MINUTES OF THE BOARD OF FIRE AND POLICE PENSION COMMISSIONERS BOARD MEETING OF JANUARY 15, 2015

Transcription

1 MINUTES OF THE BOARD OF FIRE AND POLICE PENSION COMMISSIONERS BOARD MEETING OF JANUARY 15, 2015 The Board of Fire and Police Pension Commissioners of the City of Los Angeles met at the LACERS Board Room, located at the Los Angeles Times Building, 202 W. First Street, Suite 500, Los Angeles on Thursday, January 15, COMMISSIONERS PRESENT: Belinda Vega, President Robert von Voigt, Vice President George Aliano Carl Cade Cielo Castro Sam Diannitto (participated telephonically) Ruben Navarro Corinne Tapia COMMISSIONER ABSENT: DEPARTMENT OF FIRE AND POLICE PENSIONS: CITY ATTORNEY'S OFFICE: Pedram Salimpour Raymond P. Ciranna William Raggio, Executive Officer Tom Lopez, Chief Investment Officer Joseph Salazar, Assistant General Manager Barbara Nobregas, Commission Executive Assistant Alan Manning, Assistant City Attorney James Napier, Deputy City Attorney President Vega called the meeting to order at 8:45 a.m. All of the above-listed Commissioners were present at the start of the meeting with the exception of Commissioner Diannitto who participated telephonically at 8:46 a.m. Item A.1 was moved to the latter portion of the meeting. B. ITEMS FOR BOARD ACTION 1. REVIEW OF INTERNATIONAL EQUITY MANAGER CONTRACT OF BAILLIE GIFFORD OVERSEAS LIMITED AND POSSIBLE BOARD ACTION

2 Page 2 Messrs. Paul Palmer, Investment Officer II and Daren Perlstein, Investment Officer I presented the Baillie Gifford contract extension report and provided an overview of the firm and its performance. Commissioner Cade requested that future staff reports clarify why the Board would hold a particular manager for growth purposes and growth in general, when the manager is under performing its benchmark. Mr. Palmer stated that he will include in future reports the discussion of the various components of the portfolio. Not every manager is going to be in favor at any one time but that is the price of diversification. Commissioner Cade agreed with Mr. Palmer stating that he is targeting a discussion of managers when they are out of favor. He prefers the written record of the meeting to reflect that the Board is targeting a specific strategy, the reason for selecting a particular index although it may not be the closest measurement, and why the Board is taking a certain position. Commissioner Navarro stated that the current Board is more interested than past Boards to understand the managers on the Watch List. The Board may opt to bring in successful managers to gain insight into their performance. President Vega agreed with both Commissioners Cade and Navarro. General Manager Ciranna stated that staff is preparing a future report suggesting minor revisions to the Watch List Policy. He will include the Board's request to meet with successful managers. RESOLUTION Commissioner Navarro moved that the Board: 1. Approve a three-year contract with Baillie Gifford Overseas Limited for international equity management services; 2. Authorize the General Manager to negotiate and approve the terms and conditions of a contract with Baillie Gifford Overseas Limited for international equity management services for the period March 1, 2015 through February 28, 2018; and, 3. Authorize the President of the Board, on behalf of the Board, to execute the contract with Baillie Gifford Overseas Limited for international equity management services, subject to the approval of the City Attorney as to form, which was seconded by Commissioner von Voigt and approved by the following vote: ayes, Commissioners Aliano, Cade, Castro, Diannitto, Navarro, Tapia, von Voigt, and President Vega - 8; nays, none.

