AGENDA BOARD OF FIRE AND POLICE PENSION COMMISSIONERS. December 15, :30 a.m.

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1 AGENDA BOARD OF FIRE AND POLICE PENSION COMMISSIONERS December 15, :30 a.m. Sam Diannitto Boardroom Los Angeles Fire and Police Pensions Building 701 East 3rd Street, Suite 400 Los Angeles, CA Commissioner Diannitto will participate telephonically from 4612 El Reposo Drive, Los Angeles, CA An opportunity for the public to address the Board or Committee about any item on today s agenda for which there has been no previous opportunity for public comment will be provided before or during consideration of the item. Members of the public who wish to speak on any item on today s agenda are requested to complete a speaker card for each item they wish to address, and present the completed card(s) to the commission executive assistant. Speaker cards are available at the commission executive assistant s desk. In compliance with Government Code Section , non-exempt writings that are distributed to a majority or all of the Board or applicable Committee of the Board in advance of their meetings may be viewed at the office of the Los Angeles Fire and Police Pension System (LAFPP), located at 701 East 3 rd Street, 2 nd Floor, Los Angeles, California 90013, or by clicking on LAFPP s website at or at the scheduled meeting. Non-exempt writings that are distributed to the Board or Committee at a scheduled meeting may be viewed at that meeting. In addition, if you would like a copy of any record related to an item on the agenda, please contact the commission executive assistant, at (213) or by at rhonda.ketay@lafpp.com. Sign language interpreters, communication access real-time transcription, assistive listening devices, or other auxiliary aids and/or services may be provided upon request. To ensure availability, you are advised to make your request at least 72 hours prior to the meeting you wish to attend. Due to difficulties in securing sign language interpreters, five or more business days notice is strongly recommended. For additional information, please contact the Department of Fire and Police Pensions, (213) voice or (213) TDD. 1. THE FIRE DEPARTMENT EMPLOYEE MEMBER OF THE BOARD ELECTION AND POSSIBLE BOARD ACTION 2. APPROVAL TO ISSUE A REQUEST FOR PROPOSAL FOR FINANCIAL PLANNING EDUCATION SEMINAR PROGRAM CATERING SERVICES AND POSSIBLE BOARD ACTION 3. RECOMMENDATION OF CONTRACT AWARD FOR FINANCIAL COUNSELING SERVICES AND POSSIBLE BOARD ACTION 4. CONSIDERATION OF ROBERT K. JARAMILLO S APPEAL TO TRANSFER FROM TIER 4 TO TIER 5 AND POSSIBLE BOARD ACTION

2 5. CHIEF INVESTMENT OFFICER S QUARTERLY REPORT OF ASSET ALLOCATION STATUS AND POSSIBLE BOARD ACTION 6. SMALL CAP US EQUITY STRUCTURE STUDY AND POSSIBLE BOARD ACTION B. REPORTS TO THE BOARD 1. QUARTERLY PORTFOLIO PERFORMANCE REPORT BY RVK 2. Miscellaneous correspondence from money managers, consultants, etc. Received and Filed. 3. General Manager s Report a. Monthly Report b. Marketing Cessation Information c. Benefits Actions approved by General Manager on December 1, 2016 d. Other business relating to Department operations C. CONSENT ITEMS 1. Approval of Minutes a. Regular Board meetings of June 2 and16, 2016 and July 7, 2016 b. Special Board meeting of June 2, Findings of Fact a. Anna M. Garza Tier 3 D. CONSIDERATION OF FUTURE AGENDA ITEMS E. GENERAL PUBLIC COMMENT ON MATTERS WITHIN THE BOARD S JURISDICTION F. DISABILITY CASES Alternative 2 Detective I Daniel K. Logan. Detective Logan will be represented by Thomas J. Wicke, Esq. of Lewis, Marenstein, Wicke, Sherwin and Lee. December 15,

3 DEPARTMENT OF FIRE AND POLICE PENSIONS 701 E. 3rd Street, Suite 200 Los Angeles, CA (213) REPORT TO THE BOARD OF FIRE AND POLICE PENSION COMMISSIONERS DATE: DECEMBER 15, 2016 ITEM: A.1 FROM: RAYMOND P. CIRANNA, GENERAL MANAGER SUBJECT: THE FIRE DEPARTMENT EMPLOYEE MEMBER OF THE BOARD ELECTION AND POSSIBLE BOARD ACTION RECOMMENDATION That the Board: 1. Authorize the General Manager to provide notification to the Office of the City Clerk (City Clerk) and the General Manager of the Personnel Department in accordance with Section (a) of the Los Angeles Administrative Code (LAAC) for the 2017 Fire Department Employee Member of the Board Election tentatively scheduled for Tuesday, April 25, 2017; 2. Authorize the General Manager to cause to be prepared, not more than 30 nor less than 20 days before the election in accordance with LAAC Section (b), a Notice of Election which shall also include the Sample Ballot and the rules concerning voter eligibility; and, 3. Authorize the General Manager and Staff to perform the necessary administrative work specified in the LAAC; to coordinate the general election and if necessary, the runoff election process as required with the City Clerk, Fire Department, Personnel Department, and employee organizations; and to make technical corrections as necessary to effectuate the intent of this report. DISCUSSION Commissioner Ruben Navarro s term of office as the Fire Department Employee Elected Board Member will expire on June 30, The City Clerk has indicated that Tuesday, April 25, 2017 is available for the election for the new five-year term starting July 1, On September 1, 2016, the Board approved changes to the Los Angeles Administrative Code (LAAC) election procedures, which then required City Council to adopt an ordinance reflecting the changes. The City Attorney s Office prepared the ordinance and on December 9, 2016, the City Council approved the ordinance, which is now pending Mayoral concurrence (Council File ). As such, these changes will be effective for the April 25, 2017 election. Some of the significant changes include the following: Regular elections shall be held by April 30 of each year in which the term of the Board member expires, changed from the last Tuesday in April to allow for greater flexibility;

