ORANGE COUNTY EMPLOYEES RETIREMENT SYSTEM BOARD OF RETIREMENT 2223 WELLINGTON AVENUE SANTA ANA, CALIFORNIA REGULAR MEETING DECEMBER 18, 2006 MINUTES

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1 ORANGE COUNTY EMPLOYEES RETIREMENT SYSTEM BOARD OF RETIREMENT 2223 WELLINGTON AVENUE SANTA ANA, CALIFORNIA REGULAR MEETING DECEMBER 18, 2006 MINUTES The Chair called the meeting to order at 8:30 a.m. and read the opening statement into the record. Attendance was as follows: Present: Richard A. White, Jr, Chair; Reed L. Royalty, Vice Chair; Russell Baldwin; Brett Barbre; Frank E. Eley; Robert A. Griffith; Arthur A. Hidalgo; George W. Jeffries; Thomas J. Lightvoet and David J. Thompson George W. Jeffries arrived at 9:39 a.m. Also Present: Keith Bozarth, Chief Executive Officer; James Buck, Assistant CEO, External Operations; Stephen Cadena, Assistant CEO, Internal Operations; Julie Wyne, General Counsel; Shanta Chary, Chief Investment Officer; Walter Lauzon, Manager, Finance; Suzanne Jenike, Manager, Member Services; Elaine Reagan, Staff Attorney; Jerry Weissburg, Staff Attorney; Robert Kinsler, Communications; Anthony Beltran, Audio/Visual Technician and Eunice Lopez, Recording Secretary Harvey Leiderman, Esq., Reed Smith introduced and welcomed Brett Barbre, Assistant Treasurer-Tax Collector, delegate for Chriss Street. introduced and welcomed Kathleen Rutland, Sr. Sheriff s Chaplin. led the Pledge of Allegiance and Ms. Rutland offered the invocation. CONSENT AGENDA All matters on the Consent Agenda are to be approved by one action unless a Board Member or a member of the public requests separate action on a specific item. Clarification: Item C-4, Confirm Committee selection of one fund of funds manager for a $60 million commitment, not $50 million. pulled Item C-3 pulled Item C-5 A motion was made by, seconded by to approve the remainder of the Consent Agenda. The motion carried unanimously, with absent. C-1 MATERIAL DISTRIBUTED Application Notices - Death Notices -

2 Regular Board Meeting Minutes Page 2 C-2 BOARD MEETINGS AND COMMITTEE MEETINGS: Approval of Meetings and Minutes Real Estate Committee Meeting - November 20, 2006 Regular Board Meeting - November 20, 2006 Private Markets Committee Meeting - December 8, 2006 Recommendation: Authorize all meetings and approve all minutes. C-3 AMENDMENT TO OCERS SUPPLEMENTAL PENSION PLAN Presentation by Keith Bozarth Recommendation: Adopt Amendment to the OCERS Supplemental Pension Plan, adding the other Executive positions to the plan at a 3% of pay level. C-4 RECOMMENDATIONS OF THE PRIVATE MARKETS COMMITTEE RESULTING FROM A MEETING ON DECEMBER 8, 2006 Recommendation: Confirm Committee selection of one fund of funds manager for a $50 million commitment. C-5 QUIET PERIOD IN PROGRESS Recommendation: Receive and file. * * * * * * * END OF CONSENT AGENDA * * * * * * * INDIVIDUAL ITEMS AGENDA I-1 INDIVIDUAL ACTION ON ANY ITEM TRAILED FROM THE CONSENT AGENDA C-3 AMENDMENT TO OCERS SUPPLEMENTAL PENSION PLAN pulled the amendment to OCERS supplemental pension plan for an explanation. Mr. Bozarth explained the amendment to OCERS supplemental pension plan. A motion was made by, seconded by to adopt the amendment to the OCERS supplemental pension plan. The motion carried unanimously, with absent. C-5 QUIET PERIOD IN PROGRESS pulled Item C-5 for clarification of the quiet period. Ms. Chary explained the quiet period policy. requested that staff provide Board members with a list of the managers participating in the open searches.

