ORANGE COUNTY EMPLOYEES RETIREMENT SYSTEM BOARD OF RETIREMENT 2223 E. WELLINGTON AVENUE, SUITE 100 SANTA ANA, CALIFORNIA

Transcription

1 ORANGE COUNTY EMPLOYEES RETIREMENT SYSTEM BOARD OF RETIREMENT 2223 E. WELLINGTON AVENUE, SUITE 100 SANTA ANA, CALIFORNIA REGULAR BOARD MEETING FEBRUARY 17, 2009 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: Robert A. Griffith, Chair; Arthur A. Hidalgo, Vice Chair; Russell Baldwin; Anthony Bedolla; Frank E. Eley; Thomas E. Flanigan; Patti Gorczyca; Chriss W. Street and Richard A. White, Jr. Reed L. Royalty arrived at 8:50 a.m. Also Present: Steve Delaney, Chief Executive Officer; Shanta Chary, Chief Investment Officer; Stephen Cadena, Assistant Chief Executive Officer, Internal Operations; Julie Wyne, Assistant Chief Executive Officer, External and Legal Operations; Dr. Michelle Williamson, Director of Finance; Sally Koltunik, Manager, Human Resources; Suzanne Jenike, Member Services Director; Patricia Mazzeo, Internal Auditor; Amit Thanki, Investment Analyst; Isabel Linares, Disability Investigator; David Lantzer, Staff Attorney; Robert Kinsler, Manager, Communications; Anthony Beltran, Audio/Visual Technician and Tracy Ayres, Recording Secretary Paul Angelo, The Segal Company Harvey Leiderman, Esq., Reed Smith Michael O Leary, CFA, Callan Associates led the Pledge of Allegiance 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. A motion was made by, seconded by to approve the Consent Agenda. The motion carried, with absent. C-1 MATERIAL DISTRIBUTED Application Notices - Death Notices -

2 C-2 BOARD MEETINGS AND COMMITTEE MEETINGS: Approval of Meetings and Minutes Private Markets Committee Meeting - January 6, 2009 Investment Committee Meeting - January 8, 2009 Regular Board Meeting - January 20, 2009 Recommendation: Authorize all meetings and approve all minutes. C-3 RECOMMENDATIONS OF THE PRIVATE MARKETS COMMITTEE RESULTING FROM A MEETING ON JANUARY 6, 2009: A. STATE STREET 2008 SECOND QUARTER TPEG PERFORMANCE AND PRIVATE EQUITY MARKET UPDATE CLOSED SESSION B. CLOSED SESSION PURSUANT TO GOVERNMENT CODE SECTION REGARDING PURCHASE OR SALE OF A PENSION FUND INVESTMENT Recommendation: No reportable action. C. CLOSED SESSION TO DISCUSS THE PURCHASE AND SALE OF SPECIFIC REAL ESTATE HOLDINGS Recommendation: Approve the Annual Budget and Management Plans provided by American Realty Advisors and CB Richard Ellis. D. CONFERENCE WITH LEGAL COUNSEL ANTICIPATED LITIGATION PURSUANT TO GOVERNMENT CODE SECTION (c) Consideration of whether to initiate litigation pursuant to subdivision (c) of Section of the Government code: (Number of potential cases one) Recommendation: No reportable action. * * * * * * END OF CLOSED SESSION * * * * * * E. CALLAN ASSOCIATES 2008 THIRD QUARTER REAL ESTATE PERFORMANCE REPORT F. DISCUSSION ON PRIVATE EQUITY VEHICLE G MANAGER DUE DILIGENCE Recommendation: Approve the 2009 due diligence lists at the discretion of staff. 2

3 C-4 RECOMMENDATIONS OF THE INVESTMENT COMMITTEE RESULTING FROM A MEETING ON JANUARY 8, 2009: A. ABERDEEN ASSET MANAGEMENT REVIEW OF PERFORMANCE Recommendation: Place Aberdeen s Core Plus Fixed Income portfolio on watch list. B. CAPITAL GUARDIAN U.S. EQUITY STAFF TURNOVER C. CAPITAL GUARDIAN U.S. EQUITY REVIEW OF PERFORMANCE Recommendation: Extend the watch list for the Capital Guardian U.S. Equity mandate. D. DODGE & COX CHANGE IN INVESTMENT GUIDELINES Recommendation: The Committee failed to reach a recommendation. E. U.S. LARGE CAP GROWTH EQUITY MANAGER CANDIDATE PROFILE Recommendation: Approve the candidate profile for U.S. large cap growth manager. F. THE CLIFTON GROUP REVIEW OF CASH OVERLAY MANDATE G. DIRECTED BROKERAGE PROGRAM REVIEW Recommendation: Continue the existing directed brokerage program with the four brokers. H. TRANSITION MANAGEMENT SERVICE PROVIDERS Recommendation: Approve a search for transition management service providers. I. MANAGER DUE DILIGENCE SCHEDULE Recommendation: Approve the due diligence schedule. J. INVESTMENT POLICY UPDATES Recommendation: Approve the updates to the investment policy. CLOSED SESSION K. CONFERENCE WITH LEGAL COUNSEL ANTICIPATED LITIGATION PURSUANT TO GOVERNMENT CODE SECTION (c) 3

