ABOUT

BOARD OF RETIREMENT MINUTES 5-7-09

PRESENT

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

ABSENT

• William de la Garza, Chair
• Si Frumkin
• William R. Pryor

STAFF ADVISORS AND PARTICIPANTS

• Gregg Rademacher, Chief Executive Officer
• Robert Hill, Assistant Executive Officer
• Janice Golden, Assistant Executive Officer
• David L. Muir, Chief Counsel
• Earl W. Buehner, Senior Staff Counsel
• Cynthia Lau, Legislative Affairs Officer
• Lita Payne, Director, Retiree Health Care

1. CALL TO ORDER

   Vice Chair Russin, presiding in the absence of Chair de la Garza, called the meeting to order at 9:00 a.m., in the Board Room of Gateway Plaza.

2. PLEDGE OF ALLEGIANCE

   Mr. Hill led the Board Members and staff in reciting the Pledge of Allegiance.

3. BOARD MEMBER ANNOUNCEMENTS (For Information Only)

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

4. APPROVAL OF THE MINUTES OF THE REGULAR MEETING OF APRIL 9, 2009

   A motion was made by Mr. Morris, seconded by Mr. Chery, to approve the minutes of the regular meeting of April 9, 2009.

   The motion passed unanimously.

5. OTHER COMMUNICATIONS
   1. For Information
      1. April 2009 All Stars

         Mr. Hill announced the eight winners for the month of April, (Imelda Saldivar, Joe Burton, Kaelyn Ung, Jovita Billups, Silvano Cruz, Bill Lindstrom, Courtney Cook, and Rachel Sacramento) of the Employee Recognition Program. Christine Roseland was the winner of LACERA’s Web Watcher Award. Huda Nassar, Mike Romero, Ramon Reyes, and Amit Aggarwall were the winners of LACERA’s RideShare Program.

      2. Chief Executive Officer’s Report (Memo dated May 1, 2009)

         Mr. Rademacher presented to Beulah Canevari the Government Finance Officers Association (GFOA) award for excellence in outstanding achievement in popular annual financial reporting and comprehensive annual financial report. Mr. Rademacher thanked Accounting, Internal Audit, and Communications Divisions for their contribution in compiling the information that goes into the report. Mr. Rademacher provided a brief overview of his Chief Executive Officer’s Report and was available for questions. Los Angeles County will be changing its payroll system from twelve (12) monthly pay periods to twenty-four (24) semi-monthly pay periods. Therefore, the County will be reporting member service credit twice a month. Implementation is scheduled to take place in the next fiscal year. The Operations Oversight Committee and the Board will be updated as this project develops. Mr. Rademacher reported on his meeting with the Los Angeles County Firefighters on April 16, 2009. Mr. Rademacher was asked various questions on the subject of finances, cost of living, and health care issues. Additionally, Mr. Rademacher reported on his attendance at the Milken Institute Global Conference in Beverly Hills. Lastly, Mr. Rademacher said that the California Foundation for Fiscal Responsibility has requested a list of retirees and beneficiaries whose gross monthly pension benefits exceed $8,333 dollars per month. The request will be denied based on Government Code Section 31532 which states that individual records of members are confidential and shall not be disclosed. However, LACERA will be providing a copy of LACERA’s Actuarial Report which provides statistics for pension payments under each of the plans.

6. VI. CONSENT AGENDA

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

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

      Approve attendance of Board Members, and staff, as designated by the Chief Executive Officer, at the National Association of Securities Professionals (NASP) 20th Annual Pension Conference; and approve reimbursement of all travel costs incurred in accordance with LACERA’s Education and Travel Policy. (Memo dated April 30, 2009.) (Placed on the agenda at the request of Mr. Chery.)

7. NON-CONSENT AGENDA
   1. Recommendation as submitted by William de la Garza, Chair, Insurance, Benefits and Legislative Committee:

      That the Board select Mercer to perform a pharmacy benefit manager (PBM) audit of CVS Caremark for the 2008-09 plan year. (Memo dated April 29, 2009.) On November 13, 2008, the Insurance, Benefits and Legislative Committee authorized staff to release a Request for Proposal (RFP) to find a Pharmacy Benefit Manager audit vendor. Thirteen (13) proposals were received. Staff evaluated the proposals and is recommending that the Board select Mercer. After a brief discussion, the following motion was made.

      A motion was made by Mr. Morris, seconded by Ms. Antebi, to approve the recommendation.

      The motion passed with Mr. Russin voting no and Mr. Chery abstaining.

   2. Recommendation as submitted by Simon S. Russin, Chair, Travel Policy Committee:

      That the Board adopt the proposed revisions to the Education and Travel Policy, as reflected in the blacklined version. (Memo dated April 24, 2009.)

