BOARD OF RETIREMENT FRESNO COUNTY EMPLOYEES RETIREMENT ASSOCIATION

Transcription

1 01/15/14 Regular Meeting Minutes 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 Trustees Present: January 15, 2014 REGULAR MEETING AGENDA MINUTES Marion Austin Laura P. Basua Alan Cade, Jr. Dr. Rod Coburn, III Vicki Crow Robert Dowell Eulalio Gomez Judith G. Case McNairy Trustees Absent: Steven Jolly Others Present: Andy Yeung, Segal Company Robert Skowronski, FCERA Member Ron Madsen, FCERA Member 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 8:34 AM. 2. Pledge of Allegiance Recited. 3. Public Presentations Robert Skowronski, FCERA Member, addressed the Board regarding the Fund s unfunded status. 4. Election of Chair and Vice Chair for the Calendar Year A motion was made by Trustee Gomez, seconded by Trustee Austin, to appoint Dr. Rod Coburn as Chair of the Board of Retirement and Alan Cade, Jr. as Vice Chair of the Board of Retirement for the calendar year VOTE: Unanimous (Absent Jolly)

2 5. Discussion and appropriate action on appointments to the Retirement Board Standing Committees: Audit, Budget, Disability, Personnel and Consultant Evaluation Chair Coburn recommended appointments to the Standing Committees as follows: (changes noted in bold) 2 Audit Committee Alan Cade, Jr. Chair Vicki Crow Steven J. Jolly Judith G. Case McNairy Budget Committee Alan Cade, Jr. Chair Vicki Crow Steven J. Jolly Judith G. Case McNairy Personnel Committee Marion Austin Chair Laura P. Basua Dr. Rod Coburn, III Robert Dowell Disability Committee Eulalio Gomez - Chair Dr. Rod Coburn, III Steven J. Jolly Judith G. Case McNairy Consultants Evaluation Committee Robert Dowell Chair Marion Austin Alan Cade, Jr. Eulalio Gomez A motion was made by Trustee Gomez, seconded by Trustee Crow, to appoint the Standing Committee members as recommended. VOTE: Unanimous (Absent Jolly) Consent Agenda/Opportunity for Public Comment Trustee Gomez pulled Consent Item 19 for discussion. A motion was made by Trustee Crow, seconded by Trustee Dowell, to approve Consent Items 6-18 and as presented. VOTE: Unanimous (Absent Jolly) *6. Approve the December 13, 2013 Board of Retirement Disability Committee Meeting Minutes *7. Approve the December 18, 2013 Retirement Board Regular Meeting Minutes *8. Approve the December 18, 2013 Board of Retirement Audit Committee Meeting Minutes 01/15/14 Regular Meeting Minutes

3 3 *9. Disability Retirements Richard Gallegos Sheriff Rex Garcia Sheriff *10. Retirements Glynis Alvardo Behavioral Health, Deferred Janie Barbosa Dept of Social Services Arlene C. Boyajian Public Health Anne L. Bridgers Assessor Recorder, Deferred Cle Mitchell Canizalez Dept of Social Services Minnie Chavarria Sheriff Julie A. Condon Public Work & Planning Marion Ann Contreras Assessor Recorder, Deferred 8.11 Henry Facio Sheriff Phillip Fuentez Probation Consuelo Gonzalez Behavioral Health Wanda Hemmitt-Patton Dept of Social Services Theresa A. Henry Dept of Social Services, Deferred 5.07 Julia M. Holmes Behavioral Health Edward Lipski Dept of Social Services, Deferred 6.53 Jerome A. Marquez Internal Services Consuelo Martin Library Donna M. Moran Library Steven K. Nitta Library Connie H. Pagulayan Library, Deferred Vickie L. Pound Dept of Social Services Willis E. Robinson Public Works & Plan, Deferred 9.08 Cheryl Rutledge Dept of Social Services Treasa Schuler ACTTC, Deferred 9.15 Fred Starks Sheriff, Deferred Brian D. Tamblin Internal Services Kenneth K. Taniguchi Public Defender Jon K. Thoren VMC, Deferred Andrea M. Zavala District Attorney *11. 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 December 2013 *12. Public Records Requests and/or Retirement Related Correspondence from Maria Almario, IPREO 01/15/14 Regular Meeting Minutes

