June 27, 2006 – Board Agenda

Call to Order: Mr. Bryan, vice chair, called the Public Session of the Board of Retirement to order at 1:01 p.m., June 27, 2006, in SamCERA’s Board Room, Suite 125, 100 Marine Parkway, Redwood Shores.

0606.2.1

Roll Call: Mr. Bryan, Mr. Buffington, Ms. Colson, Mr. Hackleman, Mr. Hooley, Ms. Salas, and Ms. Stuart. Board Alternate: Ms. Arnott. Excused: Mr. Lewis and Ms. Tashman. Staff: Mr. Ali, Mr. Bailey, Ms. Dames, Ms. Lamica, Ms. Palu and Ms. Wong. Consultants: Mr. Blum, Ms. Carlson, Dr. Fracchia and Ms. Jadallah. Retirees: 1, Actives: 1.

0606.2.2

Report from Ad Hoc Nominating Committee: Ms. Stuart, Chair of the Ad Hoc Nominating Committee, reported that the committee will nominate Mr. Bryan for Chair, Ms. Tashman for Vice Chair and Ms. Stuart for Secretary of the Board of Retirement. The committee will place these names in nomination for the three positions at the July 25, 2006, board meeting.

0606.3

Approval of the Minutes: Motion by Hackleman, second by Stuart, carried unanimously to approve the board meeting minutes of May 23, 2006, as submitted.

0606.4.1

Oral Communications From the Board: Mr. Hackleman wanted to clarify an article in the June 26, 2006 edition of Business Insurance regarding his involvement with a homebuyer’s assistance program proposal. The article states that Walter Zhovreboff, president of First Home Inc., and Mr. Hackleman will go before the retirement board in November to consider a real estate investment that will also serve as a homebuyers program. Mr. Hackleman wished to make clear that he is not involved with the proposal.

0606.4.2

Oral Communications From the Public: John Murphy, representing SCORPA, congratulated Mr. Hackleman for receiving the Father of the Year award from the Fatherhood Collaborative of San Mateo County.

0606.5

Benefit & Actuarial Services

0606.5.1

Adoption of Consent Calendar: Motion by Salas, second by Hackleman, carried unanimously to adopt the consent calendar, as submitted, as follows:

Disability Retirements:

The board finds that Dimitrios Fanourgiakis is disabled from performing his usual and customary duties as a Heavy Equipment Mechanic and GRANTS his 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:

Carino, Gloria

June 3, 2006

Human Services Agency

Hoover, Rosalie

June 3, 2006

Library

Lewis, Carol

June 5, 2006
(from deferred)

Department of Social Services

Osborne, Mark

June 10, 2006

San Mateo County Courts

Marshall, Lynette

June 17, 2006

San Mateo County Medical Center

Dupree-Reagan, Charlotte

June 24, 2006

San Mateo County Medical Center

Kennelly, Joann

June 17, 2006

Aging and Adult Services

Continuance of Benefits:

Acorn, Franklin

Beneficiary of Luella

Deferred Retirements:

Cabaniss, Leonard A.

S2 vested

McGraw, Christina W.

G4 vested

Mckenzie, Marie

G2 vested

Reciprocity

Palange, Kathleen

G2 vested

Pereda, Marisol G.

G4 vested

Pierluissi, Edgar

G2 vested

Reed, Carla

G2 vested

Vega, Tonia

G2 vested

Extended Purchase:

None

Refunds For June 2006:

Pace, Darryl

G4 non vested

Alejandre, Gilbert

G4 non vested

Aranas Jr., Jerry

G4 non vested

Benavides, Benjamin

G4 non vested

Brooks, Lanae

G4 non vested

Moulton, Julie

G4 non vested

Nikkel, John

G4 non vested

Palega, Lalonnie

G4 non vested

Rayas, Penelope

G4 non vested

Tinio, Alejandro

G4 non vested

Torres, Gilbert

G4 non vested

Rollovers for June 2006:

Begansky, James

G4 non vested

Humphrey, Owen

G4 non vested

Madsen, Julia

G4 non vested

Marshall Morton, Theresa

G4 non vested

0606.5.2

Consideration of Items Removed from Consent Agenda: None.

0606.6

Investment Services

0606.6.1

Monthly Portfolio Performance Report: Mr. Bailey presented the monthly portfolio performance report for period ending May 31, 2006. SamCERA’s -2.59% Total Fund Return for May 2006 underperformed the Total Plan Policy Benchmark return of -2.47%. The Fund’s Fiscal Year to Date (FYTD) return, 10.09%, is 278 basis points above the FYTD Actuarial Discount Rate, 7.31%, and 48 basis points above SamCERA’s Total Plan Policy Benchmark of 9.61%.

Ms. Jadallah noted Brandes’ outperformance of the benchmark for the month. Holdings in the auto components industry added the most value to its portfolio during the period. Ms. Jadallah then stated that Julius Baer’s allocation to emerging markets detracted from its portfolio return but opined that they could have fared far worse since many of the banks in Turkey, Russia and Poland have been particularly hard hit in May.