4 The Nomination of Candidates requires that a candidate submit a Notice of Intent to run form to the City Clerk s office, eliminating the nominating petition election process. This change is now consistent with the retired member election process; Candidates now have the opportunity to appoint him/herself as an observer to the ballot count in addition to two observers, for a maximum total of three observers; The standardization of formatting was completed to mirror the retired member election processes and provide for consistent election procedures; and, The election process for Board member recalls was changed to allow for one concurrent election that allows for a vote for the recall and the successor at the same time, also consistent with the retired member recall election process. Attached is the general election calendar for the Fire Department employee member of the Board. Certified election results from the City Clerk will be furnished within 14 calendar days after the date of the election and will be presented to the Board on May 18, If no candidate receives a majority of votes cast, the City Clerk shall conduct a runoff election between the two candidates receiving the highest number of votes. Per LAAC Section (b), a runoff election shall be conducted not more than 45 nor fewer than 30 calendar days after the date of certification of the regular election. The City Clerk has indicated that June 2, 2017 is tentatively available for the runoff election, only if necessary. The runoff election results would then be presented to the Board on June 15, BUDGET $25,000 for election-related expenses is included in the budget. POLICY There are no policy changes associated with this report. This report was prepared by: Wendy Kamayatsu, Management Analyst II Administrative Services Section RPC:WSR:SHC:DP:MG:WK Attachment: 2017 General Election Calendar and General Information Fire Department Employee Member of the Board Board Report Page 2 December 15, 2016

5 2017 General Election Calendar and General Information Board of Fire and Police Pension Commissioners Fire Department Employee Member Attachment City of Los Angeles Department of Fire and Police Pensions 701 E. 3rd Street, Suite 200 Los Angeles, CA The current term for the Fire Department Employee Member of the Board of Fire and Police Pension Commissioners will end on June 30, The Office of the City Clerk, in conjunction with the Department of Fire and Police Pensions, is scheduled to conduct a General Election on Tuesday, April 25, 2017, to fill that position. The election is open to all active sworn members of the Los Angeles Fire Department. Below is a list of important dates for members interested in running in the election and for eligible voters. The Office of the City Clerk - Election Division is located at Piper Technical Center, 555 Ramirez Street, Space 300, Los Angeles, CA Questions related to the Board of Fire and Police Pension Commissioners should be addressed to the Department of Fire and Police Pensions at (213) Questions related to election conduct should be addressed to the Office of the City Clerk at (213) February 24, 2017 (Fri.) March 9, 2017 (Thurs.) March 17, 2017 (Fri.) March 21, 2017 (Tues.) April 5, 2017 (Wed.) April 5, 2017 (Wed.) April 17, 2017 (Mon.) The Office of the City Clerk mails notification to eligible members that candidates are being sought for the 2017 Fire Department Employee Member of the Board Election. Starting at 8:00 a.m., candidates who wish to qualify for the ballot may provide Notice of Intent to run for office, optional Occupational Ballot Designation and optional Statement of Qualifications for office in person to the Office of the City Clerk - Election Division, 555 Ramirez Street, Space 300, Los Angeles, CA (7 business days preceding the deadline to file Notice of Intent to run for office). Deadline for candidates to submit a Notice of Intent to run for office and optional Occupational Ballot Designation and Statement of Qualifications for office either by mail or in person. All candidate documents must be received by the Office of the City Clerk - Election Division by 5:00 p.m. in order to qualify for the ballot. Randomized alphabet drawing will be conducted at the Office of the City Clerk - Election Division at 9:00 a.m. The Office of the City Clerk mails ballots to eligible voters. Notice of Election and Sample Ballot posted at the Office of the City Clerk - Election Division. First day that members who gain eligibility to vote prior to election can vote in person at the Office of the City Clerk - Election Division after securing a certificate of eligibility from the Personnel Department. Page 1 of 2

6 April 21, 2017 (Fri.) Deadline for candidates to submit an Observers List with the Office of the City Clerk by 5:00 p.m. Limit of 2 observers per candidate, but candidates may also observe in addition to the two observers. April 25, 2017 (Tues.) Election Day. All ballots must be received by the Office of the City Clerk - Election Division, by 5:00 p.m., in order to be counted. April 27, 2017 (Thurs.) May 2, 2017 (Tues.) May 9, 2017 (Tues.) May 18, 2017 (Thurs.) June 2, 2017 (Fri.) June 15, 2017 (Thurs.) July 1, 2017 (Sat.) Ballot counting will take place at the Office of the City Clerk - Election Division, Piper Technical Center, 555 Ramirez Street, Space 300, Los Angeles, CA 90012, at 9:00 a.m. Deadline to file written protest to the Office of the City Clerk. Deadline by which the Office of the City Clerk shall furnish the official certified election results to the Board of Fire and Police Pension Commissioners. Certified election results of the General Election presented to the Board. Runoff Election (If needed) Certified election results of the Runoff Election presented to the Board (If needed) Five-year term begins for the Fire Department Employee Member of the Board of Fire and Police Pension Commissioners. Page 2 of 2

