Review: Mondrian Investment Partners (Item 6.3)

1:15 pm

Acceptance of June 30, 2005, Actuarial Valuation Study (Item 5.4)

5.

Benefit & Actuarial Services

5.1

Adoption of Consent Agenda

5.2

Consideration of Items Removed from Consent Agenda

5.3

Consideration of Waiver of Reciprocity Six-Month Requirement

5.4

Acceptance of June 30, 2005, Actuarial Valuation Study  (Special Order at 1:15 p.m.)

5.5

Acceptance of 2006-2007 Fiscal Year Employer & Employee Contribution Rates

5.6

Annual Actuarial Review (Public Pension Professionals) 

6.

Investment Services (The Investment Committee will meet on September 26 at 8:30 a.m.)

6.1

Monthly Portfolio Performance Report

6.2

Annual Review: Julius Baer Investment Management  (Special Order at  9:45 a.m.)

6.3

Annual Review: Mondrian Investment Partners            (Special Order at 10:30 a.m.)

6.4

Approval of Finalists for Manager Search – Domestic Fixed Income Enhanced Product

7.

Board & Management Support Services

7.1

Monthly Financial Reports

7.2

Approval of Revisions to Resolution 98-99-06

8.

Management Reports

8.1

Chief Executive Officer's Report

8.2

Investment & Finance Manager’s Report

8.3

County Counsel's Report

9.

Adjournment

September 27, 2005 – Board Minutes

0509.1

Call to Order:  Mr. Lewis, chair, called the Public Session of the Board of Retirement to order at 9:34 a.m., September 27, 2005, in SamCERA’s Board Room, Suite 125, 100 Marine Parkway, Redwood Shores.

0509.2

Roll Call:  Mr. Buffington, Ms. Salas, Mr. Bryan, Mr. Lewis, Ms. Colson, Mr. Hooley, Ms. Stuart and Mr. Hackleman.  Board Alternate: None.  Excused:  Ms. Tashman.  Staff:  Mr. Bailey, Mr. Clifton, Ms. Lamica, Ms. Palu.  Consultants:  Ms. Jadallah, Dr. Fracchia and Ms. Carlson.  Retirees: 1, County: 0.

0509.3

Approval of the Minutes:  Motion by Bryan, second by Stuart, carried unanimously to approve the board meeting minutes of August 23, 2005, as submitted.

0509.4.1

Oral Communications From the Board:  Ms. Stuart invited trustees to attend SCORPA’s picnic to be held on September 28^th.  She then complimented staff on its most current issue of the SamCERA newsletter.  Mr. Bailey thanked the several members of SCORPA who routinely assist in the newsletter mailing.  Ms. Stuart also mentioned that she was not assigned to a standing committee and would like the opportunity to participate in one.

Mr. Lewis then pulled agenda items 5.3, 5.4, 5.5 and 5.6 from the agenda to be deferred to a later board meeting.  Mr. Bailey noted that Jack Stroppini, the SamCERA member requesting the waiver of reciprocity’s six-month requirement in agenda item 5.3, was unable to attend the day’s meeting and therefore requested to defer the item.  Mr. Bailey then said that agenda items 5.4, 5.5 and 5.6 were being deferred due to materials not yet received from the actuary.

0509.4.2

Oral Communications From the Public:  None.

0509.5

Benefit & Actuarial Services

0509.5.1

Adoption of Consent Calendar:  Mr. Lewis removed the disability application of Christine Watson (Ms. Colson) from the Consent Calendar for consideration under agenda item 5.2.  Motion by Salas, second by Colson, carried unanimously to adopt the Consent Calendar, as amended, as follows:

Disability Retirements:

The Board finds that Deanna Austin is not disabledfrom performing her usual and customary duties as a Sheriff’s Correctional Officer and DENIESher application for a service-connected disability.

The Board finds that Sharon O’Donnell is disabledfrom performing her usual and customary duties as a Court Reporter andGRANTS 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:

Hickman, Philip

August 13, 2005

Coroner’s Office

Jackson, Barbara

August 31, 2005

Human Services Agency

Botsford, Judith

September 1, 2005

San Mateo County Medical Center

Harris, Gwendolyn

September 3, 2005

San Mateo County Medical Center

Myers, Susan

September 3, 2005

Department of Superior Court

Haines, George

September 5, 2005 

Department of Public Works

Judd, Lance

September 7, 2005

Probation Department

Guidice, Edmund

September 8, 2005

Sheriff’s Department

Nash, Carole

September 10, 2005

Human Services Agency

Gold, Patricia

September 17, 2005

Department of Public Health

Jewell, John

September 30, 2005

Sheriff’s Department

Munevar, Patricia

September 30, 2005

Human Services Agency

O’Connor, Thomas

September 30, 2005

Parks Department

Thilmany, Christine

September 30, 2005

Library Department

Continuance of Benefits:

Brusuelas, Andrea

Beneficiary of Edward

Poat, Harriet

Beneficiary of Austin

Quey, Betty

Beneficiary of Peter

Deferred Retirements:

Claeys, Carla L.

