SONOMA COUNTY EMPLOYEES RETIREMENT ASSOCIATION BOARD MINUTES

Transcription

1 BOARD MINUTES Thursday, 8:45 A.M. Presiding: Present: Also Present: Chair Jerry Allen presided until noon; Vice-Chair Kiergan Pegg presided thereafter to adjournment. Trustees Al Alys, Donna Beels, Dianne Edwards, Tom Ford, Greg Jahn, Kiergan Pegg, David Rabbitt, David Sundstrom, and Kimber Williams. Retirement Administrator Gary Bei; Assistant Retirement Administrator Kelly Jenkins; Accounting Manager Cathy Lanz, Retirement Benefits Coordinator Helen Olson, Investment Officer James Failor, Information Systems Manager Diane Ginn, Legal Counsel Neil Baker, Deputy County Counsel IV Jeff Berk; Administrative Aide Jennifer Howze, Sharon Stockham, President Ed Clites of the Sonoma County Law Enforcement Association, and Bob Williamson. I. CONSENT CALENDAR A. Membership as of January 31, 2012: Active = 3,604 Deferred/Transfer = 531 Retirees = 4,019 New Members = 37 Withdrawals = 8 = $236,834 Funds on Deposit/Members with Less than 5 Years = 379 = $5,918,468 B. SERVICE RETIREMENTS: Name Effective Date Department Cathy Neville 01/11/2012 Deferred Chuck Herzog 01/24/2012 Sheriff Thomas Johnson 01/24/2012 Public Defender Vicki Petersen 01/24/2012 CRA Arnold Yee 01/24/2012 TPW Susan Alesi 02/07/2012 Human Services Carol Alexander 02/07/2012 CDC George Gomez Tamayo 02/07/2012 Human Services Robert Hammond 02/07/2012 SCWA Michelle Judson 02/07/2012 CRA Steven Marks 02/07/2012 General Services Sheila Quince 02/07/2012 Fairgrounds Neda West 02/10/2012 Transferred Total = 13 1

2 C. DEFERRED/TRANSFER: Name Effective Date Department Juanita Chavez 12/23/2011 Human Services Kshatriya Dean 01/10/2012 Human Services Vanessa Finnigan 01/10/2012 Human Services John Orio 01/10/2012 TPW Belinda Soto 11/11/2011 Superior Court Brett Fairbanks 12/20/2011 Sheriff Total = 6 D. ACTIVE/DEFERRED/TRANSFER DEATH: None. E. THIRTY YEARS SERVICE: None. F. PURCHASE OF SERVICE: (Period from 12/01/11 12/31/11) Totals Service Prior LWOP Public Service Redeposit (Sick &/or Military) Years (safety) Years (general) Cost $29,640 $61 $500,276 $30,713 G. SERVICES: Brown Armstrong 2011 Audit $ 477 Lawrence Guinney, MD EL Consultation 11/15/11 $ 1,425 Nossaman LLP Legal Services Oct $ 4,933 Neil Baker Legal Services May & June 2011 $ 40,125 Davis Wright Tremaine Trust PD Attorneys Fees $ 93,517 APPROVED as per the following: Ayes 9 Noes 0 Abstain 0 Absent 0 II. MINUTES APPROVAL: Approval of January 19, 2012 Retirement Board Meeting Minutes. With the exception of a slight modification to the presentation made by INTECH, the minutes were approved. APPROVED as per the following: Ayes 8 Noes 0 Abstain 1 Absent 0 2

