DAVID H. PRINCE Tel. (760) Retirement Administrator Fax (760) BRIEF MINUTES

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1 DAVID H. PRINCE Tel. (760) Retirement Administrator Fax (760) KATHLEEN L. KUBLER Clerk of the Board 1221 State Street El Centro, CA BRIEF MINUTES REGULAR MEETING OF THE IMPERIAL COUNTY BOARD OF RETIREMENT January 16, :30 A.M. 940 W. Main Street County Administration Center, Second Floor El Centro, CA OPEN SESSION 1. The meeting was called to order by Chairman Tabarez at 8:31 a.m. A. Roll Call: MEMBERS PRESENT: VOGEL, McDONALD, TERRAZAS, JAUREGUI, WILLIAMS, TABAREZ, MCFETRIDGE, RHODES. MEMBERS ABSENT: None. MEMBERS ARRIVING AFTER ROLL CALL: HOLBROOK ALTERNATES PRESENT: Charles L. Jernigan LEGAL REPRESENTATIVES: Rosario Gonzalez, Deputy County Counsel CLERK: Kayleen Smith, Retirement Specialist STAFF: David H. Prince, Retirement Administrator, Regina Rodrigues, Assistant Retirement Administrator B. Pledge of Allegiance: The Pledge of Allegiance was led by Chairman Tabarez. 2. Discussion of the Agenda: A. Items to be pulled from the Action Calendar: Mr. Prince requested that Item 18 on the Supplemental Agenda be pulled and should follow Item 7 on the Agenda.

2 January 16, 2013 BRIEF MINUTES PAGE 2 MOTION by McFetridge, Second by McDonald and carried by the unanimous vote of members present, the Board approved to move Item 18 on the Supplemental Agenda to follow Item 7 on the Agenda. B. Items to be pulled from the Discussion Calendar: None C. Items to be pulled from the Consent Agenda: None D. Emergency Items to be added: None E. Approval of the Agenda: MOTION by Williams, Second by Terrazas and carried by the unanimous vote of members present, the Board approved the Agenda. F. Approval of the Consent Agenda: MOTION by Terrazas, Second by Jauregui and carried by the unanimous vote of members present, the Board approved the Consent Agenda. 3. Public comments on items that are NOT on the Action or Discussion Calendars. (Public comments on items that are on the Action or Discussion Calendars shall only be made during the Board s discussion of these items.): None ACTION CALENDAR 4. Approval of the Minutes of December 19, 2012, regular adjourned meeting: Mr. Prince requested that the Minutes be changed to reflect that Board Member McDonald left the meeting at 10:00 a.m. and alternate Bumgart took her seat. This change will be inserted into the Minutes after Item 7. MOTION by Jauregui, Second by Williams and carried by the unanimous vote of members present with one abstention by Terrazas, the Board approved the corrected Minutes of the December 19, 2012, regular adjourned meeting. Item 7 was taken out of order and heard before Item Evaluation and interviewing of potential commodities managers presented by Scott Whalen, Executive Vice President, Senior Consultant Wurts Associates BOARD MEMBER JERNIGAN ARRIVED AT 8:55 A.M. BOARD MEMBER HOLBROOK ARRIVED AT 9:08 A.M. A. Gresham Investment Management, LLC: presentation by Jonathan D. Berland, Managing Director.

