ORANGE COUNTY EMPLOYEES RETIREMENT SYSTEM BOARD OF RETIREMENT 2223 WELLINGTON AVENUE SANTA ANA, CALIFORNIA REGULAR MEETING MAY 17, 2004 MINUTES The Chairman called the meeting to order at 8:34 a.m. and read the opening statement into the record. Attendance was as follows: Present: Reed L. Royalty, Chairman; Frank E. Eley; George W. Jeffries; Thomas J. Lightvoet; John M. W. Moorlach; Sharon L. Neebe, Vice-Chairman; David J. Thompson and Richard A. White, Jr. Lisa Welch Silbar arrived at 8:44 a.m. Keith L. Concannon participated by telephone. Also Present: Keith Bozarth, Chief Executive Officer; Tom Flanigan, Chief Investment Officer; Jim Buck, Assistant CEO, External Operations; Stephen Cadena, Assistant CEO, Internal Operations; Toi Dang, Chief Financial Officer; Julie Wyne, General Counsel; Alicia Cavazos, Administrative Services Manager; Shanta Chary, Investment Analyst; Lorelei Chao, Investment Analyst; Andre Kujawski, Disability Investigator; Elaine Reagan, Staff Attorney; Fred Messerer, Staff Attorney; Robert Kinsler, Communications; Anthony Beltran, Audio/Visual Technician and Diane Schumacher, Recording Secretary Harvey Leiderman, Steefel, Levitt & Weiss Michael O Leary, Callan Associates Mr. Thompson led the Pledge of Allegiance and Mr. Jeffries offered the invocation. CONSENT AGENDA All matters on the Consent Agenda are to be approved by one action unless a Board Member or a member of the public requests separate action on a specific item. Mr. Moorlach pulled Items C-5 and C-6. A motion was made by Mr. Lightvoet, seconded by Mr. White to approve the remainder of the Consent Agenda. A roll call vote was taken. Motion carried 8 to 0. C-1 MATERIAL DISTRIBUTED Applications and Notices - Recommendation: Receive and file. f:board/agenda/05-17-04 Board Minutes
Regular Board Meeting Minutes Page 2 C-2 BOARD MEETINGS AND COMMITTEE MEETINGS: Approval of Meetings and Minutes Regular Board Meeting - April 19, 2004 Recommendation: Authorize all meetings and approve all minutes. C-3 LEGISLATIVE UPDATE Recommendation: Receive and file. C-4 STATUS REPORT ON RFP FOR ACTUARIAL SERVICE Recommendation: Receive and file. * * * * * * END OF CONSENT CALENDAR * * * * * * INDIVIDUAL ITEMS AGENDA I-1 INDIVIDUAL ACTION ON ANY ITEM TRAILED FROM THE CONSENT AGENDA C-5 QUARTERLY EDUCATION, TRAVEL & TRAINING REPORT FOR BOARD MEMBERS AND STAFF Recommendation: Receive and file. Mr. Moorlach pulled Item C-5 to request that the Education and Travel Policy be discussed at Strategic Planning. A motion was made by Mr. Moorlach, seconded by to receive and file Item C- 5. A roll call vote was taken. Motion carried 8 to 0. C-6 ELECTIVE CHARITABLE DEDUCTIONS FROM RETIREE PAYROLL Recommendation: Approve standards for allowing elective charitable deductions from retiree payroll. Mr. Moorlach pulled Item C-6 to oppose it. Following discussion, a motion was made by Mr. Moorlach, seconded by Mr. Jeffries to oppose the elective charitable deductions from retiree payroll. Ms. Colleen Sandrin, Executive Vice President, United Way, Orange County, addressed the Board.
