7
BOARD OF RETIREMENT
FRESNO COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION
February 1, 2006
Trustees Present:
Michael Cardenas Vicki Crow
Vera Dominguez Steven Jolly
Phil Larson A. Papaleo
Stephanie Savrnoch John Souza
Trustees Absent:
William Storey
Others Present:
Ronald S. Frye, Alternate Trustee
Barry Taylor, Warburg Pincus
Michael Flaherman, New Mountain Capital
Jeffrey MacLean, Wurts & Associates
Barbara Booth Grunwald, Deputy County Counsel
Roberto L. Peña, Retirement Administrator
Becky Van Wyk, Chief Accountant
Elizabeth Avalos, Administrative Secretary
See Attached List
1. Call to Order
Chair Jolly called the meeting to order at 9:09 AM.
2. Presentation of Plaque to John P. Souza for his two years as Chair of the Board of Retirement of the Fresno County Employees’ Retirement Association.
Mr. Peña requested that the Board postpone the presentation until the arrival of Trustee Souza. The Chair agreed.
3. Public Presentations
None.
Consent Agenda/Opportunity for Public Comment:
Trustee Papaleo pulled Item 4. Trustee Savrnoch pulled Item 10.
Trustee Souza joined the Board at 9:13 AM.
*4. Approval of the January 11, 2006 Board of Retirement and the Board of Supervisors Joint Meeting Minutes, January 13, 2006 Actuarial Committee Meeting Minutes and the January 18, 2006 Retirement Board Regular Meeting Minutes
Trustee Papaleo noted that his request for additional schedules for Investment Expenses had not been reflected in the January 18, 2006 minutes.
Trustee Savrnoch expressed her concern that the minutes be more detailed to insure that a clear record of deliberations is documented.
RECEIVED AND FILED; APPROVED
*5. Retirements
RECEIVED AND FILED; APPROVED
Leo Aguirre, Jr. / A-C/T-TC / 14.67Astrid L. Brown / Behavioral Health, Deferred / 14.14
Sheila M. Davidson-Rollin / Children & Family Svs, Deferred / 5.19
Arthur De Alba / Superior Court / 14.94
Jolene Edwards / Behavioral Health / 13.84
Angelina D. Garcia / Agriculture, Deferred / 25.02
Rolein Hiatt / A-C/T-TC / 16.14
Larry D. Hendrix / Sheriff, Deferred / 14.02
Daryl J. Maurer / General Services / 18.39
Gerald A. Petersen / Community Health, Deferred / 11.89
John K. Pickering / Behavioral Health, Deferred / 12.56
Elisa Salazar / E & TA / 21.53
Jean M. Sanchez / E & TA / 15.29
Carol A. Smalridge / Community Health / 30.55
Jerry L. Smith / Behavioral Health / 13.76
Larry J. Spitzer / E & TA / 23.61
Jennie Tabarez / E & TA / 9.58
Daniel Trimmer / Sheriff / 10.33
Harriette S. Wagner / E & TA / 15.50
Duane Wahl / E & TA / 25.84
*6. Disability Retirements
RECEIVED AND FILED; APPROVED
Sherry Coelho / Sheriff / 17.15*7. Request to Purchase General Service as Safety Time
1. Eric G. Schmidt
2. Robert R. Reed
RECEIVED AND FILED; APPROVED
*8. Most recent investment returns, performance summaries and general investment information from investment managers
RECEIVED AND FILED
*9. Public Records Requests and/or Retirement Related Information Requests from Mark Burton, Active FCERA Member and Bob Solis, SEIU
RECEIVED AND FILED
*10. Report on Trustees Savrnoch and Cardenas’ attendance at the Public Pension Fund Fiduciary Symposium sponsored by Steefle, Levitt & Weiss
Trustee Savrnoch commented on her attendance at the Public Pension Fund Fiduciary Symposium and expressed her concern that the minutes be more detailed to insure that a clear record of deliberations is documented.
Michael Cunningham, FCERA Retiree, addressed the Board regarding record keeping.
Mr. Peña explained to the Board that all meetings are recorded and available upon request.
RECEIVED AND FILED
*11. Correspondence to FCERA Members regarding the October 25, 2005 Judgement in the “Final Compensation” litigation mailed the week of January 30, 2006
RECEIVED AND FILED
Mr. Peña presented Trustee Souza with a plaque and thanked him for his leadership and two years of dedicated service as Chair of the Board of Retirement.
A motion was made by Trustee Larson, seconded by Trustee Dominguez to Approve Consent Agenda Items 4-9 and 11. VOTE: Unanimous (Absent – Storey)
12. Performance and Economic Summary report presented by Barry Taylor, Warburg Pincus
Mr. Taylor gave a presentation on the Performance and Economic Summary report for Warburg Pincus, a Private Equity Manager.
Mr. MacLean inquired about the difference between the Net and Gross Internal Rates of Return and requested that a letter be drafted to explain the difference. Mr. MacLean also requested that Mr. Taylor include a list of successful investments versus unsuccessful investments. Mr. Taylor agreed.
Mr. Peña requested comments from Mr. MacLean regarding FCERA’s expectations of 400 to 500 basis points over the S&P/Equity return. Mr. MacLean commented that FCERA is looking for a return of 500 basis points over the market place taking into account risk return and other factors. This is included in FCERA’s Investment Guidelines.