G4 vested

Reciprocity

Davis, Ronald M.

G2 vested

Reciprocity

Gallagher, Kathleen

G2 vested

Reciprocity

Perry, Kristin M.

G4 vested

Reciprocity

Duri, Alyssa A.

G2 vested

Maltez, Cynthia R.

G4 vested

Prado, Mario

G4/3 vested

Extended Purchase:

Gatto, Timothy

12 years, 7 months, 11.246 days

Refunds For September 2005:

Alaman, Lorena

G4 non-vested

Ciaccio, Niccole

G4 non-vested

Cuevas, Monica

G4 non-vested

Francis, Albert

G4 non-vested

Kaczmarek, Anne

G4 vested

Morris, Sophia

G4 non-vested

Perez, Jennifer P.

G4 non-vested

Richardson, Bryan

G4 non-vested

Rochan, Romero

G4 non-vested

Rodriguez, Axel

G4 non-vested

Yambao, Edwin

G4 non-vested

Rollovers for September 2005:

Camp, Rosario

G2 non-vested

Cottrell, Christopher

G4 non-vested

Fernandes, Tanya

G4 non-vested

Guerrero, Mercedes

G4 non-vested

Juron, Darlene

G4 non-vested

Paris, Douglas

G4 non-vested

Sullivan, Anne

G4 non-vested

Vong, Kammy

G4 non-vested

Mr. Lewis then took up agenda item 6.2.

0509.5.2

Consideration of Items Removed from Consent Agenda:  The Board went into closed session for this agenda item. 

Report on Actions taken in Closed Session:  Ms. Carlson reported that Mr. Lewis convened the Board in Closed Session at 1:02 p.m. with all trustees present for roll call in attendance.  The Board finds that Christine Watson is disabledfrom performing her usual and customary duties as a Legal Office Specialist, and GRANTS her application for a service-connected disabilitywith a condition that subsequent evaluations be performed in accordance with SamCERA policies.  There being no further business, Mr. Lewis adjourned the Closed Session at 1:15 p.m. 

Mr. Lewis then took up agenda item 7.1.

0509.5.3

Consideration of Waiver of Reciprocity Six-Month Requirement:  Deferred to a future board meeting.

0509.5.4

Acceptance of June 30, 2005, Actuarial Valuation Study:  Deferred to a future board meeting.

0509.5.5

Acceptance of 2006-2007 Fiscal Year Employer & Employee Contribution Rates:  Deferred to a future board meeting.

0509.5.6

Annual Actuarial Review (Public Pension Professionals):  Deferred to a future board meeting.

0509.6

Investment Services

0509.6.1

Monthly Portfolio Performance Report:  Mr. Clifton presented the Preliminary Monthly Performance Report for the period ending August 31, 2005.  He stated that SamCERA’s Total Fund Return of 0.28% for the month slightly outperformed the Total Plan Policy Benchmark return of 0.22%. 

Asset Class

Market Value

1-Month

1-year TTWRR

5-year TTWRR

$882,879,570

-1.03%

17.86%

-0.48%

International Equity

          276,970,200

2.82%

26.52%

0.97%

Total Equity

$1,159,849,770

-0.14%

19.81%

-0.18%

Fixed Income

488,956,997

1.33%

5.06%

7.49%

Real Estate Aggregate

59,252,519

0.00%

21.76%

11.94%

Cash Equivalents

336,261

0.32%

3.23%

3.24%

Total Fund

$1,708,395,546

0.28%

15.18%

3.53%

Benchmark

0.22%

14.47%

3.01%

The board then briefly discussed the Investment Managers Annual Review presentations of Julius Baer and Mondrian Investment Partners.  Mr. Hackleman stated that he would like further discussion at a future board meeting regarding the differences in emerging market exposure between SamCERA and other clients with Julius Baer.   Ms. Colson opined that the board will benefit from the information regardless of whether or not any changes are made.   Mr. Lewis requested that Julius Baer discuss in detail its acquisition of the three Swiss private banks in its next annual review.

Mr. Lewis then took up agenda 6.4.

