ABOUT

BOARD OF RETIREMENT MINUTES 4-9-09

PRESENT

• Simon S. Russin, Vice Chair
• Yves Chery, Secretary
• Sadonya Antebi
• Edward L. Blecksmith
• James P. Harris (Alternate Member)
• Ed C. Morris (Alternate Retired)
• William R. Pryor
• Les Robbins
• Mark J. Saladino

ABSENT

• William de la Garza, Chair
• Si Frumkin

STAFF ADVISORS AND PARTICIPANTS

• Gregg Rademacher, Chief Executive Officer
• Robert Hill, Assistant Executive Officer
• Janice Golden, Assistant Executive Officer
• David L. Muir, Chief Counsel
• Johanna M. Fontenot, Senior Staff Counsel
• Christine Roseland, Staff Counsel
• Cynthia Lau, Legislative Affairs Officer
• Lita Payne, Director, Retiree Health Care
• Kimberly Hines, Manager, Claims Processing Division
• Stephen Gibbs, Claims Processing Division

1. CALL TO ORDER

   The meeting was presided over by Vice Chair Russin in the absence of Chair de la Garza. The meeting was then called to order by Acting Chair Russin at 9:00 a.m., in the Board Room of Gateway Plaza.

2. PLEDGE OF ALLEGIANCE

   Mr. Chery lead the Board Members and staff in reciting the Pledge of Allegiance.

3. BOARD MEMBER ANNOUNCEMENTS (For Information Only)

   Acting Chair Russin announced that both Messrs. de la Garza and Frumkin would not be present at today’s meeting.

4. APPROVAL OF THE MINUTES OF THE REGULAR MEETING OF MARCH 5, 2009

   A motion was made by Mr. Morris, seconded by Mr. Chery, to approve the minutes of the regular meeting of March 5, 2009. The motion passed unanimously.

5. OTHER COMMUNICATIONS
   1. For Information

      Mr. Hill reported that a new parking validation system was being implemented at LACERA’s parking structure. New parking stickers were distributed to the Board and staff was available for questions. The new system takes effect Wednesday, April 15, 2009.

      1. March 2009 All Stars

         Mr. Hill announced the eight winners for the month of March, (Melissa Norris, Toeashia Tate, Allene Davis, Elizabeth Smith, Randy Coon, Derwin Brown, Jacqueline Stewart-Boute, and Valery Ptacek) of the Employee Recognition Program. Raymond Boncato was the winner of LACERA’s Web Watcher Award. Albert Robles, Arlene Owens, Nicole Howard and Sharon Norton were the winners of LACERA’s RideShare Program.

      2. Service Awards

         Mr. Rademacher presented a 25 year service award to Isis Morcos and a 30 year service award to Jody Trovela.

      3. Chief Executive Officer’s Report (Memo dated April 1, 2009)

         Mr. Rademacher provided a brief overview of his Chief Executive Officer’s Report with emphasis on LACERA’s Budget.

         The revised LACERA MAPP Program, previously approved by both Boards of Investments and Retirement, was presented to the Board of Supervisors and unanimously approved at their meeting of March 31, 2009.

         Mr. Rademacher thanked both LACERA’s Legal and Human Resources staff, particularly David Muir, Janice Golden and Bob Proctor, for their input in finalizing official procedures needed to ensure the approval of the program.

         Mr. Rademacher reported that both Jeannine Smart and David Muir spoke at the SACRS Symposium concerning the consequences of the 2008 Financial Market Collapse.

         Ms. Mazzocco gave a presentation at UCLA’s School of Management, RELAC General Meeting, and was a panelist at the Pacific Pension Institute.

         Mr. Rademacher addressed the Los Angeles Management Council on the state of LACERA.

6. CONSENT AGENDA

   The following agenda item was placed on the consent agenda and unanimously approved on a motion by Mr. Saladino, seconded by Mr. Chery.

   1. Recommendation as submitted by Gregg Rademacher, Chief Executive Officer:

      Approve attendance of staff, as designated by the Chief Executive Officer, at the Centers for Medicare & Medicaid Services Retiree Drug Subsidy Community Information Group Kickoff Meeting to be held in Baltimore, Maryland on April 28, 2009; and approve reimbursement of all travel costs incurred in accordance with LACERA’s Education and Travel Policy. (Memo dated April 2, 2009.)

7. NON-CONSENT AGENDA
   1. Recommendation as submitted by Gregg Rademacher, Chief Executive Officer:

      That the Board provide the SACRS voting delegate direction on voting for the SACRS slate of officers. (Memo dated March 30, 2009.) A motion was made by Mr. Morris, seconded by Mr. Chery, that the Board approve the following slate of SACRS officers for the 2009-2010 year: Richard White, President
      Tim Barrett, Vice President
      Darryl Walker, Secretary
      Chris Johnston, Treasurer

      The motion passed with Mr. Robbins voting no and Ms. Antebi abstaining.

