Tacoma Employes Retirement System

Regular Meeting Board of Administration Tacoma Employes’ Retirement System 1:00 p.m., Thursday, April 10, 2008 Tacoma Municipal Building Conference Room 16 733 Market Street Tacoma, Washington 98402

Minutes 1. Call to Order Mayor Baarsma, Chair, called the meeting to order on Thursday, April 10, 2008. 2. Roll Call Members Present: Mayor Baarsma, Rey Arellano, Bob Biles, Rodney Croston, Dave Peterson, Tim Ross, Chris Webster, and Diane Wetzel Members Absent: Ken Turner Others Present: Maggie Coleman, Steve Gross, Melanie Panui, and Patricia Pabst

3. Citizen Comments No comments.

Suspend Order of Business Upon motion by Chris Webster, seconded by Rey Arellano, the Retirement Board moved to suspend the Order of Business to consider New Business, item A, State Auditors and New Business B, Internal Auditor. Resume the Order of Business Upon consensus, the Retirement Board resumed the Order of Business. 4. Consent Agenda The Consent Agenda distributed to the Retirement Board consisted of the draft amended March 13, 2008 Retirement Board Meeting minutes; the amended April Retirement Transactions; and the Fund Activity Reports, noting no rebalancing was required for in accordance with the memorandum from Wilshire Associates dated April 07, 2008. The minutes were amended on page 9, section 7 and replaced as follows: “The Mayor and Retirement Board expressed appreciation to Kelli Boettger for her assistance in serving the Board and wished her well in her new job.” Under the Retirement Transactions, it was noted that there was a typo (i.e. decimal place) on the second retirement transaction under the twice the value calculation. The Retirement Board asked that the footnote at the bottom of the last page of the retirement transaction report be simplified.

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4. Consent Agenda (continued) Upon motion by Diane Wetzel, seconded by Dave Peterson, the Retirement Board moved to approve the Consent Agenda. 5. Old Business None. 6. New Business 6A. State Auditors – Entrance Interview The Joanne Klein was present to have the entrance interview with the Retirement Board. The projected hourly rate for the auditors is $78.50 and has not increased in several years. It is estimated that it will take them 184 hours to complete the audit; therefore, the total projected costs for the audit are $14,444. It was communicated that the audit will consist of financial and compliance tests organized under Financial Reporting and Accountability for Public Resources. An audit opinion letter will be provided by June for inclusion in the 2007 Comprehensive Annual Financial Report. The results of any accountability testing will be included in the City’s accountability report however; any issues would be communicated to the Retirement Board prior to and during the exit interview which will be held upon completion of the audit. An exit interview will be provided to the Retirement Board. 6B Internal Auditor – Presentation Scottie Nix, Internal Auditor for the City of Tacoma, provided an overview of the Internal Audit Function. In her role as Internal Auditor for the City of Tacoma, Scottie coordinates all the audits and is invited to the entrance and exit interviews. Scottie reviewed a Self-Assessment Questionnaire focusing on the Risk Aversion and Board Governance sections as a tool for discussion. After reviewing the Self Assessment Questionnaire the Board recommended that the newly revised Code of Ethics policy be distributed at the May Retirement Board meeting. Attached you will find a copy of the Code of Ethics policy. It was further recommended that Steve Gross, legal counsel, provide a presentation on the Open Public Meeting Act at the May Retirement Board meeting.

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6. New Business (continued) 6B. Internal Auditor – Presentation (continued) It was also suggested that the Self-Assessment Questionnaire be forwarded to Julia Chivers-Nicholson indicating that she may have thoughts on how this document could be perhaps revised or streamlined in conjunction with the Strategic Thinking presentation that she will be providing. It was also suggested it may be more helpful to use a 1-10 ranking or rating on the self-assessment questionnaire. It was also noted that Davis Wright Tremaine will be providing a presentation on Fiduciary Responsibility at the June or July Retirement Board meeting. Scottie distributed an audit and monitoring list illustrating that the Retirement Board audits or monitors the plan in a number of ways. Scottie indicated that she would add another column to the list outlining the risk areas. Scottie referenced that one of her resources would be a document entitled “Public Pension Systems –Operational Risks of Defined Benefit and Related Plans and Controls to Mitigate those Risks”. It was also noted that the qualification of the plan by the Internal Revenue Service code should be added. It was also noted that the Retirement Office has been working with Scottie and Wilshire Associates and has developed a process for reporting investment manager compliance with SEC by asking that the investment managers address these two questions each month. The information appears in the Executive Summary which is presented to the Retirement Board at the Quarterly Managers’ meetings. The handouts will serve as an addendum to the minutes. 7. Retirement Director’s Report Addendum The Retirement Director’s Report serves as an addendum to the Retirement Board Meeting minutes. Highlights from the Retirement Director’s Report were noted. Retirement Office Relocation At the Retirement Board at the October 2007 Retirement Board meeting moved to approve the proposal to relocate the Retirement Office to the Department of Public Utilities after reviewing a cost benefit analysis. Attached is a drafted floor plan providing approximately 3,000 square feet, increasing the area for the workstations, filing systems, a retirement counseling room, production room and space for two vacant positions.

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7. Retirement Director’s Report (continued) Retirement Office Relocation (continued) As discussed at the October 2007 Retirement Board meeting, in serving the increased number of customers it may be necessary to budget for another office assistant position which would be presented to the Board in the form of a budget recommendation. The fees for the estimated square footage are $30.00 a square foot for 2008. The space is located on the ground floor of the main building at the Department of Public Utilities. This space will provide for a handicap accessible entrance as well as parking for our customers. In addition there will be easy access to the cafeteria. The Board indicated that they had been of the understanding that the estimated cost per square foot was going to be approximately $32.00 for 2008. The Retirement Director confirmed that the cost estimate had decreased to an estimate of $30.00 a square foot. Budget 2009-2010 We are in the process of beginning the budget for 2009-2010. We have been asked to provide budgeted position information to the Budget Office by April 14, 2008. With that understanding we would like to provide the Budget Office with two new positions for the purposes of continuing dialogue with the Board as we progress through the budget process for the 2009/2010 biennium. The positions are as follows:  Office Assistant – Additional Position -We would like to budget for an additional Office Assistant position should we find it necessary to recommend to the Board of Administration that an additional Office Assistant is needed after our move to the Tacoma Public Utilities admin building as we will be providing service to more walk-in customers.  Senior Financial Analyst –Up-grade –We would like to budget for a Senior Financial Analyst to provide promotional opportunities within the department in order to retain knowledgeable and qualified individuals should we want to recommend to the Board of Administrative a departmental promotion from the position of Financial Analyst to Senior Financial Analyst. Having the Department be able to consider a departmental promotion from the position of Financial Analyst to Senior Financial Analyst would allow the Assistant Retirement Director to delegate some current duties such as the preparation of the Annual Report and more completely fulfill the duties of Assistant Retirement Director by fully assuming responsibility for the day to day operation of the Retirement Office. The Board indicated that they understood staffing recommendations would be discussed when the Budget is presented to the Retirement Board for approval.

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8. Good of the Order Investment Advisory Committee Frank Underwood submitted his resignation from the Investment Advisory Committee to Mayor Baarsma effective March 31, 2008. Frank served on the Investment Advisory Committee since 1983. A plaque will be prepared for Frank to recognize his more than 25 years of service with Tacoma Employes’ Retirement System. RCW 35.39.080 requires an appointment of at least three members who are considered experienced and qualified in the field of Investments. There are presently four Investment Advisory Committee members: Alva Butcher, Joe Cook, Lynda Livingston and Alan Undem. The Board discussed whether they wished to form a subcommittee. Steve Gross, legal counsel, indicated that a subcommittee meeting of two or more would be an open public meeting and meetings would need to be posted. It was suggested that the Board may have individuals that they are acquainted with that the Board would wish to contact to see if an individual has an interest in serving on the Investment Advisory Committee. Individuals would then be interviewed by the Retirement Board. The Retirement Board asked that Board members provide names to the Mayor as Chairman of the Retirement Board. Web Pension Calculator Upon motion by Chris Webster, seconded by Dave Peterson, the Retirement Board approved $10,000 to have Milliman audit the newly developed web pension calculator. Steve Gross, legal counsel, indicated that he would review the contract to see if this was within the scope of the present contract and therefore an amendment or whether it would be considered a new contract. Actuarial Audit Request for Proposal The Retirement Director reported that the Purchasing Department should be sending out the actuarial audit request for proposal shortly. It is anticipated the Board would interview candidates in July or August so that the firm could be brought on board in November as work begins on the actuarial valuation.

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8. Good of the Order (continued) Strategic Thinking The May 22, 2007 Strategic Thinking meeting will be rescheduled due to a scheduling problem with Julia Chivers-Nicholson.

9. Debriefing No discussion. 10. Adjourn Upon motion by Chris Webster, seconded by Tim Ross, the Retirement Board moved to adjourn.

Patricia F. Pabst Robert K. Biles Retirement System Director Secretary to the Retirement Board

Melanie Panui Acting Recording Secretary

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