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Item 3 092006 Agenda Minutes

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Item 3 092006 Agenda Minutes Powered By Docstoc
					                     BOARD OF RETIREMENT
        FRESNO COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION
                                    September 20, 2006

Trustees Present:

       Michael Cardenas                  Vicki Crow
       Steven Jolly                      Phil Larson
       A. Papaleo                        Stephanie Savrnoch
       William Storey                    Ronald S. Frye – Alternate, sitting for John Souza

Trustees Absent:

       Vera Dominguez
       John Souza

Others Present:

       Michael Cunningham, Retired FCERA Member
       Bob Solis, Retired FCERA Member
       Ashley Dunning, Steefel, Levitt, & Weiss
       Linda Balok, Steefel, Levitt, & Weiss
       Michael Toumanoff, Steefel, Levitt, & Weiss
       Harvey Leiderman, Reed Smith
       Jeffrey Rieger, Reed Smith
       Barbara Booth Grunwald, Deputy County Counsel
       Roberto L. Peña, Retirement Administrator
       Becky Van Wyk, Assistant Retirement Administrator
       Elizabeth Avalos, Administrative Secretary
       Sign in Sheet Attached

1.     Call to Order

       Chair Jolly called the meeting to order at 9:05 AM.

2.     Public Presentations

       None.

Consent Agenda/Opportunity for Public Comment

       Trustee Savrnoch pulled Consent Agenda Item 5.

       A motion was made by Trustee Larson, seconded by Trustee Cardenas, to Approve
       Consent Agenda Items 3, 4, and 6 through 12. VOTE: Unanimous (Absent – Crow,
       Dominguez)

*3.    Approval of the September 6, 2006 Board of Retirement Regular Meeting Minutes

       RECEIVED AND FILED; APPROVED


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*4.    Request to Rescind Deferred Retirement

       RECEIVED AND FILED; APPROVED

        Name                        Department                             Years
        Anthony W. Ishii            Superior Court                         10.04

*5.    Summary of monthly statistics from the Retirement Association Office on
       buybacks, retirement benefit estimates, public service, age adjustments, final
       compensation calculations and disability retirement applications for August
       2006

       Trustee Savrnoch inquired as to the timeframe in which Buybacks are being
       processed.

       Roberto L. Peña, Retirement Administrator, stated that depending on the type of
       buyback the process could take up to one year. Mr. Peña noted that 481 buybacks
       had been completed for the period September 2005 through August 2006 compared to
       145 buybacks for the period September 2004 through August 2005.

       A motion was made by Trustee Savrnoch, seconded by Trustee Larson, to Approve
       Consent Agenda Item 5. VOTE: Unanimous

       RECEIVED AND FILED

*6.    Public Records Requests and/or Retirement Related Information Requests from
       William May, Retired FCERA Member and Bob Solis, Retired FCERA Member

       RECEIVED AND FILED

*7.    FCERA Unaudited Comparative Financial Statements for the six months ending
       December 31, 2005 and September 30, 2005

       RECEIVED AND FILED

*8.    Approve Amendments to the FCERA Trustee Due Diligence Policy

       RECEIVED AND FILED; APPROVED

*9.    Approve Amendments to the Conflict of Interest Code and direct staff to submit
       to Board of Supervisors for approval

       RECEIVED AND FILED; APPROVED

*10.   Approve proposed amendments to FCERA Bylaws article II, section F,
       paragraph 1, regarding the start time of regular meetings, and direct staff to
       submit amendments to Board of Supervisors for approval (Two-thirds vote
       required.)

       RECEIVED AND FILED; APPROVED


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*11.   Request to extend deadline related to Retirement Contributions Collected on
       Court Transcription Fees

       RECEIVED AND FILED; APPROVED

*12.   Request by FCERA Administration to write off stale claims for reimbursement
       from estate

       RECEIVED AND FILED; APPROVED

       Trustee Crow joined the Board at 9:09 AM.

