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Board of Retirement Financial Meeting San Joaquin County Employees’ Retirement Association

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Board of Retirement Financial Meeting San Joaquin County Employees’ Retirement Association San Joaquin County Employees Retirement Association A G E N D A FINANCIAL MEETING SAN JOAQUIN COUNTY EMPLOYEES RETIREMENT ASSOCIATION BOARD OF RETIREMENT FRIDAY, JULY 24, 2015 AT 9:00 AM Location: SJCERA Board Room 6 S. El Dorado Street, Suite 400, Stockton, California. 1.0 ROLL CALL 2.0 PLEDGE OF ALLEGIANCE 3.0 APPROVAL OF MINUTES 3.01 Approval of the minutes for the Financial Meeting of June 26, 2015 3 3.02 Board to approve minutes 4.0 CONSENT ITEM 4.01 Report of Closed Session 01 On December 7, 2014, the Real Estate Committee unanimously approved Resolution 2014-12-03 titled "Angelo Gordon Fund IV" and authorized the Chair to sign the necessary documents to invest $20 million in the Fund 4.02 Board to approve consent item 5.0 ALTERNATE RETIRED MEMBER OF THE BOARD 7 5.01 RPESJC letter dated July 13, 2015, regarding Appointment of Alternate Retired 9 Member of the Board of Retirement 5.02 Board to consider request to appoint Alternate Retired Member of the Board 6.0 2015 ASSET LIABILITY STUDY 6.01 Presentation on Modeling & Considering Various Portfolio Options 10 6.02 Discussion with David Sancewich and John Linder, Principals of PCA and Robert McCrory, Executive Vice President of Cheiron 6.03 Board to discuss and give direction to staff and consultants as appropriate 7.0 ACTUARIAL VALUATION AND FUNDING POLICY 41 7.01 2015 Preliminary Valuation Results as of January 1, 2015 and Funding Policy 43 7.02 Presentation by Cheiron Executive Vice President Robert McCrory and Vice President Graham Schmidt 7.03 Board to discuss and give direction to staff and consultant as necessary 8.0 PROPOSED ANNUAL SCHEDULE OF PROJECTED CONTRIBUTIONS BY 61 MEMBER TYPE 8.01 Proposed First Amendment to Actuarial Consulting Services Agreement 63 6 South El Dorado Street, Suite 400 • Stockton, CA 95202 SJCERA Financial Meeting • 07/24/2015 • Page 1 (209) 468-2163 • (209) 468-0480 • www.sjcera.org 8.02 Proposed Resolution 2015-07-02 65 8.03 Board to approve proposed amendment and adopt Resolution 2015-07-02 9.0 REPORTS 9.01 Monthly Investment Performance Updates 01 Manager Performance Flash Report (to be provided at the meeting) 02 PCA Investment Market Risk Metrics June 2015 67 9.02 PCA Mananger Due Diligence Meetings and Reports 01 Manager Due Diligence Schedule 85 02 PCA Memo on meeting with Mount Lucas Management - July 2015 86 9.03 CIO Report 01 Proposed Financial Agenda Topics 91 9.04 Trustee and Executive Staff Travel 01 Conferences and Events Summary for 2015 93 a 2015 PRJ Public Retirement Seminar 94 02 Summary of Pending Trustee and Executive Staff Travel 98 03 Summary of Completed Trustee and Executive Staff Travel 99 9.05 Report from Real Estate Committee 01 SJCERA Committee Chair and staff will provide a brief summary of the outcome of the Real Estate Committee meeting and investments 9.06 Board to accept and file reports 10.0 CORRESPONDENCE 10.01 Letters Received 01 7/2/15 Mesa West Real Estate Income Fund IV Announcement 100 10.02 Letters Sent 10.03 Market Commentary/Newsletters 01 Research Affiliates Fundamentals June 2015 103 The Whole Story: Factors + Asset Classes 11.0 COMMENTS 11.01 Comments from the Board of Retirement 11.02 Comments from the Chief Executive Officer 11.03 Comments from the Public 12.0 CALENDAR 12.01 Regular Meeting, August 14, 2015 at 9:00 AM 12.02 Financial Meeting, August 19, 2015 at 10:00 AM 13.0 ADJOURNMENT SJCERA Financial Meeting • 07/24/2015 • Page 2 San Joaquin County Employees Retirement Association M I N U T E S FINANCIAL MEETING SAN JOAQUIN COUNTY EMPLOYEES RETIREMENT ASSOCIATION BOARD OF RETIREMENT FRIDAY, JUNE 26, 2015 AT 9:03 AM Location: SJCERA Board Room 6 S. El Dorado Street, Suite 400, Stockton, California. 1.0 ROLL CALL 1.01 MEMBERS PRESENT: Shabbir Khan, J.C. Weydert, Cindy Garman, Michael Duffy (left at 11:50), Michael Restuccia, David Souza, Lawrence Mills, Richard Callistro, Raymond McCray and Steve Bestolarides presiding MEMBERS ABSENT: None STAFF PRESENT: Chief Executive Officer Annette St. Urbain, Assistant Chief Executive Officer Patricia Pabst, Chief Investment Officer Nancy Calkins, Retirement Financial Officer Lily Cherng, Information Systems Manager Tallie Claypool, Retirement Investment Accountant Fe Maliwat, Management Analyst III Greg Frank, Retirement Payroll Technician Marissa Smith and Senior Office Assistant Mercy Tayabas OTHERS PRESENT: Deputy County Counsel Jason Morrish, David Sancewich and John Linder of PCA, Robert McCrory of Cheiron and Retired Member Elect Adrian Van Houten. 2.0 PLEDGE OF ALLEGIANCE 2.01 Led by Lawrence Mills 3.0 APPROVAL OF MINUTES 3.01 Approval of the minutes for the Financial Meeting of May 8, 2015 3.02 Board unanimously approved the minutes of the Financial Meeting of May 8, 2015. 