3 III. REGULAR CALENDAR: A. COMMITTEE MEMBERSHIP REVIEW: 1. Review of draft changes to SCERA Governance Policies and Investment Policy Statement to support an Investment Committee of the whole retirement board. Administrator Bei said staff reviewed Board Policies and Bylaws and recommends modifications to the Investment Committee Charter, the Board Operations Policy and the Investment Policy Statement needed to implement an Investment Committee of the Whole Board. Assistant Administrator Kelly Jenkins reviewed some of the changes and pointed out that while the Investment Committee may take action without needing further Board action or approval on investment related items, the Investment Committee may not take action on non-investment related matters, but can submit such items for consideration by the Board. Administrator Bei noted that, as a committee, the Investment Committee will still elect a committee Chair, who may or may not be the same person as the Board Chair. Board members noted the importance of notifying the public that all investment discussions and decisions will take place at the Investment Meeting so they can accordingly plan to attend if they wish to address the Committee on a particular topic. Sharon Stockham noted that Section II.D. of the Board Operations Policy addresses public comment at Board meetings. Motion to approve the changes to the SCERA Governance Policies and Investment Policy Statement as written. APPROVED as per the following: Ayes 9 Noes 0 Abstain 0 Absent 0 2. Review of the committee membership recommendation of the Ad-Hoc Nominating Committee of the Retirement Board for the following committees: Administrative/Benefits Committee: Jerry Allen, Dianne Edwards, Tom Ford, Kiergan Pegg, David Rabbitt, and Kimber Williams. Audit Committee: Al Alys, Donna Beels, Greg Jahn, Kiergan Pegg, and David Sundstrom. Disability Committee: Jerry Allen, Donna Beels, Dianne Edwards, Tom Ford, David Rabbitt, and Kimber Williams Investment Committee: Jerry Allen, Al Alys, Donna Beels, Dianne Edwards, Tom Ford, Greg Jahn, Kiergan Pegg, David Rabbitt, David Sundstrom and Kimber Williams. Each Committee Chair will be elected at the next meeting of the committee. APPROVED as per the following: Ayes 9 Noes 0 Abstain 0 Absent 0 3

4 B. PRESENTATION: Quarterly Investment Performance Report - John Lee and Shane Schurter of Hewitt EnnisKnupp presented. The returns for the year ended up positive despite market turmoil. Real Estate and Bonds performed particularly well, while international stocks had a year of poor performance. The fourth quarter was very strong for equities. There was larger than usual lack of correlation between US and non-us equities this year. The main reason for this disparity and international equities poor performance was a flight towards quality with US stocks being viewed as a safer option. The best performers of the international equities were the United Kingdom and Japan. In the market as a whole, value stocks tended to outperform growth stocks; on the whole, small cap stocks outperformed large cap stocks. Year-to-date, the best performing sector was utilities, while materials performed the worst. Treasuries and government securities did quite well for the year, with long term Treasuries performing the best. Treasury yields have dropped significantly in the last year. The fund ended the year with a total market value of $1.76 billion. Returns for the fourth quarter were 6.2%, while returns for the year were relatively flat at 0.6%. The three year return was 10.2% and 20 and 30 year returns were 6.8% and 9.6%, respectively. Trustee Jahn noted that total fund returns are below the benchmark, raising the question of whether active management is adding value or not. Administrator Bei noted that active management has added value at different year-end periods, but more recently the numbers have lagged behind the benchmark. Additional analysis will be provided at an upcoming Investment Committee meeting. Retirement Investment Officer Failor suggested that looking at 10 year rolling-period returns might be an appropriate option, given the period dependency of the issue. Trustee Rabbitt commented that the return numbers at any given point may have consequences for the system if the sponsor is not in a position to backfill losses. US Equities were flat for the year versus a benchmark return of 1%. Dodge & Cox was the major detractor from benchmark-relative returns while Jacobs Levy contributed positively over the one-year period. Trustee Pegg inquired about whether rebalancing was done among managers. Mr. Failor indicated that was a consideration when rebalancing are conducted, although managers on watch are not given additional funds. Non US Equities underperformed significantly this year, with a return of -15% versus -14.1% for the benchmark. A major driver of this underperformance was Artio, who is currently on watch and will be part of a due diligence meeting the following week. 4