13.    Discussion and appropriate action on selection of legal services; presentations
       by Harvey Leiderman, Reed Smith and Ashley Dunning, Steefel, Levitt, & Weiss

       Roberto L. Peña, Retirement Administrator, opened discussions by reminding the
       Board of Harvey Leiderman’s decision to leave the firm of Steefel, Levitt, & Weiss
       (Steefel) and join the firm of Reed Smith. Mr. Peña noted the Board’s previous
       decision to continue using the services of Attorney Leiderman for the final
       compensation litigation and to use Steefel for all other legal matters until a decision
       could be made on which firm to retain.

       Ashley Dunning, Steefel, Levitt, & Weiss, began the presentation by reminding the
       Board that Steefel has been providing legal counsel, advice, and representation to the
       Fresno County Employees’ Retirement Association (FCERA), its Board of Retirement,
       and staff since May 2003. Ms. Dunning noted that FCERA is an important client to the
       firm.

       Ms. Dunning noted that in addition to her, the Fiduciary Practice Group includes six
       attorneys including Linda Balok and Michael Toumanoff. The six attorneys constitute a
       highly experienced fiduciary team, who are knowledgeable and well-versed in public
       pension and related laws and who are available to serve FCERA’s needs on an on-
       going basis. Ms. Dunning stated that Mr. Toumanoff has been advising California
       public pension systems since the early 1990s, and is one of the preeminent attorneys
       in California in this practice area and that collectively, they have over 30 years of
       experience representing California public pension funds.

       Ms. Dunning stated that in addition to FCERA, Steefel currently serves as fiduciary,
       litigation, real estate, investment, insurance coverage and/or outside general counsel
       to twelve other public employee retirement systems in California.

       Ms. Dunning reviewed the billing rates and noted that the rate for Linda Balok was
       incorrectly stated at $355/hour. Ms. Balok’s hourly rate is $325/hour.

       Linda Balok, Steefel, Levitt, & Weiss, stated that she advises several California public
       pension funds on issues relating to private equity and alternative investment vehicles.
       Ms. Balok noted that she has significant expertise in the structure of a range of
       alternative investment vehicles and a wide variety of third party securities’ agreements.


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       Ms. Balok continued by noting her substantial experience in real estate matters. Ms.
       Balok represents a number of real estate developers, operating companies and high
       net worth individuals in a variety of commercial property transactions and she has
       successfully applied her securities expertise and her depth in real estate matters in her
       representation of a real estate investment fund.

       Michael Toumanoff, Steefel, explained to the Board his reasons for joining the firm of
       Steefel, Levitt, & Weiss and gave a brief overview of his law background. Mr.
       Toumanoff noted that the he has specialized in the law affecting public retirement
       system fiduciaries and has represented and advised several California public pension
       systems.

       In response to a question from Trustee Larson, Mr. Toumanoff stated the difference
       between an Article 5 County and an Article 5.5 County as being the Board of an Article
       5 County has the discretion to determine how excess earnings are distributed.

       In response to questions from Chair Jolly, Ms. Dunning stated that Harvey Leiderman,
       Reed Smith left his position at Steefel to represent publicly held companies that are
       governed by ERISA and that approximately 10% of Steefel’s business is dedicated to
       public pension systems.

       Trustee Frye inquired as to rate increases. Ms. Dunning stated that Steefel has
       charged FCERA $300/hour for her time and that the rate is approximately 20% less
       that her normal rate. Steefel has agreed to continue with that rate until January 1,
       2007 at which time the hourly rate will increase to $360/hour.

       In response to a comment from Trustee Cardenas, Ms. Dunning stated that the law
       prohibits a single law firm from acting in both an advocacy role on behalf of the
       retirement system in disability application hearings and advising the Board in its
       fiduciary and adjudicatory capacity on those same applications. Accordingly, they
       restrict their role with respect to advising on disability applications to advising boards
       of retirement in their fiduciary capacity.

       For disclosure purposes, Roberto L. Peña noted that he and Mr. Toumanoff had
       worked together when Mr. Peña was employed with the Kern County Employees’
       Retirement Association.

       In response to a question from Mr. Peña, Ms. Dunning noted that Steefel has been
       through similar selection processes with other Counties and that the majority have
       decided to stay with Steefel.

       In response to a question from Mr. Peña, Ms. Dunning stated that Steefel will provide
       FCERA with exemplary service in all areas where strong legal services are needed
       such as board counsel, fiduciary counsel, litigation, investments, and real estate. Ms.
       Dunning also noted that Steefel is cost effective, committed and, in contrast to the
       competition, has substantial experience as Board Counsel.