3 January 16, 2013 BRIEF MINUTES PAGE 3 Mr. Berland stated that Gresham is an investment specialist with a singular focus on commodities and gave an overview of Gresham s investment history. He discussed their investment strategy and performance in each commodity sector. Mr. Berland reviewed their portfolio construction and composition. BREAK AT 9:45 A.M. RECONVENED AT 9:55 A.M. B. Invesco: presentation by Delia Rogers, Managing Director and David Gluch, Client Portfolio Manager. Ms. Rogers announced the Global Asset Allocation Team and their locations. Mr. Gluch discussed their balanced risk commodity strategy and investment process. He reviewed Invesco s performance history and portfolio exposure. Mr. Gluch explained their asset selection by commodity, tactical strategy and risk allocation. BREAK AT 10:50 A.M. RECONVENED AT10:55 A.M. C. Wellington Management Company, LLP: presentation by Rich Hoffman, Vice President and Investment Director, Scott Geary CFA Vice President Business and Business Development Manager. Mr. Geary reviewed the biographical information of their investors. Mr. Hoffman discussed their investment philosophy in the market of commodities. He explained their commodities portfolio by natural resources as well as by individual commodities. Mr. Hoffman discussed their investment guidelines, risk management, current focus, and the market outlook for commodities. Mr. Whalen discussed the primary differences between the three managers. The Board asked questions and voiced their opinions. MOTION by Rhodes, Second by Vogel and carried by a roll call vote of 6 to 3 (Yes Vogel, Holbrook, Terrazas, Williams, Tabarez and Rhodes; No McDonald, Jauregui and McFetridge), the Board voted to move half of the assets from the Black Rock Commodities Index Fund to Gresham Investment Management with a 50/50 target between active and passive. 6. Discussion/Action on criteria for the evaluation of the long term performance of Active Managers. Mr. Prince announced that we will have an Asset Allocation review at next month s meeting and asked the Board what criteria they would like to see on this report. Mr. Rhodes indicated that he would like to see how the active managers are performing against the benchmark. 7. Adoption/Direction of Audit report by Brown Armstrong: Andrew J. Paulden, CPA, Managing Partner.

4 January 16, 2013 BRIEF MINUTES PAGE 4 Mr. Paulden reviewed the purpose of the audit as well as the process involved. He congratulated our system on receiving the highest opinion that an independent audit firm can issue on our financial statement audit. Mr. Paulden reviewed the findings of the audit report of June 30, MOTION by Jauregui, Second by McFetridge and carried by the unanimous vote of members present, the Board approved the Audit Report of June 30, 2012 by Brown Armstrong. 8. Board Election: Instruct staff to request the Board of Supervisors to direct the County Clerk of the Board/ Registrar of Voters, to hold an election for the 2nd seat to the Board of Retirement, for a three year term beginning July 1, 2013, according to the adopted procedures. MOTION by Vogel, Second by Jauregui and carried by the unanimous vote of members present, the Board instructed staff to request the Board of Supervisors to direct the County Clerk of the Board/ Registrar of Voters, to hold an election for the 2nd seat to the Board of Retirement, for a three year term beginning July 1, 2013, according to the adopted procedures. 9. Review and Reaffirm Board of Retirement Policies and Procedures. Mr. Prince informed the Board that staff performs an annual review of all previously approved Board policies and procedures and would like the Board to reaffirm them once a year. MOTION by Holbrook, Second by McFetridge and carried by the unanimous vote of members present, the Board reaffirmed the attached policies and procedures. DISCUSSION CALENDAR Item 10 is for discussion only. Items requiring action will be placed on a future agenda. 10. Reports/Correspondence/Announcements: A. Retirement Administrator: 1. Market Value Graph of the Retirement System s Assets Mr. Prince reviewed the market value graph and investment fund reallocation for the month ending December 31, He stated that the system was up 1.27% for the month of December and up almost 7.81% for the first six months of the fiscal year 2. Book vs. Market Graph compares the Market Value of the system s assets to the Book Value of Assets. Mr. Prince discussed the current and upcoming activities of the system s assets.

5 January 16, 2013 BRIEF MINUTES PAGE 5 3. Update on Security Lending Account with JP Morgan Mr. Prince gave a status report to the Board. A meeting has been scheduled for January 31, 2013 with J.P. Morgan s representatives including their Securities Lending Manager for California. 4. Update on Pension Administration Computer System (PAS) Ms. Rodrigues stated that the Disaster Recovery testing was successful with the system up and running within 30 minutes. She stated that the member interest posting was successful in the new system and we have turned off payroll in the old system on the active side. Payroll on the retiree side will begin in January under the new system. JEA will be onsite next week for more training and to help with the retiree payroll process. Paychex is working to resolve the issues on the files we have been receiving from the Courts, LAFCO and ICTC. Mr. Prince stated that IT renewed the contract with IBM for one year on the old system and will bill us a pro-rated share as long as other departments are also on the system. If no other department is using it, we will bear the full cost until we no longer need it. IBM has agreed to give IT credit on their other systems for the remaining time not used during that year. Mr. Prince informed the Board of the additional time and cost involved to implement AB Annual filing of 700 Statement of Economic Interests Form by April 1, Mr. Prince introduced a new process for filing the forms. Board members were asked to complete the forms and bring them back at next month s meeting. Staff will file and track the forms each year for the Board members. B. Board Members: None. C. County Counsel: None. 11. Convene to Closed Session: MOTION by Vogel, Second by Holbrook and carried by a unanimous vote of members present, the Board convened into Closed Session. CLOSED SESSION A. Conference with Legal Counsel Existing Litigation (Government Code (a).) disability retirement applications relating to the following: Kevin White Margaret Navarro Sandra Moreno Jose Buelna Linda G. Bruce

