MINUTES OF THE BOARD OF FIRE AND POLICE PENSION COMMISSIONERS MEETING OF SEPTEMBER 1,2011

Transcription

1 MINUTES OF THE BOARD OF FIRE AND POLICE PENSION COMMISSIONERS MEETING OF SEPTEMBER 1,2011 The Board offire and Pension Commissioners ofthe City oflos Angeles met in Room 800, 360 East Second Street, on Thursday,. COMMISSIONERS PRESENT: COMMISSIONER ABSENT: DEPARTMENT OF FIRE AND POLICE PENSIONS: CITY ATTORNEY'S OFFICE: Robert von Voigt, President Brenda Maull, Vice President George Aliano Sam Diannitto Dean Hansell Ruben Navarro Raul Perez Wayne Moore Michael A. Perez, General Manager William Raggio, Assistant General Manager Joseph Salazar, Interim Assistant General Manager Tom Lopez, ChiefInvestment Officer Barbara Nobregas, Commission Executive Assistant Alan Manning, Assistant City Attorney President von Voigt called the regular meeting to order at 9:04 a.m. All of the above-listed Commissioners were present at the start ofthe meeting. A. ITEMS FOR BOARD ACTION Commissioner Hansell recused himselffrom Item A. I stating that offices of his firm located in Milan and Germany may possibly represent one ofthe firms on the list. 1. FINALIST RECOMMENDATIONS FOR INTERNATIONAL LARGE CAP GROWTH MANAGERS BY RV KUHNS AND POSSIBLE BOARD ACTION Messrs. Jim Voytko, ChiefOperating Officer and Michael Ford, CFA, Senior Consultant from RV Kuhns presented the report. Commissioner Navarro motioned to approve the recommendation, seconded by Commissioner Diannitto. Commissioner Diannitto was concerned with the process of hiring investment

2 Minutes of the Board of Fire and Pension Commissioners Page 2 managers and that individual board members may have a preference to hire certain managers. He preferred that staffwork with the consultant to bring a final hiring recommendation to the Board. Mr. Voytko stated that his team and LAFPP senior staffwork closely together and the recommendation is a collaborative effort. The Board discussed the selection and hiring process of money managers and that staff have more input. Commissioner Navarro moved the recommendation, seconded by Commissioner Diannitto who chose later to withdraw his motion. After Board discussion, Commissioner Diannitto chose not to withdraw his motion to second. RESOLUTION Commissioner Navarro moved that the Board interview the following managers as finalist candidates in the search for an international equity large cap growth investment manager: 1. Baillie Gifford - All Country World ex US Alpha Strategy 2. Hansberger - International Growth Strategy 3. Schroder - International Alpha Strategy 4. Neuberger Berman - International Large Cap Strategy, which was seconded by Commissioner Diannitto and approved by the following vote: ayes, Commissioners Aliano, Diannitto, Hansell, Maull, Navarro, Perez, and President von Voigt - 7; nays, none. 2. DISCUSSION OF PHASE-IN OF EXPERIENCE STUDY ASSUMPTIONS AND POSSIBLE BOARD ACTION Ms. Robyn Wilder, Interim Chief Benefits Analyst, Pensions Division stated the Board approved an experience study in July Mr. Angelo presented the three-year and two-year phase-in. Mr. Angelo used estimated numbers for the study but the actual results of the study win depend upon the 2011 evaluation which has not yet been performed. Commissioner Hansell stated it would be helpful if staff prepared an independent analysis. Commissioner Hansell asked for the City (CAO) to comment onthe issue ifthe Board were to adopt the phase-in today it will result in greater expense for the City in subsequent years. He supports a three-year phase-in but asked the City to comment if it is in the City's best interest under the three-year plan. In response to Commissioner Aliano's question as to what is best for the System, Ms. Wilder commented that during the first and second year of the phase-in there would less money available to the System but at the end of three years the System would be made whole. General Manager Perez stated the Board has taken numerous actions that have impacted contributions from the City. A couple ofthose actions resulted in increased contributions from the City, which were not anticipated by the City. The Board adopted the staffrecommendation to reduce the earnings assumption from eight percent down to seven and three quarters; that increased the contributions from the City to the Fund. Also, the Board adopted assumptions on the health trend that were different from what the actuary recommended, but were more conservative. Those assumption changes resulted in increased contributions from the City. General Manager Perez stated he was in agreement with the City's request for the three-year phase-in. It is not unreasonable

