MEMORANDUM - OCERS · MEMORANDUM DATE: ecember D 1, ... Trustee education within the first two (2)...

F New Trustee Orientation of 2 Governance Committee Meeting, December 9, 2015

MEMORANDUM

DATE: December 1, 2015

TO: Members of the Governance Committee

FROM: Steve Delaney – Chief Executive Officer

SUBJECT: New Trustee Orientation

Recommendation:

Consider New Trustee Orientation policies of other pension systems and determine if there are modifications to the OCERS Trustee Education Policy to be recommended to the OCERS Board.

Background:

The OCERS Trustee Education Policy (attached) addresses the issue of new Trustee’s orientation in Sections 16 through 22, under the subheading “Orientaton Program.”

Some sample OCERS New Trustee Orientation agendas previously used are also attached.

As part of the Hewitt Ennis Knupp (HEK) review of OCERS Board governance in September 2014, it was recommended that OCERS “Explore how other systems are orienting new trustees, and identify what practices could enhance OCERS new trustee orientation.”

A series of other system policies are attached for your consideration:

Alameda CERA Fresno CERA Kern CERA Mendocino CERA Sonoma CERA

A review of the other plans shows that when it comes to topics for consideration, all systems including OCERS are similar in what they have identified as key to ensuring the successful integration of a new Trustee to the Board of Retirement.

A key change to the OCERS process took place this year when OCERS’ legal team completed the OCERS Board Member Handbook, a valuable document that in fact we copied in part from the Los Angeles CERA Board Member handbook which is a basis for their orientation program.

Staff is prepared to address some additional topical questions in future orientations, not based necessarily on what we have seen in exploring other systems processes, as much as feedback

F New Trustee Orientation of 2 Governance Committee Meeting, December 9, 2015

from our own OCERS Trustees who have gone through the process. Questions that I have been asked by current Trustee to address for future Trustees include:

How long do meetings last? What rules guide the meetings? How does one use the voting machine? When can the Alternate member vote? How does a Trustee obtain reimbursement for travel expenses?

Additionally, an ongoing focus for all Trustees will also be a review of the continuing education requirements for Trustees.

The conversation with the Governance Committee on December 9 will prove very helpful to OCERS staff in ensuring that we provide each Trustee with the necessary tools to successfully begin their service on the OCERS Board of Retirement.

Prepared by:

_____________________ Steve Delaney Chief Executive Officer

Trustee Education Policy Page 1 Adopted February 19, 2002

Last revised July 20, 2015

ORANGE COUNTY EMPLOYEES RETIREMENT SYSTEM

TRUSTEE EDUCATION POLICY

PURPOSE

1. It is the policy of the Board of Retirement to ensure that individual Trustees have sufficient

knowledge of the issues and challenges facing OCERS so as to craft policies to guide the

administration of the plan and effectively monitor their implementation based on ongoing

exposure to up-to-date benefit, financial, investment and policy information and together

with staff are properly trained to perform their respective duties.

2. Effective January 1, 2013, Trustees are required to complete a minimum of 24 hours of

Trustee education within the first two (2) years of assuming office and for every subsequent

2-year period in which the Trustee serves on the Board (Gov. Code § 31522.8).

3. Trustees are also required to complete two hours of ethics training every two years. (Gov.

Code § 53235) Ethics training received as part of the 24 hours of Trustee education will

satisfy this requirement.

4. Trustees are also required to complete two hours of harassment prevention training every two

years. (Gov. Code § 12950.1) Harassment prevention training is in addition to the 24 hour

education requirement set forth in Gov. Code § 31522.8.

5. To that end, each Trustee is encouraged to regularly participate in those educational

opportunities that will enable competent discharge of the obligations of that position and

meet the statutory requirements for continuing education.

POLICY OBJECTIVES

6. The objective of this policy is to ensure that all Trustees have adequate opportunity to

acquire the knowledge they need to carry out their fiduciary duties.

POLICY GUIDELINES

7. Trustees agree to develop and maintain knowledge of relevant issues pertaining to the

administration of OCERS throughout their terms.



8. Trustees agree to pursue appropriate education across a range of pension-related areas, rather

than limiting their education to specific areas. General pension-related areas to be pursued

include:

a. Pension funding;

b. Institutional investments and investment program management;

c. Investment performance measurement;

d. Actuarial science;

e. Benefits structure and administration;

f. Disability retirements;

g. Due process in benefit determinations;

h. Pension law;

i. Organizational structure, methods, and practices;

j. Budgeting;

k. Governance and fiduciary duty; and

l. Ethics.

9. Trustees agree that at least two hours of education they receive will qualify as ethics training

relevant to the Trustees’ public service. Subject matter that qualifies for ethics training

includes, but is not limited to:

a. Laws relating to personal financial gain by public servants, including, but not

limited to, laws prohibiting bribery and conflict-of-interest laws.

b. Laws relating to claiming prerequisites of office, including, but not limited to, gift

and travel restrictions, prohibitions against the use of public resources for

personal or political purposes, prohibitions against gifts of public funds, mass

mailing restrictions, and prohibitions against acceptance of free or discounted

transportation by transportation companies.

c. Government transparency laws, including, but not limited to, financial interest

disclosure requirements and open government laws.

d. Laws relating to fair processes, including, but not limited to, common law bias

prohibitions, due process requirements, incompatible offices, competitive bidding

requirements for public contracts, and disqualification from participating in

decisions affecting family members.



10. Educational tools for trustees include, but are not limited to:

a. External conferences, seminars, workshops, roundtables, courses or similar sessions

(henceforth referred to collectively as “conferences”);

b. Industry association meetings or events;

c. In-house educational seminars or briefings;

d. Periodicals, journals, textbooks and similar materials; and

e. Electronic media including CD ROM-based education, Internet-based education and

video-based education.

11. On an ongoing basis, the Chief Executive Officer and the Chief Investment Officer will

identify appropriate educational opportunities, based on the needs of individual Trustees or

the Board as a whole, and include details of such in Board meeting information packages for

Trustee consideration. Trustees are encouraged to suggest educational opportunities that may

provide value to the Board of Retirement.

12. Standards for determining the appropriateness of a potential educational opportunity shall

include:

a. The extent to which the opportunity is expected to provide Trustees with the

knowledge they need to carry out their roles and responsibilities;

b. The extent to which the opportunity meets the requirements of this policy; and

c. The cost-effectiveness of the program in light of travel, lodging and related

expenses.

13. Beginning January 1, 2013, Trustees will acquire a minimum of 24 hours of Trustee

education within the first two (2) years of assuming office and for every subsequent 2-year

period for which the Trustee serves on the Board.

14. Trustees will attempt to meet the following minimum goals:

a. To secure, over time, a useful level of understanding in each of the topic areas listed

in paragraph 8 above;

b. To attend at least one conference annually. In accordance with a. above, Trustees are

encouraged to attend conferences, on occasion, that address pension topics other than

investments; and



c. Participate in any in-house educational seminars or briefings that are organized by the

Chief Executive Officer and Chief Investment Officer including:

i. The educational component of the annual Strategic Planning Session;

ii. The Education Forum;

iii. Individual sessions at regular Board meetings; and

iv. Workshops available to Board and staff members.

15. The Board shall maintain a record of Trustee compliance with this policy, and the Chief

Executive Officer or his designee will ensure that the policy and annual compliance report

are placed on the OCERS website.

ATTENDANCE AT CONFERENCES & INDUSTRY ASSOCIATION MEETINGS

16. Approval for attendance and reimbursement of travel expenses in connection with

educational conferences and industry association meetings will be in accordance with the

Travel Policy.

17. In furtherance of this policy, the Chief Executive Officer shall have discretionary authority to

approve staff travel as necessary to carry out the administrative responsibilities of the

OCERS, such as attendance at legislative meetings or hearings, conducting on-site visits as

part of due diligence evaluation of existing and proposed service providers, participating in

continuing education programs, and other duties as directed.

18. The Board will periodically review the programs, training or educational sessions that qualify

for Trustee education.

HARASSMENT PREVENTION TRAINING

19. As an employer of over 50 employees, OCERS is required to provide harassment and

abusive conduct prevention training to all “supervisory employees” every two years.

20. Trustees are considered “supervisory employees” for the purposes of the statute since

Trustees may influence the terms and conditions of employment for OCERS employees.

21. The Chief Executive Officer working with the Legal Department and outside vendors will

schedule appropriate training for Trustees every two years.



ORIENTATION PROGRAM

22. Working with the Chief Investment Officer and OCERS’ professional advisors, the Chief

Executive Officer will hold an orientation program, covering the general topic areas outlined

in paragraph 8 above, and designed to introduce new Trustees to all pertinent operations of

the System and highlight the knowledge bases required of a Trustee. The aim of the

orientation program will be to ensure that new Trustees are in a position to contribute fully to

Board of Retirement and committee deliberations, and effectively carry out their fiduciary

duties as soon as possible after joining the Board.

23. Prior to a Trustee’s first official meeting with the Board of Retirement, he or she will

endeavor to attend a Board meeting or a standing committee meeting in the role of an

observer.

24. Within 30 days of a trustee’s election or appointment to the Board, the Chair will designate

an incumbent member of the Board to provide the new Trustee an orientation to current

Board governance practices.

25. As part of the orientation process, new Trustees will, within 30 days of their election or

appointment to the Board of Retirement:

a. Be briefed by the Chief Executive Officer on the history and background of OCERS;

b. Be oriented by the Chair on current issues before the Board;

c. Be introduced to members of senior management;

d. Be provided a tour of OCERS offices by the Chief Executive Officer;

e. Be briefed by the Board’s fiduciary counsel on their fiduciary duties, conflict of

interest guidelines, the County Employees Retirement Law of 1937, Proposition 162,

The Brown Act, and other pertinent legislation; and

f. Be provided with an iPad (or other electronic device) with access to a document

repository containing the following:

i. A Trustee Reference Manual (the contents of which are listed in the

Appendix);

ii. A listing of upcoming recommended educational opportunities; and

iii. Other relevant information and documentation deemed appropriate by the

Chief Executive Officer.



26. During the course of their first 12 months on the Board of Retirement, new Trustees will

endeavor to attend a seminar on the principles of pension management or a comparable

program.

27. The Chief Executive Officer will review, and if necessary, update all orientation material. It

is the responsibility of Trustees to maintain their Trustee Reference Manuals, by ensuring

that they contain the most up to date materials. A master copy of the Trustee Reference

Manual will be available for use by Trustees at the OCERS office.

28. Trustees will inform the Chief Executive Officer, for information purposes, of all pension-

related conferences attended, whether attending on behalf of OCERS or not.

POLICY REVIEW

29. The Board of Retirement will review this policy at least every three years to ensure that it

remains relevant and appropriate.

POLICY HISTORY

30. This policy was adopted by the Board of Retirement on February 19, 2002.

31. The policy was revised on May 16, 2005, March 24, 2008, June 18, 2012,

November 19, 2012, and July 20, 2015.

SECRETARY’S CERTIFICATE

I, the undersigned, the duly appointed Secretary of the Orange County Employees Retirement

System, hereby certify the adoption of this Policy.

7/20/15

Steve Delaney, Secretary to the Board Date

OCERS’ Trustee Education Policy Page 7

Adopted February 19, 2002


APPENDIX

TRUSTEE REFERENCE MANUAL

A Trustee Reference Manual will include the following materials:

a. OCERS Board Handbook;

b. Relevant sections of the County Employees Retirement Law of 1937;

c. The Brown Act and Proposition 162;

d. Most recent plan description and member handbook;

e. Copies of Board policies;

f. Most recent Annual Report;

g. Most recent actuarial valuation and financial statements;

h. Most recent actuarial experience study;

i. Most recent asset/liability study;

j. Most recent investment performance report;

k. Most recent Business Plan and budget;

l. Organizational chart;

m. Names and phone numbers of the trustees and the Chief Executive Officer;

n. Listing of current committee assignments;

o. Listing of current service providers; and

p. Glossary of key pension administration terms and definitions.

ORANGE COUNTY EMPLOYEES RETIREMENT SYSTEM SAMPLE OF PREVIOUSLY USED DETAILED AGENDA

M EM OR A N D U M

DATE:

TO:

FROM: Steve Delaney

SUBJECT: New Trustee Overview

Welcome!

Overview of OCERS Long serving Board Funding level Good relations with employers and associations Excellent customer service - On line application for instance 2015 Business Plan

Budget Highlights Stayed below 18% of Fund level (at 13%) for consecutive years Number of staff has remained static at 57 as well Monthly summary report (Example of Board query)

Pending Issues Triennial experience study - testing of assumptions Employer contribution rates\ Strategic planning with the Board in the Fall Ad hoc OCERS Management Compensation Committee Litigation – Legal will review

Internal Audit Has been vacant for one year Working with Brown Armstrong on two audits - 2006 and 2007 Full plan to audit committee in

SAMPLE OF PREVIOUSLY USED AGENDA

Rough Time Estimates Topics

8:30 a.m. - 9:45 a.m. CEO Overview of OCERS; Budget highlights; Pending issues overview; Internal audit

9:45 a.m. -10:30 a.m. CIO Investment overview; Consultant interview process; Pending issues

10:30 a.m. - 11:00 a.m. Assistant CEO Accounting; Information technology; Building tour

11:00 p.m. - 12:30 p.m. Assistant CEO Legal Overview; Member services; Disabilities; Communications

12:30 p.m.- 1:30 p.m. Lunch with management staff

TRUSTEE EDUCATION POLICY

I. PURPOSE

1. The purpose of a Trustee Education Policy is to establish guidelines and

procedures for ACERA Board and Alternate trustees (hereinafter collectively

referred to as “Trustees”) that recognize and affirm the importance of education to

the success of fulfilling their fiduciary responsibilities. The policy is designed to

mitigate the risk that ACERA trustees will not possess the minimum level of

knowledge necessary and relevant to carrying out their fiduciary duties in

overseeing the pension plan.

II. ASSUMPTIONS

1. The ACERA Trustee Education Policy rests on the following important

assumptions:

(a) The role of an ACERA trustee is distinct from that of management;

therefore the knowledge or educational needs of trustees are

correspondingly different.

(b) There does exist a unique body of knowledge that can be imparted to

trustees to facilitate the carrying out of their distinct roles and

responsibilities.

(c) The Trustees are responsible for making policy decisions affecting all

major aspects of pension plan administration. They, therefore, must

acquire an appropriate level of knowledge of all significant facets of the

plan, rather than only specializing in particular areas.

(d) No single method of educating trustees is optimal. Instead, a variety of

methods is necessary and appropriate.

(e) The ACERA Trustee Education Policy is not intended to dictate that

trustees attend only specific conferences, programs, etc. Instead, it should

be left to the discretion of the trustees as to which programs best meet

their needs and the objectives of this policy, as needs change and new

opportunities become available.

ACERA Trustee Education Policy

Revised 12/18/08 2

III. OBJECTIVES

1. The objectives of the ACERA trustee education program are as follows:

(a) Ensure that all ACERA trustees gain the knowledge they need to

effectively carry out their fiduciary responsibilities.

(b) Ensure that access to the necessary knowledge is made available to all

trustees.

(c) Ensure that ACERA trustees possess a shared knowledge of pension

administration that facilitates group discussion, debate, and effective

decision-making.

(d) Ensure that ACERA trustees have the opportunity to acquire a relevant

level of knowledge across all major aspects of pension plan

administration, as opposed to only gaining specialized knowledge in

particular areas.

(e) Ensure that all newly appointed or elected trustees are provided with the

general introductory knowledge they need to enable them to actively and

effectively participate in Board and committee deliberations.

(f) Treat Board and Alternate Trustees alike with regard to educational

opportunities.

IV. POLICY GUIDELINES

A. General Provisions

1. All ACERA trustees agree to develop and maintain their knowledge and

understanding of the issues involved in the management of ACERA

throughout their terms as trustees of ACERA.

2. Trustees agree to develop a relevant level of knowledge across a broad

spectrum of pension-related areas, rather than limiting their education to

any particular area(s). The specific areas in which trustees agree to

develop and maintain useful levels of knowledge shall include, as a

minimum:

(a) Governance

(b) Investments

(c) Actuarial Process


Revised 12/18/08 3

(d) Benefit Administration

(e) Technology

(f) Regulatory and Legal

(g) Resources Management

3. Senior management shall prepare and maintain a matrix of the key

concepts and relevant levels of knowledge that trustees should strive to

acquire in each of the areas denoted in 2 above. Said listing shall be

provided to all trustees to serve as a reference guide and may be modified

as required.

4. ACERA trustees agree to help seek out, evaluate and attend appropriate

educational programs, which may include, but are not limited to:

(a) Conferences and seminars;

(b) Courses and workshops sponsored by academic institutions;

(c) Relevant periodicals, trade journals, textbooks, etc.;

(d) In-house workshops, seminars, or presentations delivered by senior

management, staff, or external service providers;

(e) Videocassettes, CD ROM, and other electronic education media.

5. Due diligence activities such as meetings with existing or prospective

service providers shall not substitute for other educational programs.

