ABOUT

BOARD OF RETIREMENT MINUTES 7-9-09

PRESENT

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

ABSENT

• William de la Garza, Chair
• Edward L. Blecksmith

STAFF ADVISORS AND PARTICIPANTS

• Gregg Rademacher, Chief Executive Officer
• Robert Hill, Assistant Executive Officer
• Janice Golden, Assistant Executive Officer
• Johanna M. Fontenot, Senior Staff Counsel
• Fern M. Billingy, Senior Staff Counsel
• J. Patrick Joyce, Chief Counsel, Disability Litigation
• Cynthia Lau, Legislative Affairs Officer
• Kimberly Hines, Manager, Claims Processing Division
• John Popowich, Manager, Member Services Division
• Suzanne Mendoza
• Milliman, Inc.
• Robert L. Schmidt, F.S.A., M.A.A.A.
• LACERA Actuary
• Karen I. Steffen, F.S.A., M.A.A.A.
• LACERA Actuary

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. Robbins 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, and Blecksmith would not be present at today’s meeting.

4. APPROVAL OF THE MINUTES OF THE REGULAR MEETING OF JUNE 11, 2009

   A motion was made by Mr. Chery, seconded by Mr. Morris, to approve the minutes of the regular meeting of June 11, 2009.

   The motion passed unanimously.

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

         Mr. Hill announced the eight winners for the month of June, (Lauren Decoudreaux, Rubiel Minjares, Robert Santos, Sergik Tahmazyan, Dmitriy Khaytovich, Tami Hammell, Isis Morcos, and Anh Tu Huynh) of the Employee Recognition Program. Elizabeth Gonzalez was the winner of LACERA’s Web Watcher Award. Richard Creamer, David Escamilla, Louis Gittens, and Tionna Fredericks were the winners of LACERA’s RideShare Program.

      2. Service Awards

         Mr. Rademacher presented a 35 year service award to Elvia Gonzalez and Elizabeth Duran. Additionally, Mr. Rademacher noted that upon Ms. Gonzalez’ retirement, her name will be placed on LACERA’s honor roll plaque because of her 30 years of service with LACERA.

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

         Mr. Rademacher reported that new Summary Plan Description Booklets for all LACERA retirement plans are now available to members. Postcards were mailed to all 100,000 active and deferred members inviting them to view the booklets online. Plan Booklets will be mailed out upon member’s request. Mr. Rademacher thanked Communications staff and the cross-functional team for all their hard work in making this possible.

         Mr. Rademacher said that the SACRS Legislative Committee Chair asked that Mr. Rademacher sit in as a member of that committee to help fill in a vacancy created with Mr. Muir’s retirement. Mr. Rademacher said he would willingly join the committee as a member on the proviso that Mr. Van Der Volgen, LACERA’s new Chief Counsel be considered for that position in the future. Therefore, Mr. Rademacher, upon approval of SACRS Board of Directors, will begin attending SACRS Legislative Committee meetings beginning next year.

         Additionally, Mr. Rademacher noted that in his CEO evaluations he was encouraged to build relationships with LACERA’s counterparts in Sacramento. Therefore, Mr. Rademacher will meet with the committee chairs of the Senate Public Employees Committee and Assembly Committee on Public Employees Retirement and Social Security.

         The Board was reminded of its yearly off-site scheduled for January 2010. Mr. Rademacher expressed his concern over the current troubled financial times and after much deliberation thought a two day format instead of a three day format would work just as well. The tentative dates are January 26 and 27, 2010.

         August 6-18, 2009, Mr. Rademacher will be out of town. Mr. Hill will be in charge of the Association during Mr. Rademacher’s absence.

6. NON-CONSENT AGENDA
   1. Recommendation as submitted by James J. Castranova, Senior Staff Counsel:

      That the Board approve payment of invoices for referee services in disability retirement appeals. (Memo dated June 25, 2009.)

      Ms. Billingy addressed the Board on behalf of Mr. Castranova who was unable to be at today’s meeting due to an appearance in court.

      Legal recommends that the Board approve payment to Referee Lishner in the amount of $2,550.00 and disallow payment in the amount of $1,925.00.

      Mr. Joyce and Ms. Billingy gave a brief summary of the reasons for disallowing payment to Referee Lishner in regards to two appellant cases. After a brief discussion, the following motion was made:

      A motion was made by Mr. Pryor, seconded by Mr. Chery, that the Board approve payment in the amount of $2,550.00 to Referee Lishner.

      An amendment to the motion was made by Ms. Antebi, seconded by Mr. Morris, to include payment of $825 to Referee Lishner for her work in the appellant case of Park.

      The amendment passed unanimously.

      The action motion, as amended, to approve payment to Referee Lishner for cases Guzman, Natividad, Papp, Moore, and Park in the amount of $3,375.00 passed unanimously.

   2. Recommendation as submitted by William de la Garza, Chair, Insurance, Benefits and Legislative Committee: That the Board continue its “watch” position on AB 155, relating to municipal bankruptcy. (Memo dated June 17, 2009.)

      AB 155

      Assembly Bill 155 would require local governments to seek approval from the California Debt and Investment Advisory Commission (CDIAC) prior to filing for bankruptcy under federal bankruptcy law (Chapter 9).