0509.6.2

Annual Review: Julius Baer Investment Management:  Mr. Clifton stated that the Investment Committee reviewed Julius Baer’s compliance certification statement and responses to SamCERA’s questionnaire.  The committee raised several questions, particularly regarding emerging markets.  He then presented Richard Pell, Chief Investment Officer, and Melvin Lindsey, Director of Institutional Investments of Julius Baer Investment Management.

Mr. Lindsey provided the board with an organizational update.  He noted that the product that SamCERA is invested in is now closed to new investors.  He also mentioned that Julius Baer’s parent company purchased three Swiss private banks in Zurich, Switzerland as well as GAM Holdings AG from UBS.

Mr. Pell then conducted a performance review as of SamCERA’s initial funding to Julius Baer in November 2004.  He discussed portfolio geographic and sector weightings.  He noted that Julius Baer was underweight in UK and Japan and overweight in the financial sector due to emerging market exposure.  He opined that the start of expensing executive stock options will reveal the overpricing of technology stocks

In response to a question from Mr. Clifton regarding the impact of energy on emerging market countries, Mr. Pell stated that those countries are benefiting from the increased demand for resources.  He also said that these countries are benefiting from the impact of globalization and improved policy formulation within those countries.   He stated that emerging markets have the best room for development and sit in an attractive position on the risk and reward spectrum.

Ms. Jadallah asked Julius Baer to quantify the liquidity and volatility of the current portfolio.  Mr. Lindsey indicated that, assuming a cap of up to $60 billion, it would take seven days to liquidate the actual portfolio in its current diversification, which is only two days more than it had been previously. 

Ms. Colson requested that Julius Baer provide a list of guidelines of an “unrestricted account” versus that of SamCERA’s for comparison and review.

0509.6.3

Annual Review: Mondrian Investment Partners:  Mr. Clifton introduced Clive Gillmore, Deputy Managing Director and James F. Brecker, Vice President- Client Services from Mondrian Investment Partners and John Campbell, President—Global Institutional Services, from Delaware International Advisors. 

James Brecker performed an organizational update, including a review on Delaware’s transition into Mondrian Investment Partners.  In response to a question from Ms. Jadallah, Mr. Gillmore stated that the contract between Delaware and Mondrian is up for renewal in March 2006.  Mr. Campbell stated that there are no plans for the Deleware and Mondrian relationship to end.  Mr. Gillmore agreed that it was a mutually beneficial relationship. 

Mr. Gillmore then discussed Mondrian’s investment philosophy and performed a brief summary of Mondian’s value style.  He then gave a performance review of the developed and emerging equity markets and discussed his firms’ investment strategy.

Mr. Lewis then took up agenda item 6.1.

0509.6.4

Approval of Finalists for Manager Search – Domestic Fixed Income Enhanced Product:  Margaret Jaddallah of Strategic Investment Solutions discussed the semi-finalists for the Domestic Fixed Income Enhanced manager search.  She reported that the Investment Committee had extensively discussed the pros and cons of each of the semi-finalists.  The Investment Committee recommended (1) Fidelity Management Trust Company and (2) Lehman Brothers Asset Management as finalists for the Domestic Fixed Income Enhanced mandate.  Ms. Jadallah also reported that Black Rock and Barclays Global Investors were also good finalist candidates.   Ms. Colson stated that she would consider inviting Baird Advisors as a contrast to the bigger semi-finalists. 

Motion by Hackleman, second by Bryan, carried with seven ayes (Lewis, Hackleman, Bryan, Stuart, Salas, Buffington and Hooley) to one no (Colson), to accept the Investment Committee’s recommendation on final candidates (Fidelty and Lehman) as well as invite a third finalist, Black Rock, for the Domestic Fixed Income Enhanced mandate. 

Mr. Lewis then recessed the meeting at 12:15 p.m.  The board meeting resumed at 1 p.m.  Mr. Lewis then took up agenda item 5.2.

0509.7

Board & Management Support Services:

0509.7.1

Monthly Financial Reports:  Mr. Clifton reported that SamCERA’s Net Assets Held in Trust for Pension Benefits as of August 31, 2005, totaled $1,706,751,122.  He also stated that most of the $53.8 million cash and cash equivalents are held with Western Asset Management ($39.4 million) and Deutsche Asset Management ($7.7 million).  SamCERA’s retiree payroll now exceeds $7 million and will more than likely increase going forward.