6. In determining the appropriateness of a potential educational opportunity,

trustees and senior management shall consider:

(a) The extent to which the opportunity is expected to provide trustees

with the knowledge they need to carry out their roles and

responsibilities; and

(b) The cost-effectiveness of the program.

7. Trustees are expected to assist in identifying the educational vehicles that

best meet their needs, and to attempt to meet the following minimum goals:

(a) ACERA trustees shall attempt to secure a useful level of

knowledge in each of the areas listed herein; and


Revised 12/18/08 4

(b) In any given year, trustees agree to participate in at least one

educational program primarily devoted to issues other than

investments; and

(c) Trustees shall participate in an annual planning and educational

retreat organized by ACERA management with input from the

Board. The retreat can be designed to address topics not

necessarily addressed by external programs. In providing input

into design of the program, the Board shall identify collective areas

for improvement in the Board’s knowledge base.

Depending upon the content of the annual planning and educational retreat,

it may serve to satisfy the requirement of attending at least one program

unrelated to investments.

B. Orientation Program

1. A formal orientation program shall be developed by senior management

for the benefit of new trustees.

2. The trustees agree that all new trustees shall be encouraged to participate

in the orientation program within 45 days of being elected or appointed to

the Board.

3. The aim of the orientation program shall be to ensure that new trustees are

in a position to contribute fully to Board and committee deliberations, and

effectively carry out their fiduciary duties as soon as possible upon joining

the Board.

4. The orientation program shall be comprised of the following minimum

elements:

(a) An Orientation Handbook containing information and materials

relevant to a trustee and that will serve as a future reference;

(b) Introduction to all key members of senior management and staff;

(c) A tour of the ACERA offices; and

(d) A comprehensive briefing by senior management.

5. The Orientation Handbook shall contain, but not be limited, to the

following:


Revised 12/18/08 5

(a) Most recent plan description and member handbook;

(b) Roles and responsibilities of trustees, committees, and senior

management, both fiduciary and operational;

(c) Copies of ACERA board policies;

(d) Most recent actuarial valuation and financial statements;

(e) Most recent actuarial asset/liability study;

(f) Most recent investment performance report;

(g) Most recent business plan and budget;

(h) Up-to-date organizational chart;

(i) Up-to-date names and phone numbers of other trustees and Chief

Executive Officer;

(j) Matrix containing key areas where trustees are expected to build

their knowledge, along with a listing of specific concepts

pertaining to each;

(k) Relevant readings covering pension fiduciary fundamentals; and

(l) Copies of relevant ACERA publications/brochures.

C. Attendance at Conferences/Seminars

1. The following guidelines shall be followed with respect to attendance at

conference or seminars:

(a) Members of the Board, and ACERA staff as authorized by the

Chief Executive Officer, are summarily authorized to attend the

following conferences:

(i) The Semi-Annual Conference of the State Association of

County Retirement Systems (SACRS);

(ii) The General Assembly for CALAPRS;

(iii) The International Foundation for Employee Benefits

Annual Conference;

(vi) CALAPRS Trustee training at Stanford University; and

(v) Wharton Pension Fund Management Course

(vi) Council of Institutional Investors – Spring and Fall

Conferences


Revised 12/18/08 6

(b) The attendance at the semi-annual SACRS conference is required

for the Members of the Board of Retirement.

V. POLICY COMPLIANCE

1. ACERA trustees agree to be accountable to each other, as a group, for complying

with the provisions of this policy, and will authorize the necessary reporting to

facilitate said accountability.

2. All ACERA board policies shall be reviewed with and consented to by each new

Board or senior staff member.

VI. POLICY REVIEW

This policy shall be reviewed by the Governance Committee at least every two (2) years

to ensure that it remains relevant and appropriate.

VII. POLICY HISTORY

1. The Board adopted this policy on October 16, 1999.

2. The Board reviewed and adopted this policy, with revisions, on September 18,

2003.

3. The Board reviewed and adopted this policy, with revisions, on November 18,

2003.

4. The Board reviewed and adopted this policy, with revisions, on November 9,

2006.

5. The Board reviewed and adopted this policy, without revisions, on December 18,

2008.

KCERA Board Policies Trustee Education Policy

33

OBJECTIVES

4. The objectives of the KCERA trustee education program are as follows:

a. To help ensure that each KCERA trustee is knowledgeable of and familiar with relevant

public pension issues and concepts so as to be able to effectively carry out their fiduciary

duties.

b. To ensure that the KCERA Board possess a common base of knowledge of pension

administration to facilitate group discussion, debate, and effective decision-making.

POLICY GUIDELINES

General Provisions

5. All KCERA trustees agree to develop and maintain an adequate level of knowledge and

understanding of relevant issues involved in the administration of KCERA throughout their

terms as trustees of KCERA.

6. Trustees agree to pursue an appropriate level of training across a broad spectrum of pension-

related areas, rather than limiting their education to particular areas. The specific areas in

which trustees shall endeavor to gain relevant knowledge and understanding shall include:

a. Governance and fiduciary duty

b. Investment policy and asset allocation

c. Benefits administration

d. Technology

e. Regulatory and legal issues

f. Human resources management

g. Plan funding and valuation

7. In each of the above areas, trustees shall attempt to gain knowledge, which is consistent with

the Board’s role as a high level policy-setting and oversight body.

8. Appropriate educational pursuits for trustees may include, but are not limited to:

a. External Education Programs;

b. Relevant periodicals, trade journals, and textbooks;

c. In-house briefings or presentations provided by senior management, staff, external

service providers or others;


34

d. Educational information compiled by staff for trustee use;

e. Electronic education media

9. Trustees are encouraged to attend appropriate educational webinars, which the Board

believes may represent a low cost means for trustees to gain knowledge of pension issues.

10. In approving trustee attendance at External Education Programs, the Board shall give

preference to events that are within close proximity to Kern County, and that are sponsored

by academic institutions or pension industry associations (such as SACRS, CALAPRS and

NCPERS) as distinct from programs sponsored by for-profit entities.

11. KCERA Administration shall identify appropriate External Education Programs and

webinars and include such information in the board packet for trustees’ consideration.

12. Trustees who identify External Education Programs or webinars they believe to be timely

and relevant may request that they be included in the board agenda for approval.

13. In assessing particular educational opportunities, the Board and KCERA Administration shall

consider.

a. The extent to which an opportunity is expected to provide trustees with the understanding

and information they need to carry out their responsibilities;

b. The cost-effectiveness of the opportunity; and

c. The timeliness and relevance of the opportunity.

14. Trustees will endeavor to meet the following minimum goals:

a. To secure, over time, a useful level of understanding in each of the seven areas listed in 6

above;

b. To attend one External Education Program annually;

c. To participate in one intensive, multi-day External Education Program of an academic

nature and classroom-format during each of their terms on the Board. (This goal is in

addition to item b. above.)

d. To participate in dedicated annual in-house planning and educational initiatives organized

by management with input from the trustees, as well as any additional in-house briefings

or presentations;


35

e. To participate in educational activities during the year that are related to the mandates of

trustees’ assigned committees, or have otherwise participated in such relevant activities in

the prior year.

15. In meeting the goals set out above, trustees may apply credits earned from educational

activities required to maintain professional designations, provided such activities are directly

related to their duties as KCERA trustees.

16. Notwithstanding anything contained herein, trustees may attend, at KCERA’s expense, up to

four External Education Programs during each of their terms on the Board. Trustees are

encouraged to ensure that one of the four programs is a multi-day program of an academic

nature and classroom-format. Trustees who do not attend their allotted number of External

Education Programs in a term may not carry them forward to subsequent terms.

Orientation Program

17. A formal orientation program shall be developed by the Executive Director for new trustees,

the aim of which shall be to ensure that new trustees are in a position to contribute fully to

board and committee deliberations, and effectively carry out their fiduciary duties as soon as

possible upon joining the Board.

18. As part of the orientation, new trustees shall, within 45 days following their election or

appointment to the Board:

a. Be assigned a Trustee mentor by the Chair;

b. Be briefed on the contents of the KCERA Trustee Handbook by KCERA Administration;

c. Be introduced to all members of senior management and staff by KCERA

Administration;

d. Be provided a tour of the KCERA offices by KCERA Administration;

e. Be briefed by the Chair and KCERA Administration on matters before the Board;

f. Be briefed on their fiduciary duties by counsel;

g. Receive other relevant information and documentation from KCERA Administration or

the Chair.

19. During the course of their first year on the Board, new trustees shall endeavor to attend the

CALAPRS program (“Basic Principles of Pension Management”).


36

20. Prior to their first meeting of the Board, new trustees shall endeavor to attend a meeting of

the Board or a standing committee as an observer.

21. A KCERA Trustee Handbook and other relevant materials shall be distributed to each new

trustee including, at a minimum, the following:

a. The ‘37 Act, the Brown Act, and the KCERA By-laws;

b. List of’37 Act provisions adopted in KCERA;

c. Most recent member handbook;

d. Copies of KCERA board policies;

e. Most recent actuarial valuation and financial statements;

f. Most recent asset/liability study;

g. Most recent quarterly investment performance report;

h. Most recent business plan and budget;

i. Organizational chart;

j. Names and phone numbers of other trustees and the Executive Director;

k. Listing of current committee assignments;

l. Listing of service providers;

m. List of recommended External Education Programs;

n. Materials describing pension fiduciary fundamentals;

o. Copies of other KCERA publications/brochures deemed relevant and appropriate by

KCERA Administration; and

p. A Glossary

22. Management shall review and update the Trustee Handbook as needed, but at least annually.

Attendance at External Education Programs

23. Trustees are encouraged to participate in External Education Programs, including but not

limited to:

i) The semi-annual Conference of the State Association of County Retirement Systems

(SACRS)

ii) Public Pension Investment Management Program, offered by SACRS;

iii) The General Assembly and Trustee Roundtables of California Association of Public

Retirement Systems (CALAPRS);

iv) The International Foundation for Employee Benefits (IFEB) Annual Conferences and

Trustee accreditation programs; and


37

v) CALAPRS “Basic Principles of Pension Management”.

24. All trustees attending an External Education Program shall, either jointly or separately,

complete and submit to the Executive Director a Conference Attendance Report (See

Exhibit).

25. Trustees may provide copies of any educational materials acquired at External Education

Programs to the Executive Director, who shall in turn make said materials available to the

Board for reference purposes.

POLICY REVIEW

26. The Board shall review the Trustee Education Policy at least every 3 years to ensure that it

remains relevant and appropriate.

POLICY COMPLIANCE

27. Annually, a report will be filed with the Board describing the educational activities of

trustees during the year.

POLICY HISTORY

28. The policy was adopted by the Board on September 27, 2000.

This policy was reviewed and amended by the Board on June 23, 2004; July 13, 2005;

September 26, 2007, and June 15, 2011.

MENDOCINO COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION

BOARD EDUCATION POLICY

I. PURPOSE

A. This Board Education Policy is intended to provide the trustees of the Mendocino

County Employees’ Retirement Association (MCERA) with guidelines and procedures

that recognize and affirm the central role of education in the successful discharge of

their statutory duties. The policy is designed to mitigate the risk that MCERA trustees

will not possess sufficient background knowledge or experience in the various facets

encompassed by pension fund administration and fiduciary practice.

B. The Trustee Education Policy is not intended to dictate that trustees attend only specific

conferences or programs. Instead, it represents a framework for the types of

opportunities that trustees may utilize in furthering their fiduciary education. Trustees

are encouraged to seek additional education in public pension matters.

II. OBJECTIVES

A. To ensure that all MCERA trustees gain the knowledge they need to effectively carry

out their fiduciary duties.

B. To ensure that MCERA trustees possess a common base of knowledge to facilitate

group discussion, debate and effective decision-making.

C. To encourage trustees to seek and maintain a level of familiarity with public pension

issues.

D. To ensure that all newly appointed or elected trustees are provided with the general

introductory knowledge they need to enable them to actively and effectively participate

in board and committee deliberations.

III. ASSUMPTIONS

A. The Board Education Policy rests on the following important assumptions:

1. The role of a trustee is distinct from that of management; therefore the knowledge

and educational needs of a trustee may also be distinct.

2. Trustees are responsible for making policy decisions affecting all major aspects of

plan administration. Therefore, trustees must acquire a level of knowledge in all

significant facets of the plan that is appropriate to policy determination.

Mendocino County Employees’ Retirement Association

Board Education Policy

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3. No single method of educating trustees is optimal. Instead, a variety of methods

may be necessary and appropriate.



1. All MCERA trustees agree to develop and maintain an adequate level of knowledge

and understanding of relevant issues involved in the administration of the MCERA

throughout their terms as trustees of the MCERA.

2. Trustees agree to pursue an appropriate level of training across a broad spectrum of

pension-related areas, rather than limiting their education to particular areas.

Accordingly, trustees shall endeavour to gain knowledge that is consistent with the

Board’s role as a high level, policy-setting and oversight body. The topic areas to

be addressed include, but are not limited to:

a. Governance and fiduciary duty;

b. Investment policy and asset allocation;

c. Benefits administration;

d. Actuarial policies and funding;

e. Technology; and

f. Regulatory and legal issues.

3. Appropriate educational tools for trustees may include, but are not limited to:

a. External conferences, seminars, workshops, roundtables, (henceforth referred

to collectively as “conferences”);

b. Courses and programs sponsored by academic institutions and Callan

Associates;

c. Relevant periodicals, trade journals or textbooks;

d. In-house briefings or presentations delivered by senior management, staff,

external service providers or others. Such briefings or presentations may be

held at or in conjunction with regular board meetings;

e. Information compiled by management for trustee education;

f. In-house educational initiatives organized by the Retirement Administrator;



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g. Electronic education media; and

h. Visits to existing or potential service providers.

4. Preference shall be given to conferences sponsored by educational institutions,

Callan Associates, or pension industry associations such as SACRS and CALAPRS.

5. Management shall identify appropriate educational opportunities and include such

information in board meeting information packages for trustees’ consideration, as

early in the year as possible to facilitate scheduling on the part of board members.

6. Trustees shall attempt to meet the following minimum goals:

a. To secure, over time, a useful level of understanding in each of the areas listed

in item 2 above.

b. To attend at least one (1) Callan College/Investment Institute event or external

industry association conference (such as SACRS or CALAPRS) annually.

c. Participate in any in-house educational initiatives. Such initiatives may be

appended to regular board meetings or organized as stand-alone sessions.

7. Management staff will facilitate accessibility to mandatory training that is required

for new trustees and continuing trustees:

a. AB 1234 – Ethics Training: every two years.

b. AB 1825 – Sexual Harassment Prevention Training: within six months of

becoming a Trustee and every two years thereafter.


1. A formal orientation program shall be developed by the Retirement Administrator

for the benefit of new trustees. The aim of the orientation program shall be to

ensure that new trustees are in a position to contribute fully to board and committee

deliberations, and effectively carry out their fiduciary duties as soon as possible

upon joining the Board.

2. As part of the orientation process, new trustees shall, within 45 days of their

election or appointment to the Board:

a. Be briefed by the Retirement Plan Administrator on the history and background

of the MCERA;

b. Be briefed by the Board Chair;



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c. Be introduced to staff of MCERA;

d. Be provided a tour of MCERA offices by management;

e. Be briefed on their fiduciary duties, conflict of interest guidelines and The

Brown Act;

f. Receive the following from the Retirement Administrator:

1) The 37 Act, the Brown Act and the MCERA By-Laws;

2) Most recent plan description and member handbook;

3) Copies of MCERA Board policies;

4) Most recent actuarial valuation and financial statements;

5) Most recent asset/liability study;

6) Most recent investment performance report;

7) Most recent budget;

8) Organizational chart;

9) Names and phone numbers of the other trustees and the Retirement

Administrator;

10) Listing of current committee assignments;

11) Listing of current MCERA service providers;

12) List of current educational opportunities (including dates of Callan

College/Investment Institutes, SACRS and CALAPRS conferences); and

13) A copy of the Board’s liability insurance policy; and

14) Other relevant information and documentation from management or the

Chair; for example, disability process guidelines/information.

3. The Retirement Administrator shall review and if necessary update all orientation

material as needed.

4. During the course of their first year on the Board, new trustees shall endeavour to

attend the SACRS New Trustee Training Program and/or the CALAPRS Principles

of Pension Management Program.



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5. Prior to their first official meeting of the Board, new trustees shall endeavour to

attend a meeting of the Board or a standing committee as an observer.

6. Within 30 days of being appointed or elected to the Board, trustees must complete a

Statement of Interest. Management shall provide new trustees with all the

necessary assistance in properly completing the Statement.

C. In-house Education

Staff will organize or deliver at least one special in-house education session each year

covering one or more topics that would be beneficial for all board members. An

example of such a topic would be the Brown Act.

D. Conferences and Seminars

The following shall provide guidance with respect to attendance at conferences or

seminars:

1. The following are preferred conferences that have been found to be informative and

beneficial:

a. The Semi-Annual Conference of the State Association of County Retirement

Systems (SACRS);

b. CALAPRS Principles of Pension Management;

c. The General Assembly and Trustee Roundtables of CALAPRS; and

d. Callan College and Investment Institutes.