Regular Board Meeting Minutes Page 3 Following further discussion on Item C-6, a substitute motion was made by Mr. Concannon, seconded by to approve standards for allowing elective charitable deductions from retiree payroll. A roll call vote was taken. Motion failed 4 to 5, with the voting as follows: Mr. Concannon Mr. Jeffries Mr. White Mr. Lightvoet Mr. Royalty Mr. Moorlach Ms. Neebe I-2 CHIEF INVESTMENT OFFICER S REPORT Mr. Flanigan reviewed the CIO Report. Following discussion, a motion was made by Mr. Moorlach, seconded by Ms. Neebe to receive and file the Chief Investment Officer s Report. A roll call vote was taken. Motion carried 9 to 0. Chairman announced that the Board would consider Item I-4 before Item I-3. I-4 QUARTERLY PERFORMANCE REVIEW CALLAN ASSOCIATES Mr. O Leary presented the Quarterly Performance Review by Callan Associates. Following discussion, a motion was made by Mr. White, seconded by to receive and file the Quarterly Performance Review by Callan Associates. A roll call vote was taken. Motion carried 9 to 0. Chairman announced the Board would take a break and reconvene to hear time certain items. Board took a break at 9:47 a.m. Board reconvened at 10:08 a.m. DISABILITY APPLICATIONS AGENDA Mr. Bozarth noted that Ms. Parker is not attending the meeting due to a death in the family. Mr. Kujawski will be covering for Ms. Parker. STAFF RECOMMENDATION TO GRANT SERVICE CONNECTED DISABILITY RETIREMENT PURSUANT TO GOVT. CODE SECTION 31720.6 (CANCER PRESUMPTIVE) WITH AN EFFECTIVE DATE OF 05-17-03 (Safety Member) (D-1) D-1 EMMETT WELLS, OC Fire Authority Fire Apparatus Engineer Application for service and non-service connected disability retirement.
Regular Board Meeting Minutes Page 4 A motion was made by Mr. Thompson, seconded by Mr. Lightvoet to grant service connected disability retirement pursuant to Alternative #1, under Section 31720. Following discussion, a substitute motion was made by, seconded by Mr. Jeffries to adopt staff recommendation, grant service connected disability retirement pursuant to Govt. Code Section 31720.6 (Cancer Presumptive) with an effective date of 05-17-03. A roll call vote was taken. Motion carried 6 to 3, with the voting as follows: Mr. Lightvoet Mr. Thompson Ms. Neebe Mr. Jeffries Mr. Concannon Mr. Moorlach Mr. Royalty STAFF RECOMMENDATION TO GRANT SERVICE CONNECTED DISABILITY RETIREMENT PURSUANT TO GOVT. CODE SECTION 31720 WITH AN EFFECTIVE DATE OF 10-23-02 (Safety Member) (D-2) D-2 ROBERT WETMORE, OC Fire Authority Fire Apparatus Engineer Application for service connected disability retirement A motion was made by Mr. Thompson, seconded by Ms. Neebe to grant service connected disability retirement pursuant to Govt. Code Section 31720 with an effective date of 10-23-02. A roll call vote was taken. Motion carried 7 to 2, with the voting as follows: Mr. Concannon Mr. Jeffries Mr. Lightvoet Ms. Neebe Mr. Moorlach Mr. Royalty Mr. Thompson STAFF RECOMMENATION TO GRANT SERVICE CONNECTED DISABILITY RETIREMENT WITH AN EFFECTIVE DATE OF 11-14-03 (Safety Member) (D-3) D-3 MICHAEL CLESCERI, OC District Attorney Assistant Chief Investigator Application for service and non-service connected disability retirement. A motion was made by Mr. Lightvoet, seconded by Mr. Concannon to refer this case to a Hearing Officer.