4.0 CONSENT ITEM 4.01 Memo from PCA regarding Daily Cash Sweep 4.02 Proposed revisions to Cash Management and Liquidity Policy (mark-up) 4.03 Proposed revisions to Cash Management and Liquidity Policy (clean) 4.04 Proposed Resolution 2015-06-02 titled “Revisions to Liquidity Pool & Cash Management Policy” 4.05 Board unanimously approved the consent items and adopted Resolution 2015-06-02. 5.0 RAVEN PRESENTATION & DUE DILIGENCE 5.01 Presentation by Josh Green of Raven Fund III 5.02 Raven Fund III - PCA’s Due Diligence Memo June 2015 6 South El Dorado Street, Suite 400 • Stockton, CA 95202 SJCERA Financial Meeting • 6/26/2015 • Page 1 (209) 468-2163 • (209) 468-0480 • www.sjcera.org 5.03 Raven Fund II Advisory Committee 5.04 Board unanimously approved a contingent commitment of up to $50 million to Raven Asset-Based OpportunityFund III subject to legal review and successful negotiation of terms. 6.0 2015 ASSET LIABILITY STUDY 6.01 Discussion with David Sancewich and John Linder, Principals of PCA and Robert McCrory, Principal Consulting Actuary of Cheiron, on 2015 Asset-Liability Study - Modeling of Proposed SJCERA Strategic Classes 6.02 Based on the Board’s input, the asset/liability model will use five decision factors. Two pairs for funding and cost and one factor for drawdowns: Funding Goal: 1) Reach (at least) 85% funding ratio in the next 15 years and 2) avoid a funding ratio below the current 65%. Cost Goal: 1) Seek a lower average employer cost and 2) avoid an employer cost greater than 45% of covered payroll. Drawdowns: Avoid a cumulative negative return on investments lower than -10% over a two-year period. In addition, Cheiron will consider methods to model lowering the assumed nominal rate of return to be more in-line with market expectations. 7.0 PROPOSAL FOR ANNUAL INVESTMENT MANAGER ROUNDTABLE 7.01 Memo from PCA regarding Roundtable topics and format 7.02 Board accepted the consultants proposed 2015 Roundtable topics and format. 8.0 REPORTS FROM INVESTMENT CONSULTANT 8.01 Quarterly Investment Performance Analysis for Period Ending March 31, 2015 8.02 Quarterly Manager Certification Report for Period Ending March 31, 2015 01 Memo from PCA on Manager Certification 02 Manager Certification Update Report from PCA 8.03 Investment Manager Fees Analysis 01 Investment Management Fees Report through December 31, 2014 02 Investment Management Fees Report for 2013 (for reference) 8.04 Monthly Investment Performance Updates 01 Manager Performance Flash Report 02 PCA Investment Market Risk Metrics May 2015 8.05 PCA Mananger Due Diligence Meetings and Reports 01 Manager Due Diligence Schedule 02 PIMCO All Asset/All Authority On-Site - June 2015 03 PCA memo on meeting with Research Affiliates - June 2015 04 PCA memo on meeting with Marinus Capital - June 2015 8.06 PCA reviewed and discussed the reports in relation to the Board’s investment policies SJCERA Financial Meeting • 6/26/2015 • Page 2 8.07 Board accepted and filed reports. 9.0 REPORTS 9.01 CIO Report 01 Proposed Financial Agenda Topics 9.02 Trustee and Executive Staff Travel 01 Conferences and Events Summary for 2015 02 Summary of Pending Trustee and Executive Staff Travel 03 Summary of Completed Trustee and Executive Staff Travel a 2015 Pension Bridge Annual Conference Report b 2015 Mesa West Annual Investors Meeting Report c 2015 World Investment Forum Report 9.03 Report from Real Estate Committee 01 Real Estate Committee Chair and staff provided a brief summary of the outcome of the Real Estate Committee meeting and investments 9.04 Board accepted and filed reports 10.0 CORRESPONDENCE 10.01 Letters Received 10.02 Letters Sent 10.03 Market Commentary/Newsletters/Articles 01 Morgan Creek Market Review Q1 2015 11.0 COMMENTS 11.01 Comments from the Board of Retirement - None 11.02 Comments from the Chief Executive Officer CEO St. Urbain Providing the following updates: 01 Board Member Elections - Congratulations to Ms. Garman and Retired Member Elect Adrian Van Houten on their success in the regular elections held earlier this month. Immediately preceding the July 10th Regular meeting, Ms. Garman, Mr. Duffy and Mr. Van Houten will take their Oaths of Office. Board Officers will be elected prior to adjournment of the July Regular Meeting. Once the Board officers are determined, the Chair will be asked to review Committee assignments for 2015-2016. 02 SJCERA’s 2014 Audited Financial Statements - Submitted to the Board of Supervisors on consent on June 23, 2015. After a few questions from Supervisor Elliott and comments from Supervisor Winn, the Board of Supervisors unanimously accepted and filed the report. 03 Statewide Ballot Initiative on Public Pensions (Chuck Reed & Carl DeMaio) - The proposed “Voter Emplowerment Act of 2016”, if qualified and passed, would place all new public employees in defined contribution plans only and require voters to approve changes to defined benefit plans for existing public employees.
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