BOARD OF FIRE AND POLICE PENSION COMMISSIONERS · 2019-12-16 · 3. annual cost of living adjustments to pensions and possible board action 4. excess benefit plan payment coordination

An opportunity for the public to address the Board or Committee about any item on today’s agenda for which there has been no previous opportunity for public comment will be provided before or during consideration of the item. Members of the public who wish to speak on any item on today’s agenda are requested to complete a speaker card for each item they wish to address, and present the completed card(s) to the commission executive assistant. Speaker cards are available at the commission executive assistant’s desk. In compliance with Government Code Section 54957.5, non-exempt writings that are distributed to a majority or all of the Board or applicable Committee of the Board in advance of their meetings may be viewed at the office of the Los Angeles Fire and Police Pension System (LAFPP), located at 701 East 3rd Street, 2nd Floor, Los Angeles, California 90013, or by clicking on LAFPP’s website at www.lafpp.com, or at the scheduled meeting. Non-exempt writings that are distributed to the Board or Committee at a scheduled meeting may be viewed at that meeting. In addition, if you would like a copy of any record related to an item on the agenda, please contact the commission executive assistant, at (213) 279-3038 or by e-mail at [email protected]. Sign language interpreters, communication access real-time transcription, assistive listening devices, or other auxiliary aids and/or services may be provided upon request. To ensure availability, you are advised to make your request at least 72 hours prior to the meeting you wish to attend. Due to difficulties in securing sign language interpreters, five or more business days notice is strongly recommended. For additional information, please contact the Department of Fire and Police Pensions, (213) 279-3000 voice or (213) 628-7713 TDD.

A. ITEMS FOR BOARD ACTION

1. 2019-20 PROPOSED BUSINESS PLAN AND POSSIBLE BOARD ACTION 2. 2019-20 PROPOSED BUDGET AND POSSIBLE BOARD ACTION 3. ANNUAL COST OF LIVING ADJUSTMENTS TO PENSIONS AND POSSIBLE BOARD ACTION 4. EXCESS BENEFIT PLAN PAYMENT COORDINATION BOARD POLICY AND POSSIBLE BOARD ACTION 5. LOS ANGELES POLICE DEPARTMENT (LAPD) ADMINISTRATIVE ORDER #1 AND POTENTIAL IMPACTS ON LAFPP AND POSSIBLE BOARD ACTION

AGENDA

BOARD OF FIRE AND POLICE PENSION COMMISSIONERS

March 21, 2019

8:30 a.m.

Sam Diannitto Boardroom Los Angeles Fire and Police Pensions Building

701 East 3rd Street, Suite 400 Los Angeles, CA 90013

http://www.lafpp.com/

http://www.lafpp.com/

mailto:[email protected]

mailto:[email protected]

March 21, 2019 2

6. CHIEF INVESTMENT OFFICER’S QUARTERLY REPORT OF ASSET ALLOCATION STATUS AND POSSIBLE BOARD ACTION

B. REPORTS TO THE BOARD

1. QUARTERLY PERFORMANCE REPORT BY RVK 2. Miscellaneous correspondence from money managers, consultants, etc. – Received

and Filed. 3. General Manager’s Report

a. Monthly Report

b. Marketing Cessation Information

c. Benefits Actions approved by General Manager on March 7, 2019 d. Other business relating to Department operations

C. CONSENT ITEMS

1. Approval of Minutes

a. Minutes of the Regular Board Meetings of August 16, 2018 and September 20, 2018 b. Minutes of the Special Board Meetings of September 6, 2018 and September 20,

2018

D. CONSIDERATION OF FUTURE AGENDA ITEMS E. GENERAL PUBLIC COMMENT ON MATTERS WITHIN THE BOARD’S JURISDICTION F. DISABILITY CASE Alternative 2

Delmus Harris III, Surviving Spouse of Detective III Kimberly L. Jones-Harris. Mr. Harris will be represented by Thomas J. Wicke, Esq. of Lewis, Marenstein, Wicke, Sherwin and Lee.

G. CLOSED SESSION 1. CLOSED SESSION PURSUANT TO GOVERNMENT CODE SECTION 54956.81 TO

CONSIDER THE PROPOSED PURCHASE OF ONE (1) PARTICULAR, SPECIFIC INVESTMENT AND POSSIBLE BOARD ACTION

2. CLOSED SESSION PURSUANT TO GOVERNMENT CODE SECTION 54956.81 TO

CONSIDER THE PROPOSED SALE OF ONE (1) PARTICULAR, SPECIFIC INVESTMENT AND POSSIBLE BOARD ACTION

March 21, 2019 3

3. CLOSED SESSION PURSUANT TO GOVERNMENT CODE SECTION 54956.81 TO CONSIDER THE PURCHASE OF THREE (3) PARTICULAR, SPECIFIC INVESTMENTS AND POSSIBLE BOARD ACTION

DEPARTMENT OF FIRE AND POLICE PENSIONS 701 E. 3rd Street, Suite 200

Los Angeles, CA 90013

(213) 279-3000

REPORT TO THE BOARD OF FIRE AND POLICE PENSION COMMISSIONERS

DATE: MARCH 21, 2019 ITEM: A.1 FROM: RAYMOND P. CIRANNA, GENERAL MANAGER SUBJECT: 2019-20 PROPOSED BUSINESS PLAN AND POSSIBLE BOARD ACTION

RECOMMENDATION

That the Board approve the attached 2019-20 Proposed Business Plan.

DISCUSSION

The 2019-21 Three-Year Strategic Plan (Attachment II) approved by the Board on February 1, 2018 includes the Vision, Mission, Values and Strategic Goals for Los Angeles Fire and Police Pensions (LAFPP). This document serves as a blueprint to guide LAFPP in the development of the 2019-20 Proposed Business Plan. As indicated on the Project Summary Matrix included in the Proposed Business Plan (Attachment I – Pages 3-4), the Plan consists of 10 projects. Of these 10 projects, one was deferred from 2018-19 and nine are new projects. The 2019-20 Proposed Business Plan was developed in conjunction with the 2019-20 Proposed Budget to ensure that all resources required to complete the Business Plan projects are adequately funded. The Business Plan is organized pursuant to the following LAFPP Strategic Goals to ensure that projects are prioritized relative to operational needs:

1) Ensure a Financially Sound Retirement System 2) Manage Risk Throughout the Organization 3) Enhance Customer Care and Stakeholder Relations 4) Pursue Operational Efficiencies 5) Build and Support a Talented Workforce

Project No. 6 of the 2019-20 Proposed Business Plan project was deferred from the 2018-19 Business Plan:

1) Implementation of New Accounting Software: Replace the current accounting software and improve financial reporting.

The nine new 2019-20 Proposed Business Plan projects include:

2) Emerging Manager Program and Policy Review (No. 1): Pursue improvements in the emerging manager program;

3) Actuarial Assumption Research (No. 2): Research and gather actuarial information and trends for the next experience study. The next experience study will cover July 1, 2016 -

Board Report Page 2 March 21, 2019

June 30, 2019 and is expected to be presented to the Board in June 2020; 4) Contractor Disclosure Review Process Enhancements (No. 3): Enhance assurance that

investment and procurement decisions are made solely on the merits of the goods or services proposed to be provided by contractors to LAFPP;

5) Direct Deposit Transition (No. 4): Reduce the usage of physical checks by 50% and enroll those members into direct deposit;

6) Focused Communications (No. 5): Create focused benefit communications on individual topics that will address frequently asked information and reduce member inquiries;

7) Update of the LAFPP Records Retention and Disposition Schedule (No. 7): Update the department's Records Retention and Disposition Schedule to regulate and preserve physical and electronic storage space through the timely disposal of records;

8) Pensions Division Business Process Reengineering (No. 8): Review of Pensions Division Sections’ business processes by PASCo in consultation with the Internal Audit Section. Recommendations will be made to leverage PARIS and DocuShare to improve efficiency;

9) Upgrade of LAFPP Support Request Ticketing System (No. 9): Replace current support request ticketing system to improve tracking of staff support requests and management reporting capabilities; and

10) Investment Staff Duties Rotation and Development of Junior Staff (No 10): Continued development of junior and senior staff through rotation of duties, cross-training and educational opportunities.

As part of the 2018-19 Business Plan Project No. 8 – Workforce Succession Planning, the Succession Planning Team (SPT) met in February 2019 and determined that a department-wide survey would be distributed in mid-March 2019 to seek input on levels of interest for different types of workforce development programs. The SPT will meet in late March to review survey results and find a more definitive direction to take with the department succession plan, which is scheduled for implementation in June 2019. As a result, an additional project to expand LAFPP workforce succession planning efforts may be submitted for the Board’s consideration with the 2019-20 Final Business Plan on June 20, 2019. Additionally, staff is exploring the idea of engaging professional services to perform an objective cost and performance benchmarking analysis of LAFPP’s investment portfolio compared to a peer group of funds. Staff plans to submit this as a new Business Plan project for the Board’s consideration on June 20, 2019, potentially increasing the total number of 2019-20 Business Plan projects to 12. The Project Summary Matrix lists all the projects and includes workload level indicators, which is intended to give the Board a sense of the staff and participant workload requirements for the upcoming fiscal year. Staff will continue to track the progress of all projects in the Business Plan Quarterly Update reports to the Board, and through these reports will recommend any necessary changes in scheduling or budget. This process allows the Board to measure progress and adjust periodically to reflect any changes that may occur. BUDGET Funding for the proposed projects has been included in the 2019-20 Proposed Budget.


POLICY There are no policy changes proposed in this report. CONTRACTOR DISCLOSURE INFORMATION There is no contractor disclosure information required with this report. This report was prepared by: Diana Pointer, Manager Administrative Services Section RPC:WSR:MTS:DP Attachments: I. 2019-20 Proposed Business Plan II. 2019-21 Three-Year Strategic Plan

ATTACHMENT I

LAFPP LOS ANGELES FIRE AND POLICE PENSIONS

PROPOSED 2019-20 BUSINESS PLAN

AS SUBMITTED TO THE BOARD:

MARCH 21, 2019

2

2019-20 PROPOSED BUSINESS PLAN INTRODUCTION The 2019-21 Strategic Plan serves as a blueprint to guide LAFPP in the development of

the annual 2019-20 Business Plan and includes the Vision, Mission, Values and Strategic Goals for LAFPP. The Strategic Plan was approved by the Board on February 1, 2018,

reaffirming its commitment to the LAFPP Vision Statement:

To be a leader and innovator in the public pension industry through an uncompromising dedication to excellence, customer service, transparency, and education

The 2019-20 Proposed Business Plan methodically allocates resources to the most critical areas of our operations to successfully accomplish our Mission:

To advance the health and retirement security of those who dedicate their careers and risk their lives to protect the people of Los Angeles

Our Business Plan includes ten projects, including nine new projects and one deferred

project from last year. We believe these ten projects are the most critical to ensure we continue to meet the Department’s five primary Goals:

1) Ensure a Financially Sound Retirement System

2) Manage Risk Throughout the Organization

3) Enhance Customer Care and Stakeholder Relations

4) Pursue Operational Efficiencies

5) Build and Support a Talented Workforce

In Fiscal Year 2018-19, the Department implemented the new Pension Administration System Project, which has been named “PARIS” (Pensions and Retirement Information

System). This marked the culmination of a multi-year effort to transition all member data and payment processing to a new system and required significant resources. While the

core system has been implemented, work continues on the other two phases of the project, which should be completed by December 31, 2019.

The Department will now shift resources to other areas throughout the organization, as discussed in the following Project details. We believe these proposed Projects will enable

the Department to meet our Mission and Strategic Goals as envisioned during the development of the 2019-21 Strategic Plan.

I want to extend my deep appreciation to the Board and staff for its continued support for

the Strategic and Business Plans over the years.

Sincerely,

Raymond Ciranna, General Manager

3

2019-20 PROPOSED BUSINESS PLAN

PROJECT MATRIX SUMMARY

GOAL 1 – Ensure a Financially Sound Retirement System

Project Title Workload

Level Duration Project Objective

(1)

(NEW)

Emerging Manager Program and Policy

Review

Lead:

Moderate

Participants:

Moderate

2019-20 To research and pursue potential improvements in the emerging manager program.

(2)

(NEW) Actuarial Assumption

Research

Lead:

Low Participants:

Low

2019-20 To research and gather actuarial information and trends for the next experience study. The next experience study will cover July 1, 2016 - June 30, 2019 and is expected to be presented to the Board in June 2020.

GOAL 2 – Manage Risk Throughout the Organization

Project Title

Workload

Level

Duration Project Objective

(3)

(NEW) Contractor Disclosure

Review Process Enhancements

Lead:

Low

Participants:

Moderate

2019-20 To enhance assurance that investment and procurement decisions are made solely on the merits of the goods or services proposed to be provided by contractors to LAFPP.

GOAL 3 – Enhance Customer Care and Stakeholder Relations



(4) (NEW)

Direct Deposit Transition

Lead:

Moderate

Participants:

Moderate

2019-20 To reduce the usage of physical checks by 50% and enroll those members into direct deposit.

(5)

(NEW)

Focused Communications

Lead:

Moderate

Participants:

Moderate

2019-20 To create focused benefit communications on individual topics that will address frequently asked information and reduce member inquiries.

4

2019-20 PROPOSED BUSINESS PLAN

PROJECT MATRIX SUMMARY

Goal 4 – Pursue Operational Efficiencies



(6) Implementation of New

Accounting Software

Lead:

Moderate

Participants:

Moderate

2019-20 To replace the current accounting software and improve accounting reporting of LAFPP financial information.

(7)

(NEW)

Update of the LAFPP Records Retention and

Disposition Schedule

Lead:

Moderate

Participants:

Moderate

2019-20 To update the department's Records Retention and Disposition Schedule to regulate and preserve physical and electronic storage space through the timely disposal of records.

(8)

(NEW)

Pensions Division Business Process Reengineering

Lead:

Moderate

Participants:

Moderate

2019-20 To review Pensions Division Sections’ business processes by PASCo in consultation with the Internal Audit Section. Recommendations will be made to leverage PARIS and DocuShare to improve efficiency

(9)

(NEW)

Upgrade of LAFPP Support Request Ticketing System

Lead:

Moderate

Participants:

Moderate

2019-20 To replace current support request ticketing system to improve tracking of staff support requests and management reporting capabilities.

Goal 5 – Enhance Communication Efforts and Outreach



(10)

(NEW)

Investment Staff Duties Rotation and

Development of Junior Staff

Lead:

High

Participants:

High

2019-20 To continue the development of junior and senior staff through rotation of duties, cross-training and educational opportunities.

5


Project 1: NEW – Emerging Manager Program and Policy

Review

Duration: 2019-20 Project Lead: Tom Lopez, Chief Investment Officer, Investments Division

Project Participants: Investments Staff and RVK Stakeholders: Board Members, LAFPP Members

PROJECT

OBJECTIVE

To research and pursue potential improvements in the emerging manager program.

PROJECT

HISTORY

The Emerging Manager program was created in the early 90's in order to seek out firms that may outperform their peers but have less ability to market themselves to large institutional investors. Similar to other managers, the performance of emerging managers varies and given the evolution of the marketplace in recent years, a deeper look into the program would be beneficial for LAFPP.

2019-20

DELIVERABLES

Comprehensive review of the Emerging Manager Program and Policy reported to the Board.

2019-20

MILESTONES

BY SEPTEMBER 30, 2019: Begin review of Emerging Managers and the existing policy.

BY DECEMBER 31, 2019: Complete review process with RVK. BY MARCH 31, 2020: Compile data and form recommendations in preparation of a report to the Board. BY JUNE 30, 2020: Present to the Board the results of the comprehensive review of the Emerging Manager Program.

2019-20

RESOURCES

There are no anticipated costs associated with this project. Staff will utilize existing resources.

6


Project 2: NEW - Actuarial Assumption Research

Duration: 2019-20

Project Lead: Greg Mack, Chief Benefits Analyst, Pensions Division

Project Participants: Greg Mack

Stakeholders: LAFPP Staff, Management, and Board of Commissioners

PROJECT

OBJECTIVE

To research and gather actuarial information and trends for the next experience study. The next experience study will cover July 1, 2016 - June 30, 2019 and is expected to be presented to the Board in June 2020.

PROJECT HISTORY

The 2020 experience study will review the economic and demographic actuarial assumptions and compare actual experience with what was expected under the current assumptions. The Board's actuarial consultant may recommend changes in assumptions including and not limited to inflation, investment return, salary increases, mortality, termination and disability incidence rates.

2019-20

DELIVERABLES

Presentation to the Board regarding actuarial industry trends that could impact the assumptions recommended in the next experience study.

2019-20

MILESTONES

BY DECEMBER 31, 2019: Research the actuarial assumptions changes being recommended for other Pension systems by their actuarial consultants. BY JUNE 30, 2020: Presentation to the Board of the results regarding actuarial information and trends as they relate to the experience study.

2019-20

RESOURCES

There are no anticipated costs associated with this project.

7

GOAL 2 – Manage Risk Throughout the Organization

Project 3: NEW – Contractor Disclosure Review Process

Enhancements

Duration: 2019-20 Project Lead: James Yeung, Internal Auditor IV, Internal Audit Section

Project Participants: Internal Audit Section Staff Stakeholders: LAFPP and LAFPP Contractors

PROJECT OBJECTIVE

To enhance assurances that investment and procurement decisions are made solely on the merits of the goods or services proposed to be provided by contractors to LAFPP.

PROJECT HISTORY

The Contractor Disclosure Policy requires contractors to disclose contributions, gifts, and contacts to provide transparency on conflicts of interest. The policy was intended to supplement city and state ethics laws. Current procedures rely solely on self-reporting, and review procedures are independent of city/state compliance requirements.

2019-20 DELIVERABLES

Enhanced Internal Audit Section review of procedures and processes.

2019-20

MILESTONES

BY SEPTEMBER 30, 2019: Identify available external data resources. Develop, document, and test procedures and processes to cross reference reported contractor disclosures to external data resources.

BY DECEMBER 31, 2019: Full implementation.

2019-20

RESOURCES


8


Project 4: NEW - Direct Deposit Transition

Duration: 2019-20

Project Lead: Kyle Susswain, Manager, Retirement Services

Project Participants: Retirement Services Staff

Stakeholders: LAFPP Members and Retirement Services Staff

PROJECT OBJECTIVE

To reduce the usage of physical checks by 50% and have members voluntarily enroll into direct deposit.

PROJECT

HISTORY

Members receiving checks can possibly receive their payments late, forget if they cashed them, or lose them. To replace a lost check, members must complete and return a notarized affidavit by a certain day to meet LAFPP's Off-Cycle check repayment date. If they miss that date, it would take another month to receive payment. CPAS allows for retroactive direct deposit payments to be made much more frequently.

2019-20

DELIVERABLES

Reduce physical check usage by 50% and have members voluntarily enroll into direct deposit.

2019-20

MILESTONES

BY SEPTEMBER 30, 2019: Identify members receiving checks and verify addresses. Mail letters w/direct deposit forms to these members. Also post to website and place messages on their checks.

BY DECEMBER 31, 2019: Receive forms and enroll 16% of check receiving members into direct deposit. Send 2nd round of letters to those that did not enroll. BY MARCH 31, 2020: Receive forms and enroll 33% of check receiving members into direct deposit. Verify phone numbers and call the remaining members, send final round of letters to those that did not enroll. BY JUNE 30, 2020: Receive forms and enroll 50% of check receiving members into direct deposit. Continue efforts to enroll the remaining members.

2019-20

RESOURCES

There are no anticipated costs associated with this project. Potential for cost savings are $0.055 per deposit versus $0.62 per check.

9


Project 5: NEW – Focused Communications

Duration: 2019-20

Project Lead: Elizabeth Trevizo, Management Analyst, Communications & Education

Project Participants: LAFPP Staff

Stakeholders: LAFPP Members and Beneficiaries, and LAFPP Staff and Management

PROJECT OBJECTIVE

To create focused benefit communications on individual topics that will address frequently asked questions and reduce member inquiries.

PROJECT

HISTORY

The Charter and Administrative Code define pension benefits and the Summary Plan Descriptions summarize the benefit information. Newsletters provide information on current benefits or upcoming changes to benefits. Focused communications such as information sheets, brochures and handbooks provide easy access to specific topics, as needed.

2019-20

DELIVERABLES

To create focused communications that are accessible and easy to update at a minimal cost.

2019-20

MILESTONES

BY SEPTEMBER 30, 2019: a) Determine information requested most often – poll staff and members b) Create a library of titles and types of communications (info sheets,

brochures, etc.). BY DECEMBER 31, 2019:

a) Prioritize topics b) Draft a minimum of two (2) communications

BY JUNE 30, 2020: Finalize two (2) communications and post on Website

2019-20

RESOURCES

$500 is included in the 2019-20 Proposed Budget for the new template from the graphic designer.

10

GOAL 4 - Pursue Operational Efficiencies

Project 6: Implementation of New Accounting Software

Duration: 2019-20

Project Lead: Yolanda Huang, Dept. Chief Accountant IV, Accounting Section

Project Participants: Accounting and Systems Sections

Stakeholders: LAFPP Staff and Management, LAFPP Members and Public

PROJECT OBJECTIVE

To replace the current accounting software and improve financial reporting.

