Fresno County Board of Retirement s30

BOARD OF RETIREMENT

FRESNO COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION

“Our mission is to administer the retirement benefits for the members and beneficiaries in a prudent, accurate, timely and cost-effective manner, while administering fund assets in a manner that achieves investment and funding objectives within prudent levels of risk”

December 18, 2013

REGULAR MEETING MINUTES

Trustees Present:

Laura P. Basua Alan Cade, Jr. Judith G. Case

Dr. Rod Coburn, III Vicki Crow Robert Dowell

Steven Jolly

Trustee Absent:

Marion Austin Eulalio Gomez

Others Present:

Paul Bustamante, FMAAA

Art Wille, Deputy County Counsel

Phillip Kapler, Retirement Administrator

Becky Van Wyk, Assistant Retirement Administrator

Kelly Prinz, Retirement Benefits Manager

Elizabeth Avalos, Administrative Secretary

1. Call to Order

Chair Coburn called the meeting to order at 8:36 AM.

2. Pledge of Allegiance

Recited.

3. Public Presentations

None.

Consent Agenda/Opportunity for Public Comment

Trustee Case pulled Consent Item 8 for a separate vote.

A motion was made by Trustee Dowell, seconded by Trustee Jolly, to Approve Consent Items 4-7 and 9 as presented. VOTE: Unanimous (Absent – Austin, Cade, Crow, Gomez)

*4. Approve the December 4, 2013 Board of Retirement Regular Meeting Minutes

RECEIVED AND FILED; APPROVED

*5. Approve the September 18, 2013 Board of Retirement Personnel Committee Meeting Minutes (Committee Members Austin, Basua, and Dowell must be present for Approval)

RECEIVED AND FILED; APPROVED

*6. Summary of monthly statistics from the Retirement Association Office on service credit purchases, retirement benefit estimates, public service, age adjustments, final compensation calculations, and disability retirement applications for November 2013

RECEIVED AND FILED

*7. Public Records Requests and/or Retirement Related Correspondence from Laura Reigle, Open the Books Portal

RECEIVED AND FILED

*8 October 2013 Cal Card Business Expense Account Statement

The Board was informed that Administration is now using the US Bank CalCard Account for office and travel expenses as directed the Board and the Bank of the West debit card will soon be closed.

A motion was made by Trustee Case, seconded by Trustee Dowell, to Receive the October 2013 Cal Card Business Expense Account Statement as presented. VOTE: Unanimous (Absent – Austin, Cade, Crow, Gomez)

RECEIVED AND FILED

*9. Travel request from Chair Rod Coburn to attend the 24th Annual Southern California Public Retirement Seminar on February 27, 2014 in Lakewood, CA

RECEIVED AND FILED; APPROVED

10. Discussion and appropriate action on TCW’s request for one year extension on the Shared Opportunity Fund

Phillip Kapler, Retirement Administrator, opened discussions by stating that the General Partner (GP) for TCW Shop IV requested approval by the Limited Partners for a one-year extension of the Fund. This would be the 4th year that the Fund will have extended beyond the initial term that ended in December 2010.

With this amendment, the GP is proposing a management fee of 0.5% and is confident that the final five positions will be sold in the coming year. Mr. Kapler noted, however, that the rate of return is a very soft number, and will probably come down somewhat as the final, least liquid holdings are managed out.

FCERA’s current interest in the Find is $5.8 million. The rate of return has been approximately 7.0% since inception in 2002.

Mr. Kapler noted the Board’s options as follows:

· Approve

· Withhold consent without comment

· Withhold with comment

Mr. Kapler recommended that the Board approve the one-year extension because should the majority of Limited Partners do not approve, there could be a forced secondary auction at a large loss, or pro-rated distribution of portfolio holdings which FCERA is not really equipped to market. Discussions ensued.

A motion was made by Trustee Jolly, seconded by Trustee Dowell to Approve the one-year extension as requested with direction to advise the General Partner of the Board’s preference that the Administrative Fee be waived. VOTE: Unanimous (Absent – Austin, Cade, Crow, Gomez)

RECEIVED AND FILED; APPROVED

Trustee Crow joined the Board at 8:51 AM.

11. Discussion and appropriate action on Election of Option as the General Partner proceeds to close BCI Growth V Partnership

Phillip Kapler, Retirement Administrator, opened discussions by reminding the Board that last year the Partnership for BCI V was extended for an additional year. The Partnership has not done well overall, and the General Partners have not succeeded in liquidating any of the positions held at this time last year.

Mr. Kapler noted that the General Partners have elected not to seek another extension. Instead, they are requesting that each limited partner elect a method for closing their interest from the following:

Method One - Take a pro rata portion of residual assets as “in-kind” security distributions, holding or trading them as deemed best.

Method Two - Transfer FCERA’s interest to a liquidating trust, which will continue to attempt to liquidate the assets at a slower pace over several years.

Method Three - Sell FCERA’s interest to the General Partners (GP) at a significant discount and exit the investment altogether. The GP is offering $1.1 million because that is what the owners of the BullsEye Company (the only holding with material value) are willing to offer at this time to buy back their company shares.