7 DEPARTMENT OF FIRE AND POLICE PENSIONS 701 E. 3rd Street, Suite 200 Los Angeles, CA (213) REPORT TO THE BOARD OF FIRE AND POLICE PENSION COMMISSIONERS DATE: DECEMBER 15, 2016 ITEM: A.2 FROM: RAYMOND P. CIRANNA, GENERAL MANAGER SUBJECT: APPROVAL TO ISSUE A REQUEST FOR PROPOSAL FOR FINANCIAL PLANNING EDUCATION SEMINAR PROGRAM CATERING SERVICES RECOMMENDATION That the Board authorize the General Manager to issue a Request for Proposal (RFP) for Financial Planning Education Seminar Program catering services. DISCUSSION Staff is requesting authorization to issue an RFP for catering services for future Financial Planning Education Seminars. Firms will be required to submit proposals that demonstrate their experience in providing professional, affordable and high quality catering services. The intent is to award a three-year contract to the firm which best meets the Department s needs. Financial Planning Education Seminars are held at different facilities throughout Los Angeles. Meals are provided to ensure that attendees return from breaks and lunch within a reasonable time frame since the primary venue (i.e., Grace Simons Lodge) is in a somewhat remote location. A continental breakfast and lunch is normally served to members and their spouses/domestic partners during the six-hour educational session. Catering services were previously provided through a oneyear contract with a limit of $25,000. By the end of FY the number of seminars will have doubled from last fiscal year. We anticipate that the cost will exceed the previous $25,000 limit. Upon Board approval, the RFP will be published on the LAFPP website and the City's contracting opportunities website (Business Assistance Virtual Network - BAVN). Staff anticipates the evaluation of responses, cost information and a contract award recommendation will be presented to the Board by March 16, BUDGET Sufficient funds are included in the current budget for the remaining seminar catering costs this fiscal year. Additional funding will be requested in future budgets due to the anticipated increase in seminars scheduled.

8 POLICY No policy changes as recommended. This report was prepared by: Conroy Gibson, Management Analyst I Communications and Education Section RPC:JS:CT:CG Board Report Page 2 December 15, 2016

9 DEPARTMENT OF FIRE AND POLICE PENSIONS 701 E. 3rd Street, Suite 200 Los Angeles, CA (213) REPORT TO THE BOARD OF FIRE AND POLICE PENSION COMMISSIONERS DATE: DECEMBER 15, 2016 ITEM: A.3 FROM: RAYMOND P. CIRANNA, GENERAL MANAGER SUBJECT: RECOMMENDATION OF CONTRACT AWARD FOR FINANCIAL COUNSELING SERVICES AND POSSIBLE BOARD ACTION RECOMMENDATION That the Board: 1) Approve the selection of Four Square Financial Literacy Partners, Inc. to provide financial counseling services for a three-year term; and 2) Authorize the General Manager to negotiate and execute the terms and conditions of the contract; and 3) Authorize the President of the Board, on behalf of the Board, to execute the contract subject to the approval of the City Attorney as to form. BACKGROUND Members participating in the Deferred Retirement Option Plan (DROP) program, as well as other members approaching retirement, have often sought referrals from LAFPP for a personal financial planner or counselor. In the Fiscal Year 2016, members exited with significant DROP account balances and were faced with decisions regarding their account distribution options, related tax consequences, investment fees, etc. Members are seeking guidance in evaluating and utilizing their resources to develop a comprehensive retirement plan. LAFPP has provided financial education to members for over 25 years, but all consultants have been restricted from soliciting personal financial planning services/advice. Information on the City s Deferred Compensation Plan is also provided to members, but these representatives are also restricted from offering personalized planning services. The average amount of the DROP account balances attracts solicitations by advisors who may not necessarily invest in the members best interests. Members of the Board have also expressed concern over financial representatives making presentations to members with biased and/or self-serving advice and inaccurate plan information. Staff worked with the member associations, the Office of the City Attorney and a sample group of members to research the possibility of offering personal financial counseling services without risk to the Fund. An initial meeting was held with representatives of United Firefighters of Los Angeles City, Los Angeles Police Protective League, Los Angeles Firemen s Relief Association, Los Angeles Police Relief Association, and Los Angeles Retired Fire and Police Association, to request their input on this type of program. The representatives were supportive of the proposed services.

10 DISCUSSION In July 2015, LAFPP released a Request for Proposal (RFP) for Financial Planning Education and Counseling Services. In response to the RFP, one proposal was received from Four Square Financial Literacy Partners, Inc., offering services for both financial education and counseling. (To separate financial education from personal financial counseling, Four Square was formed to provide fee-based education-only services for clients of Cambridge Financial Partners, LLC. Four Square does not engage in the sale of insurance, investment products or fee-based counseling. These services are conducted through Cambridge Financial.) In November 2015, to continue the Financial Planning Education Program without disruption, the Board awarded a contract to Four Square Financial to provide financial education seminars. At that time, further research was necessary to determine the scope and feasibility to proceed with an award of a financial counseling services contract. In May 2016, the following items were discussed with the City Attorney: Approved disclaimers and waivers would be required to transition the member from education services to counseling services and to allow sessions to take place at LAFPP offices. After each counseling session, an evaluation would be completed by the member and submitted to LAFPP to ensure that no solicitation of products occurred. Having the member pick up the full cost of the proposed counseling session fee would avoid any potential issues related to using Plan assets for purposes not directly related to administering LAFPP benefits. A focus group was conducted with recently retired and active members in September 2016 to determine if members found the proposed program beneficial and the proposed fee reasonable. Eleven members participated and provided valuable feedback. Information on the proposed counseling program was introduced and each participant was provided personalized reports similar to those that would be provided as part of the final program. After reviewing their personalized reports and providing suggestions, the participants agreed that the proposed program will be of great value to LAFPP members, even with the members picking up the full cost of the individual counseling session. Staff recommends to award a three-year contract to Four Square Financial Literacy Partners, Inc. for financial counseling services. Four Square will retain the services of Cambridge Financial Partners, LLC. During the counseling session, the advisors of Cambridge would not be allowed to provide, sell or derive any income from the sale of any investment products to members. In addition, any advice to the member for certain investment choices should not affect or provide compensation to the advisor. The contract and waivers completed by member participants will include these stipulations. The proposed counseling services include a 3-part meeting with members (in-person, phone, or web-based): 1. Collect personal data (1 hour) 2. Input data into financial counseling software, TRAK 1 (collect any additional data - 1 hour) 1 Consultant will work with LAFPP staff to customize the TRAK program and integrate Plan provisions within the deliverable. Board Report Page 2 December 15, 2016