3 Page 3 2. FEE RECALCULATION SERVICES CONTRACT EXTENSION WITH R.V. KUHNS & ASSOCIATES AND POSSIBLE BOARD ACTION Ms. Erin Kenney, Departmental Audit Manager and Ms. Caroline Dinu, Senior Management Analyst II provided an overview of extending the contract to perform fee recalculation services. The work is progressing but because of the intensity of the work, staff requests an extension of the contract to complete the work. Staff anticipates preparing a future report within the next couple of months. No monies have been paid under the contract to date. RESOLUTION Commissioner von Voigt moved that the Board authorize the General Manager to approve a contract extension with R.V. Kuhns & Associates for six months at no additional cost for fee recalculation services, which was seconded by Commissioner Cade and approved by the following vote: ayes, Commissioners Aliano, Cade, Castro, Diannitto, Navarro, Tapia, von Voigt, and President Vega - 8; nays, none. C. REPORTS TO THE BOARD 1. SIX-YEAR ILLUSTRATION OF CONTRIBUTIONS, FUNDING RATIO AND UAAL General Manager Ciranna stated that the report is for informational purposes. The Segal Company was asked to prepare a six-year illustration. Exhibit 1 of the Segal report reflects a positive trend in the Plan's funding status, provided all actuarial assumptions are met, including the 7.5% investment rate of return. We will not achieve 100% funding over the six-year period illustrated, but will be close at the end of the six-year period. Mr. Joseph Salazar, Assistant General Manager and Ms. Robyn Wilder, Chief Benefits Analyst clarified the funding status and smoothing process for the Board. Public comment was given by Elsa Moy. The board report was received and filed. 2. SECOND QUARTER UPDATE FOR THE BUSINESS PLAN Mr. Mark Shin, Senior Management Analyst II, Administrative Services Section provided a status report to the 10 projects. He highlighted the following projects: Member System Conversion Assessment and Lifecycle Review, Document Imaging System, LAFPP Subsidy Audits, and the new headquarters facility. General Manager Ciranna stated that in regards to the subsidy audit with Los Angeles Police Protective League, the operations agreement has been signed. In regards to the Headquarters facility, specifically the seismic work, staff is working with a different seismic engineer to save money.

4 Page 4 Mr. Shin continued with the new headquarters facility indicating that staff continues to look for parking agreements and is currently considering a long term agreement with Los Angeles County. Mr. Shin continued with the business continuity plan. This project fell behind the milestone goal but staff is now current. The completion of this project is expected to be on schedule. Staff will continue to report the status and progress of the projects. The board report was received and filed. Public comment was given by Elsa Moy. Commissioner Navarro asked the City Attorney if the Board is required to have public comment on receive and file reports or on motions only. His belief is that it would be allowable for public comment on receive and file items during the general public comment portion of the meeting. Under the general public comments, the public may address any matter that the Board has discussed. Mr. Alan Manning, Assistant City Attorney stated that the Board is not required to have public comment on receive and file items, but may if the Board so chooses. Public comment is required at every agenda item that the Board is taking a vote on. Commissioner Navarro suggested expediting Board meetings by receiving public comment for receive and file reports during the general public comment portion of the agenda, as that was his opinion. Commissioner Cade and President Vega agreed with Commissioner Navarro. President Vega stated that the Board had consensus regarding public comment for receive and file items during the general public comment portion of the meetings. 3. QUARTERLY TRAVEL REPORT FOR COMMISSIONERS AND STAFF The board report was received and filed without discussion. 4. DEL REY GLOBAL INVESTORS UPDATE General Manager Ciranna stated that the report is for informational purposes. Staff has initiated action with del Rey Global. Messrs Tom Lopez, Chief Investment Officer (CIO) and Paul Palmer addressed President Vega's question stating that the money from the del Rey Global account will be transitioned to the BlackRock EAFE Index Fund (BlackRock). Mr. Palmer provided an overview of the emerging manager policy, specifically the reallocations of funds. Staff will return to the Board after the transition of the fund to BlackRock is complete so that the Board may decide where to reallocate the assets.