5 B. PRESENTATION, cont.: Global Equity performed relatively well against the benchmark despite producing negative returns for the year. Returns were -3.6% versus -8.0% for the benchmark. GMO and Templeton beat their benchmark for the year and Calamos, which was incepted at the end of January 2011, outperformed its benchmark for the last 11 months of the year. It was noted that global managers tend toward defensiveness, a posture that worked to their advantage in last year s market. The Fixed Income managers performed well for the year slightly beating the benchmark with 7.9% returns versus 7.8%. The PIMCO account was funded at the end of March 2011 and performed approximately in-line with the benchmark for the last 9 months of The UBS Trumbull Property Fund is a part of the core real estate allocation and underperformed its benchmark this year due to its lower leverage in a strong year for real estate. The real estate sector as a whole did well with a one-year return of 17.8% versus 17.2% for the benchmark. BlackRock is being redeemed due to its underperformance over the trailing 3 and 5 years and their migration to a more risky strategy. SCERA is in the redemption queue and expects to receive the remainder of its capital over the next 3 to 4 quarters. The RREEF fund is liquidating and the distribution of capital to investors will take place over the next few years. Real estate returns are booked with a one-quarter lag so this report covers the one-year period through the third quarter of C. INVESTMENT COMMITTEE REPORT: Committee Chair Jerry Allen and Retirement Investment Officer Jim Failor reported on the Investment Committee meeting held on February 15, Presentations: GMO Portfolio Manager Matt Kadnar, and Client Relationship Manager Wendy Malaspina presented an update on the organization, portfolio positioning and performance. GMO is a well regarded firm and we have given them a global equity portfolio which allows them to tactically allocate, within guidelines, between various approved equity strategies. We also allow them to have up to 10% of their allocation in a cash-plus strategy providing some dry powder for market opportunities. Mr. Failor noted that the cash-plus strategy is, to a large degree, derived by holding high quality stocks long and shorting out the beta or market exposure. A personnel change has resulted in Wendy Malaspina being assigned to SCERA s account, which is a favorable outcome given her expertise and abilities. GMO has let SCERA know that an error was made in SCERA s portfolio positioning in 2011 and, as a result, SCERA s benchmark-relative outperformance was less than it would have otherwise been. SCERA changed its benchmark for the GMO account in March 2011 and after their initial adjustment to the new benchmark their allocation to US equities 5

6 1. Presentations, cont.: within the benchmark was not being updated. This error was discovered in January 2012 and has since been corrected. The cost to benchmark-relative performance is currently estimated as around 50 basis points. Once GMO completes their detailed calculation of the opportunity cost, expected in the next couple of weeks, they will make SCERA whole. The circumstances were unique to SCERA s situation and do not reflect a systematic problem. However, GMO is reviewing their processes to insure the error does not reoccur. At peak, GMO managed $160 billion, but they are now at about $97 billion, which is still a sizeable amount of assets under management. They have provided SCERA with outperformance against the benchmark for nearly all periods, with the exception of the three year period ending December 31. During the last year they significantly outperformed the benchmark. Their style is based on a seven year forecast for all of the major asset classes and sub-asset classes, considering probable mean reversion within a seven year market cycle. Currently they believe the long-term outlook for fixed income is for negative real returns. GMO believes non-us and high quality US equities are fairly priced but other US equities are priced to deliver lower than average returns. As a result, they have built their portfolio leaning toward the high quality and non-us market sectors. Chairman Allen noted that because of GMO s defensive positioning, they will lag when the market rallies. Mr. Failor affirmed that they are more value than growth oriented. Administrator Bei noted that because of their investment guidelines and global equity mandate, GMO can engage in tactical allocations. Trustee Jahn noted that GMO Chief Investment Strategist Jeremy Grantham s view that large parts of the equity market are fairly priced is more optimistic than his usual bearish attitude. 2. Investment Consultant & Staff: a. Hewitt EnnisKnupp s Interest Rate Sensitivity Analysis of SCERA s Fixed Income Portfolio. HEK looked at different scenarios to see what would happen to the value of our bond portfolio if interest rates were to increase. They looked at the forward market of what interest rates are anticipated to be in 5 years for guidance to model future interest rates. Then they looked at PIMCO, Western, and Reams to assess their current interest rate and sector exposure. The initial stress test was an assumption of an increase in interest rates as well as a 100 basis point spread widening between Treasury and credit bonds. The five year annualized impact of this scenario on the fixed income portfolio was a negative 80 basis points, or a 20 basis point impact on the total fund. Offset by current yield income, the net impact was a cumulative 5 year return in the $334 million fixed income portfolio of $14.9 million. Administrator Bei noted that this 6