4 4 *13. Educational Reading Materials January 7, 2014 San Francisco article California pension reformer disputes write-up on initiative * Pension Payroll Payment Schedule *15. Board of Retirement Annual Attendance Report for the calendar year 2013 *16. Budget Status for the Quarter ended December 31, 2013 *17. Most recent investment returns, performance summaries and general investment information from investment managers *18. FCERA Cash Flow position as of November 2013 *19. Quarterly Trustee Travel Report and Anticipated Trustee Travel Trustee Gomez suggested prominently displaying the Travel Report on the FCERA website and Trustee Case McNairy recommended adding a section to the report that will identify whether a Trustee has submitted a written seminar report for Board reference. The Board agreed. In addition, Trustee Case McNairy noted that a cost $ for meals was noted in error on her expenses at the Pacific States Institutional Investors forum and requested that it be corrected. Administration agreed. A motion was made by Trustee Gomez, seconded by Case McNairy, to accept the Quarterly Travel Report with the noted revisions. VOTE: Unanimous (Absent Jolly) *20. FCERA s Comprehensive Annual Financial Report (CAFR) for the fiscal year ended June 30, /15/14 Regular Meeting Minutes

5 *21. Travel request from Trustee Case to attend the 24 th Annual Southern CA Public Retirement Seminar on February 27, 2014 in Lakewood, CA *22. Travel request from Trustee Jolly to attend the Pension Bridge Annual on April 22-23, 2014 in San Francisco, CA *23. Travel requests from Chair Coburn and Trustee Jolly to attend the International Investing and Emerging Markets Wharton Course on July 28-30, 2014 in San Francisco, CA *24. Travel request from the Disability Committee to conduct a Fact Finding visit to Santa Barbara Employees Retirement System and Orange County Employees Retirement System to gain an understanding their disability processes *25. Recommendation to adopt PEPRA Pension Compensation Limit (Code Section ) *26. Adopt FCERA 2010 IRS Code Compliance Policy 27. Discussion and appropriate action on draft Actuarial Valuation report as of June 30, 2013 presented by Andy Yeung, The Segal Company 01/15/14 Regular Meeting Minutes 5 Andy Yeung, The Segal Company, opened discussions by noting that the valuation was performed to determine whether the assets and contributions are sufficient to provide the prescribed benefits and reviewed the actuarial valuation key findings as follows: The results of the valuation reflect changes to the economic and non-economic assumptions adopted by the Board for the June 30, 2013 valuation. These assumption changes resulted in an increase in the average employer rate of 7.78% of payroll and an increase in the average member rate of 1.04% of payroll. On June 30, 2013, after crediting interest to the various reserve accounts at the assumed earnings rate, the balance of the Contra Tracking Account increased from $516.3 million as of June 30, 2012 to $588.3 million as of June 30, In this June 30, 2013 valuation, the UAAL has increased from $1,040.4 million to $1,175.8 million when determined on a valuation (smoothed) value of assets. On a market value basis, the UAAL decreased from $1,225.7 million to $1,215.7 million.