PROJECT HISTORY

Accounting currently uses Microsoft Dynamics-Solomon which is no longer being supported by Microsoft in its current form. A new version of the same software would require purchasing the entire package which is too expensive at this time. Accounting and Systems are looking for other alternative software that would provide equal or better accounting functionality at a more reasonable cost.

2019-20

DELIVERABLES

New accounting software with better functionality would be the expected output of this project.

2019-20

MILESTONES

BY MARCH 31, 2020: a) Review existing software features and gather new requirements; b) Research and evaluate available software and cloud-based services; and c) Select and procure software. BY JUNE 30, 2020: a) Install, configure, and deploy software in production; and b) Migrate data and conduct user training.

2019-20

RESOURCES

The cost associated with this project is included in Systems’ 2019-20 proposed budget.

11

GOAL 4 – Pursue Operational Efficiencies

Project 7: NEW – Update of the LAFPP Records Retention

and Disposition Schedule

Duration: 2019-20

Project Lead: Diana Pointer, Manager, Administrative Services Section

Project Participants: All Sections

Stakeholders: LAFPP Staff and Management

PROJECT OBJECTIVE

To update the department's Records Retention and Disposition Schedule to regulate and preserve physical and electronic storage space through the timely disposal of records

PROJECT HISTORY

Periodically, the Administrative Services Section is tasked with updating the Records Retention and Disposal Schedule (Schedule) to conform with the Department's inventory of regularly used documents (paper records and electronic records in DocuShare). The updated Schedule will be placed in the department's Electric Content Management System Governance Manual.

2019-20

DELIVERABLES

To produce an updated Records Retention and Disposition Schedule.

2019-20 MILESTONES

BY SEPTEMBER 30, 2019: Review and update current Records Retention and Disposition Schedule. BY MARCH 31, 2020: Submit revised Records Retention and Disposition Schedule for review by the City’s Records Management Officer and City Council approval. BY JUNE 30, 2020: Upon City Council action, distribute the newly approved Records Retention and Disposition Schedule.

2019-20 RESOURCES


12


Project 8: NEW – Pensions Division Business Process

Reengineering

Duration: 2019-20

Project Lead: Anthony Torres, Manager, PASCo

Project Participants: Pensions Division, Accounting Section, and Internal Audit Section Stakeholders: Executive Management, Pensions Division Staff, and Accounting Section

PROJECT OBJECTIVE

To review Pensions Division Sections’ business processes by PASCo in consultation with the Internal Audit Section. Recommendations will be made to leverage PARIS and DocuShare to improve efficiency

PROJECT HISTORY

This project is an outgrowth of the implementation of PARIS and DocuShare. The workload involved with conversion and testing activities has not left staff with much time to reevaluate their business processes to make the most of PARIS and DocuShare.

2019-20

DELIVERABLES

Process improvement recommendations for Pensions Division with respect to payment of member benefits. Proposals for further PARIS enhancements.

2019-20 MILESTONES

BY SEPTEMBER 30, 2019: Business process review completed and recommendations made for one Section in Pensions Division. BY DECEMBER 31, 2019: Business process review completed and recommendations made for an additional two Sections in Pensions Division. BY MARCH 31, 2020: Business process review completed and recommendations made for remaining three Sections in Pensions Division. BY JUNE 30, 2020: Business process review completed and recommendations implemented for all sections.

2019-20 RESOURCES

There are no anticipated staff costs associated with this project. Enhancements may be required for PARIS as a result of this project.

13


Project 9: NEW – Upgrade of LAFPP Support Request

Ticketing System

Duration: 2019-20

Project Lead: David Liu, Sr. Systems Analyst II, Systems Section

Project Participants: Administrative Services, Accounting, and Systems Sections Stakeholders: LAFPP Staff and Management

PROJECT OBJECTIVE

To replace current support request ticketing system to improve tracking of staff support requests and management reporting capabilities.

PROJECT HISTORY

The current support request system is an in-house application developed more than 10 years ago. Incremental improvements have been made to support request ticketing system, but it has been increasing difficult to expand its functionalities and provide support due to the outdated technology/tool used in its development. An off-the-shelf system with enhanced features and reporting capabilities will better serve the Department.

2019-20

DELIVERABLES

Evaluation and implementation of a new support request ticketing system with enhanced features and management reporting capabilities.

2019-20 MILESTONES

BY MARCH 31, 2020: a) Review existing software features & gather new requirements; b) Research & evaluate available software & cloud-based services; and, c) Select and procure software or cloud-based services. BY JUNE 30, 2020: a) Install, configure, and deploy software in production; and, b) Migrate data and conduct user training.

2019-20 RESOURCES

$6,000 is included in the 2019-20 Proposed Budget for the annual subscription of a cloud-based system.

14

GOAL 5: Build and Support a Talented Workforce

Project 10: NEW - Investment Staff duties Rotation and

Development of Junior Staff

Duration: 2019-20

Project Lead: Tom Lopez, Chief Investment Officer, Investments Division

Project Participants: Investments Division Staff Stakeholders: Board Members and LAFPP Members

PROJECT OBJECTIVE

To continue the development of junior and senior staff through rotation of duties, cross-training and educational opportunities.

PROJECT HISTORY

The size and complexity of the Fund's investment portfolio have grown significantly over the last decade. With junior Staff coming into the Investment Division, succession planning and cross-training are important. By changing the Investment Division structure both junior and senior Staff will gain more exposure to additional asset classes.

2019-20

DELIVERABLES

Change reporting structure of junior staff and asset class coverage of senior Investments Staff.

2019-20 MILESTONES

BY SEPTEMBER 30, 2019: Begin the rotation of senior Staff asset classes and new reporting structure of junior Staff.

BY DECEMBER 31, 2019: Continue cross-training through conferences, seminars and staff cross collaboration. BY MARCH 31, 2020: Internal staff review to revise responsibilities to match section needs. BY JUNE 30, 2020: Final implementation of staff rotation.

2019-20

RESOURCES


Attachment II

1

LOS ANGELES FIRE & POLICE PENSIONS 2019-21 THREE-YEAR STRATEGIC PLAN

Vision

To be a leader and innovator in the public pension industry through an uncompromising dedication to excellence, customer service, transparency and education

Mission

To advance the health and retirement security of those who dedicate their careers and risk their lives to protect the people of Los Angeles

Goals

1. Ensure a financially sound retirement system2. Manage risk throughout the organization3. Enhance customer care and stakeholder relations4. Pursue operational efficiencies5. Build and support a talented workforce

Attachment II

2

Values

I) Collaboration – We value teamwork to achieve success and encourage staff at alllevels to share ideas and offer suggestions for improving operations. We are enrichedby our engagement with the Board, our members and our stakeholders.

II) Respect - We treat each other and our members with kindness and dignity. Wepromote a fair environment and support each other by sharing information andknowledge to ensure we deliver quality services.

III) Efficiency - We continually search for ways to deliver quality services and reduceadministrative expenses. We promote innovation throughout the organization anduse performance measurement to drive decisions.

IV) Accountability – We recognize our responsibility to our members to deliver promisedpension benefits. We ensure appropriate oversight to achieve excellence in service,operational and investment decision making.

V) Transparency – We strive to always provide clear, accurate and completeinformation and transact business decisions in an open manner so that our members,the City, and the public can trust that our decisions are fair, honest and ethical.

VI) Ethics – We preserve the public trust by adhering to the ethical standards establishedby the State, the City, and our Board.

Attachment II

3

Goals, Objectives and Strategic Initiatives

Goal 1: Ensure a Financially Sound Retirement System

Objective

• Achieve our long-term investment performance targets.

Strategic Initiatives

• Employ prudent risk-adjusted asset allocation strategies that will withstand both up anddown market conditions; and

• Measure portfolio performance against the appropriate benchmark(s) and takeappropriate action when investment objectives are not met.

Objective

• Pursue funding policies and strategies that sustain member benefits.


• Adopt sound actuarial policies and assumptions that balance the goals of: 1) keepingcontributions relatively stable; 2) equitably allocating the cost of benefits over themember’s period of actual service; and 3) achieving long-term full funding of the cost ofbenefits over time;

• Pursue strategies to better manage retiree health care costs; and

• Explore local and sustainable investment opportunities that complement our portfolioobjectives and comply with our investment goals concerning risk, return anddiversification.

Objective

• Promote diversity and advocate for new and emerging managers to help build tomorrow’sportfolio managers for the Plan.

Strategic Initiative

• Continue building LAFPP’s Emerging Manager Program.

Attachment II

4

Goal 2: Manage Risk Throughout the Organization

Objective

• Maintain & promote a culture of risk awareness with an enterprise-wide view.


• Develop a top-down risk-intelligent culture that proactively identifies and acts to managerisk exposure, through enhanced governance, Board and staff training, and collaborationwith stakeholders.

Objective

• Actively monitor systems and processes to reduce or minimize risk.


• Assess and test our systems and processes through periodic audits, risk assessmentsand technology to help mitigate and minimize risk in our organization.

Goal 3: Enhance Customer Care and Stakeholder Relations

Objective

• Deliver superior customer service that is adaptive to our member needs.


• Research and implement technology solutions to upgrade our business processes tobetter serve our members; and

• Maximize educational opportunities to our members regarding their benefits, access tohealthcare options and costs, and our services so that they can make informed decisionsabout retirement security.

Objective

• Enhance our communication to members, the City, and the public regarding our Plan.


• Provide stakeholders with thorough and timely information utilizing a range ofcommunication methods to help promote our system; and

Attachment II

5

• Continue to build and strengthen stakeholder relations with the Fire, Police, Airport andHarbor Departments, along with other City agencies, employee unions and retireeassociations.

Goal 4: Pursue Operational Efficiencies

Objective

• Implement industry best practices for continuous improvement.


• Identify and pursue best practice opportunities throughout the organization; and

• Benchmark operations against similar systems.

Objective

• Foster a “team approach” or culture of collaboration within and outside the Departmentto facilitate innovation.


• Increase team engagement and encourage ideas and suggestions from the Board,employees and stakeholders to improve knowledge and communications.

Goal 5: Build and Support a Talented Workforce

Objective

• Implement best practices for succession planning.


• Identify LAFPP's long-term staffing needs, the aspirations of individuals and theworkforce's developmental needs, to prepare and grow future leadership pool;

• Define targeted leadership development programs for continued professional growth offuture key leaders; and

• Develop a clearly defined and communicated career ladder program to attract and retaintalent at all levels.



(213) 279-3000


DATE: MARCH 21, 2019 ITEM: A.2 FROM: RAYMOND P. CIRANNA, GENERAL MANAGER SUBJECT: 2019-20 PROPOSED BUDGET AND POSSIBLE BOARD ACTION

RECOMMENDATION That the Board approve the 2019-20 Proposed Budget (Attachment) and instruct staff to submit it to the City Administrative Officer (CAO) and the Mayor’s Office for inclusion in the Mayor’s 2019-20 Proposed Budget. DISCUSSION Los Angeles Fire and Police Pensions (LAFPP) is tasked with administering the defined benefit retirement plan for all sworn employees of the City of Los Angeles (City) in a sound and efficient manner. Over the years, we have sustained a disciplined approach to managing our budget, always trying to stay within our fiscal year budgets. For 2019-20, we are confident that the Proposed Budget will help us continue providing excellent customer service to our members, maintaining our fiduciary responsibilities, and implementing best practices. The LAFPP 2019-20 Proposed Budget includes the estimated City’s (employer) annual required contributions to prefund LAFPP retirement and healthcare benefits, member (employee) contributions, investment earnings, pension benefit payments, investment management fees, and the departmental administrative expenses. A final 2019-20 budget will be submitted for Board approval on June 20, 2019 that incorporates changes made by the Mayor and City Council upon adoption of the City’s final 2019-20 budget. The City’s adopted budget will include updated employer contribution receipts and updated estimated member contributions. To help develop the 2019-20 Budget, staff utilized the following key items:

1. The 2019-21 Three-Year Strategic Plan – a plan that effectively guides our department and includes our Vision, Mission, Strategic Goals and Values;

2. The Annual Business Plan – a plan that includes specific projects to help us achieve our Strategic Goals;

3. Performance Metrics – a tool that helps us measure our services and provides a basis for prioritizing business improvements; and

4. Mayor’s Priority Outcomes – goals aimed to drive greater efficiency and effectiveness in the operations and services provided by the City.


In addition, staff were instructed that all new budget requests should relate to the following LAFPP budget priorities:

• Support for Existing and Future Business Plan Projects

• Operational Efficiencies

• Risk Assessment

• Customer Care and Stakeholder Relations

• Employee Development and Succession Planning

This year’s Proposed LAFPP Budget totals approximately $1.40 billion, a $69.01 million increase from 2018-19 levels. This increase is primarily due to $66.58 million in anticipated increases in pension and health benefit payments. Investment management expenses are also projected to increase slightly by approximately $3.39 million because of projected asset growth of the portfolio in 2019-20. The proposed LAFPP Administrative Expense Budget totals approximately $22.74 million, a net decrease of approximately $952,000 from 2018-19. The decrease is primarily due to administrative expenses associated with the completed implementation of phase 4A of the Pension Administration System Replacement Project. Provided below are additional details of the anticipated receipts and expenditures. RECEIPTS LAFPP receives revenue primarily from three sources: City’s (employer) contribution, member (employee) contributions, and investment earnings. Collectively for 2019-20, these sources are estimated at $1.33 billion. 1) City’s Contribution (Schedules 1 & 2)

The City’s total contribution is based on the application of the actuarial calculated rates for each Tier to the budgeted sworn payroll amounts. Each year, the LAFPP Board of Fire and Police Pension Commissioners (Board) adopts a contribution rate that is applied to the sworn payroll to fund the retirement and retiree health care benefits promised by the City to its sworn LAFPP members. On November 15, 2018, the Board adopted the pension and health valuation reports for the period ending June 30, 2018 that established the City’s combined contribution rate of 47.37% for sworn members of the Los Angeles Fire Department and the Los Angeles Police Department, 27.49% for the Los Angeles World Airports Police, and 33.52% for the Harbor Port Police. These figures mark increases of 0.52%, 0.04%, and decrease of 0.54% from 2018-19, respectively. The City’s combined general fund contribution rate increase is a result of gain layers from the June 30, 2003 valuation being fully amortized, higher than expected salary increases for active members, and higher than expected COLAs for Tier 1 and 2 retirees and beneficiaries. The increase was partially offset by a higher than expected return on the valuation value of assets (after smoothing) and amortizing the prior year’s unfunded actuarial accrued liability over a larger than expected payroll. Because the 2019-20 sworn payroll amounts have not yet been finalized by the City, staff uses the 2018-19 sworn payroll amounts with the Board-adopted contribution rates to determine the City’s estimated 2019-20 contribution for purposes of the Proposed Budget. Based on these amounts, the 2019-20 total City contribution to LAFPP, which is comprised of the City’s General Fund, Special


Funds (Airports and Harbor Departments), and the City’s Excess Benefit Plan payment, are estimated to be $702.28 million, an increase of $8.11 million (1.2%) from the 2018-19 Budget (Schedule 2).

The City’s actual 2019-20 contribution amount will be adjusted after the 2019-20 Adopted Budget for sworn payroll accounts is approved by the Mayor and City Council, the Board of Harbor Commissioners and the Board of Airport Commissioners. The revised amount will be included in the 2019-20 Final Budget to be presented to the Board on June 20, 2019. 2) Member Contributions (Schedules 1 & 3) Using 2018-19 sworn payroll amounts, total member contributions are estimated at $153.92 million, an increase of $741,400 (0.5%) from the 2018-19 Budget (Schedule 3). The proposed member contribution amount will also be adjusted after the City’s 2019-20 Budget is adopted. Member contributions are calculated based on the member’s obligation or contribution rate for each Tier. These rates range from 7% to 9% for members in Tiers 2 through 5 while members in Tier 6 contribute 11% of salary. In addition, members of Tiers 2 through 5, who elected to unfreeze their future retiree medical subsidy, make additional 2% “opt-in” contributions. Following a recommendation from LAFPP's actuary to keep all member payments to LAFPP in one account, member buybacks, which were formally budgeted under Miscellaneous revenue, has been included under Member Contributions. Consequently, the proposed 2019-20 Member Contributions will see a slight increase to accommodate anticipated member payments. [Conversely, Miscellaneous revenue, which now only includes litigation settlements, Neptune tenant and parking revenue and other administrative receivables will see a marked decrease.]

3) Investment Earnings (Schedule 1) The third major source of revenue for the System is derived from investment earnings, which consists of “Earnings on Investments” and “Gain (Loss) on Sale of Investments.” Earnings on Investments - includes interest and dividends, real estate income, securities lending income and miscellaneous income. Earnings on Investments for 2019-20 are estimated at $468.90 million, an increase of $13.40 million (2.9%) from 2018-19. The projected increase is due to higher interest rates and an increase in domestic dividends.

Gain (Loss) on Sale of Investments - includes capital gains/losses as investments are sold. These estimated receipts are not included in the Proposed Budget because it is difficult to determine in advance which investments will be sold within the year. Additionally, the gains and losses will fluctuate significantly from year to year depending upon market conditions. As such, gains/losses on sale of investments are recorded in our financial statements and future budget cycles after the amount is audited.


53.0%

11.6%

35.4%

2019-20 Budget - Estimated Receipts*

City (Employer) Contribution

Member Contributions

Investment Earnings**

*Receipts do not include Miscellaneous revenue. Percentages may be rounded.

**Investment Earnings do not include Gain (Loss) on Sale of Investments.

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

2015-16Actual

2016-17Actual

2017-18Actual

** 2018-19Budget

** 2019-20Proposed

In Millions

Five-Year Receipts History*

City (Employer) Contribution

Member Contributions

Gain/Loss on Sale of Investments

Earnings on Investments

*Receipts do not include Miscellaneous funds.

**Investment Earnings do not include Gain (Loss) on Sale of Investments.


EXPENDITURES 1) Pension Benefits Expenses (Schedule 1) The 2019-20 pension benefits expenses represent 90.8% of total 2019-20 estimated expenditures and are projected at $1.27 billion, a net increase of $66.58 million (5.5%) from the 2018-19 Budget. Expenses include service pensions, DROP distributions, disability and survivorship pensions, refunds of contributions, health/dental subsidies and Medicare and Health Insurance Premium reimbursements. The benefit expense increases are grouped by Pension Expenses and Health Benefit Expenses:

• Pension Benefit Expenses ($1.13 billion) – $59.63 million net increase (5.6%) based on the following: o Service Pensions ($710.00 million) - $39.00 million increase (5.8%) based on a three-year

growth average in actual expenditures; o DROP Distributions ($162.19 million) - $16.73 million increase (11.5%) based on projected

payments for 34 additional mandatory exits, for a total of 293, expected in 2019-20; o Surviving Spouse/Domestic Partner Pensions ($132.00 million) - $5.00 million increase

(3.9%) based on a three-year growth average in actual expenditures; and o Minor/Dependent Pensions ($3.9 million) - $900,000 increase (30.0%) based on a three-

year growth average in actual expenditures.

• Health Benefit Expenses ($148.45 million) – $6.95 million increase (4.9%) based on the following: o Health Insurance Subsidy ($127.00 million) – $5.00 million increase (4.1%) based on

anticipated annual increase in retirees receiving a health insurance subsidy and projected increase in line with the Board’s adopted medical trend rate of 6.5% for Medicare. Note that this estimate does not include an increase in the non-Medicare subsidy at this time. Staff will adjust this amount for the Final Budget in June, upon Board consideration of the non-Medicare subsidy rate increase effective July 2019 and related Board action. Pursuant to Los Angeles Administrative Code Section 4.1154(c), the Medicare subsidy is linked to the highest Medicare plan premium for LACERS members;

o Medicare Reimbursement ($15.50 million) – $2.00 million increase (14.8%) based on the projected increase in the number of retirees who will be eligible to receive a Medicare reimbursement next fiscal year and an estimated 5% increase to the Medicare reimbursement rate effective January 2020; and

o Health Insurance Premium Reimbursement ($1.3 million) – $200,000 decrease (-13.3%) based on actual average increase in participants and potential increase in Medicare and non-Medicare Subsidy.

2) Investment Management Expense (Schedule 4) Investment management expenses for the 2019-20 Proposed Budget represent 7.6% of total 2019-20 estimated expenditures and are projected at $107.01 million, an increase of about $3.4 million (3.3%) from the 2018-19 Budget and are derived as follows (amounts have been rounded):


Type/Asset Class 2019-20

Investment Management Expense Budget

Percentage of 2019-20 Total Investment

Management Expense Budget

Consultants & Bank Services $0.84 million 0.8%

Public Equity $30.63 million 28.6%

Fixed Income $9.16 million 8.6%

Private Equity $41.83 million 39.0%

Commodities $3.72 million 3.5%

Real Estate $20.82 million 19.5%

TOTAL $107.00 million 100%

Actual payments to investment managers depend on the dollar amount of assets under management, the portfolio performance, the period in which the fee is calculated, and the terms and conditions of the individual contracts as approved by the Board. These investment management expenses are reasonable and in line with the growth in the portfolio. The changes by asset class are primarily attributed to the following (amounts have been rounded): Public Equity – $26,500 net increase to overall Public Equities due to increases in asset values; Fixed Income – $452,000 increase due to increases in asset values, primarily for high yield bonds; Private Equity – $3.30 million increase due to increasing commitments to private equity; Commodities - $129,000 increase mainly due to increases in asset values; and Real Estate – $532,000 decrease due to property sales and valuation changes. 3) Administrative Expense (Schedules 5 & 6) The proposed LAFPP Administrative Expense Budget totals approximately $22.74 million, a net decrease of $951,600 (-4.0%) from 2018-19. Administrative expenses include staff salaries and benefits, operating costs, and funding for contingencies. The proposed budget aims to maintain critical programs that are prioritized as mandatory and essential to the Department’s business operations. Details of the significant proposed changes are listed below (amounts have been rounded).