11 3. Counseling session (1 hour): Review personalized summary (sample reports attached) Review entire financial plan Other: budget items, gap analysis (from paycheck to pension check), spending strategy, taxation recommendations, Social Security integration, long term care comments, life insurance comments/analysis, estate planning considerations. The member would first be required to attend a Financial Planning Education seminar. After attending the seminar, members interested in a follow-up personal counseling session would sign a disclaimer acknowledging the transition of services from education to counseling. The final fee will not exceed $ All fees would be collected by the consultant upon completion and acceptable delivery of the proposed plan. 2 As a pilot program, LAFPP will offer the counseling services to only DROP members after they attend a DROP Exit seminar. After one year, the counseling program will be evaluated to assess the level of interest and participation. At that time, staff will determine the ability to offer counseling sessions to all interested members after they attend any of the financial education seminars. BUDGET There is no budgetary impact related to this report as participating members will pay the entire cost of the financial counseling services they receive. POLICY No policy changes as recommended. This report was prepared by: Carol Tavares, Manager Communications & Education Section RAP:JS:CT Attachment: Sample Summary of Plan Findings and Gap Analysis Report 2 Since Cambridge advisors are Investment Advisor Representatives (IARs) of a Registered Investment Advisor (RIA), all payments must be made payable to the RIA: OneAmerica Securities. All final plans and delivery receipts are kept on record with the RIA and are available for scrutiny by the governing regulatory bodies of the industry. Board Report Page 3 December 15, 2016

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22 DEPARTMENT OF FIRE AND POLICE PENSIONS 701 E. 3rd Street, Suite 200 Los Angeles, CA (213) REPORT TO THE BOARD OF FIRE AND POLICE PENSION COMMISSIONERS DATE: DECEMBER 15, 2016 ITEM: A.5 FROM: SUBJECT: RAYMOND P. CIRANNA, GENERAL MANAGER CHIEF INVESTMENT OFFICER S QUARTERLY REPORT OF ASSET ALLOCATION STATUS AND POSSIBLE BOARD ACTION RECOMMENDATION That the Board approve the actual asset allocation of the Fund and Staff s plans for bringing asset classes currently outside of their target allocation ranges back within their allocation ranges. BACKGROUND The Rebalancing Policy (Board Policies Sec 1.7) specifies that the Board will review and affirmatively approve any allocations of Fund assets outside of their target ranges. It states: Staff will monitor the portfolio s asset allocation relative to the target allocations. If the actual allocations fall within the defined ranges, no rebalancing will be required. If actual allocations fall outside the predetermined range, Staff will implement a rebalancing back to within the range of the target allocation. Staff will report all rebalancing activities to the Board on a quarterly basis at a minimum. In circumstances where it is impractical to rebalance the portfolio for any market or portfolio-specific reason, Staff shall assess the rebalancing options, notify the Board of the out of balance situation, and report its recommendations to the Board. Staff shall seek approval from the Board to implement rebalancing according to Staff s recommended rebalancing plan in situations that involve leaving the portfolio, or some portion of the portfolio out of balance for an extended period of time. On June 16, 2016, the Board approved the current asset allocation: Target Upper Lower Asset Class Allocation Range Range Dom. Large Cap Equity 23.0% 25.8% 20.2% Dom. Small Cap Equity 6.0% 7.3% 4.7% Int'l Equity 16.0% 18.4% 13.6% Int'l Emerging Markets 5.0% 6.4% 3.6% Core Bond 12.0% 12.7% 11.3%

23 (cont d from previous page) Target Upper Lower Asset Class Allocation Range Range TIPS 5.0% 5.3% 4.7% High Yield Bond 3.0% 3.4% 2.6% Unconstrained Fixed Income 2.0% 2.2% 1.8% Real Estate 7.0% 8.0% 6.0% REITS 3.0% 3.5% 2.5% Commodities-Energy 5.0% 6.2% 3.8% Private Equity 12.0% 15.0% 9.0% Cash Equivalent 1.0% 4.0% 1.0% Together with the General Consultant RVK and Staff, rebalancing range limits were established. DISCUSSION Portfolio Status As of November 30, 2016, all asset classes were within their target ranges except Domestic Equity (Attachment I). Due to market optimism associated with the US Presidential election result, US stocks increased in value substantially through the end of November. Domestic Large Cap Equity which was above its target allocation but within its upper range edged slightly above its upper limit. Private Equity which fell below its lower target range in June 2016 when the Board increased its allocation from 10% to 12% is now in its target range. The primary driver of this change was additional capital contributions to this asset class. Attachment II illustrates the portfolio and allocation status of each asset class as of November 30, Rebalancing With the uncertainties associated with the global situation, our cash level remained at a healthy level to fund operating needs such as pension rolls. With the approval by the Board on November 3, 2016 to restructure the Domestic Large Cap Equity asset class, more rebalancing is expected to occur during the first half of Board Report Page 2 December 15, 2016

24 CASH FLOW The actual and estimated cash flows (in millions) for 4Q2016 and 1Q2017 are summarized as below. Oct 1 - Dec 31, 2016 Jan 1 - Mar 31, 2017 Actual/Projected Projected City Contributions (Net) 1 $ - $ - Member Contributions $ 31.1 $ 32.8 Securities Lending $ 2.2 $ 2.2 Investment Income $ 83.0 $ 87.0 Earnings on Cash/Misc. $ 0.9 $ 1.2 Real Estate $ 39.5 $ 6.5 Private Equity $ 4.6 $ 0.2 DROP $ (5.2) $ (22.5) Benefits & Administrative Expense $ (266.3) $ (274.0) Net Cash Flow (est.) $ (110.2) $ (166.6) 1 The Net City Contribution = (the Total General Fund Contribution the retirement contribution payment from LAFPP to LACERS for LAFPP staff) + the Special Fund (Harbor) contribution. The Excess Benefit Plan contribution is not included in the calculation. CURRENT EVENTS Asset Allocation/Asset Structural Review In addition to Domestic Large Cap Equity structural changes, a series of other asset allocation discussions which include Domestic Small Cap, International Equity (including Emerging Markets), and Fixed Income will be conducted by RVK. This report was prepared by: Tom Lopez Chief Investment Officer RPC:TL:DN:MS:AP Attachments: I. Portfolio Allocation Chart as of November 30, 2016 II. Total Portfolio as of November 30, 2016 Board Report Page 3 December 15, 2016