4 Consideration of whether to initiate litigation pursuant to subdivision (c) of Section of the Government code: (Number of potential cases two) Recommendation: No reportable action. * * * * * * END OF CLOSED SESSION * * * * * * C-5 FINANCIAL STATEMENTS FOR THE MONTH ENDING NOVEMBER 30, 2008 C-6 LEGISLATIVE UPDATE C-7 CHICAGO BOARD OPTIONS EXCHANGE (CBOE) 25 TH ANNUAL RISK MANAGEMENT CONFERENCE Recommendation: Authorize Thomas E. Flanigan s attendance at the CBOE 25 th Annual Risk Management Conference. C-8 QUIET PERIOD IN PROGRESS * * * * * * * END OF CONSENT AGENDA * * * * * * * INDIVIDUAL ITEMS AGENDA I-2 CHIEF INVESTMENT OFFICER S REPORT Ms. Chary reviewed the CIO s report. Following discussion, a motion was made by, seconded by to receive and file the CIO s report. The motion carried unanimously. arrived at 8:50 a.m. Mr. Street stated his concerns regarding the rebalancing of OCERS portfolio. Ms. Chary stated that staff intends to rebalance the portfolio. I-3 QUARTERLY PERFORMANCE REVIEW CALLAN ASSOCIATES Mr. O Leary reviewed Callan Associates Quarterly Performance Review. Following discussion, a motion was made by, seconded by to receive and file the Quarterly Performance Review. The motion carried unanimously. 4

5 I-4 DISTRESSED SECURITIES Mr. O Leary reviewed Distressed Securities. The Board requested that Mr. O Leary continue this item after the time certain agenda. Board recessed at 10:00 a.m. Board reconvened at 10:10 a.m. for the time certain agenda. left at 10:00 a.m. Mr. Street left at 10:10 a.m., the Treasurer/Tax Collector s Board alternate arrived at 10:10 a.m. and voted in Mr. Street s absence. DISABILITY APPLICATIONS/MEMBER APPEALS AGENDA 10:10 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. STAFF RECOMMENDATION IS TO GRANT SERVICE CONNECTED DISABILITY RETIREMENT WITH AN EFFECTIVE DATE OF JUNE 20, (SAFETY MEMBER) (D-1) D-1: Peter M. Perez Deputy Sheriff II, OC Sheriff s Department Application for service and non-service connected disability retirement Following discussion, a motion was made by, seconded by to grant service connected disability retirement with an effective date of June 20, The motion carried 8 to 0, with voting as follows: 5

6 STAFF RECOMMENDATION IS TO GRANT NON-SERVICE CONNECTED DISABILITY RETIREMENT WITH AN EFFECTIVE DATE OF MAY 2, (GENERAL MEMBER) (D-2) D-2: Roberto Y. Sy Engineering Technician III, OC Public Works Application for non-service connected disability retirement Following discussion, a motion was made by, seconded by to grant service connected disability retirement with an effective date of May 2, 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 FEBRUARY 28, (GENERAL MEMBER) (D-3) D-3: Glennis Washington Coach Operator, OC Transportation Authority Application for non-service connected disability retirement Following discussion, a motion was made by seconded by to grant nonservice connected disability retirement with an effective date of February 28, The motion carried 7 to 1, with voting as follows: STAFF RECOMMENDATION IS TO DENY SERVICE CONNECTED DISABILITY RETIREMENT FOR CONDITIONS 1 AND 2 DUE TO INSUFFICIENT EVIDENCE OF PERMANENT INCAPACITY OR JOB CAUSATION. 6