      The Travel Policy Committee met on April 9, 2009, and is recommending that the Board of Retirement adopt the following proposed revisions:

      Reimbursement Schedule: Revised to:

      • Permit travel in business class on “red eye” flights; and
      • Create a “Transportation” category, subdivided into “Airline Travel” and “Other Common Carrier Travel”.

      The Committee proposes allowing travelers the option of using common carriers other than airlines for “long distance travel” when the traveler has special travel needs or concerns.

      Exhibit C: Conferences and Meetings for which Prior Board Approval is Not Required

      • All conferences pre-approved for attendance by members of one Board are now pre-approved for attendance by members of each Board
      • Two new conferences were added to the list of pre- approved conferences.

      A motion was made by Mr. Morris, seconded by Ms. Antebi, to approve the recommendation.

      The motion passed unanimously.

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

      That the Board adopt a position on AB 609 relating to disability retirements in Tulare County. (Memo dated April 16, 2009.)

      AB 609

      The Insurance, Benefits and Legislative Committee did not adopt a position on Assembly Bill 609 relating to disability retirements for Tulare CERA. The Committee decided to refer the bill to the Board for a position. The bill was amended on April 30, 2009 and no longer relates to Tulare CERA. It now states the intent of the Legislature to review linking the administrative budget of a ’37 Act retirement system to the value of its assets. Staff recommends a “Watch” position on amended AB 609.

      A motion was made by Mr. Saladino, seconded by Mr. Morris, to adopt a “watch” position on AB 609.

      The motion passed unanimously. Mr. Robbins was not present for the vote.

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

      That the Board adopt a position on AB 664 as it relates to workers’ compensation and the creation of a rebuttable presumption for hospital employees. (Memo dated April 22, 2009.)

      AB 664

      The bill relates to workers’ compensation and the creation of rebuttable presumptions for blood-borne infectious diseases, neck or back impairment, and MRSA for hospital employees. As introduced, these presumptions would be extended following termination of service for a period of three (3) calendar months for each full year of requisite service, but not to exceed 60 months following the last day actually worked. The bill was amended on April 30, 2009 to shorten the time the MRSA presumption is extended to a period of 90 days following the last day actually worked. The blood-borne infectious disease and neck or back impairment presumptions would still be subject to the longer post-employment period. The Insurance, Benefits and Legislative Committee had no recommendation.

      A motion was made by Mr. Harris, seconded by Ms. Antebi, to adopt an “oppose unless amended to eliminate presumption for neck or back impairment” on AB 664.

      The motion passed with Mr. Chery abstaining.

   5. Recommendation as submitted by William de la Garza, Chair, Insurance, Benefits and Legislative Committee:

      That the Board adopt a “watch” position on AB 1034 authorizing special district status for Marin CERA. (Memo dated April 15, 2009.)

      AB 1034

      Assembly Bill 1034 would authorize the Board of Retirement of Marin County to include Marin CERA within the definition of “district” for purposes of providing retirement benefits to its system’s employees. Currently, this definition applies to the retirements in only Orange County and San Bernardino County. It also authorizes Marin County’s Board of Retirement to classify specified management, investment, and legal personnel of its system as “at will” employees of the system who would not be subject to the civil service system. Ventura CERA and Contra Costa CERA have also expressed interest in special district status. It is possible that this bill may be amended into a multi-system bill.

      A motion was made by Mr. Morris, seconded by Mr. Chery, to adopt a “watch” position on AB 1034.

      The motion passed unanimously. Mr. Blecksmith was not present for the vote.

   6. Recommendation as submitted by William de la Garza, Chair, Insurance, Benefits and Legislative Committee:

      That the Board adopt a “watch” position on AB 1136 which would permit specified retired members the ability to revoke certain optional settlements. (Memo dated April 15, 2009.)

      AB 1136

      Under current law, a spouse is eligible for a survivor continuance under the member’s unmodified option if married to the member at least one year prior to retirement. The Legislature added a provision to CERL, commonly referred to as the “Post-retirement spouse” provision, which makes a spouse eligible for a survivor’s continuance of an unmodified allowance, if the spouse was married to the retiree at least two years prior to the retiree’s death, and was, at least, 55 years old on the retiree’s death. This is an optional provision that may be implemented by a board of retirement. LACERA has not done so. According to the sponsor, a number of retirees who were unmarried or married for less than one year and who elected an optional settlement in lieu of the unmodified allowance at the time they retired might not have done so had the post-retirement spouse provision been made applicable in the county from which they retired. The bill would allow those retirees to revoke their election of an optional settlement if: 1. The retiree was unmarried or had been married less than one year at the time of retirement; and 2. The retiree retired on or before the date the post-retirement spouse provision was made applicable in the county from which he/she retired.