• Salaries, General – $170,000 net increase, including 2% cost of living increase for staff and $133,700 for the following position changes: o Senior Accountant II (new position) to address the increased workload assumed by

Accounting staff with the implementation of the PARIS project; and o Investment Officer II (upgrade from Investment Officer I) to more evenly distribute

management across asset classes;

• Salaries, As-Needed – $2,400 increase due to the amount of work anticipated to be performed by part-time employees to support short-term projects or supplement workloads negatively impacted by vacant positions;

• Overtime – $18,900 decrease due to the reduction in overtime corresponding with the completed implementation of Phase 4A of the PARIS project;

• Printing and Binding – $8,400 decrease due to the reduction in the number of newsletters associated with the implementation of Phase 4A of the PARIS project;


• Contractual Expense – decrease of $1,586,000 based on the following: o $80,000 net decrease in services related to member outreach, including a decrease of

$5,000 for non-City facility rental expenses, a $6,000 increase for a financial planning education consultant, a $14,000 increase for graphic design services, and $95,000 decrease for website support services;

o $1,334,000 net decrease in contracts related to the completed implementation of Phase 4A of the PARIS project;

o $35,000 net decrease in investigative services due to a contract that has been phased out, and an anticipated new contract with a to-be-determined contractor for these services;

o $20,000 decrease for the completion of pension administration benchmarking analysis; o $3,000 increase for financial audit services; o $125,000 decrease for health consultant services for medical and dental plans; and

o $1,300 net decrease in various department-wide contractual services that include a $15,000 increase to career development training, a $5,000 increase to photocopier-related expense, a $5,000 increase to office furniture expense, and other decreases as a result of the elimination of one-time expenses and other cost savings identified by staff;

• Employee Benefits – $437,000 net increase due to higher employee costs for health insurance, retirement contributions to LACERS, and Medicare contributions;

• Election Expenses – $20,000 increase due to the Fire Department Retired Member and Police Department Employee Member Board elections in 2019-20; and

• Office and Administrative Expense – $17,700 net increase primarily due to budgeting more training opportunities for staff and miscellaneous office supplies.

1.6%7.6%

10.6%

0.3%

9.7%

8.0%

11.6%

50.6%

2019-20 Budget - Expenditures

Administrative Expense

Investment Management Expense

Health Benefits

Refund of Contributions

Surviving Sp/DP and Minor/Dependent Pensions

Disability Pensions

Service Pensions - DROP payout

Service Pensions

*Percentages may be rounded.


Personnel Resolution & Personnel Changes (Schedules 7 & 8) The Personnel Resolution provides employment authorization for all Department employees, whereas the Detail of Personnel Changes illustrates the proposed changes to the Civil Service classifications for 2019-20. These schedules include the addition of one new Senior Accountant II, and an upgrade of an existing Investment Officer I to an Investment Officer II. This report was prepared by: TJ Knight, Senior Management Analyst I Administrative Services Section RPC:WSR:MTS:DP:TJK Attachment: 2019-20 Proposed Budget Schedules

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

2015-16Actual

2016-17Actual

2017-18Actual

2018-19Budget

2019-20Proposed

In Millions

Five-Year Expenditure History

Administrative Expense

Investment ManagementExpense

Health Benefits

Refund of Contributions

Surviving Sp/DP andMinor/Dependent Pensions

Disability Pensions

Service Pensions - DROP payout

Service Pensions

DEPARTMENT OF FIRE AND POLICE PENSIONS2019-20 Proposed Budget

Attachment I

Schedule Title Schedule Page

2019-20 BUDGET SCHEDULE 1 2

DETAIL OF CITY, HARBOR, AND AIRPORT CONTRIBUTION REQUIREMENTS SCHEDULE 2 3

DETAIL OF ESTIMATED PAYROLLS AND MEMBER CONTRIBUTIONS SCHEDULE 3 6

DETAIL OF INVESTMENT MANAGEMENT EXPENSE SCHEDULE 4 7

ADMINISTRATIVE EXPENSE SCHEDULE 5 9

DETAIL OF ADMINISTRATIVE EXPENSE SCHEDULE 6 10

PERSONNEL RESOLUTION SCHEDULE 7 12

DETAIL OF PERSONNEL CHANGES SCHEDULE 8 14

ORGANIZATION CHART SCHEDULE 9 15

TRAVEL RESOLUTION SCHEDULE 10 19

TABLE OF CONTENTS

1 2019-20 Proposed Budget - March 21, 2019

DEPARTMENT OF FIRE AND POLICE PENSIONS2019-20 Proposed Budget

Attachment ISchedule 1

Receipts 2017-18

Adopted Budget 2018-19

Estimated Receipts 2018-19

Proposed Budget2019-20

Change from Budget 2018-19

% Change from Budget

2018-19

% Change from

Estimated Receipts2018-19

RECEIPTS

634,905,342 687,867,488 687,867,488 Total General Fund2 696,053,226 8,185,738 1.2% 1.2%

(1,917,323) (1,274,936) (1,274,936) less: Excess Benefit Plan (EBP)2 (1,530,121) (255,185) 20.0% 20.0%632,988,019 686,592,552 686,592,552 General Fund to LAFPP 694,523,105 7,930,553 1.2% 1.2%

4,663,241 4,967,756 4,967,756 Special Fund (Harbor) 4,888,690 (79,066) (-1.6%) (-1.6%)

2,294,645 1,337,008 1,337,008 Special Fund (Airport)3 1,338,956 1,948 -- 0.1%639,945,905 692,897,316 692,897,316 City Contribution (to LAFPP) 700,750,751 7,853,435 1.1% 1.1%

145,424,650 153,177,807 141,754,302 Member Contributions 153,919,168 741,361 0.5% 8.6%506,866,348 455,500,000 455,500,000 Earnings on Investments 468,900,000 13,400,000 2.9% 2.9%

1,231,533,441 - - Gain (Loss) on Sale of Investments4 - - 0.0% 0.0%5,536,030 2,500,000 576,161 Miscellaneous 1,500,000 (1,000,000) (-40.0%) 160.3%

2,529,306,374 1,304,075,123 1,290,727,778 Total Receipts 1,325,069,919 20,994,796 1.6% 2.7%

Expenditures 2017-18


Estimated Expenditures

2018-19


Change from Budget 2018-19


2018-19

% Change from


2018-19

EXPENDITURES

640,177,353 671,000,000 677,054,361 Service Pensions 710,000,000 39,000,000 5.8% 4.9%111,155,586 145,464,000 128,004,327 Service Pensions - DROP payout 162,192,000 16,728,000 11.5% 26.7%111,743,322 115,000,000 111,922,021 Disability Pensions 113,000,000 (2,000,000) (-1.7%) 1.0%125,174,099 127,000,000 129,574,355 Surviving Spouse/Domestic Partner Pensions 132,000,000 5,000,000 3.9% 1.9%

2,763,131 3,000,000 3,933,958 Minor/Dependent Pensions 3,900,000 900,000 30.0% -0.9%3,786,094 4,500,000 3,434,409 Refund of Contributions 4,500,000 - 0.0% 31.0%

994,799,585 1,065,964,000 1,053,923,431 Subtotal Pension Benefits 1,125,592,000 59,628,000 5.6% 6.8%

114,559,091 122,000,000 121,741,333 Health Insurance Subsidy 127,000,000 5,000,000 4.1% 4.3%4,143,206 4,500,000 4,277,382 Dental Insurance Subsidy 4,650,000 150,000 3.3% 8.7%

10,871,700 13,500,000 11,554,822 Medicare Reimbursement 15,500,000 2,000,000 14.8% 34.1%1,147,915 1,500,000 1,761,124 Health Insurance Premium Reimbursement 1,300,000 (200,000) (-13.3%) -26.2%

130,721,912 141,500,000 139,334,661 Subtotal Health Benefits 148,450,000 6,950,000 4.9% 6.5%1,125,521,497 1,207,464,000 1,193,258,092 Total Benefits Expenses (90.8%) 1,274,042,000 66,578,000 5.5% 6.8%

95,217,452 103,621,611 99,843,301 Investment Management Expense (7.6%) 107,008,749 3,387,138 3.3% 7.2%21,654,037 23,693,000 22,851,639 Administrative Expense (1.6%) 22,741,396 (951,604) (-4.0%) -0.5%

1,242,392,986 1,334,778,611 1,315,953,032 Total Expenditures (100.0%) 1,403,792,146 69,013,535 5.2% 6.7%

1,286,913,388 (30,703,488) (25,225,254)

Increase (Decrease)

in Fund Balance 5 (78,722,227) (48,018,739) 156.4% 212.1%

2,529,306,374 1,304,075,123 1,290,727,778

Total Expenditures and Increase (Decrease) in Fund Balance 1,325,069,919 20,994,796 1.6% 2.7%

1 2017-18 Actual Receipts and Expenditures are derived from LAFPP's Audited Financial Statements using the modified accrual basis. 2018-19 Estimated Receipts andExpenditures and 2019-20 Budgeted Receipts and Expenditures are calculated on a cash basis.

2 On May 6, 2010, the Board authorized a credit to be applied toward the City's Annual Required Contribution equal to the amount budgeted for the Excess Benefit Plan (EBP), ascalculated by the actuary. As such, beginning in 2010-11, the total General Fund Contribution in a given fiscal year is the sum of the General Fund and EBP line items. However,since EBP revenue is not transferred to LAFPP, it is excluded from the Department's total revenue.

3 Pursuant to the November 2016 Charter Amendment, 42 Los Angeles World Airports (LAWA) Police Officers transferred to Tier 6 of LAFPP effective January 2, 2018. Newhires are automatically enrolled as Tier 6 members of LAFPP. LAFPP's total receipts include special fund contributions from LAWA.

4 Gain (Loss) on Sale of Investments is recorded in LAFPP financial statements after the amount is audited and therefore an amount is not included in the budget.

5 2018-19 Adopted and 2019-20 Proposed Budget Decrease in Fund Balance reflects the increase in estimated pension benefit payments and does not include the Gain (Loss)on Sale of Investments.

1

1


DEPARTMENT OF FIRE AND POLICE PENSIONS2019-20 Proposed BudgetDetail of City, Harbor, and Airport Contribution Requirements(Assuming Contributions Made on July 15, 2019)


% of Payroll

Projected Payroll =

Contribution

Required1

TIER 1 requirements:1. Unfunded supplemental present value annual amount N/A N/A 14,561,099 2. Health subsidy unfunded actuarial accrued liability annual amount N/A N/A 1,565,954

Subtotal 16,127,053 TIER 2 requirements:

1. Entry age cost 24.84% 1,468,524 364,781 2. Unfunded supplemental present

value annual amount* 0.92% 1,468,523,373 13,510,415

3. Pension Admin Expenses 1.12% 1,468,524 16,447 4. Health subsidy entry age cost 2.83% 1,468,524 41,559 5. Health subsidy unfunded actuarial accrued liability annual amount* 4.34% 1,468,523,373 63,733,914 6. Health Admin Expenses 0.09% 1,468,524 1,322

Subtotal 77,668,438 * Unfunded Actuarial Accrued Liability (UAAL) expressed as a percent of payroll for all active members.

TIER 3 requirements:1. Entry age cost 17.09% 85,174,356 14,556,297 2. Unfunded supplemental present value annual amount* 0.00% 1,468,523,373 -

3. Pension Admin Expenses 1.12% 85,174,356 953,953 4. Health subsidy entry age cost 4.53% 85,174,356 3,858,398 5. Health subsidy unfunded actuarial accrued liability annual amount* 0.39% 1,468,523,373 5,727,241 6. Health Admin Expenses 0.09% 85,174,356 76,657


TIER 4 requirements:1. Entry age cost 18.78% 32,307,514 6,067,351 2. Unfunded supplemental present value annual amount* 0.52% 1,468,523,373 7,636,322

3. Pension Admin Expenses 1.12% 32,307,514 361,844 4. Health subsidy entry age cost 4.35% 32,307,514 1,405,377 5. Health subsidy unfunded actuarial accrued liability annual amount* 0.23% 1,468,523,373 3,377,604 6. Health Admin Expenses 0.09% 32,307,514 29,077


TIER 5 requirements:1. Entry age cost 19.56% 1,116,077,763 218,304,810 2. Unfunded supplemental present value annual amount 13.17% 1,116,077,763 146,987,441

3. Pension Admin Expenses 1.12% 1,116,077,763 12,500,071 4. Health subsidy entry age cost 4.21% 1,116,077,763 46,986,874 5. Health subsidy unfunded actuarial accrued liability annual amount 3.39% 1,116,077,763 37,835,036 6. Health Admin Expenses 0.09% 1,116,077,763 1,004,470

Subtotal 463,618,702




% of Payroll

Projected Payroll =

Contribution

Required1

TIER 6 requirements:1. Entry age cost 16.17% 233,495,216 37,756,176 2. Unfunded supplemental present value annual amount 13.17% 233,495,216 30,751,320

3. Pension Admin Expenses 1.12% 233,495,216 2,615,146 4. Health subsidy entry age cost 6.57% 233,495,216 15,340,636 5. Health subsidy unfunded actuarial accrued liability annual amount 3.39% 233,495,216 7,915,488 6. Health Admin Expenses 0.09% 233,495,216 210,146

Subtotal 94,588,912

NET CITY (GENERAL FUND) ACTUARIAL CONTRIBUTION REQUIREMENT 696,053,226 Early Payment Savings (relative to payment at the end of each pay period) 22,816,753

TIER 5 Harbor requirements:1. Entry age cost 19.86% 12,439,991 2,470,582 2. Unfunded supplemental present value annual amount 5.90% 12,439,991 733,959

3. Pension Admin Expenses 1.12% 12,439,991 139,328 4. Health subsidy entry age cost 5.79% 12,439,991 720,275 5. Health subsidy unfunded actuarial accrued liability annual amount 1.22% 12,439,991 151,768 6. Health Admin Expenses 0.09% 12,439,991 11,196

Subtotal 4,227,108 TIER 6 Harbor requirements:

1. Entry age cost 16.19% 2,143,820 347,084 2. Unfunded supplemental present value annual amount 5.90% 2,143,820 126,485


Subtotal 661,582

NET HARBOR (SPECIAL FUND) ACTUARIAL CONTRIBUTION REQUIREMENT 4,888,690

Early Payment Savings (relative to payment at the end of each pay period) 159,738

TIER 6 Airport requirements:1. Entry age cost 16.18% 4,870,700 788,079 2. Unfunded supplemental present value annual amount 1.97% 4,870,700 95,953


Subtotal 1,338,956

NET AIRPORT (SPECIAL FUND) ACTUARIAL CONTRIBUTION REQUIREMENT 1,338,956

Early Payment Savings (relative to payment at the end of each pay period) 43,836




GENERAL FUND TO LAFPP 694,523,105 EXCESS BENEFIT PLAN 1,530,121

696,053,226

4,888,690

1,338,956

TOTAL CITY CONTRIBUTION 702,280,872

TOTAL SPECIAL FUND (HARBOR) CONTRIBUTION TO LAFPP

TOTAL GENERAL FUND CONTRIBUTION

1 Figures may be rounded.

TOTAL SPECIAL FUND (AIRPORT) CONTRIBUTION TO LAFPP


DEPARTMENT OF FIRE AND POLICE PENSIONS2019-20 Proposed BudgetDetail of Estimated Payrolls and Member Contributions


Tier 2 Tier 3 Tier 4 Tier 5 Tier 6 TOTAL4

SWORNPAYROLL

PENSIONABLE PAYFire 392,356 22,756,622 8,631,822 298,190,215 62,384,532 392,355,546 Police 1,076,168 62,417,734 23,675,692 817,887,548 171,110,684 1,076,167,826 Harbor - - - 12,439,991 2,143,820 14,583,811 Airport - - - - 4,870,700 4,870,700

TOTAL 1,468,524 85,174,356 32,307,514 1,128,517,754 240,509,736 1,487,977,884 TOTAL General Fund 1,468,524 85,174,356 32,307,514 1,116,077,763 233,495,216 1,468,523,373 TOTAL Special Fund (Harbor) - - - 12,439,991 2,143,820 14,583,811 TOTAL Special Fund (Airport) - - - - 4,870,700 4,870,700

BASE PAY (2% OPT-IN)1

Fire 249,555 1,449,777 4,137,163 219,199,897 - 225,036,392 Police 373,204 55,903,003 16,617,465 517,724,363 - 590,618,035 Harbor - - - 9,243,106 - 9,243,106 Airport - - - - - -

TOTAL 622,759 57,352,780 20,754,628 746,167,366 - 824,897,533 TOTAL General Fund 622,759 57,352,780 20,754,628 736,924,260 - 815,654,427 TOTAL Special Fund (Harbor) - - - 9,243,106 - 9,243,106 TOTAL Special Fund (Airport) - - - - - -

MEMBER CONTRIBUTIONS

PENSIONABLE PAYSeven Percent2 Eight Percent Eight Percent Nine Percent3 Eleven Percent TOTAL

Fire - 1,820,530 690,546 26,837,119 6,862,299 36,210,494 Police - 4,993,419 1,894,055 73,609,879 18,822,175 99,319,528 Harbor - - - 1,119,599 235,820 1,355,419 Airport - - - - 535,777 535,777 TOTAL - 6,813,949 2,584,601 101,566,597 26,456,071 137,421,218

BASE PAY (2% OPT-IN)Two Percent Two Percent Two Percent Two Percent N/A TOTAL

Fire 4,991 28,996 82,743 4,383,998 - 4,500,728 Police 7,464 1,118,060 332,349 10,354,487 - 11,812,360 Harbor - - - 184,862 - 184,862 Airport - - - - - - TOTAL 12,455 1,147,056 415,092 14,923,347 - 16,497,950

TOTAL 12,455 7,961,005 2,999,693 116,489,944 26,456,071 153,919,168 TOTAL General Fund 12,455 7,961,005 2,999,693 115,185,483 25,684,474 151,843,110 TOTAL Special Fund (Harbor) - - - 1,304,461 235,820 1,540,281 TOTAL Special Fund (Airport) - - - - 535,777 535,777

1 This figure reflects estimated base pay amounts for those members who elected to unfreeze their future retiree medical subsidy by making additional 2% opt-incontributions. The 2% is calculated based on base pay, not pensionable pay.

2 Pursuant to Charter Section 1420, pension benefit-related deductions shall not be made from the salaries of Tier 2 System members who have completed 30 yearsof service. Accordingly, as of December 8, 2010, all Tier 2 members have completed at least 30 years of service and therefore no longer make pensioncontributions.


