BOARD OF RETIREMENT FRESNO COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION
“Our mission is to administer the retirement benefits for the members and beneficiaries in a prudent, accurate, timely and cost-effective manner, while administering fund assets in a manner that achieves investment and funding objectives within prudent levels of risk”
July 15, 2015
REGULAR MEETING AGENDA MINUTES
Trustees Present:
Laura P. Basua Greg Baxter Dr. Rod Coburn, III Paul Dictos, CPA Robert Dowell Eulalio Gomez Steven Jolly Mary Ann Rogozinski, Alternate
Trustees Absent:
Vicki Crow Vacant Seat
Staff and Service Providers Present:
Donald Kendig, Retirement Administrator Becky Van Wyk, Assistant Retirement Administrator Heather McGill, Office Assistant Kelly Prinz, Retirement Benefits Manager Kimberly Zepeda, Systems & Procedures Analyst Matthew Gonzalez, Retirement Coordinator Harvey Leiderman, Reed Smith Dean Stuckenschmidt, County Counsel DeAnn VonBerg, Personnel Analyst Tom Boonstra, Personnel Analyst Joy Clark, REFCO
Members of the Public that Addressed the Board:
Robert Skowronski, FCERA Member
1. Call to Order
Chair Jolly called the meeting to order at 8:32 AM.
2. Pledge of Allegiance
Recited.
07/15/15 Regular Meeting 2 Trustee Dictos joined the Board at 8:34 AM.
3. Public Presentations
Robert Skowronski, FCERA Member, expressed concerns regarding the relationship with and the cost of doing business with Aksia a Hedge Fund investment manager and asked the Board to consider other alternatives besides liquid hedge funds and ETF’s. Chair Jolly noted that the Board issued a Hedge Fund Request for Information (RFI) and that the results of the RFI will be presented at the August 5, 2015 Regular meeting.
4. Consent Agenda
On behalf of Robert Skowronski, FCERA Member, Chair Jolly pulled Consent Item 4.C. for discussion. Trustee Basua pulled Consent Item 4.H. for discussion.
A. Retirements June 2015 – RECEIVED AND FILED; APPROVED
B. Activity Report of monthly service credit purchases, retirement benefit estimates, public service, age adjustments, final compensation calculations, and disability retirement applications for June 2015 – RECEIVED AND FILED
D. Business Expense Account Statement for May 2015 – RECEIVED AND FILED
E. Quarterly Trustee Travel and Anticipated Travel Report – RECEIVED AND FILED
F. FCERA Cash Flow as of May 2015 – RECEIVED AND FILED
G. Travel Requests from Trustees Basua, Baxter, and Gomez and Retirement Administrator Donald Kendig to attend the Verus 2015 Client Summit on September 1, 2015 – RECEIVED AND FILED; APPROVED
I. Travel Request from Trustee Jolly to attend the Wharton Advanced Investments Management Course on September 29 – October 2, 2015 – RECEIVED AND FILED; APPROVED
J. Travel Request from the Retirement Administrator to attend the CALAPRS Administrators’ Institute on September 30 – October 2, 2015 – RECEIVED AND FILED; APPROVED
K. Travel Request from Trustee Baxter to attend the Opal Investment Trends Summit on September 28-30, 2015 – RECEIVED AND FILED; APPROVED
L. Travel Requests from Trustees Baxter and Coburn to attend the Nossaman LLP’s Public Pension and Investments Fiduciaries’ Forum on September 24-25, 2015 – RECEIVED AND FILED; APPROVED
M. Travel Request from Donald Kendig, Retirement Administrator, to attend the NCPERS Public Pension Funding Forum on August 23-25, 2015 – RECEIVED AND FILED; APPROVED
N. Second Reading and Approval of the Updated Active Member Handbook – RECEIVED AND FILED; APPROVED
07/15/15 Regular Meeting 3 O. SACRS Year 2016 Legislative Timelines and Worksheet – RECEIVED AND FILED
A motion was made by Trustee Gomez, seconded by Trustee Basua to approve/accept Consent Items 4.A. and 4.B., 4.D. through 4.G. and 4.I. through 4.O. VOTE: Unanimous (Absent – Crow) (Vacancy – 1)
C. Public Records Requests and /or Retirement Related Correspondence
Robert Skowronski, FCERA Member, addressed the Board regarding concerns of the fees associated with Hedge Funds. A brief discussion ensued regarding the current fees paid to the Hedge Fund managers. It was noted that the fees are performance based. Chair Jolly reminded Mr. Skowronski that a discussion regarding Hedge Funds is scheduled for the August 5, 2015 Regular meeting.
A motion was made by Trustee Gomez, seconded by Trustee Baxter, to accept Consent Item 4.C. as presented. VOTE: Unanimous (Absent – Crow) (Vacancy – 1)
RECEIVED AND FILED
H. Travel Request from Trustee Gomez to attend the 2015 Public Funds Forum on September 8-10, 2015
Trustee Basua requested approval to attend the Forum along with Trustee Gomez.
A motion was made by Trustee Gomez, seconded by Trustee Baxter, to approve the travel for both Trustees Basua and Gomez. VOTE: Unanimous (Absent – Crow) (Vacancy – 1)
RECEIVED AND FILED; APPROVED
5. Minutes
A. June 17, 2015 Retirement Board Regular Meeting Minutes
A motion was made by Trustee Coburn, seconded by Trustee Dictos, to approve the June 17, 2015 Regular Meeting Minutes as presented. VOTE: Unanimous (Absent – Crow) (Vacancy – 1)
RECEIVED AND FILED; APPROVED
6. Discussion
A. Presentation of the GFOA Certificate of Achievement for Excellence in Financial Reporting presented by Becky Van Wyk, Assistant Retirement Administrator
Becky Van Wyk, Assistant Retirement Administrator, opened discussions by stating that each year, upon the completion of the audit of the financial statements and preparation of the Comprehensive Annual Financial Report (CAFR), FCERA’s Accounting Unit submits the CAFR to the Government Finance Officers Association (GFOA) in an effort to earn the Certificate of 07/15/15 Regular Meeting 4 Achievement for Excellence in Financial Reporting. Management’s goal each year is that the submitted CAFR meets the high standards of the GFOA’s prestigious award program.
Ms. Van Wyk that stated that FCERA has been awarded the Certificate of Achievement for Excellence in Financial Reporting in each of the past consecutive seventeen years. The Certificate of Achievement is the highest form of recognition in the area of governmental accounting and financial reporting. In addition, she noted that the June 30, 2014 CAFR has been judged to meet the criteria and high standards of the GFOA’s award program. The CAFR demonstrates the “spirit of full disclosure” clearly communicating its financial story which we hope motivates stake holders to read the CAFR in order to become more informed about the overall financial health of FCERA.
The Accounting Unit staff was recognized for their dedication, their continued hard work and effort in achieving the distinguished award for the eighteenth consecutive year. The team includes Conor Hinds, Supervising Account; Pamela Fine, Senior Account; Bryan Anderson, Accountant; Dolores Racca, Account Clerk; and Edith Balanon, Account Clerk.
RECEIVED AND FILED
B. Consideration of the Issuance of a Request for Proposal (RFP) for Board Legal Counsel Services presented by Donald Kendig, Retirement Administrator
Donald Kendig, Retirement Administrator, opened discussion by reminding the Board that it was notified that a partial conflict of interest existed that reduced the representation that County Counsel could provide to the Board. As a result, the Board directed Administration to begin a search for a local attorney to represent the Board during Board meetings and to act as general counsel to the Board. In the interim, Harvey Leiderman of Reed Smith, the Board’s fiduciary counsel, stepped in to provide general legal counsel and counsel during Board meetings.
Mr. Kendig informed the Board that a draft Request for Proposal (RFP) for Board Legal Counsel was drafted for the Board’s consideration and reviewed the anticipated conduct of the process as follows:
Request for Proposal (RFP) issued: July 15, 2015 Deadline for Questions and Clarifications July 31, 2015 Due Date for Submission of Proposals August 7, 2015 Evaluation of Proposals August 10-14, 2015 Finalist Interviews September 2, 2015 Contract Finalization October 7, 2015 or shortly thereafter
In response to a question from Trustee Coburn, Mr. Kendig stated that hiring an attorney to represent the Board during Board meetings will not impact the disability process/review currently handled by County Counsel. Staff was directed to include disability processing/review in the RFP.
A motion was made by Trustee Gomez, seconded by Trustee Dictos to approve the RFP with noted change to include disability processing/review and the delegation of the review of proposals to staff, with staff bringing to the Board the top 2-3 candidates. VOTE: Unanimous (Absent – Crow) (Vacancy – 1) 07/15/15 Regular Meeting 5
RECEIVED AND FILED; APPROVED
C. Consideration of the Issuance of a Request for Quote (RFQ) for Tax Counsel Services presented by Donald Kendig, Retirement Administrator
Becky Van Wyk, Assistant Retirement Administrator, opened discussions by stating that FCERA must file for a Tax Determination Letter with the Internal Revenue Service in January 2016. Reed Smith assisted FCERA with the filing of the current Tax Determination Letter. However, Harvey Leiderman, Reed Smith, has advised FCERA Administration that it would be more efficient to contract with a law firm that specializes in filing Tax Determination Letters for 1937 Act Systems.
Ms. Van Wyk noted that a Request for Proposal for Taxation Legal Counsel was drafted for the Board’s consideration and reviewed the anticipated conduct of the process as follows:
Request for Proposal (RFP) issued: July 15, 2015 Deadline for Questions and clarifications July 31, 2015 Due Date for submission of proposals August 7, 2015 Evaluation of Proposals August 10-14, 2015 Finalist Interviews (if needed) September 2, 2015 Contract Finalization October 7, 2015 or shortly thereafter
It was noted that there are two or three firms that have prepared most of the Tax Determination Letter filings for the 1937 Act systems. FCERA Administration believes that direct mailings to these firms would be the most efficient method of contracting with a legal firm rather than placing an ad and evaluating multiple responses.
Mr. Leiderman noted that the IRS could possibly end the requirement of Tax Determination filings in the near future.
A motion was made by Trustee Coburn, seconded by Trustee Basua, to approve the issuance of a Request for Quote (RFQ) for Tax Counsel Services as presented. VOTE: Unanimous (Absent – Vicki Crow) (Vacancy – 1)
RECEIVED AND FILED; APPROVED
D. Consideration of Resolutions for SACRS and REFCO Deduction Codes presented by Becky Van Wyk, Assistant Retirement Administrator
Becky Van Wyk, Assistant Retirement Administrator, opened discussions by stating that SACRS offers a vision care package to eligible retired members of 1937 Act systems that have opted into the program. Many FCERA retirees have expressed interest in the program. In order for retired members to participate in the program, the retirement system must authorize the use of payroll deduction for the premium which is paid by the benefit recipient. Currently, two or three 1937 Act systems participate in the program. Once set up, the program is at little to no cost to the retirement system. The retirement system is responsible for the costs to set up the program, on- 07/15/15 Regular Meeting 6 going custodial bank costs, and issuing the premium check to VSP, all other costs are paid by VSP and the participant.
In addition, Ms. Van Wyk stated that REFCO would like to add a deduction code for its supplemental insurance offerings, which should improve participation. Given both SACRS and REFCO will have dental and vision, there might be some confusion, but REFCO and will will make the notices as clear as possible.
In response to a question from Trustee Coburn regarding the potential costs to the System, Ms. Van Wyk stated that using an average hourly salary and benefits amount for full-time staff of $40.42 per hour (FY2015-16 salary request $2,522,120) divided by budgeted full time hours (30 positions times 2,080 hours), staff anticipates the per vendor initial set up to cost $808 ($2,424 one-time costs for three vendors) and on-going costs of $566 per year plus $24 per year ($1,770 per year for the three vendors) to issue the checks. Statutes do allow the collection of a reasonable charge for deductions to participants’ retirement benefits. FCERA has not imposed such a fee in the past and does not recommend doing so at this point.
A motion was made by Trustee Gomez, seconded by Trustee Dowell, to adopt the resolution, without charge, authorizing retiree payroll deduction under Government Code Section 31452.5(a)(3) for premiums for vision and dental care programs sponsored by SACRS for the benefit of the retired member or his or her dependents and to adopt the resolution, without charge, authorizing retiree payroll deduction under Government Code Section 31452.5(a)(10) for payment for a retiree benefit program available through REFCO and payable to a single party designated by REFCO. VOTE: Unanimous (Absent – Crow) (Vacancy – 1)
RECEIVED AND FILED; APPROVED
E. Consideration of Retirement Coordinator Classification and Compensation Study presented by Donald Kendig, Retirement Administrator
Donald Kendig, Retirement Administrator, opened discussions by reminding the Board that FCERA went to Personnel in 2007 with a problem of recruitment and retention. A proposed solution was given that FCERA agreed with, but it was denied by the Board of Supervisors. Management returned in 2015 with the same problem. At this time there is a disagreement with the proposed solution.
Personnel is recommending that five of the Coordinators be reclassified as Specialists, and two of the Coordinators be reclassified as Analysts limiting them to disabilities, indirectly directing how FCERA is to conduct its business. This recommended differentiation between Analyst and Specialist has already created internal discord and that management anticipates would worsen recruitment and retention issues, not abate them. Management does not believe that Personnel’s recommendation would succeed and has requested support for one that it believes will succeed.
Management recommends that FCERA be given the flexibility to recruit Specialists and Analysts (across the seven positions) as the market and employees would bear, but has been refused. Management would like to appeal directly to the Board of Supervisors, but it is unclear if that would bear any success. 07/15/15 Regular Meeting 7
Given the options, Management recommended option 3 with a Supervising Retirement Specialist at this time. Management also asks that the Personnel Committee be tasked with further review of comparable County data and staff turnover data, in order to determine if additional avenues are available to appeal with Personnel or the County Board of Supervisors.
A brief discussion ensued regarding the option of FCERA becoming independent from the County.
Tom Boonstra and DeAnn VonBerg, Personnel Analysts, gave a brief summary of the processes use and the findings of the reclassification study noting that employee classification and compensation are based on qualifications, rather than being based on duties performed and responsibilities.
The Board, Staff, Personnel representatives, and Robert Skowronski; FCERA Member, engaged in detailed discussion regarding the processes for establishing classification and compensation, duties and responsibilities, and qualifications of the proposed Retirement Specialist and Retirement Analyst.
A motion was made by Trustee Dictos, seconded by Trustee Coburn, to adopt Staff’s recommendation to make all Retirement Coordinators Retirement Specialists, without providing an Analyst classification for the disability functions with direction to Staff to work with Personnel to propose to the Board of Supervisors the replacement of the Retirement Coordinator series with a Retirement Specialist series, and the replacement of the Retirement Coordinator Supervisor with a Supervising Retirement Specialist. VOTE: Unanimous (Absent – Crow) (Vacancy – 1)
RECEIVED AND FILED; APPROVED
F. Consideration of the Quarterly Written Administration Report presented by Donald Kendig, Retirement Administrator
Donald Kendig, Retirement Administrator, gave a brief summary of his written Quarterly Administration Report noting any significant issues and developments, projects and initiatives, and key meetings and communications.
RECEIVED AND FILED
7. Closed Session:
A. Conference with Legal Counsel -- Consideration of whether or not to initiate litigation - pursuant to Govt. Code §54956.9(d)(4) (one case)
B. Conference with Legal Counsel - Existing Litigation -- pursuant to Govt. Code §54956.9 (d)(1) - Gary Johnson v. Board of Retirement of FCERA, Fresno County Superior Court, Case No. 12 CE CG 00759 (5th District Court of Appeal Case No. F069503)
07/15/15 Regular Meeting 8 C. Conference with Legal Counsel – Existing Litigation and Settlement Negotiations = pursuant to G.C. §54956.9: Thomas Alberda v. Board of Retirement of FCERA, Fresno County Superior Court Case No. 10 CE CG 02961 (5th Court of Appeal Case No. F069466)
8. Oral Reports:
A. Closed Session
7.A. No reportable action. 7.B. No reportable action. 7.C. No reportable action.
B. FCERA Administration
Administration reported on the following:
1. In regard to Item 6.D., Becky Van Wyk, Assistant Retirement Administrator, clarified that the Insurance Premium Overpayment due from the County is approximately $30,000, not $200,000 has previously mentioned. 2. Approximately 50 boxes will be moved from the Boardroom to off-site storage by weeks end. 3. Advised the Board that Staff would be seeking special compensation for an Interim Retirement Coordinator Supervisor, and the Board was supportive. 4. A Pre-Retirement seminar is scheduled for July 16, 2015.
C. Board Counsel
1. Voter Empowerment Act of 2016
Harvey Leiderman, Reed Smith, gave a brief summary of the Voter Empowerment Act of 2016 noting the Statement of Findings and Purpose, and the General Provisions as they relate to compensation and benefits.
D. Committee Members – Committee Matters
Eulalio Gomez, Personnel Committee Chair, requested Staff schedule a Personnel Committee meeting in late August.
E. Board Members
Trustee Basua reported on the recent BOS/SEIU contract negotiations noting that an agreement was reached to provide a 9% salary increase to covered employees over the next two years.
There being no further business, the meeting adjourned at 12:12 PM.
07/15/15 Regular Meeting 9 Donald C. Kendig, CPA Secretary to the Board
07/15/15 Regular Meeting