8
BOARD OF RETIREMENT
FRESNO COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION
Wednesday, August 1, 2007 – 8:30 AM
Trustees Present:
Alan Cade, Jr. Michael Cardenas
Nick Cornacchia Eulalio Gomez
Steven Jolly Phil Larson
Stephanie Savrnoch John Souza
Trustees Absent:
Vicki Crow
Others Present:
Ronald S. Frye, Alternate
William Storey, FCERA Member
Michael Cunningham, Retired FCERA Member
Les Jorgensen, Retired FCERA Member
Jeffrey MacLean, Wurts & Associates
Pat Srisukwatana, FCERA Systems & Procedures Analyst
Conor Hinds, FCERA Supervising Accountant
1. Call to Order
Chair Jolly called the meeting to order at 8:38 AM.
2. Pledge of Allegiance
Recited.
3. Presentation of Plaque to William Storey for over 1 year of service as Trustee for the Board of Retirement of the Fresno County Employees’ Retirement Association.
Roberto L. Peña, Retirement Administrator, and the Board thanked Mr. William Storey for his service as a Trustee for the Board of Retirement of the Fresno County Employees’ Retirement Association.
4. Public Presentations
None.
5. Discussion and appropriate action on appointments to the Retirement Board Standing Committees: Audit, Budget, Disability, and Personnel
Roberto L. Peña, Retirement Administrator, opened discussions by reminding the Board of the changes in the composition of the Board over the past months and noted the openings of the various positions.
The Board elected members to the Standing Committees to fill positions as follows (changes in bold):
Audit Committee
Vicki Crow – Chair
Alan Cade, Jr.
Steven J. Jolly
Stephanie Savrnoch
Michael Cardenas, Alternate
Budget Committee
Michael Cardenas – Chair
Alan Cade, Jr.
Phil Larson
Vicki Crow, Alternate
Personnel Committee
John Souza – Chair
Michael Cardenas
Nick Cornacchia
Eulalio Gomez, Alternate
Disability Committee
Stephanie Savrnoch
Steven J. Jolly
John Souza
Eulalio Gomez, Alternate
RECEIVED AND FILED; APPROVED
Consent Agenda/Opportunity for Public Comment
Trustee Savrnoch pulled Consent Agenda Item 13 for discussion.
A motion was made by Trustee Souza, seconded by Trustee Jolly, to Approve Consent Agenda Items 6 - 12 and 13 - 15. VOTE: Unanimous (Absent – Crow)
*6. Approve the July 18, 2007 Retirement Board Regular Meeting Minutes
RECEIVED AND FILED; APPROVED
*7. Retirements
RECEIVED AND FILED; APPROVED
Nancy Jolene Arnold / Superior Court / 22.77John Burrola / Children & Family Services / 10.00
Steven C. Carrillo / E&TA / 10.11
Lois Ceja / VMC, Deferred / 13.15
David Church / Public Works & Planning / 29.18
Kathleen M. Flanders / Community Health, Deferred / 20.96
Paul N. Gonzales / VMC, Deferred / 2.42
Robert B. Goodrich / Sheriff / 22.07
Richard S. Guardado / Sheriff, Deferred / 20.19
Juanita Kallal / E&TA, Deferred / 18.93
Connie Kellogg / VMC, Deferred / 12.81
Mary Helen Martinez / Behavioral Health / 27.61
Mary Negrete / Superior Court / 17.98
Ellen M. Okada / Administrative Office / 32.79
Diane Schafer / Behavioral Health / 15.85
Lowell L. Thomas / VMC, Deferred / 18.44
Joseph Torres / Child Support Svs, Deferred / 16.58
Rosemary C. Williams / E&TA / 20.51
Xing Yang / Child Support Services / 13.26
Amelia Zuniga / Sheriff / 15.60
*8. Disability Retirements
RECEIVED AND FILED; APPROVED
Ray J. Ramos / Library / 3.88Juan A. Gonzalez, Jr. / Sheriff / 8.78
*9. Deferred Retirements
RECEIVED AND FILED; APPROVED
Rafael Alonso, Jr. / Community Health / 4.61Susan Conell / Public Works and Planning / 5.57
Jose Ferrer / Sheriff / 13.80
Dennis Gregg / Superior Court / 33.10
Soua Herr / Children & Family Services / 8.58
Johannes J. Hoevertsz / Public Works & Planning / 6.66
Paul N. Hulak / Community Health / 9.43
Russell C. Kolander / General Services / 4.19
Joaquin Leyva / Probation / 4.81
Crystal Padilla / Administrative Office / 7.83
Theresia L. Rogerson / Community Health / 0.81
Milinda Saldivar / Community Health / 10.94
Jesus F. Santillan / Probation / 4.26
Ronald D. Stevens / Children & Family Services / 7.90
*10. Most recent investment returns, performance summaries and general investment information from investment managers
RECEIVED AND FILED