Regular Board Meeting Minutes Page 5 Mark Singer, Attorney for applicant, addressed the Board. Michael Clesceri, applicant, addressed the Board. Following further discussion a substitute motion was made by Mr. White, seconded by to grant service connected disability retirement with an effective date of 11-14-03. Motion carried 6 to 2, with the voting as follows: Mr. Concannon Mr. Moorlach Mr. Jeffries Mr. Royalty Mr. Lightvoet Ms. Neebe Mr. White STAFF RECOMMENDATION TO GRANT SERVICE CONNECTED DISABILITY RETIREMENT WITH AN EFFECTIVE DATE OF 07-13-03 (General Member) (D-4) D-4 BILLY GANDARA, OC Transportation Authority Coach Operator Application for service and non-service connected disability retirement. A motion was made by Mr. Lightvoet, seconded by Ms. Neebe to grant service connected disability retirement with an effective date of 07-13-03. A roll call vote was taken. Motion carried 9 to 0. STAFF RECOMMENDATION TO GRANT SERVICE CONNECTED DISABILITY RETIREMENT WITH AN EFFECTIVE DATE OF 08-01-03 (General Member) (D-5) D-5 RONALD KLUKAN, OC Transportation Authority Diesel Mechanic Application for service and non-service connected retirement A motion was made by, seconded by Mr. Lightvoet to grant service connected disability retirement with an effective date of 08-01-03. A roll call vote was taken. Motion carried 9 to 0. STAFF RECOMMENDATION TO GRANT SERVICE CONNECTED DISABILITY RETIREMENT WITH AN EFFECTIVE DATE OF 10-24-03 (General Member) (D-6) D-6 JACK MISSOURI, OC Sheriff s Department Warehouse Worker II Application for service connected disability retirement A motion was made by Mr. Lightvoet, seconded by to refer this matter to a Hearing Officer. A roll call vote was taken. Motion carried 8 to 1, with the voting as follows:
Regular Board Meeting Minutes Page 6 Mr. Royalty Mr. Jeffries Mr. Lightvoet Ms. Neebe Mr. Moorlach Mr. White Mr. Concannon STAFF RECOMMENDATION TO GRANT SERVICE CONNECTED DISABILITY RETIREMENT WITH AN EFFECTIVE DATE OF 06-09-03 (General Member) (D-7) D-7 LOIS NORLING, Health Care Agency Behavioral Health Nurse Application for service connected disability retirement Lois Norling, applicant, addressed the Board. A motion was made by, seconded by Ms. Neebe to grant service connected disability retirement with an effective date of 06-09-03. A roll call vote was taken. Motion carried 8 to 1, with the vote as follows: Mr. Royalty Mr. Jeffries Mr. Lightvoet Ms. Neebe Mr. Moorlach Mr. White Mr. Concannon STAFF RECOMMENDATION TO GRANT NON-SERVICE CONNECTED DISABILITY RETIREMENT WITH AN EFFECTIVE DATE OF 05-08-03 (General Member) (D-8) D-8 DONNA MILLFELT, OC Superior Court Staff Specialist Application for non-service connected disability retirement A motion was made by, seconded by Mr. Moorlach to grant non-service connected disability retirement with an effective date of 05-08-03. A roll call vote was taken. Motion carried 9 to 0.
Regular Board Meeting Minutes Page 7 STAFF RECOMMENDATION TO GRANT NON-SERVICE CONNECTED DISABILITY RETIREMENT WITH AN EFFECTIVE DATE OF 02-05-03. STAFF RECOMMENDATION TO DENY SERVICE CONNECTED DISABILITY RETIREMENT (General Member) (D-9) D-9 ETHEL MACKIN, OC Superior Court Court Processing Specialist Application for service and non-service connected disability retirement A motion was made by Ms. Neebe, seconded by Mr. Jeffries to grant non-service connected disability retirement with an effective date of 02-05-03, and to deny service connected disability retirement. Following discussion, a substitute motion was made by Mr. White, seconded by Mr. Eley to grant a non-service connected disability retirement with an effective date of 12-18-02, and to deny service connected disability retirement. A roll call vote was taken. The motion carried 9 to 0. STAFF RECOMMENDATION TO DENY SERVICE AND NON-SERVICE CONNECTED DISABILITY RETIREMENT (General Member) (D-10) D-10 RICHARD ADAMS, OC Sheriff s Department Senior Correctional Services Technician Application for service and non-service connected disability retirement A motion was made by Mr. White, seconded by Mr. Lightvoet to deny service and nonservice connected disability retirement. Mark Singer, Attorney for applicant, addressed the Board. A roll call vote was taken. Motion carried 9 to 0. STAFF RECOMMENDATION TO DENY SERVICE AND NON-SERVICE CONNECTED DISABILITY RETIREMENT (General Member) (D-11) D-11 JESSE MORENO, Social Services Agency Eligibility Technician Application for service and non-service connected disability retirement A motion was made by, seconded by Ms. Neebe to deny service and nonservice connected disability retirement. Mark Singer, Attorney for applicant, addressed the Board. A roll call vote was taken. Motion carried 9 to 0.