25 Attachment I Portfolio as of January 29, 2016 Total Fund Portfolio Allocation 35.00% 30.00% 26.01% 25.00% % 15.00% 10.00% 5.00% % % Core Equity (23%) Small Cap. Equity (6%) Int'l Equity (16%) Int'l Emerg. Mkts (5.0%) Core Bonds Iincluding TIPS) (17.0%) 15.02% % % % High Yield Bonds (3%) % Unconstrained Fixed Income (2.0%) Actual Allocation, Target Allocation in parenthesis Over-allocated (Blue), Under-allocated (Red) % % 9.19% Cash (1.0%) Total RE (Including REITS) Private Equity (12.0%) (10.0%) *Board approved ranges on 6/16/ % Commodities Energy (5.0%)

26 Attachment II A Portfolio as of November 30, 2016 EQUITIES STOCKS BONDS CASH TOTAL ALLOC. PRIVATE EQUITY STOCKS / EQUITY / RE BONDS CASH TOTAL ALLOC. Alliance Capital (S&P 500 Index) 2, ,107.8 Abbott Capital Alliance Capital (Russell 1000 Value Index) Hamilton Lane Alliance Capital (Russell 1000 Growth Index) PCA Chicago Equity (Enh. Index-Core) Portfolio Advisors 1, ,287.6 LA Capital (Enh. Index-Growth) Aldus Equity PIMCO (Enh. Index-Value) Stepstone Group Robeco (Value) TOTAL PRIVATE EQUITY MGRS (12%) 1, , % OakBrook Investments (Large Cap-Core) Target Differential (2.81)% (543.9) Redwood Investments (Large Cap-Core) Terminated Domestic Equity Managers REAL ESTATE Core Equity Managers (23%) 5, , % Alliance Capital Global REIT Target Differential 3.01% Principal Global REIT Principal U.S. REIT Frontier Capital Mgt (Growth) Terminated REIT Managers Daruma (Value) REIT Managers (3.0%) % Channing Capital Mgt. (Small Cap.) Target Differential 0.03% 6.4 Phocas Financial (Small Cap.) REAL ESTATE COMMINGLED FUNDS SUMMARY Granite Investment Partners (Micro Cap) Total Pooled Funds % Attucks (Mgr of Emerging Mgrs) / New Accts REAL ESTATE SEPARATE ACCT. SUMMARY BY MANAGER Small Cap. Equity Mgrs (6%) 1, , % Heitman Target Differential 0.86% Sentinel Real Estate Equity Mgrs % Brandes (Value) TOTAL REAL ESTATE (10%) 1, , % Fisher (Core) Target Differential 0.08% 14.7 Blackrock (Core Passive) COMMODITIES Baille Gifford (Growth) Alliance (Commodities, Public Equity) Boston Common (ESG) Gresham Invest. Mgmt. (Commodities, Active) Northern Trust (Int'l Small Cap Index) Goldman Sachs (Commodities, Enhanced Index) FIS (Mgr of Emerging Mgrs) International Kleinwort Benson (Commodities, Public Equity) Terminated Int'l Equity Managers Mellon Capital (Commodities, Public Equity) Int'l Equity Mgrs (16%) 2, , % PA (Commodities, Private Equity) Target Differential (0.98)% (189.1) TOTAL COMMODITIES (5.0%) % Harding Loevner Target Differential (1.08)% (220.6) Dimensional Fund Advisors Terminated Int'l Emerg. Mkts. Mgrs CASH Int'l Emerg. Mkts Mgrs (5.0%) % HOUSE ACCOUNTS Target Differential (1.12)% (217.2) Tier 1 (Article 17) TOTAL EQUITIES MGRS (50.0%) 9, , % Tier 2 (Article 18) Int'l Tax Reclaims Tier 3 (Article 35) FIXED INCOME Tier 4 (New) Northern Trust (Fixed Income Index) Tier 5 (New) Reams Asset Mgmt. (Opportunistic) Tier 6 (New) LM Capital (Opportunistic) CASH SUMMARY GIA Partners (Opportunistic) Unallocated Cash Reserve (1%) % SemperCapital Mgt Target Differential 2.57% Loomis Sayles (Long Duration) Transition CA Comm. Mort. Fund TOTAL FUND Bridgewater (TIPS) PRIVATE REAL Reams Asset Mgmt. (Passive TIPS) COMMODITIES EQUITY STOCKS BONDS ESTATE CASH TOTAL Bridgewater Pure Alpha ACTUAL ASSET MIX Core Bond Mgrs (17.0%) - 3, , % Current Month , , , , ,329.3 Target Differential (0.15)% (28.6) 3.86% 9.19% 51.00% 21.18% 10.05% 4.73% % MacKay Shields Last Month , , , , ,214.7 High Yield Bond Mgrs (3.0%) % % Change 2.22% 3.66% 2.45% -2.11% -2.29% -6.75% 0.60% Target Differential (0.33)% (63.0) Reams Asset Mgmt. (Unconstrained) Payden & Rygel (Unconstrained) Unconstrained Fixed Income (2.0%) % Target Differential (0.05)% (10.4) TOTAL FIXED INCOME MGRS (22.0%) 1.3 4, , % Subtotals & totals may not sum up exactly due to rounding. Note: Data is unaudited Dollars expressed in Millions. Note: City Pension Contribution received on 7/15/16

