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 MEETING JUNE 17, :00 a.m. MINUTES The Chair called the meeting to order at 9:06 a.m. and read the opening statement into the record. Attendance was as follows: Present: Thomas E. Flanigan, Chair; Frank E. Eley, Vice Chair; Roger Hilton; Wayne S. Lindholm; Robert A. Griffith; Reed L. Royalty; Ray Geagan; Chuck Packard; Chris Prevatt. Shari L. Freidenrich participated by telephone from a teleconference location at the Parks, Recreation and Tourism, 700 Town Center Drive, Director s Conference Room, Floor 3, Suite 3200, Newport News, VA, Also present: Steve Delaney, Chief Executive Officer; Julie Wyne, Assistant CEO, External and Legal Operations; Brenda Shott, Assistant CEO, Finance and Internal Operations; David James, Director of Internal Audit; Girard Miller, Chief Investment Officer; Robert Kinsler, Communications Manager; Cynthia Hockless, Human Resources Manager; David Lantzer, Staff Attorney; Megan Cortez; Disability Coordinator, Suzanne Jenike; Member Services Manager; Anthony Beltran, Visual Technician; and Alison Griffith, Recording Secretary Harvey Leiderman, Esq., Reed Smith, LLP Andy Yeung, The Segal Company Chair Flanigan led the Pledge of Allegiance. Chair Flanigan requested that the Board table item E-1 until the July 2013 Board meeting. A motion was made by, seconded by to table item E-1. The motion carried unanimously. 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 unanimously.

2 Regular Board Meeting - Minutes Page 2 C-1 MATERIAL DISTRIBUTED Application Notices - Death Notices - Recommendation: Receive and file. C-2 BOARD MEETINGS AND COMMITTEE MEETINGS Approval of Meetings and Minutes Regular Board Meeting - May 20, 2013 Recommendation: Authorize all meetings and approve all minutes. C-3 PENSION ADMINISTRATION SYSTEM SOLUTION (PASS) STATUS UPDATE Recommendation: Receive and file. C-4 STRATEGIC PLANNING FISCAL YEAR Recommendation: Receive and file. C-5 BOARD MEMBER ELECTION UPDATE Recommendation: Receive and file. C-6 LEGISLATIVE UPDATE JUNE 2013 Recommendation: Receive and file. C-7 BOARD COMMUNICATIONS Recommendation: Receive and file. * * * * * * END OF CONSENT AGENDA * * * * * * * Mr. Mark Nichols, Association of Orange County Deputy Sheriff s (AOCDS), addressed the Board asking that he be allowed to comment on item I-4 early as he needed to leave the meeting. He stated that of the three options being considered by the Board today on item I-4, he stands with his colleagues in support of alternative number 3. Mr. Nichols thanked the Board for allowing him to be part of their discussion.

3 Regular Board Meeting - Minutes Page 3 INDIVIDUAL ITEMS AGENDA I-1 INDIVIDUAL ACTION ON ANY ITEM TRAILED FROM THE CONSENT AGENDA None I-2 PORTFOLIO ACTIVITY REPORT This report will be presented at the June 26, 2013 Investment Committee meeting No action was taken on item I-2. I-3 DECEMBER 31, 2012 ACTUARIAL VALUATION Presentation by Andy Yeung, The Segal Company Recommendation: Approve December 31, 2012 Actuarial Valuation and adopt contribution rates for Fiscal Year as recommended by The Segal Company. Andy Yeung, The Segal Company, presented to the Board. Mr. Yeung explained the process of the process of the Valuation. requested that Mr. Yeung speak about the move from the 7¾ to 7¼ assumption rate. Mr. Yeung stated that it goes back to earlier returns and that in last 9 years, it has only happened twice, that the returns were less than the assumption. In response to a question by, Mr. Yeung stated that the change in the assumption rate would not affect our system through the end of He also stated that if the future investments failed to earn the assumed rates then the Board may feel pressure to adopt more conservative assumption rates. left the meeting at 9:51 a.m. Mr. Yeung stated that The Segal Company recommends that the Board approve the December 31, 2012 Actuarial Valuation and adopt contribution rates for Fiscal Year as recommended. A motion was made by, seconded by, to approve the item I-3. The motion carried unanimously with absent. The Board recessed at 10:10 a.m. The Board reconvened at 10:25 a.m. with present.