       Discussions, questions, and comments followed.


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       Harvey Leiderman, Reed Smith, began the presentation by reminding the Board that
       he, along with Jeffrey Rieger, have been primarily responsible for advising the Board
       and FCERA staff on numerous fiduciary, administrative, litigation and other legal
       issues during the last 3 ½ years. Mr. Leiderman noted that Mr. Rieger had joined the
       Reed Smith firm as well and that they will continue working together to guide FCERA
       staff on a day-to-day basis and the Board on a special needs basis.

       Mr. Leiderman stated that, in addition to successfully representing FCERA in the
       “Fresno Method” litigation he and Mr. Rieger have also advised the Board and staff in
       other areas.

       Mr. Leiderman noted that he believes that his extensive experience uniquely qualifies
       him to continue to provide top quality services to the Board and staff as General
       Counsel, including taking on the important responsibility of serving as independent,
       “capital F” Fiduciary Counsel to the Board.

       Mr. Leiderman stated that he has demonstrated that he is an effective advocate, can
       give effective guidance to the Board keeping in mind expenses, efficiency, and the
       interest of the members.

       Mr. Leiderman strongly believes that the Board would be well served by having Mr.
       Rieger attending the Regular Board Meetings. Mr. Leiderman would continue to be
       available to attend Board meeting when necessary (by telephone or in person, as
       appropriate).

       Jeffrey Rieger, Reed Smith, gave a brief summary of his background with FCERA and
       other retirement systems and explained his reasons for leaving Steefel and joining the
       Reed Smith firm.

       In response to a question from Chair Jolly, Mr. Leiderman stated that he had resigned
       his position at Steefel simply because he felt that they did not have the talent and
       expertise available to fully serve his pension fund clients the way he felt they should be
       served. Mr. Leiderman noted that he would also explore an ERISA practice, although
       this was not the reason he left Steefel.

       In response to a question from Chair Jolly, Mr. Leiderman stated that because of his
       fiduciary role to his partners at Steefel, he did not solicit anyone to join him at Reed
       Smith until after he had left Steefel and at that time Mr. Rieger was the only attorney
       that he had approached with an offer to join the Reed Smith firm.

       In response to a question from Trustee Cardenas, Mr. Leiderman stated that,
       although, he could serve as an Advisor to the Board on disability cases, it would not be
       in the best interest of the Board to serve as general counsel and as the system’s
       advocate in disability hearings. Mr. Leiderman noted that California cases hold that the
       same attorney may not represent the board as both its general counsel and as an
       advocate for the system in preliminary administrative hearings. Although, it technically
       may be possible to erect an “ethical wall” between two different attorneys at the same
       firm, he believes that this solution would erode FCERA members’ confidence in the
       Board’s independence.
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       In response to a question from Mr. Peña, Mr. Leiderman stated that Reed Smith has
       been through similar selection processes with other Counties and that the San Diego
       City Retirement and Orange County Retirement had made decisions to hire Reed
       Smith and that the other systems had not yet made their decisions.

       In response to a question from Mr. Peña, Mr. Leiderman stated that Reed Smith
       offered an opportunity to expand his capabilities as a fiduciary advisor by being able to
       serve both the public and private retirement systems.

       Mr. Leiderman stated that because responsibility of the Board is extremely important,
       he feels that he has a substantial advantage to offer guidance through his experiences
       with other retirement systems.

       Trustees Crow, Jolly and Cardenas were heard in favor of hiring Harvey Leiderman,
       Reed Smith.

       Discussions, questions, and comments followed.

       A motion was made by Trustee Cardenas, seconded by Trustee Crow to select Harvey
       Leiderman, Reed Smith, as FCERA’s primary counsel. VOTE: Unanimous (Absent –
       Dominguez)

       RECEIVED AND FILED; APPROVED

       A motion was made by Trustee Larson to have Barbara Grunwald, Deputy County
       Counsel, continue her role at FCERA Board meetings and to have Harvey Leiderman
       available when necessary.

       Discussions, questions, and comments followed in favor of having independent
       counsel present at Board meetings.