27 DEPARTMENT OF FIRE AND POLICE PENSIONS 701 E. 3 RD Street, Suite 200 Los Angeles, CA (213) REPORT TO THE BOARD OF FIRE AND POLICE PENSION COMMISSIONERS DATE: DECEMBER 15, 2016 ITEM: B.3.a FROM: SUBJECT: RAYMOND P. CIRANNA, GENERAL MANAGER NOVEMBER 2016 MONTHLY REPORT AND UPDATE THIS REPORT IS PROVIDED FOR INFORMATIONAL PURPOSES DISCUSSION The November 2016 Monthly Report includes the following notable items: 1) Pension Perspectives Retired Members The upcoming newsletter for Retired Members was approved and forwarded to the graphic designer for the final layout. Staff anticipates the distribution date to be in mid-december. Retired and DROP members will receive copies via U.S. mail and . A copy of the newsletter will also be posted on the website for their reference. 2) 2016 Annual Report Staff continues to update the various sections of the Annual Report and are currently being reviewed by Executive Staff and City Attorney. With the Board approval of the June 20, 2016 Valuation, the Report can be finalized with the pertinent data. 3) Airport Police Transfer to Tier 6 Representatives from the CAO s office, Airports, LACERS, and City Attorney s office met with staff on November 16 th to discuss the timeline and logistics for the transfer of Airport Police Officers. Per the latest published election results on the Los Angeles County Registrar-Recorder website, it appears that the ballot measure was approved by voters. The election results must be certified by the County prior to the confirmation of City Council. In January, it is then anticipated that a first reading of an ordinance for establishing the dates and procedures for the transfer of these employees from LACERS to LAFPP with a second reading in February for an ordinance defining the methodology for purchases of the employee s LACERS service with LAFPP will be presented to City Council. 4) Side A Director s and Officer s (D&O) Liability Insurance A quote for $33,510 has been received for a one-year $10 million policy ($0 deductible), which is the same cost as last year. Additionally, built into the quote is a renewal guarantee for a second year of D&O Insurance at the same cost. The City Attorney s office will review the policy once it is received by staff. There will be no lapse in coverage since the policy will commence on December 23, ) Electronic Documents Management (Documentum & Docushare) Since the backlog of dayforward scanning is completed, staff has begun the Quality Assurance assessment for documents stored and retrieved from an off-site storage facility. Both Administrative Services and Systems staff are researching the technical requirements to replace the high-volume document scanner since the current scanner is experiencing software problems with the digital

28 capture software program. The new scanner is anticipated to be purchased within the next two to three months. Documentum s retirement was postponed to December to ensure the DocuShare training was completed for the routing and review process of Disability packages. 6) Private Equity - The following private equity investments have closed since the last meeting announcement: On September 15, 2016, the Board, in closed session pursuant to Government Code Section , approved a commitment of up to $20 million in the following alternative investment: Tillridge Global Agribusiness Partners II, L.P. and the investment closed on October 21, Board vote: Ayes 6, Nays 0 On September 15, 2016, the Board, in closed session pursuant to Government Code Section , approved a commitment of up to $25 million in the following alternative investment: Incline Equity Partners IV, L.P. The general partner reduced LAFPP's commitment to $12 million due to oversubscription and the investment closed on December 2, Board vote: Ayes 5, Nays 0 The following searches and firms are within the Marketing Cessation Period Policy*: Vendor / Contract Contract Start Date Contract Expiration Date Market Cessation Start Date Harding Loevner (International Emerging Markets) 02/01/14 01/31/17 11/02/16 The Townsend Group (Real Estate Consultant) 02/01/14 01/31/17 11/02/16 *Marketing Cessation: In accordance with Section 9.0 of the Investment Policy, from the time the search begins with the Board s approval of the minimum criteria for the search until the search ends with the selection of the firm(s) to receive contract(s), all direct marketing contact with firms that meet the search criteria will be limited to meetings with the Consultant, information sent to the Consultant or Department, questions about the search directed to the Staff or Consultant, one meeting at the Department s office with Staff and any site visits. The Board members, Department Staff or Consultant will accept no entertainment or gifts of any kind from any firm qualifying for the search. This policy does not prohibit contact with potential interview candidates at group social events, educational seminars, conferences, or charitable events so long as there is no direct marketing. During the three months prior to the renewal of a contract with a firm currently under contract, the Board Members, Department Staff and Consultant will accept no entertainment or gifts from that firm until the contract has been renewed or terminated by the Board. Firms who currently have contracts with LAFPP are allowed to continue contact related to the existing contract with Staff and the Consultant. Attachment Board Report Page 2 December 15, 2016

29 Item: B.3.a MONTHLY REPORT NOVEMBER 2016

30 STATUS REPORT OF BOARD ASSIGNMENTS TO STAFF 12/15/16 MEETING DATE ASSIGNMENT FORMERLY GOVERNANCE COMMITTEE STAFF PERSON DATE DUE TO THE BOARD STATUS The Board approved the status of the two recommendations on October 2, 2014, leaving one in Progress. 04/03/14 HEK Audit recommendations: 2 recommendations assigned to the Governance Committee. William Raggio (1) TBD The one remaining active recommendation marked In Progress concerns the process that will be invoked when a potential conflict of interest arises with the City Attorney. This is being discussed by the Ad Hoc Committee City Attorney on Engagement of Outside Counsel. The date this is expected to be completed and presented to the Board is contingent upon the work of the Ad Hoc Committee on Outside Counsel. I:Executive/Board Assignments/Board Assign to Staff 12/15/16