0509.7.2

Approval of Revisions to Resolution 98-99-06:  Mr. Bailey discussed the proposed changes to SamCERA’s resolution regarding underpayments and overpayments.  He stated that SamCERA needed to establish a consistent approach to amounts that are due from active and retired members.  He indicated that every quarter, staff will review the amounts due to ensure that collection efforts are initiated.  The resolution allows amounts under $50 that are due from benefit recipients (non-active members) to be written off.  For amounts $50 to $300, the CEO will have the discretion to write off the amount if collection efforts have failed.  For amounts $300 to $5,000, the CEO will have the discretion to commence litigation or write off the amount should litigation costs seem too costly.   For amounts over $5,000, the CEO will commence litigation efforts or go to the board for alternative action. 

Ms. Carlson stated that active and retired members shall be treated differently in respect to the manner in which payments are collected.  She said that it is an active member’s statutory duty to pay member contributions and that overpayments or underpayments are usually of relatively smaller amounts than those of retirees.  The resolution will permit SamCERA to take up to 5% of missed contributions from an active member’s paycheck.   Trustees instructed staff to inform the members of any such collection should the deduction from the member’s paycheck be greater than $5.  Staff will not able to deduct from a retiree’s pension check to retrieve amounts due to SamCERA unless this is agreed to by the retiree.

Mr. Hooley asked why SamCERA must collect past due contributions when it is the county’s responsibility to transfer appropriate contribution amounts to SamCERA.  Mr. Bailey said he would look into the question.

Mr. Buffington stated that staff should report to board any collection over $50 on the consent agenda for documentation purposes.  Mr. Bailey stated that he will incorporate the board’s comments into the resolution and bring back the finalized document at next month’s board meeting.

0509.8

Approval or Acceptance of Reports

0509.8.1

Chief Executive Officer's Report:  Mr. Bailey stated that he had met with the Grand Jury on September 9^th to give a status report on SamCERA. 

He also reported that the county is performing an organizational structure study.  The last study had been performed ten years ago.  SamCERA is not directly involved with the study but Mr. Bailey will provide the board with updates.

He reminded the board that the SACRS conference will be held on November 8^th thru the 11^th.

In conclusion, Mr. Bailey reported that, SamCERA has received a Certificate of Achievement for Excellence in Financial Reporting for fiscal year 2003-2004 as detailed in its Comprehensive Annual Financial Report (CAFR).  SamCERA has received a Certificate of Achievement for Excellence in Financial Reporting for the eighth consecutive year.  SamCERA also received a GFOA award for its Popular Annual Financial Report (PAFR).  Mr. Clifton thanked Mabel Wong, Management Analyst, for her work on the PAFR.

0509.8.2

Investment & Finance Manager’s Report:  Mr. Clifton reported on Julius Baer’s acquisition of the three Swiss private banks in Zurich, Switzerland as well as GAM Holdings AG from UBS.  He also mentioned that INVESCO reported that none of its properties were damaged by the recent hurricanes.  Western Asset Management gave a breakdown of GAM and GMAC in its portfolio.  Mr. Clifton also stated that BGI has moved to a single CEO strategy.  He then informed the trustees that the November Investment Committee meeting will be held on Monday, November 21^st at 3 p.m.  The board meeting will be at 8:30 a.m. on Tuesday, November 22^nd.

0509.8.3

County Counsel's Report:  Ms. Carlson stated that she had attended a CALAPRS Attorney’s Roundtable which brought forth many interesting issues.  She reported that the in-house counsel for the San Diego City Retirement System was present and gave a chronological review of events that have recently occurred in their system.

0509.9

Adjournment in Memory of the following Deceased Members:  There being no further business, Mr. Lewis adjourned the meeting at 1:45 p.m., in memory of the following deceased members:

Battaglia, Patricia

August 4, 2005

Chope General Hospital

Tozier, George

August 16, 2005

Beneficiary Of Cecile

Poat, Austin

August 20, 2005

Park And Recreation

Cronin, Judith

August 23, 2005

District Attorneys Office

Cadiz, Remedios

August 26, 2005

Assessor’s Office

Mcavin, Kathleen

August 26, 2005

Library Department

Bennett, Alice

August 31, 2005

Human Services Agency

Maxon, C. Frances

August 31, 2005

Chope General Hospital

Gantt, Johnetta

September 3, 2005

Crystal Springs Rehab. Center

Mayo, Shirley

September 12, 2005

San Mateo Medical Center

E-Mail:samcera@co.sanmateo.ca.us - Tel:(650)599-1234 - Fax:(650)591-1488 - Hours:M-TH 7am-6pm
Address: 100 Marine Parkway, Suite 125, Redwood Shores, CA 94065-5208 - InterOffice Pony: RET141