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

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1 ORANGE COUNTY EMPLOYEES RETIREMENT SYSTEM BOARD OF RETIREMENT 2223 E. WELLINGTON AVENUE, SUITE 100 SANTA ANA, CALIFORNIA REGULAR BOARD MEETING FEBRUARY 14, 2011 MINUTES The Chair called the meeting to order at 9:00 a.m. and read the opening statement into the record. Attendance was as follows: Present: Patti Gorczyca, Chair; Russell Baldwin, Vice Chair; Anthony Bedolla; Frank E. Eley; Shari L. Freidenrich, CPA; Robert A. Griffith; Wayne S. Lindholm; and Richard A. White, Jr. Absent: Also present: Thomas E. Flanigan and Reed L. Royalty Steve Delaney, Chief Executive Officer; Jennifer Hom, CFA, Managing Director of Investments; Stephen Cadena, Assistant CEO, Internal Operations; Julie Wyne, Assistant CEO, External and Legal Operations; Dr. Michelle Williamson, Director of Finance; Sally Koltunik, Manager, Human Resources; Suzanne Jenike, Member Services Director; Kathryn Morisette, Disability Coordinator; Isabel Linares, Disability Investigator; Jacqueline Reep, Disability Investigator; David Lantzer, Staff Attorney; Robert Kinsler, Manager, Communications; Anthony Beltran, Visual Technician and Tracy Ayres, Recording Secretary Harvey Leiderman, Esq., Reed Smith led the Pledge of Allegiance. read the appointment of Committees into the record: Audit Committee Robert Griffith, Chair Thomas Flanigan, Vice-Chair Russell Baldwin Anthony Bedolla Ad Hoc Compensation Committee Robert Griffith, Chair Patti Gorczyca Frank Eley Thomas Flanigan Governance Committee Frank Eley, Chair Richard White, Vice-Chair Patti Gorczyca Reed Royalty Investment Committee Reed Royalty, Chair Richard White, Vice-Chair Full Board of Retirement 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. F:\Board\APPROVED MINUTES\Board\2011\ new.docx

2 A motion was made by, seconded by to approve the Consent Agenda. The motion carried unanimously. 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 - January 18, 2011 Recommendation: Authorize all meetings and approve all minutes. C-3 LEGISLATIVE UPDATE Recommendation: Receive and file. C-4 BY-LAWS AMENDMENT NEW INVESTMENT COMMITTEE STRUCTURE Recommendation: Approve the By-laws amendments. C-5 UNAUDITED FINANCIAL STATEMENTS FOR THE MONTH ENDING NOVEMBER 30, 2010 Recommendation: Receive and file. C-6 BOARD COMMUNICATIONS Recommendation: Receive and file. * * * * * * * END OF CONSENT AGENDA * * * * * * * INDIVIDUAL ITEMS AGENDA I-2 MANAGING DIRECTOR OF INVESTMENTS REPORT Mr. Delaney stated that the Managing Director of Investments Report has been postponed until the Investment Committee Meeting on Wednesday, February 23, I-3 ANNUAL COST OF LIVING ADJUSTMENT Ms. Wyne reviewed the annual cost of living adjustment. F:\Board\APPROVED MINUTES\Board\2011\ new.docx 2