   2. Recommendation as submitted by Cynthia Lau, Legislative Affairs Officer:

      That the Board adopt a “watch” position on AB 155 which would require approval of the California Debt and Investment Advisory Commission (CDIAC) before a local agency could file a petition in bankruptcy. (Memo dated March 30, 2009.)

      AB 155

      The Insurance, Benefits, and Legislative Committee is recommending a “Watch” position on Assembly Bill 155, which required approval of the State Controller, Treasurer, and Director of Finance before a local agency could file a petition in bankruptcy. Following the date of the Committee’s action, the bill was amended to require approval of the California Debt and Investment Advisory Commission (CDIAC) in lieu of the three state officials identified above. The CDIAC was created in 1981 and consists of nine members, including the State Treasurer, the Governor or the Director of Finance, the State Controller, two local government finance officials, two Assembly Members, and two Senators.

      Staff recommends a “Watch” position on the bill, as amended.

      A motion was made by Mr. Saladino, seconded by Mr. Pryor, that the Board adopt a “watch” position on AB 155.

      The motion passed with Ms. Antebi voting no.

   3. Recommendation as submitted by Lita Payne, Director, Retiree Health Care regarding the 2009-2010 Plan Year Health Insurance Rate Renewals and Benefit Changes for LACERA’s Retiree Health Care Benefits Program. (Memo dated March 25, 2009.)

      Christine Roseland addressed the board and read into the record a statement regarding “Board Member Conflicts of Interest and Recusal Relating to Renewal of Contracts With Health Insurance Carriers.” A copy of the statement is attached to these minutes.

      Ms. Roseland then advised the Board that a “Finding Of Necessity Related To Renewals Of Retiree Health Care Insurance Contracts; Disclosure Of Conflicts Of Interest; and Recusal And NonParticipation of Board Members” must be adopted to allow a conflicted Board Member to act on the agenda item in order for there to be a quorum. A copy of the “Finding of Necessity “ is attached to these minutes.

      A motion was made by Mr. Morris, seconded by Ms. Antebi, to adopt the “Finding Of Necessity” as set forth in the document noted above.

      The motion passed unanimously.

      Mr. Pryor said that he would recuse himself from the selection process should he be needed to achieve a quorum.

      In accordance with the “Finding of Necessity”, Messrs. Harris, Robbins, Morris, and Ms. Antebi drew playing cards in order that there be a quorum. Mr. Robbins drew the ace and was, therefore, designated to participate in the renewal of the health care insurance contracts. Messrs. Harris, Morris, Pryor and Ms. Antebi recused themselves from participating on this agenda item and left the room. Mr. Muir also left the room as he expects to retire during the contract period.

      Ms. Payne said this year’s contract negotiations with LACERA’s health insurance carriers concluded with an overall renewal increase of 4.5%, or approximately $17.4 million. This reflects a $13.2 million reduction from the original renewal proposals as a result of renewal negotiations. The medical premiums are increasing by 4.7%, or approximately $16.8 million. The dental/vision increase is approximately 1.7%, or $525,000. The projected annual program cost for the 2009-2010 plan year will be approximately $407.4 million.

      PacifiCare/SecureHorizons is adding a 0.5% surcharge to the LACERA premium for late payment. Based on LACERA’s vendor payment schedule, premiums are received by the carriers the third week of the month. PacifiCare considers this a late payment. Staff has worked on and has found a solution to eliminate this problem.

      A brief question and answer period ensued with the following renewal rates being voted on: Rate

      RENEWAL AND BENEFIT CHANGE PROPOSALS

      Anthem Blue Cross Plans I, II and III

      • Accept the 3.8% overall increase with the following separate increases:
        • Accept the 3.8% increase on Plans I and II.
        • Accept the 3.9% increase on Plan III.
      • Retain the in-patient hospitalization benefit for Plan I at the current level.

      Anthem Blue Cross Prudent Buyer

      • Accept the 7.7% increase.
      • Retain the 5% retrospective premium feature in the event that claims plus expenses exceed the billed premium.
      • Retain the inpatient hospitalization benefit at the current level.

      Kaiser California

      • Accept the 5.2% overall increase with the following separate increases:
        • Accept the Basic/Pre-65 increase of 7.5%.
        • Accept the Senior Advantage rate pass of 0.0%.
        • Accept the Medicare Cost increase of 5.7%.

      PacifiCare

      • Accept the 15.4% overall increase with the following separate increases:
        • Accept the PacifiCare Pre-65 HMO increase of 18.4%.
        • Accept the Secure Horizons increase of 9.6% and the mandatory plan design changes.

      CIGNA Medical

      • Accept the 4.0% overall increase with the following separate increases:
        • Accept the Pre-65 HMO increase of 4.0%.
        • Accept the MAPD HMO rate pass of 0.0% (Phoenix, AZ only).