       Hearing no second, Trustee Larson withdrew the motion.

       The Board agreed to continue discussions regarding which attorney will be present
       during the Board meetings.

       Chair Jolly clarified that it is the Board’s intent to move forward with Reed Smith, but
       will continue working with Steefel on any outstanding issues.

       In response to a question from Bob Solis, Retired FCERA Member, Mr. Peña
       introduced the FCERA staff that were present at the meeting and gave a brief job
       description for each. Mr. Peña also summarized Agenda Item 13 for Mr. Solis.

       At this time, Chair Jolly thanked Ms. Dunning and Mr. Leiderman for their time
       presenting to the Board and announced the decision to proceed and continue the
       relationship with Mr. Leiderman, Reed Smith.

       The Board went into Closed Session at this time.

       Roberto L. Peña, Retirement Administrator, pulled Agenda Item 14.a.1. as there was
       nothing to discuss.

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                                               7
14.    Closed Session:

       a.      Conference with Legal Counsel – Actual Litigation – pursuant to G.C.
               §54956.9(a)

               1.     County of Fresno v. Board of Retirement

       b.      Conference with Legal Counsel – Potential Litigation – pursuant to G.C.
               §54956.9(b) – one case

       c.      Disability Retirement Applications – Personnel Exception pursuant to G.C.
               §54957

                       1.   Ron Adolph
                       2.   Brian Davis
                       3.   Diane Christian

15.    Report from Closed Session

       14.b.          Nothing to Report.

       14.c.1.        Ron Adolph – Decision – To Approve the Findings of Fact and Decision
                      presented and grant Ron Adolph’s service connected disability. VOTE:
                      Yes – Cardenas, Crow, Frye, Larson, Savrnoch, Storey, Jolly. Abstain –
                      Papaleo. Absent – Dominguez.
                      For disclosure purposes, Chair Jolly noted that Mr. Adolph was a prior
                      FCERA Board Member.

       14.c.2.        Brian Davis – Direction – The Board directed Administration to return
                      on October 4, 2006 with the Findings of Fact and Decision so that
                      service connected disability can be granted. VOTE: Unanimous. Absent
                      – Dominguez.

       14.c.3.        Diane Christian – Decision – To Approve the Findings of Fact and
                      Decision presented and grant Diane Christian’s service connected
                      disability. VOTE: Yes – Cardenas, Crow, Frye, Larson, Papaleo,
                      Savrnoch, Storey, Jolly. Absent – Dominguez.

16.    Report from FCERA Administration

       Mr. Peña reported on the following items:

       1. Mr. Peña strongly urged the Board Members to complete the Board Governance
          Surveys that were e-mailed to them by Tom Iannucci, Cortex.

       2. The Board Retreat is scheduled for October 18-19, 2006 at the Harris Ranch Inn in
          Coalinga, CA.



09/20/06 Regular Meeting
                                              8
       Report from FCERA Administration (continued)

       3. The Trustees received the Agenda for the Trustees Roundtable scheduled for
          October 13, 2006 in Santa Barbara, CA.

       4. An e-mail will be sent to the Personnel Committee Members to schedule a meeting
          to begin the Administrator Performance evaluation.

       5. The September 22, 2006 Disability Committee Meeting Agenda Packet would be
          delivered to the Committee Members timely.

17.    Report from County Counsel

       1. Barbara Booth Grunwald, Deputy County Counsel, assured the Board that she
          would be available when necessary and is willing to cooperate with private counsel.

18.    Board Member Announcements or Reports

       1. Trustee Cardenas reminded the Board of the upcoming Due Diligence trip and
          suggested that the Board Members submit questions to be asked of the managers.
          Mr. Peña noted that, as part of the next Agenda, he would include questions and
          input from the Board.

       2. Trustee Cardenas suggested that because the Board was unable to meet with
          Brown Armstrong prior to the start of the audit they be invited to present at the
          upcoming Board Retreat.
          Becky Van Wyk, Assistant Retirement Administrator, noted that because of
          Committee Members’ conflicting schedules, a meeting with the auditors was not
          scheduled.


There being no further business, the meeting adjourned at 12:00 PM.




Roberto L. Peña
Secretary to the Board




09/20/06 Regular Meeting

				
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