3 For Tier 5 only, the City pays 1% of the 9% if the Plan is at least 100% actuarially funded for pension benefits.


DEPARTMENT OF FIRE AND POLICE PENSIONS2019-20 Proposed BudgetDetail of Investment Management Expense




2018-19


Change from

Budget3

2018-19


2018-19

CONSULTANTS & BANK SERVICESCustodian Bank Services (STIF) 331,739 355,230 338,863 7,124 2.1%General Consultant - RV Kuhns 503,750 503,750 503,750 - 0.0%CONSULTANTS & BANK SERVICES TOTAL (0.8%) 835,489 858,980 842,613 7,124 0.9%

ADVISORYPUBLIC EQUITY - LARGE CAP

AllianceBernstein (Systemic Value) 423,917 430,779 462,010 38,093 9.0%Alliance Capital (S&P 500 Index) 142,320 131,898 141,461 (859) -0.6%Alliance Capital (Russell 1000 Growth Index) 270,011 244,657 262,395 (7,616) -2.8%LA Capital (Enhanced Index-Growth) 772,808 734,921 788,202 15,394 2.0%OakBrook Investments (Core) 175,774 37,553 - (175,774) -100.0%Redwood Investments (Core) 168,319 158,543 170,038 1,719 1.0%Robeco (Value) 597,526 567,955 609,132 11,606 1.9%S&P 500 (Equal Weighted Index) 310,596 304,490 326,566 15,970 5.1%STOXX USA (900 Minimum Variance) 222,246 222,572 238,709 16,463 7.4%

Subtotal 3,083,517 2,833,369 2,998,513 (85,004) -2.8%

PUBLIC EQUITY - SMALL CAPChanning Capital Mgmt. (Core) 557,269 509,292 546,216 (11,053) -2.0%Daruma (Core) 2,463,693 2,094,214 2,470,649 6,956 0.3%Frontier Capital Management (Growth) 1,884,753 2,711,039 2,907,589 1,022,836 54.3%AB Small Cap Value Domestic 853,360 790,859 848,197 (5,163) -0.6%Phocas Financial (Value) 591,729 471,995 506,214 (85,515) -14.5%Westwood Management (Value) 1,633,225 1,514,849 1,624,676 (8,549) -0.5%

Subtotal 7,984,029 8,092,248 8,903,540 919,511 11.5%

PUBLIC EQUITY - INTERNATIONALBaille Gifford (Growth) 2,932,756 2,632,455 2,823,308 (109,448) -3.7%Blackrock (Large Cap Index) 324,995 311,913 334,526 9,531 2.9%Boston Common (ESG) 202,882 175,413 188,130 (14,752) -7.3%Brandes (Value) 3,426,301 3,271,355 3,508,528 82,226 2.4%FIS International (Manager of Emerging Managers) 805,483 677,670 726,801 (78,682) -9.8%Fisher (Core) 2,317,228 1,990,197 2,134,486 (182,742) -7.9%Principal (Active Small Cap) 1,349,936 1,133,102 1,215,252 (134,684) -10.0%Victory Capital Management (Active Small Cap) 1,600,809 1,343,341 1,440,733 (160,076) -10.0%

Subtotal 12,960,390 11,535,444 12,371,764 (588,627) -4.5%

PUBLIC EQUITY - EMERGING MARKETSDimensional Fund Advisors 2,886,671 2,646,050 2,837,889 (48,782) -1.7%Harding Loevner 3,690,397 3,281,822 3,519,755 (170,642) -4.6%

Subtotal 6,577,068 5,927,873 6,357,643 (219,425) -3.3%

PUBLIC EQUITY TOTAL (28.6%) 30,605,004 28,388,934 30,631,461 26,456 0.1%

FIXED INCOME - INVESTMENT GRADEBridgewater (Pure Alpha) 1,569,218 1,489,500 1,597,489 28,271 1.8%Bridgewater (TIPS) 1,536,034 1,455,471 1,560,992 24,958 1.6%CA Community Mortgage Fund 7,793 - - (7,793) -100.0%GIA Partners (Opportunistic) 88,073 143,410 153,807 65,734 74.6%LM Capital Group (Opportunistic) 349,351 306,050 328,239 (21,112) -6.0%Loomis Sayles (Long Duration) 626,195 605,094 648,963 22,768 3.6%Northern Trust (Index) 206,650 210,457 225,715 19,065 9.2%Payden & Rygel (Unconstrained) 842,369 776,694 833,004 (9,365) -1.1%


DEPARTMENT OF FIRE AND POLICE PENSIONS2019-20 Proposed BudgetDetail of Investment Management Expense




2018-19


Change from

Budget3

2018-19


2018-19

FIXED INCOME - INVESTMENT GRADE (Continued)Reams Asset Management (Opportunistic) 755,358 710,183 761,672 6,314 0.8%Reams Asset Management (Passive TIPS) 118,012 136,539 146,438 28,426 24.1%Reams Asset Management (Unconstrained) 481,085 444,445 476,667 (4,418) -0.9%Semper Capital Management 91,909 152,383 163,431 71,522 77.8%

Subtotal 6,672,047 6,430,226 6,896,417 224,370 3.4%

FIXED INCOME - HIGH YIELDMacKay Shields 2,037,646 2,112,187 2,265,321 227,675 11.2%

Subtotal 2,037,646 2,112,187 2,265,321 227,675 11.2%

FIXED INCOME TOTAL (8.6%) 8,709,693 8,542,413 9,161,738 452,045 5.2%

PRIVATE EQUITYFairview Capital Partners (Specialized Mandate) 240,000 240,000 300,000 60,000 25.0%Portfolio Advisors 1,300,000 1,300,000 1,300,000 - 0.0%Portfolio Advisors (Specialized Mandate) 45,000 45,000 45,000 - 0.0%Private Equity Partnership Fees1 36,940,972 37,468,756 40,185,241 3,244,269 8.8%

PRIVATE EQUITY TOTAL (39.1%) 38,525,972 39,053,756 41,830,241 3,304,269 8.6%

COMMODITIESAB Commodities Indices (6) 485,305 470,423 504,528 19,223 4.0%Gresham Investment Management (Active) 489,616 482,965 517,980 28,364 5.8%Goldman Sachs (Enhanced Index) 210,033 201,718 216,342 6,309 3.0%Private Equity Partnership Fees1 2,407,580 2,314,823 2,482,648 75,068 3.1%

COMMODITIES TOTAL (3.5%) 3,592,534 3,469,928 3,721,498 128,964 3.6%

REAL ESTATEAlliance Capital (Global REIT) Index 84,493 84,659 90,797 6,304 7.5%Principal (Global REIT) 893,332 898,283 963,409 70,077 7.8%Cohen & Steers (US REIT) 835,357 964,135 835,357 (0) 0.0%Principal (U.S. REIT) 813,196 825,083 884,902 71,706 8.8%Total Pooled Funds2 14,389,162 14,093,777 15,115,576 726,414 5.0%AEW (Asset Management Fees) 4,057,379 2,383,352 2,651,158 (1,406,221) -34.7%Real Estate Annual Appraisals - - 35,000 35,000 --Townsend (Consultant) 280,000 280,000 245,000 (35,000) -12.5%

REAL ESTATE TOTAL (19.5%) 21,352,919 19,529,290 20,821,198 (531,721) -2.5%

ADVISORY TOTAL (99.2%) 102,786,122 98,984,322 106,166,137 3,380,014 3.3%

INVESTMENT MANAGEMENT EXPENSE TOTAL (100.0%) 103,621,611 99,843,301 107,008,749 3,387,138 3.3%


¹ Partnership fees do not include performance fees. Generally performance fees take 20% of the profit. In some cases, they can go as high as 30%.2 Pooled Fund fees do not include performance fees. Generally performance fees take 20% of the profit. In some cases, they can go as high as 30%.


DEPARTMENT OF FIRE AND POLICE PENSIONS2019-20 Proposed BudgetAdministrative Expense


% Change from

Actual Estimated % Change Estimated

Exp Expenditure from Budget Expenditure

2017-18 2018-19 Account Titles 2018-19 2018-19

11,138,993 12,009,000 11,296,000 Salaries - General2 12,179,000 1.4% 7.8%

60,248 39,000 108,224 Salaries - As-Needed2 41,400 6.2% (-61.7%)

78,701 87,000 112,000 Overtime 68,100 (-21.7%) (-39.2%)

11,277,942 12,135,000 11,516,224 Sub-total Salaries 12,288,500 1.3% 6.7%

20,768 72,000 72,000 Printing and Binding 63,600 (-11.7%) (-11.7%)

100,967 147,000 139,000 Travel Expense 162,400 10.5% 16.8%

4,988,739 5,534,000 5,534,000 Contractual Expense 3,947,833 (-28.7%) (-28.7%)

6,000 6,000 6,000 Transportation 6,000 0.0% 0.0%

131,738 300,000 300,000 Medical Services 320,000 6.7% 6.7%

1,168,538 1,417,000 1,373,000 Health Insurance 1,420,000 0.2% 3.4%

49,503 60,000 59,000 Dental Insurance 60,000 0.0% 1.7%

36,069 40,000 34,000 Other Employee Benefits 40,000 0.0% 17.6%

2,987,549 3,081,000 3,081,000 Retirement Contribution1 3,514,000 14.1% 14.1%

147,336 176,000 136,415 Medicare Contribution 177,000 0.6% 29.8%

16,005 25,000 43,000 Election Expense 45,000 -- 4.7%

432,223 659,000 540,000 Office and Administrative Expense 662,063 0.5% 22.6%

274,805 - - Total Furniture, Office, & Tech Equip. - 0.0% 0.0%

15,854 41,000 18,000 Tuition Reimbursement 35,000 (-14.6%) 94.4%

10,376,096 11,558,000 11,335,415 Sub-total Expense 10,452,896 (-9.6%) (-7.8%)

- - - Unappropriated Balance - 0.0% 0.0%

21,654,037 23,693,000 22,851,639 TOTAL ADMINISTRATIVE EXPENSE 22,741,396 (-4.0%) (-0.5%)


1 Beginning 2014-15, LAFPP has made payments to LACERS for LAFPP employee retirement contributions pursuant to the released audit ofthe City Contribution to LACERS and LAFPP (Account 645360). LAFPP will begin receiving credit for the Enhanced Benefit Adjustment in 2018-19 for the Airport Peace Officers who opted to stay with LACERS (Tier 1 Enhanced) during the transition of Airport Police to LAFPP. As costsassociated with the Enhanced Benefit Adjustment would be borne exclusively by Airport, LAFPP was credited for its share.2 The following adjustments were made to the 2018-19 Adopted Budget:


a) Based on the General Manager's authority, delegated by the Board on June 21, 2018, funds totaling $54,224 were transferred from Salaries,General (Account 641010) to Salaries, As-Needed (Account 641070) to fund costs for four Relief Retirement Workers and one 120-daycontractor in preparation of the implementation of PARIS;

b) On February 21, 2019, the Board approved the General Manager to transfer funds totaling $18,000 from Office Office and Administrative Expense (Account 646010) to Election Expense (Account 645417), for expenses associated with the upcoming election of the Police Department Retired Member of the Board; and

c) On February 21, 2019, the Board approved the General Manager to transfer funds totaling $40,000 from General Salaries (Account 641010) and appropriate $15,000 to As-Needed Salaries (Account 641070) and $25,000 to Overtime Salaries (Account 641090), for as-needed and overtime expenses attributable to PARIS implementation and increased counseling due to changes in the DROP ordinance.


DEPARTMENT OF FIRE AND POLICE PENSIONS2019-20 Proposed BudgetDetail of Administrative Expense


Acct Change fromNo. Account Titles 2018-19

641010 Salaries - General2 12,009,000 12,179,000 170,000641070 Salaries - As-Needed2 39,000 41,400 2,400641090 Overtime 87,000 68,100 (18,900)

Sub-total Salaries 12,135,000 12,288,500 153,500

642120 Printing and Binding 72,000 63,600 (8,400)642130 Travel Expense 147,000 162,400 15,400643040 Contractual Expense

City AttorneyCity Attorney Expense Paid to LACERS 31,500 30,000 (1,500) City Attorney Staff 700,000 700,000 - Legal Services: Fiduciary Counsel 100,000 50,000 (50,000) Legal Services: Legal Representation 50,000 50,000 - Legal Services: Real Estate and Investment Counsel 335,000 310,000 (25,000) Legal Services: Tax Counsel 100,000 100,000 - Legal Services: Health & Data Privacy Outside Counsel - 50,000 50,000

Subtotal 1,316,500 1,290,000 (26,500)

Communications & EducationFinancial Planning Education - Venue 10,000 5,000 (5,000) Financial Planning Education Consultant 70,000 76,000 6,000 Graphic Design Services 19,000 33,000 14,000 Pre-Retirement Seminar Caterer 40,000 40,000 - Web Site Support Services 115,000 20,000 (95,000)

Subtotal 254,000 174,000 (80,000)

Department-wideCareer Development Training 5,000 20,000 15,000 Headquarters Furnishing - 5,000 5,000 Neptune Building Property Management 511,000 511,000 - Photocopiers 30,000 35,000 5,000 Records Retention 5,000 5,000 - Secure Shredding Services 4,500 4,500 - Vehicle Maintenance 2,300 1,000 (1,300) Workers Compensation 50,000 25,000 (25,000)

Subtotal 607,800 606,500 (1,300)

Disability PensionHearing Reporter 20,000 20,000 - Investigative Services 80,000 45,000 (35,000)

Subtotal 100,000 65,000 (35,000)

ExecutiveActuarial Services 500,000 500,000 - Annual Offsite Meeting 10,000 10,000 - Fiduciary Liability Insurance 40,000 40,000 - Governance Consultant 20,000 20,000 - Pension Administration Benchmarking 20,000 - (20,000)

Subtotal 590,000 570,000 (20,000)

Internal AuditFinancial Audit 82,000 85,000 3,000

Subtotal 82,000 85,000 3,000

Investments DivisionProxy Service 40,000 40,000 - Investment Management Expense Benchmarking - 30,000 30,000

Subtotal 40,000 70,000 30,000




DEPARTMENT OF FIRE AND POLICE PENSIONS2019-20 Proposed BudgetDetail of Administrative Expense


Acct Change fromNo. Account Titles 2018-19



Medical and Dental BenefitsHealth Consultant 225,000 100,000 (125,000) Graphic Designer - 2,500 2,500

Subtotal 225,000 102,500 (122,500)

SystemsDisaster Recovery - Verizon Terremark 50,000 50,000 - EMC/AT&T 24,000 24,000 - OnPoint Enhancements 15,000 - (15,000) OnPoint License & Maintenance 87,500 - (87,500) Pension Administration System Consultant (LRWL) 217,200 - (217,200) Pension Administration System (Conduent State & Local Solutions) 1,700,000 725,833 (974,167) Retiree Benefit Payment Services 225,000 185,000 (40,000)

Subtotal 2,318,700 984,833 (1,333,867)

Total Contractual Expense 5,534,000 3,947,833 (1,586,167)

643310 Transportation 6,000 6,000 - 644230 Medical Services (Disability Cases) 300,000 320,000 20,000 645180 Health Insurance 1,417,000 1,420,000 3,000 645190 Dental Insurance 60,000 60,000 - 645200 Other Employee Benefits 40,000 40,000 - 645360 Retirement Contribution1 3,081,000 3,514,000 433,000 645370 Medicare Contribution 176,000 177,000 1,000 645417 Election Expense 25,000 45,000 20,000 646010 Office and Administrative Expense

646010-01 Office & Administrative Expense 316,000 333,737 17,737 646010-02 Office Supplies 74,000 69,000 (5,000) 646010-03 Telephone, Internet, and Tablet Devices 117,000 86,000 (31,000) 646010-05 Training Expense 73,000 93,086 20,086 646010-06 Dues & Subscriptions 26,000 27,240 1,240 646010-530 Computer & Peripheral 53,000 53,000 -

Total Office and Administrative Expense 659,000 662,063 3,063

647300 Total Furniture, Office, & Technical Equip > $5,000 - - - 649570 Tuition Reimbursement 41,000 35,000 (6,000)

Sub-total Expense 11,558,000 10,452,896 (1,105,104)

649500 Unappropriated Balance (UB) - - -

TOTAL ADMINISTRATIVE EXPENSE 23,693,000 22,741,396 (951,604)

a) Based on the General Manager's authority, delegated by the Board on June 21, 2018, funds totaling $54,224 were transferred from Salaries,General (Account 641010) to Salaries, As-Needed (Account 641070) to fund costs for four Relief Retirement Workers and one 120-day contractorin preparation of the implementation of PARIS.

b) On February 21, 2019, the Board approved the General Manager to transfer funds totaling $18,000 from Office Office and AdministrativeExpense (Account 646010) to Election Expense (Account 645417), for expenses associated with the upcoming election of the Police DepartmentRetired Member of the Board; and

c) On February 21, 2019, the Board approved the General Manager to transfer funds totaling $40,000 from General Salaries (Account 641010) andappropriate $15,000 to As-Needed Salaries (Account 641070) and $25,000 to Overtime Salaries (Account 641090), for as-needed and overtimeexpenses attributable to PARIS implementation and increased counseling due to changes in the DROP ordinance.

2 The following adjustments were made to the 2018-19 Adopted Budget:

1 Beginning 2014-15, LAFPP has made payments to LACERS for LAFPP employee retirement contributions pursuant to the released audit of theCity Contribution to LACERS and LAFPP (Account 645360). LAFPP will begin receiving credit for the Enhanced Benefit Adjustment in 2018-19 forthe Airport Peace Officers who opted to stay with LACERS (Tier 1 Enhanced) during the transition of Airport Police to LAFPP. As costs associatedwith the Enhanced Benefit Adjustment would be borne exclusively by Airport, LAFPP was credited for its share.


DEPARTMENT OF FIRE AND POLICE PENSIONS2019-20 Proposed BudgetDetail of Personnel Changes


FIRE AND POLICE PENSIONS

2018-19 2019-20 Change Code Title

2 2 0 1116 Secretary ( 50,425 - 73,686 )2 2 0 1117-2 Executive Administrative Assistant II ( 60,656 - 88,698 )1 1 0 1117-3 Executive Administrative Assistant III ( 65,020 - 95,067 )1 1 0 1170-1 Payroll Supervisor I ( 63,579 - 92,957 )1 1 0 1201 Principal Clerk ( 55,332 - 80,930 )

20 20 0 1203 Benefits Specialist ( 55,332 - 80,930 )4 4 0 1358 Administrative Clerk ( 37,584 - 54,935 )

17 17 0 1368 Senior Administrative Clerk ( 46,374 - 67,818 )2 2 0 1455-1 Systems Programmer I ( 105,276 - 127,305 )1 1 0 1455-2 Systems Programmer II ( 93,667 - 136,931 )1 1 0 1455-3 Systems Programmer III ( 101,497 - 148,394 )7 7 0 1513 Accountant ( 55,018 - 80,471 )1 2 1 1523-2 Senior Accountant II ( 69,217 - 101,205 )1 1 0 1525-1 Principal Accountant I ( 79,615 - 116,385 )1 1 0 1525-2 Principal Accountant II ( 83,937 - 122,732 )1 1 0 1593-3 Departmental Chief Accountant III ( 113,984 - 166,664 )6 6 0 1596 Systems Analyst ( 70,156 - 102,562 )3 3 0 1597-1 Senior Systems Analyst I ( 82,977 - 121,333 )2 2 0 1597-2 Senior Systems Analyst II ( 102,666 - 150,127 )1 1 0 1610 Departmental Audit Manager ( 123,067 - 179,944 )1 1 0 1625-2 Internal Auditor II ( 70,156 - 102,562 )1 1 0 1625-4 Internal Auditor IV ( 102,666 - 150,127 )3 2 -1 9146-1 Investment Officer I ( 95,442 - 139,541 )3 4 1 9146-2 Investment Officer II ( 118,912 - 173,889 )1 1 0 9146-3 Investment Officer III ( 149,563 - 218,655 )1 1 0 9147 Chief Investment Officer ( 179,109 - 261,814 )2 2 0 9151 Chief Benefits Analyst ( 123,067 - 179,944 )1 1 0 9167-1 Senior Personnel Analyst I ( 86,339 - 126,199 )4 4 0 9171-1 Senior Management Analyst I ( 82,872 - 121,145 )7 7 0 9171-2 Senior Management Analyst II ( 102,666 - 150,127 )1 1 0 9182 Chief Management Analyst ( 123,067 - 179,944 )

22 22 0 9184 Management Analyst ( 70,156 - 102,562 )1 1 0 9267 General Manager ( 168,627 - 298,876 )2 2 0 9269 Assistant General Manager ( 141,462 - 206,837 )1 1 0 9375 Director of Systems ( 123,067 - 179,944 )1 1 0 9734-2 Commission Executive Assistant II ( 70,156 - 102,562 )

127 128 1

A resolution authorizing the employment of personnel in the Department of Fire and Police Pensions of the City of Los Angeles.

BE IT RESOLVED, that:

Section 1. Effective July 1, 2019, the number and classification of positions listed below are authorized within the Los Angeles Fire andPolice Pension System:

(a) Regular Positions:

Salary Range




(b) Resolution Authority Positions:

2018-19 2019-20 Change Code Title

1 1 0 1539 Management Assistant ( 49,903 - 72,996 )1 1 0 9184 Management Analyst ( 70,156 - 102,562 )1 1 0 1203 Benefits Specialist ( 55,332 - 80,930 )

3 3 0

(c) To be Employed As Needed in Such Numbers as Required:

0820 Administrative Trainee1133 Relief Retirement Worker1501 Student Worker1502 Student Professional Worker1535-1 Administrative Intern I1535-2 Administrative Intern II

(d) Commissioner Positions:

9 0101-2 Commissioner9

Section 6. The personnel authority contained in this resolution shall be limited by the amount of money available on the records of theDepartmental Chief Accountant for the payment of salaries and wages in the appropriate departmental account.

Section 2. One Assistant General Manager (Class Code 9269), when designated by the General Manager to assume the additionaladministrative and supervisory duties of Executive Officer, shall be compensated at the fourth premium level rate above the appropriate steprate or premium level rate of the incumbent. Upon approval of the General Manager, one additional Assistant General Manager (Class Code9269) may receive salary up to the fourth premium level rate above the appropriate step rate of the prescribed salary range.

Section 3. Whenever the General Manager is authorized pursuant to Charter Section 1164(b) to employ a person who is retired from Cityservice, the employee may be employed at any step within the salary range prescribed for the class that is determined by the General Managerto be commensurate with, and based upon, the extent, responsibility, and importance of the work to be assigned and the experience, skill andability of the employee.

Section 4. Upon approval of the General Manager, substitute and resolution authority positions may be activated and filled using anyclass of position specified in Schedule "A" of Los Angeles Administrative Code Section 4.61 or approved Memorandum of Understanding. Thisapproval shall specify the period during which the position shall be filled. The General Manager shall maintain a record of the substitute andresolution authority positions approved for filling.

Section 5. The General Manager may employ persons and assign duties appropriate to the employee’s classification and pay grade inany class of position specified in Schedule "A" of Los Angeles Administrative Code Section 4.61 in lieu of vacant positions in a relatedoccupational series which vacant positions have a salary or salary range equal to or higher than the salary or salary range for the class ofposition in which the persons are to be employed; provided, however, that at no time shall the total number of persons employed in thedepartment exceed the total number of positions authorized.

Salary Range




CHANGE No. REASON FOR CHANGE

ADD/DELETE POSITION

AccountingSenior Accountant II (New) 1 The Senior Accountant II will have the appropriate skills and knowledge to

undertake the additional responsibilities required with the new pensionsystem, PARIS.