2. The Board will allocate sufficient funds annually in its budget to enable trustees to

attend specified conferences. Accordingly, board approval is not required for

attendance at such conferences, provided they are held within the State of

California; trustees, however, shall confirm with the Retirement Administrator that

there is sufficient space and funding available.

3. If a conference is not listed in the budget, or is to be held outside the State of

California, attendance at that conference shall require board approval.

4. Reimbursement for travel and associated expenses relating to educational

conferences shall be in accordance with the provisions of the County Travel Policy,

unless superseded by a MCERA travel policy.

5. In approving a particular educational opportunity, the Board shall consider:

a. The extent to which an opportunity is expected to provide trustees with the

understanding and information they need to carry out their responsibilities;



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6. In cases where attendance at a particular conference is limited:

a. The Chair and Retirement Administrator shall jointly determine whether it is

necessary for management to participate; and then

b. The Chair shall determine which interested trustees shall attend, on a rotating

basis.

7. If a limited number of trustees attend a particular conference, they will report back

to the Board on the conference and provide an evaluation of the conference.

8. Trustees may provide the Retirement Administrator with copies of any educational

material acquired at conferences that they deem to be useful. The Retirement

Administrator shall in turn make said materials available to the Board for reference

purposes.

V. POLICY REVIEW

The Board shall review the Board Education policy at least every three (3) years to

ensure that it remains relevant and appropriate.

VI. POLICY HISTORY

The Board adopted this policy on 12/16/09.

SONOMA COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION

BOARD EDUCATION POLICY

I. PURPOSE

A. This Board Education Policy is intended to provide the trustees of the Sonoma County Employees’ Retirement Association (SCERA) with guidelines and procedures that recognize and affirm the central role of education in the successful discharge of their statutory duties. The policy is designed to mitigate the risk that SCERA trustees will not possess sufficient background knowledge or experience in the various facets encompassed by pension fund administration and fiduciary practice.

B. The Trustee Education Policy is not intended to dictate that trustees attend only specific conferences or programs. Instead, it represents a framework for the types of opportunities that trustees may utilize in furthering their fiduciary education. Trustees are encouraged to seek additional education in public pension matters.

II. OBJECTIVES

A. To ensure that all SCERA trustees gain the knowledge they need to effectively carry out their fiduciary duties.

B. To ensure that SCERA trustees possess a common base of knowledge to facilitate group discussion, debate and effective decision-making.

C. To encourage trustees to seek and maintain a level of familiarity with public pension issues.

D. To ensure that all newly appointed or elected trustees are provided with the general introductory knowledge they need to enable them to actively and effectively participate in board and committee deliberations.

Sonoma County Employees’ Retirement Association Board Education Policy

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III. ASSUMPTIONS

A. The Board Education Policy rests on the following important assumptions:

1. The role of a trustee is distinct from that of management; therefore the knowledge and educational needs of a trustee may also be distinct.

2. Trustees are responsible for making policy decisions affecting all major aspects of plan administration. Therefore, trustees must acquire a level of knowledge in all significant facets of the plan that is appropriate to policy determination.

3. No single method of educating trustees is optimal. Instead, a variety of methods may be necessary and appropriate.



1. All SCERA trustees agree to develop and maintain an adequate level of knowledge and understanding of relevant issues involved in the administration of the SCERA throughout their terms as trustees of the SCERA.

2. Trustees agree to pursue an appropriate level of training across a broad spectrum of pension-related areas, rather than limiting their education to particular areas. Accordingly, trustees shall endeavour to gain knowledge that is consistent with the Board’s role as a high level, policy-setting and oversight body. The topic areas to be addressed include, but are not limited to:

a. Governance and fiduciary duty;

b. Investment policy and asset allocation;

c. Benefits administration;

d. Actuarial policies and funding;

e. Technology;

f. Regulatory and legal issues; and

g. Human resources management.

3. Appropriate educational tools for trustees may include, but are not limited to:

a. External conferences, seminars, workshops, roundtables, (henceforth referred to collectively as “conferences”);


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A. General Provisions (cont.)

b. Courses and programs sponsored by academic institutions;

c. Relevant periodicals, trade journals or textbooks;

d. In-house briefings or presentations delivered by senior management, staff,external service providers or others. Such briefings or presentations may beheld at or in conjunction with regular board meetings;

e. Information compiled by management for trustee education;

f. In-house educational initiatives organized by the Retirement Administrator;

g. Electronic education media; and

h. Visits to existing or potential service providers.

4. Preference shall be given to conferences sponsored by educational institutions orpension industry associations such as SACRS and CALAPRS.

5. Management shall identify appropriate educational opportunities and include suchinformation in board meeting information packages for trustees’ consideration, asearly in the year as possible to facilitate scheduling on the part of board members.

6. Trustees shall attempt to meet the following minimum goals:

a. To secure, over time, a useful level of understanding in each of the areas listedin item 2 above.

b. To attend at least one (1) external industry association conference (such asSACRS or CALAPRS) annually.

c. Participate in any in-house educational initiatives. Such initiatives may beappended to regular board meetings or organized as stand-alone sessions.

7. Management staff will facilitate accessibility to mandatory training that is requiredfor new trustees and continuing trustees:

a. AB 1234 – Ethics Training: every two years.

b. AB 1825 – Sexual Harassment Prevention Training: within six months ofbecoming a Trustee and every two years thereafter.


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1. A formal orientation program shall be developed by the Retirement Administrator for the benefit of new trustees. The aim of the orientation program shall be to ensure that new trustees are in a position to contribute fully to board and committee deliberations, and effectively carry out their fiduciary duties as soon as possible upon joining the Board.

2. As part of the orientation process, new trustees shall, within 45 days of their election or appointment to the Board:

a. Be briefed by the Retirement Plan Administrator on the history and background of the SCERA;

b. Be briefed by the Board Chair;

c. Be introduced to members of senior management;

d. Be provided a tour of SCERA offices by management;

e. Be briefed on their fiduciary duties, conflict of interest guidelines and The Brown Act;

f. Receive the following from the Retirement Administrator:

1) The 37 Act, the Brown Act and the SCERA By-Laws;

2) Most recent plan description and member handbook;

3) Copies of SCERA Board policies;

4) Most recent actuarial valuation and financial statements;

5) Most recent asset/liability study;

6) Most recent investment performance report;

7) Most recent business plan and budget;

8) Organizational chart;

9) Names and phone numbers of the other trustees and the Retirement Administrator;


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B. Orientation Program (cont.)

10) Listing of current committee assignments;

11) Listing of current SCERA service providers;

12) List of current educational opportunities (including dates of SACRS andCALAPRS conferences); and

13) A copy of the Board’s liability insurance policy; and

14) Other relevant information and documentation from management or theChair; for example, disability process guidelines/information.

3. The Retirement Administrator shall review and if necessary update all orientationmaterial as needed.

4. During the course of their first year on the Board, new trustees shall endeavour toattend the SACRS New Trustee Training Program and/or the CALAPRS Principlesof Pension Management Program.

5. Prior to their first official meeting of the Board, new trustees shall endeavour toattend a meeting of the Board or a standing committee as an observer.

6. Within 30 days of being appointed or elected to the Board, trustees must complete aStatement of Interest. Management shall provide new trustees with all thenecessary assistance in properly completing the Statement.

7. If requested, a new trustee can be assigned a trustee mentor by the Board Chair,who could be available to answer questions and provide general information.

C. In-house Education

Staff will organize or deliver at least one special in-house education session each year covering one or more topics that would be beneficial for all board members. Examples include educational topics covered at the annual Planning Session or Special Retirement Board Meetings.

D. Conferences and Seminars

The following shall provide guidance with respect to attendance at conferences or seminars:

1. The following are preferred conferences that have been found to be informative andbeneficial:

a. The Semi-Annual Conference of the State Association of County RetirementSystems (SACRS);


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D. Conferences and Seminars (cont.)

b. CALAPRS Principles of Pension Management; and

c. The General Assembly and Trustee Roundtables of CALAPRS.

2. The Board will allocate sufficient funds annually in its budget to enable trustees toattend specified conferences. Accordingly, board approval is not required forattendance at such conferences, provided they are held within the State ofCalifornia; trustees, however, shall confirm with the Retirement Administrator thatthere is sufficient space and funding available.

3. If a conference is not listed in the budget, or is to be held outside the State ofCalifornia, attendance at that conference shall require board approval.

4. Reimbursement for travel and associated expenses relating to educationalconferences shall be in accordance with the provisions of the Board Travel Policy.

5. In approving a particular educational opportunity, the Board shall consider:

a. The extent to which an opportunity is expected to provide trustees with theunderstanding and information they need to carry out their responsibilities;



6. In cases where attendance at a particular conference is limited:

a. The Chair and Retirement Administrator shall jointly determine whether it isnecessary for management to participate; and then

b. The Chair shall determine which interested trustees shall attend, on a rotatingbasis.

7. If a limited number of trustees attend a particular conference, they will report backto the Board on the conference and provide an evaluation of the conference.

8. Trustees may provide the Retirement Administrator with copies of any educationalmaterial acquired at conferences that they deem to be useful. The RetirementAdministrator shall in turn make said materials available to the Board for referencepurposes.

V. POLICY REVIEW

The Board shall review the Board Education policy at least every three (3) years to ensure that it remains relevant and appropriate.


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VI. POLICY HISTORY

The Board adopted this policy on 7/15/04.

Reviewed on 3/16/06.

Reviewed, revised and approved on March 19, 2009.

Reviewed, revised and approved on March 15, 2012.

P a g e | 0

2014

Board Handbook

TABLE OF CONTENTS

PART 1: INTRODUCTION ................................................................................................................................... 1.

Governing Board ...................................................................................................................................................... 1.

Handbook Purpose .................................................................................................................................................. 1.

Governance .............................................................................................................................................................. 1.

California Retirement System History .................................................................................................................... 1.

The State, the County & the Retirement System ................................................................................................... 2.

OCERS Today ............................................................................................................................................................ 4.

OCERS’ Mission Statement ...................................................................................................................................... 4.

Committees .............................................................................................................................................................. 4.

OCERS Organizational Chart .................................................................................................................................... 5.

PART 2: BOARD COMPOSITION & AUTHORITY ..................................................................................... 6.

Board Composition .................................................................................................................................................. 6.

Board Terms & Schedules ........................................................................................................................................ 7.

Taking Office ............................................................................................................................................................ 7.

Board Authority ....................................................................................................................................................... 7.

Board Members are Public Officials ........................................................................................................................ 8.

Board Policies .......................................................................................................................................................... 8.

PART 3: FIDUCIARY DUTIES & RESPONSIBILITIES ............................................................................. 9.

Overview .................................................................................................................................................................. 9.

Duty of Loyalty ......................................................................................................................................................... 9.

Duty of Care ............................................................................................................................................................. 9.

Duty to Provide Benefits & Defray Expenses ........................................................................................................ 10.

Duty to Diversify Investments ............................................................................................................................... 10.

PART 4: CONFLICTS OF INTEREST & ETHICS RULES ........................................................................ 14.

Table of Contents

PART 5: OPEN MEETING LAWS ................................................................................................................... 17.

Overview of the Brown Act ................................................................................................................................... 17.

Agenda Posting ...................................................................................................................................................... 17.

Closed Sessions ...................................................................................................................................................... 17.

Open Meetings ...................................................................................................................................................... 18.

Brown Act Violations ............................................................................................................................................. 18.

Preventing & Redressing Brown Act Violations .................................................................................................... 18.

PART 6: COMMUNICATIONS ......................................................................................................................... 19.

OCERS’ Communications Policy ............................................................................................................................ 19.

Communications between Board Members ......................................................................................................... 19.

Communications with Members, Plan Sponsors, and Stakeholders ................................................................... 19.

Communications with OCERS Management and Staff ......................................................................................... 20.

Communications with the Public and Media ........................................................................................................ 20.

PART 7: SYSTEM FUNDING ............................................................................................................................ 22.

Funding Sources ..................................................................................................................................................... 22.

Actuarial Valuation ................................................................................................................................................ 22.

Contribution Rates................................................................................................................................................. 22.

Funding Goal .......................................................................................................................................................... 22.

PART 8: INVESTMENTS ................................................................................................................................... 23.

Investment Authority ............................................................................................................................................ 23.

Delegation of Investment Authority ..................................................................................................................... 24.

Investment Consultants ........................................................................................................................................ 24.

Investment Expenses ............................................................................................................................................. 24.

PART 9: BENEFITS ............................................................................................................................................. 26.

OCERS Plan Summary ............................................................................................................................................ 26.

Service Retirement ................................................................................................................................................ 26.

Table of Contents

Disability Retirement ............................................................................................................................................. 29.

Reciprocity ............................................................................................................................................................. 29.

Survivor Benefits ................................................................................................................................................... 30.

Cost of Living Adjustments (COLA) ........................................................................................................................ 30.

PART 10: OCERS MEMBERSHIP IN ORGANIZATIONS ........................................................................ 32.

Overview ................................................................................................................................................................ 32.

AICPA ..................................................................................................................................................................... 32.

APPFA ..................................................................................................................................................................... 32.

CalAPRS .................................................................................................................................................................. 32.

CalCPA .................................................................................................................................................................... 32.

CII ........................................................................................................................................................................... 32.

GFOA ...................................................................................................................................................................... 33.

IFEBP ...................................................................................................................................................................... 33.

ILPA ........................................................................................................................................................................ 33.

IPMA-HR ................................................................................................................................................................. 33.

ISCEBS..................................................................................................................................................................... 33.

NAPPA .................................................................................................................................................................... 34.

NASRA .................................................................................................................................................................... 34.

NCPERS ................................................................................................................................................................... 34.

P2F2 ........................................................................................................................................................................ 34.

PIHRA ..................................................................................................................................................................... 34.

PREA ....................................................................................................................................................................... 35.

PRISM ..................................................................................................................................................................... 35.

SACRS ..................................................................................................................................................................... 35.

SHRM ..................................................................................................................................................................... 35.

PART 11: TRAINING AND EQUIPMENT ..................................................................................................... 36.

Table of Contents

Training Policy........................................................................................................................................................ 36.

Policy Objectives .................................................................................................................................................... 36.

Policy Guidelines.................................................................................................................................................... 36.

Attendance at Conferences & Industry Association Meetings ............................................................................ 37.

Orientation Program ............................................................................................................................................. 38.

Equipment & Supplies ........................................................................................................................................... 40.

PART 12: FAQs ...................................................................................................................................................... 40.

Stipend: .................................................................................................................................................................. 40.

1. Who is eligible for stipends? .................................................................................................................... 40.

2. How much is the stipend? ........................................................................................................................ 40.

3. What counts as a meeting? ...................................................................................................................... 40.

4. When are stipends paid? .......................................................................................................................... 40.

5. How are stipends treated for tax purposes? ........................................................................................... 40.

6. Who do you call if you have questions about your stipend? .................................................................. 40.

Board Meeting Attendance: .................................................................................................................................. 40.

1. What should I do if I am unable to attend a meeting or I know I will be late? ...................................... 40.

2. What should I do if I need to leave a meeting before adjournment? .................................................... 41.

Informal Board Member Discussions: ................................................................................................................... 41.

1. To what extent can Board members discuss OCERS business outside of official Board meetings? ...... 41.

Mileage: ................................................................................................................................................................. 41.

1. What kinds of trips entitle one to claim mileage? .................................................................................. 41.

2. How frequently should mileage claims be submitted? ........................................................................... 41.

3. What form should be used? ..................................................................................................................... 41.

4. How long does it take to get reimbursement? ........................................................................................ 42.

5. Am I covered by OCERS insurance when I'm using my vehicle on OCERS business? ............................. 42.

Board Education: ................................................................................................................................................... 42.

Table of Contents

1. How do Board members receive the training they need to perform their duties?................................ 42.

2. Where can I get copies of education and reference materials? ............................................................. 42.

3. Do we have Board meetings off-site? ...................................................................................................... 42.

4. What conferences or educational seminars may I attend? .................................................................... 42.

5. How can I submit a conference for Board approval? .............................................................................. 42.

6. How many conferences may a Board member attend? .......................................................................... 43.

7. May Board members travel to conferences that are held outside of the United States? ..................... 43.

8. Who goes to a conference when the conference invitation limits the number of attendees? ............. 43.

9. What periodicals do Board members receive? ........................................................................................ 43.

Board Travel Arrangements: ................................................................................................................................. 43.

1. Who makes the travel arrangements for Board members? ................................................................... 43.

2. How much notice do I need to give if I am thinking of attending a conference or seminar? ................ 44.

3. What happens if I need to cancel a trip? ................................................................................................. 44.

4. May I request a travel advance? .............................................................................................................. 44.

5. What kind of transportation can I use for OCERS business travel? ........................................................ 44.

6. What if the trip is more than 100 miles away and I prefer to drive? ...................................................... 44.

7. What if I prefer not to travel by plane even though this would be considered the common carrier? .. 44.

8. What about Saturday “stay-overs?” ........................................................................................................ 44.

Reimbursement of Travel Expenses: ..................................................................................................................... 44.