Regular Board Meeting Minutes Page 8 APPROVE AND ADOPT HEARING OFFICER S RECOMMENDATION TO GRANT SERVICE CONNECTED DISABILITY RETIREMENT WITH AN EFFECTIVE DATE OF 02-05-02 (General Member) (D-12) D-12 REINHOLD KRAMER, OC Treasurer-Tax Collector Tax Compliance Officer Application for service connected disability retirement A motion was made by, seconded by to approve and adopt Hearing Officer s recommendation to grant service connected disability retirement with an effective date of 02-05-02. Mark Singer, Attorney for applicant, addressed the Board. Mr. Jeffries would like to see this matter deferred for a month to allow him to review all the material in this case since he was absent from last month s meeting. A substitute motion was made by Mr. Moorlach, seconded by Ms. Neebe to defer this Item for one month to allow Mr. Jeffries to review material. A roll call vote was taken. Motion failed 4 to 5, with the voting as follows: Mr. Jeffries Mr. Lightvoet Ms. Neebe Mr. White Mr. Moorlach Mr. Concannon Mr. Royalty A roll call vote was taken on the original motion to approve and adopt Hearing Officer s recommendation to grant service connected disability retirement with an effective date of 02-05-03. Motion failed 4 to 5, with the voting as follows: Mr. White Ms. Neebe Mr. Moorlach Mr. Concannon Mr. Lightvoet Mr. Jeffries Mr. Royalty Mr. Bozarth commented that since the motion failed the disability is denied. commented that the factual record is closed, the Hearing Officer has rendered a decision, this is a denial of the disability, and this is now a matter for a court case. Mr. Bozarth noted that there are three other options the Board can adopt, 1) review the record itself; 2) refer back to the Hearing Officer, with or without instructions and 3) set it
Regular Board Meeting Minutes Page 9 for a hearing in front of the Board, which would be a new evidentiary hearing. It would be at the applicant s discretion whether to go to Superior Court. APPROVE AND ADOPT HEARING OFFICER S RECOMMENDATION TO GRANT SERVICE CONNECTED DISABILITY RETIREMENT WITH AN EFFECTIVE DATE OF 09-17-02 (General Member) (D-13) D-13 GEORGE SMITH, PFRD Groundskeeper Application for service and non-service connected disability retirement A motion was made by Mr. Moorlach, seconded by to approve and adopt Hearing Officer s recommendation to grant service connected disability retirement with an effective date of 09-17-02. A roll call vote was taken. Motion carried 9 to 0. APPROVE AND ADOPT HEARING OFFICER S RECOMMENDATION TO DENY SERVICE CONNECTED DISABILITY RETIREMENT (General Member) (D-14) D-14 LISA RUIZ, OC Superior Court Information Processing Technician Application for service connected disability retirement A motion was made by Mr. Moorlach, seconded by Ms. Neebe to approve and adopt hearing officer s recommendation to deny service connected disability retirement. A roll call vote was taken. Motion carried 9 to 0. requested that the Chairman allow the Board to reconsider Item D-12. APPROVE AND ADOPT HEARING OFFICER S RECOMMENDATION TO GRANT SERVICE CONNECTED DISABILITY RETIREMENT WITH AN EFFECTIVE DATE OF 02-05-02 (General Member) (D-12) D-12 REINHOLD KRAMER, OC Treasurer-Tax Collector Tax Compliance Officer Application for service connected disability retirement Chairman asked for clarification from Counsel. Ms. Wyne stated that it was the discretion of the Chairman whether he wanted to follow Robert s Rules of Order. Mr. Moorlach commented that there was already a motion to defer, the Board voted against it. The Chair is inclined to grant the request of two Board members and allow it.