6 01/15/14 Regular Meeting Minutes 6 The funded ratio on valuation value of assets decreased from 76.1% to 75.0%, while on a market value basis, the funded ratio increased from 71.8% to 74.1%. The aggregate employer rate calculated in the valuation increased from 47.37% of payroll to 53.52% of payroll. The reasons for this change are: (i) lower than expected return on investments (based on valuation value of assets after smoothing), (ii) one year delay in implementing employer and employee contribution rates calculated in the June 30, 2012 valuation, (iii) increase in UAAL rate due to less than expected increase in total payroll, and (iv) changes is actuarial assumptions, offset to some degree by (v) salary increases less than expected, (vi) lower than expected COLA increases, (vii) fewer than expected retirements, and (viii) other actuarial gains. The aggregate member rate calculated in this valuation has increased from 8.55% of payroll to 9.56% of payroll. The change in the aggregate member rate is due to changes in actuarial assumptions and changes in membership demographics for the June 30, 2013 valuation. Mr. Yeung noted that based on discussions with the Board, Segal used the discretion made recently available by AB1380 to no longer round the member s contributions to the nearest ¼% as previously required by CalPEPRA. The employer and member rates developed in this valuation have been determined only with respect to the Regular and the Settlement benefits. Assets and liabilities associated the non-vested supplemental benefits (i.e., discretionary purchasing power and additional non-vested retiree health benefits) have been excluded from the development of the employer and member rates. The net total unrecognized investment losses as of June 30, 2013 are $39.9 million compared to the net total unrecognized investment losses of $185.3 million as of June 30, These investment losses will be recognized in the determination of the actuarial value of assets for funding purposes in the next few years, and will offset any investment gains that may occur after June 30, This means, if the Association earns the assumed net rate of investment return of 7.25% per year on a market value basis, it will result in investment losses on the actuarial value of assets in the next few years. So, if the actual market return is equal to the assumed 7.25% rate and all other actuarial assumptions are met, the contribution requirements would increase in the next few years. The unrecognized investment losses represent about 1% of the market value of assets. Unless offset by future investment gains or other favorable experience, the recognition of the $39.9 million in past market losses is expected to an impact on the Association s future funded ratio and the aggregate employer contributions. This potential impact may be illustrated as follows: If the deferred losses were recognized immediately in the actuarial value of assets, the funded percentage would decrease from 75.0% to 74.1%. If the deferred losses were recognized immediately in the actuarial value of assets, the aggregate employer contribution rate would increase from 53.5% of payroll to 54.5% of payroll.

7 01/15/14 Regular Meeting Minutes 7 In preparing the breakdown of the total costs of the General Tier I plan into the cost to provide the Regular and the Settlement benefits, Segal followed the Association s practice of allocating the cost to provide a benefit under section as the cost for the Regular benefit and allocating the difference between this Regular benefit cost and the cost to provide a benefit under Section plus Section as the Settlement benefit. In particular, this means that the difference between benefits under Sections and is considered Settlement and so under the Settlement Agreement could be funded out of future undistributed earnings. Mr. Yeung reviewed, in detail, the changes in the recommended employer contribution rate from the prior valuation to the current year s valuation and the average member contribution rates noting the rates vary based on data such as tier level, age, and salary. Detailed discussions, questions, and comments ensued regarding the demographic and financial data provided in the valuation. A motion was made by Vice Chair Cade, seconded by Trustee Crow, to adopt the Actuarial Valuation as of June 30, 2013 and to recommend the employer and employee contribution rates to the Board of Supervisors. VOTE: Unanimous (Absent Jolly) 28. Discussion and appropriate action on Project Tracking Phillip Kapler, Retirement Administrator, opened discussions with a brief update on the status of each Administrative project noting which projects have been completed and which were ongoing. The Board considered whether to purge projects that are no longer an on-going concern or that have been substantially resolved. Chair Coburn suggested combining the matter of adding an internal auditor and in-house investment position to the FCERA complement and delegating the issue to the Board Consultants Evaluation Committee for further consideration. The Board agreed. NO ACTION TAKEN Verbal report from Trustee Alan Cade on the December 18, 2013 Audit Committee Meeting Trustee Cade gave a verbal report of the December 18, 2013 Audit Committee meeting stating that the Plan earned unqualified ( clean ) opinion. It was noted that the opinion is the highest opinion that an independent audit firm can issue. Trustee Cade informed the Board that one recommendation was made to help FCERA make improvements and achieve operational efficiencies. It was noted that findings and recommendations are intended to improve the internal control structure or result in other efficiencies. In addition, Trustee Cade noted that the prior year conditions (six) have been addressed and implemented according to Brown Armstrong s recommendations.

