BOARD OF RETIREMENT
FRESNO COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION
Wednesday, October 4, 2006 – 9:00 AM
Trustees Present:
Michael Cardenas
Steve Jolly
Stephanie Savrnoch
William Storey
Vicki Crow
A. Papaleo
John Souza
Trustees Absent:
Vera Dominguez
Phil Larson
Others Present:
Ronald S. Frye, Alternate Trustee
Michael Cunningham, Retired FCERA Member
Jeffrey MacLean, Wurts & Associates
Adam Spector, Brandywine Global
Henry Otto, Brandywine Global
Ken Johnson, Loomis Sayles
Peter Palfrey, Loomis Sayles
Jeffrey Rieger, Reed Smith – via telephone
Barbara Booth Grunwald, Deputy County Counsel
Roberto L. Peña, Retirement Administrator
Becky Van Wyk, Assistant Retirement Administrator
Elizabeth Avalos, Administrative Secretary
Sign in Sheet Attached
1.
Call to Order
Chair Jolly called the meeting to order at 9:11 AM.
2.
Public Presentations
None.
Consent Agenda/Opportunity for Public Comment
Chair Jolly pulled Consent Agenda Items 9, 10, and 12.
A motion was made by Trustee Storey, seconded by Trustee Souza, to Approve
Consent Agenda Items 3-8, 11, and 13-16. VOTE: Unanimous (Absent – Dominguez,
Larson)
10/04/06 Regular Meeting
2
*3.
Approval of the September 20, 2006 Board of Retirement Regular Meeting
Minutes
RECEIVED AND FILED; APPROVED
*4.
Retirements
RECEIVED AND FILED; APPROVED
Virginia M. Aubuchon
Daniel Aveitia
Mary H. Beltran
Patti Gimbarti
Thomas T. Greene
Irma E. Marez
Barbara Mechikoff
Lucia Ng
Yolanda J. Partida
Sally A. Ryland
Maureen J. Sarkisian
Melecia D. Wong
Dorothy A. Zack
*5.
E&TA
Sheriff
Public Defender
Sheriff
Probation, Deferred
Superior Court
Child Support Services, Deferred
VMC, Deferred
VMC, Deferred
Behavioral Health
VMC, Deferred
E&TA
Community Health
10.08
29.03
15.81
25.52
31.03
30.79
5.19
16.68
11.38
15.72
9.69
9.81
18.48
Deferred Retirements
RECEIVED AND FILED; APPROVED
Bruce Barnes
Joseph Christl
Robin Derman
Andrew J. Haussler
Kathy A. Hayden
Emily M. Oliver
Judy Rogers
James Silva
Margaret A. Singleton
Sandy S. Vang
Joan G. VonRenner
*6.
Local Agency Formation Committee
NCFPD
District Attorney
Public Works & Planning
Community Health
Community Health
Public Defender
NCFPD
County Counsel
E&TA
Behavioral Health
0.92
1.62
2.23
4.19
4.68
0.38
4.47
1.60
3.11
1.32
8.65
Most recent investment returns, performance summaries and general
investment information from investment managers
RECEIVED AND FILED
*7.
Public Records Requests and/or Retirement Related Information Requests from
Randolfo Hernandez, Active FCERA Member; Analisa Almaguer, Employment &
Temporary Services; and Bob Solis, Retired FCERA Member
RECEIVED AND FILED
10/04/06 Regular Meeting
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*8.
Updates to the Trustee Binder – Organization Chart, Job Specifications, FCERA
Trustee Due Diligence Policy, and Investments Guidelines
RECEIVED AND FILED
*9.
Kern County Employees’ Retirement Association (KCERA) Survey Responses
regarding Investment Consultant Evaluation Process
Roberto L. Peña, Retirement Administrator, stated that Administration had received an
e-mail from Kern County Employees’ Retirement Association (KCERA) regarding the
responses to a request for information on investment consultant evaluation practices.
Mr. Peña suggested that an annual evaluation of various FCERA consultants would be
beneficial and noted that, if the Board desired, he would return with a consultant
evaluation process for the Board’s approval. The Board Agreed.
Discussions, questions, and comments followed.
A motion was made by Chair Jolly, seconded by Trustee Souza, to Approve Consent
Agenda Item 9. VOTE: Unanimous (Absent – Dominguez, Larson)
RECEIVED AND FILED
*10.