3 Minutes ofthe Board of Fire and Pension CommissiOIiers September 1,2011 Page 3 and he would support that from the staff recommendation. Mr. Alan Manning stated the Board should consider whether the phase-in and the resulting reduction in City contributions over the next few years would adversely affect the Systems' ability to pay benefits. Ifit does not, then it is basically the Board's call. Mr. Thomas Simonovski, Senior Labor Relations Specialist I, CAO stated the City is supportive ofa threeyear phase-in. The Board further discussed the issue. Commissioner Hansell moved that the Board: RESOLUTION Review the report on the impact of phasing-in the actuarial experience study assumptions from the System's Actuary, The Segal Company; and, 2. Instruct the Actuary to phase-in the impact ofall ofthe experience study assumption changes for the retiree pension and/or health plan over a three-year period, beginning with the June, 2011 valuation, which was seconded by Commissioner Perez and approved by the following vote: ayes, Commissioners Aliano, Diannitto, Hansell, Maull, Navarro, Perez, and President von Voigt -7; nays, none. 3. PRESENTATION ON GASB PROPOSED PENSION ACCOUl'JTING AND FINANCIAL REPORTING STANDARDS AND POSSIBLE BOARD ACTION Ms. Robyn Wilder and Mr. Paul Angelo presented the report. Mr. Angelo highlighted the Governmental Accounting Standards Board (GASB) misconceptions and recent changes to measure expenses. Commissioner Navarro moved that the Board instruct staff to continue to monitor the proposed Governmental Accounting Standards Board (GASB) changes and report back to the Board if additional analysis is recommended in the future, which was seconded by Commissioner Hansell and approved by the following vote: ayes, Commissioners Aliano, Diannitto, Hansell, Maull, Navarro, Perez, and President von Voigt - 7; nays, none. Item A. 5 was taken out oforder. 5. BUSINESS CONTINUITY PLAN DEVELOPMENT AND POSSIBLE BOARD ACTION Ms. Jennifer Huang-Leifeste, Programmer Analyst V, Systems Section and Mr. Kyle Lennard, Professional Services Consultant from Verizon Business were before the board. The board report was approved as submitted. Commissioner Hansell complimented staff's work on the issue.

4 Minutes ofthe Board offire and Pension Commissioners Page 4 RESOLUTION Commissioner Diannitto moved that the Board: 1. Authorize the General Manager to utilize the contract with Verizon Business to develop a Business Continuity Plan at a cost not to exceed $110,000, and 2. Authorize the General Manager to amend the Verizon Business contract ceiling from $450,000 to $595,000 and authorize the President ofthe Board, on behalfofthe Board, to execute and approve the necessary contract amendment, subject to City Attorney approval as to form, which was seconded by Commissioner Hansell and approved by the following vote: ayes, Commissioners Aliano, Diannitto, Hansell, Maull, Navarro, Perez, and President von Voigt - 7; nays, none. 4. BUSINESS IMPACT ANALYSIS OVERVIEW AND STATUS AND POSSIBLE BOARD ACTION General Manager Perez asked the Board to hear Mr. Kyle Lennard's report on the aftermath ofthe Tsunami and earthquake in Japan in relation to business continuity. Mr. Lennard provided a brief overview ofthe need to have a backup plan. He perceived the likelihood ofan electrical power outage imminent. He was glad that the Board was working to implement a business continuity plan. RESOLUTION Commissioner Hansell moved that the Board direct staff to prepare and report back with a Business Continuity Plan, which was seconded by Commissioner Maull and approved by the following vote: ayes, Commissioners Aliano, Diannitto, Hansell, Maull, Navarro, Perez, and President von Voigt - 7; nays, none. B. REPORTS TO THE BOARD 1. Communication to the Board re: Ordinance submitted to City Council by City Attorney regarding vesting of retiree health benefits in exchange for voluntary payment of additional contributions Commissioner Diannitto requested that all documentation related to the vesting of health benefits be included with the opinion from outside counsel in the September 15,2011 board meeting package. 2. President von Voigt asked if any Board Member made any expenditure to influence State legislative or administrative action to which their reply was negative. 3. Miscellaneous correspondence from money managers, consultants, etc. - Received and Filed.