*11. Public Records Requests and/or Retirement Related Information Requests from Ron Madsen, Retired FCERA Member; Martin Pell, Sonoma County Employees’ Retirement Association; Randolfo Hernandez, Active FCERA Member; and various FCERA Members regarding the COLA UAAL refund
RECEIVED AND FILED
*12. Trustee Binder Updates
RECEIVED AND FILED
· Board Governance Policy
· FCERA Organizational Chart
· FCERA 2007-08 Budget
· Board of Retirement Roster
· Service Provider List – Investment Management Firms
*13. Update of Board of Retirement directives to FCERA Administration
At the request of Trustee Savrnoch, Roberto L. Peña, Retirement Administrator, gave a brief update on the progress of the selection of a real estate professional for the Fresno Station Business Center. It was noted that Pat King of Collier Tingey International will be meeting with Mr. Peña in anticipation of accepting an invitation to meet with the Board at the August 15, 2007 Regular Board Meeting.
Trustee Savrnoch inquired as to the Board direction on June 20, 2007 regarding the issuance of an RFP for investment attorney services. Mr. Peña noted that the Board had recently approved a fee increase, which had not been adjusted since inception in 2003, for the current investment attorney, Seyfarth Shaw, for the remainder of the 2007 calendar year and requested that an RFP for investment attorney services be issued for 2008 forward.
A motion was made by Trustee Savrnoch, seconded by Trustee Souza, to accept Consent Agenda Item 13. VOTE: Unanimous (Absent – Crow)
RECEIVED AND FILED
*14. SACRS Year 2008 Legislative Timelines for submission of proposed legislation to be sponsored by SACRS
RECEIVED AND FILED
*15. Quarterly Trustee Travel Report and Anticipated Trustee Travel for the quarter ended June 30, 2007
RECEIVED AND FILED
16. Discussion and appropriate action on selection of finalists for Custodial Services and Benefit Payments provider
Roberto L. Peña, Retirement Administrator, opened discussions by reminding the Board of its request to issue a Request for Proposal (RFP) for Custodial Services and Benefit Payments provider.
Mr. Peña noted that eight responses were received and evaluated by Administration and Jeffrey MacLean of Wurts & Associates. It was noted that from the review that there was a “top tier” and a “lower tier” of respondents based on their experience in the custodian and benefit payment services arena.
Mr. Peña recommended State Street, Mellon/BNY, and JPMorgan as the finalists to be selected for on-site due diligence visits. Mr. Peña noted that Northern Trust was excluded from the list of finalists, although it is definitely a “top tier” bank, because of system limitations that prevent it from meeting FCERA’s benefit payments requirements.
Mr. MacLean stated that FCERA is approximately a $2.8 billion Plan and gave a brief overview of the services required by a Plan of this size, such as benefit payment services, securities lending arrangements, and cash management.
Discussions, questions, and comments followed regarding the issues related to the performance of Fifth Third Bank over the past years.
Discussions, questions, and comments followed regarding the conversion process. It was noted that the conversion process will need to begin 90 days prior to implementing a new system.
The Board requested that Administration prepare a detailed presentation for the September 5, 2007 Regular Board Meeting outlining the pros and cons of employing a new firm and the costs associated with the conversion process.
Discussions, questions, and comments followed regarding each firm’s fees. It was noted that no costs will be incurred with the conversion process in that the bank selected would “eat” the cost of converting to their system.
After a thorough discussion, including whether or not trustees would or should be included on the due diligence visit, it was determined that Administration and Wurts will conduct due diligence and invite the top two firms to make presentations before the Board at the September 5, 2007 Regular Board Meeting. The current provider, Fifth Third Bank, will also be invited to present at that time.
Mr. MacLean reviewed each firm’s background, experience, and stability and noted that the recommended firms each offer the Plan’s service requirements.