3 Regular Board Meeting Minutes Page 3 requested that staff inform Board members when the quiet period ends. Ms. Chary agreed to their requests. A motion was made by, seconded by to receive and file the quiet period in progress. The motion carried unanimously, with absent. I-2 CHIEF INVESTMENT OFFICER S REPORT Ms. Chary reviewed the CIO report Following discussion, a motion was made by, seconded by to receive and file the CIO report. The motion carried unanimously, with absent. thanked staff for their extra-ordinary effort through the year. I-3 RETIREE MEDICAL HEALTH TRUST ACCOUNT FOR OCFA Mr. Bozarth stated that the Retiree Medical Health Trust Account for OCFA will be continued to January 16, I-4 PENSION PROTECTION ACT HELPS PROVISION Mr. Buck reviewed the Pension Protection Act HELPS Provision. Following discussion, a motion was made by, seconded by to wait until further guidance is provided by the IRS. Following discussion, a substitute motion was made by, seconded by to refer the matter back to staff for follow-up monitoring on periodic basis and bring back to the Board for review before the end of The motion carried 8 to 1, with voting No. Board took a break at 9:55 a.m. Board reconvened at 10:05 a.m. returned 10:39 a.m. DISABILITY APPLICATIONS AGENDA 10:00 a.m. NOTE: WHEN CONSIDERING DISABILITY RETIREMENT APPLICATIONS, THE BOARD MAY FIND IT NECESSARY TO DISCUSS MATTERS RELATING TO THE EVALUATION OF THE WORK PERFORMANCE OF AN EMPLOYEE WHO HAS APPLIED FOR DISABILITY RETIREMENT, OR DISCUSS COMPLAINTS OR CHARGES MADE AGAINST SUCH EMPLOYEE. IF THIS OCCURS, THE BOARD MAY ADJOURN TO A CLOSED SESSION TO DISCUSS SUCH MATTERS PURSUANT TO GOVERNMENT CODE SECTION 54957, UNLESS THE EMPLOYEE REQUESTS THAT THE DISCUSSION BE IN PUBLIC.

4 Regular Board Meeting Minutes Page 4 STAFF RECOMMENDATION IS TO GRANT SERVICE CONNECTED DISABILITY RETIREMENT WITH AN EFFECTIVE DATE OF APRIL 14, 2006 (SAFETY MEMBER) (D-1) D-1 Kelley Simpson Deputy Sheriff, OC Sheriff s Department Following discussion, a motion was made by, seconded by to grant service connected disability retirement with an effective date of April 14, The motion carried 8 to 0, with voting as follows: STAFF RECOMMENDATION IS TO GRANT SERVICE CONNECTED DISABILITY RETIREMENT WITH AN EFFECTIVE DATE OF JANUARY 3, 2006 (GENERAL MEMBER) (D-2) D-2 Iliana Pratte Coach Operator, OC Transportation Authority A motion was made by, seconded by to grant service connected disability retirement with an effective date of January 3, The motion carried 8 to 0, with voting as follows: STAFF RECOMMENDATION IS TO GRANT NON-SERVICE CONNECTED DISABILITY RETIREMENT WITH AN EFFECTIVE DATE OF NOVEMBER 26, 2004 AND DENY SERVICE CONNECTED DISABILITY RETIREMENT (GENERAL MEMBER) (D-3) D-3 Henry Pho Sheriff s Special Officer, OC Sheriff s Department A motion was made by, seconded by to grant non-service connected disability retirement with an effective date of November 26, 2004 and deny service connected disability retirement. The motion carried 7 to 1, with voting as follows:

5 Regular Board Meeting Minutes Page 5 Mark Singer, attorney for applicant, addressed the Board on applicant s injury. STAFF RECOMMENDATION IS TO DENY SERVICE AND NON-SERVICE CONNECTED DISABILITY (GENERAL MEMBER) (D-4) D-4 Robert Adams Window Dispatcher, OC Transportation Authority A motion was made by, seconded by to deny service and non-service connected disability. The motion carried 7 to 1, with voting as follows: Robert Adams, applicant, addressed the Board. STAFF RECOMMENDATION IS TO DENY SERVICE CONNECTED DISABILITY (GENERAL MEMBER) (D-5) D-5 Steven Hahn Agricultural Weights and Measures Program Supervisor, RDMD Application for service connected disability retirement A motion was made by, seconded by to deny service connected disability. The motion carried 8 to 0, with voting as follows:

6 Regular Board Meeting Minutes Page 6 STAFF RECOMMENDATION IS TO DENY SERVICE AND NON-SERVICE CONNECTED DISABILITY (GENERAL MEMBER) (D-6) D-6 Charlaine Marlow Office Assistant, OC Public Library A motion was made by, seconded by to deny service and non-service connected disability. The motion carried 8 to 0, with voting as follows: John Gulino, attorney for applicant, addressed the Board on Dr. Nair s report. Ms. Jenike stated that Mr. Gulino was referring to a physician s report that was not included as evidence per applicant s and attorney s request. STAFF RECOMMENDATION IS TO DENY SERVICE AND NON-SERVICE CONNECTED DISABILITY (GENERAL MEMBER) (D-7) D-7 Sheryl Grinstead Radio Dispatcher, OC Sheriff s Department A motion was made by, seconded by to deny service and non-service connected disability. The motion carried 8 to 0, with voting as follows: Mark Singer, attorney for applicant, addressed the Board. Ms. Jenike gave the Board a brief overview of applicant s disability history.