Asset Class

Market Value

1-Month

1-year TTWRR*

5-year TTWRR*

Domestic Equity

$891,073,812

-3.61%

11.73%

4.32%

International Equity

288,690,035

-4.69%

30.49%

8.29%

Total Equity

1,179,763,846

3.88%

16.01%

5.23%

Fixed Income

492,815,028

-0.02%

0.29%

5.52%

Real Estate Aggregate

110,629,343

0.00%

21.06%

13.09%

Cash Equivalents

2,948,884

0.39%

3.61%

2.90%

Total Fund

$1,786,157,101

-2.59%

11.35%

6.40%

Benchmark

-2.47%

11.05%

6.09%

* Total Time-Weighted Rate of Return

0606.6.2

Approval of Topics for the Investment Manager Review – INVESCO Realty Advisors: Motion by Hackleman, second by Salas, carried unanimously to approve the topics for INVESCO’s annual review. The review will take place at the Investment Committee level.

0606.6.3

Approval of Topics for the Investment Manager Review – Chartwell Investment Partners: Motion by Hackleman, second by Salas, carried unanimously to approve the topics for Chartwell’s annual review. The review will take place at the Investment Committee level.

0606.6.4

Approval of Topics for the Investment Manager Review – Brandes Investment Partners: Ms. Jadallah of Strategic Investment Solutions requested that a question regarding Brandes’ auto-sector theme, at the industry and company level, be added to the list of topics for Brandes’ annual review. Since Brandes has closed its product, Ms. Jadallah would also like for them to clarify whether or not SamCERA has the ability to rebalance to its Brandes portfolio. Motion by Hackleman, second by Salas, carried unanimously to approve the topics, as amended, for Brandes’ annual review. The review will take place at the full board level.

0606.7

Board & Management Support Services

0606.7.1

Monthly Financial Report: Mr. Bailey presented the monthly financial report for the period ending May 31, 2006. He reported that SamCERA’s Net Assets Held in Trust for Pension Benefits for the period totaled $1,783,662,552.

0606.7.2

Office Space Project – Status Report: Mr. Bailey presented a Letter of Agreement between SamCERA and Peggy Clymer, owner of the business adjacent to the SamCERA office. The agreement is contingent on the board approval as well as approval of the building ownership. Staff will work with building ownership and Ms. Clymer to develop a draft lease which will then be brought to the board for approval.

0606.7.3

Approval to Issue Information Technology Plan Request for Proposal: Mr. Bailey stated that the association is faced with a number of technology issues. Staff requested approval to issue Request for Proposals (RFP) to study all of these issues under one vendor. The major issues SamCERA needs to address involve the analysis of its PensionGold software, Great Plains accounting software as well as Electronic Data Management System software. Staff would like the vendor to also study the association’s system security, technology security, IT emergency recovery plan and electronic delivery of publications. Tariq Ali, Information Technology Manager, was present to answer questions from trustees. Mr. Buffington suggested that staff create a written list of deliverables to ensure that all core needs are met. In response to a question from Mr. Hooley, Mr. Bailey clarified that RFP’s will only be sent out to Information Technology consultants and not software firms.

Motion by Salas, second by Stuart, carried unanimously to approve to issue Request for Proposals for an Information Technology Plan.

0606.7.4

Approval to Issue Website Redesign Request for Proposal: Mr. Bailey stated that as SamCERA’s website has been increasingly utilized by its members for retirement information, a study and redesign of the website would prove beneficial for both active and retired member. Some key issues include making Web Member Services (WMS) available through the Internet for greater accessibility, survey software, email mailing list subscriptions, interactive forms and American with Disabilities Act (ADA) compliance. On the most recent retiree survey, SamCERA retirees have shown interest in accessing their account information online.

Motion by Hooley, second by Salas, carried unanimously to approve issuing a Request for Proposal for a SamCERA website redesign.

0606.7.5

Acceptance of Certification of Election Results for the Second Seat and the Seventh Seat & Certification of the Alternate Member for the Seventh Seat: Mr. Bailey reported that, pursuant to Regulation 3.16, Warren Slocum, County Elections Officer, certified and declared on June 16^th Paul Hackleman the winner in the election for the Second Member position, David Wozniak the winner in the election for the Seventh Seat position and Alma Salas as the alternate for the Seventh Seat position on the Board of Retirement. The swearing-in of the new board member will take place at the July board meeting. Motion by Salas, second by Hackleman, carried unanimously to accept the County Elections Officer’s certification of election results.

0606.7.6

Appointment of Alternate Retiree Board Member: Pursuant to Government Code 31520.5, the board is allowed to appoint an Alternate Retired Member. At the May board meeting, it was the consensus of the board that an agenda item be added to the June board meeting to consider the appointment of a retiree alternate. An election of an alternate cannot take place until the current term of the retired member ends on June 30, 2007, but the board is permitted to appoint one in the interim. Since the May meeting, Ms. Stuart had worked with SCORPA to provide the retirement board with a slate of candidates for the position. SCORPA selected John Murphy as the only candidate for the alternate retired member position.