1. What kind of travel entitles me to reimbursement of travel-related expenses? .................................. 45.

2. How do I claim reimbursement for travel expenses? ............................................................................. 45.

3. How frequently should I submit travel claims? ....................................................................................... 45.

4. How long does it take to receive reimbursement once my claim has been submitted? ....................... 45.

Mail: ....................................................................................................................................................................... 45.

1. Do Board members receive mail? ............................................................................................................ 45.

2. How do I get my mail? .............................................................................................................................. 45.

Table of Contents

3. How do I respond to correspondence? .................................................................................................... 45.

Agendas: ................................................................................................................................................................ 46.

1. How do I receive meeting Agendas? ........................................................................................................ 46.

2. When can I expect my Agenda? ............................................................................................................... 46.

Board Member Addresses and Telephone Numbers: .......................................................................................... 46.

1. How is Board member contact information listed? ................................................................................ 46.

2. Who has access to my contact information? ........................................................................................... 46.

3. What happens if someone wants to contact me at the OCERS number? .............................................. 46.

Equipment and Supplies: ....................................................................................................................................... 46.

1. What will OCERS provide to assist me in fulfilling my Board duties? ..................................................... 46.

PART 1: INTRODUCTION

Governing Board The role of governance in any organization is vital to its success. The governing Board of the Orange County Employees Retirement System (OCERS), in partnership with management, determines guiding policy, the organization’s vision, mission and strategic goals. While management is charged with implementation, the Board is responsible for oversight of the organization’s aspirations, purpose and focus.

Handbook Purpose The OCERS Board Handbook is intended to enhance the Board’s effectiveness as Board members successfully guide the efforts of OCERS into the future. Both new and experienced Board members will find value in the document, as the Handbook can be used as an initial educational method and as an ongoing reference.

On January 1, 1945, OCERS was established to provide retirement allowances and other benefits to its safety and general members employed by the County of Orange. Subsequently, OCERS expanded its membership program to include additional agencies. In addition to the county, the covered agencies are Children and Families Commission of Orange County, City of San Juan Capistrano, Orange County Employees Retirement System, Orange County Local Agency Formation Commission, Orange County Cemetery District, Orange County Department of Education, Orange County Fire Authority, Orange County In-Home Supportive Services Public Authority, Orange County Public Law Library, Orange County Sanitation District, Orange County Transportation Authority, , Superior Court of California for the County of Orange, the Transportation Corridor Agencies, and UCI Medical Center.

Governance OCERS is governed by the California Constitution, the County Employees Retirement Law of 1937, and the bylaws, procedures and policies adopted by OCERS’ Board of Retirement. The Orange County Board of Supervisors may also adopt resolutions, as permitted by the County Employees Retirement Law of 1937, which may affect the benefits of OCERS members.

The Board of Retirement is responsible for the general management of OCERS and determining OCERS’ investment objectives, strategies, and policies and for funding the system to assure the prompt delivery of benefits. The Board adopts operating budgets and appoints the Chief Executive Officer, who is delegated the responsibility for the day-to-day management of OCERS.

California Retirement System History In 1937, the California State Legislature enacted the County Employees Retirement Law of 1937,1 which authorizes a board of supervisors to create a retirement system for officers and employees of the county. Frequently referred to as “the ‘37 Act,” the legislation was sponsored by the County of Los Angeles and drafted by the Los Angeles County Counsel’s office.

1 Government Code Section 31450, et seq. All future statutory references are to the Government Code unless otherwise noted.

Part 1: Introduction

The Orange County Board of Supervisors implemented the ‘37 Act in 1945 after a vote by the people of the County of Orange, thus creating the Orange County Employees Retirement System (“OCERS”). The ‘37 Act has also been implemented in the counties of Alameda, Contra Costa, Fresno, Imperial, Kern, Los Angeles, San Bernardino, San Diego, San Joaquin, San Mateo, Sonoma, Marin, Mendocino, Merced, Sacramento, Stanislaus, Tulare, Ventura and Santa Barbara. Orange County and these other 19 counties are sometimes referred to collectively as “the ‘37 Act counties.”2

The State, the County & the Retirement System Counties are political subdivisions of the State. A county has only those powers granted by the State Legislature, and those powers necessarily implied therefrom.3 For this reason, all of the retirement benefits provided by a county must be authorized by State statute. In OCERS’s case, as noted previously, the authorizing statutes are set forth in the ‘37 Act. Any future changes in retirement benefits likewise must be authorized by state statute.4 Consequently, OCERS pursues an active legislative program connected with ongoing administration of the system.

The relationship of a ‘37 Act retirement system to county government can be confusing at times. Although a county board of supervisors must take formal action to create a system, once created, the retirement system is a separate government entity, independent from the county.5 OCERS and the San Bernardino County Employees Retirement Association are unique among the ’37 Act systems in that they are separate political districts from the county.6 Adding to the complexity even more is the fact that the county Board of Supervisors must approve OCERS By-Laws and any regulations adopted by the OCERS Board of Retirement.7

Further complicating the relationship between a county and the retirement system is the manner in which the system is staffed and operated. In some counties, administration of the system is handled by employees in the county treasurer’s office and the cost of administration is included in the county’s general fund budget. In larger counties, the retirement system appoints its own personnel, in which case the cost of administration is included in a budget approved by the retirement system and charged against the earnings of the retirement fund. Orange County falls into this latter category. OCERS’ Board of Retirement annually adopts a budget providing for the entire administration of the system, and the system is run using personnel who are appointed and managed independent of county government.

2 Some city and county retirement systems are provided for in the city or county charter: e.g. City and County of San Francisco,

San Luis Obispo County, City of Los Angeles, City of San Diego. The remaining counties of the state obtain retirement benefits for their employees by contracting with the California Public Employees Retirement System (“CalPERS”).

3 Younger v. Board of Supervisors (1979) 93 Cal.App.3d 864.

4 In addition, Measure J, passed by voters in the County of Orange in November 2008, requires that increases in retirement

benefits for employees and officers of the County receive voter approval.

5 The independence of a retirement system was first recognized in 1961, when the Court of Appeal held that the Board of

Retirement, in denying a disability retirement, was not bound by a finding against the County in an earlier workers’ compensation claim. Flaherty v. Board of Retirement (1961) 198 Cal.App.2d 397.

6 Section 31468 (l).

7 Section 31525.


OCERS personnel are divided into two categories. General staff are county employees appointed and managed by OCERS. These county employees are members of the Orange County Employees Association (“OCEA”) and are subject to MOUs negotiated between the county and OCEA. OCERS management personnel are direct employees of OCERS and are not represented by a bargaining group.

Private pension systems are regulated by the Federal Government under the Employees Retirement Income and Security Act (“ERISA”). Although public pension plans are not subject to ERISA, California public pension plans are governed by similar provisions contained in the California Constitution and the ‘37 Act.

Article XVI, Section 17 of the California Constitution grants public retirement boards “plenary authority and fiduciary responsibility for investment of moneys and administration of the system...,” and further provides:

a) The Retirement Board of a public pension or retirement system shall have the sole and exclusive fiduciary responsibility over the assets of the public pension or retirement system. The Retirement Board shall also have sole and exclusive responsibility to administer the system in a manner that will assure prompt delivery of benefits and related services to the participants and their beneficiaries.

The assets of a public pension or retirement system are trust funds and shall be held for the exclusive purposes of providing benefits to participants in the pension or retirement system and their beneficiaries and defraying reasonable expenses of administering the system.

b) The members of the Retirement Board of a public pension or retirement system shall discharge their duties with respect to the system solely in the interest of, and for the exclusive purposes of providing benefits to, participants and their beneficiaries, minimizing employer contributions thereto, and defraying reasonable expenses of administering the system. A Retirement Board’s duty to its participants and their beneficiaries shall take precedence over any other duty.

c) The members of the Retirement Board of a public pension or retirement system shall discharge their duties with respect to the system with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with these matters would use in the conduct of an enterprise of a like character and with like aims.

The standard of care imposed on OCERS’s trustees by the Constitution is essentially the same standard applicable to ERISA trustees. Government Code Section 31595 is consistent with the Constitution and requires OCERS’s trustees, officers and employees to “discharge their duties with respect to the system:

a) Solely in the interest of, and for the exclusive purposes of providing benefits to, participants and their beneficiaries, minimizing employer contributions thereto, and defraying reasonable expenses of administering the system.

b) With the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with these matters would use in the conduct of an enterprise of a like character and with like aims.


c) Shall diversify the investments of the system so as to minimize the risk of loss and to maximize the rate of return, unless under the circumstances it is clearly prudent not to do so.

OCERS Today In February of 2013, with assets in excess of $9.7 billion, OCERS was ranked by “Pensions & Investments” magazine as the 144th largest pension fund in the U.S.

OCERS serves over 40,000 members including more than 14,000 retirees. Members can contact OCERS staff to receive information regarding retirement estimates, disability retirement processing, and pension division and support in family law matters.

OCERS’ Mission Statement The role of the Orange County Employees Retirement System is to provide secure retirement and disability benefits, quality information concerning those benefits, and prompt, professional and courteous service that meets the highest standards of excellence. In carrying out that role, the Board of Retirement and staff are committed to act for the exclusive benefit of the plan and its participants, manage assets of the plan prudently, and administer benefits with impartiality.

Committees The following are the OCERS Board committees including the current number of members.

Committee Name Number of Members

Investment Committee Full Board

Governance Committee Four

Investment Manager Monitoring Subcommittee

Four

Audit Committee Four


OCERS Board Handbook P a g e | 5

OCERS Organizational Chart

Board of Retirement

CEO Director of Internal Audit

Chief Legal Officer

Assistant CEO (Finance & Internal Operations)

Chief Investment Officer

Assistant CEO

(External Operations)

Investment

Officer Investment

Analyst

Director of

Investment

Operations

Staff

Specialist

(1)

Director of

Member

Services Communications

Manager Staff

Attorneys (3)

Internal Auditor

Director of

Administrative

Services Director of

IT Director of

Finance

Disability

Coordinator

(1)

Member

Services

Managers

(2)

Senior Staff Development

Specialist

(1)

Staff

Specialist

(1)

Member Services

Supervisors (2)

Senior Retirement Program Specialist (1) Retirement Program Specialist (8)

Benefits Technician (3) Accounting Technicians (2)

Office Technician (3) Office Specialist (1)

Disability

Investigators (2) Office Specialists

(2)

Staff Specialist (1)

Staff Assistant (1)

Staff Assistant PT

(1)

Store Clerk (1)

IT Manager

IT

Supervisor

Operations

IT

Supervisor Programming

Finance

Managers (3)

Senior Applications

Developer

(1)

Contractors

(13) Systems

Technicians (3)

Systems Programmer

Analysts II

(2)

Acct/Auditor II (3) Acct Technician (2)

Sr. Acct Assistant (1)

Secretary II

(1)

Executive Secretary (1)


PART 2: BOARD COMPOSITION & AUTHORITY

Board Composition The ’37 Act designates members of the Board of Retirement as follows:8

Composition of the OCERS Board of Retirement

Member Position Description

First County Treasurer who serves as Ex Officio member

Second Elected by OCERS General Membership

Third Elected by OCERS General Membership

Fourth Appointed by the Board of Supervisors

Fifth Appointed by the Board of Supervisors

Sixth Appointed by the Board of Supervisors

Seventh Elected by OCERS Safety Membership

Eighth Elected by OCERS Retired Membership

Ninth Appointed by the Board of Supervisors

Alternate Member The candidate in the election for the Seventh Member from the branch of service other than the successful candidate’s branch who received the most votes. (See example following this table.)

Example: If the person receiving the most votes in the election is from the Sheriff’s Department, the candidate from the Fire Department receiving the most votes would be the Alternate Member.

The alternate member sits with the Board during meetings and is permitted to make motions and participate in all deliberations, but the member’s ability to vote is limited. The alternate member becomes a voting member whenever the second, third, seventh, or eighth member is absent. In the case of an application for a disability retirement by a person from the same branch of service as the alternate member, the alternate member votes in lieu of the seventh member. Finally, in the event there is a vacancy in one of the elected offices, the alternate member fills such vacancy on a temporary basis until such time as the vacancy is filled on a permanent basis by an election held for such purpose.

8 Section 31520.1.

Part 2: Board Composition & Authority


The members appointed by the Board of Supervisors must be qualified electors of the County and cannot be connected with County government in any capacity.9 Being retired from the County does not constitute a disqualifying connection with County government because the retirement system is separate and independent from the County. Also, a member of the Board of Supervisors may sit on the OCERS Board as an appointed member.

Board Terms & Schedules The Board of Supervisors has adopted a policy providing for members of the Board of Supervisors to take turns in nominating a person to fill a Board of Retirement vacancy. OCERS staff is not aware of any instance when an individual Supervisor’s nomination was not confirmed by the Board of Supervisors.

Elected and appointed members of the Board serve for a fixed term of three (3) years. In the event a term has expired but a successor has not been appointed or elected, the member whose term expired continues in office until a successor has qualified.10 An appointed member cannot be removed by the Board of Supervisors, even for cause during his or her term of office. There is no recall procedure applicable to an elected member. Only a court of law can remove a Board member for cause. In some instances, however, a Board member’s term can terminate early by operation of law.

Such instances include the following:

An appointed member ceasing to be an elector of the County

Termination of County employment of the second, third, or seventh member

Conviction of a felony or any offense involving violation of official duties

Expiration of the term of office of a member of the Board of Supervisors

Taking Office Upon taking office for the first time, a Board member must file a disclosure form required by the state Fair Political Practices Commission. The form is commonly called Form 700. Forms can be filed electronically through the Clerk of the Board of Supervisors’ office or manually through OCERS. Board members are required to file an annual Form 700 for each year they serve on the Board. A leaving office filing is also required. OCERS staff can assist Board members with filing Form 700 upon request. For more information regarding conflicts and ethics, please see Part 4 of this handbook.

Board Authority With the few exceptions described below, the Board of Retirement serves as OCERS’s governing body responsible for management of the retirement system.11 The Board also has exclusive jurisdiction over all investments of the retirement system and matters dealing with the funding of retirement benefits (i.e., the actuarial valuation and the setting of contribution rates).

9 Ibid.

10 Section 1302.

11 Section 31520.

Part 2: Board Composition & Authority


Board Members are Public Officials As public officials, Board members are subject to a variety of laws and regulations dealing with conflicts of interest and other matters. (For a discussion of the OCERS Conflicts of Interests and Ethics Rules, see Part 4).

Board Policies All Board policies will be provided to Board members in electronic format on devices provided by OCERS. Board policies are subject to review a minimum of every three years. Generally, policies are first reviewed by the Governance Committee and then presented to the full Board as part of the Consent agenda. Once a new or revised policy has been adopted, it will be loaded into the Board Policy Electronic Binder.

While policies are automatically reviewed every three years, policies may be amended outside the three-year schedule as needed.


PART 3: FIDUCIARY DUTIES & RESPONSIBILITIES

Overview OCERS is a public pension system created and administered in accordance with the ‘37 Act, solely for the benefit of the active and retired members of OCERS and their survivors and beneficiaries. Its Board has “plenary authority and fiduciary responsibility for investment of moneys and administration of the system,” notwithstanding any other provisions of law or the California Constitution.12 Thus, members of the Board of Retirement are “fiduciaries.” A “fiduciary” is a person to whom property or power is entrusted for the benefit of another.

Duty of Loyalty As fiduciaries, Board members have special duties to the system, active members, retired members, survivors, and beneficiaries. Article XVI, Section 17 of the California Constitution as amended by Proposition 162, passed by the general electorate in 1992, is the source of many of these duties. Statutes and case law also describe the duties of Board members. These duties are discussed in this Section.

A Board’s “duty to its participants and their beneficiaries shall take precedence over any other duty.”13 As fiduciaries, Board members must act exclusively in the interest of the participants and their beneficiaries, as opposed to the Board member’s own interests or those of a third party. This duty includes the obligation to put aside the interests of the party responsible for a Board member’s appointment. It also includes the duty to be impartial towards differing interests of participants and beneficiaries.

Duty of Care As fiduciaries, Board members must act prudently. Board members are required to discharge their fiduciary duties with respect to the system “with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with these matters would use in the conduct of an enterprise of a like character and with like aims.”14

The standard is essentially the same as that applicable to ERISA trustees. In contrast to the law of private trusts, it imposes a higher standard of conduct than that of a “prudent amateur,” but does not go so far as to hold the Board member to a “prudent expert” standard. It is an objective standard. A prudent Board member behaves as the members of similar boards similarly situated would behave. Board members have the duty to familiarize themselves with the matters that come before the Board. For example, members sitting on the Board have a duty to familiarize themselves with the types of investments OCERS has made or may be advised by staff or outside consultants to make in the future.

12 California Constitution Article XVI, Section 17.

13 Cal. Const. Art. XVI, section 17(b).

14 Cal. Const. Art. XVI, section 17(c) and Section 31595(b).

Part 3: Fiduciary Duties & Responsibilities


Duty to Provide Benefits & Defray Expenses Board members “shall discharge their duties with respect to the system solely in the interest of, and for the exclusive purposes of providing benefits to, participants and their beneficiaries, minimizing employer contributions thereto, and defraying reasonable expenses of administering the system.”15 Board members must therefore be motivated only by the objectives of providing benefits, minimizing the County’s and other plan sponsors’ contributions, and the payment of reasonable expenses. Wasting money, for example, is imprudent. Determining the reasonableness of an expense depends on the type of asset involved and the skills of the Board members. A Board relatively inexperienced in investment matters may be acting prudently by spending more on investment advice than other boards whose members are more experienced in such matters.