6 January 16, 2013 BRIEF MINUTES PAGE 6 B. Public Employee Appointment (Cal. Gov ). Title: Retirement Administrator Consider appointment of Retirement Administrator, effective on February 8, OPEN SESSION 12. Announcement of Closed Session Action: Rosario Gonzalez, Deputy County Counsel, announced the following action was taken in Closed Session: The Board discussed but took no action on the disability retirement applications of Jose Buelna, Linda Bruce, Margaret Navarro, Kevin White and Sandra Moreno. Ms. Gonzalez announced no action was taken on the public employee appointment item regarding the Retirement Administrator position. 13. BUDGET: CONSENT AGENDA Retirement Administrator recommends approval of Items 13 through 15 Approval of the following Budget claims for the remaining , to include Board Members in attendance at the 11/21/12 meeting, an Investment Funds Expense Summary, and a JPMorgan Cash Account Summary per Govt. Code & 31521: A. Administrative Budget B. Investment Expense Summary 14. Administrative Agenda: A. Enrollment of New Members to ICERS (14) B. Terminations (5) C. Service Retirement: 1. Suzanne Matus Safety/Deferred Department: Sheriff Effective Date: 11/28/ Diane Ming General Member Department: Information Systems Effective Date: 11/30/ Dolores M. Vargas General Department: Social Services Effective Date: 11/30/2012

7 January 16, 2013 BRIEF MINUTES PAGE 7 D. 60% Continuance of Service Retirement Allowance per Govt. Code Section & Death Benefit: James Kelley General Member Deceased: 12/12/2012 E. Final Payment of Survivor Service Connected Disability Retirement Allowance per Govt. Code Section : 1. Dorothy Douglas General Member Deceased: 11/22/ O. Clair Hevener Safety Member Deceased: 11/27/ Conferences & Seminars: A. California Association of Public Retirement Systems (CALAPRS) March 2 5, General Assembly InterContinental San Francisco, CA B. CALAPRS 2013 Program Calendar OTHER ITEMS 16. Previously Approved Seminars/Conferences (list available in Retirement office). 17. Supplemental Item Discussion/Action and Ratification of appointment of David H. Prince as Retirement Administrator at Level 436, Step E starting February 8, 2013 with the benefits included with a Department Head position and recommendation to the Imperial County Board of Supervisors regarding the same. Ms. Gonzalez reviewed the item under discussion. Board Member Vogel requested that staff prepare a letter to the Board of Supervisors. MOTION by McFetridge, Second by McDonald and carried by the unanimous vote of members present, the Board approved the ratification of the appointment of David H. Prince as Retirement Administrator at Range 436, Step E starting February 8, 2013 with the benefits included with a Department Head position and directed staff to move forward with the recommendation to the Imperial County Board of Supervisors regarding both the appointment and the reclassification of the position as a Department Head. 18. Supplemental Item Discussion/Action: Authorize Retirement Administrator to negotiate and sign a renewal contract with Brown Armstrong for auditing services for the next three fiscal years.

8 January 16, 2013 BRIEF MINUTES PAGE 8 MOTION by McFetridge, Second by McDonald and carried by the unanimous vote of members present, the Board approved a three year extension to the contract with Brown Armstrong with a 10% increase in the premium. Adjournment: Meeting was adjourned at 1:02 p.m. to February 20, 2013 at 8:30 a.m. POMPEYO TABAREZ, JR., Chairman GEOFFREY HOLBROOK, Secretary