Mr. Bailey then discussed the differences in roles between the Safety Alternate and the Retired Alternate. The Safety Alternate is able to serve as an alternate for any elected board member whereas the Retired Alternate may only serve as an alternate for the retired member. The Retired Alternate may “hold positions on committees of the board independent of the eighth member,” however, the Safety Alternate is not allowed to serve on committees unless he or she is doing so as the alternate for the Safety Member. The Retiree Alternate may also sit at the board table and participate in all discussions of the board or its committees although cannot vote unless the Retired Member is absent. There is no language allowing the Safety Alternate to participate in board or committee discussions unless the Safety Member is absent. The estimated cost of the appointment of a Retired Alternate would be a total of $28,600 for three years.

Ms. Colson asked if legislation permitting alternates for other positions on the Board of Retirement may be on the horizon. There has been no word on possible legislation. Mr. Bryan opined that every board member looks out for the interest of SamCERA’s members, including that of its retirees and beneficiaries.

Motion by Salas, second by Bryan, failed with two ayes (Salas and Bryan) to five nays (Buffington, Colson, Hackleman, Hooley and Stuart) to not appoint an alternate retiree board member.

Mr. Hooley opined that looking into the appointment of a Retired Alternate would be a valid pursuit to protect the interests of the retirees. As illustrated with the Medicare Part-B discussion, the interests are not always the same.

Motion by Colson, second by Stuart, passed with six ayes (Bryan, Buffington, Colson, Hackleman, Hooley and Stuart) to one nay (Salas) to instruct staff to work with Counsel to draft a resolution specifying the conditions and limitations of the alternate retiree board member that are similar to those of the Safety Alternate and to include the current memorandum reiterating the costs associated with the potential appointment at the next board meeting.

0606.8

Management Reports

0606.8.1

Chief Executive Officer's Report: Mr. Bailey distributed drafts of the new member statement which contains color and amended language to make the document more readable to SamCERA members.

Mr. Bailey intends to present a staffing plan before the board at next month’s meeting. Milliman’s estimates for retirement rates in the next ten years indicate a 43% increase as compared to the past ten years. He said that there is a real need for additional staff particularly in the benefits area. The benefits staff has been requesting additional assistance to help alleviate the increasing workload. A temporary employee has been hired to help answer phones, perform data entry, mail packets and perform other clerical work for three months. Mr. Bailey also intends to advertise for at least one Retirement Analyst position prior to any board approval. Because of the county’s relatively slow hiring process, the procedure would last three months at minimum. If the board approves the extra position, staff will then be able to hire the most qualified candidate. By advertising early, he wishes to jump start the process.

Mr. Bailey also has been in meetings with Mr. Hackleman, Ms. Farrales, Ms. Carlson, Mr. Adler, and Ms. McMillan tracking legislation related to the County’s proposal of placing its health insurance trust fund with SamCERA. Mr. Bailey will keep the board posted regarding the progress of this legislation.

In June, Capitol Weekly of Sacramento made a public records request asking for a copy of Mr. Bailey’s employee salary and benefits contract. He stated that most 1937 Act county administrators also received the request and complied. He worked with the county counsel’s office and sent them the appropriate information.

Mr. Bailey will issue an email to all county employees notifying them of SamCERA’s office closure on Monday, July 3^rd.

Mr. Hood will return to the office Wednesday, July 5^th.

Mr. Bailey also reported that Mr. Hackleman received the Benefits Manager of the Year award from Business Insurance, Father of the Year award from the Fatherhood Collaborative of San Mateo County and was re-elected to his seat on the Board of Retirement.

0606.8.2

Investment & Finance Manager’s Report: None.

0606.8.3

County Counsel's Report: Ms. Carlson stated that the matter regarding Mr. Stroppini’s petition to establish reciprocity beyond the six-month maximum requirement has been dismissed by the trial court.

0606.9

Report on Actions Taken in Closed Session: Ms. Colson reported that Mr. Bryan had convened the Board in Closed Session at 2:12 p.m. The board conferred with Counsel on Anticipated Litigation – Significant exposure to litigation pursuant to subdivision (b) of Government Code Section 54956.9. No action was taken. There being no further business, Mr. Bryan adjourned the Closed Session at 4 p.m.

0606.10

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

Warren, Viola

April 28, 2006

San Mateo County Medical Center

Joseph, Margureite

May 3, 2006

Department Of Public Works

Ver-Linden, Emma

Foster, Thelma

May 4, 2006

May 17, 2006

Controller’s Office

Department Of Social Services

Shaw, Thelma

May 21, 2006

San Mateo County Medical Center

Costa, Jane

May 24, 2006

San Mateo County Medical Center

Sanders, Vernon

June 3, 2006

Department Of Public Works

Johnson, Richard

June 18, 2006

Department Of General Services

Tom E. Bryan, Vice-Chair

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