Duty to Diversify Investments Members of the Board have a duty to diversify investments. Board members must “diversify the investments of the system so as to minimize the risk of loss and maximize the rate of return, unless under the circumstances it is clearly not prudent to do so.”16

The duty to diversify is based on the modern portfolio theory of investing, and is intended to minimize “uncompensated” risk. “Uncompensated” risk is risk taken for which there is no compensation offered, and is distinguished from “compensated” risk.17 For example, limiting investments to one or a small number of asset classes (for example, fixed income) is very risky,18 because if those asset classes perform poorly, the entire portfolio performs poorly. It is also an “uncompensated” risk, because there is no one paying OCERS for deciding to limit its investments to one or a small number of asset classes. OCERS could reduce this type of “uncompensated” risk simply by diversifying, that is, by investing in a larger number of asset classes (stocks, real estate, and alternative assets, for example, in addition to fixed income).19 The law requires OCERS to diversify unless it would clearly not be prudent to do so.

Because the constitutional and statutory provisions governing OCERS's investment activities are essentially identical to federal law governing ERISA plans, we may look to ERISA cases for guidance in determining whether the Board and the Board's investments advisors and managers acted consistently within their fiduciary responsibilities.

In Laborers National Pension Fund v. Northern Trust Quantitative Advisors, Inc., 173 F.3d 313, decided by the 5th Circuit U.S. Court of Appeals in 1999, the Court opined:

15 Cal. Const. Art. XVI, section 17(b) and Section 31595(a)

16 Cal. Const. Art. XVI, section 17(d) and Section 31595(c).

17 In a “compensated” risk scenario, a third party does offer compensation to OCERS to take risk. For example, government

bonds, traditionally a low-risk investment, pay a relatively low rate of interest. So-called junk bonds, because they are riskier, pay a higher rate of interest. The issuer of the junk bond is compensating OCERS for taking additional risk by offering the higher rate of interest.

18 A strategy described in laymen’s terms as “putting all your eggs in one basket.”

19 Again in laymen’s terms, “putting your eggs in many baskets.”



“In determining compliance with ERISA's prudent man standard, courts objectively assess whether the fiduciary, at the time of the transaction, utilized proper methods to investigate, evaluate and structure the investment; acted in a manner as would others familiar with such matters; and exercised independent judgment when making investment decisions. [ERISA's] test of prudence… is one of conduct, and not a test of the result of performance of the investment. The focus of the inquiry is how the fiduciary acted in his selection of the investment, and not whether his investments succeeded or failed. Thus, the appropriate inquiry is whether the individual trustees, at the time they engaged in the challenged transactions, employed the appropriate methods to investigate the merits of the investment and to structure the investment.” (Id. at 317)

To the same effect is the opinion of the 3rd Circuit U.S. Court of Appeals in In re Unisys Sav. Plan Litig., 173 F3d 145, decided on March 22, 1999. The Court noted that the prudence requirement focuses on whether “a fiduciary employed the appropriate methods to investigate and determine the merits of a particular investment.”

Evidence that fiduciaries deviated from standard industry practice can be compelling evidence that the fiduciaries failed to satisfy the standard of care imposed on them by law. For example, Bussian v. RJR Nabisco, Inc., decided August 14, 2000, by the 5th Circuit U.S. Court of Appeals, involved the collapse of Executive Life Insurance Co. The RJR pension fund trustees were sued for purchasing annuities from Executive Life. The Court returned the case to the trial court and provided guidance for deciding whether the plan fiduciaries complied with their fiduciary obligations:

“We note that a reasonable fact-finder could conclude from the evidence that application of the ‘normal’ investigation was not sufficient under the circumstances. Executive Life's investment strategy deviated significantly from the norm, was comparatively untested, and was the subject of debate among industry insiders.

Similarly, a reasonable fact-finder could conclude that Executive Life was not an appropriate choice based upon the investigation that RJR should have conducted. There is evidence that many voices in the industry had concerns about Executive Life's investment strategy — a strategy that was substantially different from that used by the industry and that had not stood the test of time. As such, there was more uncertainty (and more associated risk) with Executive Life than with the other candidates. A fact-finder could conclude on this basis alone that a prudent person would not select Executive Life's annuity over the annuities offered by those candidates.

The record supplies the fact-finder with considerable additional evidence that leads to the same conclusion [that a prudent person would not select Executive Life]. A fact-finder could conclude from evidence in the record that the vast majority of insurance companies at the time rejected the type of investment strategy that Executive Life had adopted.” (Slip Opinion at pp. 15-16. Emphasis added.)

In Hittle v. Santa Barbara County Employees Retirement Assoc. (1985) 39 Cal.3d 374, the California Supreme Court applied the standard of care applicable to trustees under California statutory trust law to a case involving the officers of the Santa Barbara County Employees Retirement Association. In that case, a member of the retirement system who was injured at work was not informed of his eligibility for



disability retirement. He withdrew his member contributions and terminated his membership in the system. The court held that officers of the retirement system had a fiduciary duty to inform the member that he could be eligible for disability retirement. The court ordered the retirement system to reinstate the member because officers of the retirement system did not fulfill their fiduciary duties to the member.

Based upon the Hittle decision’s reliance on statutory trust law, it seems likely the Court will also apply the "prudent investor rule," adopted by the California Legislature in 1995, and found at Probate Code Section 16047:

“A trustee shall invest and manage trust assets as a prudent investor would, by considering the purposes, terms, distribution requirements, and other circumstances of the trust. In satisfying this standard, the trustee shall exercise reasonable care, skill, and caution.”

“A trustee's investment and management decisions respecting individual assets and courses of action must be evaluated not in isolation, but in the context of the trust portfolio as a whole and as a part of an overall investment strategy having risk and return objectives reasonably suited to the trust.”

Applying California trust law, our Courts have held that a trustee must make a reasonable effort to ascertain facts relevant to the investment and management of trust assets and to exercise reasonable effort and diligence in making those investments. [See Prob. Code 16047(d).]

A trustee must also consider the trust's assets, purposes, and circumstances as a whole. In Christensen v. the Superior Court of Orange County, (1987) 193 Cal.App.3d 139, 143, the court said, “a trustee must prudently invest properly in light of ‘the general economic conditions and the anticipated needs of the ... beneficiaries .... [a] trustee has a general duty to maximize the trust assets consistent with safety and other relevant considerations.’” Further, the court in Wells Fargo Bank v. Wilton, (1982) 132 Cal.App.3d 496, 501 said, “As a general rule, a ‘trustee has not performed his duty merely because he has made an investment in a type of security which is authorized; he must use care and skill and caution in selecting the particular investment.’”

Therefore, to determine whether a trustee has satisfied the prudent investor rule, a court will look to the circumstances existing at the time the investment was made. As one legal guide states, “Whether an investment is proper depends upon the circumstances existing at the time it was made, rather than upon subsequent events.”20

The basis of analysis, therefore, is not how the trustee would handle personal affairs, but how another trustee would act in similar circumstances. Similarly, a trustee owes a duty of care with respect to the delegation of trust investment and management decisions.

In delegating investment authority to investment managers and consultants, the Board must exercise great care. Probate Code Section 16052(a), a provision of the California Uniform Prudent Investment Act, provides:

20 Rest. 2d Trusts Sec. 227 Comment.



“A trustee may delegate investment and management functions as prudent under the circumstances. The trustee shall exercise prudence in the following:

(1) Selecting an agent.

(2) Establishing the scope and terms of the delegation, consistent with the purposes and terms of the trust.

(3) Periodically reviewing the agent's overall performance and compliance with the terms of the delegation.”

For a helpful discussion on the issue of trustees delegating authority to external managers, see the quote below by J. Hartog, and P. Anderson, Fiduciary Delegation of Investment Power Under the California Uniform Prudent Investor Act-Part II:

“The trustee will be required to demonstrate that the selection of the investment manager was made according to reasonably objective criteria. In consequence, the trustee may need to retain an additional agent for assistance in determining the qualifications of persons wishing to manage the trust portfolio.”


PART 4: CONFLICTS OF INTEREST & ETHICS RULES

Overview The fiduciary character of ‘37 Act retirement systems, coupled with the fact that such systems are governmental entities, imposes obligations upon Board members and staff to avoid conflicts of interest and to conduct themselves in accordance with other ethical standards. The statutory requirements are set forth primarily in the Political Reform Act of 1974 (Cal. Gov. Code § 81000 et seq.), which includes the Ethics in Government Act of 1990 (Cal. Gov. Code § 89500 et seq.); California Government Code Sections 1090 through 1097; and California Government Code Sections 1125 through 1128. Other requirements and standards are set forth in court decisions, opinions of the California Attorney General, in the Retirement Law itself, and in OCERS’s own By Laws and Policies.

Conflicts of Interest The Political Reform Act prohibits a public official from participating in or influencing, directly or indirectly, any governmental decision in which he or she knows, or has reason to know, he or she has a financial interest. (Cal. Gov. Code § 87100.) Such a “financial interest” shall be found to exist if all of the following factors are satisfied:

It is reasonably foreseeable that the decision will have a financial effect;

The anticipated financial effect is upon a financial interest of the official;

The anticipated financial effect is “material”; and

The financial effect of the decision upon the official’s financial interest is distinguishable from the effect on the public generally.

Government Code Section 87103 also sets forth certain specific transactions or interests that automatically constitute a disqualifying financial interest, including business or real property investments of $1,000 or more; and businesses in which the official is a director, officer, partner, trustee, employee, or holds a management position.

It is not a conflict of interest for a member of the Board of Retirement who is a retiree of OCERS to vote on a cost-of-living increase for retirees. Under Fair Political Practices Commission Regulation 18702.1(c), a public official does not have to disqualify him or herself from a governmental decision if the decision only affects the salary, per diem, or reimbursement for expenses the official receives from a state or local government agency. In Opinion A-88-348 dated October 28, 1988, the Fair Political Practices Commission concluded that the regulation was applicable to a decision to grant cost-of-living increases because a pension is a form of deferred compensation and thus considered to be “salary.”

Government Code Sections 1090 through 1097 prohibit government officials from having a financial interest in contracts made by them in their official capacity. An exception exists for “remote” interests that are disclosed to the agency’s board, provided the official abstains from participating in or influencing the contracting decision.

Part 4: Conflicts of Interest & Ethics Rules


Incompatible Activities Government Code Sections 1125 through 1128 set forth standards for determining whether outside activities of a public agency officer or employee are “incompatible” with his or her public service. Section 1126 provides in part that a public agency officer or employee “shall not engage in any employment, activity, or enterprise for compensation which is inconsistent, incompatible, in conflict with, or inimical to his or her duties…or with the duties, functions, or responsibilities of his or her appointing power or the agency by which he or she is employed.”

Court cases and opinions of the California Attorney General have confirmed this principle. As the Attorney General has stated:

“The time honored maxim, that no man can serve two masters, supports the mandate of sound policy that a ‘public officer is impliedly bound to exercise the powers conferred on him with disinterested skill, zeal, and diligence. . . .’ [Citation Omitted] Fidelity in public office must be maintained, and the law does not permit a public officer to place himself in a position in which he might be tempted by his own private interests to disregard the interests of the public.” [Citation Omitted] 48 Cal. Ops. Atty. Gen. 80, 84 (1966).

Acceptance of Gifts Government Code Section 89503(a), which is part of the Ethics in Government Act of 1990, prohibits designated public officials, including those who manage public investments (see Cal. Gov. Code § 87200), from accepting gifts from any single source in any calendar year with a total value of more than four hundred forty dollars ($440) for 2013-2014. The dollar limit on gifts is adjusted in odd-numbered years for inflation. This provision applies to all members of the Board.

Section 89503(c), which applies to “designated” employees and officials of governmental agencies, including members of the Board of Retirement, prohibits the acceptance of gifts over four hundred forty dollars ($440) for 2013-2014 in any calendar year from a single source, if he or she would be required to report the gift on a statement of economic interests. The dollar limit on gifts is adjusted in odd-numbered years for inflation.

Members of the Board and OCERS employees must be careful in this area since food and drink purchases for a Board member are considered gifts. Likewise, conference tuition waivers and travel are gifts. Board members are always encouraged to consult staff when questions arise as to whether certain items or services are gifts. If a Board member is invited to a conference that has a tuition requirement, he or she should contact the CEO’s office to assist with determining the usefulness of the conference and to set up travel and tuition payment pursuant to the OCERS Travel Policy.

There are a number of definitions and exceptions that apply to the limitations on the acceptance of gifts that are set forth in the regulations adopted by the Fair Political Practices Commission. The FPPC has also published a fact sheet on gifts, honoraria and travel that helps to explain these complicated rules. You can access these publications at the FPPC website located at www.fppc.ca.gov.

Prohibition on Accepting Honoraria The rules on accepting honoraria differ, as with the rules relating to gifts, depending upon whether the official is a member of the Board or an OCERS staff member. Members of the Board and the Chief Investment Officer are deemed “officials who manage public investments,” and are prohibited from

http://www.fppc.ca.gov/

Part 4: Conflicts of Interest & Ethics Rules


accepting honoraria payments from any source. (Cal. Gov. Code § 89502(a)). Staff members listed in OCERS’s Conflict of Interest Code are “designated” officials, and may not accept honoraria payments from any source if the receipt of income or gifts from that source is required to be disclosed on a statement of economic interests.

The definition of what constitutes an honorarium payment is set forth at Government Code Section 89501, and in the Fair Political Practices Commission regulations. (See also the FPPC fact sheet on gifts, honoraria, and travel.)

Disclosure Requirements The Political Reform Act requires a public official to file a Statement of Financial interest disclosing his or her personal economic interests in stocks, corporations, partnerships, real estate, loans, and other business entities. These statements are commonly known as Form 700. Members of the Board and the Chief Investment Officer must file an initial “Assuming Office Statement” within ten days after assuming office. Staff members listed in OCERS’s Conflict of Interest Code, must file such a statement within thirty days after assuming office. Each official must also file subsequent annual statements, and also a “Leaving Office Statement” within thirty days after leaving office. (Cal. Gov. Code § 87200 – 87207, 87302.)

In addition to Form 700, the OCERS Board requires that its members and executive staff file an OCERS Annual Disclosure Form. This form certifies that the Board member or staff person does not have business relationships that conflict with his or her duties as an OCERS Board or staff member.


PART 5: OPEN MEETING LAWS

Overview of the Brown Act The Ralph M. Brown Act (“Brown Act”), found at Government Code Sections 54950-54962, provides that public commissions, boards, councils and other public agencies in California must conduct their business in public unless the law provides otherwise. The Brown Act covers both deliberation and action.

OCERS’ Board is covered by the Brown Act. All permanent committees and subcommittees established by the Board are also covered by the Brown Act.21 Ad hoc committees composed solely of members constituting less than a quorum are not covered by the Brown Act.

The Brown Act applies to all “meetings.” The term “meeting” is defined broadly to include “any congregation of a majority of the members of [the Board] at the same time and place to hear, discuss, or deliberate upon any item that is within the subject matter jurisdiction of [the Board or OCERS].”22 It is a violation of the Brown Act to conduct a telephone poll of Board members’ opinions, or to use any other form of communication to develop a collective concurrence as to action to be taken. The same prohibition applies to developing consensus through a series of communications such as an email string or conversation.

Agendas of public meetings, and materials distributed to a majority of the Board members in connection with a matter subject to discussion or consideration at a Board meeting, are disclosable public records, unless otherwise exempt from public disclosure under the California Public Records Act, Government Code Sections 6250 et seq.23

Agenda Posting For regular meetings, the Board or its designee must post an agenda at least 72 hours prior to the meeting containing a brief general description of each item of business to be transacted or discussed at the meeting. For special meetings, the agenda must be posted at least 24 hours prior to the meeting.

Closed Sessions Closed sessions, sometimes called “executive sessions,” are private meetings of the Board where the Board’s business may be transacted without public attendance. Before holding a closed session, the Board must state the general reason(s) for the session, and/or the legal authority under which the closed session is being held.24 The reason for the closed session and legal authority are usually posted on the meeting agenda.

The scope of the closed session is limited to the matters covered in the Board’s statement of reasons for the meeting. After the closed session, the Board must reconvene in open session and publicly report any action taken in closed session.

21 Section 54952.3.

22 Section 54952.2.

23 Section 54957.5.

24 Section 54957.7.

Part 5: Open Meeting Laws


The Brown Act describes many purposes for which closed sessions may be held, including personnel matters and the discussion of litigation with legal counsel.