31 A Portfolio as of November 30, 2016 EQUITIES STOCKS BONDS CASH TOTAL ALLOC. PRIVATE EQUITY STOCKS / EQUITY / RE BONDS CASH TOTAL ALLOC. Alliance Capital (S&P 500 Index) 2, ,107.8 Abbott Capital Alliance Capital (Russell 1000 Value Index) Hamilton Lane Alliance Capital (Russell 1000 Growth Index) PCA Chicago Equity (Enh. Index-Core) Portfolio Advisors 1, ,287.6 LA Capital (Enh. Index-Growth) Aldus Equity PIMCO (Enh. Index-Value) Stepstone Group Robeco (Value) TOTAL PRIVATE EQUITY MGRS (12%) 1, , % OakBrook Investments (Large Cap-Core) Target Differential (2.81)% (543.9) Redwood Investments (Large Cap-Core) Terminated Domestic Equity Managers REAL ESTATE Core Equity Managers (23%) 5, , % Alliance Capital Global REIT Target Differential 3.01% Principal Global REIT Principal U.S. REIT Frontier Capital Mgt (Growth) Terminated REIT Managers Daruma (Value) REIT Managers (3.0%) % Channing Capital Mgt. (Small Cap.) Target Differential 0.03% 6.4 Phocas Financial (Small Cap.) REAL ESTATE COMMINGLED FUNDS SUMMARY Granite Investment Partners (Micro Cap) Total Pooled Funds % Attucks (Mgr of Emerging Mgrs) / New Accts REAL ESTATE SEPARATE ACCT. SUMMARY BY MANAGER Small Cap. Equity Mgrs (6%) 1, , % Heitman Target Differential 0.86% Sentinel Real Estate Equity Mgrs % Brandes (Value) TOTAL REAL ESTATE (10%) 1, , % Fisher (Core) Target Differential 0.08% 14.7 Blackrock (Core Passive) COMMODITIES Baille Gifford (Growth) Alliance (Commodities, Public Equity) Boston Common (ESG) Gresham Invest. Mgmt. (Commodities, Active) Northern Trust (Int'l Small Cap Index) Goldman Sachs (Commodities, Enhanced Index) FIS (Mgr of Emerging Mgrs) International Kleinwort Benson (Commodities, Public Equity) Terminated Int'l Equity Managers Mellon Capital (Commodities, Public Equity) Int'l Equity Mgrs (16%) 2, , % PA (Commodities, Private Equity) Target Differential (0.98)% (189.1) TOTAL COMMODITIES (5.0%) % Harding Loevner Target Differential (1.08)% (220.6) Dimensional Fund Advisors Terminated Int'l Emerg. Mkts. Mgrs CASH Int'l Emerg. Mkts Mgrs (5.0%) % HOUSE ACCOUNTS Target Differential (1.12)% (217.2) Tier 1 (Article 17) TOTAL EQUITIES MGRS (50.0%) 9, , % Tier 2 (Article 18) Int'l Tax Reclaims Tier 3 (Article 35) FIXED INCOME Tier 4 (New) Northern Trust (Fixed Income Index) Tier 5 (New) Reams Asset Mgmt. (Opportunistic) Tier 6 (New) LM Capital (Opportunistic) CASH SUMMARY GIA Partners (Opportunistic) Unallocated Cash Reserve (1%) % SemperCapital Mgt Target Differential 2.57% Loomis Sayles (Long Duration) Transition CA Comm. Mort. Fund TOTAL FUND Bridgewater (TIPS) PRIVATE REAL Reams Asset Mgmt. (Passive TIPS) COMMODITIES EQUITY STOCKS BONDS ESTATE CASH TOTAL Bridgewater Pure Alpha ACTUAL ASSET MIX Core Bond Mgrs (17.0%) - 3, , % Current Month , , , , ,329.3 Target Differential (0.15)% (28.6) 3.86% 9.19% 51.00% 21.18% 10.05% 4.73% % MacKay Shields Last Month , , , , ,214.7 High Yield Bond Mgrs (3.0%) % % Change 2.22% 3.66% 2.45% -2.11% -2.29% -6.75% 0.60% Target Differential (0.33)% (63.0) Reams Asset Mgmt. (Unconstrained) Payden & Rygel (Unconstrained) Unconstrained Fixed Income (2.0%) % Target Differential (0.05)% (10.4) TOTAL FIXED INCOME MGRS (22.0%) 1.3 4, , % Subtotals & totals may not sum up exactly due to rounding. Note: Data is unaudited Dollars expressed in Millions. Note: City Pension Contribution received on 7/15/16

32 3.88% 2.67% 1.95% 3.57% 3.92% 6.86% 9.19% 10.08% 15.02% 16.85% 26.01% Portfolio as of January 29, 2016 Private Equity Commitment Summary Venture Capital Buy-out Special Situations Percentage Total $848,202,000 23% $1,787,218,000 49% $987,536,000 27% % Commitment Total $3,622,956,000 Private Equity Funding Summary Total Commitment Contributions Remaining Commitment Percent Funded Abbott $282,351,000 $272,553,000 $9,798, % Hamilton Lane $200,852,000 $193,398,000 $7,454, % Portfolio Advisors Legacy $265,205,000 $254,458,000 $10,747, % Portfolio Advisors Current $1,999,276,000 $997,681,000 $1,001,595, % PCA $193,197,000 $180,919,000 $12,278, % Stepstone Group $197,451,000 $178,051,000 $19,400, % Aldus Equity $484,625,000 $438,657,000 $45,968, % Total $3,622,957,000 $2,515,717,000 $1,107,240, % Unfunded Commitment $1,107,240,000 Source: BOARD OF FIRE AND POLICE PENSION COMMISSIONERS Data as of June 30, 2016 Data is based only on current/active funds whaich are funds that have r ing commitment or residual value. Total Fund Portfolio Allocation 35.00% 30.00% 25.00% % % % 5.00% % Core Equity (23%) Small Cap. Equity (6%) Int'l Equity (16%) Int'l Emerg. Mkts (5.0%) Core Bonds Iincluding TIPS) (17.0%) High Yield Bonds (3%) Unconstrained Fixed Income (2.0%) Cash (1.0%) Total RE (Including REITS) Private Equity (12.0%) (10.0%) Commodities Energy (5.0%) Actual Allocation, Target Allocation in parenthesis Over-allocated (Blue), Under-allocated (Red) *Board approved ranges on 6/16/16