InvestmentsInvestment Officer II (Reallocation) 1

Investment Officer I -1

NET NUMBER OF POSITIONS 1

The Investment Officer II will allow for a more efficient distribution of assetclass management. This re-distribution of asset class management willalso allow junior employees to assist multiple Investment Officer II's indifferent asset classes, providing for improved employee development.


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Ch

ief

Inve

stm

ent

Off

ice

rT

ho

ma

s L

opez

#042

As

sis

tan

t G

en

era

l Man

ag

er

Jo

sep

h S

ala

zar

DE

PA

RT

ME

NT

OF

FIR

E A

ND

PO

LIC

E P

EN

SIO

NS

2019

-20

Pro

po

se

d B

ud

ge

tO

rga

niz

ati

on

Ch

art

201

9-2

0 P

ropo

sed

Bu

dge

t M

arc

h 2

1, 2

019

Eff

ectiv

e J

uly

1,

201

9 (

as o

f M

arch

21

, 20

19)

Att

ach

me

nt

Sc

he

du

le 9

Va

can

t

M

arth

a B

isse

tt#

014

Va

can

t

Vin

cen

t On

An

a V

ele

n R

eye

s (S

r. A

ccou

ntan

t I i

n-lie

u)

LoA

n L

uu (

Mg

mt.

Ass

t. in

-lie

u)

Jam

es

Pin

ed

a

Va

can

t

Va

can

t#

049

Va

can

tH

eld

fo

r S

ub-A

uth

ori

ty

Va

can

t

Va

can

t

Ta

i Ma

Nic

ho

le C

he

ung

AD

MIN

IST

RA

TIV

E O

PE

RA

TIO

NS

DIV

ISIO

N

Sy

ste

ms

Ac

cou

nti

ng

Hu

ma

n R

eso

urc

es

Ad

min

istr

ati

ve S

erv

ices

Ex

ecu

tive

Off

icer

#077

Will

iam

S.

Ra

ggio

Bo

b Y

an

(Inf

o S

yste

ms

Man

age

r II

in-li

eu)

Rita

Har

pe

rC

on

SE

PP

Alfr

edo

Do

ma

gat

Te

resa

Gue

rre

ro

2

Sys

tem

s A

naly

st

Se

rver

an

d H

elp

De

sk

Da

vid

Liu

Ta

rral

yn R

ose

4

Sys

tem

s A

naly

st

Jack

Hu

an

g#

110

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bin

Wo

o#

095

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c H

o#

046

1

Se

nio

r S

yste

ms

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aly

st I

#04

4

1

Sys

tem

s P

rog

ram

mer

I#

079

1

Sys

tem

s P

rog

ram

mer

II

#09

4

1S

en

ior

Sy

ste

ms

An

aly

st

II#

114

Sh

aro

n C

han

#09

2

1

Se

nio

r S

yste

ms

An

aly

st I

#07

4

1S

en

ior

Sy

ste

ms

An

aly

st

II#

073

1

Sr.

Ad

min

istr

ativ

e C

lerk

#10

9

1

Se

nio

r S

yste

ms

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aly

st I

#10

2

1D

ire

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r o

f S

yst

em

s#

064

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ond

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eta

y

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ng

e M

asu

d (S

ecre

tary

in-li

eu)

1

Man

ag

emen

t A

nal

yst

#12

8

1

Exe

cutiv

e A

dm

inis

tra

tive

Ass

ista

nt I

I#

011

1

Co

mm

issi

on

Exe

cutiv

e A

ssis

tan

t II

#06

9

Yo

lan

da

Hu

an

g

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ura

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varr

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en

sio

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oll

/In

ves

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nt

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cou

nti

ng

Ce

cilia

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Lo

s A

nge

les

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rcis

o M

agn

o, J

r.

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ou

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nt

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na

Mar

ia

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rian

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oug

lass

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7

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en

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cia

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0

Mon

Go

nza

les

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4

Joh

n S

tra

nd

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3

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en

ior

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co

un

tan

t II

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5

1P

rin

cip

al

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cou

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nt

II#

036

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Ad

min

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lerk

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1

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ep

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7

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u)

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hie

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an

ag

em

en

t A

nal

ys

t#

057

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es

Sch

iffh

au

er

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nife

r B

arn

ych

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e W

ells

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Sr.

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min

istr

ativ

e C

lerk

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6

1

Man

ag

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nal

yst

#05

1

1S

en

ior

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rso

nn

el

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aly

st

I#

118

Ad

min

istr

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ve U

nit

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na P

oin

ter

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igh

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ana

gem

ent

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alys

t

Ad

min

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ati

ve S

up

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rt U

nit

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ndy

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rist

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inis

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rR

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017

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rin

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al

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rk#

012

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5#

056

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en

ior

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eme

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5

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ior

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ag

eme

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aly

st I

I#

061

DE

PA

RT

ME

NT

OF

FIR

E A

ND

PO

LIC

E P

EN

SIO

NS

2019

-20

Pro

po

se

d B

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ge

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ati

on

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art

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0 P

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dge

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arc

h 2

1, 2

019

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two

rk a

nd

Se

curi

ty

1

Sys

tem

s P

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I#

116

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yst

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s P

rog

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me

r II

I#

115

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ne

ral

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un

tin

g/P

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oll

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net

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pe

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or

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018

2

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nt

I#

093

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min

ado

r D

e L

eo

n#

032

Ra

ymo

nd M

an

gah

as

#10

3

1

Re

lief

Re

tire

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nt W

ork

er

RR

W6

2

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ou

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nt

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en

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ndra

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1

Eff

ectiv

e J

uly

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9 (

as o

f Mar

ch 2

1,

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9)

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ach

me

nt

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he

du

le 9

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w 2

019

-20

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stle

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#

062

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end

ra A

huja

SA

72

Va

can

t

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can

t

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am P

ere

z (M

gm

t. A

naly

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-lieu

)

M

iki S

ha

ler

(Sr.

Mgm

t. A

naly

st I

in-li

eu)

#03

8

Va

can

t#

052

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TS

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pp

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set

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ss

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age

me

nt

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om

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ie P

rieto

1

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min

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9

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cre

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ul P

alm

er

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ves

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nt

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9

2

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iel C

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ves

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nt

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0

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ere

k N

iu

2

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ag

emen

t A

nal

yst

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ves

tme

nt

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icer

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7

DE

PA

RT

ME

NT

OF

FIR

E A

ND

PO

LIC

E P

EN

SIO

NS

2019

-20

Pro

po

se

d B

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ge

t O

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art

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0 P

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2

Re

al E

sta

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nie

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ao (

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stm

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r I i

n-lie

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Eff

ectiv

e J

uly

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as o

f Mar

ch 2

1,

201

9)

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ach

me

nt

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he

du

le 9

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ion

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19

-20

1In

ves

tme

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8

#12

0

#08

41

Inve

stm

en

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ffic

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I

Va

can

t

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aca

nt

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von

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ors

ki (

Mg

mt.

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t. in

-lie

u)

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can

t

Va

can

t

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can

t#

133

Va

can

t#

135

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8

V

aca

nt

Riz

a M

ula

win

Va

can

t

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lyn

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nch

ez

(A

dmin

istr

ativ

e C

lerk

in-l

ieu

)#

020

#05

8

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n Is

lam

(A

dmin

istr

ativ

e C

lerk

in-l

ieu)

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riss

a E

spin

osa

(M

gm

t. A

sst.

in-li

eu)

#09

9

Ka

trin

a-E

lise

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p (

Mg

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t. in

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dic

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nd

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tal

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ord

ina

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ION

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sis

tan

t G

en

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ph

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laza

r#0

42

1

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dm

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tra

tive

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ista

nt I

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010

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tho

ny

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rres

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ka R

obi

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n

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nife

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han

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ag

emen

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2

1

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1

1S

en

ior

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nt

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aly

st I

I#

070

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nic

e Z

ord

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in-li

eu)

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co

un

t R

eco

nc

ilia

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n

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its

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mb

er E

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ach

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st I

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096

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ack

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ity

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nio

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4

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uss

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en

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ner

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ts A

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inis

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en

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t

Pe

nsi

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er In

form

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pp

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t#

131

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st I

I#

060

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7

Tim

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ori

ta (

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mt.

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t. in

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u)#

129

1

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nef

its S

pe

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8

1

Sr.

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min

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7

1S

en

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ag

eme

nt

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st I

I#

080

1M

an

ag

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nt

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aly

st#

045

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bor

ah

Ca

mp

os#

021

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ura

Go

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lez

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s#

026

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a V

ille

ro#

122

1M

an

ag

eme

nt

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aly

st#

013

Ra

mir

o L

op

ez

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2

Ro

byn

Wild

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cti

ve M

em

ber

Se

rvic

es

2

Man

ag

emen

t A

nal

yst

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ne B

arr

aga

n Se

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se

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t A

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phe

n B

ayu

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/Se

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e P

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pe

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dm

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097

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be

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1

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ene

va C

ob

b#

113

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gel

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spin

o#

089

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3

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098

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ela

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071

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2

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st I

I#

053

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0

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136

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1

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7#

125

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ho

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2

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iu (

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124

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alla

s#

078

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en

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eme

nt

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st I

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9

1C

hie

f B

en

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na

lys

t#

043

DE

PA

RT

ME

NT

OF

FIR

E A

ND

PO

LIC

E P

EN

SIO

NS

2019

-20

Pro

po

se

d B

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rga

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201

9-2

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dge

t M

arc

h 2

1, 2

019

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lyn

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go

ryo

na

(Offi

ce T

rain

ee in

-lieu

)#

024

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ul G

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vara

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6

1

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lief

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nt W

ork

er

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jan

dro

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rna

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zR

RW

17

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e T

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aki

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5

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ste

n R

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#06

5

To

nett

e L

aw

son

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dmin

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e C

lerk

in-li

eu)

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3

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en

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ag

eme

nt

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aly

st I

1

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ag

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t A

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1

La

ura

Mo

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na

gem

en

t A

na

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0

Ch

rist

ina

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res

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mt.

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t. in

-lie

u)1

M

ana

gem

ent

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alys

t#

134

2

Sr.

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min

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its S

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win

a V

ale

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087

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e S

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n O

rozc

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Eff

ectiv

e J

uly

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as o

f Mar

ch 2

1,

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9)

Att

ach

me

nt

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he

du

le 9

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m D

aco

ff

#06

61

S

en

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min

istr

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lerk

Ro

el V

illa

nue

vaR

A3

DEPARTMENT OF FIRE AND POLICE PENSIONS2019-20 Proposed BudgetTravel Resolution


A. Business Trips

1. To meetings with investment advisors, a master custodian bank, and various consultants under contract in connection with fund asset management.

2. To the offices of investment advisors and consultants who are under consideration to be hired.

3. To the site of proposed real estate property investments.

B. Conferences, business meetings and educational programs held or sponsored by the following organizations as necessary to conduct the businessof LAFPP:

Association of Asian American Investment Managers (AAAIM)

Association of Local Government Auditors (ALGA)

Association of Public Pension Fund Auditors (APPFA)

California Association of Public Retirement Systems (CALAPRS)

California Public Employees' Retirement System (CalPERS)

California State Teachers' Retirement System (CalSTRS)

Callan Investment Institute

Chartered Financial Analyst Institute (CFA Institute)

Client conferences of current contractors

Conduent State and Local Solutions, Inc. (Pension Administration System)

Conferences and seminars related to women in Information Technology

Government Finance Officers Association (GFOA)

Harvard Kennedy School

Hispanic Heritage Foundation - Latinos On Fast Track Investors Forum (LOFT)

Institute for Fiduciary Education

Institute of Internal Auditors (IIA)

Institutional Investor Institute

Institutional Limited Partners Association (ILPA)

International Foundation of Employee Benefit Plans (IFEBP)

MER Conference

National Association of Investment Companies (NAIC)

National Association of Public Pension Attorneys (NAPPA)

National Association of Securities Professionals (NASP)

National Conference on Public Employee Retirement Systems (NCPERS)

National Employment Law Institute (NELI)

New America Alliance (NAA)

Opal Financial Group Conferences

Pension Real Estate Association (PREA)

Public Retirement Information Systems Management (PRISM)

Public Safety Employees Pension and Benefits Conference

Stanford Law School - Fiduciary College

State Association of County Retirement Systems (SACRS)

Sworn active employee or retired member associations

The Pension Bridge

Wharton School (Partnership w/ IFEBP)

C. Pension industry organization meetings of officers and directors, when a Commissioner or staff member is an officer in that organization andexpenses are not reimbursable by the organization.

D. Other educational or continuing education training and seminars (not listed in B above), approved by the General Manager up to $4,500 per staffmember per trip.

AUTHORIZATIONS FOR TRAVEL

BE IT RESOLVED, that the Board of Fire and Police Pension Commissioners and staff are authorized to travel and incur requiredexpenses to the functions and for the reasons listed below, adopted effective July 1, 2019. Travel under the following categories (A, Band C) is automatically approved to a maximum of four Commissioners (Board Operating Policies and Procedures, Section 2.6).

Travel expenses incurred by any Commissioner or General Manager shall require the approval of the Board President.




(213) 279-3000

REPORT TO THE BOARD OF FIRE AND POLICE PENSION COMMISSIONERS DATE: MARCH 21, 2019 ITEM: A.3 FROM: RAYMOND P. CIRANNA, GENERAL MANAGER SUBJECT: ANNUAL COST OF LIVING ADJUSTMENTS TO PENSIONS AND POSSIBLE

BOARD ACTION

RECOMMENDATION That the Board:

1. Determine that the percentage of the annual increase in the cost of living is 2.5%; and,

2. Authorize all eligible pensions to be adjusted on July 1, 2019, as follows:

a. For members and beneficiaries of Tiers 1, 2, 3, 4 and Deferred Retirement Option Plan (DROP) participants in Tiers 2, 3, and 4 by up to 2.5%;

b. For members and beneficiaries of Tiers 5, 6 and DROP participants in Tiers 5 and 6 by up to 2.5%; and that 0.5% be withdrawn and applied from eligible members’ and beneficiaries’ cost of living bank balance for a total COLA of 3.0%; and,

3. Take no action regarding a Discretionary Cost of Living Adjustment for eligible pensioners

for Calendar Year 2020.

BACKGROUND The Los Angeles City Charter and Administrative Code authorize the Board to provide an annual Cost of Living Adjustment (COLA) to all eligible pensions. Tiers 1 and 2 have an uncapped COLA; Tiers 3, 4, 5, 6 and DROP are capped at 3.0%. Tiers 5 and 6 have an added feature of a "COLA bank." The COLA bank is credited when the percentage increase exceeds 3.0%, then the excess is added to the pensioner's/DROP member’s COLA bank balance. In subsequent years, this balance is withdrawn and applied to the current year's COLA, up to the maximum of 3.0%, should the Board determine that the cost of living increase is less than 3.0%. DISCUSSION Pursuant to the City Charter and Administrative Code, the COLA is determined by the annual increase or decrease in the Consumer Price Index (CPI) for All Urban Consumers as published by the U.S. Bureau of Labor Statistics for the area in which the City is located. The 2019 COLA is


calculated based on the change in the CPI for the Los Angeles-Long Beach-Anaheim area using a 12-month period from March 1 through February 28. The change for 2019 is an increase of 2.5% (Attachment). The COLA will be effective July 1, 2019 and will appear on the July 31, 2019 pension roll upon approval by the Board. There is currently a COLA bank balance of 0.6% for Tiers 5 and 6, as the COLA was 3.6% in 2018. Members and beneficiaries of Tiers 5 and 6 will have 0.5% withdrawn from their balance and added to the 2.5% COLA to receive a total increase of up to 3.0% by utilizing their COLA bank. The COLA bank balance will be reduced to 0.1% for future years. Discretionary Cost of Living Adjustment (DCOLA) To address years when the CPI exceeds the 3.0% cap for members of Tiers 3, 4, 5, 6, and DROP, the City Council can grant a DCOLA. The Board may recommend this DCOLA to the City Council with the below restrictions established in Charter Sections 1516(c), 1616(c) and 1716(c), and Administrative Code Section 4.2016(c): 1. An adjustment can be made no more than once every three years for the prior three-year

period and is prorated on a monthly basis; 2. The adjustment for Tier 5 and Tier 6 pensioners is withdrawn from the individual's COLA bank; 3. The adjustment can be no greater than one-half (1/2) of the difference between the CPI and

the actual increase granted for each of the preceding three years; 4. An actuarial report of the cost of the proposed increase must be obtained and published by the

Board's actuary prior to the Council adopting the ordinance; 5. The City Council must adopt an ordinance providing for this adjustment by a two-thirds (2/3)

vote. The Council cannot adopt the ordinance unless 30 days have passed since its presentation to the Council and after a public hearing thereon. The ordinance must be published by November 30 and becomes effective the following January 1; and,

6. Adjustments are not retroactive. The last three years produced differences between the CPI change and COLA of 0.0%, 0.6%, and 0.0%. Adding these three figures together, the DCOLA can be no greater than one-half the difference of 0.6%. The table below shows how the maximum DCOLA of 0.3% is calculated for 2017 – 2019.

Year CPI

Change Actual COLA

Difference Maximum

Additional DCOLA

2017 2.7% 2.7% 0.0% 0.0%

2018 3.6% 3.0% 0.6% 0.3%

2019 2.5% 2.5% 0.0% 0.0%

TOTAL 8.8% 8.2% 0.6% 0.3%

Pensioners in Tiers 3, 4, 5, and 6, and DROP participants in Tiers 3-6 would be eligible for this 0.3% DCOLA. However, a DCOLA adjustment can only occur once every three years and for two out of the last three years the COLA matched the change in the CPI. Staff does not believe a DCOLA should be requested from the City Council at this time since the rate of inflation for the Los Angeles area has been below the 3% COLA cap (applicable to Tiers 3-6) for nine of the past ten years.


BUDGET

The proposed FY 2019-20 budget includes the COLA increase for pensioners. POLICY

There is no required policy change. CONTRACTOR DISCLOSURE INFORMATION There is no contractor disclosure information required with this report.

This report was prepared by:

Kyle Susswain, Manager Retirement Services Section

RPC:JS:GM:KS

Attachment: Bureau of Labor Statistics CPI Report

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CPI-All Urban Consumers (Current Series)

Series Id: CUURS49ASA0,CUUSS49ASA0Not Seasonally AdjustedSeries Title: All items in Los Angeles-Long Beach-Anaheim, CA, all urban consumers, not seasonally adjustedArea: Los Angeles-Long Beach-Anaheim, CAItem: All itemsBase Period: 1982-84=100

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Year Feb2018 263.0122019 269.608

12-Month Percent ChangeSeries Id: CUURS49ASA0,CUUSS49ASA0Not Seasonally AdjustedSeries Title: All items in Los Angeles-Long Beach-Anaheim, CA, all urban consumers, not seasonally adjustedArea: Los Angeles-Long Beach-Anaheim, CAItem: All itemsBase Period: 1982-84=100

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ATTACHMENT



(213) 279-3000


DATE: MARCH 21, 2019 ITEM: A.4 FROM: RAYMOND P. CIRANNA, GENERAL MANAGER SUBJECT: EXCESS BENEFIT PLAN PAYMENT COORDINATION BOARD POLICY AND

POSSIBLE BOARD ACTION

RECOMMENDATION That the Board approve the proposed amendment to Board Operating Policies and Procedures, Section 3.3.2: Excess Benefit Plan Payment Coordination (Attachment).

BACKGROUND In order for LAFPP to maintain its tax-qualified status under Internal Revenue Code (IRC) section 401(a), the plan must limit the annual benefit paid to a retired member in accordance with IRC section 415(b). For example, in 2018 this annual limit was $220,000. This limit will increase to $225,000 for 2019. Notwithstanding the limitation imposed by IRC section 415(b), a governmental employer such as the City of Los Angeles may establish a “qualified excess benefit arrangement” for the purpose of providing the portion of a member’s annual benefit that exceeds the 415(b) limits. In other words, the pension amount that may not be paid from the defined benefit plan on account of IRC section 415(b) may be paid from a qualified excess benefit arrangement, subject to certain requirements. The City has previously established an Excess Benefit Plan to supplement the benefits of members of Tiers 2 – 5 whose payments are limited by IRC section 415(b). When applying IRC section 415(b) limits, all defined benefit plans ever maintained by the employer under which the participant has accrued a benefit are treated as one defined benefit plan. In the City of Los Angeles, there are three defined benefit plans for employees (WPERP, LACERS, LAFPP). Therefore, the sum of a member’s annual benefit paid under LAFPP and any payments from the City’s other defined benefit plans cannot exceed the limitations of IRC section 415(b). DISCUSSION In the event a member retires from multiple plans in the City of Los Angeles and their combined benefits exceed the 415(b) limit, the plans must coordinate with each other when applying the reduction and making any Excess Benefit Plan payments. Los Angeles Administrative Code Section 4.1906(s) states that the reduction of benefits under the City’s retirement plans, where required in order to comply with IRC section 415(b), shall be made first with respect to the plan in which the member most recently accrued benefits and thereafter in such other plans. In other words, the “excess benefit” will be paid by the plan from which the member most recently retired. The Administrative Code further provides that the Board is authorized to create rules necessary to facilitate different manners for reduction of benefits. The LACERS Board Rules include similar


language allowing their Board to create administrative rules necessary to facilitate different manners for reduction of benefits. The LACERS Board recently delegated this administrative authority to the LACERS General Manager. In the past there has not been an issue regarding the coordination of payments under the Excess Benefit Plan for a member retiring from LAFPP and later retiring under WPERP or LACERS because all three plans had accompanying excess benefit plans funded by their respective plan sponsor. However, LACERS’ Tier 3 (includes employees who enter LACERS membership on or after February 21, 2016) and WPERP’s Tier 2 were created without an Excess Benefit plan component, so both plan payments are simply capped at the IRC section 415(b) limit without any supplement from an excess benefit arrangement. Without the creation of a Board policy to provide for different manners for reduction of benefits, a highly compensated LAFPP retiree who becomes a LACERS Tier 3 or WPERP Tier 2 member after their retirement, with a pension amount close to or exceeding the 415(b) limit, would not receive a LACERS or WPERP pension benefit. Staff therefore proposes that the Board adopt a policy delegating to the General Manager the authority to determine a different manner and priority of reduction of benefits of a retired member who becomes eligible for benefits from one or both of the City’s other defined benefit plans. The recommended policy will also authorize the General Manager to enter into an agreement with the City’s other plans to facilitate the reduction of benefits. If the Board approves the attached policy, the General Manager would be authorized, pursuant to the authority delegated under revised Board Operating Policies and Procedures Section 3.3.2, to execute on behalf of LAFPP, agreements with LACERS and/or WPERP whereby LAFPP would agree to provide all LAFPP retirement benefits payable to a retired member (who is also a LACERS Tier 3 or WPERP Tier 2 member) from the LAFPP Excess Benefit Plan. This arrangement would allow the retiree to also receive a retirement benefit under Tier 3 of LACERS or Tier 2 of WPERP if the retiree becomes eligible to receive such a benefit.