Open Meetings All meetings of the Boards must be open to the public unless an exception permitting closed sessions applies.25 Secret ballots are prohibited.26 A member of the public cannot be required, as a condition of attendance, to register his or her name, to provide other information, to complete a questionnaire, or otherwise to fulfill any condition for attendance.27 Any member of the public may tape record or film the meeting unless the Board makes a finding it would disrupt the proceedings.28

Any member of the public may address the Board on any item on the agenda, and this must be permitted before the Board takes action on the item. In addition, the Board must include a “public comment” item on the agenda, permitting a member of the public to address the Board on any item of interest to the public that is within OCERS’ jurisdiction.29

While members of the public must be permitted to address the Board, the Board may adopt rules for the orderly conduct of meetings. OCERS generally follows Roberts Rules of Order in its meetings. The meeting chair is responsible for maintaining order and ensuring progression of meetings.

Brown Act Violations A Board member may be convicted of a misdemeanor if he or she attends a meeting where action is taken in violation of the Brown Act, or if the member intends to deprive the public of information which the member knows, or has reason to know, the public is entitled to have disclosed. There is no criminal penalty, however, if the meeting consists of deliberation only, and no action is taken.

Preventing & Redressing Brown Act Violations The district attorney or any “interested person” may commence legal action to stop violations or threatened violations of the Brown Act by the Board.30 They may also demand that the Board correct or cure actions they believe to have been taken in violation of the Brown Act.31 If the Board fails to cure or correct such action, or determines not to cure or correct such action, the interested person may petition the courts to declare such action null and void. Courts may award court costs and attorneys’ fees to plaintiffs where it is found that the Board has violated the Brown Act. The costs and fees are paid by OCERS, and do not become the personal liability of any Board member.

25 Section 54953.

26 Ibid.

27 Section 54953.3.

28 Section 54953.5.

29 Section 54954.3.

30 Section 54960.

31 Section 54960.1.


PART 6: COMMUNICATIONS

OCERS’ Communications Policy The OCERS Board adopted the Board of Retirement Communications Policy on November 18, 2002. This policy is reviewed and updated at least every three years. The last review and update took place on March 17, 2014. The policy provides guidelines for communications with various groups.

Communications between Board Members Communications between Board members are governed by the Brown Act.

The Brown Act prohibits Board members from participating in a series of communications one at a time or in a group that in total constitutes a quorum of the Board or Committee for the purpose of developing a concurrence as to action to be taken. This prohibition includes the use of intermediaries and electronic devices that would constitute a serial or secret meeting.32

The Communications Policy further states, “A member of the Board shall disclose information in his or her possession pertinent to the affairs of OCERS to the entire Board in a timely manner.” Therefore, Board members should disclose all relevant information to the full Board and should refrain from disclosing information only to individual members or small groups of members.

In order to facilitate the requirements of the policy, OCERS executive staff includes a Board Communications section in each Board Meeting Agenda. Board members are encouraged to submit articles or links to articles to executive staff for inclusion in the Board Communications section of the agenda.

During meetings of the Board and its committees, Board members are required to communicate in a straightforward, constructive manner with due respect and professionalism.

Communications with Members, Plan Sponsors, and Stakeholders In order to reduce the risk of miscommunication and potential liability to plan sponsors, active members, and retirees, Board members should not give specific advice, counsel, or education about technicalities of OCERS plan provisions, policies, or processes. The statutes, policies, and procedures that OCERS follows can be quite complex and open to interpretation. In many cases, the OCERS legal staff has provided opinions regarding complex issues to assist staff in advising plan sponsors and members.

When a Board member feels that specific advice, counsel, or education is needed, the Board member should refer the inquiry to the CEO’s office or to an appropriate OCERS staff member. The CEO or a staff member will inform the Board member when and how the matter was resolved.

Board members should not disclose any confidential communication received orally or in writing during a closed session meeting of the Board or committee. Likewise, Board members should not disclose any oral or written communications received from internal or external legal counsel when those communications have been identified as confidential.

32 Section 54953.

Part 6: Communications


Communications with OCERS Management and Staff Board members who have concerns or questions regarding any aspect of OCERS operations should direct those questions or concerns to the CEO or other executive staff. The CEO or executive staff will then assign the appropriate staff to address the questions or concerns.

If a Board member wishes to obtain information that will involve substantial expenditure of staff time, the Board member should take steps to ensure that the request is consistent with the roles and responsibilities of the Board. These requests should be made formally at a Board or committee meeting or be directed to the CEO. The CEO will then make sure that the requested information is made available to all Board members.

If a Board member obtains any information pertinent to the affairs and operations of OCERS, that Board member should communicate that information to the CEO in a timely manner. The CEO will then take steps necessary to communicate relevant and pertinent information to the entire Board in a timely manner.

Communications with the Public and Media OCERS recognizes that Board members are individuals who enjoy First Amendment rights under the United States Constitution. However, issues may arise when individual Board members communicate conflicting information to the public and media. Therefore, OCERS has adopted general guidelines for communication with the public and media.

First, the purpose of communication to the public and media should be consistent with the Board member’s sole and exclusive fiduciary duty to represent the interests of all plan members.

Second, Board members and OCERS management are expected to respect the decisions and policies of the Board in external communications even if the Board or staff member opposed the decision or policy during Board deliberations.

Board members shall not disclose confidential communications received orally or in writing during closed session meetings of the Board or committees. Also, Board members shall not disclose information or communications received from internal or external legal staff when those communications or information have been identified as confidential. If a Board member has questions regarding disclosure of any of these materials, those questions should be directed to the CEO or senior legal staff.

Individual Board members should not speak for the Board as a whole unless they have been specifically authorized to do so by the Board.

In communications with the public or media, Board members are expected to disclose when they are not representing an approved position of the Board of Retirement or are not speaking in their capacity as a member of the Board of Retirement.

If the situation requires a spokesperson from the Board, the Board Chair or his or her designee will act as spokesperson on an issue by issue basis. The spokesperson should request that any questions posed by the public or media be put in writing.

Part 6: Communications


If approached for an interview concerning OCERS, members of the Board should refrain from making any unilateral commitments on behalf of the Board or OCERS.

All materials disclosed to the public or media for publication should be reviewed by the CEO and legal counsel prior to being submitted for publication or presentation in order to ensure accuracy and mitigate risk of liability to the Board, individual Board members, and OCERS.


PART 7: SYSTEM FUNDING

Funding Sources Benefits provided to OCERS’s members and their beneficiaries are funded from three sources:

Member contributions made by active employees

Employer contributions

Investment earnings

Actuarial Valuation Government Code Section 31453 requires OCERS to engage an enrolled actuary to perform an actuarial valuation at least every three years. Based on such valuation, the Board is required to recommend to the Board of Supervisors changes in the rates of contributions for members and the County to assure that the system is properly funded.

Actuarial valuations are performed annually to monitor OCERS’s funded status. Triennially, an investigation is made of the appropriateness of all economic and non-economic assumptions.

Contribution Rates Government Code Section 31454 requires the Board of Supervisors to adjust contribution rates in accordance with the recommendations of the Board of Retirement not later than 90 days after the beginning of the immediately succeeding fiscal year.

Funding Goal The OCERS Board is committed to fully funding all retirement benefits for all members of the system. However, market downturns and unforeseen circumstances cause unfunded liabilities to arise. As of December 2012, OCERS was approximately 63% funded. This means OCERS had sufficient funds to pay approximately 63% of all of its current and future liabilities as of that date. The unfunded actuarially accrued liability (“UAAL”) stood at approximately $5.6 billion as of that date.

At its meeting on November 18, 2013, the Board voted to adopt a 20 year re-amortization of all past UAAL. Therefore, the $5.6 billion UAAL as of December 2012 is projected to be paid off within 20 years of January 1, 2014. The Board also voted to adopt a 20 years amortization period for future unfunded liabilities. This commitment to full funding of OCERS is embodied in the Actuarial Funding Policy adopted by the Board at its January 21, 2014 meeting.


PART 8: INVESTMENTS

Investment Authority Prior to 1984, Article 16, section 17 of the California Constitution restricted the type and amount of securities a California public pension fund could invest in. In 1984, the voters passed Proposition 21, which amended Article 16, section 17 to enable the California Legislature to authorize public pension systems to invest in any form or type of investment, subject to the conditions below:

Recognition that the assets of the retirement system are trust funds.

The assets are held for the provision of benefits and reasonable administrative expenses of the system.

The fiduciaries of the system discharge their duties solely with the objective of providing benefits, minimizing employer contributions and the payment of the system’s administrative expenses.

The fiduciaries carry out their duties “with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with these matters would use in the conduct of an enterprise of a like character and with like aims.”

Diversification of investments minimizes losses and maximizes gains.

The Legislature exercised the authority granted under Proposition 21 by adding Government Code Sections 31594 and 31595 to the ‘37 Act to read:

Section 31594: It is the intent of the Legislature, consistent with the mandate of the voters in passing Proposition 21 at the June 5, 1984, Primary Election, to allow the board of any retirement system governed by this chapter to invest in any form or type of investment deemed prudent by the board pursuant to the requirements of Section 31595. It is also the intent of the Legislature to repeal, or amend as appropriate, certain statutory provisions, whether substantive or procedural in nature, that restrict the form, type, or amount of investments that would otherwise be considered prudent under the terms of that section. This will increase the flexibility and range of investment choice available to these retirement systems, while ensuring protection of the interest of their beneficiaries.

Section 31595: The board has exclusive control of the investment of the employees’ retirement fund. The assets of a public pension or retirement system are trust funds and shall be held for the exclusive purposes of providing benefits to participants in the pension or retirement system and their beneficiaries and defraying reasonable expenses of administering the system. Except as otherwise expressly restricted by the California Constitution and by law, the board may, at its discretion, invest, or delegate the authority to invest, the assets of the fund through the purchase, holding, or sale of any form or type of investment, financial instrument, or financial transaction when prudent in the informed opinion of the board.

The board and its officers and employees shall discharge their duties with respect to the system:

Part 8: Investments


Solely in the interest of, and for the exclusive purposes of providing benefits to, participants and their beneficiaries, minimizing employer contributions thereto, and defraying reasonable expenses of administering the system.

With the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with these matters would use in the conduct of an enterprise of a like character and with like aims.

Shall diversify the investments of the system so as to minimize the risk of loss and to maximize the rate of return, unless under the circumstances it is clearly prudent not to do so.

Delegation of Investment Authority As noted previously, Section 31595 allows the board to delegate its authority to invest. Such delegation must be done with care, skill, prudence and diligence regarding:

The selection of the agent to whom authority is delegated;

The terms of the delegation, for example, how much authority is delegated, and what recourse is available if the agent exceeds its authority or acts irresponsibly; and

Monitoring the agent’s compliance with its delegated authority. The level of “care, skill, prudence and diligence” to be exercised in delegating authority is that which under the circumstances then prevailing, a prudent person acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.33

The assets of OCERS are managed exclusively by external investment management firms. Additional information concerning OCERS’s investment policies and portfolio is included in the “Investment Section” from OCERS’s Annual Financial Report, which can be found on www.ocers.com.

Investment Consultants In order to accomplish its mandate to diversify the portfolio and to provide information and direction regarding investments, the Board employs investment consultants. The Board currently employs three investment consultants: a general consultant, a real estate consultant, and a hedge fund consultant. These consultants regularly advise staff regarding the suitability and performance of managers and periodically attend Investment Committee meetings to advise the Board regarding final selection of managers. The general consultant also assists the Board in devising its asset allocation. OCERS also employs a risk management consultant who reviews the asset allocation and advises the Board on risk issues.

33 Section 31595.

http://www.ocers.com/

Part 8: Investments


Investment Expenses Section 31596.1 provides that the expenses of investing are to be borne solely by the system, and sets forth the following list of expenses which are not costs of administration, but rather a reduction in earnings from investments or a charge against the assets of the system, as determined by the Board:

Costs, approved by the board, of actuarial valuations and services;

The compensation to the bank or trust company performing custodial services;

Loan servicing costs, when investments are made in deeds of trust and mortgages;

Fees to investment counsel for consulting or management services in connection with the administration of the board’s investment program; and

Compensation to attorneys for services rendered or legal representation provided.


PART 9: BENEFITS

OCERS Plan Summary OCERS members are divided into two (2) classes: general members and safety members. Safety members include employees whose principal duties consist of active law enforcement, including probation, and active fire suppression. All other members of OCERS are general members.

OCERS administers thirteen (13) general member plans: Plans A, B, G, H, I, J, M, N, O, P, S, T, and U, and seven (7) safety member plans: Plans C, D, E, F, Q, R, and V. All of these plans are “defined benefit” plans. Under a defined benefit plan, retirement benefits are based on years of service, age, and compensation, and are defined at the time membership commences.

All OCERS plans are “contributory” plans. Members make monthly contributions to OCERS to partly finance their retirement benefits. Also financing the payment of benefits are contributions made by the employer and investment earnings of the retirement fund.

Membership in a particular plan is determined by the date of entry into OCERS, the employer, and the member’s status (i.e. safety or general). Generally, new employees become members of OCERS on the first day of the month following their hire date. Membership in OCERS is required for all regular full-time employees and part-time employees of participating employers (referred to as Plan Sponsors) who work 20 hours or more per week. Employees who work less than 20 hours per week and extra-help employees are excluded from membership.

Effective January 1, 1990, Section 415 of the Internal Revenue Code set a limit on the maximum retirement benefit an employee may receive from a qualified Plan. Section 415 limits apply to employees hired after January 1, 1990, and to benefit enhancements taking effective after January 1, 1990. To mitigate the federal limit imposed on state approved benefit levels, the Board of Supervisors adopted a replacement benefit plan that allows for direct payments from employers when a retirement benefit exceeds the Section 415 limits.

On January 1, 2013, changes brought by the passage of the Public Employee Pension Reform Act (“PEPRA”) were instituted. In general, these changes lowered benefits and raised retirement eligibility age for employees who became OCERS members on or after January 1, 2013. PEPRA also requires more cost sharing by all OCERS members. PEPRA limits pensionable compensation to base wages and compensation due to special skills and shifts and takes away the section 415 replacement benefit for members hired after January 1, 2013. Anyone who has specific questions or concerns about how PEPRA will affect member benefits should contact OCERS staff to discuss these concerns.

The official OCERS Summary Plan Description for each plan is available on the OCERS website.

Service Retirement A member’s benefit formula and retirement age is set by the employer using formulas contained in various sections of the ’37 Act. For example, a general member who is an employee of the county hired prior to the effective date of PEPRA may retire at age fifty or older if he or she has retirement credit for

Part 9: Benefits


ten or more years of qualifying service; or at any age with retirement credit of thirty or more years of qualifying service; or at age seventy or older, regardless of service credit.34

A safety member hired before the PEPRA effective date may retire at age fifty or older if he or she has retirement credit for ten or more years of qualifying service; or at any age with retirement credit of twenty or more years of qualifying service.35 Unlike some other counties, Orange County has not adopted a mandatory retirement age for safety members.

General members hired under PEPRA have a choice of two age / benefit formulas – 1.62% at 65 and 2.5% at 67. In addition to the different retirement ages, the 1.62% benefit includes a defined contributions element that is not administered by OCERS. Safety members hired under PEPRA receive a 2.7% at 57 benefit formula.

Public service (service with certain other public agencies) for which a member may be eligible to receive credit may not be used to meet the minimum requirements for retirement.36

A member who has elected deferred retirement may retire with a minimum of five years of service at any time at which he or she could have retired had he or she remained in County service in a full-time position, but not later than the first day of the month following that in which he or she attains the applicable compulsory retirement age, if any.37

Upon retirement, a retiree’s allowance consists of three factors: (1) a service retirement annuity, 2) a current service pension, and (3) prior service pension. A “service retirement annuity” is an annuity which is the actuarial equivalent of the member’s accumulated contributions at the time of his or her retirement. A member’s “current service pension” is a pension purchased by the contributions of the county or district, equal to that portion of the annuity purchased by the accumulated normal contributions of the member. “Prior service pension” is an additional pension for members purchased by contributions of the county or district, multiplied by the number of years of prior service credited.38

In general, a member retired for service or disability may not be paid for any services rendered to the county (or district) after the date of his or her retirement. There are several exceptions to this rule: (1) Any person who has retired may be employed in a position requiring special skills or knowledge for a period of time not to exceed one hundred twenty working days or nine hundred sixty hours whichever is greater per fiscal year, (2) Services are rendered as an employee of an independent contractor under a bona fide contract for services and not directly to the OCERS covered employer, and (3) A retired member may receive compensation for services on the retirement board, investment board, or as a juror, an election officer, or temporarily as a judge when assigned by the Chairman of the Judicial

34 Section 31672.

35 Section 31663.25.

36 Section 31480.

37 Section 31700.

38 Sections 31673, 31674, 31675, and 31676.

Part 9: Benefits


Council, as well as compensation for services if he or she is subsequently elected to county office after retirement.39

Deferred retirement is governed by Article 9, commencing with Section 31700 of the Government Code. It allows a member to terminate employment, leave funds on deposit with the system, and receive a retirement allowance at a later time when the member would have been eligible to retire had the member remained in employment.