Regular Board Meeting Minutes Page 10 Mr. Bozarth clarified if a Board member who voted against the motion brings it up; it is deemed acceptable to allow further discussion and another vote. Following further discussion of this matter, a motion was made by Mr. Lightvoet, seconded by to approve and adopt Hearing Officer s recommendation to grant service connected disability retirement. A roll call vote was taken. Motion carried 5 to 4, with the voting as follows: Mr. Concannon Mr. Moorlach Mr. Lightvoet Mr. Jeffries Mr. White Ms. Neebe Mr. Royalty * * * * * END OF DISABILITY AGENDA * * * * * Board took a break at 11:30 a.m. Board reconvened at 11:40 a.m. INDIVIDUAL ITEMS AGENDA (CONTINUED) I-3 INVESTMENT IMPLEMENTATION ISSUES Mr. Flanigan reviewed implementation issues, 1) Tactical Asset Allocation (TAA), 2) determining the range for major asset classes, and 3) what percentage of cash should be held by managers and at the fund level. Mr. O Leary reviewed the objective and alternative approaches to expand asset allocation flexibility. Board adjourned for lunch at 1:00 p.m. Board reconvened at 1:44 p.m. I-3 INVESTMENT IMPLEMENTATION ISSUES (continued) Following discussion, a motion was made by Mr. Lightvoet, seconded by Mr. White to 1) give managers the flexibility to go up to 20% cash; 2) adding a Global TAA component with a target of 5% plus or minus; 3) adjusting Broad Domestic from 20 to 18%, International from 20 to 18% and Domestic Fixed Income from 20 to 19% with a target of plus or minus 5%. A roll call vote was taken. Motion carried 9 to 0.
Regular Board Meeting Minutes Page 11 I-5 CUSTODIAN CONTRACT Mr. Dang reviewed the Custodian Contract for the Orange County Employees Retirement System and reported on the two meetings with the Bank of New York and State Street. Mr. Moorlach reported that the two meetings were very productive. Mr. Lightvoet questioned whether these contracts would be linked and what would happen if OCERS exited. Mr. Moorlach reported that the contracts would be separate. Following discussion, a motion was made by Mr. Lightvoet, seconded by Ms. Neebe to receive and file. A roll call vote was taken. Motion carried 9 to 0. I-6 CONTINUATION OF AGENDA FROM MAY 7, 2004 Mr. Bozarth reviewed the contribution rates for Probation from the May 7, 2004 meeting. A question was raised regarding our system s reporting of service credit. Mr. Bozarth identified four potential areas to be investigated: 1) service purchase credit, 2) retirees reemployed, 3) one employer s reporting error and 4) closed group phenomenon. Following discussion, a motion was made by Mr. Moorlach, seconded by to adopt the contribution rates with respect to the Probation Department as recommended by Towers Perrin. A roll call vote was taken. Motion carried 9 to 0. * * * * * * END OF INDIVIDUAL ITEMS AGENDA * * * * * * PUBLIC COMMENTS: None BOARD MEMBERS COMMENTS thanked staff for the matrix on legislation. Mr. Moorlach commented he was a little frustrated and disappointed the system has to pay for a service connected disability when we could have spent a little bit of money in Superior Court. Mr. Royalty thanked staff and the public for their work and patience. CHIEF EXECUTIVE OFFICER/STAFF COMMENTS Mr. Bozarth provided an update on the Actuary RFP. Responses have been received and staff will be working with Mr. Leiderman to go over proposals.
Regular Board Meeting Minutes Page 12 COUNSEL COMMENTS None. ADJOURNMENT: (IN MEMORY OF THE ACTIVE MEMBERS, RETIRED MEMBERS, AND SURVIVING SPOUSES WHO PASSED AWAY THIS PAST MONTH) Active Members: Retired Members: Surviving Spouses: Robert Perez; Pearl Smith Joyce Agee; Emogene Berkey; Jackie Bush; Wanda Davis; Virginia Gooch; William Hamblin; Everett Hurst; Myles Meers; Marshall Norris; Dorothy Patrick; Dominic Rea; William Reyna; Juan Sanchez; Sam Sena; Emmett Wells; None There being no further business to bring before the Board, a motion was made by Mr. Concannon, seconded by Ms. Neebe to adjourn the meeting. A roll call vote was taken. The motion carried 9 to 0. Meeting adjourned at 3:02 p.m. Submitted by: Approved by: Keith Bozarth Secretary to the Board Reed L. Royalty Chairman