BUDGET No net budget impact as recommended. On May 6, 2010, the Board authorized a credit to be applied toward the City's Annual Required Contribution equal to the amount budgeted for the Excess Benefit Plan (EBP), as calculated by the actuary. As such, beginning in 2010-11, the total General Fund Contribution in a given fiscal year is the sum of the General Fund and EBP line items. However, since EBP revenue is not transferred to LAFPP, it is excluded from the Department's total revenue. In the event that the General Manager enters into an agreement with LACERS or WPERP to pay 100% of the LAFPP pension benefit from our Excess Benefit Plan, this will increase the amount required by the City to fund the LAFPP Excess Benefit Plan (which is offset by a corresponding reduction in the City’s Annual Required Contribution to LAFPP). The LAFPP Excess Benefit Plan is administered by LAFPP but all benefits under the Excess Benefit Plan are paid from the City’s General Fund. POLICY The recommended amendment to Board Operating Policies and Procedures Section 3.3.2 have been approved by the City Attorney as to form.


CONTRACTOR DISCLOSURE INFORMATION There is no contractor disclosure information required with this report. This report was prepared by: Kyle Susswain, Manager Retirement Services Section RPC:JS:GFM:KS Attachment: Proposed Amendment to Board Operating Policies and Procedures Section

3.3.2: Excess Benefit Plan Payment Coordination

Los Angeles Fire & Police Pension System

3.0 - PENSION PROCESSING

APPLICATIONS AND DOCUMENTATION

3.1 All pension applications shall be filed in writing on forms prescribed by the Department of Fire and Police Pensions. Applicants shall be responsible for furnishing all required documents needed to process and verify pension eligibility. Pensioners, surviving spouses and legally appointed guardians/conservators of pension beneficiaries shall be responsible for notifying the Department of Fire and Police Pensions of any change of status which affects pension eligibility. Failure to provide required documentation or cooperate with processing requirements shall be the basis for denial of an application or suspension of pension payments.

DEFERRED RETIREMENT OPTION PLAN (DROP)

3.2 CREDITING OF INTEREST

DROP accounts shall earn interest in the amount of 5%, compounded annually (i.e., compounding after 12 DROP payments have been deposited in the member’s account). Interest will be calculated each month using a monthly factor of 0.004167 (1/12 of 5%), applied to the prior end of month inception-to-date deposits balance. Interest will be credited to member accounts semi-annually on June 30 and December 31. For members exiting DROP between the semi-annual interest-crediting dates, the account shall be credited with the monthly interest earned as of the exit date.

3.2.1 ACTIVE DUTY STATUS

Effective November 1, 2008, in addition to the age and/or service requirements to enter DROP, a member must also be on active duty status on the DROP entry date. For purposes of this provision active duty status shall include members working on light-duty status, but exclude members on sick, vacation, injured-on-duty, administrative leave, and all other types of non-working status.

A. The City Administrative Officer has been authorized to classify payroll codes as

“active” or “not active” for the purposes of DROP.

B. At least one of the prescribed active duty payroll codes must be recorded on a member’s timesheet on their DROP entry date.

C. Verification of active duty status shall be made using the City’s payroll system

(PaySR) at the time of entry. D. In the event a member elects a DROP entry date and is not on active duty status

on the DROP entry date as defined above, the member’s DROP entry date will automatically be advanced to the next qualifying entry date. The revised entry date will not be subject to further adjustment by the member. The DROP Program Administrator shall notify the member of the approved DROP entry date in writing.

14935

Typewritten Text

ATTACHMENT

3.2.2 REVOCATION OF DROP ENROLLMENT

A member may revoke participation in DROP by submitting a DROP Revocation Notice (hereafter, “the Notice”) in-person or by facsimile no later than the day prior to the DROP entry effective date. The Notice must be received before the close of business at 5:00 p.m., or if faxed, by 11:59 p.m. The effective date of revocation shall be established upon receipt of the Notice and signature thereupon by LAFPP administrative staff. The member is responsible for confirming timely receipt by LAFPP. If the member does not revoke his/her application for DROP as specified above, the DROP agreement will become final and binding, and thereafter be irrevocable. (Amended 05/21/15)

3.2.3 DISTRIBUTION OF DROP ACCOUNT A member shall receive a distribution of the funds in his/her DROP account as either: (a) a lump sum cash payment, (b) a direct rollover to a qualified plan, or (c) a combination lump sum payment and direct rollover to a qualified plan. Members may not leave a portion of their DROP account on deposit with LAFPP. The DROP Distribution Election Form must be completed and returned to LAFPP no later than 90 days following the member’s DROP exit date; otherwise, the member will receive distribution as a single lump sum taxable cash payment. A member may directly rollover the taxable portion of his/her DROP distribution to only one eligible financial institution. Members may not rollover any non-taxable DROP funds unless they also rollover all of their taxable DROP funds. A member may directly rollover the non-taxable portion of his/her DROP distribution to only one eligible financial institution. For members exiting DROP on or after January 1, 2014 who complete and return the DROP Distribution Form no later than 90 days following the member’s DROP exit date, the member may recover his/her pre-1987 after-tax basis entirely from the lump sum DROP distribution. Any post-1986 after-tax basis will be allocated pro-rata between the lump sum DROP distribution and the member’s ongoing monthly pension annuity. (Section added 12/19/2013)

AUTHORITY OF BOARD AND GENERAL MANAGER 3.3 The General Manager shall present to the Board all eligible pension applications. The

Board as a ministerial act shall approve all properly qualified service pension and surviving spouse applications. On August 7, 2003 the Board adopted Resolution 04008 delegating authority to the General Manager to perform this function. The General Manager’s actions are reported to the Board at the next subsequent Board meeting. The General Manager shall adopt procedures for the submission, verification and withdrawal of applications and shall determine whether applicants meet the qualifications specified in the Charter and Administrative Code.

3.3.1 The Board has delegated authority to the General Manager to adjust the effective date of

a Declaration of Domestic Partnership, provided the following criteria are met: A. The Member completes LAFPP’s Declaration of Domestic Partnership prior to

his/her retirement effective date or DROP entry date; and,

B. The Member makes a written request to accept the filing date with the Personnel

Department, Employee Benefits Office’s (EBO) or the Los Angeles City Employees’ Retirement System (LACERS) as the effective date of the Domestic Partnership; and,

C. Staff has verified with the EBO or LACERS the following: a) the date that the parties

filed an Affidavit of Domestic Partnership with the EBO or LACERS; b) the fact that this partnership has not been terminated subsequent to the filing date.

If the General Manager determines that any of the above criteria is not met, then the matter will be referred to the Board along with staff’s analysis and recommendation. (Section added 11/15/12, Amended 10/19/17)

3.3.2 In the event a retired member receives benefits from more than one of the City of Los Angeles’ defined benefit plans, and their combined benefit exceeds the applicable Internal Revenue Code (IRC) section 415(b) limit, the plans must coordinate when limiting the combined benefit. Pursuant to Administrative Code Section 4.1906(s), the Board has delegated authority to the General Manager to enter into agreements with the Water and Power Employees’ Retirement Plan and/or the Los Angeles City Employees’ Retirement System and to create the administrative rules necessary to facilitate different manners for reduction of benefits in order to comply with IRC section 415(b). (Section added 03/21/19)

DISABILITY APPLICATION PROCESS 3.4 The Board shall conduct hearings on disability pension applications. Active Members have

the option of having their hearing conducted in open or closed session, either of which must be specifically requested in writing by the applicant/ representative. Should no completed election form be received by staff by the due date, the hearing will be conducted in open session. For Closed Session hearings, all witnesses must be excused from the room until their testimony is needed, and family members, the general public and non-essential Staff are prohibited from attending. Open sessions will be open to the general public but the Board may request that witnesses wait outside the hearing until called to testify. In order to expedite the hearing process, the Board may appoint a hearing examiner to conduct preliminary hearings as it deems necessary. The applicant has the burden of proof as to the existence of disability. (Amended 01/18/18)

A. The General Manager shall provide all relevant evidence and records, including

doctor reports that the Board requires for the hearing process, and shall make a written recommendation to the Board on whether applicants should be granted or denied disability or survivor benefits.

B. LAFPP staff shall endeavor to accommodate the applicant/representative when

scheduling a disability pension hearing. When the applicant/ representative cannot be reached, fails to return calls, correspondence, or emails, or twice cancels, delays, or continues a hearing, a compulsory hearing will be scheduled at the Board’s convenience.

1) Using certified mail with return receipt requested or by email with return receipt,

LAFPP staff shall provide the applicant/representative with the following:

a) Notice of three dates to conduct the hearing. The earliest date should be at least four weeks from the date of notice.

b) Instructions to choose one of the three dates and to contact LAFPP staff within ten calendar days of receipt of the notice. If no response is received after ten calendar days, the hearing will automatically be scheduled for the last of the three proposed hearing dates.

c) Notice that attendance is mandatory and failure to attend the hearing will

result in an administrative withdrawal of the application. If applicant/representative is present but not ready to conduct the hearing on the scheduled date, s/he must provide a verbal explanation to the Board. (Section added 01/18/18)

C. LAFPP staff may Administratively Withdraw an inactive application. An application

shall be considered inactive if it has not proceeded to the next logical processing step for reasons that can’t be resolved. The applicant/representative will have 30 calendar days to respond to a request made by LAFPP staff. After 30 days, LAFPP staff shall mail a Notice of Administrative Withdrawal to the applicant/representative. The notice will inform the applicant/representative they have 15 calendar days to reply to keep their application open. If the applicant/representative does not reply, or replies but the delay extends another 30 calendar days, their application will be administratively withdrawn. Once an application is withdrawn, the applicant/representative may submit a new application for a disability pension. Upon receipt of a new application, staff shall start the process over from the beginning. (Section added 01/18/18)

D. The General Manager shall be responsible for selecting physicians to examine

applicants. Physicians, preferably Board certified in their specialty, shall whenever possible be rotated considering geographical and availability constraints. Refusal by an applicant to be examined will cause suspension of disability application processing and initiate the administrative withdrawal process Section 3.4(C). The General Manager may consider applicant objections to physicians made for good cause to select a different physician. (Amended 01/18/18)

E. Charges by physicians for missed appointments by an applicant or for new or

updated reports caused by the delay of an applicant shall be paid by the applicant, unless the applicant can show good cause for the missed appointment or delay. Failure to pay for missed appointments may cause a suspension of processing and initiate the administrative withdrawal process Section 3.4(C). (Amended 01/18/18)

F. Appeals to the Board of the General Manager's decision regarding the selection of

a physician or physician charges to an applicant must be made in writing, within 14 days of the Manager's decision.

G. All communication with pension physicians relating to any aspect of an examination

performed on behalf of the Department of Fire and Police Pensions shall only be through Department staff. Under no circumstances shall an applicant, an applicant representative or operating department directly contact or provide materials or documents to a pension physician without prior approval of Department of Fire and Police Pensions staff. All materials or documents to be reviewed by pension

physicians shall first be submitted to staff for inclusion in the administrative record and then forwarded to the physicians.

H. Physicians who have performed disability examinations shall provide report

clarification or additional evidence as required by the applicant or Department of Fire and Police Pensions staff. Such clarification shall be submitted in writing to the Department of Fire and Police Pensions. This step may be repeated as often as reasonable and necessary. If the applicant does not accept the written response, the applicant may then request a deposition of a pension physician. Staff and a City Attorney shall attend each deposition, arranged by Department of Fire and Police Pensions staff. The cost for the physician and court reporter shall be paid solely by the party requesting the deposition. The Department of Fire and Police Pensions will be responsible for the cost of the transcription service and deposition documents provided by the court reporter. Staff will provide copies of the deposition material. If the applicant fails to accept the results of the deposition, a pension physician may be subpoenaed to appear for questioning at the time the claim is considered by the Board.

SUSPENSION OF DISABILITY PENSION PAYMENTS 3.5 It shall be the pensioner’s duty to cooperate with the Board and Staff and to comply with

reasonable requests when the disability pensioner’s medical status is under review. Failure to cooperate or some other action that impedes or prevents completion of the review process may constitute cause for a suspension of disability pension payments by the Board. Suspended pension payments will be deposited in an escrow account.

A. Staff shall first ascertain if a hardship exists which prevents the pensioner from

cooperating with the review process. If there is no apparent hardship, the pensioner shall be provided the opportunity to appear before the Board to present reasons or evidence justifying the lack of cooperation or failure to comply with requests made in conjunction with the review process. If the pensioner fails to appear at this hearing or is unable to demonstrate good cause for noncompliance, the Board may suspend pension payments for a period of one to three months pending compliance.

B. If the pensioner continues to refuse or fails to cooperate again, a second hearing will

be scheduled for the purpose of suspending disability pension payments until the review process is completed.

RESTORATION OF DISABILITY PENSIONERS TO ACTIVE DUTY 3.6 A pensioner on service connected or non-service connected disability pension who is

found by the Board to be no longer disabled shall have the pension terminated upon restoration to active duty, or failure to be restored as ordered by the Airport, Fire, Harbor or Police Department, or upon the date of the Board's determination if the retired member had previously been terminated or resigned. (Amended 01/18/18)

SURVIVOR BENEFIT APPLICATIONS 3.7 Applications for surviving spouse, minor or dependent children or dependent parent

benefits when members are deceased while on active duty due to indisputably service connected causes shall be processed automatically by staff for service connected

benefits. A. When there is an issue whether the death is service connected, the application shall

automatically be processed as non-service connected, without prejudice (recognizing that this is the minimum pension entitlement resulting from the death of an active member.)

B. A hearing shall be conducted by the Board to determine whether the deceased

member's death was service connected, at which time the Board shall review the autopsy report, if available, and a report of at least one qualified physician.

3.7.1 A surviving child of a Tier 3, 4, 5 or 6 member may qualify for benefits provided for a minor

child until he or she reaches the age of 22 years, if such person is enrolled in school full-time, but such person’s marriage terminates entitlement to these benefits. Such person must provide proof of registration at an academic or vocational school, with enrollment in the number of units required of a full-time student as determined by the educational institution. Submission of transcripts may be required should there be a dispute regarding continued full-time student status. (Added 01/07/16)

POST RETIREMENT SURVIVOR BENEFIT PURCHASE PROGRAM

3.8 Application for post retirement survivors shall be processed automatically by staff.

A. A Retired Plan Member (Retiree) may elect percentage choices of 30% to 100%

continuances in 5% increments (service retirees and disability retirees) provided the election does not exceed any limitations imposed by federal law. The cost factors used to provide the continuance percentage elected shall be based upon the mortality tables as adopted by the Board in the most recent actuarial experience study.

B. A Retired Plan Member may make an election to provide a survivor benefit pursuant

to Charter Section 1236 on the first day of any given month, provided that all the documents necessary to make this election are provided to the Plan no later than the fifth day of that month, and the Retiree’s monthly benefit shall be reduced beginning with the payment due for that month. If the necessary documents are not received by Plan by the fifth day, the election to provide this benefit shall be made on the first day of the following month and the Retiree’s monthly benefit shall be reduced beginning with the payment due that month.

C. In the event that a Retiree dies less than one year from the date that the Retiree

made an election to provide this benefit, as determined pursuant to the prior provision, then no survivor benefit shall be provided unless the Board shall determine that the Retiree’s death was accidental. A Retiree’s death shall be determined to be accidental if the preponderance of the evidence establishes that an accident resulting in bodily injury caused the Retiree’s death. A death due to sickness, bodily infirmity, suicide or an intentionally inflicted injury shall not be considered accidental. If no survivor benefit is provided, a lump sum shall be paid as provided in Charter Section 1236.

D. The Retiree’s entire benefit, to the extent such constitutes his/her separate property,

must be payable entirely to him/her at the time that he/she makes an election under this program. A Retiree whose benefit is subject to a wage assignment for support, a tax lien, a workers’ compensation offset, or any other lien that may legally be imposed on his/her retirement benefit shall not be eligible to elect to provide a survivor benefit.

E. A Retiree shall not be precluded from electing this benefit due to a prior community

property division awarding a portion of his/her benefit to a former spouse/domestic partner, as that person’s separate property, and the balance of his/her benefit to the Retiree as the Retiree’s separate property. However, only the Retiree’s separate property interest in his/her pension shall be subject to this election. The Retiree’s election to provide this benefit shall have no impact upon the former spouse/domestic partner’s interest in the Retiree’s pension benefit or the payment of other survivor benefits from the Plan. Since the Retiree is paying the full actuarially determined cost of this survivor benefit through a reduction in the Retiree’s separate property interest in his/her benefit, the Board shall not subject this survivor benefit to a community property claim from a prior spouse/domestic partner.

F. A Retiree receiving a disability pension from the Plan may elect to provide a survivor

benefit, but should be advised that this benefit will not be paid if his/her disability pension is discontinued and he/she is returned to duty. Also, because his/her disability pension could be subject to reduction in the future, only such portion of the Retiree’s disability pension that represents the minimum that he/she could be awarded shall be subject to reduction to provide for a survivor benefit and any balance of his/her disability pension in excess of this minimum amount shall continue to be payable to the Retiree in full.

G. Because a disability Retiree’s benefit may be subject to a Workers’ Compensation

offset in the future, a disability Retiree shall provide an authorization, signed by both the Retiree and his/her spouse/domestic partner, allowing the Plan, in the event of the Retiree’s death, to continue to offset any Workers’ Compensation paid to the Retiree from the survivor’s benefit until recouped in full. This authorization is required because the survivor’s benefit is funded by a reduction in the disability benefit payable during the Retiree’s lifetime, which reduced the amount of the offset recoverable directly from the Retiree.

H. The election to provide a survivor benefit must be signed by the Retiree unless

someone else has the legal authority to act for the Retiree in this regard. When the Retiree lacks the capacity to make this election and there is no one else legally authorized to act on the Retiree’s behalf, staff shall prepare a report explaining the situation for the Board’s consideration prior to taking any final action by the Board.

REINSTATEMENT OF SERVICE PENSIONERS 3.9 The General Manager shall provide a written recommendation to the Board on all

applications for reinstatement to active duty from a service pension and the Board shall conduct a hearing on such applications.

CORRECTION OF ERRONEOUS PAYMENTS 3.10 The Department of Fire and Police Pensions shall recover any payments made in error

exceeding $100, pursuant to the IRS Employee Plans Compliance Resolution System Section 6.06(3), or as a result of failure of a beneficiary to notify the Department of discontinuation of entitlement to benefits (e.g. due to death of a pensioner or surviving spouse, attainment of Charter/Administrative Code specified age for a minor, or discontinuation of full-time student status of a minor).

An additional amount equivalent to the interest that would have been earned in accordance with Section 5.1 (i.e., the amount credited to member accounts) during the period of overpayment shall also be charged to the member or beneficiary. The member/beneficiary shall be notified of the amount of the overpayment, including interest, and provided an opportunity to pay the total amount due in a lump sum or in two installments within a six-month period from the notification. If the member/beneficiary elects to have the overpayment collected out of future monthly benefit payments, the payment period, not to exceed the individual’s life expectancy per the Social Security Administration’s Retirement & Survivors Benefits – Life Expectancy Calculator, shall be determined in advance by the member/beneficiary, except however, the General Manager may prescribe a minimum payment amount. The entire balance may be paid at any time. If the member/beneficiary who received the overpayment is deceased, reasonable recoupment efforts shall be taken, including an offset against the decedent’s last check and request for payment from the decedent’s estate. If the overpayment is a result of delayed notification of a surviving child’s (between age 18 and 22) discontinuation as a full-time student, the funds to be recovered are effective the month subsequent to the date of discontinuation. Recoupment may be made by offsetting against any reinstated benefits should the surviving child later re-enroll in school on a full-time basis.