7 2. Investment Consultant & Staff, cont.: a. Hewitt EnnisKnupp s Interest Rate Sensitivity Analysis, cont.: would nearly be 5 years of no return from the bond portfolio. But it was also noted that this modeling does not take into account the ability of fixed income managers to adjust the positioning of the portfolio to presumably dampen these effects. The extreme stress test tripled both the anticipated increase in rates and the spread. Under such extreme circumstances, the five year annualized change in the fixed income portfolio would be -5.2%, which translates to a cumulative impact of a $73.1 million loss (a -1.1% drag on the total fund performance for each of five years). The Board and staff discussed the fixed income managers current and possible future positioning and the recent diversification with the addition of PIMCO. Mr. Failor pointed out that fixed income managers, almost by definition, are oriented toward quantitative analysis and utilize sophisticated modeling to manage their portfolios and, as a result, they are very familiar with the kind of modeling just discussed. b. Prime Broker Asset Protection review by Jacobs Levy. Jacobs Levy manages a strategy for SCERA which means they are expressing their relative confidence in stocks by buying some stocks (traditional long holdings) and shorting other stocks (up to 30% of the portfolio). The proceeds from the short sales are reinvested as long holdings, providing long holdings valued at up to 130% of the portfolio. This created some questions regarding the safety of SCERA s assets under a rehypothecation (securities lending) scenario, where the Prime Broker, Credit Suisse, is allowed to lend up to 130% of the indebtedness of the portfolio (meaning, in the case of a 130/30 portfolio, 42% = 1.30 X 30%). The result is, given applicable regulations, that 88% of the principal value of the account is held separately and for the benefit of only SCERA and the remaining 12% is held in a special account with other client assets which is not available to creditors of Credit Suisse. It was also noted that, if SCERA was concerned about Credit Suisse solvency, that Jacobs Levy could unwind their short positions and turn the portfolio into a traditional long-only strategy which could be moved to our custodian State Street. Mr. Failor added that rehypothecation using a Prime Brokerage is a complex process, and there will always be some broker risk, but that it is quite small in our situation. SCERA moved from Credit Suisse s UK-based rehypothecation platform to their US platform a couple of years ago because of the greater protection for clients under US law. Moreover, financial stability of the prime broker was a key determinant in the selection of Credit Suisse and they remain financially very sound. Staff and the Plan s investment consultant continue to believe that the limited risk for the Jacobs Levy strategy is being managed well and strict oversight is ongoing. 7

8 2. Investment Consultant & Staff, cont.: c. Raising Cash and The Plan s Real Estate Allocation discussion. It was noted that SCERA needs to raise approximately $40 million for cash flow needs between now and June. In following the rebalancing process in the investment policy, typically asset classes would be adjusted toward their target allocations. However, there is a liquidity issue with regard to real estate, in that two of the funds, Blackrock and RREEF, are not easily liquidated now but will be redeemed over the longer term, as discussed earlier. Mr. Failor presented two options for rebalancing which involved some amount of draw-down from the UBS Trumbull Property Fund, the largest of the Plan s core real estate managers. One scenario would draw real estate down to a 16% allocation, the upper end of the real estate allocation range, and the other would draw it down to a 15.3% allocation. These allocations would drift down further over the following year as we receive expected redemptions from BlackRock and RREEF. The Trustees discussed the relative valuations of the major asset classes including the possibility of poor returns on bonds and more normalized returns expected for real estate. The consensus view was that they were comfortable bringing the real estate exposure down just to the high end of the policy range and allow it to drift further down toward the middle of the range over the following year and longer. Motion to approve scenario A to rebalance as recommended, including a draw-down of the real estate allocation to 16%. APPROVED as per the following: Ayes 9 Noes 0 Abstain 0 Absent 0 d. State Street Global Markets Transition Management Services update. SSGM had a problem in the UK where certain clients were overcharged for some fixed income transitions. SSGM engaged PricewaterhouseCoopers (PwC) to audit their transition management business worldwide and they found the incident was confined to four UK based client accounts which were all managed by the same person. The individuals involved were released from the firm. HEK has advised SCERA that State Street appears to have taken the proper steps to determine the scope of the issue and the proper response. HEK is satisfied the issue has been resolved and is once-again comfortable with SCERA utilizing SSGM for transition management services. The Investment Committee was also supportive of SCERA using SSGM for future transition services. e. Investment Manager Finalist Communication Packet review. A draft communications packet for finalists in manager searches was provided and discussed. The intent is to discover any issues these managers may have with regard to SCERA s standard investment management agreement and relevant policies in advance of final consideration by the Investment Committee. The Board agreed that the new procedure could provide valuable, timely information. 8