5 Page 5 Mr. Lopez stated that the Board has various options of where to reallocate the assets after the portfolio is liquidated. He gave an overview of the process on how the funds are transitioned and provided an update of the current emerging manager searches. Commissioner Navarro complimented staff for acting quickly and not losing fund assets. Mr. Lopez stated that staff will prepare a report for the next meeting outlining the options for the redeployment of the assets. The board report was received and filed. President Vega recessed the meeting fora break at 9:28 a.m., and reconvened at 9:36 a.m. 5. DISABILITY TRAINING SELECTION AND USE OF PENSION PHYSICIANS Mr. Chris Annala, Senior Management Analyst II, Ms. Tina Zipper, Senior Management Analyst I from the Disability Pension Section and Mr. Jim Napier, Deputy City Attorney provided the disability training. Ms. Cece Paris-Harper, Senior Personnel Analyst I, from the Los Angeles Police Department (LAPD), Medical Liaison Unit, and Fire Captain II Bernardo Bonaventura, from the Los Angeles Fire Department (LAFD), Medical Liaison Unit, provided brief overviews of the disability process for their respective departments. Commissioner von Voigt requested that a sworn officer be present at disability hearings. Ms. Paris-Harper stated that LAPD will have a police officer at hearings upon our request. The board report was received and filed. A. COMMITTEE REPORTS 1. CITY MANAGEMENT AUDIT RECOMMENDATIONS ASSIGNED TO THE DISABILITY PENSION SECTION AND POSSIBLE BOARD ACTION President Vega requested a summary of the Benefits Committee meeting where the staff recommendation was approved. Mr. Chris Annala presented an overview of the three separate Hewitt EnnisKnupp (HEK) Audit recommendations related to the disability process. The first was that staff evaluate the process of scheduling disability hearings. The Benefits Committee determined that the current process is efficient and no changes were recommended. The second HEK recommendation was to have disability applicants to submit some of their own information. Mr. Annala stated that staff would have to verify that the medical records were complete and accurate. Applicants may have to pay

6 Page 6 the physician or hospital for copies of their medical records. It also may be burdensome for applicants since staff contacts many medical facilities to obtain records. For these reasons, the Committee believed it would not be in the best interest of the Department and members to place the onus on the applicants to obtain their medical records and other information. The third recommendation was to review other common practices which may help streamline the disability process. The Board utilized hearing examiners to conduct disability hearings as recently as Staff and the Committee also discussed the idea of having a medical advisor serve as a consultant to the Board/Plan. Mr. Annala felt that the recommendation was not feasible because of the knowledge necessary for the various medical specialties when handling a wide variety of claimed disabilities. Board members gave their respective opinions on the issue. Commissioner Cade stated it would be helpful if the staff would apprise the Board of any areas of disagreement between the three pension physicians. RESOLUTION Commissioner von Voigt moved that the Board: 1. Direct staff to continue to follow current disability hearing scheduling procedures and schedule future Alternative 1 hearings at the beginning of the Board meeting as a standard practice, subject to the discretion of the Board President and the General Manager (HEK Recommendation #38); 2. Direct staff to continue to handle all responsibilities related to the disability process internally, including obtaining medical records and other evidence gathering (HEK Recommendation #39); and 3. Continue to follow current hearing procedures and rely upon the evidence in the Administrative File and testimony at hearings to make informed decisions (HEK Recommendation #40), which was seconded by Commissioner Cade and approved by the following vote: ayes, Commissioners Aliano, Cade, Castro, Diannitto, Navarro, Tapia, von Voigt, and President Vega - 8; nays, none. C. REPORTS TO THE BOARD (continued) 6. Miscellaneous correspondence from money managers, consultants, etc. Received and Filed. 7. General Manager's Report a. Monthly Report

7 Page 7 b. Marketing Cessation Information c. The following Benefits Actions were approved by General Manager. Pursuant to Resolution 04008, adopted by the Board of Fire & Police Pension Commissioners on August 7, 2003, the following benefit actions have been approved by the General Manager on December 18, DISCONTINUED PENSIONS TIER 1 4 Stanley A. Rotz Police Service Retired: Died: Edgar A. Smith Police Service Retired: Died: Rene R. Najera Police Disability Retired: Died: Mildred E. Wood Police Widow Retired: Died: DISCONTINUED PENSIONS TIER 2 7 Raymond J. Bennett Police Service Retired: Died: Carl D. Helm Police Service Retired: Died: Vicki B. Wilson Police Service Retired: Died: Norman Livengood Fire Disability Retired: Died: Allie D. Alexander Fire Widow Retired: Died: Helen Brechel Police Widow Retired: Died: Vicki B. Wilson Police Widow Retired: Died: DISCONTINUED PENSIONS TIER 3 1 Ronald E. Chambers Police Disability Retired: Died: DISCONTINUED PENSIONS TIER 5 1 Samuel E. Mundt Fire Service Retired: Died: DISCONTINUED PENSIONS FORMER SPOUSE TIER 1 1 Name Linda A. Boyer Police Disability Retired: Member Died: ELIGIBLE SURVIVING SPOUSE'S PENSION TIER 1 1 Name Deceased Member Member's Class Effective Date Mary A. Rotz Stanley A. Rotz Police Service ELIGIBLE SURVIVING SPOUSE'S PENSION TIER 2 1 Name Deceased Member Member's Class Effective Date Charlotte E. Helm Carl D. Helm Police Service