      The following rules would apply to the revocation of an optional settlement: 1. Member’s allowance would be adjusted to the unmodified option, adjusted by any cost of living increases, effective on first day of month following receipt of the member’s signed revocation. 2. Retirement system not obligated to locate or otherwise contact retired members who may qualify for revocation. 3. Member would not be excused from an obligation to former spouse pursuant to court order. 4. After revoking an optional settlement, a retired member shall not be entitled to elect any optional settlement. The provisions allowing for the revocation would not be applicable until adopted by the Board of Retirement. Assembly Bill 1136 applies to counties with post-retirement spousal provisions. LACERA’s Board of Retirement has not adopted these provisions, therefore, this bill would not be applicable at this time.

      A motion was made by Ms. Antebi, seconded by Mr. Blecksmith, to take a “watch” position on AB 1136. The motion passed unanimously.

   7. Recommendation as submitted by William de la Garza, Chair, Insurance, Benefits and Legislative Committee:

      That the Board adopt a “watch” position on AB 1227 relating to workers’ compensation benefits payable under Labor Code Section 4850. (Memo dated April 15, 2009.)

      AB 1227

      Existing law provides specified safety personnel with special "leave of absence" benefits equal to 100 percent of salary for up to one year if he or she is unable to work due to an on-the-job injury. This is in lieu of temporary disability benefits. Also known as “4850 time” because the benefit is set forth in Labor Code Section 4850, this benefit is tax-free and payable regardless of length of service. (Temporary disability benefits generally replace two-thirds of the worker’s salary and are subject to a maximum cap.) PROPOSED AMENDMENT TO LABOR CODE SECTION 4850 AB 1227 is sponsored by the Peace Officers Research Association of California (PORAC) and amends Labor Code Section 4850 by: 1. Removing the requirement that specified personnel be members of PERS, a CERL system or LACERS in order to qualify for 4850 pay. It would require instead that eligible personnel be employed on a regular, full-time basis and disabled due to the course of his or her duties. 2. Expanding the 4850 benefit to specified local park rangers, California Community College police, and police officers of a school district. 3. Excluding public safety personnel who are employees of the City and County of San Francisco. AB 1227 is identical to vetoed AB 419 from the 2007-2008 legislative session. Supporters of that bill explained that safety employees in several other municipalities in the state are excluded from 4850 benefits due to participation in other retirement systems. They felt that this was an oversight in current law. Opponents, on the other hand, disputed that current law was an oversight and contended that existing law was intentionally applied only to those safety officers who are members of the three specified retirement systems (PERS, those subject to CERL, and LACERS). Governor Schwarzenegger vetoed AB 419 because it would result in increased workers’ compensation costs to some cities and counties and because he felt that “…eligibility for this benefit was best left to locals, not the state, to determine.” A formal analysis of this year’s bill is not yet available, but it is anticipated that similar arguments by proponents and opponents will be made.

      A motion was made by Ms. Antebi, seconded by Mr. Chery, to take a “watch” position on AB 1227.

      The motion passed unanimously.

   8. Recommendation as submitted by William de la Garza, Chair, Insurance, Benefits and Legislative Committee:

      That the Board adopt a “watch” position on SB 345 relating to increased survivor benefits for San Bernardino County’s safety members killed in the line of duty. (Memo dated April 15, 2009.)

      SB 345

      Senate Bill 345 is sponsored by the San Bernardino County Safety Employees Benefits Association and applies to safety members of San Bernardino County only. Under existing law, if a member would have been entitled to retirement in the event of a service-connected disability, but dies prior to retirement as the result of injury or disease arising out of and in the course of the member’s employment, the surviving spouse or eligible surviving children of the member have the right to elect an optional death allowance. The optional death allowance consists of a monthly payment equal to the monthly retirement allowance to which the deceased member would have been entitled if he or she had retired by reason of a service-connected disability as of the date of his or her death. The bill would provide that in San Bernardino County only the final compensation upon which the optional death allowance is calculated shall be increased by applying any salary increases that are granted to then-active members in the same job classification and membership category. Increases to the final compensation, which would result in a larger monthly allowance, would cease upon the death of the eligible beneficiary, or the date the deceased member would have attained the age of 50 years. The sponsor states that CalPERS passes on increases in pay to spouses of its slain officers and that the bill is needed to provide spouses of slain San Bernardino police officers with salary and benefits commensurate with currently serving safety officers.

      A motion was made by Mr. Saladino, seconded by Mr. Morris, to take a “watch” position on SB 345.

      The motion passed unanimously.