Trustee Cardenas asked how investment commitments are met. Mr. Taylor explained that the amount is paid (i.e., drawn) over a period of time.
Trustee Savrnoch expressed concern that the 10 percent rate of return was low given the high risk of the investments. Mr. MacLean gave a brief description of the investment environment and stated that he is hopeful that a 20 percent return will be achieved.
Trustee Savrnoch suggested that for future meetings reports should include FCERA’s returns rather than an overall company report.
Trustee Larson inquired about the timeframe in which a return is completed. Mr. Taylor explained that the expectation is 8 to 10 years from the initial commitment.
Discussions, questions, and comments followed.
RECEIVED AND FILED
13. Performance and Economic Summary report presented by Michael Flaherman, New Mountain Capital
Mr. Flaherman gave a presentation on the Performance and Economic Summary report for New Mountain Capital, a Private Equity Manager.
Trustee Jolly asked for a description of non-cyclical and defensive growth sectors. Mr. Flaherman gave a brief description.
Mr. Peña asked Mr. Flaherman for examples of “less than stellar” investments. Mr. Flaherman indicated that he did not have any examples and stated that their investment choices have proved to be very good.
Discussions, questions, and comments followed.
RECEIVED AND FILED
14. Discussion and appropriate action on presentation regarding Real Estate Search Criteria presented by Jeffrey MacLean, Wurts & Associates
Mr. MacLean gave a brief presentation on FCERA’s current real estate allocation, types of private real estate investments that are available and the search criteria for private real estate funds.
Trustee Savrnoch inquired as to the number of candidates that will make presentations to the Board. Mr. MacLean stated that approximately 3 firms would ultimately address the Board.
Mr. Frye inquired as to the increased allocation in core private real estate. Mr. MacLean gave a brief explanation that FCERA’s core private real estate is underweighted relative to other styles.
Mr. MacLean explained to the Board the process in which firms will be selected.
Discussions, questions, and comments followed.
A motion was made by Trustee Souza, seconded by Trustee Dominguez to approve the search criteria for Core Private Real Estate. VOTE: Unanimous (Absent – Storey)
RECEIVED AND FILED; APPROVED
15. Discussion and appropriate action on presentation regarding Cash Equatization Strategy presented by Jeffrey MacLean, Wurts & Associates
Mr. MacLean gave a presentation regarding Cash Equatization Strategy and his recommendation that FCERA implement a strategy that will help earn a greater return on its cash assets while at the same time provide the necessary liquidity required by the ongoing operations of the pension fund.
Trustee Savrnoch stated when a firm is hired that a presentation by Mr. MacLean should include the reason a particular firm was considered but not chosen. Mr. MacLean agreed.
Discussion, questions, and comments followed.
A motion was made by Trustee Souza, seconded by Trustee Larson to approve the recommendation by Jeffrey MacLean, Wurts & Associates regarding Cash Equatization.
RECEIVED AND FILED; APPROVED
Mr. Peña pulled Agenda Item 16.a., as there was nothing to discuss.
16. Closed Session:
a. Conference with Legal Counsel – Actual Litigation - pursuant to G.C. §54956.9(a) - County of Fresno v. Board of Retirement
b. Disability Retirement Applications – Personnel Exception (G.C. §54957):
1. John Mackie
2. Robert Mero
3. Dori Baxendell
17. Report from Closed Session
16.a. Item 16.a. was pulled.
16.b.1. John Mackie – Decision – A motion was made and seconded to direct the Administrator to notify the applicant that the application will be denied unless the applicant requests a hearing. M-Savrnoch, S-Larson, VOTE: Unanimous (Absent – Storey)
16.b.2. Robert Mero – Decision – To approve the Findings of Fact and Decision presented and grant Robert Mero’s non-service connected disability. M-Savrnoch, S-Souza. VOTE: YES – Cardenas, Crow, Dominguez, Papaleo, Savrnoch, Souza, Jolly. NO – Larson. ABSENT – Storey
16.b.3. Dori Baxendell – Decision – To approve the Findings of Fact and Decision presented and grant Dori Baxendell’s non-service connected disability. M-Savrnoch, S-Dominguez. VOTE: Unanimous (Absent – Storey)
18. Report from FCERA Administration
1. Mr. Peña asked the Board for direction in scheduling the Supplemental Health (Non-Vested) Benefit meeting. The Board directed Administration to schedule the meeting for March 15, 2006 once input is received from Fresno County and the employee organizations.
2. Mr. Peña reminded that Board that the CalAPRS and SACRS Travel Questionnaires are due.
19. Report from County Counsel
1. Participation in a Meeting of Standing Committee by an Alternate Committee Member or other Board Member
2. Gave a brief report on her attendance at the CalAPRS Attorney’s Roundtable.
20. Board Member Announcements or Reports
1. Trustee Savrnoch shared an anonymous letter with the Board regarding Ira Summer, Public Pension Professionals.
2. Trustee Savrnoch stated the need for FCERA’s financial advisor to sign a disclosure form.
3. Trustee Savrnoch shared her concerns for a need for a Board policy regarding accepting invitations.
There being no further business, the meeting adjourned at 12:59 PM.
Robert L. Peña
Retirement Administrator
02/01/06 Regular Meeting Minutes