Generally, to be eligible for deferred retirement, the member must leave accumulated contributions on deposit and make an election for deferred retirement within one hundred eighty days after leaving County service.40 If a member leaves OCERS covered service and fails to make an election, the member is deemed deferred if:

The member’s contributions remain in the system.41

The member applies for and receives a retirement allowance at any time after the member could have retired had he or she remained in County service, but not later than the compulsory retirement age.42

The member’s retirement allowance is calculated based on the ‘37 Act law as it exists when the retirement allowance commences.43

A person on deferred retirement remains a member of the ‘37 Act System.44

A member on deferred retirement wishes to take one of the optional allowances, for which six months prior notice must be given.45

A member on deferred retirement may cancel or rescind the deferred retirement status and withdraw accumulated contributions at any time before the effective date of retirement.46

39 Sections 31680, 31680.1, 31680.2 and 31680.6.

40 Section 31700.

41 Section 31700.

42 Sections 31700 and 31703.

43 Section 31705.

44 Section 31470.

45 Section 31704.

46 Section 31701.

Part 9: Benefits


Disability Retirement A member of OCERS is entitled to a disability retirement if the Board of Retirement determines the member is permanently incapacitated from the performance of his or her job duties as a result of:

A service-connected injury or disease, regardless of the length of service, or

Any injury or disease, whether or not service-connected, when the member has completed five (5) years of service.47

It is the exclusive domain of the Board to determine whether a member is permanently incapacitated and whether the incapacity is service connected.48 The disability retirement application process begins when a member files an Application for Disability Retirement. OCERS staff arranges an appointment with a physician in the area of specialty for the injury or illness claimed by the member. Staff gathers the medical records for review by the OCERS panel physician, who then prepares a report. The report is then evaluated by staff and presented to the Board with a recommendation. The Board then votes on the staff recommendation.

If a member disagrees with the Board’s initial decision, the member can appeal the decision to an administrative hearing. Administrative hearings are conducted by experienced attorneys who are instructed to remain neutral. After testimony, review of the evidence, and review of briefs and arguments by the parties, the hearing officer provides a recommendation to the Board. The Board then votes to accept the recommendation or take other action. If the member disagrees with the Board’s final action, the member has the right to appeal the decision to the superior court. While the process can be quite lengthy, it does afford a member the best chance to provide evidence and argument in support of his or her case.

A member who receives a service-connected disability retirement will receive either 50% of his or her salary or what they would have received for service retirement, whichever is higher. A service-connected disability retirement also receives favorable tax treatment in that the service-connected disability retirement allowance is tax free up to 50% of the member’s final annual salary. A person who receives a non-service-connected disability retirement will receive at least one-third of his or her salary or the amount he or she would receive for service retirement.

Reciprocity In order to encourage career public service, a system of reciprocal benefits among certain public agencies has been established.49 Reciprocity is designed to protect a member’s earned retirement benefits when the member transfers from one public agency to another.

47 Section 31720.

48 Section 31725; Flaherty v. Board of Retirement (1961) 198 Cal.App.2d 397, 407.

49 Section 31830, et seq.

Part 9: Benefits


Reciprocity exists between OCERS and the other 19 county retirement systems in California governed by the ‘37 Act. OCERS also has reciprocity with CalPERS (California Public Employees Retirement System) and its contracting agencies.50

In order for members to receive reciprocal benefits, members must leave one system and enter another system within 180 days.51 The member must retire from both systems concurrently, or be legally unable to retire from both systems, and must have funds on deposit with both systems.52

Reciprocal service counts toward meeting the minimum service requirements for retirement.53 For purposes of contribution rates, the age at entry for a member who enters a retirement system within 90 days of last rendering service shall be the age at entry into the first system.54

Survivor Benefits OCERS members may designate a beneficiary to receive benefits upon the member’s death. Survivor benefits are available to all members who die before or after retirement. Generally, a Survivor benefit will be paid to a qualified surviving spouse, surviving domestic partner, or surviving minor child.55

To be eligible to receive post-retirement survivor benefits, a survivor other than a qualified surviving spouse, surviving domestic partner, or minor child must be designated as a beneficiary.56

To be eligible to receive pre-retirement survivor benefits, a survivor other than a surviving spouse or minor children must be designated as a beneficiary.57 In the absence of a surviving spouse, a minor child, or other named beneficiary, the member’s estate is entitled to receive a death benefit.58 Survivor benefits are paid to surviving spouses for life and to minor children until age 18, or age 22 if the child remains unmarried and enrolled as a full-time student in an accredited school.59

Cost of Living Adjustments (COLA) Article 16.5 of the ‘37 Act, commencing with Section 31870, governs cost-of-living adjustments for retired members.

50 Sections 31830, 31831.1 and 31831.2.

51 Sections 31831 and 31840.1.

52 Section 31815.

53 Sections 31836 and 31836.1.

54 Section 31833.

55 Sections 31760.1, 31760.2, 31780, and 31780.2.

56 Sections 31761 through 31764 allow a member to designate his or her estate or a beneficiary with “an insurable interest” in

the life of the member as beneficiary. Under these “Optional settlements,” the member takes a reduced amount during his or her lifetime in order to provide a continuing benefit to the estate or named beneficiary.

57 Sections 31765, 31765.1, 31780, 31781.1 and 31786.

58 Section 31780.

59 Sections 31760.1, 31781.1, and 31781.2.

Part 9: Benefits


Each year the Consumer Price Index (CPI) is reviewed by the Board of Retirement to determine whether a cost-of-living adjustment may be granted.

The Board is required to adjust allowances on April 1st of each year to approximate to the nearest one-half of one percent the percentage of annual increase or decrease in the CPI in the Los Angeles-Anaheim-Riverside area. Cost-of-living adjustments are limited to a maximum of 3% for all members.60 Other ’37 Act systems may offer different COLA amounts based upon the statute they adopt. Other systems may also use different measuring periods for the CPI. This can cause different COLA awards between systems for a certain year. However, the differences are usually balanced as the CPI for different periods adjusts.

In order to capture CPI changes that are over OCERS 3% COLA, members have a “COLA bank.” The COLA bank increases by the amount of CPI over 3%. Therefore, if the CPI increase is 4% for the measuring period, members will receive a 3% increase in their allowances plus a 1% credit to their COLA banks. When the CPI is below 3%, OCERS will use any credit in the COLA bank to increase allowances up to 3%. Therefore, if a member has 1% in his or her COLA bank and the CPI is 2.5%, OCERS will take .5% from the COLA bank and add that amount to the CPI so that member receives a full 3% increase and has .5% left in his or her bank.

On some occasions, the CPI is negative. In those cases, OCERS will still pull from a member’s COLA bank to award a maximum of 3% COLA if the member’s COLA bank has sufficient credit. For example, if the COLA bank has 4% credit and the CPI is -1%, OCERS would exhaust the COLA bank and award a 3% COLA increase. The member’s bank would then be at 0%. If the COLA bank does not have sufficient credit to cover the negative CPI, OCERS will set the bank at 0%, and the member will not receive an increase. If the member was previously awarded COLA, and there is a negative CPI, and the member does not have sufficient credit to cover the negative CPI, OCERS will reduce the prior COLA award. However, OCERS will not reduce the COLA bank below 0% or decrease the member’s allowance below his or her original base amount.

The Board of Retirement has implemented a cost-of-living benefit known as the Supplemental Targeted Adjustment for Retirees (STAR) Program, pursuant to Section 31874.3(b). The STAR Program seeks to restore long-term retirees’ lost purchasing power to a level equal to 80% of the purchasing power held when their benefits commenced. Cost-of-living adjustments under the STAR Program can only be made so long as there are sufficient excess earnings to fund them.

60 Section 31870.1.


PART 10: OCERS MEMBERSHIP IN ORGANIZATIONS

Overview To ensure that individual Board members and staff receive current benefit, financial and policy information, OCERS has membership or significant participation in many organizations. Some are listed below:

AICPA American Institute of CPAs – (www.aicpa.org)

Founded in 1887, the AICPA represents the CPA profession nationally regarding rule-making and standard-setting, and serves as an advocate before legislative bodies, public interest groups and other professional organizations. The AICPA develops standards for audits of private companies and other services by CPAs; provides educational guidance materials to its members; develops and grades the Uniform CPA Examination; and monitors and enforces compliance with the profession’s technical and ethical standards.

APPFA Association of Public Pension Fund Auditors – (www.appfa.org)

A non-profit organization that has 44 member organizations, including the largest public employee retirement systems in 25 states and Canada. This organization serves to unify and encourage cooperation among public pension fund auditors, to provide comprehensive professional development opportunities on pension related topics, to promote and maintain high professional standards for internal auditors of public retirement systems, and to encourage and facilitate research, publication, and dissemination of information among the membership.

CalAPRS California Association of Public Retirement Systems – (www.calaprs.org)

This is an association that sponsors educational forums for sharing information and exchanging ideas among trustees and staff of California public retirement systems to enhance their ability to administer public pension plan benefits and manage investments consistent with their fiduciary responsibility.

CalCPA California Society of Certified Public Accountants – (www.calcpa.org)

CalCPA provides education and advocacy for over 40,000 CPAs in California. Its stated mission is “To increase the value and promote the integrity of the CPA profession, contribute to the success of our members, and strengthen client, employer, public and government trust in CalCPA member advice, work products and opinions.”

CII Council of Institutional Investors – (www.cii.org)

This is an organization of large public, labor, and corporate pension funds which seeks to address investment issues that affect the size or security of plan assets. Its objectives are to encourage member

http://www.aicpa.org/

http://www.appfa.org/

http://www.calaprs.org/

http://www.calcpa.org/

http://www.cii.org/

Part 10: OCERS Membership in Organizations


funds, as major shareholders, to take an active role in protecting plan assets and to help members increase return on their investments as part of their fiduciary obligations.

GFOA Government Finance Officers Association – (www.gfoa.org)

This is a professional organization of state and local finance officers in the United States and Canada dedicated to the sound management of government financial resources. Its many programs include over 40 national training seminars, publications, periodicals, and an annual Conference.

IFEBP International Foundation of Employee Benefit Plans – (www.ifebp.org)

This is a non-profit organization serving the employee benefit field. The foundation addresses all aspects of benefit-related issues including contemporary issues influencing the administration and design of benefit plans. The Foundation offers annually over 50 educational programs covering a wide range of topics to meet the needs of benefit professionals.

ILPA Institutional Limited Partners Association – (www.ilpa.org)

The Institutional Limited Partners Association is the global, member-driven organization dedicated to advancing the interests of private equity Limited Partners through industry-leading education programs, independent research, best practices, networking opportunities and global collaborations. Initially founded as an informal networking group, the ILPA is a voluntary association funded by its members. The ILPA membership has grown to include over 250 member organizations from around the world representing over US $1 trillion of private assets globally.

IPMA-HR International Public Management Association for Human Resources – (www.ipma-hr.org)

The International Public Management Association for Human Resources is an organization that represents the interests of human resource professionals at the Federal, State and Local levels of government. IPMA-HR members include all levels of public sector HR professionals. Its goal is to provide information and assistance to help HR professionals increase their job performance and overall agency function by providing cost effective products, services and educational opportunities. The Association is divided into four regions, which are made up of the Association's Chapters, as well as non-Chapter members residing within the regional boundaries. The regions include the Central Region, the Eastern Region, the Southern Region, and the Western Region. All regions host an annual conference. There are approximately 50 Chapters, and each maintain their own dues structure and member benefits packages. Chapter members are encouraged to be members of the national IPMA-HR.

ISCEBS International Society of Certified Employee Benefit Specialists – (www.iscebs.org)

The International Society of Certified Employee Benefit Specialists (ISCEBS) is the organization that provides for the Certified Employee Benefit Specialist (CEBS) designation. This membership organization is for those who have earned the CEBS, Group Benefits Associate (GBA), Retirement Plans Associate

http://www.gfoa.org/

http://www.ifebp.org/

http://www.ilpa.org/

http://www.ipma-hr.org/

http://www.iscebs.org/



(RPA) and Compensation Management Specialist (CMS) designations. Members have access to a variety of educational resources and networking opportunities that can broaden their knowledge and enhance their careers. Since 1981, the Society has provided educational programs, information and networking resources, publications, and other services to a diverse group of benefits professionals.

NAPPA National Association of Public Pension Attorneys – (www.nappa.org)

This organization consists exclusively of attorneys who are employed by or provide advice to public pension systems. Its purpose is to provide educational opportunities and informational resources for its attorney members. During its annual conference, OCERS attorneys are able to address legal issues common to other jurisdictions, and to exchange ideas and experiences regarding those legal issues.

NASRA National Association of State Retirement Administrators – (www.nasra.org)

NASRA members are the administrators of the state retirement systems for the 50 American states, the District of Columbia, and the territories of American Samoa, Guam, Puerto Rico and the Virgin Islands. In addition, the administrators of certain other statewide retirement systems are also eligible for full membership in the association.

NCPERS National Conference on Public Employee Retirement Systems – (www.ncpers.org)

This organization is the largest national, non-profit public pension advocate. Since 1941, it has protected the pensions of public employees. It represents pensions on Capitol Hill, provides trustee education, and delivers essential pension information to trustees, administrators and public officials.

P2F2 Public Pension Financial Forum – (www.p2f2.org)

The Public Pension Financial Forum is an organization representing the financial operations of public pension systems throughout North America. It provides comment regarding exposure drafts and other potential accounting pronouncements promulgated by the Governmental Accounting Standards Board. The purpose of the organization is to promote excellence in public pension plan financial operations, provide educational programs of current interest to membership, and create a medium for the consideration of common problems and the exchange of ideas and information that will facilitate the most efficient and economical operation of the financial operations and reporting between public pension systems.

PIHRA Professionals in Human Resources Association – (www.pihra.org)

Professionals in Human Resources Association was founded as the Personnel and Industrial Relations Association in 1944 by a small group of Los Angeles personnel executives. They organized to provide a forum in which Human Resource professionals could exchange ideas, increase their knowledge of and work together for the betterment of the profession

http://www.nappa.org/

http://www.nasra.org/

http://www.ncpers.org/

http://www.p2f2.org/



In 1959, PIHRA became affiliated with the Society of Human Resource Management (SHRM), then known as the American Society of Personnel Administration (ASPA). Today, PIHRA is the largest SHRM chapter in the country, consistently achieving SHRM's Annual Superior Merit Award. PIHRA is a non-profit California corporation whose officers and committee members serve without compensation. There are more than 4,900 members representing more than 3,000 firms. PIHRA is comprised of all levels of HR practitioner, representing the complete spectrum and breadth of every type of industry in Southern California; who have an interest in acquiring knowledge of the most recent and innovative developments in the HR arena.

PREA Pension Real Estate Association – (www.prea.org)

This is a non-profit organization whose members are engaged in the investment of tax-exempt pension and endowment funds into real estate assets.

PRISM Public Retirement Information Systems Management – (www.prism-assoc.org)

The Public Retirement Information Systems Management provides opportunities for IT management of public retirement funds to collaborate and share their experiences with new technologies affecting the retirement and IT industries.

SACRS State Association of County Retirement Systems – (www.sacrs.org)

SACRS is an association of 20 California county retirement systems, established under the County Employees Retirement Law of 1937. This law chapter, beginning with Section 31450 of the California Government Code, sets forth the policies and regulations governing the actions of these county retirement system. SACRS meets as an organization twice a year with all 20 counties participating through attendance by Trustees, Administrators, Treasurers and staff. Education and legislation are the principle focus of these meeting, particularly education in the investment and fiduciary responsibility area.

SHRM Society for Human Resource Management – (www.shrm.org)

SHRM is the world's largest association devoted to human resource management. Representing more than 205,000 individual members, the Society's mission is to serve the needs of HR professionals by providing the most essential and comprehensive resources available. As an influential voice, the Society's mission is also to advance the Human Resource Profession to ensure that HR is recognized as an essential partner in developing and executing organizational strategy. Founded in 1948, SHRM currently has more than 550 affiliated chapters and members in more than 100 countries.

http://www.prea.org/

http://www.shrm.org/


PART 11: TRAINING AND EQUIPMENT

Training Policy The OCERS Board has adopted the following Training Policy:

1. It is the policy of the Board of Retirement to ensure that individual Trustees have sufficient knowledge of the issues and challenges facing OCERS so as to craft policies to guide the administration of the plan and effectively monitor their implementation based on ongoing exposure to up-to-date benefit, financial, investment and policy information and together with staff are properly trained to perform their respective duties.

2. Effective January 1, 2013, Trustees are required to complete a minimum of 24 hours of Trustee education within the first two (2) years of assuming office and for every subsequent 2-year period in which the Trustee serves on the Board.

3. To that end, each Trustee is encouraged to regularly participate in those educational opportunities that will enable competent discharge of the obligations of that position and meet the statutory requirements for continuing education.

Policy Objectives 1. The objective of this policy is to ensure that all Trustees have adequate opportunity to acquire

the knowledge they need to carry out their fiduciary duties.

Policy Guidelines 1. Trustees agree to develop and maintain knowledge of relevant issues pertaining to the

administration of OCERS throughout their terms.