      Kaiser – Out-of-State

      • Kaiser – Colorado
        • Accept the preliminary increase of 14.2%.
      • Kaiser – Georgia
        • Accept the preliminary decrease of 0.3%.
      • Kaiser – Hawaii
        • Accept the preliminary increase of 10.6%.
      • Kaiser – Oregon
        • Accept the preliminary increase of 6.0%.
      • Accept the preliminary mandated plan design changes for all locations.

      SCAN

      • Accept the 0.0% rate pass.

      CIGNA Dental and Vision

      • Accept the 1.7% overall increase with the following separate increases:
      • Accept the 1.6% increase for the indemnity dental plan.
      • Accept the 6.1% increase for the vision plan.
      • Accept the 0.0% rate pass for the pre-paid dental plan.

      Administrative Fee

      Approve the continuation of the flat monthly fee of $3.00 per retiree per month to pay for LACERA’s administrative fees (including consulting and vendor fees).

      SUMMARY OF BENEFIT CHANGES

      Anthem Blue Cross Plan I and Prudent Buyer Plan

      Anthem Blue Cross has identified coinsurance amounts in the in-patient hospitalization category of the plan design that are out of compliance with Department of Managed Health Care (DMHC) and Department of Insurance (DOI) regulations. The LACERA benefit is part of the basic benefit design and is not subject to change.

      Kaiser

      Infertility services will no longer be subject to any deductible and will no longer apply to a member’s annual out-of-pocket maximum effective July 1, 2009 for the basic/pre-65 HMO.

      PacifiCare

      • Secure Horizons
        • The copay for annual routine physical examinations (non-Medicare covered) will decrease from $5 to $0.

      CIGNA Medical

      • CIGNA MAPD HMO (Phoenix, AZ only)
        • All pharmacy options will include a new Tier 1 with five commonly used generics at $0 copay:
          • Enalapril (generic of Vasotec)
          • Simvastatin (generic of Zocor)
          • Amlodipine (generic of Norvasc)
          • Atenolol (generic of Tenormin)
          • Triamterene/HCTZ Tablets (generic of Maxzide)

      The final plan design has not been authorized by CMS at this time.

      A motion was made by Mr. Saladino, seconded by Mr. Chery, to approve the renewal and benefit change recommendations listed above, and the administrative fee for the 2009-2010 plan year.

      The motion passed with Mr. Robbins abstaining.

      Messrs. Harris, Morris, Pryor, Muir, and Ms. Antebi returned to the meeting for the remainder of the agenda.

8. PUBLIC COMMENT
9. GOOD OF THE ORDER (For discussion purposes only.)
10. EXECUTIVE SESSION
    1. A. CONFERENCE WITH LEGAL COUNSEL–ANTICIPATEDLITIGATION (Subdivision (c) of California Government Code Section 54956.9)
       1. 1. One Case
    2. B. Pursuant to Government Code Section 54957 – Public Employee Performance Evaluation:

       MID-YEAR EVALUATION

       Title: Chief Executive Officer

       The Board met in Executive Session to discuss the above anticipated litigation with its legal counsel. The Board reconvened in open session, at which time Mr. Muir made the following statement for the record:

       In the matter of one case, the Board authorized settlement of a claim against the estate of Joseph Jorgens to recover overpayment of retirement allowances in the amount of $76, 984.25. The substance of the settlement agreement will be disclosed upon inquiry by any person, after the settlement becomes final. Approved by on a motion of Mr. Pryor, seconded by Mr. Morris, with Mr. Saladino and Ms. Antebi voting no and Mr. Chery abstaining.

       The Board met in closed session pursuant to Government Code Section 54957 to consider the mid-year performance evaluation of the Chief Executive Officer.

       No reportable action was taken.

       Green Folder Information

       (Information distributed in each Board Member’ Green Folder at the beginning of the meeting.)

       1. LACERA Legislative Report –Bills Amending CERL. (Dated April 6, 2009)
       2. LACERA Legislative Report – Other. (Dated April 6, 2009)
       3. LACERA Legislative Report – PERS/STRS Bills. (Dated April 6, 2009)
       4. Memo from Liz Duran, Board Secretary, regarding: Health Insurance Renewals. (Memo dated April 8, 2009.)
11. ADJOURNMENT

Documents subject to public disclosure that relate to an agenda item for an open session of the Board of Investments that are distributed to members of the Board of Investments less than 72 hours prior to the meeting will be available for public inspection at the time they are distributed to a majority of the Board of Investments Members at LACERA’s offices at 300 N. Lake Avenue, Suite 820, Pasadena, CA 91101, during normal business hours of 9:00 a.m. to 5:00 p.m. Monday through Friday.

Listening Devices are available at days notice before the meeting date. Persons requiring an alternative format of this public notice pursuant to Section 202 of the Americans with Disabilities Act of 1990 may request one by contacting Cynthia Guider at (626) 564-6000, x3327 from 8:30 a.m. to 5:00 p.m. Monday through Friday, but no later than 48 hours prior to the time the meeting is to commence.

5/14/09