7 Regular Board Meeting Minutes Page 7 STAFF RECOMMENDATION IS TO GRANT SURVIVOR BENEFITS PURSUANT TO GOVERNMENT CODE WITH AN EFFECTIVE DATE OF APRIL 4, 2006 (SAFETY MEMBER) (D-8) D-8 Robert Gonzalez (deceased) Deputy Sheriff, OC Sheriff s Department A motion was made by, seconded by to grant survivor benefits pursuant to Government Code with an effective date of April 4, The motion carried 9 to 0, with voting as follows: STAFF RECOMMENDATION IS TO DISMISS DISABILITY APPLICATION WITHOUT PREJUDICE (GENERAL MEMBER) (D-9) D-9 Phillip Matson Utility Worker/Driver, Auditor-Controller Application for non-service connected disability retirement A motion was made by, seconded by to dismiss disability application without prejudice. The motion carried 9 to 0, with voting as follows: STAFF RECOMMENDATION IS TO GRANT SERVICE CONNECTED DISABILITY RETIREMENT AND REFER THE ISSUE OF THE EFFECTIVE DATE BACK TO THE REFEREE (SAFETY MEMBER) (D-10) D-10 Corene Sullivan Deputy Probation Counselor, OC Probation Department A motion was made by, seconded by to grant service connected disability retirement and refer the issue of the effective date back to the referee.

8 Regular Board Meeting Minutes Page 8 An amended motion was made by, seconded by to grant service connected disability retirement and refer the issue of the effective date back to staff. If an agreement cannot be reached the matter is to be referred back to the referee. The motion carried 9 to 0, with voting as follows: Mark Singer, attorney for applicant, addressed the Board on effective date. Ms. Reagan addressed the Board on effective date. * * * * * * * * END OF DISABILITY APPLICATIONS AGENDA * * * * * * * * * * * * * INDIVIDUAL ITEMS CONTINUED* * * * * * I-5 ATTORNEYS CHANGE OF EMPLOYMENT STATUS TO OCERS EMPLOYEES Ms. Wyne reviewed the Attorneys Change of Employment Status to OCERS Employees. Following discussion, a motion was made by, seconded by to approve the creation of two OCERS staff attorney positions and the transfer of the existing staff attorneys from County employment to OCERS employment and authorize an amendment to the OCERS Personnel Policies and Regulations to include the staff attorney position and necessary provisions. The motion carried unanimously. I-6 DISCUSSION AND ACTION CONCERNING TERM OF THE CHAIR AND VICE CHAIR A motion was made by, seconded by for to continue as Chair for Following discussion, a substitute motion was made by, seconded by for to continue as Chair and as Vice Chair for The motion carried unanimously. * * * * * * * END OF INDIVIDUAL ITEMS AGENDA * * * * * * stated that the Board will be going into closed session and will take public comments. He wished the public Happy Holidays. PUBLIC COMMENTS: None

9 Regular Board Meeting Minutes Page 9 Board went into Closed Session at 11:00 a.m. Board returned from Closed Session at 11:39 a.m. * * * * * * * CLOSED SESSION* * * * * * * E-2 CONFERENCE WITH LEGAL COUNSEL - ANTICIPATED LITIGATION Discussion of whether to initiate litigation pursuant to subdivision (c) of Section (One potential case) stated that the Board unanimously approved the appeal of judgment granting the Petition for Writ of Mandate in the matter of Block vs., which is a case involving the calculation of Mr. Block s retirement allowance. E-1 PUBLIC EMPLOYEE PERFORMANCE EVALUATION PURSUANT TO GOVERNMENT CODE SECTION Position to be evaluated: Chief Executive Officer A motion was made by, seconded by to increase Mr. Bozarth s compensation package by 5%. 2% base salary increase and 3% to a non-base building benefit. Following discussion, a substitute motion was made by, seconded by to increase Mr. Bozarth s compensation package by 5% with the distribution of funds determined by Mr. Bozarth and the Chair. The motion carried 8 to 1, with voting No. Mr. Bozarth excused himself at 11:39 a.m. for discussion purposes. Mr. Bozarth returned at 12:09 a.m. * * * * * * * END CLOSED SESSION* * * * * * * CHIEF EXECUTIVE OFFICER/STAFF COMMENTS: Mr. Bozarth thanked the Board and wished everyone Happy Holidays. BOARD MEMBERS COMMENTS: The Board individually wished everyone a Merry Christmas. requested that staff agendize a discussion of the Contra Costa provisions on alternate appointed members for the Board. thanked Mr. Leiderman for attending the Board meeting. and thanked the Board for the re-appointment.

10 Regular Board Meeting Minutes Page 10 COUNSEL COMMENTS: Ms. Wyne thanked the Board for changing staff employment status of staff attorneys to OCERS employees. ADJOURNMENT: (IN MEMORY OF THE ACTIVE MEMBERS, RETIRED MEMBERS, SURVIVING SPOUSES, AND DEATHS (QDRO) WHO PASSED AWAY THIS PAST MONTH) Active Members: Retired Members: Surviving Spouses: Sharon R. Corp; David Erickson; Jennifer Martineau, Israel M. Romo Manuel B. Garcia, Robert H. Haight, James E. Hatter, Alice W. Peters, Donald R. Puckett Ardell Belton, William H. Hein, Preston Loder, Faith Smiley, Patricia Walters Deaths (QDRO): There being no further business to bring before the Board, a motion was made by to adjourn the meeting at 12:15 p.m. Submitted by: Approved by: Keith Bozarth Secretary to the Board Richard A. White, Jr. Chair