9 2. Investment Consultant & Staff, cont.: f. Managers on Watch January 2012 updates. 1. Artio Int l Equity II Fund review. Staff will participate in due diligence meetings with Artio next week. This meeting will be particularly significant in light of Artio s status on the watch list. A recommendation will be made to the Investment Committee as a result of this meeting. 2. BlackRock Granite Fund review. 3. RREEF America III Fund review. The fund is winding down and it is expected that SCERA could receive a portion of $24 million remaining in the fund later this year. 3. Communications: a. Investment Benchmark Summary January b. SCERA 2012 Investment Project Plans February Update. c. FUNDfire, Julius Baer Spinout Artio Suffers Heavy Losses, January 27, d. Dodge & Cox, Quarterly Letter from the Chairman, December 31, e. UBS Realty News & Views, UBS Trumbull Property Fund Acquires two new trophy investments, January f. Wall Street Journal, Weaning Off Alternative Investments, January 30, g. FUNDfire, Institutional Investors Flock to Low-Volatility Products, January 19, E. ADMINISTRATIVE-BENEFITS COMMITTEE REPORT: As the next meeting of the Administrative-Benefits Committee Meeting is on May 3, 2012, no report will be given. F. AUDIT COMMITTEE REPORT: As the next meeting of the Audit Committee is on May 16, 2012, no report will be given. 9

10 G. DISABILITY COMMITTEE: As the next meeting of the Disability Committee is on March 8, 2012, no report will be given. H. FINANCIAL STATEMENTS & SUMMARY: 1. Investment Performance Summary for January Mr. Failor said January was a good month with the fund up 4.5%, the best performing January in 15 years. For the month, international small cap stocks performed the best of all the sectors, but all sectors generally performed well. The three year fund return is 15.7% which is 155 basis points over benchmark. The twenty year return is 7.6% through January. The fund ended January at $1.82 billion. Asset allocation is over investment policy target in real estate and under in bonds. Dodge & Cox had a strong month of outperformance by 182 basis points. GMO trailed by 225 basis points for the month due to a heavy weight to high quality stocks. A bias to quality generally does not perform well in growth markets. INTECH underperformed for the month as well. Outperformance came largely from bonds this month. Reams, PIMCO and Western all did very well against the benchmark. 2. Monthly Financial Statement(s). Statements are being finalized and will be available next month. 3. Government Finance Officers Association Award for Outstanding Achievement in Popular Annual Financial Reporting (PAFR) for the year ended December 31, The Board members expressed their appreciation for the outstanding work of the accounting staff on putting together SCERA s reporting documents each year. I. ADMINISTRATOR S REPORT: 1. SACRS Board of Directors Elections for 2012/2013. The slate of candidates should be coming out in the next few weeks. Tom Ford will be a candidate for the Treasurer position. 2. Investment Job Series Update. This project establishes a Senior Investment Officer and an Investment Analyst position in the Investments unit. Civil Service Commission approval was established for the positions, and we have since been working with Human Resources to set the salary schedule for these positions. There has been some discussion about an appropriate salary scale for the Senior Investment Officer position given the need to recruit and retain talented staff. The Retirement Board ad hoc committee on the investment job series and staff met with representatives of Human Resources to discuss the salary scale methodology. Thereafter, the ad hoc committee met and agreed to recommend that the Retirement Board 10

11 I. ADMINISTRATOR S REPORT, cont.: 2. Investment Job Series Update, cont.: set the salary levels for the investment job series as discussed with Human Resources. Trustee Ford noted that the key focus should be to define the job and duties and to implement the job series expeditiously. Motion to accept the Civil Service Commission approval of the positions, set the salary levels for the investment job series as discussed with Human Resources and request the item be included on the Board of Supervisors agenda for inclusion in the County s salary ordinance. APPROVED as per the following: Ayes 9 Noes 0 Abstain 0 Absent 0 3. Retirement Operational Statistics for Mr. Jenkins provided an overview saying the benefits team processed 282 retirements this last year (one less than the record set in 2010), 178 new members, and 54 deferred or transferred members. They also completed 483 benefits estimates with an average turnaround time of just over 12 days, which improved to a turnaround time of less than 6 days for the 260 estimates done from June to year end. They completed 186 service purchase estimates, and hosted 22 retirement classes for those planning to retire, with 326 attendees, and 13 sessions for 128 employees ineligible for retirement, as well as 6 new employee orientations. It was also noted that processing retirees is not just a benefits team function, but involves a great deal of work by the accounting unit as well. The entire staff did an excellent job and is providing a high level of service to our members. 4. SCERA Website Upgrade Project. There are two projects going on in parallel: the web member services integration and an update to SCERA website: Project coordinator Elizabeth Anderson provided an update on the SCERA website project. While periodic website improvement projects have been implemented, this will be the first major overhaul to the SCERA website in several years, giving the website a new look and feel and improving the functionality. A primary goal is to increase transparency by improving navigation and making it easier for people to find what they are looking for. There will also be improvements to the educational component of the website so members will be able to refer to that information as a primary resource. The web member services component will be linked to the main SCERA homepage, which will allow members to look at their individual information and complete estimate calculations. We expect to be able to complete this project within the average range of the budget that has already been approved. This would also include limiting board document retention to a period of 10 years for minutes and 3 years for agendas. Financial reports would be posted on a monthly basis until the CAFR is published, and then would be kept on a quarterly basis for five years. Board members suggested keeping agendas for only one year as they are incorporated into the minutes, which will be kept for full ten years. 11