Correspondence from Blackstone Alternative Asset Management L.P. regarding
Hedge Fund – Amaranth Advisors
In response to a question from Chair Jolly, Jeffrey MacLean, Wurts & Associates,
stated that Blackstone Alternative Asset Management had been invested with
Amaranth, they redeemed earlier this year prior to the reported losses. Blackstone has
a small investment remaining (approximately 0.2% of the fund’s investment, relating to
some designated investments) and the fund has no exposure to Amaranth.
In response to a question from Trustee Souza, Mr. MacLean, noted that the original
investment in December 2001 was $10 million and as of August 2006 is worth
approximately $13.5 million.
Roberto L. Peña, Retirement Administrator, noted that of the Plan’s $2.5 billion
investments, only $13 million is invested in Hedge Funds.
Discussions, questions, and comments followed.
A motion was made by Chair Jolly, seconded by Trustee Crow, to Approve Consent
Agenda Item 10. VOTE: Unanimous (Absent – Dominguez – Larson)
RECEIVED AND FILED
Trustee Savrnoch stated that it was her intention to pull Consent Agenda Item 14 for
discussion.
A motion was made by Trustee Savrnoch, Seconded by Chair Jolly, to reconsider
Consent Agenda Item 14. VOTE: Unanimous (Absent – Dominguez, Larson)
10/04/06 Regular Meeting
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*11.
Due Diligence Interview Guidelines and Agendas for on-site visits to Real Estate
Managers
RECEIVED AND FILED
*12.
State Street Global Advisors and JP Morgan Agreements for implementation of
the Cash Overlay Strategy
Chair Jolly noted that it is his understanding that the FCERA will eventually use State
Street Global Advisors (State Street) Strategic Overlay with other investment
managers, but in reviewing the contract with State Street he noted the minimum
annual fee of $50,000 is much higher than the $20,000 annual fee based on 8 basis of
points of $25 million of Administrative Cash and asked that Jeffrey MacLean, Wurts &
Associates, to work with State Street on the fee.
Roberto L. Peña, Retirement Administrator, and Mr. MacLean recommended that the
Board approve the contract “as is” and in the event any difficulties arise in negotiating
a new fee, they would return to the Board.
Discussions, questions, and comments followed.
A motion was made by Chair Jolly, seconded by Trustee Storey, to Approve Consent
Agenda Item 12. VOTE: Unanimous (Absent – Dominguez, Larson)
RECEIVED AND FILED; APPROVED
*13.
Request for direction on proxy voting quidelines for INTECH
RECEIVED AND FILED; APPROVED
*14.
Request for direction on Sonoma County Employees’ Retirement Association’s
(SCERA) request that SACRS Legislative Committee seek clarification related to
G.C. §31720(a)
A motion was made by Trustee Savrnoch, seconded by Chair Jolly, to direct
Administration to prepare a letter supporting the request of Sonoma County
Employees’ Retirement Association (SCERA) that SACRS Legislative Committee work
towards revising Government Code §31720(a) as it relates to the term “contributes
substantially” in evaluating a service-connected disability application.
Discussions, questions, and comments followed in favor of supporting SCERA’s
request.
VOTE: Unanimous. (Absent – Dominguez, Larson)
RECEIVED AND FILED; APPROVED
*15.
Liability Insurance for the FCERA Administration Building – Terrorism Coverage
RECEIVED AND FILED; APPROVED
10/04/06 Regular Meeting
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*16.
Liability Insurance for the Fresno Station Business Center – Terrorism Coverage
RECEIVED AND FILED; APPROVED
17.
Performance and Economic Summary report presented by Ken Johnson and
Peter Palfrey, Loomis Sayles
Jeffrey MacLean, Wurts & Associates, reminded the Board that Loomis Sayles
(Loomis) is a Fixed Income Manager hired by FCERA on July 31, 2001 and stated
that, due to some issues early on, Loomis Sayles was put on “watch”. Loomis was
able to recover by August 2004, but remained on “watch” until March 2005 and the
performance has been “good” since.
Ken Johnson, Loomis Sayles, began the presentation with a brief overview of the
firm’s recent developments and staff changes.
Peter Palfrey, Loomis Sayles, reviewed the preliminary investment results through
September 30, 2006. Mr. Palfrey noted that the inception number is trailing primarily
due to very poor performance in 2002.
Mr. Palfrey gave a brief overview of the portfolio and the bond market environment.
Discussions, questions, and comments followed.
RECEIVED AND FILED
18.
Performance and Economic Summary report presented Adam Spector and
Henry Otto, Brandywine
Jeffrey MacLean, Wurts & Associates, reminded the Board that Brandywine is a Small
Cap Value Manager and stated that FCERA has no issues with Brandywine other than
the lacking performance over the past 12 months.
In response to a question from Michael Cunningham, Retired FCERA Member, Mr.
MacLean stated that Brandywine’s inception was August 21, 1995 and the total
number of assets is approximately $135 million.
Adam Spector, Brandywine, gave a brief overview of the firm, investment philosophy,
and strategy. Mr. Spector noted that, although the long term numbers have been
strong, they have recently been behind the benchmark.
Henry Otto, Brandywine, summarized the portfolio performance and explained the
recent underperformance. Mr. Otto noted that Consumer-Oriented Stocks, Auto Parts,
Capital Goods/Materials, and Energy detracted from the performance.
In response to a question from Trustee Savrnoch, Mr. MacLean stated the explanation
for the underperformance is sound.
Discussions, questions, and comments followed.
RECEIVED AND FILED
10/04/06 Regular Meeting
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19.
Discussion and appropriate action on recommended responses to Grand Jury
Reports 1 and 5
Roberto L. Peña, Retirement Administrator, opened discussions by noting that FCERA
Administration, along with Harvey Leiderman and Jeffrey Rieger of Reed Smith, had
drafted proposed responses to the Grand Jury Interim Reports 1 and 5. Mr. Peña
recommended that the Board approve the proposed responses.
Trustee Savrnoch expressed her concern regarding response F15, in that the Board
may not have reported, in the minutes, the vote or abstention of every member present
as related to the Fresno Station Business Center real estate negotiation when the
acquisition became final.
Trustee Souza expressed his concern regarding statement F8 of the Grand Jury Final
Report, in that two Board members were “acquainted” with the real estate agent
selected to negotiate the acquisition of the Fresno Station Business Center. Trustee
Souza stated, for the record, that the agent was not an “acquaintance”, rather he
“knew of” the agent only because they had lived in the same neighborhood. Trustee
Souza questioned the interpretation of “acquaintance”.
Attorney Jeffrey Rieger, Reed Smith, stated, via telephone, that the Grand Jury did not
elaborate as to the definition of “acquaintance” and due to that, the response to F8 is
sufficient.
In response to a question from Mr. Peña, Trustee Souza stated he is satisfied with
having his statement on record and noted that because of his position of “knowing of”
the agent he did not deal directly with the agent during the acquisition of the Fresno
Station Business Center.
In response to Trustees Savrnoch’s concern, Barbara Booth Grunwald, Deputy County
Counsel, stated that the Brown Act dictates that the Board disclose the facts of an
approval and the substance of an agreement upon inquiry by any person, but is “silent”
on the reporting of an agreement where the final approval rests with the other party
[Real Estate Negotiations].
Mr. Rieger reminded the Board that response F15 is a general response to a general
statement made by the Grand Jury. Mr. Rieger noted that any changes or corrections
made to the 2002 minutes would not necessarily impact the response to the Grand
Jury at this time.
Trustee Crow stated that response F15 is relevant and adequate.
Mr. Peña stated that after working with Staff, Mr. Leiderman, and Mr. Rieger, he is
comfortable with the response.
Discussions, questions, and comments followed.
Trustee Cardenas departed at 11:30 AM.
10/04/06 Regular Meeting
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A motion was made by Trustee Crow, seconded by Trustee Storey, to Approve
Agenda Item 19 as presented. VOTE: Yes – Crow, Jolly, Papaleo, Storey. Abstain –
Souza, Savrnoch. Absent – Cardenas, Dominguez, Larson. MOTION PASSED
RECEIVED AND FILED; APPROVED
The Board directed Administration to research Public Requests regarding the vote or
abstention of every member present at the July 19, 2002 Closed Session meeting as
related to the acquisition of the Fresno Station Business Center and to bring the
findings back to the Board for further direction.
Roberto L. Peña, Retirement Administrator, pulled Item 20.A.1. as there was nothing
to discuss. Mr. Peña noted that the Board was provided a brief related to Agenda Item
20.A.1.
20.
Closed Session:
A. Conference with Legal Counsel – Actual Litigation - pursuant to G.C.
§54956.9(a)
1.
County of Fresno v. Board of Retirement
B. Conference with Legal Counsel – Potential Litigation – pursuant to G.C.
§54956.9(b) – one case
21.
Report from Closed Session
20.A.1.
Pulled.
20.B.
A motion was made by Trustee Savrnoch, seconded by Trustee Crow, to
accept the declarations and Certificate of Independent Review provided
to the Board, which present clear and convincing evidence that Ms. Rae
Ann Predika is eligible to receive benefits from FCERA as Sandra
Keslek’s designated beneficiary. VOTE: Unanimous (Absent – Cardenas,
Dominguez, Larson)
A motion was made by Trustee Savrnoch, seconded by Trustee Crow, to
determine that FCERA member Sandra Keslek should have been
advised of the possible negative consequences of post-dating her
retirement application, and thus her retirement application shall be
granted with an effective date of retirement of July 9, 2006. VOTE:
Unanimous. (Absent – Cardenas, Dominguez, Larson)
22.
Discussion and appropriate action on application for retirement of FCERA
Member Sandra Keslek (deceased) and designation of beneficiary Rae Ann
Predika
Please see Agenda Item 21.
RECEIVED AND FILED; APPROVED
10/04/06 Regular Meeting
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23.
Report from FCERA Administration
Roberto L. Peña, Retirement Administrator, reported on the following:
1. The Board of Supervisors approved two mandatory retirement tiers effective June
2007.
2. The General Member Retirement election will be held in November with 6
candidates running.
3. Vice Chair Vera Dominguez will be retiring from the County effective October 13,
2006 and as a result will no longer be a Trustee for FCERA or the Chair of the
Personnel Committee. Mr. Peña will work with the other Personnel Committee
members to schedule a Personnel Committee Meeting for later this month. As a
requirement of the Bylaws, Mr. Peña will return at the next Regular Board Meeting
to ask that the Board elect a Vice Chair of the Board of Retirement.
4. Brown Armstrong will begin the audit fieldwork on the annual financial audit on
October 10, 2006.
5. Mr. Peña will be joined by Jeffrey MacLean, Wurts & Associates, Trustee
Cardenas, and Alternate Trustee Frye on the Private Market Core Real Estate Due
Diligence trip scheduled for October 5-6, 2006.
6. FCERA Administration has provided the Actuarial data file to the Actuary for the
valuation and it is expected to be completed by early Spring.
7. Links have been placed on both the Fresno County Retired Employees’
Association (FCREA) and FCERA web-sites to allow viewers to easily move to the
other web-site.
8. Trustees Cardenas, Papaleo, and Souza attended a dinner hosted by Adam
Spector and Henry Otto of Brandywine on October 3, 2006.
9. The next Regular Board Meeting will be held at Harris Ranch in Coalinga, CA on
October 18-19, 2006. Mr. Peña encouraged all to participate.
10. Kern County and the Kern County Employees’ Retirement (KCERA) has filed a
lawsuit against Public Pension Professionals. Additional information will be given
as it becomes available.
In response to a question from Trustee Savrnoch, Mr. Peña and Becky Van Wyk,
Assistant Retirement Administrator, gave a brief summary of the new retirement tiers
approved by the Board of Supervisors.
In response to questions from Trustees Souza and Savrnoch, Mr. Peña clarified that
the two new retirement tiers are mandatory tiers for those who are a part of SEIU
Bargaining Units and becomes effective June 18, 2006. General benefits are based on
2% at 55 and a 3 year average final compensation calculation (G.C. §31676.15) and
the Safety benefits are based on 3% at 55 with a 1 year average final compensation
calculation (G.C. §31664.2).
10/04/06 Regular Meeting
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24.
Report from County Counsel
Nothing to Report.
25.
Board Member Announcements or Reports
Trustee Savrnoch reported on the Disability Committee Meeting held on September
22, 2006.
There being no further business, the meeting adjourned at 12:15 PM.
Roberto L. Peña
Secretary to the Board
10/04/06 Regular Meeting