ABOUT LACERA

OPERATIONS & OVERSIGHT COMMITTEE MINUTES 10-15-09

PRESENT

• Yves Chery, Chair
• Ed C. Morris, Vice Chair
• Sadonya Antebi, Alternate

ABSENT

• Edward L. Blecksmith
• James P. Harris

BOARD MEMBERS AT LARGE

• Les Robbins

STAFF, ADVISORS, PARTICIPANTS

• Robert Hill
• Janice Golden
• Shamila Alam
• Bernie Buenaflor
• Mike Mikhail
• JJ Popowich
• Kaelyn Ung

The meeting was called to order by Chairman Chery at 1:10 p.m.

1. APPOINTMENT OF VOTING MEMBER(S) IN THE EVENT ONE OR MORE REGULAR COMMITTEE MEMBERS ARE ABSENT

   The Chair appointed Miss Antebi a voting member of the Committee.

2. APPROVAL OF THE MINUTES OF THE REGULAR MEETING OF SEPTEMBER 10, 2009

   A motion was made by Mr. Morris seconded by Miss Antebi, to approve the minutes of the regular meeting of September 10, 2009.

   The motion passed unanimously.

3. FOR INFORMATION
   1. FY 2008-2009 Final Budget Control Report Shamila Alam, Kaelyn Ung

      Shamila Alam and Kaelyn Ung presented the final Budget Control Report for fiscal year 2008-2009, based on actual expenditures through June 30, 2009. Total operating expenses for the LACERA Administrative Budget were $49 million, an underexpenditure of approximately $4.1 million from LACERA’s operating budget. The Retiree Health Care Benefits Program Budget’s total operating expenses were $3.5 million. This represents an overexpenditure of approximately $289,000 from the operating budget. A major factor of this overexpenditure is due to the OPEB (Other Post Employment Benefits) valuation costs being transferred from Non-Administrative to Administrative expense.

   2. Status Update on the “1996 Cases” Project Bernie Buenaflor, Mike Mikhail

      LACERA is currently reviewing the records of 6,000 plus members to uncover and correct potential discrepancies (e.g. contribution errors), which first came to the attention of the Board of Retirement in 1996. A cross functional team was formed to address these cases on a monthly basis, with Quality Assurance providing audits of the work being done. A Claims Processing team consisting of 10 new temporary Claims Processing staff and their supervisor is now assigned to this project. This team is finishing their training and by January, 2010, they will be working 100% on this project until completion.

      Three basic work processes are involved in cleaning up the 1996 cases:

      • Monthly case review
      • Ad-hoc case review
      • Expedited case review

      To date, 1,290 cases have been selected for review, 1,253 have been reviewed, with 37 being worked on. Of those reviewed, 65% are clean, with nothing owed to the member or LACERA. Approximately 20% are monies owed to LACERA by the member which we may not be able to collect due to statute of limitations. In about 11% of the cases, LACERA owes money to the member. One to two percent are monies owed to LACERA by members which should be collected. Another 4% is just basic clean-up, with no amount due to either side.

   3. An Overview of the Federal and State Tax Table Changes that have Impacted our Members to date in 2009 (oral presentation) John Popowich

      There have been a total of three tax changes this year. The first was a benefit for members, The American Recovery and Reinvestment Act, also known as the Obama Stimulus Plan. This was passed in early 2009, taking effect March 31, 2009. This plan created the “making work pay” tax credit, a $400 tax credit for single filers, $800 for joint filers. The tax credit was provided via a reduction in the withholding on the tax tables instead of a lump sum rebate check. The net impact for our members was a higher take home allowance. However, retirees may not be able to claim it as a tax credit, which was precluded in the bill, so they may see a higher tax liability at the end of the year.

      Second, the State’s budget for the last fiscal year passed in February, 2009, which included a personal income tax increase effective March 31, 2009. The impact to our members is less take home pay.

      Third, AB 17, recently signed by the Governor, becomes effective November 30, 2009. This bill requires a mandatory 10% increase in the current withholding rate for all California wage earners. This is not a tax increase, just an increase in the amount of money withheld. The impact to our members is a lower take home benefit amount.

      LACERA members are notified of these tax changes on the website at lacera.com; through paycheck inserts, and articles in the newsletters. Staff has had training to be able to answer members’ questions. Staff also has a tax calculator available if members inquire what their increase may be due to AB 17.

4. MISCELLANEOUS
5. PUBLIC COMMENT
6. GOOD OF THE ORDER

   (For discussion purposes only)

7. ADJOURNMENT

The Board of Retirement has adopted a policy permitting any member of the Board to attend a standing committee meeting open to the public. In the event five or more members of the Board of Retirement (including members appointed to the Committee) are in attendance, the meeting shall constitute a joint meeting of the Committee and the Board of Retirement. Members of the Board of Retirement who are not members of the Committee may attend and participate in a meeting of a Board Committee but may not vote on any matter discussed at the meeting. The only action the Committee may take at the meeting is approval of a recommendation to take further action at a subsequent meeting of the Board.

Documents distributed to members of the Committee less than 72 hours prior to the meeting will be available for public inspection at LACERA at the time they are distributed to a majority of the Committee, provided the documents are subject to public disclosure and relate to an open session of the Committee. Such documents may be viewed Monday through Friday during normal 9:00 a.m. to 5:00 p.m. business hours. LACERA is located at 300 N. Lake Avenue, Suite 820, Pasadena, California.

Persons requiring an alternative format of this agenda pursuant to Section 202 of the Americans with Disabilities Act of 1990 may request one by calling Cynthia Guider at (626)-564-6000, 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. Assistive Listening Devices are available upon request. American Sign Language (ASL) Interpreters are available with at least three (3) business days notice before the meeting date.

11/5/09