8 Page 8 ELIGIBLE SURVIVING SPOUSE'S PENSION TIER 5 2 Name Deceased Member Member's Class Effective Date Arlene B. Clore Kenneth J. Clore, Jr. Fire Service Sherry L. Mundt Samuel E. Mundt Fire Service REINSTATE SURVIVING CHILD'S PENSION TIER 5 1 Pension payable to Bailey P. Hoss, surviving child of deceased Firefighter III, Kelly R. Hoss, reinstated effective September 1, Documentation has been submitted for full-time student status. DECREASE SURVIVING CHILD'S PENSION TIER 5 1 Decrease the pension payable to Kendall B. Hoss, surviving child of deceased Firefighter III, Kelly R. Hoss, effective September 1, 2014, due to full-time student status by Bailey P. Hoss. DISCONTINUE SURVIVING CHILD'S PENSION TIER 3 1 Discontinue the pension payable to Sabrina M. Schmid, surviving child of deceased Police Officer, David C. Schmid, effective November 1, 2014, due to the discontinuance of full-time student status. PARTIAL PAYMENT OF PENSION TIER 5 2 In accordance with the City Attorney's advice, a designated proportion of the community property interest of the Surviving Spouse Pension payable to Arlene B. Clore, surviving spouse of deceased Fire Service Pensioner, Kenneth J. Clore, Jr., is to be paid to his former spouse, Cindy A. Larsen, effective October 27, Ms. Larsen will receive cost of living adjustments. In accordance with the City Attorney's advice, a designated proportion of the community property interest of the pension payable to John N. Incontro, Police Service Pensioner, is to be paid to his former spouse, Maureen A. Incontro, effective December 14, Ms. Incontro will receive cost of living adjustments. MODIFIED PARTIAL PAYMENT OF PENSION TIER 5 2 In accordance with the City Attorney's advice, a designated proportion of the community property interest of the pension payable to Jim Rossum, Jr., Police Service Pensioner, being withheld for his former spouse, Lee E. Rossum, since November 1, 2012, should be released effective December 1, In accordance with the City Attorney's advice, a designated proportion of the community property interest of the pension payable to Leonard P. Ruvalcaba, Fire Service Pensioner, being withheld for his former spouse, Teresa Ruvalcaba, since March 9, 2014, should be released effective December 1, DEFERRED SERVICE PENSION TIER 3 1 Police James C. Kelly II Police Officer II Eff: Years 8 Days SERVICE PENSION/DROP TIER 5 8

9 Minutes of the Board of Fire and Police Pension Page 9 Commissioners Fire Joseph A. Carcamo Firefighter III Eff: Years 95 Days Chris M. Caropino Engineer Eff: Years 79 Days Robert T. Decuir Firefighter III Eff: Years 203 Days Jeffrey E. Elder Battalion Chief Eff: Years 0 Days Xenophon A. Gikas, Jr. Captain I Eff: Years 175 Days Police Brian A. Collins Detective II Eff: Years 6 Days David L. Kennedy Detective III Eff: Years 23 Days Curtis R. Woodle Sergeant II Eff: Years 215 Days DISCONTINUE DROP TIER 3 1 Police John L. Hardin Retired: Exit Close of: DISCONTINUE DROP TIER 5 5 Police Reginald L. Gay Retired: Exit Close of: John N. Incontro Retired: Exit Close of: Pedro L. Llanes Retired: Exit Close of: Frank Partida Retired: Exit Close of: Douglas R. Wade Retired: Exit Close of: PARTIAL PAYMENT OF DROP FUNDS TIER 5 1 In accordance with the City Attorney's advice, a designated proportion of the community property interest of the DROP funds payable to John N. Incontro, Police Service Pensioner, is to be paid to his former spouse, Maureen A. Incontro, effective December 13, ELIGIBLE SURVIVING SPOUSE APPLICATION TIER 5 1 Name Member's Rank Type % Rate Effective Date Glenn G. Adams Police Officer II NSC w/o prejudice (Marian L. Adams) 30% ELIGIBLE SURVIVING CHILD BASIC DEATH BENEFIT TIER 5 1 Name Member's Rank Effective Date Kyngi 0. Wallace Police Officer II (James H. Wallace) SERVICE-CONNECTED DISABILITY PENSION TIER 3 1 Name Member's Rank Percentage Effective Date Board Date Tina Y. Glenn Detective II 65%