If the error results in an underpayment, an additional amount equivalent to the interest that would have been earned in accordance with Section 5.1 (i.e., the amount credited to member accounts) during the period of underpayment shall also be paid to the member/beneficiary. (Amended 01/07/16)

PENSION PAYROLL DEDUCTIONS FOR ORGANIZATIONS

3.11 The Department of Fire and Police Pensions permits organizations that are organized or operated for the benefit of LAFPP members, Police Officers or Firefighters to receive deductions from LAFPP pension payments. Organizations seeking to receive pension deductions after the effective date of this policy will be required to provide, as part of any request:

• Evidence that the organization is organized or operated for the benefit of

LAFPP members, Police Officers or Firefighters;

• Evidence that a minimum of 50 retired LAFPP members are willing to

authorize voluntary deductions to the group; and

• The organization must receive monthly deductions from at least 50 LAFPP pensioners for LAFPP to continue processing deductions.

Under this policy, organizations that are currently receiving deductions from less than 50

members will remain eligible to continue receiving deductions from LAFPP regardless of membership figures. This policy does not apply to organizations providing medical and/or dental insurance to LAFPP members. The General Manager or his/her designee shall establish a procedure for approving or denying applications from organizations seeking eligibility to receive voluntary pension deductions. If the organization is approved to receive deductions, the authorized deductions shall be submitted to LAFPP electronically. Payment shall be prepared and issued to such organizations by LAFPP after the close of each respective Pension payment period. All organizations must submit to the General Manager financial records upon request. (Section added 04/19/18)

STALE-DATED CHECKS

3.12 Pension or refund checks that have not been negotiated after 180 days will be considered stale-dated and cancelled. Prior to cancellation, members/beneficiaries will be contacted approximately one month prior to the check’s expiration date reminding them of the deadline. If contact cannot be established or the member/beneficiary does not negotiate the check within the 180-day period, notification along with an affidavit form requesting a replacement check will be sent by certified mail with return receipt explaining that the check has been cancelled and that a new check will not be issued until a completed affidavit is received. (Section added 06/21/18)

HISTORY 3.13 Adopted: Circa June 13, 1996; Amended 11/02/06, 12/04/08, 05/07/09, 01/21/10,

12/16/10, 08/04/11, 01/05/12, 11/15/12, 12/06/12, 12/19/13, 05/01/14, 05/21/15, 01/07/16, 11/03/16, 10/19/17, 01/18/18, 04/19/18, and 06/21/18 and 03/21/19.

REVIEW 3.14 This policy shall be reviewed by the Board as needed and may be amended by the Board at any time.



(213) 279-3000


DATE: MARCH 21, 2019 ITEM: A.5 FROM: RAYMOND P. CIRANNA, GENERAL MANAGER SUBJECT: LOS ANGELES POLICE DEPARTMENT (LAPD) ADMINISTRATIVE ORDER #1

AND POTENTIAL IMPACTS ON LAFPP AND POSSIBLE BOARD ACTION

RECOMMENDATION That the Board direct staff to monitor and report back to the Board on the impact of LAPD’s implementation of Administrative Order #1. DISCUSSION The Los Angeles Police Protective League (LAPPL) recently notified its membership that effective April 4, 2019, the Chief of Police intends to fully implement Administrative Order #1 (formerly known as Special Order #7) to eliminate long-term temporary modified duty (TMD) assignments (Attachment). Once this Administrative Order is in effect, with limited exceptions* LAPD officers on TMD due to on- or off-duty injuries will no longer be allowed to work in TMD after 180 days. Officers returning to full-duty will need to be able to perform the essential job functions of a police officer. Officers unable to return to full-duty after 180 days will be sent home to recover. LAPD has informed staff that there are 727 officers on TMD that could be impacted by the implementation of Administrative Order #1. Officers unable to perform the essential job functions and return to duty could be forced to retire, resign or apply for a disability pension. Officers who resign, depending upon their Tier and years of service, may be eligible for a refund of their member contributions and accrued interest, or a deferred/service pension. Additionally, many officers currently on TMD may decide to apply for a disability pension. On average, staff of the Disability Pensions section is working on about 70 active disability cases and receives two to three new disability applications per month. The Disability Pensions section has four Management Analyst positions that process the disability cases, of which two are currently vacant. The Department has encountered challenges in maintaining staffing levels within this section. If Administrative Order #1 is implemented and it results in a large increase in the number of disability pension applications, LAFPP will encounter difficulty in processing disability cases in a timely manner. In anticipation of a large increase in the disability pension caseload, Staff is considering increasing the number of analysts assigned to process disability cases. Staff will also be investigating the possibility of using contractors, such as our current independent medical exam

* Employees who have a permanent work restriction from an injury or illness that was reported prior to August 1, 2006 will continue to have their permanent injuries accommodated until a time that their work status changes.


providers, to assist with the processing of disability applications, including but not limited to collecting member medical records. BUDGET At the present time, Staff is unable to quantify the budgetary impact of the implementation of Administrative Order #1. Additional staffing and disability medical exam costs may be required. POLICY No policy changes as recommended. CONTRACTOR DISCLOSURE INFORMATION There is no contractor disclosure information required with this report. This report was prepared by: Greg Mack, Chief Benefits Analyst Pensions Division RPC:JS:GM Attachment: LAPPL Membership Alert: Full Implementation of Special Order #7/Administrative

Order #1



(213) 279-3000

REPORT TO THE BOARD OF FIRE AND POLICE PENSION COMMISSIONERS DATE: MARCH 21, 2019 ITEM: A.6 FROM: RAYMOND P. CIRANNA, GENERAL MANAGER SUBJECT: CHIEF INVESTMENT OFFICER’S QUARTERLY REPORT OF ASSET

ALLOCATION STATUS AND POSSIBLE BOARD ACTION

RECOMMENDATION That the Board approve the actual asset allocation of the Fund and Staff’s plans for bringing asset classes currently outside of their target allocation ranges back within their allocation ranges. BACKGROUND The Rebalancing Policy (Board Policies Sec 1.7) specifies that the Board will review and affirmatively approve any allocations of Fund assets outside of their target ranges. It states:

Staff will monitor the portfolio’s asset allocation relative to the target allocations. If the actual allocations fall within the defined ranges, no rebalancing will be required. If actual allocations fall outside the predetermined range, Staff will implement a rebalancing back to within the range of the target allocation.

Staff will report all rebalancing activities to the Board on a quarterly basis at a minimum. In circumstances where it is impractical to rebalance the portfolio for any market or portfolio-specific reason, Staff shall assess the rebalancing options, notify the Board of the out of balance situation, and report its recommendations to the Board. Staff shall seek approval from the Board to implement rebalancing according to Staff’s recommended rebalancing plan in situations that involve leaving the portfolio, or some portion of the portfolio out of balance for an extended period of time.

On June 16, 2016, the Board approved the current asset allocation: February 28, 2019

Target Upper Lower Actual

Asset Class Allocation Range Range Allocation*

Dom. Large Cap Equity 23.00% 25.80% 20.20% 24.21%

Dom. Small Cap Equity 6.00% 7.30% 4.70% 6.71%

Int'l Equity 16.00% 18.40% 13.60% 15.55%

Int'l Emerging Markets 5.00% 6.40% 3.60% 4.49%

Core Bonds 12.00% 12.70% 11.30% 11.31%


(cont’d from previous page)

Target Upper Lower Actual

Asset Class Allocation Range Range Allocation*

TIPS 5.00% 5.30% 4.70% 4.55%

High Yield Bonds 3.00% 3.40% 2.60% 2.60%

Unconstrained Fixed Income 2.00% 2.20% 1.80% 2.09%

Real Estate 7.00% 8.00% 6.00% 5.74%

REITS 3.00% 3.50% 2.50% 3.00%

Commodities-Energy 5.00% 6.20% 3.80% 4.44%

Private Equity 12.00% 15.00% 9.00% 9.82%

Cash Equivalent 1.00% 4.00% 1.00% 5.49% * May not add up to 100% due to rounding

Together with the General Consultant RVK and Staff, rebalancing range limits were established. DISCUSSION For the 3-month period ended February 28, 2019, global markets continued to experience large swings. In December 2018, global stocks declined substantially attributed to 1) a 25bp rate hike by the Federal Reserve (Fed) and its signal of a possible two more rate hikes in 2019, 2) trade tension between the U.S. and China, 3) slowing global economic growth, Europe in particular and 4) a continual decline in oil prices due to economic concerns. Global equities rebounded during the 1st two months of 2019 as the Fed hinted at putting 2019 rate hikes on hold and market participants had favorable views on the progress in trade talks between the U.S. and China. U.S. government bond yields behaved differently during this period. The December 2018 correction in the equity markets led to safe-haven buying in government bonds resulting in lower yields in long-dated bonds despite the 25bp rate hike by the Fed. The yields on long-term government bonds remained low in both January and February 2019 as investors expected the rate increase cycle was completed (no more rate hikes by the Fed in 2019). As noted in the prior quarterly report, Staff allocated $50 million to the high yield bond asset class in November 2018 as the high yield market began to cheapen at the beginning of the 4 th quarter 2018. The $50 million allocation was funded when the high yield benchmark index (BofA Merrill Lynch US High Yield Index) yield reached at a level around 7.25%. During the December 2018 equity selloff, the high yield market cheapened further with the benchmark index yielding at approximately 7.9% (5.5% at the beginning of 2018). Another $25 million was allocated to this asset class at this yield level due to its relative attractive return as well as its under-allocated status. After a total of $75 million allocated to high yield during the last two months of 2018, this asset class is now at its lower range. Staff gradually increased the allocation to high yield due to concerns of 1) a large supply of high yield bonds from potential downgrades of lower rated investment grade corporate bonds, and 2) the denominator effect resulting from any further decline in the equity markets (the reduction in total Fund size will increase the high yield allocation as a percentage of total Fund amount).


In late January 2019, the purchase of a retail property in the real estate separate account was funded with about $47 million (a $2 million deposit was funded in 2018). In late February 2019, $100 million in large cap domestic equities were liquidated as this asset class was near its upper range and the market level was near the highs reached in the 3rd quarter of 2018. After the rebalancing of assets, all asset classes were within their respective target ranges except for Cash, TIPS and Real Estate (excluding REITS). Cash continued to be above the upper target range (as of February 28, 2019). Cash was managed to allocate to cheaper under-allocated asset classes but maintained at a level to ensure liabilities were met without any forced liquidation of assets under pressure. Both TIPS and Real Estate remained below their respective lower target ranges due to the rebound in global equity markets. Attachment I and II illustrate the portfolio and allocation status of each asset class as of February 28, 2019. DUE DILIGENCE During the 3-month period ended February 28, 2019, Staff conducted 11 due diligence meetings (including site visits, manager visits, conference calls and annual meetings) with investment managers working for the Fund. For the same period, Staff believes all fund managers that invested in public securities were investing Fund assets in compliance with their individual investment policy guidelines. CASH FLOW The actual and estimated cash flows (in millions) for 1Q2019 and 2Q2019 are summarized as below:

Jan 1 - Mar 31, 2019 Apr 1 - Jun 30, 2019

Actual/Projected Projected

City Contributions (Net)1 0 0

Member Contributions 40.3 36.5

Securities Lending 1.2 1.3

Investment Income 91.2 93.7

Earnings on Cash/Misc. 7.3 6.9

Real Estate -24.8 -4.6

Private Equity 0 21.1

DROP -60.5 -41.2

Benefits & Administrative Expense

-273.5

-266.6

Net Cash Flow (est.)* -218.8 -152.9

*Negative Cash Flow is funded by Cash. 1The Net City Contribution = (the Total General Fund Contribution – the retirement contribution payment from LAFPP to LACERS for LAFPP staff) + the Special Fund (Harbor) contribution) + the Special Fund (LAWA) contribution.


CURRENT EVENTS A search for domestic small cap manager is in process. The search is expected to be completed during the 2nd quarter of 2019. This report was prepared by: Tom Lopez Chief Investment Officer RPC:TL:SL:DN:AP Attachments: I. Portfolio Allocation Chart as of February 28, 2019 II. Total Portfolio as of February 28, 2019

Total Fund Portfolio Allocation

24.2

1%

6.71

%

15.5

5%

4.49

%

15.8

6%

2.60

%

2.09

%

5.49

%

8.75

%

9.82

%

4.44

%

Core Equity (23%) Small Cap. Equity (6%) Int'l Equity (16%) Int'l Emerg. Mkts (5.0%) Core Bonds IincludingTIPS) (17.0%)

High Yield Bonds (3%) Unconstrained FixedIncome (2.0%)

Cash (1.0%) Total RE (Including REITS)(10.0%)

Private Equity (12.0%) Commodities Energy(5.0%)

Actual Allocation, Target Allocation in parenthesisOver-allocated (Blue), Under-allocated (Red) *Board approved ranges on 6/16/16*Board approved ranges on

Attachment I

A

EQUITIES STOCKS BONDS CASH TOTAL ALLOC. PRIVATE EQUITY BONDS CASH TOTAL ALLOC.AllianceBernstein (S&P 500 Index) 1,715.0 - 2.1 1,717.2 Abbott Capital 27.2 - - 27.2AllianceBernstein (Systematic Value) 514.1 - 1.4 515.5 Hamilton Lane 4.0 - - 4.0AllianceBernstein (Russell 1000 Growth Index) 1,191.6 - 2.9 1,194.4 PCA 20.0 - - 20.0LA Capital (Enhanced Index-Growth) 406.7 - 1.7 408.4 Fairview Capital 16.8 - - 16.8NTI S&P 500 Equal Weight 787.7 - 5.1 792.8 Portfolio Advisors 1,873.4 - - 1,873.4NTI Stoxx USA 900 454.8 - 2.7 457.5 Aldus Equity 167.0 - - 167.0Boston Partners (Value) 358.3 - 8.0 366.3 TCP 16.6 - - 16.6Redwood Investments (Large Cap-Core) 33.3 - 1.1 34.4 Stepstone Group 100.6 - - 100.6Terminated Domestic Equity Managers - - 0.1 0.1 TOTAL PRIVATE EQUITY MGRS (12%) 2,225.6 - - 2,225.6 9.82%Core Equity Managers (23%) 5,461.5 - 25.1 5,486.6 24.21% Target Differential (2.18)% (494.1)Target Differential 1.21% 273.7

REAL ESTATEFrontier Capital Mgt. (Growth) 517.3 - 12.3 529.6 AllianceBernstein Global REIT 117.6 - 0.5 118.1Daruma Capital Mgt. (Core) 388.3 - 20.7 409.0 Principal Global REIT 193.9 - 1.0 194.9Channing Capital Mgt. (Core) 66.9 - 2.0 68.9 Principal U.S. REIT 177.0 - 2.0 179.0Phocas Financial (Value) 64.1 - 1.7 65.8 Cohen & Steers U.S. REIT 187.1 - 1.2 188.3Westwood Management (Value) 221.1 - 5.5 226.6 Terminated REIT Managers - - - -AllianceBernstein (Value) 216.5 - 4.1 220.6 REIT Managers (3.0%) 675.6 - 4.7 680.3 3.00%Terminated Small Cap Equity Managers - - - -Small Cap. Equity Mgrs (6%) 1,474.1 - 46.4 1,520.4 6.71% Target Differential 0.00% 0.4 Target Differential 0.71% 160.6 REAL ESTATE COMMINGLED FUNDS SUMMARY

Total Pooled Funds 764.4 - - 764.4 3.37%Brandes Investment Partners (Value) 964.5 - 47.5 1,012.0 REAL ESTATE SEPARATE ACCT. SUMMARY BY MANAGERFisher Asset Mgt. (Core) 482.1 - 10.0 492.1 AEW (Heitman, Sentinel) 504.7 - - 504.7Blackrock (Core Passive) 808.6 - 3.5 812.1 Neptune Building 33.3 - - 33.3Baille Gifford (Growth) 672.9 - 9.0 682.0 Real Estate Equity Mgrs 538.0 - - 538.0 2.37%Boston Common (ESG) 30.2 - 0.5 30.6 TOTAL REAL ESTATE (10%) 1,978.0 - 4.7 1,982.6 8.75%Principal Global Int'l Small Cap 186.2 - 5.3 191.5 Target Differential (1.25)% (283.8)Victory Capital Mgt. Small Cap 191.7 - 1.2 192.9 COMMODITIESFIS (Mgr of Emerging Mgrs) International 108.7 - 2.2 110.9 Alliance (Commodities, Public Equity) 651.5 - 4.6 656.2Terminated Int'l Equity Managers 0.3 - 0.0 0.3 Gresham Invest. Mgmt. (Commodities, Active) 99.0 - 6.0 105.0Int'l Equity Mgrs (16%) 3,445.2 - 79.1 3,524.3 15.55% Goldman Sachs (Commodities, Enhanced Index) 105.1 - - 105.1Target Differential (0.45)% (102.0) PA (Commodities, Private Equity) 140.4 - - 140.4Harding Loevner 459.2 - 7.5 466.7 TOTAL COMMODITIES (5.0%) 996.1 - 10.6 1,006.7 4.44%Dimensional Fund Advisors 549.3 - 2.1 551.3 Target Differential (0.56)% (137.2)Terminated Int'l Emerg. Mkts. Mgrs. 0.0 - - 0.0Int'l Emerg. Mkts Mgrs (5.0%) 1,008.5 - 9.5 1,018.0 4.49% CASHTarget Differential (0.51)% (115.2) HOUSE ACCOUNTSTOTAL EQUITIES MGRS (50.0%) 11,389.3 - 160.2 11,549.5 50.96% Tier 1 (Article 17) - - 31.2 31.2Int'l Tax Reclaims - - 0.5 0.5 Tier 2 (Article 18) - - 936.5 936.5FIXED INCOME Tier 3 (Article 35) - - 21.1 21.1Northern Trust (Fixed Income Index) - 736.8 5.0 741.8 Tier 4 (New) - - 9.4 9.4Reams Asset Mgmt. (Opportunistic) - 699.0 - 699.0 Tier 5 (New) - - 225.3 225.3LM Capital (Opportunistic) - 316.0 5.0 321.0 Tier 6 (New) - - 20.0 20.0GIA Partners (Opportunistic) - 48.2 0.3 48.4 CASH SUMMARYSemper Capital Mgt. - 49.0 0.6 49.5 Unallocated Cash Reserve (1%) - - 1,243.6 1,243.6 5.49%Loomis Sayles (Long Duration) - 626.4 3.4 629.9 Target Differential 4.49% 1,017.0 CA Comm. Mort. Fund - 0.4 - 0.4 Transition - - - -Bridgewater (TIPS) - 364.5 - 364.5 Reams Asset Mgmt. (Passive TIPS) - 666.2 0.4 666.6 PRIVATE REAL Bridgewater Pure Alpha - 72.7 - 72.7 EQUITY STOCKS BONDS ESTATE CASH TOTALCore Bond Mgrs (17.0%) - 3,579.2 14.6 3,593.8 15.86% ACTUAL ASSET MIXTarget Differential (1.14)% (259.2) Current Month 996.1 2,225.6 11,392.1 4,626.3 1,978.0 1,446.8 22,664.8 MacKay Shields 2.8 574.2 12.5 589.5 4.39% 9.82% 50.26% 20.41% 8.73% 6.38% 100.00%High Yield Bond Mgrs (3.0%) 2.8 574.2 12.5 589.5 2.60% Last Month 985.7 2,226.3 11,162.2 4,633.5 1,960.3 1,453.1 22,421.0 Target Differential (0.40)% (90.4) % Change 1.05% -0.03% 2.06% -0.16% 0.90% -0.44% 1.09%Reams Asset Mgmt. (Unconstrained) - 237.6 - 237.6 Payden & Rygel (Unconstrained) 235.3 - 235.3Unconstrained Fixed Income (2.0%) 472.9 - 472.9 2.09%Target Differential 0.09% 19.6

TOTAL FIXED INCOME MGRS (22.0%) 2.8 4,626.3 27.1 4,656.2 20.54%

Subtotals & totals may not sum up exactly due to rounding.Note: Data is unauditedDollars expressed in Millions.

Note: City Pension Contribution received on 7/13/18

COMMODITIES

Portfolio as of February 28, 2019

TOTAL FUND

STOCKS / EQUITY / RE

Attachment II



(213) 279-3000

REPORT TO THE BOARD OF FIRE AND POLICE PENSION COMMISSIONERS DATE: MARCH 21, 2019 ITEM: B.3.a FROM: RAYMOND P. CIRANNA, GENERAL MANAGER SUBJECT: FEBRUARY 2019 MONTHLY REPORT AND UPDATE

THIS REPORT IS PROVIDED FOR INFORMATIONAL PURPOSES

DISCUSSION The February 2019 Monthly Report includes the following notable items:

1) Actuarial Audit - On May 3, 2018 the Board awarded a new three-year contract to Segal

Consulting to provide actuarial consulting services. At the same Board meeting, the Board selected Milliman, Inc. to conduct an actuarial audit. Board Policy requires that an actuarial audit be performed every 5 – 7 years if the same actuary is retained during that time. Segal has served as the Plan actuary since 2006, so Milliman will prepare an actuarial audit based on the June 30, 2018 valuation data and will present the audit results to the Board in June 2019.