33 Portfolio as of January 29, 2016 Real Estate Summary COMMINGLED FUNDS EQUITY POOLED CASH TOTAL ALLOC. ABR Chesapeake Fund III NA AEW Partners V NA AEW Value Investors II NA Almanac Securities Realty VII NA Berkshire Multifamily Income Realty Fund NA Buchanan Fund IV NA Calif Smart Growth IV NA Capri Urban Investors NA CIM Real Estate Fund III NA CIM Urban REIT, LLC NA CityView LA Urban Land Fund NA Clarion Lion NA Colony VIII NA CPI Capital Europe (A NA Forum Asian Realty II NA Gerrity Retail Fund NA Genesis Workforce Fund II NA Hampshire Partners VI NA Heitman Value Partners II NA Heitman American Realty Trust (HART) NA Jamestown Premier NA LaSalle Asia Opp. II NA Legg Mason Chesapeake RE NA Legg Mason II NA Metlife Core Property NA Noble Hospitality NA Oaktree Capital RE Opp. III NA Praedium Fund VII NA Principal Green I NA Prudential PRISA NA Prudential PRISA III NA Prudential RE Fund II NA Rothschild Five Arrows Realty V (Almanac) NA Savanna Real Estate Fund III NA Starwood Distressed Opp IX NA Standard Life Investments NA Standard Life Investments Euro RE Club II NA Stockbridge RE Fund II NA Unico Partners I NA Urdang Value-Added Fund II (CenterSquare) NA Value Enhancement IV (Ares) NA Value Enhancement V (Ares) NA Total % SEPARATE ACCOUNT PROPERTIES EQUITY POOLED CASH TOTAL ALLOC. Heitman - Galleria Palms Apts NA Heitman W. Chestnut 69.2 NA Heitman - Palm Valley 0.0 NA Heitman - Woodland Plaza 35.2 NA Heitman - Twin Creeks Village 31.7 NA Heitman - Sea Isle, Inc NA Sentinel - Corridor Park Pointe 6.8 NA Sentinel - Riverplace 28.1 NA Sentinel - Walmart Building at Water Ridge 34.2 NA Sentinel - Windward Place Apts NA Sentinel - Jefferson Town Center Apts 44.8 NA Sentinel - Broad Street 0.0 NA Sentinel - St. Louis Industrial 45.9 NA Sentinel - NorthPointe Exec. Park 37.2 NA Sentinel - Aerial Center Exec. Park 27.6 NA Sentinel (Urdang) - Shadeland Station 47.5 NA Sentinel (Urdang) - Exelon Building 23.7 NA Neptune Building 0.0 NA 0.0 Real Estate Managers Total Committed Heitman Sentinel Sentinel (Urdang) 71.2 Total %

34 Preliminary Return Information as of November 30, 2016 Manager 1-month 3-month 1-year 3-years 5-years FYTD Total Fund 0.73 % % 5.85 % 5.55 % 9.17 % 3.19 % S & P 500 Index 3.70 % 1.83 % 8.06 % 9.07 % % 5.73 % Total Equity 2.32 % 0.84 % 5.27 % 4.74 % % 6.40 % S & P 500 Index 3.70 % 1.83 % 8.06 % 9.07 % % 5.73 % Total Domestic Equity 5.50 % 2.93 % 7.49 % 7.86 % % 7.90 % Russell 3000 Index 4.48 % 2.38 % 8.31 % 8.68 % % 6.71 % Total Large Cap Equity 4.26 % 2.20 % 7.66 % 8.81 % % 6.17 % S & P 500 Index 3.70 % 1.83 % 8.06 % 9.07 % % 5.73 % Total Small Cap % 5.90 % 6.65 % 4.10 % % % Russell 2000 Index % 7.05 % % 6.45 % % % Total International Equity % % 1.63 % % 5.88 % 3.89 % MSCI ACWI ex-us % % 0.46 % % 4.71 % 3.05 % Total International Developed Markets % % % % 6.77 % 4.22 % MSCI ACWI ex-us % % 0.46 % % 4.71 % 3.05 % Total International Emerging Markets % % 9.92 % % 1.94 % 3.07 % MSCI Emerging Markets Index % % 8.86 % % 1.34 % 4.39 % Total Fixed Income % % 4.95 % 3.85 % 3.89 % % Barclays Universal % % 3.09 % 3.02 % 2.96 % % Total Core Fixed Income % % 3.83 % 3.98 % 4.01 % % Barclays Aggregate % % 2.17 % 2.79 % 2.43 % % Total High Yield % 1.05 % % 5.90 % 8.04 % 5.89 % LAFPP HY Benchmark % 0.56 % % 4.25 % 7.46 % 5.40 % Total REITs % % 2.56 % 9.24 % % % LAFPP REIT Benchmark % % 3.48 % 9.03 % 9.87 % % Total Commodities 1.87 % 2.88 % % % N/A 3.09 % Bloomberg Commodities Index TR 1.33 % 4.00 % 6.40 % % N/A % Footnote: 1 LAFPP HY Benchmark: CS HY Index thru 12/31/11 & BofA ML US HY Master II Cnst Index thereafter. 2 LAFPP REIT Benchmark: Dow Jones US Select RE Securities Index thru 12/31/13, 50% FTSE EPRA/NAREIT Global RE Index & 50% Dow Jones US Select RE Securities Index thereafter.

35 PENSIONS DIVISION (Data through November 30, 2016) DISABILITY PENSIONS Total Claims Filed* Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec YTD *Claims filed include the following: Disability, Active Member Death, Dependent Child/Parent. 7 Withdrawn Claims Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec