March 16, 2017 Agenda
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AGENDA BOARD OF FIRE AND POLICE PENSION COMMISSIONERS March 16, 2017 8:30 a.m. Sam Diannitto Boardroom Los Angeles Fire and Police Pensions Building 701 East 3rd Street, Suite 400 Los Angeles, CA 90013 Commissioner Diannitto will participate telephonically from 4612 El Reposo Drive, Los Angeles, CA 90065 An opportunity for the public to address the Board or Committee about any item on today’s agenda for which there has been no previous opportunity for public comment will be provided before or during consideration of the item. Members of the public who wish to speak on any item on today’s agenda are requested to complete a speaker card for each item they wish to address, and present the completed card(s) to the commission executive assistant. Speaker cards are available at the commission executive assistant’s desk. In compliance with Government Code Section 54957.5, non-exempt writings that are distributed to a majority or all of the Board or applicable Committee of the Board in advance of their meetings may be viewed at the office of the Los Angeles Fire and Police Pension System (LAFPP), located at 701 East 3rd Street, 2nd Floor, Los Angeles, California 90013, or by clicking on LAFPP’s website at www.lafpp.com, or at the scheduled meeting. Non-exempt writings that are distributed to the Board or Committee at a scheduled meeting may be viewed at that meeting. In addition, if you would like a copy of any record related to an item on the agenda, please contact the commission executive assistant, at (213) 279-3038 or by e-mail at [email protected]. Sign language interpreters, communication access real-time transcription, assistive listening devices, or other auxiliary aids and/or services may be provided upon request. To ensure availability, you are advised to make your request at least 72 hours prior to the meeting you wish to attend. Due to difficulties in securing sign language interpreters, five or more business days notice is strongly recommended. For additional information, please contact the Department of Fire and Police Pensions, (213) 279-3000 voice or (213) 628-7713 TDD. A. ITEMS FOR BOARD ACTION 1. APPROVAL OF AMENDMENTS TO BOARD POLICY SECTION 5.0 MEMBER ACCOUNTS AND POSSIBLE BOARD ACTION 2. REVISIONS TO BOARD POLICY SECTION 10.0: ACTUARIAL FUNDING POLICY AND POSSIBLE BOARD ACTION 3. 2017-18 PROPOSED ANNUAL BUSINESS PLAN AND POSSIBLE BOARD ACTION 4. 2017-18 PROPOSED BUDGET AND POSSIBLE BOARD ACTION 5. RECOMMENDATION OF CONTRACT AWARD FOR FINANCIAL PLANNING EDUCATION SEMINAR PROGRAM CATERING SERVICES AND POSSIBLE BOARD ACTION 6. CHIEF INVESTMENT OFFICER’S QUARTERLY REPORT OF ASSET ALLOCATION STATUS AND POSSIBLE BOARD ACTION 7. APPROVAL TO ISSUE A REQUEST FOR PROPOSALS FOR INDEPENDENT REVIEW OF HEALTH SUBSIDY AND BENEFITS COSTS AND POSSIBLE BOARD ACTION B. REPORTS TO THE BOARD 1. RETIREE HEALTH BENEFITS PROGRAM OVERVIEW 2. QUARTERLY PORTFOLIO PERFORMANCE REPORT BY RVK 3. CONTRACTOR DISCLOSURE POLICY QUARTERLY REPORT 4. REVIEW OF 2017 PRIVATE EQUITY AND COMMODITIES INVESTMENT ACTIVITY BY PORTFOLIO ADVISORS 5. Miscellaneous correspondence from money managers, consultants, etc. – Received and Filed. 6. General Manager’s Report a. Monthly Report b. Marketing Cessation Information c. Benefits Actions approved by General Manager on March 2, 2017 d. Other business relating to Department operations C. CONSENT ITEMS 1. APPROVAL OF TRAVEL AUTHORITY (VON VOIGT) – LAPPL, 2017 DELEGATES CONFERENCE 2. APPROVAL OF TRAVEL AUTHORITY (BABCOCK AND VEGA) – IFEBP, THE WHARTON SCHOOL - PORTFOLIO CONCEPTS AND MANAGEMENT 3. APPROVAL OF TRAVEL AUTHORITY (NAVARRO) – IFEBP, HEALTH CARE MANAGEMENT CONFERENCE D. CONSIDERATION OF FUTURE AGENDA ITEMS March 16, 2017 2 E. GENERAL PUBLIC COMMENT ON MATTERS WITHIN THE BOARD’S JURISDICTION F. CLOSED SESSION 1. CLOSED SESSION PURSUANT TO GOVERNMENT CODE SECTION 54956.81 TO CONSIDER THE PURCHASE OF TWO (2) PARTICULAR, SPECIFIC INVESTMENTS AND POSSIBLE BOARD ACTION 2. CLOSED SESSION PURSUANT TO SUBDIVISIONS (a) AND (d)(1) OF GOVERNMENT CODE SECTION 54956.9 TO CONFER WITH LEGAL COUNSEL REGARDING PENDING LITIGATION IN THE FOLLOWING CASE: ESTATE OF DENNIS SAL MASSA, DECEDENT (CASE NO. BP 161 463, LOS ANGELES SUPERIOR COURT) March 16, 2017 3 DEPARTMENT OF FIRE AND POLICE PENSIONS 701 E. 3rd Street, Suite 200 Los Angeles, CA 90013 (213) 279-3000 REPORT TO THE BOARD OF FIRE AND POLICE PENSION COMMISSIONERS DATE: MARCH 16, 2017 ITEM: A.1 FROM: RAYMOND P. CIRANNA, GENERAL MANAGER SUBJECT: APPROVAL OF AMENDMENTS TO BOARD POLICY SECTION 5.0 MEMBER ACCOUNTS AND POSSIBLE BOARD ACTION RECOMMENDATION That the Board approve the proposed amendments to Board Policy Section 5.0 – Member Accounts. BACKGROUND Currently, sworn personnel of the Airport Department (“Airport Peace Officers”) are members of the Los Angeles City Employees’ Retirement System (LACERS). On November 8, 2016, voters approved Measure SSS, a Charter amendment that would: 1) enroll new Airport Peace Officers into Tier 6 effective January 7, 2018; 2) allow current Airport Peace Officers to transfer into Tier 6 from LACERS at their own expense; and 3) permit new Airport Police Chiefs to transfer into LACERS rather than participate in Tier 6. On January 31, 2017, the City Council instructed the City Attorney to prepare and present all ordinances necessary to implement the measure, including the requirements and methodology for transferring Airport Peace Officers to purchase all of their LACERS service at LAFPP. The first reading of that implementing ordinance was approved by the City Council on February 22, 2017. The second reading and proposed final adoption of the ordinance is scheduled for March 24, 2017. The Mayor would then have ten days to approve or veto the ordinance. DISCUSSION Once the ordinance becomes law, Section 4.2215 “Airport Peace Officer Service Purchase Program” will be added to the Los Angeles Administrative Code. This new section provides for the voluntary transfer of current Airport Peace Officers (hired prior to January 7, 2018) to Tier 6 and requires them to purchase all of their prior LACERS service in order to do so. Staff has been informed that there are approximately 536 Airport Peace Officers who have the option to transfer to Tier 6. For the majority of these Airport Peace Officers, the transfer will become effective on January 7, 2018. A subgroup of Airport Peace Officers, Airport Safety Officers (ASOs), currently perform firefighting duties at Ontario Airport. These ASOs will have the opportunity to graduate from the LAFD drill tower and become LAFD firefighters. This group of Airport Safety Officers will have the right to transfer to Tier 6 upon graduation from the drill tower. As of November 2016, six out of thirteen ASOs were scheduled to begin training in the drill tower. These ASOs are expected to graduate on April 13, 2017. The remaining seven ASOs will enter the drill tower in May and August 2017. Upon graduation, they can elect to enter Tier 6 membership in lieu of membership in LACERS. LAFPP and LACERS staff are scheduled to begin counseling the ASOs on March 29, 2017. Per the draft ordinance, for each member who elects to transfer and make a purchase under the Airport Peace Officer Service Purchase Program, LACERS will transfer to LAFPP sufficient funds to cover all funded accrued liability for pension and retiree health benefits for all periods of membership with LACERS, to include employee contributions, City contributions and earnings. As these purchases must be cost neutral, the transferring members are required to pay any remaining balance for the service to be purchased. Staff proposes modifying Board Policy 5.0 to implement Measure SSS and the ordinance by: 1) including references to the Airport Department and Airport Police members, as well as references to the November 2016 Charter language amendments; 2) documenting the special member contribution requirements for transferring Airport Peace Officers and former Airport Safety Officers, to the extent required by the Internal Revenue Code; 3) including language detailing the rules for and authorizing the purchase of all Airport Peace and Safety Officers’ service credit; and 4) establishing timeframes in which qualified survivors must elect to complete payments for service purchases agreed to by a member. Although the ordinance is not yet law, staff recommends that the Board adopt the amendments now to ensure that these policy changes are in place before the first ASOs graduate from the LAFD drill tower and (if they so choose) enter Tier 6. The policy amendments are subject to the Mayor’s final approval of the ordinance which is expected in early April, following Council’s final adoption of the ordinance on March 24. Miscellaneous Amendments In addition to establishing the policies for the new Airport Peace Officer Service Purchase Program, staff is also recommending an amendment to Section 5.5 B of the policy based upon new advice from outside tax counsel. The current policy states that if a member who is purchasing nonqualified permissive service (as defined by Internal Revenue Code Section 415(n)) and who has fewer than five service credit years and opted for trustee-to-trustee transfer or rollover will only be allowed to do so, if the purchase amount will be fully covered by the transfer or rollover. In practice, this can make it difficult for new members to purchase their academy or drill tower training time as members at this early career stage may not have sufficient funds in another plan, such as the City’s Deferred Compensation Plan, to cover the full purchase amount. In reviewing the draft Airport Peace Officer Service Purchase Program ordinance, tax counsel noted that nonqualified service credit does not include service as an employee of a state or political subdivision, or an agency or instrumentality of a state or political subdivision (with some exceptions), provided the service credit would not cause a participant to receive a retirement benefit for the same service under more than one plan (see IRC § 415(n)(3)(C)).