12 I. ADMINISTRATOR S REPORT, cont.: 5. Planning Session Location for Staff reviewed the results of a request for proposal from four hotels in Sonoma County: Hyatt Vineyard Creek, Hotel Healdsburg, Hilton Sonoma Wine Country, and Sheraton Petaluma. Subsequent to the initial proposal, we were informed that Hotel Healdsburg does not have adequate space to accommodate attendees this year. Overall, staff recommended the Sheraton, given a very competitive proposal and the ability to guarantee use of specified meeting spaces. Board members briefly discussed and were supportive of contracting with the Sheraton Petaluma for the 2012 Planning Session. 6. Form 700 Reporting Requirements. Forms should be turned in to Jennifer Howze by Friday, March 23, 2012 for filing with the County Clerk s Office prior to the April 1, 2012 deadline. 7. Pensions Report by Sonoma County resident Ken Churchill. The article is quite long and on initial review includes a number of inaccuracies. Comments will be noted for major areas directed at SCERA. SCERA received the paper after it was issued with no prior review. Several issues raised in the paper had received comprehensive SCERA comment, however, the article was published without accurately incorporating information received from SCERA staff. As background, initial contacts were made last summer with the County and SCERA in relation to work related to a paper for the Sonoma County Taxpayers Association (SCTA). The County and SCERA provided substantive responses to questions asked by Mr. Churchill when he was gathering information. The County responded primarily to benefit change questions and SCERA responded primarily to retirement funding and actuarial topics. Also a meeting was held in September to address questions with Mr. Churchill and Mr. Atkin, SCTA President. In October, Administrator Bei received a communication from the President of the Sonoma County Taxpayers Association, indicating that Mr. Churchill s pursuit of the pension topic was not consistent with the approach the Association views as appropriate. After the report was issued and upon review of it, Administrator Bei received comment from Rick Roeder, the Board s actuary during the time discussed in the report. Among other things Mr. Roeder said, I am responding because of some glaring inaccuracies in relation to the role played by County retirement staff before the implementation of benefit changes almost a decade ago. I am aghast that there was any direct or indirect effort in Mr. Churchill s letter to imply that the role of SCERA was anything less than would be expected from responsible professionals. Mr. Roeder also outlined the actuarial factors behind the setting of the general member retirement assumption and noted the inaccurate conclusion that this assumption was a major factor in subsequent cost increases. The conclusion by Mr. Roeder was also consistent with the 10-Year Review presentation at the October SCERA Planning Session which outlined the major drivers of increased pension cost over the last decade based on ten years of actuarial valuations for SCERA. Another point in the report that should be clarified is that the implication 12

13 I. ADMINISTRATOR S REPORT, cont.: 7. Pensions Report by Sonoma County resident Ken Churchill, cont.: that the retirement system has authority to unilaterally increase employee contribution rates, which is not accurate as SCERA does not have authority under the County Employees Retirement Law (CERL) to go beyond the agreements reached in collective bargaining to further increase employee rates as implied. Overall, the report contains fundamental misunderstandings related to roles of SCERA and the County. The responsibility for setting benefits lies solely with the County and results from the collective bargaining process. In addition, decisions related to Pension Obligation Bonds lie solely with the County. SCERA is responsible for the administration of the retirement system based on benefits set by employers. The Governance presentation at the SCERA Planning Session on Fiduciary Duty outlined the role of Settlor function of employers in setting the benefits and the Fiduciary function of SCERA in the administration of the plan and the proper and limited role of the retirement system in the area of benefit changes in light of these fiduciary duties. Chair Allen was most disappointed with the personal attacks on Administrator Bei, who conducts himself with the utmost integrity. Trustee Ford noted the amount of information in the paper qualified by the phrase in my opinion. Board members expressed their disappointment at the inaccuracies presented in this report. At this point in the meeting Chair Allen left the meeting, and the Chair was assumed by Vice-Chair Pegg. 8. Trustee/ Staff Training & Conferences a. CALAPRS Trustees Round Table- To be held February 3, 2012 at the DoubleTree Hotel in San Jose, CA. Trustee Williams reported out saying there were presentations on Global markets, and an actuary spoke in the afternoon. b. LA Trustees Round Up To be held February 27-28, 2012 at the Westin LAX in Los Angeles. Trustee Williams will attend. c. CALAPRS General Assembly- To be held March 3-6, 2012 at the Westin Mission Hills in Rancho Mirage, CA. Trustees Edwards, Ford, and Williams will attend. d. CALAPRS Principles of Pension Management Course for Trustees to be held March 27-30, 2012 at the Stanford Law School in Palo Alto, CA. Trustee Beels will attend. e Pension Bridge Annual Conference - To be held April 10-11, 2012 at The Four Seasons Hotel in San Francisco, CA. If you are interested in attending, please notify Jennifer Howze by March 1,