7 DENY SERVICE CONNECTED DISABILITY RETIREMENT FOR CONDITION 3 DUE TO INSUFFICIENT EVIDENCE OF PERMANENT INCAPACITY AS A RESULT OF THE EMPLOYER S ABILITY TO ACCOMMODATE THE APPLICANT S PERMANENT WORK RESTRICTIONS. (GENERAL MEMBER) (D-4) D-4: Cheryl A. Case Senior Supervisor, Social Services Agency Application for service connected disability retirement Following discussion, a motion was made by, seconded by to deny service connected disability retirement for conditions 1 and 2 due to insufficient evidence of permanent incapacity or job causation and to deny service connected disability retirement for condition 3 due to insufficient evidence of permanent incapacity as a result of the employer s ability to accommodate the applicant s permanent work restrictions. The motion carried 8 to 0, with voting as follows: STAFF RECOMMENDATION IS TO DISMISS THE APPLICATION FOR NON-SERVICE CONNECTED DISABILITY RETIREMENT WITHOUT PREJUDICE DUE TO THE MEMBER S FAILURE TO JOIN THE APPLICATION PROCESS. (GENERAL MEMBER) (D-5) D-5: Daniel Mercado Laborer, OC Public Works Application for non-service connected disability retirement Following discussion, a motion was made by, seconded by to dismiss the application for non-service connected disability retirement without prejudice due to the member s failure to join the application process. The motion carried 8 to 0, with voting as follows: 7

8 STAFF RECOMMENDATION IS TO DISMISS THE APPLICATION FOR SERVICE CONNECTED DISABILITY RETIREMENT WITHOUT PREJUDICE DUE TO THE MEMBER S FAILURE TO JOIN THE APPLICATION PROCESS. (GENERAL MEMBER) (D-6) D-6: Reyes Vargas Certified Journeyman Mechanic, OC Transportation Authority Application for service connected disability retirement Following discussion, a motion was made by, seconded by to dismiss the application for service connected disability retirement without prejudice due to the member s failure to join the application process. Following further discussion, a substitute motion was made by, seconded by Mr. Baldwin to continue this matter in two months. The motion carried 8 to 0, with voting as follows: Mark Singer, Attorney for Applicant, addressed the Board. STAFF RECOMMENDATION IS TO ADOPT THE FINDINGS AND RECOMMENDATIONS OF THE REFEREE AND GRANT APPLICANT S APPLICATION FOR SERVICE CONNECTED DISABILITY RETIREMENT WITH AN EFFECTIVE DATE OF FEBRUARY 28, (SAFETY MEMBER) (D-7) D-7: William Vellekoop Fire Apparatus Engineer, OC Fire Authority Application for service connected disability retirement Following discussion, a motion was made by Mr. Bedolla, seconded by to adopt the findings and recommendations of the referee and grant applicant s application for service connected disability retirement with an effective date of February 28, The motion carried 8 to 0, with voting as follows: Mr. Bedolla Richard J. Silber, Attorney for Applicant, addressed the Board. 8

9 STAFF RECOMMENDATION IS TO ADOPT THE FINDINGS AND RECOMMENDATIONS OF THE REFEREE AND DENY APPLICANT S APPLICATION FOR SERVICE AND NON- SERVICE CONNECTED DISABILITY RETIREMENT. (GENERAL MEMBER) (D-8) D-8: Michael Mercado Coach Operator, OC Transportation Authority Application for service and non-service connected disability retirement Following discussion, a motion was made by, seconded by to adopt the findings and recommendations of the referee and deny applicant s application for service and non-service connected disability retirement. The motion carried 8 to 0, with voting as follows: STAFF RECOMMENDATION IS TO ADOPT THE FINDINGS AND RECOMMENDATIONS OF THE REFEREE AND DENY APPLICANT S APPLICATION FOR SERVICE AND NON- SERVICE CONNECTED DISABILITY RETIREMENT. (GENERAL MEMBER) (D-9) D-9: Phu Nguyen Accounting Specialist, Treasurer/Tax Collector Application for service and non-service connected disability retirement Following discussion, a motion was made by, seconded by to adopt the findings and recommendations of the referee and deny applicant s application for service and non-service connected disability retirement. The motion carried 8 to 0, with voting as follows: 9