   9. Recommendation as submitted by William de la Garza, Chair, Insurance, Benefits and Legislative Committee:

      That the Board adopt a “watch” position on SB 538 relating to disability leaves and mandatory retirement for Safety members. (Memo dated April 15, 2009.)

      SB 538

      Current law exempts safety members of the Sheriff’s and Fire Departments from mandatory retirement by age 60, provided a County physician certifies that the safety member is capable of performing his or her assigned duties pursuant to standards set forth by the County. (Safety members whose safety service commenced on or after April 1, 1997 are not subject to mandatory retirement.) Senate Bill 538, sponsored by California Professional Firefighters, would allow a safety member who is on a disability leave of absence the opportunity to receive the physician certification upon return from his/her leave.

      A motion was made by Mr. Morris, seconded by Mr. Saladino, to take a “watch” position on SB 538.

      The motion passed with Ms. Antebi abstaining.

   10. Recommendation as submitted by William de la Garza, Chair, Insurance, Benefits and Legislative Committee:

       That the Board adopt a “support” position on AJR 10 which would request the President and the Congress of the United States to enact the “Social Security Fairness Act of 2009”. (Memo dated April 15, 2009.)

       AJR 10

       Federal bills HR 235 and S 484, introduced on January 7, 2009 and February 25, 2009, would amend Title II of the Social Security Act to repeal the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). The Act is referred to as the “Social Security Fairness Act of 2009”. Assembly Joint Resolution 10 requests the Congress of the United States to enact this legislation to remove the effects of WEP and GPO, and to further request President Obama to support and sign that legislation. This resolution requires the approval of both Assembly and Senate but does not require signature of the Governor. This Resolution is similar to AJR 5 which was chaptered in 2007.

       A motion was made by Mr. Morris, seconded by Mr. Chery, to take a “support” position on AJR 10.

       The motion passed unanimously.

   11. Recommendation as submitted by William de la Garza, Chair, Insurance, Benefits and Legislative Committee:

       That the Board adopt a “support” position on S 484, which would enact the “Social Security Fairness Act of 2009”. (Memo dated April 15, 2009.)

       S 484

       U. S. Senate Bill 484, also known as the “Social Security Fairness Act of 2009”, is another attempt to amend Title II of the Social Security Act to repeal Government Pension Offset (GPO) requirements and the Windfall Elimination Provision (WEP). This bill is identical to HR 235 which was introduced in the House of Representatives on January 7, 2009.

       A motion was made by Mr. Chery, seconded by Mr. Morris, to take a “support” position on S 484.

       The motion passed unanimously.

   12. Recommendation as submitted by William de la Garza, Chair, Insurance, Benefits and Legislative Committee:

       That the Board adopt a “support” position on HR 1413 (HELPS II) which would extend eligibility for tax-free distributions for health and long-term care premiums for all eligible public retirees. (Memo dated April 15, 2009.)

       HR 1413

       Currently, under the Pension Protection Act of 2006 (PPA), retired Public Safety Officers (PSOs) who meet all eligibility requirements are entitled to a deduction of up to $3,000 per year for qualified health and long-term care premiums. HR 1413, also known as “Healthcare Enhancement for Local Public Servants Act of 2009” or “HELPS II”, would amend the Internal Revenue Code to: 1. Extend eligibility for tax-free distributions of up to $3,000 to any eligible retired state or local public employee. This is currently limited to retired public safety officers. 2. Allow the deduction for surviving spouses of public retirees, who were allowed the deduction, for subsequent taxable years. There is no spousal provision under current law. 3. Allow an annual inflation adjustment to the $3,000 distribution limit beginning with taxable years after December 31, 2009. 4. Remove the administrative responsibility from pension funds. The requirement for insurance premiums to be paid directly from LACERA to the insurance carrier would be repealed by this bill. Passage of this bill would provide more retirees with tax relief from the federal government.

       A motion was made by Mr. Chery, seconded by Mr. Morris, to take a “support” position on HR 1413.

       The motion passed unanimously.

8. PUBLIC COMMENT
9. GOOD OF THE ORDER (For discussion purposes only.)

   Green Folder Information

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

   1. 1. LACERA Legislative Report –Bills Amending CERL. (Dated May 5, 2009)
   2. 2. LACERA Legislative Report – Other. (Dated May 5, 2009)
   3. 3. LACERA Legislative Report – PERS/STRS Bills. (Dated May 5, 2009)
   4. 4. Memo from Cynthia Lau, Legislative Affairs Officer, regarding: Assembly Bill 609 – Amended Bill No Longer Relates to Disability Retirements for Tulare CERA (Memo dated May 4, 2009).
10. X. 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.

6/12/09