      Earlier versions of the bill provided broad authority to the CDIAC to deny access to bankruptcy. Your board adopted a “Watch” position on the bill at its April 9, 2009, meeting. The bill was subsequently amended on June 1, 2009 to:

      1. Specify requirements from a local public entity in its request to CDIAC

      2. Establish specific timelines for CDIAC

      3. Establish specific findings that CDIAC must make before rejecting an application.

      4. Require CDIAC to hold public hearings

      5. Delete portions of the intent language that imply state obligation to provide financial relief to local governments facing bankruptcy.

      A motion was made by Mr. Morris, seconded by Mr. Robbins, to continue a “watch” position on AB 155.

      The motion passed unanimously.

   3. Recommendation as submitted by William de la Garza, Chair, Insurance, Benefits and Legislative Committee: That the Board adopt a “support” position on AB 609 which defines the administrative cost cap.

      AB 609

      Existing law specifies the administrative budget of ’37 Act retirement systems to be based on the assets of the retirement system. Due to the significant decline in the market, this has resulted in reduced operating budgets for retirement systems.

      SACRS is sponsoring AB 609 to address this issue to enable systems to function properly and to provide continuing service to its members. As amended on June 2, 2009, AB 609 does the following:

      1. Increases the maximum annual amount from eighteen hundredths of 1% (0.18%) of the total assets of the retirement system to nineteen hundredths of 1% (0.19%)

      2. Increases the maximum amount a system may spend on administration in years when they incur expenses for software, hardware, and computer technology consulting services as follows:

      a. From eighteen hundredths of 1% (0.18) to nineteen hundredths of 1% (0.19%) of the total assets of the retirement system, plus $1 million; or

      b. From twenty-three hundredths of 1% (0.23%) to twenty-four hundredths of 1% (0.24%) of the total assets of the retirement system.

      Your board adopted a “Watch” position at its meeting on May 7, 2009 prior to the recent amendment. The prior version of the bill declared the Legislature’s intent to review linking the administrative budget of a ’37 Act retirement system to the value of its assets.

      The bill was subsequently amended on July 1, 2009, to change the statutory asset-based cap to a liability-based cap. The shift to a liability-based cap may result in less volatility to the administrative cap for ’37 Act systems.

      Staff recommend a “support” position on AB 609, as amended.

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

      The motion passed unanimously.

   4. Recommendation as submitted by Cynthia Lau, Legislative Affairs Officer: That the Board adopt a “support” position on AB 1584, as amended, relating to conflict of interest laws applicable to public pension systems. (Memo dated June 24, 2009.)

      AB 1584

      The Insurance, Benefits and Legislative Committee has referred Assembly Bill 1584 to the Board of Retirement with a “Support” recommendation.

      The bill is urgency legislation which would strengthen conflict of interest laws applicable to public pension systems.

      The bill has been subsequently amended on June 18, 2009 to:

      1. Prohibit an external manager or placement agent that violated the placement agent disclosure policy from soliciting new investments from the system for five years following the violation. In addition, the amendment provides that this five-year prohibition may be reduced by a majority vote of the board at a public session upon a showing of good cause. (The original version of the bill specified a two-year prohibition.)

      2. Require placement agents, prior to acting as a placement agent in connection with any potential system investment, to disclose to the board all gifts, as defined in Section 82028, given by the placement agent to any member of the board during the prior 24-month period. Additionally, any subsequent gift given by the placement agent to any member of the board during the time the placement agent is receiving compensation in connection with a system investment shall also be disclosed. (This is a new requirement. The original version required only disclosure of campaign contributions to elected board members.)

      Staff recommends a “Support” position on AB 1584 as amended.

      A motion was made by Mr. Chery, seconded by Mr. Robbins, to adopt a “support” position on AB 1584.

      The motion passed unanimously.

   5. Information only from Gregg Rademacher, Chief Executive Officer, regarding: Los Angeles County Other Post Employment Benefits Program Actuarial Valuation. (Memo dated July 1, 2009.)

      Mr. Rademacher introduced LACERA’s actuaries Karen I. Steffen and Robert L. Schmidt of Milliman Inc. Ms. Steffen and Mr. Schmidt conducted a slide presentation on the results of the actuarial procedures, assumptions, and valuation for the Los Angeles County - Other Post Employment Benefits Program. A brief discussion followed and the Report was received and filed.

7. PUBLIC COMMENT

   Mrs. Mendoza spoke on behalf of calculations made on her retirement benefits.

8. GOOD OF THE ORDER (For discussion purposes only.)
9. EXECUTIVE SESSION
   1. Conference with Legal Counsel -Anticipated Litigation (Subdivision (b) of California Government Code Sec. 54956.9)
      1. Claim of Suzanne Mendoza

         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 Ms. Billingy made the following statement for the record:

         In the claim of Suzanne Mendoza, on a motion by Mr. Pryor, seconded by Mr. Saladino, the Board adopted staff’s recommendation and gave further direction to staff regarding this case.

         The motion passed with Mr. Chery abstaining.

      Green Folder Information

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

      1. LACERA Legislative Report –Bills Amending CERL. (Dated July 8, 2009)
      2. LACERA Legislative Report – Other.(Dated July 8, 2009)
      3. LACERA Legislative Report – PERS/STRS Bills. (Dated July 8, 2009)
      4. Additional Reference Information Regarding AB 1584. Item D under - Non-Consent Agenda.
10. 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.

8/20/09