3 Following discussion, a motion was made by Mr. White, seconded by to adjust all applicable benefit allowances, in accordance with the 1.0% change in CPI, as follows: 1. For benefit recipients who began receiving benefits on or before April 1, 1971 through April 1, 1988, increase applicable benefit allowances by 3%, and reduce COLA banks by 2%. 2. For benefit recipients who began receiving benefits between April 2, 1988 and April 1, 2001, increase applicable benefit allowances by 2%, and reduce COLA banks by 1%. 3. For benefit recipients who began receiving benefits between April 2, 2001 and April 1, 2005, increase applicable benefit allowances by 1.5%, and reduce COLA banks by.5%. 4. For benefit recipients who began receiving benefits between April 2, 2005 and April 1, 2011, increase applicable benefit allowances by 1%. The motion carried unanimously. I-4 PENSION ADMINISTRATION SYSTEM SOLUTION (PASS) STATUS REPORT Brian Colker reviewed the PASS status report. He highlighted the Liberty EDMS integration with V3. A motion was made by, seconded by to receive and file the PASS status report. The motion carried unanimously. requested the following: Further financial information on the change from Liberty to V3 Imaging and The cost comparison after the initial five year period covered by lower costs while integrating to the V3 module Mr. Colker will provide that information to the Board. I-5 SUCCESSION PLANNING Mr. Delaney reviewed the succession plan. A motion was made by, seconded by Mr. White to determine critical positions, identify expected vacancies, identify current and future competencies, skills and success factors for positions and assess current bench strength, identify opportunities to strengthen competency levels, encourage learning, ensure education opportunities being provided match the skill and knowledge needs of the identified critical positions, provide developmental opportunities, ensure the organizational chart covers the full flow of responsibilities, capture and document the knowledge of departing staff and revisit progress each year with Human Resources. The motion carried unanimously. requested that staff in similar position have the same training and opportunities. requested that the succession planning be joined with the individuals PIP. F:\Board\APPROVED MINUTES\Board\2011\ new.docx 3

4 * * * * * * * END OF INDIVIDUAL ITEMS AGENDA * * * * * * Board recessed at 10:00 a.m. Board reconvened at 10:10 a.m. DISABILITY APPLICATIONS/MEMBER APPEALS AGENDA 10:00 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 DECEMBER 18, (SAFETY MEMBER) (D-1) D-1: Richard R. Fassel Deputy Sheriff II, OC Sheriff s Department Application for service connected disability retirement Following discussion, a motion was made by Mr. White, seconded by to grant service connected disability retirement with an effective date of December 18, The motion carried 7 to 0, with voting as follows: Mr. White STAFF RECOMMENDATION IS TO GRANT SERVICE CONNECTED DISABILITY RETIREMENT WITH AN EFFECTIVE DATE OF FEBRUARY 12, (SAFETY MEMBER) (D-2) D-2: Gregory L. Hoffman Fire Captain, OC Fire Authority Application for service connected disability retirement F:\Board\APPROVED MINUTES\Board\2011\ new.docx 4

5 Following discussion, a motion was made by Mr. Bedolla, seconded by to grant service connected disability retirement with an effective date of February 12, The motion carried 7 to 0, with voting as follows: Mr. Bedolla STAFF RECOMMENDATION IS TO GRANT SERVICE CONNECTED DISABILITY RETIREMENT WITH AN EFFECTIVE DATE OF OCTOBER 9, (SAFETY MEMBER) (D-3) D-3: Christine A. Murray Captain, OC Sheriff s Department Application for service connected disability retirement Following discussion, a motion was made by Mr. White, seconded by to grant service connected disability retirement with an effective date of October 9, The motion carried 7 to 0, with voting as follows: Mr. White STAFF RECOMMENDATION IS TO GRANT NON-SERVICE CONNECTED DISABILITY RETIREMENT WITH AN EFFECTIVE DATE OF JANUARY 22, DENY SERVICE CONNECTED DISABILITY RETIREMENT DUE TO INSUFFICIENT EVIDENCE OF JOB CAUSATION. (SAFETY MEMBER) (D-4) D-4: Donald L. Blankenship Chief, OC District Attorney Application for service and non-service connected disability retirement This item was pulled. STAFF RECOMMENDATION IS TO DENY SERVICE AND NON-SERVICE CONNECTED DISABILITY RETIREMENT DUE TO INSUFFICIENT EVIDENCE OF PERMANENT INCAPACITY. (GENERAL MEMBER) (D- 5) F:\Board\APPROVED MINUTES\Board\2011\ new.docx 5