10 Page 10 Pursuant to Resolution 04008, adopted by the Board of Fire & Police Pension Commissioners on August 7, 2003, the following benefit actions have been approved by the General Manager on January 2, DISCONTINUED PENSIONS TIER 1 1 Miriam Werner Police Widow Retired: Died: DISCONTINUED PENSIONS TIER 2 11 Roy B. Swanhart Fire Service Retired: Died: Frederick K. Yager Fire Service Retired: Died: David G. Gonda Police Service Retired: Died: Gerald R. Ladhoff Police Service Retired: Died: Wilbur L. Lightsey Police Service Retired: Died: Paul K. Miller Police Service Retired: Died: Richard A. Sharpe Police Service Retired: Died: Thomas J. Oberhaus Police Disability Retired: Died: Vivian M. Dunham Fire Widow Retired: Died: Shirlie T. Heryford Fire Widow Retired: Died: Jane C. Cooke Police Widow Retired: Died: DISCONTINUED PENSIONS TIER 3 1 Vivian M. Dunham Fire Widow Retired: Died: DISCONTINUED PENSIONS FORMER SPOUSE TIER 2 2 Edna M. Kellogg Fire Service Retired Member Died: Sharon L. Gonda Police Service Retired: Member Died: ELIGIBLE SURVIVING SPOUSE'S PENSION TIER 2 4 Name Deceased Member Member's Class Effective Date Susan C. Ladhoff Gerald R. Ladhoff Police Service Margaret J. Lightsey Wilbur L. Lightsey Police Service Patricia E. Sharpe Richard A. Sharpe Police Service Vivien E. Livengood Norman Livengood Fire Disability ELIGIBLE SURVIVOR BENEFIT PURCHASE PROGRAM PENSION TIER 2 1 Name Deceased Member Member's Class Effective Date Phyllis M. Gonda David G. Gonda Police Service DISCONTINUE SURVIVING CHILD'S PENSION TIER 5 2

11 Page 11 Discontinue the pension payable to Richard L. Kelsey, surviving child of deceased Detective III Louis P. Kelsey, Jr., effective January 26, 2015, due to the attainment of age 22 on January 27, There are no remaining minor children. Discontinue the pension payable to Ryan J. Kelsey, surviving child of deceased Detective III Louis P. Kelsey, Jr., effective January 26, 2015, due to the attainment of age 22 on January 27, There are no remaining minor children. SERVICE PENSION/DROP - TIER 5-1 Fire Kevin G. Mason Inspector I Eff: Years 102 Days DISCONTINUE DROP - TIER 5-1 Fire Carlos Vargas Retired: Exit Close of: d. Other business relating to Department operations General Manager Ciranna gave the following updates: 1. He thanked staff and everyone for their work on LAFPP's Annual Report. An electronic copy of the Annual Report will be available by the end of February and the hard copies will be printed in March The information is a reflection from last fiscal year. 2. There was a previous discussion about the Document Imaging System and the challenges and strategy moving forward. 3. There was a strategic planning session and we will return to the Board with a recommended plan to adopt on February 5, We are assessing the Pension Administration System. We are considering vendors, performing reviews, and viewing demonstrations in early February. We are considering several vendors. This is a large project and he reminded everyone of the marketing cessation policy. 5. He read into the record some Private Equity Funds that have closed: a. On October 2, 2014, and pursuant to Government Code Section , the Board approved an investment of up to $15 million in the following private equity firm: Siris Partners Ill, LP. That transaction closed on December 11, b. On November 20, 2014, and pursuant to Government Code Section , the Board approved an investment of up to $10 million in the following private equity firm: Carrick Capital Partners II, LP. That transaction closed on December 16, 2014.