8 01/15/14 Regular Meeting Minutes 8 Trustee Cade noted Brown Armstrong will work with Administration in the upcoming year in setting up a task force consisting of members of the Board of Retirement and the Board of Supervisors to address the implementation of GASB 67. A motion was made by Trustee Gomez, seconded by Trustee Crow, to accept the Audit Report as recommend by the Audit Committee. VOTE: Unanimous (Absent Jolly) 30. Discussion and appropriate action of first consideration of the revised FCERA Trustee Travel, Education, and Due Diligence policies Chair Coburn opened discussions by noting that, as part of the on-going process of reviewing and updating the Board s policies, the FCERA Travel, Education, and Due Diligence policies were revised and submitted for the Board s consideration. Chair Coburn noted that the recommended policies changes and updates were reviewed by FCERA staff and Attorney Jeffrey Rieger of Reed Smith. In addition, Trustees Basua, Cade, and Austin reviewed the changes and updates recommended by Chair Coburn. Discussions ensued regarding the importance of keeping travel costs to a minimum. Chair Coburn recommended approval of the FCERA Travel, Education, and Due Diligence policies. A motion was made by Trustee Gomez, seconded by Trustee Basua, to approve the FCERA Education and Due Diligence policies as presented and to approve the FCERA Travel policy with changes to page 4 (replacing the Trustee with Traveler ). VOTE: Unanimous (Absent Jolly) 31. Closed Session: A. Disability Retirement Applications Personnel Exception (G.C ): 1. Socorro Alvarez 2. Richard Papazian 3. Amy Rolfs 4. Conni Washington 5. John Swenning, Jr. 32. Report from Closed Session 31.A.1. Socorro Alvarez Decision The Board directed Administration to notify the applicant that her application for service connected disability retirement will be denied unless a hearing is requested in accordance with the Policy Re Administrative Proceedings and Appeals to the Board. In addition, the Board determined that the applicant may have satisfied the requirements of a non-service connected disability and may grant the nonservice connected disability if the applicant submits and application for non-service connected disability benefits. M Gomez. S Austin. VOTE Unanimous (Absent Jolly)

9 01/15/14 Regular Meeting Minutes 9 31.A.2. Richard Papazian Decision To grant service connected disability benefits based on the Findings of Fact and Decision with an effective dated of July 28, 2011, the day following the last day compensated by the County of Fresno. M Gomez. S Cade. VOTE: Unanimous (Absent Jolly) 31.A.3. Amy Rolfs Decision To grant non-service connected disability benefits based on the Finding of Fact and Decision. M Cade. S Dowell. VOTE: Unanimous (Absent Jolly) 31.A.4. Conni Washington Decision To grant non-service connected disability benefits based on the Findings of Fact and Decision with an effective date of October 19, 2010, the date the Applicants department submitted an application for non-service connected disability. M Gomez. S Cade. VOTE: Unanimous (Absent Jolly) 31.A.5. John Swenning, Jr. Decision To direct Administration to notify the applicant that the service connected disability application will be denied unless the applicant requests a hearing in accordance with the Policy Re Administrative Proceedings and Appeals to the Board. M Gomez. S Austin. VOTE: Unanimous (Absent Jolly) 33. Report from FCERA Administration Phillip Kapler, Retirement Administrator, reported on the following: 1. The staff attendance at the Skill Path Training held on December 19, 2013 in the FCERA Boardroom. The training covered topics such as time management and prioritizing. 2. The Retirement Coordinator Outreach Program. The program has been well received by the FCERA membership. 3. The status on the requests for Buybacks. Administration is reviewing processes and procedures in ensure that buybacks are processed timely. 4. His due diligence visit to Artisan Partners in San Francisco, CA on January 13, A currency conversion issue with PIMCO. A full Board discussion will be agendized as details become available. 6. The upcoming Bankrate hearing in New York City on January 31, Mr. Kapler will attend on behalf of the Board. 7. The Excessive Returned Mail project. The Administrative Support Unit is working diligently to ensure that the excessive returned mail is processed timely and that member s are notified timely of the returned mail. 34. Report from County Counsel Art Wille, Deputy County Counsel, reported on his attendance at the Skill Path Training. 35. Board Member Announcements or Reports Trustee Gomez suggested that Chair Coburn speak with Beth Bandy regarding the recent pay increases for County Department Heads and Management as they relate to the FCERA staff. In addition, Trustee Cade suggested that Administration speak with Attorney Jeffrey Rieger to determine if there may be any spiking issues with the recent County pay raises. Administration agreed.

10 10 Chair Coburn informed the Board that he will continue his review of the FCERA Board policies and encouraged Trustee input and participation in the review process. Trustee Dowell thanked the FCERA Staff for participating in the REFCO Toys for Tots and food drives. There being no further business, the meeting adjourned at 11:33 AM. Phillip Kapler Secretary to the Board Educational Credits = 0 01/15/14 Regular Meeting Minutes