6 D-5: Maribel Ferrer Coach Operator, OC Transportation Authority Application for service and non-service connected disability retirement Following discussion, a motion was made by, seconded by Mr. White to deny service and non-service connected disability retirement due to insufficient evidence of permanent incapacity. The motion carried 7 to 0, with voting as follows: Mr. White STAFF RECOMMENDATION IS TO DENY SERVICE CONNECTED DISABILITY RETIREMENT DUE TO INSUFFICIENT EVIDENCE OF PERMANENT INCAPACITY. (GENERAL MEMBER) (D-6) D-6: Kevin T. Jellison Coach Operator, OC Transportation Authority Application for service and non-service connected disability retirement * * Member does not have sufficient years of service to qualify for non-service connected disability retirement. This item was pulled. STAFF RECOMMENDATION IS TO DENY SERVICE AND NON-SERVICE CONNECTED DISABILITY RETIREMENT DUE TO INSUFFICIENT EVIDENCE OF PERMANENT INCAPACITY. (GENERAL MEMBER) (D- 7) D-7: Refugio C. Sanchez Custodian Leadworker, OC Public Works Application for service and non-service connected disability retirement Following discussion, a motion was made by, seconded by to deny service and non-service connected disability retirement due to insufficient evidence of permanent incapacity. The motion carried 7 to 0, with voting as follows: Mr. White F:\Board\APPROVED MINUTES\Board\2011\ new.docx 6

7 * * * * * * * * END OF DISABILITY APPLICATIONS/MEMBER APPEALS AGENDA * * * * * * * CLOSED SESSION Mr. Leiderman reported in Open Session that the Second District Court of Appeals unanimously affirmed in a 3 to 0 opinion to uphold an earlier judgment by the Los Angeles County Superior Court, to throw out the County of Orange s lawsuit to overturn the 3% at 50 pension benefits for Orange County Deputy Sheriff s. Mr. White recused himself from the Board deliberation and decisions concerning County of Orange v. Board of Retirement of Orange County Employees Retirement System. The Board entered into Closed Session at 10:16 a.m. E-1 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 Government Code Section (one case: County of Orange, California v. Association of Orange County Deputy Sheriff s) Recommendation: Take appropriate action. The Board reconvened from Closed Session at 10:44 a.m. The Board took no reportable action. * * * * * * END OF CLOSED SESSION * * * * * * (IN MEMORY OF THE ACTIVE MEMBERS, RETIRED MEMBERS, AND SURVIVING SPOUSES WHO PASSED AWAY THIS PAST MONTH) Active Members: Retired Members: Surviving Spouses: Steven Sobodos and Steven Swiderski Iola Bearden; Candace Blackinton; Vincent Campisi; Sue Carter; Anthony Caserta; Devon Dailey; Elizabeth Dibona; Demetrio Elenes; Mary Fennell; Richard Finnerty; John Harvey; Lorraine Kimberling; Dorothy Lindsey; Michael Moore; Martin Orth; Arlan Pentecost; Lupe Quesada; Alexander Ramm; Milos Saiben; Elizabeth Schaefer; Grace Shafer; Kazuo Shibata; William Talley; Beverly Victor and Gwendolyn Walton Audrey Farmer; Ina Haney; Ronald Reneker; Donald Rose; Barbara Smith and Mancil Wright F:\Board\APPROVED MINUTES\Board\2011\ new.docx 7

8 Deaths (DRO): None PUBLIC COMMENTS None BOARD MEMBER COMMENTS None CHIEF EXECUTIVE OFFICER/STAFF COMMENTS Mr. Delaney reviewed OCFA s Budget and Finance Committee meeting on February 9, He stated that he will provide the Committee and OCERS Board with a monthly update on the Employer Contribution Reconciliation. COUNSEL COMMENTS None ADJOURNMENT: There being no further business to bring before the Board, a motion was made by, seconded by to adjourn the meeting at 10:54 a.m. The motion carried unanimously. Submitted by: Approved by: Steve Delaney Secretary to the Board Patti Gorczyca Chair F:\Board\APPROVED MINUTES\Board\2011\ new.docx 8