10 STAFF RECOMMENDATION IS TO ADOPT THE FINDINGS AND RECOMMENDATIONS OF THE REFEREE AND DENY APPLICANT S APPLICATION FOR SERVICE CONNECTED DISABILITY RETIREMENT DUE TO UNTIMELY FILING OF THE APPLICATION. (GENERAL MEMBER) (D-10) D-10: John Salverson Sergeant, OC Sheriff s Department Application for service connected disability retirement Ms. Jenike stated that the applicant, John Salverson withdrew his application for a service connected disability retirement. STAFF RECOMMENDATION IS TO DISMISS THE APPLICANT S APPLICATION FOR SERVICE AND NON-SERVICE CONNECTED DISABILITY RETIREMENT, AND DISMISS THE RELATED APPEAL, WITHOUT PREJUDICE, DUE TO THE APPLICANT S FAILURE TO COMPLY WITH THE HEARING RULES. (GENERAL MEMBER) (D-11) D-11: Deborah Lazan Eligibility Technician, Social Services Agency Application for service and non-service connected disability retirement Following discussion, a motion was made by, seconded by to dismiss applicant s application for service and non-service connected disability retirement, and dismiss the related appeal, without prejudice, due to the applicant s failure to comply with the hearing rules. The motion carried 8 to 0, with voting as follows: * * * * * * * * END OF DISABILITY APPLICATIONS/MEMBER APPEALS AGENDA * * * * * * * I-4 DISTRESSED SECURITIES Mr. O Leary continued with the review of Distressed Securities. Following discussion, a motion was made by, seconded by to receive and file the Distressed Securities report. The motion carried, with absent. requested that staff capture OCERS distressed securities exposure in a report. Mr. O Leary stated that Mercer Consultants have signed a definitive agreement to merge its investment consulting business with Callan Associates. 10

11 returned at 10:53 a.m. I-5 ANNUAL COST OF LIVING ADJUSTMENT Mr. Delaney reviewed the annual cost of living adjustment. Following discussion, a motion was made by, seconded by to acknowledge the adjustment of all applicable retirement allowances by 3.0% based upon the CPI for calendar year 2008 increasing by 3.50%. The motion carried unanimously. Mr. Angelo addressed the Board. Ms. Wyne addressed the Board. I-6 DISCUSSION OF ASSET SMOOTHING POLICY Mr. Angelo reviewed the report on Asset Smoothing. Following discussion, a motion was made by, seconded by to receive and file the report on Asset Smoothing. The motion carried unanimously. stated that Mr. Angelo will be presenting at the SACRS Symposium in Sacramento on Friday, March 20, CLOSED SESSION The Board entered into Closed Session at 12:06 p.m. E-1 CLOSED SESSION PURSUANT TO GOVERNMENT CODE SECTION REGARDING PURCHASE OR SALE OF A PENSION FUND INVESTMENT Recommendation: Take appropriate action. E-2 CONFERENCE WITH LEGAL COUNSEL REGARDING SIGNIFICANT EXPOSURE TO LITIGATION INITIATED AGAINST ORANGE COUNTY EMPLOYEES RETIREMENT SYSTEM (GOVERNMENT CODE SECTION (a)) Adjourn pursuant to subdivision (a) of section (one case: County of Orange, California v. Association of Orange County Deputy Sheriff s) Recommendation: Take appropriate action. recused himself from the Board deliberation and decisions concerning County of Orange v. Board of Retirement of Orange County Employees Retirement System. The Board reconvened from Closed Session at 12:42 p.m. The Board took no reportable action. 11

12 * * * * * * END OF CLOSED SESSION * * * * * * I-7 CORPORATE GOVERNANCE Mr. Delaney reviewed Corporate Governance. Following discussion, a motion was made by, seconded by to vote yes on CII s claw-back policy and to abstain on the director s policy. The motion carried, with Mr. Rodenhuis abstaining. requested that staff work with the Governance Committee to create a CII voting policy that identifies certain broad positions that staff can apply to the various issues that arise as well as defining the scope of delegation to staff. * * * * * * * END OF INDIVIDUAL ITEMS AGENDA * * * * * * PUBLIC COMMENTS None BOARD MEMBER COMMENTS stated that SACRS has hired Bob Palmer as SACRS interim CEO for one year. stated that SACRS Spring Conference will be held in May in San Francisco. CHIEF EXECUTIVE OFFICER/STAFF COMMENTS None COUNSEL COMMENTS None ADJOURNMENT: (IN MEMORY OF THE ACTIVE MEMBERS, RETIRED MEMBERS, AND SURVIVING SPOUSES WHO PASSED AWAY THIS PAST MONTH) Active Members: Retired Members: Surviving Spouses: Deaths (QDRO): Ray Logan and Kelly Pinion Donna Begley; Elizabeth Bell; Donald Campbell; Gayle Cleigh; Roy Crosby; Robert De Sutter; Jack Harloe; Martha Mayor; Dana Moseley; Ruth Prater; Lan Vinh and Evan Whiting None None 12

13 There being no further business to bring before the Board, motion was made by, to adjourn the meeting at 1:13 p.m. The motion carried unanimously. Submitted by: Approved by: Steve Delaney Secretary to the Board Robert A. Griffith Chair 13