Administration recommended Method Three in that monetary gains from the residual holdings are uncertain, as are the timelines. Considering this, a lack of willing secondary buyers, and the scale of the investment, the odds of obtaining any material improvement in the position under Methods 1 or 2 seem remote. Discussions ensued.

A motion was made by Trustee Jolly, seconded by Trustee Dowell, to Elect Method 3 as recommended. VOTE: Unanimous (Absent – Austin, Cade, Gomez)

RECEIVED AND FILED; APPROVED

12. Discussion and appropriate action on FMAAA Earn Codes Resolution

Phillip Kapler, Retirement Administrator, opened discussions with a review of the proposed Earn Codes Resolutions (Compensation Earnable and Pensionable Compensation) developed for FMAAA. It was noted that the resolution for Pensionable Compensation is new consequent to the Pension Reform Bill of 2013. The Resolutions and the Exhibits have been reviewed internally, with staff for FMAAA and with Legal Counsel.

Paul Bustamante of FMAAA and Mr. Kapler confirmed that there appears to be no controversy associated with the categorization of the earn codes regarding eligibility for retirement benefit contributions and benefit determinations.

It was noted that there is one item on which Counsel and staff may need to do further research (Dock Time). However, the classification in this set of resolutions is the same as has been applied for the two previous sets of resolutions the Board has approved (County of Fresno and Superior Courts). Review of this particular earn code should not suspend action on these resolutions in the interim. Discussions ensued.

A motion was made by Trustee Crow, seconded by Trustee Basua, to Adopt the FMAAA Earn Codes Resolutions as presented. VOTE: Unanimous (Absent – Austin, Cade, Gomez)

RECEIVED AND FILED; APPROVED

Trustee Cade joined the Board at 9:16 AM.

13. Discussion and appropriate action on Backlog of Service Credit Purchases and Redeposit Calculations

Phillip Kapler, Retirement Administrator, opened discussions by reminding the Board that FCERA receives many requests from members for calculations of the cost to redeposit previous withdrawals to re-establish service and service credit purchases for time deemed “public service” eligible. It was noted that several factors have contributed to the creation of our substantial backlog. The members are informed that the calculation process could take as long as nine months to complete.

Mr. Kapler stated that the sources of the backlog appear to be several:

· Employment/termination patterns and staff reductions at the County of Fresno

· High demand for estimates from members with non-continuous service patterns

· Staff turnover and vacancies

· Staff special projects with retroactive effects/benefit calculations (e.g., Health Benefit Project, Supplemental COLA Project)

· New systems development and testing

In order to reduce the backlog of cases to a more manageable level and because only about 15% of initial inquiries actually result in an election to purchase time, Mr. Kapler suggested developing a methodology that would allow staff to calculate rough estimates that provide a range or “window” of expected costs, as a preliminary figure that the member could use in deciding whether to request a detailed estimate, or withdraw their inquiry.

In addition, it was noted that a member requested exemption from the requirement to pay associated interest beyond the nine-month window from the time of initial request because that is the amount of time she was told it might take for the re-deposit amount to be calculated. However, Mr. Kapler said that a waiver of interest does not appear to be an option under the statutes as presently constructed. Discussions ensued.

The Board directed Administration to develop a methodology that would allow staff to calculate rough estimates that provide a range or “window” of expected costs for the Boards consideration. It was noted that the process will include a disclosure regarding interest accumulation and “estimate” disclaimers. Administration agreed.

NO ACTION TAKEN

14. Verbal report from Trustee Eulalio Gomez on the December 13, 2013 Disability Committee Meeting

In the absence of Trustee Gomez, Kelly Prinz, Retirement Benefits Manager, gave a verbal report on the December 13, 2013 Disability Committee meeting noting that the Committee reviewed, discussed in detail, and approved the proposed disability forms which included the Application for Disability Retirement and the Referral for Independent Medical Examination.

In addition, the Committee engaged in a question and comment period where suggestions and ideas were shared on streamlining the current disability application processes.

The Committee directed Administration to issue a Request for Proposal for a Medical Reviewer. Administration agreed.

Ms. Prinz noted that the Committee tentatively scheduled a Fact Finding trip to Santa Barbara County and Orange County Employees’ Retirement Systems to evaluate their individual disability processes as an aid in developing a more efficient process for FCERA.

The Committee directed Administration to schedule a follow-up meeting on January 17, 2014. Administration agreed.

NO ACTION TAKEN

15. Closed Session:

A. Conference with Legal Counsel – Actual Litigation - pursuant to G.C. §54956.9(a)

1. Thomas Alberda v. Board of Retirement Case No. 10 CECG 02961

B. Disability Retirement Applications – Personnel Exception (G.C. §54957(b)):

1. Gary Schmidt

16. Report from Closed Session

15.A.1. Nothing to report.

15.B.1. Schmidt – Decision – Grant Gary Schmidt service connected disability benefits based on the Findings of Fact and Decision. M – Case. S – Basua. VOTE: Unanimous (Absent – Austin, Gomez)