5 Minutes ofthe Board of Fire and Pension Commissioners September 1,2011 Page 5 4. General Manager's Report a. Benefits Actions approved by General Manager on August 18, 2011 Pursuant to Resolution 04008, adopted by the Board of Fire & Pension Commissioners on August 7, 2003, the following benefit actions have been approved by the General Manager. DISCONTINUED PENSIONS - TIER 1-2 Franklin T. Post Service Retired: Died: John W. Whaley Disability Retired: Died: DISCONTINUED PENSIONS - TIER 2-13 John E. Cass Fire Service Retired: Died: Laurence B. Wirtz Fire Disability Retired: Died: Samuel J. Butler Service Retired: Died: Dennis G. Farnham Service Retired: Died: Raymond G. Madrid Service Retired: Died: Charles D. Perriguey, Jr. Service Retired: Died: Thomas Quarles Service Retired: Died: Thomas D. Sullivan, Jr. Service Retired: Died: Lloyd F. Tucker Service Retired: Died: Charles C. Wright Service Retired: Died: Patricia A. Fredrickson Widow Retired: Died: Virginio V. Santiago Disability Retired: Died: Dennis Vandervort Disability Retired: Died: ELIGIBLE SURVIVING SPOUSE'S PENSION - TIER 2-6 Name Deceased Member Member's Class Effective Date Marjorie F. Cass John E. Cass Fire Service Kathleen Farnham Dennis G. Farnham Service Betty G. Perriguey Charles D. Perriguey, Jr. Service Kathleen A. Santiago Virginio V. Santiago Disability Apolonia Sullivan Thomas D. Sullivan, Jr. Service Sherri A. Vandervort Dennis Vandervort Disability ELIGIBLE SURVIVING SPOUSE'S PENSION - TIER 2-1 CORRECTION Name Deceased Member Member's Class Effective Date Gertrude J. Lane James W. Lane Service

6 Minutes ofthe Board offire and Pension Commissioners Page 6 DISCONTINUED SURVIVOR BENEFIT PURCHASE PROGRAM - TIER 2-1 Member's Class Effective Date Died Kenneth G. Baker Disability PARTIAL PAYMENT OF PENSION - TIER 3-1 interest of the pension payable to Jon C. Sprague, Service Pensioner, is to be paid to his former spouse, Patti A. Paquin-Sprague, effective July 11, Ms. Paquin-Sprague will receive cost ofliving adjustments. PARTlAT, PAYMENT OF PENSION - TIER 4-1 interest ofthe pension payable to David L. Hall, Service Pensioner, is to be paid to his former spouse, Melissa Hall, effective July 14,2011. Ms. Hall will receive cost ofliving adjustments. PARTIAL PAYMENT OF PENSION - TIER 5-3 interest ofthe pension payable to Joe J. Avalos, Fire Service Pensioner, is to be paid to his former spouse, Sondra Theodore Avalos, effective August 1, Ms. Theodore Avalos will receive cost ofliving adjustments. interest of the pension payable to Miilage Peaks, III, Fire Service Pensioner, is to be paid to his former spouse, Janet M. Peaks, effective July 10, Ms. Peaks will receive cost of living adjustments. interest of the pension payable to Ronald J. Sanchez, Service Pensioner, is to be paid to his former spouse, Kam L. Byalick, effective August 1, Ms. Byalick will receive cost of living adjustments. PARTIAL PAYMENT OF PENSION - TIER 2-1 CORRECTION interest ofthe pension payable to Donald R. Ravens, Service Pensioner, is to be withheld for his former spouse Claire Ravens, effective August 1, Ms. Ravens will receive cost ofliving adjustments.