4 Regular Board Meeting - Minutes Page 4 I-4 ACTUARIAL FUNDING POLICY (AMORTIZATION) Presentation by Andy Yeung, The Segal Company Recommendation: Take appropriate action. Mr. Yeung presented item I-4 to the Board. Using a PowerPoint presentation, he highlighted key points of the Actuarial Funding Policy to the Board. During his presentation, he highlighted the funding policy components, general policy objectives, OCERS current funding policy, and stated the funding policy recommendations from The Segal Company which included no change from the current entry age normal cost method and no change to the current asset smoothing method. Mr. Yeung also highlighted the amortization policy and recommendations. He explained the components of the annual contributions and sources of unfunded liability. He also explained the amortization structure stating that OCERS amortizes UAAL in layers using a model approach. Mr. Yeung presented the Board with three alternatives to OCERS future UAAL arising from assumption changes. The Chair opened up the floor for statements from the public. Mr. Craig Young, City of Yorba Linda-Mayor Pro Tem, stated that the City of Yorba Linda is in favor of alternative number three, which was to shorten the amortization period from 30 to 25 years on future UAAL arising from assumption changes. Johnny Fleishman, resident of Rancho Santa Margarita, stated that he felt the importance of not passing off unfunded liability to future generations and requested that the Board choose an alternative that pays down the liability. Robert Ming, Mayor, City of Laguna Niguel, stated that if the Board were to adopt a longer term smoothing approach, it will inspire him to look at cost saving measures which include no longer contracting with the Orange County Sheriff s Department. Kathleen Sage, AOCW, stated that she represents the lowest paid employees of the County and would like to see the Board adopt alternative number three. Lori Zeller, OCFA, stated that OCFA was in favor of alternative number 3. Ken Gabrielson, OCPFF, stated that he was in favor of alternative number 3. David Shawver, Mayor, City of Stanton stated that the City of Stanton supports alternative #3 for future UAAL amortization and no change for current UAAL amortization. Mr. Mitch Tevlin, Manager of Budget for the County of Orange, stated that the County was in favor of alternative number 3 and no changes to the current UAAL amortization period. Jennifer Muir, OCEA, stated that OCEA supports alternative number 3. The Board recessed for lunch at 12:20 p.m. The Board reconvened 1:02 p.m. with absent.

5 Regular Board Meeting - Minutes Page 5 DISABILITY APPLICATIONS/MEMBER APPEALS AGENDA 1:00 P.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. D-1: John Lawrence (deceased) Firefighter, Orange County Fire Authority Date of employee filed application for service and non-service connected disability retirement: 07/25/2012 STAFF RECOMMENDATION IS TO GRANT SERVICE CONNECTED DISABILITY RETIREMENT WITH AN EFFECTIVE DATE OF MARCH 28, (SAFETY MEMBER) (D-1) Megan Cortez, Disability Coordinator, presented Item D-1 to the Board along with the staff A motion was made by Mr. Geagan, seconded by to approve the staff The motion carried 5-3 with voting as follows: Mr. Geagan D-2: Joseph Levy Coach Operator, Orange County Transportation Authority Date of employee filed application for service and non-service connected disability retirement: 07/09/2012 STAFF RECOMMENDATION IS TO GRANT SERVICE CONNECTED DISABILITY RETIREMENT WITH AN EFFECTIVE DATE OF JULY 9, (GENERAL MEMBER) (D-2) Megan Cortez, Disability Coordinator, presented Item D-2 to the Board along with the staff A motion was made by, seconded by to approve the staff The motion carried 6-2 with voting as follows:

6 Regular Board Meeting - Minutes Page 6 D-3: Parichart Ratawessnant Eligibility Technician, Orange County Social Services Agency Date of employee filed application for non-service connected disability retirement: 09/20/2012 STAFF RECOMMENDATION IS TO GRANT NON-SERVICE CONNECTED DISABILITY RETIREMENT WITH AN EFFECTIVE DATE OF SEPTEMBER 20, (GENERAL MEMBER) (D-3) Megan Cortez, Disability Coordinator, presented Item D-3 to the Board along with the staff A motion was made by, seconded by to approve the staff The motion carried 8-0 with voting as follows: D-4: Steve W. Shomber Fire Captain, Orange County Fire Authority Date of employee filed application for service connected disability retirement: 02/14/2012 STAFF RECOMMENDATION IS TO GRANT SERVICE CONNECTED DISABILITY RETIREMENT FOR CONDITION #1 WITH AN EFFECTIVE DATE OF FEBRUARY 14, 2012 AND DENY SERVICE CONNECTED DISABILITY RETIREMENT FOR CONDITION # 2 DUE TO INSUFFICIENT EVIDENCE OF JOB CAUSATION. (SAFETY MEMBER) (D-4) Megan Cortez, Disability Coordinator, presented Item D-4 to the Board along with the staff A motion was made by Mr. Geagan, seconded by to approve the staff The motion carried 6-2 with voting as follows:

7 Regular Board Meeting - Minutes Page 7 Mr. Geagan D-5: Janet A. Bolszo Senior Accounting Assistant, Orange County District Attorney Date of employee filed application for service and non-service connected disability retirement: 06/04/2012 STAFF RECOMMENDATION IS TO DENY SERVICE AND NON-SERVICE CONNECTED DISABILITY RETIREMENT DUE TO INSUFFICIENT EVIDENCE OF PERMANENT INCAPACITY. (GENERAL MEMBER) (D-5) Megan Cortez, Disability Coordinator, presented item D-5 to the Board along with the staff A motion was made by, seconded by to approve the staff The motion carried 8-0 with voting as follows: D-6: Brenda Bosco Sheriff s Special Officer II, Orange County Sheriff s Department Date of employee filed application for service connected disability retirement: 01/03/2012 STAFF RECOMMENDATION IS TO DENY SERVICE CONNECTED DISABILITY RETIREMENT DUE TO INSUFFICIENT EVIDENCE OF PERMANENT INCAPACITY. (GENERAL MEMBER) (D-6) Megan Cortez, Disability Coordinator, presented Item D-6 to the Board along with the staff Mr. Singer addressed the Board and urged them to approve the service connected disability retirement for Brenda Bosco.

8 Regular Board Meeting - Minutes Page 8 A motion was made by, seconded by to grant the service connected disability retirement for Brenda Bosco. A substitute motion was made by, seconded by to refer item D-6 back to staff for further evaluation with regards to pain management. The motion carried 7-1 with voting as follows: rejoined the meeting at 1:27 p.m. D-7: James E. Flannigan Coach Operator, Orange County Transportation Authority Date of employee filed application for service connected disability retirement: 06/01/2012 STAFF RECOMMENDATION IS TO DENY SERVICE CONNECTED DISABILITY RETIREMENT DUE TO INSUFFICIENT EVIDENCE OF PERMANENT INCAPACITY. (GENERAL MEMBER) (D-7) Megan Cortez, Disability Coordinator, presented item D-7 to the Board along with the staff A motion was made by, seconded by to approve the staff addressed the Board stating that he had not yet seen another doctor as requested by the OCERS Board at the April 2013 meeting. A substitute motion was made by, seconded by to refer the matter to a Hearing Officer. A second substitute motion was made by, seconded by to refer item D-7 back to staff for 2 months to give the opportunity to see another doctor. The second substitute motion failed 4-5 with voting as follows:

9 Regular Board Meeting - Minutes Page 9 Chair Flanigan called for the vote on the substitute motion to refer this item to a hearing officer. The substitute motion failed 0-9 with voting as follows: Chair Flanigan called for the vote on the original motion to approve the staff The motion carried 8-1 with voting as follows: D-8: David A. Cherman Sergeant, Orange County Sheriff s Department Application for service and non-service connected disability retirement Date of employee application: 09/17/2009 STAFF RECOMMENDATION IS TO ADOPT THE FINDINGS AND RECOMMENDATIONS OF THE HEARING OFFICER AND DENY APPLICANT S APPLICATION FOR SERVICE AND NON-SERVICE CONNECTED DISABILITY RETIREMENT. (SAFETY MEMBER) (D-8) Megan Cortez, Disability Coordinator, presented Item D-8 to the Board along with the staff Mr. Singer addressed the Board and urged them to approve the service and non-connected disability retirement for David Cherman. A motion was made by, seconded by to refer this matter back to a hearing officer for a determination of what the duties of a Sergeant in the Sherriff s department are.

10 Regular Board Meeting - Minutes Page 10 A substitute motion was made by, seconded by to adopt the findings of the hearing officer in item D-8. The substitute motion carried 6-3 with voting as follows: D-9: Margaret Nelson Deputy Probation Officer II, Orange County Probation Department Application for service and non-service connected disability retirement Date of employer application: 09/28/2004 Date of employee application: 11/23/2004 STAFF RECOMMENDATION IS TO ADOPT THE FINDINGS AND RECOMMENDATIONS OF THE HEARING OFFICER AND DENY APPLICANT S APPLICATION FOR SERVICE AND NON-SERVICE CONNECTED DISABILITY RETIREMENT. (SAFETY MEMBER) (D-9) Item D-9 was pulled from the agenda. * * * * * * * * END OF DISABILITY APPLICATIONS/MEMBER APPEALS AGENDA * * * * * * * * * * * * * * INDIVIDUAL ITEMS AGENDA CONTINUED * * * * * * Chair Flanigan called to continue item I-4. A motion was made by, seconded by Lindholm to adopt alternative number 1 on slide 21 with regards to future UAAL only. A substitute motion was made by, seconded by to adopt alternative number 3 on slide 21 with regard to future UAAL only. A second substitute motion was made by, seconded by to adopt alternative number 1 on slide 21 with regard to future UAAL and for the current UAAL created by the 12/31/12 Assumption change to reduce amortization to 20 years. The second substitute motion failed 4-5 with voting as follows:

11 Regular Board Meeting - Minutes Page 11 The Chair called for the vote on the substitute motion which was to adopt alternative number 3 on slide 21 with regard to future UAAL only. The substitute motion carried 5-4 with voting as follows: Ms. Lori Zeller, OCFA, addressed the Board and stated that she understood the need for change in the future however, wanted to be clear about the motion that was made. She also requested that slow and smooth changes were the best option. There was no action on the original motion to adopt alternative number 1 on slide 21 with regards to future unfunded liability only due to the passage of the subsequent substitute motion. A motion was made by, seconded by to amortize 12/31/12 UAAL of $934.6 over 25 years; no other changes in current amortization The motion failed 4-5 with voting as follows: A motion was made by, seconded by for no changes in the current UAAL amortization, (i.e., the non-future points on Slide 30). The motion carried 5-4 with voting as follows:

12 Regular Board Meeting - Minutes Page 12 The Board recessed at 2:55 p.m. The Board reconvened at 3:03 p.m. with absent. I-5 CONDITIONS OF EMPLOYMENT OF OCERS CEO - COMPENSATION Recommendation: Take appropriate action. stated that The Hay Group has completed their evaluation of the CEO s salary and it is not out of line with other public and private entities. He stated that the Board may now consider a salary adjustment for Mr. Delaney. A motion was made by, seconded by to increase the CEO s salary by 4% retroactive to the first pay period of 2013., and expressed their concern about approving the retroactive pay beginning December 14, 2012 (First pay period for 2013). stated his concern on the number of increases the CEO has received since 2008, and stated that according to the Hay Group study he is below by 2% from the high-end measure. A substitute motion was made by, seconded by to increase the CEO s salary by 2% effective the pay period beginning June 28, 2013 no retroactive pay. The motion failed 3-5 with absent. The Board returned to the original motion to increase the CEO s salary by 4% retroactive to the first pay period of The motion failed 4-4 for lack of a majority, with absent. A motion was made by, seconded by to increase the CEO s salary by 4% effective the pay period beginning June 28, The motion failed 3-5 with absent.

13 Regular Board Meeting - Minutes Page 13 A motion was made by, seconded by to increase the CEO s salary by 4% beginning January 1, The motion failed 4-4 for lack of a majority, with absent. A motion was made by, seconded by to increase the CEO s salary by 3% effective the pay period beginning June 28, The motion carried 5-3 with absent. I-6 OCERS BY THE NUMBERS (UPDATED DATA TABLES) Presentation by Steve Delaney and Suzanne Jenike Recommendation: Receive and file. Suzanne Jenike and Jenny Sadoski presented item I-6 to the Board. Ms. Jenike described the contribution comparison chart to the Board and continued to explain the PEPRA contribution comparison chart. She went through the annual investment returns versus the total valuation value of assets and unfunded actuarial accrued liability. Ms. Jenike presented the system funding status and OCERS funded ratio by calendar years along with the fund performance. A motion was made by, seconded by to receive and file item I-6. The motion carried unanimously with absent.

14 Regular Board Meeting - Minutes Page 14 I AUDITED FINANCIAL STATEMENTS Presentation by Brenda Shott and Tracy Bowman Recommendations: 1. Approve OCERS Audited Financial Statements for the Year Ended December 31, Direct staff to finalize OCERS 2012 Comprehensive Annual Financial Report (CAFR) and present it to the Board of Retirement at their regularly scheduled Board meeting. 3. Receive and file Macias, Gini & O Connell LLP s (MGO) OCERS Report to the Audit Committee for the Year Ended December 31, 2012 and their Independent Auditor s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards. Ms. Shott and Ms. Bowman presented item I-7 to the Board along with staff recommendations. Mr. Delaney publically thanked the Finance Department for their hard work in preparing the 2012 Audited Financial Statements. Ms. Shott concurred with Mr. Delaney. A motion was made by, seconded by to approve the three staff recommendations for item I-7. The motion carried unanimously with absent. I-8 TIPS ON IPAD USAGE Presentation by Jenny Sadoski Recommendation: Receive and File Ms. Sadoski presented item I-8 to the Board. She pointed out that there is a Board Vantage update was becoming available. She also pointed out highlighted ways to simplify use of the ipad including use of the reader, accessing and learning more about applications. No action was taken on item I-8. Item E-1 was tabled to a future meeting. E-1 CLOSED SESSION * * * * * * * END OF INDIVIDUAL ITEMS AGENDA * * * * * * CLOSED SESSION CONFERENCE WITH LEGAL COUNSEL DECIDING WHETHER TO INITIATE LITIGATION Recommendation: Discuss whether to initiate litigation pursuant to subdivision (c) of Section (One potential case) * * * * * * * END OF CLOSED SESSION AGENDA * * * * * *

15