2. Trustees agree to pursue appropriate education across a range of pension-related areas, rather than limiting their education to specific areas. General pension-related areas to be pursued include:

a. Pension funding; b. Institutional investments and investment program management; c. Investment performance measurement; d. Actuarial science; e. Benefits structure and administration; f. Disability retirements; g. Due process in benefit determinations; h. Pension law; i. Organizational structure, methods, and practices; j. Budgeting; k. Governance and fiduciary duty; and l. Ethics.

3. Educational tools for trustees include, but are not limited to: a. External conferences, seminars, workshops, roundtables, courses or similar sessions

(henceforth referred to collectively as “conferences”); b. Industry association meetings or events;

Part 11: Training and Equipment


c. In-house educational seminars or briefings; d. Periodicals, journals, textbooks and similar materials; and e. Electronic media including CD ROM-based education, Internet-based education and

video-based education.

4. On an ongoing basis, the Chief Executive Officer and the Chief Investment Officer will identify appropriate educational opportunities, based on the needs of individual Trustees or the Board as a whole, and include details of such in Board meeting information packages for Trustee consideration. Trustees are encouraged to suggest educational opportunities that may provide value to the Board of Retirement.

5. Standards for determining the appropriateness of a potential educational opportunity shall include:

a. The extent to which the opportunity is expected to provide Trustees with the knowledge they need to carry out their roles and responsibilities;

b. The extent to which the opportunity meets the requirements of this policy; and c. The cost-effectiveness of the program in light of travel, lodging and related expenses.

6. Beginning January 1, 2013, Trustees will acquire a minimum of 24 hours of Trustee education within the first two (2) years of assuming office and for every subsequent 2-year period for which the Trustee serves on the Board.

7. Trustees will attempt to meet the following minimum goals: a. To secure, over time, a useful level of understanding in each of the topic areas listed in

paragraph 6 above; b. To attend at least one conference annually. In accordance with a. above, Trustees are

encouraged to attend conferences, on occasion, that address pension topics other than investments; and

c. Participate in any in-house educational seminars or briefings that are organized by the Chief Executive Officer and Chief Investment Officer including:

i. The educational component of the annual Strategic Planning Session; ii. The Education Forum;

iii. Individual sessions at regular Board meetings; and iv. Workshops available to Board and staff members.

8. The Board shall maintain a record of Trustee compliance with this policy, and the Chief Executive Officer or his designee will ensure that the policy and annual compliance report are placed on the OCERS website.

Attendance at Conferences & Industry Association Meetings 1. Approval for attendance and reimbursement of travel expenses in connection with educational

conferences and industry association meetings will be in accordance with the Travel Policy.

2. In furtherance of this policy, the Chief Executive Officer shall have discretionary authority to approve staff travel as necessary to carry out the administrative responsibilities of the OCERS, such as attendance at legislative meetings or hearings, conducting on-site visits as part of due diligence evaluation of existing and proposed service providers, participating in continuing education programs, and other duties as directed.



3. The Board will periodically review the programs, training or educational sessions that qualify forTrustee education.

Orientation Program 1. Working with the Chief Investment Officer and OCERS’ professional advisors, the Chief Executive

Officer will hold an orientation program, covering the general topic areas outlined in paragraph6 above, and designed to introduce new Trustees to all pertinent operations of the System andhighlight the knowledge bases required of a Trustee. The aim of the orientation program will beto ensure that new Trustees are in a position to contribute fully to Board of Retirement andcommittee deliberations, and effectively carry out their fiduciary duties as soon as possible afterjoining the Board.

2. Prior to a Trustee’s first official meeting with the Board of Retirement, he or she will endeavorto attend a Board meeting or a standing committee meeting in the role of an observer.

3. Within 30 days of a trustee’s election or appointment to the Board, the Chair will designate anincumbent member of the Board to provide the new Trustee an orientation to current Boardgovernance practices.

4. As part of the orientation process, new Trustees will, within 30 days of their election orappointment to the Board of Retirement:

a. Be briefed by the Chief Executive Officer on the history and background of OCERS;b. Be oriented by the Chair on current issues before the Board;c. Be introduced to members of senior management;d. Be provided a tour of OCERS offices by the Chief Executive Officer;e. Be briefed by the Board’s fiduciary counsel on their fiduciary duties, conflict of interest

guidelines, the County Employees Retirement Law of 1937, Proposition 162, The BrownAct, and other pertinent legislation; and

f. Be provided with:i. A Trustee Reference Manual (the contents of which are listed in the Appendix);

ii. A listing of upcoming recommended educational opportunities; andiii. Other relevant information and documentation deemed appropriate by the

Chief Executive Officer.

5. During the course of their first 12 months on the Board of Retirement, new Trustees willendeavor to attend a seminar on the principles of pension management or a comparableprogram.

6. The Chief Executive Officer will review, and if necessary, update all orientation material. It is theresponsibility of Trustees to maintain their Trustee Reference Manuals, by ensuring that theycontain the most up to date materials. A master copy of the Trustee Reference Manual will beavailable for use by Trustees at the OCERS office.

7. Trustees will inform the Chief Executive Officer, for information purposes, of all pension-relatedconferences attended, whether attending on behalf of OCERS or not.



Equipment & Supplies OCERS will supply Board members with iPad devices. These devices are used to transmit materials for Board and committee meetings. The devices are configured to use both wi-fi and cellular connections to access the internet. The devices are also configured with all applications necessary to conduct OCERS business. Technical support and services on provided equipment and software will be provided by OCERS IT staff as necessary to perform Board duties. We do not provide support or software for personal equipment.

Please Note: The configuration, specification, and version of the provided equipment are based on policy, security requirements, internal testing, and currently supported products. Equipment is also standardized to lower cost of ownership and facilitates troubleshooting and updates. Hardware and software may not necessarily mirror industry trends.

Staff will provide special equipment/software, under special circumstances (e.g. ADA requirements), to meet the Board member’s needs. This applies solely to OCERS-supplied equipment.

Board members are reminded that any and all equipment supplied by OCERS as a perquisite of office remain the property of OCERS and must be returned at termination of appointment or term of office.


PART 12: FAQS

This section provides the answers to questions often asked by new and existing board members regarding stipends, reimbursement, travel, agendas, equipment, mileage, and more.

Stipend:

1. Who is eligible for stipends?

Board members who are County employees do not receive stipends. Board members who are not active County employees and who have been appointed by the Board of Supervisors or elected by the retirees (the 4th, 5th, 6th, 8th, and 9th members of the Board) will receive a stipend.

2. How much is the stipend?

$100 per meeting. The maximum number of meetings you may attend a month is five, for a maximum of $500 a month.

3. What counts as a meeting?

Regular Board Meetings, Special Board Meetings, OCERS-sponsored Off-Site Board Meetings, and Board Committee Meetings are all considered meetings. Attendance at Board-approved conferences and seminars do not count as meetings, nor do meetings with investment managers or other vendors that take place outside of a committee or Board meeting.

4. When are stipends paid?

As soon as possible after the meeting.

5. How are stipends treated for tax purposes?

Board members who are eligible to receive a stipend are required to complete a W-4 form. Stipends are taxed as regular income. Board members should consult their tax professionals if they have any questions regarding the tax implications of receiving a stipend.

6. Who do you call if you have questions about your stipend?

Contact the CEO’s office.

Board Meeting Attendance:

1. What should I do if I am unable to attend a meeting or I know I will be late?

Please inform the Board Chair or the CEO prior to the meeting so your absence can be noted as an approved absence. If you are an appointed member, your attendance record is reported quarterly to the Executive Office of the Board of Supervisors.

Part 12: FAQs


NOTE: The attendance of all Board members is a matter of public record that must be disclosed to anyone upon request.

2. What should I do if I need to leave a meeting before adjournment?

Please inform the Board Chair prior to the convening of the meeting. This allows the Chair to rearrange agenda items to cover action items first, in the event there are potential issues related to maintaining a quorum.

Informal Board Member Discussions:

1. To what extent can Board members discuss OCERS business outside of official Board meetings?

The Ralph M. Brown Act prohibits a majority of Board members from discussing OCERS business when not present at a Board meeting. Underlying the Brown Act is the public policy that government business, including the deliberation of issues, should take place at a public meeting. A series of telephone calls or emails can result in a violation if a majority of Board members are ultimately involved. If, as a result of internal discussions, a majority of Board members reach a consensus as to how to vote at a meeting, a crime has been committed for which the participants could be prosecuted.

Mileage:

1. What kinds of trips entitle one to claim mileage?

Travel to and from Board and committee meetings

Travel to and from meetings with investment managers or other vendors to discuss OCERS business

Trips to the Hall of Administration to meet with the Board of Supervisors when related to OCERS business

Trips to meetings for the purpose of explaining or discussing OCERS business

Trips to attend conferences and seminars located within the Southern California region

Use of personal automobile to travel to common carriers such as airports and rail terminals in connection with attendance at Board-approved conferences

2. How frequently should mileage claims be submitted?

Monthly. Mileage claims for specific conferences can be submitted upon return from the conference.

3. What form should be used?

Part 12: FAQs


Use the Mileage Reimbursement Form, which includes the current reimbursement rate.

4. How long does it take to get reimbursement?

Generally, reimbursement should take approximately one week. However, the process may takelonger, depending on accuracy and completeness of the reimbursement request.

5. Am I covered by OCERS insurance when I'm using my vehicle on OCERS business?

No. All Board members and staff are required to carry at least minimum vehicle coverage whenusing personal vehicles for OCERS business.

Board Education:

1. How do Board members receive the training they need to perform their duties?

Board Handbook

Board Orientation Presentation

Periodicals

Board meetings

Attendance at Educational Conferences and Seminars

2. Where can I get copies of education and reference materials?

You may request copies of materials through the CEO’s office or OCERS executive staff.

3. Do we have Board meetings off-site?

Yes. Off-site meetings are held at a location within Orange County, but at a site other thanOCERS headquarters. These are official, posted meetings of the Board that are used for in-depthreview of benefits, administration, and investments. Generally, the agendas for these meetingsdo not include action items. An off-site Strategic Planning meeting, including the Board andOCERS executive management, usually occurs in September.

4. What conferences or educational seminars may I attend?

Board members may attend any conference in the Southern California region if the incurredcosts will be limited to mileage and parking. Other conferences must be approved by the Board.Board members and OCERS staff designated by the CEO are automatically authorized andencouraged to attend regular meetings of SACRS, the NCPERS annual conference and annual

Part 12: FAQs


legislative workshop, 61 and the CALAPRS annual general assembly. Attendance at other conferences should be submitted to the Board for approval.

In addition, Board members who are members of committees of SACRS are automatically authorized to attend all committee meetings.

5. How can I submit a conference for Board approval?

Advise the CEO that you would like a conference or seminar placed on the agenda for approval.Agenda requests must be received at least two weeks prior to the date of the next Boardmeeting in order to be included on the agenda.

6. How many conferences may a Board member attend?

Every Board member may attend three conferences per year.

NOTE: Attendance at the semi-annual SACRS educational conferences, NCPERS Annual Meetingand Legislative Workshop and the annual general assembly meeting of CALAPRS are not subjectto the limitation of three conferences per year.

7. May Board members travel to conferences that are held outside of the United States?

Travel to a destination outside the United States requires pre-approval of the Board.

8. Who goes to a conference when the conference invitation limits the number of attendees?

If the conference invitation limits the number of attendees, the Board will decide by majorityvote which Board member(s) will attend. Other Board members interested in attending will bedesignated as alternate attendees in case the designated attendee(s) are unable to attend. Indeciding who will attend, the Board will give priority to Board members who have not previouslyattended the conference in order that educational opportunities can be more evenly distributedamong all Board members.

9. What periodicals do Board members receive?

Most Board members have subscriptions to Pensions & Investments. Other relevant periodicalsinclude Plan Sponsor and Institutional Investor. If there is a certain publication a Board memberfeels is important, he or she should speak to the CEO to determine whether OCERS shouldsubscribe.

Board Travel Arrangements:

1. Who makes the travel arrangements for Board members?

61 Authorization to attend an NCPERS meeting may be withheld if travel to the meeting is cost prohibitive in the judgment of

the CEO.

Part 12: FAQs


Please contact the CEO’s office if you want OCERS to make your travel arrangements. Otherwise, Board members and staff may make their own arrangements as long as those arrangements conform to the OCERS Travel Policy.

2. How much notice do I need to give if I am thinking of attending a conference or seminar?

If the trip involves air transportation, we encourage you to let us know at least 25 days prior to the departure date so that we can obtain lower airfares.

3. What happens if I need to cancel a trip?

If OCERS made your reservations, notify the CEO’s office as soon as possible in order to avoid cancellation penalties. The OCERS Travel Policy states, “Board Members as well as staff are responsible for the timely cancellation of registration fees, travel and lodging reservations made on his/her behalf that will not be used, so that no unnecessary expense will be incurred by OCERS.”

4. May I request a travel advance?

OCERS will pre-pay conference registration fees, lodging, and airfare. Other travel advances must be approved by the CEO per the OCERS Travel Policy.

5. What kind of transportation can I use for OCERS business travel?

If your destination is within 100 miles of your residence, OCERS would expect you to use personal vehicle or public transportation such as bus, train, or subway. If the destination is more than 100 miles away, Board members usually travel by air.

6. What if the trip is more than 100 miles away and I prefer to drive?

You may drive and be reimbursed mileage. Lodging and meals are reimbursed to the same extent they would be if you traveled by air.

7. What if I prefer not to travel by plane even though this would be considered the “common carrier?”

If you choose to travel by bus or train, the cost of the transportation will be reimbursed up to the amount that would be incurred for airfare. Lodging and meals are reimbursed to the same extent they would be if you traveled by air.

8. What about Saturday “stay-overs?”

In the past, airfare was sometimes less expensive if the trip included staying at the destination on Saturday night. If this situation should occur, OCERS will reimburse the additional expenses related to including Saturday in the trip, as long as the extra expenses plus airfare do not exceed the airfare that would be paid without the Saturday stay-over. The airfare differential should be documented in a report to the CEO on the conference.

Reimbursement of Travel Expenses:

Part 12: FAQs


1. What kind of travel entitles me to reimbursement of travel-related expenses?

Administrative Travel: This travel is linked to participation in committees or serving as an officer of SACRS or CalAPRS. For example, you are a member of the SACRS program committee and you travel to Sacramento to attend a committee meeting. Reimbursable expenses related to this type of trip include transportation costs, lodging, meals, local ground transportation, and parking.

Educational Travel: This travel is associated with attendance at approved seminars or conferences. Travel expenses including transportation, lodging, meals, local ground transportation, and parking are reimbursable.

2. How do I claim reimbursement for travel expenses?

Immediately following completion of your trip, a Mileage and Expense Claim Form must be completed with all original, itemized receipts attached. You can obtain the form from the CEO’s office. Staff will be happy to assist you in completing the form. All expenses, with the exception of porterage, should be substantiated with receipts. If OCERS has pre-paid airfare and/or lodging expenses, you should still obtain receipts.

Meal expenses over $25.00 must be substantiated by receipts.

3. How frequently should I submit travel claims?

We prefer that you submit a claim immediately after a completed trip. The IRS will force us to treat the reimbursement as taxable compensation if the claim is submitted more than three (3) months after the travel expenses have been incurred.

4. How long does it take to receive reimbursement once my claim has been submitted?

Generally, reimbursement should take approximately one week. However, the process may take longer, depending on the accuracy and completeness of the reimbursement request.

Mail:

1. Do Board members receive mail?

Yes. Typically, Board members receive periodicals, conference announcements, letters and informational materials from vendors and prospective vendors, letters from members, memos from OCERS staff, and letters from the Board of Supervisors and County Departments.

2. How do I get my mail?

You are always welcome to pick up your mail whenever you visit OCERS. The OCERS staff stores your mail in the work room adjacent to the Executive area on the 2nd floor. The accumulated mail is sent to you every once per week.

3. How do I respond to correspondence?

Part 12: FAQs


Board bylaws specify that correspondence will be forwarded to the appropriate staff member for response. Board members may not send correspondence on OCERS letterhead without specific Board authorization.

Agendas:

1. How do I receive meeting Agendas?

All Board Agendas and corresponding information are sent directly to you the Board Vantagesystem that has been installed on your OCERS iPad.

2. When can I expect my Agenda?

You should receive your Agenda and any related information at least three (3) business daysbefore a meeting.

Board Member Addresses and Telephone Numbers:

1. How is Board member contact information listed?

For external parties, we list OCERS’s address and telephone number as your address andnumber unless you direct us to use a different address and phone number.

2. Who has access to my contact information?

Your address and phone numbers are provided to your fellow Board members and to OCERSstaff who have a business need to know this information. Some Board members ask us torelease only business addresses and phone numbers. We will honor such requests.

3. What happens if someone wants to contact me at the OCERS number?

Staff will take a message and phone you to determine how you want the call to be handled. Ifyou are not available, they will leave you a voice message, email, or fax the message, as youprefer.

Equipment and Supplies:

1. What will OCERS provide to assist me in fulfilling my Board duties?

OCERS supplies all Board members with an iPad device equipped with cellular capabilities.

MEMORANDUM - OCERS · MEMORANDUM DATE: ecember D 1, ... Trustee education within the first two (2)...

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