7 Minutes ofthe Board offire and Pension Commissioners September 1,2011 Page 7 MODIFIED PARTIAL PAYMENT OF PENSION - TIER 2-1 In accordance with City Attorney's advice, the designated proportion of the community property interest ofthe pension payable to Stanley A. Embry, Disability Pensioner, being withheld for his former spouse, Gina Embry, since April 1, 2008, is to be released to Ms. Embry, effective August 1,2011. Ms. Embry will receive cost ofliving adjustments. MODIFIED PARTIAL PAYMENT OF PENSION - TIER 5-1 interest ofthe pension payable to Paul J. Hernandez, Fire Service Pensioner, being withheld for his former spouse, Julie S. Hernandez, since January 8, 2011, is to be released to Ms. Hernandez, effective August 1,2011. Ms. Hernandez will receive cost ofliving adjustments. DEFERRED SERVICE PENSION - TIER 3-1 Barbara L. Macdermot Officer II Years 124 Days SERVICE PENSION - TIER 4-4 Mark E. Didion Officer II Years 343 Days Carol J. Gavin Sergeant II Years 11 Days David L. Hall Sergeant II Years 5 Days Franklyn D. Orlando Sergeant II Years 126 Days SERVICE PENSION - TIER 5-5 Fire Millage Peaks, III Chief Engineer Years 180 Days Harbor Donald K. Hobbs, Jr. Port Officer I Years 235 Days Miros D. Surrena Detective I Years 325 Days Diane Y. Ponce Sergeant I Years 152 Days Kandis M. Schmidt Detective I Years 4 Days

8 Minutes ofthe Board offire and Pension Commissioners Page 8 SERVICE PENSIONIDROP - TIER 2-1 Fire Scott W. Peters Captain II Years 279 Days SERVICE PENSION/DROP - TIER 3-2 James S. Ross Charles L. Williams Officer II Officer III Years 227 Days SERVICE PENSIONIDROP - TIER 4-4 George O. Lopez Kelly P. Mulldorfer Louis H. Reyes Diana M. Smith Officer III Captain II Officer III+1 Detective II Years 12 Days Years 283 Days SERVICE PENSIONIDROP - TIER 5-21 Fire Monte A. Moore Thomas A. Ottman Richard T. Sakurai Brent A. Spankroy KellyN. Toman Rex W. Vilaubi Rickey A. Wheeler Captain I Battalion Chief Captain I Captain I Captain II Captain II Helicopter Pilot IV Years 69 Days Years 285 Days Years 187 Days Years 8 Days Years 32 Days Years 282 Days Kris M. Davis Ramon E. Espinosa Jose L. Maldonado Brian J. O'Hara Karen A. Owens Jeffrey B. Pailet Jack L. Parker Earl C. Paysinger Jimmy Render, III Thomas M. Small Robert Smith, Jr. Sergeant I +2 Officer III Officer III + 1 Officer III + 2 Officer III + 1 Lieutenant II Officer III +1 Deputy Chief II Detective III Detective II Detective II Years 13 Days Years 271 Days Years 255 Days Years 5 Days Years 111 Days Years 199 Days Years 90 Days Years 224 Days