12 Page 12 c. On November 20, 2014, and pursuant to Government Code Section , the Board approved an investment of up to $25 million in the following private equity firm: Insight Venture Partners IX, LP. That transaction closed on December 23, Mr. Alan Manning, Assistant City Attorney stated that effective January 1, 2015 the overall gift limitation for accepting gifts has been increased from $440 to $460 per year for the calendar years 2015 and This is performed every odd year by the Legislature. 7. He invited everyone to the February 5, 2015 Board meeting. The City Ethics Commission (Ethics) will provide a presentation and training. There is an upcoming mandatory training which he will have Ethics discuss. Ms. Elsa Moy stated that she represented the police and wished to give a public comment. President Vega asked that she not misrepresent her status and to indicate if she worked for a particular company. Ms. Moy gave a public comment. D. COMMITTEE CALENDAR 1. Audit Committee Last met: 06/05/14; next meeting: 01/15/15 2. Benefits Committee Last met: 12/18/14; next meeting: 02/05/15 3. Governance Committee Last met: 09/18/14; next meeting: 03/19/15 4. Ad Hoc Emerging Investment Managers Last met: 11/06/14; next meeting: 03/05/15 President Vega noted the upcoming Committee meetings. E. CONSENT ITEMS 1. APPROVAL OF TRAVEL (ALIANO) IFEBP, INVESTMENTS INSTITUTE 2. Approval of Minutes a. Minutes of the Regular Board meeting of September 18, 2014, October 2, 2014, and October 16, 2014 b. Minutes of the Special Board Meeting of September 18, 2014, October 2, 2014 MOTION Commissioner von Voigt moved to approve the consent items, seconded by Commissioner Navarro and approved by the following vote: ayes, Commissioners Aliano, Cade, Castro, Diannitto, Navarro, Tapia, von Voigt, and President Vega 8; nays, none.

13 Page 13 F. CONSIDERATION OF FUTURE AGENDA ITEMS President Vega requested a report regarding the various options on investing the funds from del Rey Global. G. GENERAL PUBLIC COMMENT ON MATTERS WITHIN THE BOARD'S JURISDICTION Ms. Elsa Moy gave a public comment. James Napier, Deputy City Attorney took the city attorney's chair at the board table. H. DISABILITY CASES DISABILITY CLAIM NEW CLAIM TIER 5-2 Donald R. Ornelas (P) Police Officer II Hearing continued. Commissioner Cade moved that this claim be continued at the request of the Board. (Original motion to grant a service-connected disability pension commensurate with the minimum disability pension rate was made by Commissioner Cade, seconded by Commissioner Aliano. Motion was withdrawn by Commissioner Cade and Commissioner Aliano.) Officer Ornelas was not present nor was his attorney, Mr. Michael J. Treger. Revlyn A. Henderson (P) Sergeant I As recommended by staff and concurred in by the applicant, non-service connected disability is granted at 50% with no foreseeable purpose for review. Motion made by President Vega, seconded by Commissioner von Voigt and adopted by the following vote: ayes, Commissioners Aliano, Cade, Castro, Diannitto, Navarro, Tapia, von Voigt and President Vega 8; nays, none. Sgt. Henderson was not present nor was she represented. DISABILITY CLAIM SCHEDULED REVIEW TIER 5-1 Phillip S. Clarke (P) Police Officer III (Retired) Prior Board Action of August 16, 2012 granting a service-connected disability pension at 60% remains unchanged. Motion made by Commissioner Aliano, seconded by Commissioner Navarro and adopted by the following vote: ayes, Commissioners Aliano, Cade, Castro, Diannitto, Navarro, Tapia, von Voigt and President Vega 8; nays, none. Mr. Clarke was not present nor was his attorney, Mr. Michael J. Treger. Commissioner Diannitto ended his telephonic participation at 11:00 a.m.

14 Page 14 Alan Manning, Assistant City Attorney took the city attorney chair at the board table. I. CLOSED SESSION ITEMS FOR POSSIBLE BOARD ACTION 1. CLOSED SESSION PURSUANT TO GOVERNMENT CODE SECTION (c) TO CONFER WITH, OR RECEIVE ADVICE FROM, LEGAL COUNSEL WITH REGARD TO POTENTIAL LEAD PLAINTIFF STATUS IN A CLASS ACTION The Board met in closed session. Upon reconvening in open session, President Vega stated there was no public report. The meeting adjourned at 11:02 a.m. dent