14 f. NCPERS 2012 Annual Conference- To be held May 5-10, 2012 at the Hilton New York Hotel in New York, NY. Please notify Jennifer Howze by April 1, 2012 if you would like to attend. g. SACRS 2012 Springs Conference- To be held May 8-11, 2012 at The Resort at Squaw Creek in Olympic Valley, CA. Trustees Allen, Alys, Edwards, Ford, and Williams will attend. h. SACRS Public Pension Investment Management Program To be held July 16-18, 2012 at the UC Berkeley Hass School of Business in Berkeley, CA. Trustee Williams has expressed interest in attending. J. EXECUTIVE SESSION: None. K. REPORT OUT OF EXECUTIVE SESSION: As no executive session topics are on the agenda, a report out is not required. L. COMMUNICATION(S): 1. SCERA Comment Letter to the IRS on Proposed Rulemaking Determination of Government Plan Status. 2. Governor s Pension Reform Bill and Constitutional Amendment Proposed February 2, Hanson Bridgett Summary of Proposals. 3. Sacramento Bee February 8, 2012 article: California Pension Reform Group Suspends Initiative Campaign. M. GENERAL DISCUSSION MATTERS: Trustee Rabbitt noted that he had gone to Sacramento in his capacity as a Supervisor to speak with the Governor s Chief of Staff regarding the Governor s pension reform plan as well as acceptance of the County Board of Supervisor s plan, particularly the new formula options and new Board membership proposal. He also talked with the local legislative delegation, including Assemblyman Allen, who indicated that the special joint pension committee expected to have a report out at the end of the month. Trustee Rabbitt also noted there will be a public forum on pension reform at the Glaser Center in Santa Rosa on April 5, IV. PUBLIC COMMENT Bob Williamson 14

15 V. NEXT MEETINGS ADMINISTRATIVE/BENEFITS COMMITTEE: Thursday, May 3, 2012 at approximately 9:30 A.M. (immediately following the Disability Committee meeting) in the SCERA Board Room located at 433 Aviation Boulevard, Suite 100 in Santa Rosa, CA. AUDIT COMMITTEE: Wednesday, May 16, 2012 at approximately 11:30 A.M. (immediately following the Investment Committee meeting) in the SCERA Board Room located at 433 Aviation Boulevard, Suite 100, Santa Rosa, CA. DISABILITY COMMITTEE: INVESTMENT COMMITTEE: RETIREMENT BOARD: Thursday, March 8, 2012 at 8:30 A.M. in the SCERA Board Room located at 433 Aviation Boulevard, Suite 100 in Santa Rosa, CA. Wednesday, March 14, 2012 at 8:30 A.M. in the SCERA Board Room located at 433 Aviation Boulevard, Suite 100, Santa Rosa, CA. The presentation scheduled for this meeting is Turner. Regular Board Meeting: Scheduled for Thursday, March 15, 2012 at 8:30 A.M. in the SCERA Board Room located at 433 Aviation Boulevard, Suite 100, in Santa Rosa, CA. VI. ADJOURNMENT The meeting was adjourned at 12:11 P.M. to the Regular Retirement Board meeting on Wednesday, March 15, 2012 at 8:30 A.M. in the SCERA Board Room located at 433 Aviation Boulevard, Suite 100, Santa Rosa, CA. JERRY ALLEN, CHAIR Respectfully Submitted, GARY BEI SECRETARY/RETIREMENT ADMINISTRATOR By Jennifer Howze 15