9 Minutes ofthe Board of Fire and Pension Commissioners Page 9 Michael H. Yang Janet R. Zumstein Peter M. Zuniga Lieutenant II Officer III +1 Officer III Years Years Years Days Days Days DISCONTINUE DROP - TIER 2-1 Fire JohnA. Buck DISCONTINUE DROP - TIER 4-1 Fire Edward J. Williams DISCONTINUE DROP - TIER 5-11 Retired: Retired: Fire Shawn T. Agnew Frank Gutierrez, Jr. James T. Horimoto Gary R. Mannan Retired: Retired: Retired: Retired: Lane J. Bragg Joseph Catanzaro John J. Dohle David M. Graff, Sr. Robert R. Heredia Bruce A. Kuehl Craig A. Liedahl Retired: Retired: Retired: Retired: Retired: Retired: Retired: PARTIAL PAYMENT OF DROP FUNDS - TIER 5-1 interest of the DROP funds payable to Joe J. Avalos, Fire Service Pensioner, is to be paid to his former spouse, Sondra J. Theodore Avalos, effective July 31, MODIFIED PARTIAL PAYMENT OF DROP FUNDS - TIER 5-1 interest ofthe DROP funds payable to Paul J. Hernandez, Fire Service Pensioner, being withheld for his former spouse, Julie S. Hernandez, since January 7, 2011, is to be released to Ms. Hernandez, effective August 1, 2011.

10 Minutes ofthe Board offire and Pension Commissioners Page 10 b. Other business relating to Department operations General Manager Perez gave the following updates: 1. General Manager Perez stated there are approximately 28 days remaining for members to opt-in to pay an extra two percent in exchange for certain health subsidy vested rights. There are about 1,228 members who have opted-in thus far. 2. The Mayor has appointed a new Board Member who will go through the approval process, the City Council Budget & Finance Committee then to City Council for approval. Mr. Rafael Bernardino's biography was distributed to the Commissioners. 3. The General Manager yearly evaluation process will begin in October and will be heard at the Governance Committee level. Staff will prepare a board report at the September 15 meeting regarding the organization that will assist and survey the Board. 4. He expects outside counsel to be present at the September 15 Board meeting to discuss the vested rights issue. He will be at a Deferred Compensation conference meeting and will participate at the Board meeting by telephone. Mr. Alan Manning, Assistant City Attorney stated he will also not be present on September 15. c. Marketing Cessation Information 5. City Attorney's Report Alan Manning, Assistant City Attorney had no further updates to report. C. COMMITTEE REPORTS 1. Benefits Committee - Last met: 08/04/11; next meeting: TBD There were no updates to report. 2. Governance Committee - Last met: 04/21/11; next meeting: Tentative: 10/20/11 Mr. William Raggio stated the tentative meeting scheduled on September 15 has been moved to October 20 to accommodate a committee member's schedule. This will allow for a staff report regarding the General Manager evaluation along with the other items to be heard by the Committee. 3. Audit Committee - Last met: 07/07/11; next meeting: TBD

11 Minutes ofthe Board of Fire and Pension Commissioners Page 11 There were no updates to report. 4. Ad Hoc Space Planning Committee - Discussion held during closed session with property negotiator President von Voigt stated this issue will be heard during closed session Item G. 5. Ad Hoc Committee on City Attorney's Office General Manager Perez stated he is meeting with the other City Retirement Systems on this issue. 6. Ad Hoc Committee on Social Investing - Last met: 07/07111; next meeting: TBD There were no updates to report. D. CONSENT ITEMS 1. Findings of Fact a. Christine L. Rohm - Tier 2 Commissioner Hansell moved that the Board approve the consent items, which was seconded by Commissioner Navarro and approved by the following vote: ayes, Commissioners Aliano, Diannitto, Hansell, Maull, Navarro, Perez and President von Voigt - 7; nays, none. E. CONSIDERATION OF FUruRE AGENDA items There were no items referred. F. PUBLIC COMMENTS There were no public comments. G. CLOSED SESSION ITEMS FOR POSSIBLE BOARD ACTION 1. CLOSED SESSION PURSUANT TO GOVERNMENT CODE SECTION TO CONFER WITH REAL PROPERTY NEGOTIATOR; Properties: 3 South Alameda Street, 360 East Second Street; Boyd Street, 464 & 470 East 3 rd Street, 216 S. Alameda Street: 1111 West Sunset Blvd.; Negotiator: David Weiner and Martin Cawley; Negotiating parties: Sentinel Real Estate Corporation; Under. negotiation: Instruction to negotiator will concern price

12 Minutes ofthe Board of Fire and Pension Commissioners Page 12 The Board met in closed session. President