Discussions, questions, and comments followed regarding the different services such as securities lending and on-line services that are provided by the larger firms compared to those of the smaller firms.
Mr. Pena noted that, of the other nineteen 1937 Act counties, eight use State Street, four use Mellon, four use Bank of New York, two use Northern Trust, and one uses JPMorgan.
A motion was made by Chair Jolly, seconded by Trustee Savrnoch, to approve Administration and Wurts to conduct on-site due diligence on State Street, Mellon, JPMorgan and present the findings at the September 5, 2007 Regular Board Meeting. VOTE: Unanimous (Absent – Crow)
RECEIVED AND FILED; APPROVED
17. Presentation of Cash Equitization Strategy Summary as June 30, 2007 presented by Jeffrey MacLean, Wurts & Associates
Jeffrey MacLean, Wurts & Associates, stated that the cash equitization strategy was implemented in March 2007 to help earn a greater return on FCERA’s cash assets while at the same time provide the necessary liquidity required by the ongoing operations of the pension fund.
At the request of Trustee Savrnoch, Mr. MacLean gave a brief overview of the cash equitization strategy. It was noted that State Street Global Advisors equitizes the cash through S&P 500 futures contracts.
Mr. MacLean reviewed the cash equitization gains and loses over a one month, three month, and since inception basis. It was noted that, although, there was a slight loss in the first month, overall, there was a return of 6.15% over the three month period.
It was noted that if the cash equitization strategy had not been implemented, the return on cash would have been approximately 1.25%.
At the request of Trustee of Trustee Savrnoch, Mr. MacLean gave a brief review of how futures contracts are implemented.
RECEIVED AND FILED
18. Closed Session:
A. Conference with Legal Counsel – Actual Litigation - pursuant to G.C. §54956.9(a)
1. County of Fresno v. Board of Retirement
2. Fresno County Employees’ Retirement Association v. Public Pension Professionals
3. Garfield v. Openwave Systems, Inc., Case No. 07-CV-1309 (DLC) pending in the United States District Court, Southern District of New York.
19. Report from Closed Session
18.A.1. Nothing to Report.
18.A.2. Nothing to Report.
18.A.3. FCERA has joined as a named plaintiff in Garfield v. Openwave Systems, Inc., Case No. 07-CV-1309, a securities lending lawsuit.
20. Report from FCERA Administration
Roberto L. Peña, Retirement Administrator, reported on the following items:
1. Pat Srisukwatana and Becky Van Wyk were thanked for their diligence in completing and distributing the first FCERA newsletter. Appreciation was expressed to Michael Cunningham, Retired FCERA Member, for his kind words and support of the newsletter.
2. An update of the COLA UAAL refund process was given. It was noted that the calculation information for the full calculation (all rate tables for all tiers and classifications) has been received and testing is in process. Administration is reviewing approximately 700 cases with special circumstances. Administration will return with further information regarding the Tier I General Member issues at the August 15, 2007 Regular Board Meeting.
3. It was noted that an error (overpayment) had occurred in the member contribution rates for those who entered the system at age twenty. Approximately 70 members were overcharged and received an “off-cycle” refund. The error has been corrected and will not affect future contribution deductions. The payroll system should be updated in time for the next paycheck cycle.
4. Administration has received two responses (The Segal Company and Cherion) to the RFP for Actuarial Services. Administration will return with an analysis and recommendation at the September 5, 2007 Regular Board Meeting.
5. At the request of Trustee Savrnoch, Mr. Pena noted that the County is working on resolutions regarding Tier III and more information will be available at the August 15, 2007 Regular Board Meeting.
6. Administration has received privileged communication from Reed Smith regarding the North Central Fire Protection District (NCFPD) transition. Chair Jolly directed Administration to begin discussions with Reed Smith and NCFPD’s counsel and to return with an analysis at the August 15, 2007 Regular Board Meeting.
7. Administration requested clarification as to the process of the custodian due diligence process. It was noted that Administration would invite the top two candidates, along with the current provider [Fifth Third Bank] to make presentations before the Board at the September 5, 2007 Regular Board Meeting.
21. Report from County Counsel
None.
22. Board Member Announcements or Reports
Trustee Larson noted that he will not be present at the September 5, 2007 Regular Board Meeting due to a prior engagement.
There being no further business, the meeting adjourned at 10:28 AM.
Roberto L. Peña
Secretary to the Board
08/01/07 Regular Meeting Minutes