2) 2017-18 Annual Report – The 2018 Annual Report was posted on the website on

January 24, 2019 and printed copies were distributed to the City Council and other stakeholders on February 28, 2019. The Report has been referred to two City Council Committees: the Budget and Finance Committee, and the Personnel and Animal Welfare Committee.

3) 2019 Police Department Retired Member Board Election – The April 23, 2019 Election date was approved by the Board on February 7, 2019. The following are some of the remaining key dates from the approved Election Calendar:

March 6, 2019 through March 15, 2019

Members who wish to qualify for the ballot may file the following documents at the Office of the City Clerk – Election Division: 1) Notice of Intent to run for office; 2) Occupational Ballot Designation (Optional); and 3) Statement of Qualifications for office (Optional). Filing deadline is 5:00 p.m. on March 15, 2019.

March 27, 2019 The Office of the City Clerk mails ballots to eligible voters.

April 18, 2019 Deadline for candidates to submit an Observers List with the Office of the City Clerk by 5:00 p.m.

April 23, 2019 Election Day. All ballots must be received by the Office of the City Clerk - Election Division, by 5:00 p.m., in order to be counted.

May 16, 2019 Date of Board Report - Election Results.

July 1, 2019 New Police Department Retired Member of the Board term begins.


4) Pension Administration System – PARIS went live in January and has successfully processed two monthly Pension Rolls. Staff continues to work with the vendor to address issues and needed enhancements, and on functionality that was intentionally deferred until after the Go-Live implementation. Staff has begun work on the next phases of the project which are:

• Phase 4C – Member Self-Service: In Spring 2019, staff expects to implement the web-portal that will again allow for member self-service.

• Phase 4B – Document Imaging and Workflow Implementation: This final stage of the project is now expected to be completed by Fall 2019 rather than early Summer 2019.

5) Private Equity and Real Estate- The following private equity and/or real estate investments have closed since the last meeting announcement:

On November 15, 2018 the Board, in closed session pursuant to Government Code Section 54956.81, approved a commitment of up to $25 million in the following alternative investment: Summit Partners Growth Equity Fund X, L.P. The general partner reduced LAFPP's commitment to $20 million due to oversubscription and the investment closed on February 26, 2019. Board vote: Ayes 7, Nays 0. On February 7, 2019 the Board, in closed session pursuant to Government Code Section 54956.81, approved a commitment of up to $5 million in the following alternative investment: Spark Capital VI, L.P. The general partner reduced LAFPP's commitment to $4 million due to oversubscription and the investment closed on February 14, 2019. Board vote: Ayes 5, Nays 0. On February 7, 2019 the Board, in closed session pursuant to Government Code Section 54956.81, approved a commitment of up to $15 million in the following alternative investment: Spark Capital Growth Fund III, L.P. The investment closed on February 14, 2019. Board vote: Ayes 5, Nays 0.

The following searches and firms are within the Marketing Cessation Period Policy*:

Vendor / Contract

Contract Start Date

Contract Expiration

Date

Market Cessation Start Date

Small Cap Equity

TBD

TBD

12/20/18

Brandes Investment Partners, LP (International Equity)

TBD

07/31/2019

02/15/2019

Fisher Asset Management, LLC (International Equity)

TBD

07/31/2019

02/15/2019

*Marketing Cessation: In accordance with Section 9.0 of the Investment Policy, from the time the search begins with the Board’s

approval of the minimum criteria for the search until the search ends with the selection of the firm(s) to receive contract(s), all direct marketing contact with firms that meet the search criteria will be limited to meetings with the Consultant, information sent to the Consultant or Department, questions about the search directed to the Staff or Consultant, one meeting at the Department’s office with Staff and any site visits. The Board members, Department Staff or Consultant will accept no entertainment or gifts of any kind from any firm qualifying for the search. This policy does not prohibit contact with potential interview candidates at group social events, educational seminars, conferences, or charitable events so long as there is no direct marketing.


During the three months prior to the renewal of a contract with a firm currently under contract, the Board Members, Department Staff and Consultant will accept no entertainment or gifts from that firm until the contract has been renewed or terminated by the Board. Firms who currently have contracts with LAFPP are allowed to continue contact related to the existing contract with Staff and the Consultant.

Attachment

Item: B.3.a

MONTHLY REPORT

February 2019

MEETING

DATE

ASSIGNMENT

STAFF

PERSON

DATE DUE

TO THE BOARD

STATUS

07/19/18

Requested an emerging managers review presentation by RVK.

Tom Lopez

June 2019

The request is being incorporated into the Investment workplan.

10/18/18 Transactional Cost Tom

Lopez June 2019

Staff and RVK will provide a report by the end of June 2019.

11/01/18 Mental Health Issues Impacting Pensions

Greg Mack

TBD Staff researching possible presenters.

02/21/19

Summary of Workers Comp claim statuses and impacts on Disability Pensions

Diana Anderson

April 2019

Staff expects to provide a report to the Board in April.

1

A

EQUITIES STOCKS BONDS CASH TOTAL ALLOC. PRIVATE EQUITY BONDS CASH TOTAL ALLOC.

AllianceBernstein (S&P 500 Index) 1,715.0 - 2.1 1,717.2 Abbott Capital 27.2 - - 27.2

AllianceBernstein (Systematic Value) 514.1 - 1.4 515.5 Hamilton Lane 4.0 - - 4.0

AllianceBernstein (Russell 1000 Growth Index) 1,191.6 - 2.9 1,194.4 PCA 20.0 - - 20.0

LA Capital (Enhanced Index-Growth) 406.7 - 1.7 408.4 Fairview Capital 16.8 - - 16.8

NTI S&P 500 Equal Weight 787.7 - 5.1 792.8 Portfolio Advisors 1,873.4 - - 1,873.4

NTI Stoxx USA 900 454.8 - 2.7 457.5 Aldus Equity 167.0 - - 167.0

Boston Partners (Value) 358.3 - 8.0 366.3 TCP 16.6 - - 16.6

Redwood Investments (Large Cap-Core) 33.3 - 1.1 34.4 Stepstone Group 100.6 - - 100.6

Terminated Domestic Equity Managers - - 0.1 0.1 TOTAL PRIVATE EQUITY MGRS (12%) 2,225.6 - - 2,225.6 9.82%

Core Equity Managers (23%) 5,461.5 - 25.1 5,486.6 24.21% Target Differential (2.18)% (494.1)

Target Differential 1.21% 273.7

REAL ESTATEFrontier Capital Mgt. (Growth) 517.3 - 12.3 529.6 AllianceBernstein Global REIT 117.6 - 0.5 118.1

Daruma Capital Mgt. (Core) 388.3 - 20.7 409.0 Principal Global REIT 193.9 - 1.0 194.9

Channing Capital Mgt. (Core) 66.9 - 2.0 68.9 Principal U.S. REIT 177.0 - 2.0 179.0

Phocas Financial (Value) 64.1 - 1.7 65.8 Cohen & Steers U.S. REIT 187.1 - 1.2 188.3

Westwood Management (Value) 221.1 - 5.5 226.6 Terminated REIT Managers - - - -

AllianceBernstein (Value) 216.5 - 4.1 220.6 REIT Managers (3.0%) 675.6 - 4.7 680.3 3.00%

Terminated Small Cap Equity Managers - - - -

Small Cap. Equity Mgrs (6%) 1,474.1 - 46.4 1,520.4 6.71% Target Differential 0.00% 0.4

Target Differential 0.71% 160.6 REAL ESTATE COMMINGLED FUNDS SUMMARY

Total Pooled Funds 764.4 - - 764.4 3.37%

Brandes Investment Partners (Value) 964.5 - 47.5 1,012.0 REAL ESTATE SEPARATE ACCT. SUMMARY BY MANAGER

Fisher Asset Mgt. (Core) 482.1 - 10.0 492.1 AEW (Heitman, Sentinel) 504.7 - - 504.7

Blackrock (Core Passive) 808.6 - 3.5 812.1 Neptune Building 33.3 - - 33.3

Baille Gifford (Growth) 672.9 - 9.0 682.0 Real Estate Equity Mgrs 538.0 - - 538.0 2.37%

Boston Common (ESG) 30.2 - 0.5 30.6 TOTAL REAL ESTATE (10%) 1,978.0 - 4.7 1,982.6 8.75%Principal Global Int'l Small Cap 186.2 - 5.3 191.5 Target Differential (1.25)% (283.8)

Victory Capital Mgt. Small Cap 191.7 - 1.2 192.9 COMMODITIESFIS (Mgr of Emerging Mgrs) International 108.7 - 2.2 110.9 Alliance (Commodities, Public Equity) 651.5 - 4.6 656.2

Terminated Int'l Equity Managers 0.3 - 0.0 0.3 Gresham Invest. Mgmt. (Commodities, Active) 99.0 - 6.0 105.0

Int'l Equity Mgrs (16%) 3,445.2 - 79.1 3,524.3 15.55% Goldman Sachs (Commodities, Enhanced Index) 105.1 - - 105.1

Target Differential (0.45)% (102.0) PA (Commodities, Private Equity) 140.4 - - 140.4

Harding Loevner 459.2 - 7.5 466.7 TOTAL COMMODITIES (5.0%) 996.1 - 10.6 1,006.7 4.44%

Dimensional Fund Advisors 549.3 - 2.1 551.3 Target Differential (0.56)% (137.2)

Terminated Int'l Emerg. Mkts. Mgrs. 0.0 - - 0.0

Int'l Emerg. Mkts Mgrs (5.0%) 1,008.5 - 9.5 1,018.0 4.49% CASHTarget Differential (0.51)% (115.2) HOUSE ACCOUNTS

TOTAL EQUITIES MGRS (50.0%) 11,389.3 - 160.2 11,549.5 50.96% Tier 1 (Article 17) - - 31.2 31.2

Int'l Tax Reclaims - - 0.5 0.5 Tier 2 (Article 18) - - 936.5 936.5

FIXED INCOME Tier 3 (Article 35) - - 21.1 21.1

Northern Trust (Fixed Income Index) - 736.8 5.0 741.8 Tier 4 (New) - - 9.4 9.4

Reams Asset Mgmt. (Opportunistic) - 699.0 - 699.0 Tier 5 (New) - - 225.3 225.3

LM Capital (Opportunistic) - 316.0 5.0 321.0 Tier 6 (New) - - 20.0 20.0

GIA Partners (Opportunistic) - 48.2 0.3 48.4 CASH SUMMARY

Semper Capital Mgt. - 49.0 0.6 49.5 Unallocated Cash Reserve (1%) - - 1,243.6 1,243.6 5.49%

Loomis Sayles (Long Duration) - 626.4 3.4 629.9 Target Differential 4.49% 1,017.0

CA Comm. Mort. Fund - 0.4 - 0.4 Transition - - - -

Bridgewater (TIPS) - 364.5 - 364.5

Reams Asset Mgmt. (Passive TIPS) - 666.2 0.4 666.6 PRIVATE REAL

Bridgewater Pure Alpha - 72.7 - 72.7 EQUITY STOCKS BONDS ESTATE CASH TOTAL

Core Bond Mgrs (17.0%) - 3,579.2 14.6 3,593.8 15.86% ACTUAL ASSET MIX

Target Differential (1.14)% (259.2) Current Month 996.1 2,225.6 11,392.1 4,626.3 1,978.0 1,446.8 22,664.8

MacKay Shields 2.8 574.2 12.5 589.5 4.39% 9.82% 50.26% 20.41% 8.73% 6.38% 100.00%

High Yield Bond Mgrs (3.0%) 2.8 574.2 12.5 589.5 2.60% Last Month 985.7 2,226.3 11,162.2 4,633.5 1,960.3 1,453.1 22,421.0

Target Differential (0.40)% (90.4) % Change 1.05% -0.03% 2.06% -0.16% 0.90% -0.44% 1.09%

Reams Asset Mgmt. (Unconstrained) - 237.6 - 237.6

Payden & Rygel (Unconstrained) 235.3 - 235.3

Unconstrained Fixed Income (2.0%) 472.9 - 472.9 2.09%

Target Differential 0.09% 19.6

TOTAL FIXED INCOME MGRS (22.0%) 2.8 4,626.3 27.1 4,656.2 20.54%

Subtotals & totals may not sum up exactly due to rounding.

Note: Data is unaudited

Dollars expressed in Millions.

Note: City Pension Contribution received on 7/13/18

COMMODITIES

Portfolio as of February 28, 2019

TOTAL FUND

STOCKS / EQUITY / RE

2

######

Venture Capital Buy-out Special Situations Percentage

Total $1,038,212,794 24% $2,047,706,000 48% $1,171,072,000 28% 100.00%

Commitment Total $4,256,990,794

Total Commitment Contributions Remaining Commitment Percent Funded

Abbott $237,466,000 $229,780,000 $7,686,000 96.76%

Hamilton Lane $128,287,000 $124,605,000 $3,682,000 97.13%

Fairview Capital $30,000,000 $7,157,000 $22,843,000 23.86%

Portfolio Advisors Legacy $264,234,000 $255,196,000 $9,038,000 96.58%

Portfolio Advisors Current $2,741,462,000 $1,535,303,000 $1,206,159,000 56.00%

PCA $192,820,000 $181,180,000 $11,640,000 93.96%

Stepstone Group $197,451,000 $183,145,000 $14,306,000 92.75%

TCP $15,484,794 $15,484,794 $0 100.00%

Aldus Equity $449,786,000 $409,853,000 $39,933,000 91.12%

Total $4,256,990,794 $2,941,703,794 $1,315,287,000 69.10%

Unfunded Commitment $1,315,287,000

Source: BOARD OF FIRE AND POLICE PENSION COMMISSIONERS

Data is based only on current/active funds whaich are funds that have remailing commitment or residual value.

Private Equity Commitment Summary

Private Equity Funding Summary

Total Fund Portfolio Allocation

Data as of June 30, 2018

24.2

1%

6.7

1%

15.5

5%

4.4

9%

15.8

6%

2.6

0%

2.0

9%

5.4

9%

8.7

5%

9.8

2%

4.4

4%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

Core Equity (23%) Small Cap. Equity (6%) Int'l Equity (16%) Int'l Emerg. Mkts (5.0%) Core Bonds Iincluding

TIPS) (17.0%)

High Yield Bonds (3%) Unconstrained Fixed

Income (2.0%)

Cash (1.0%) Total RE (Including REITS)

(10.0%)

Private Equity (12.0%) Commodities Energy

(5.0%)

Actual Allocation, Target Allocation in parenthesisOver-allocated (Blue), Under-allocated (Red)

6.2

3.8

*Board approved ranges on 6/16/16

1.8

*Board approved ranges on

7.3

4.73.6

6.4

18.0

16.0

2.6

1.0

4.0

8.5

11.5

9.0

15.0

25.8

3.4

20.2

18.4

13.6

2.2

3

8/31/2018

COMMINGLED FUNDS EQUITY POOLED CASH TOTAL ALLOC.

ABR Chesapeake Fund III NA 3.0 - 3.0

AEW Partners V NA 0.1 - 0.1

AEW Value Investors II NA 0.0 - 0.0

Almanac Securities Realty VII NA 36.7 - 36.7

Almanac Securities Realty VIII NA 0.5 - 0.5

Asana Partners NA 26.7 - 26.7

Berkshire Multifamily Income Realty Fund NA 36.4 36.4

Buchanan Fund IV NA 4.0 - 4.0

Calif Smart Growth IV NA 3.4 - 3.4

Capri Urban Investors NA 8.5 - 8.5

CIM Real Estate Fund III NA 15.7 - 15.7

CIM Urban REIT, LLC NA 16.3 - 16.3

CityView LA Urban Land Fund NA 0.0 - 0.0

Clarion Lion NA 106.6 - 106.6

Colony VIII NA 0.7 - 0.7

CPI Capital Europe (A NA 0.7 - 0.7

Exeter Industrial NA 17.4 - 17.4

Forum Asian Realty II NA 0.0 - 0.0

Gerrity Retail Fund NA 29.7 - 29.7

Heitman Value Partners II NA 0.1 - 0.1

Heitman Asia Pacific Property Investors NA 19.3 - 19.3

Heitman American Realty Trust (HART) NA 74.3 - 74.3

Jamestown Premier NA 56.5 - 56.5

Kayne Anderson Core NA 3.0 - 3.0

LaSalle Asia Opp. II NA 0.1 - 0.1

Legg Mason II NA 0.0 - 0.0

Metlife Core Property NA 102.3 - 102.3

Noble Hospitality NA 0.2 - 0.2

Oaktree Capital RE Opp. III NA 0.0 - 0.0

Praedium Fund VII NA 0.0 - 0.0

Principal Green I NA 0.2 - 0.2

Prudential PRISA NA 80.0 - 80.0

Rothschild Five Arrows Realty V (Almanac) NA 0.9 - 0.9

Savanna Real Estate Fund III NA 42.3 - 42.3

Starwood Distressed Opp IX NA 10.8 - 10.8

Standard Life Investments NA 3.2 - 3.2

Standard Life Investments Euro RE Club II NA 15.6 - 15.6

Stockbridge RE Fund II NA 10.4 - 10.4

Unico Core Plus Partners NA 33.4 - 33.4

Unico Partners I NA 5.1 - 5.1

Value Enhancement V (Ares) NA 0.5 - 0.5

Total 764.4 - 764.4 3.37%

SEPARATE ACCOUNT PROPERTIES EQUITY POOLED CASH TOTAL ALLOC.

AEW (Heitman) - 121 W. Chestnut 73.6 NA - 73.6

AEW (Heitman) - Woodland Plaza 23.1 NA - 23.1

AEW (Heitman) - Twin Creeks Village 32.3 NA - 32.3

AEW (Heitman) - Sea Isle, Inc. 36.4 NA - 36.4

AEW (Sentinel) - Riverplace 28.9 NA - 28.9 AEW (Sentinel) - Walmart Building at Water Ridge 21.5 NA - 21.5

AEW (Sentinel) - Windward Place Apts. 30.8 NA - 30.8 AEW (Sentinel) - Jefferson Town Center Apts 53.8 NA - 53.8

AEW (Sentinel) - St. Louis Industrial 40.9 NA - 40.9

AEW (Sentinel) - NorthPointe Exec. Park 31.2 NA - 31.2

AEW (Sentinel) - Aerial Center Exec. Park 41.7 NA - 41.7

AEW (Sentinel (Urdang)) - Shadeland Station 40.5 NA - 40.5

AEW (Sentinel (Urdang)) - Exelon Building 0.7 NA - 0.7

AEW - Sycamore Hills Plaza 49.3 NA - 49.3

Neptune Building 33.3 NA 33.3

Real Estate Managers Total Committed

AEW (Heitman, Sentinel (Urdang)) 504.7

Total 538.0 2.37%

Real Estate Summary

4

Manager 1-month 3-month 1-year 3-years 5-years FYTD

Total Fund 1.56 % 2.81 % 3.08 % 10.61 % 6.93 % 1.32 %

S & P 500 Index 3.21 % 1.42 % 4.68 % 15.28 % 10.67 % 3.84 %

Total Equity 3.01 % 3.82 % 0.67 % 14.05 % 7.50 % 0.50 %

S & P 500 Index 3.21 % 1.42 % 4.68 % 15.28 % 10.67 % 3.84 %

Total Domestic Equity 3.76 % 2.94 % 6.08 % 15.63 % 9.69 % 2.60 %

Russell 3000 Index 3.52 % 1.94 % 5.05 % 15.53 % 10.15 % 3.19 %

Total Large Cap Equity 3.19 % 1.87 % 5.27 % 15.57 % 10.65 % 3.53 %

S & P 500 Index 3.21 % 1.42 % 4.68 % 15.28 % 10.67 % 3.84 %

Total Small Cap 5.89 % 7.10 % 9.03 % 16.24 % 6.15 % -0.66 %

Russell 2000 Index 5.20 % 3.13 % 5.58 % 16.67 % 7.36 % -3.27 %

Total International Equity 1.86 % 5.21 % -7.37 % 11.56 % 3.98 % -2.91 %

MSCI ACWI ex-US 1.97 % 4.76 % -6.00 % 11.25 % 2.97 % -2.05 %

Total International Developed Markets 2.19 % 4.70 % -6.54 % 10.80 % 3.72 % -3.32 %

MSCI ACWI ex-US 1.97 % 4.76 % -6.00 % 11.25 % 2.97 % -2.05 %

Total International Emerging Markets 0.78 % 7.03 % -10.49 % 14.86 % 5.08 % -1.59 %

MSCI Emerging Markets Index 0.23 % 6.20 % -9.54 % 15.46 % 4.52 % 0.00 %

Total Fixed Income 0.12 % 2.65 % 2.85 % 3.68 % 3.18 % 2.14 %

Bloomberg Barclays Universal 0.11 % 3.08 % 3.19 % 2.45 % 2.61 % 2.95 %

Total Core Fixed Income -0.16 % 3.36 % 2.96 % 2.93 % 3.15 % 2.52 %

Bloomberg Barclays Aggregate -0.06 % 2.86 % 3.17 % 1.69 % 2.32 % 2.67 %

Total High Yield 1.53 % 1.23 % 4.11 % 9.95 % 5.60 % 3.98 %

LAFPP HY Benchmark1

1.69 % 4.03 % 4.26 % 9.91 % 4.55 % 3.87 %

Total REITs 0.75 % 4.67 % 17.06 % 10.04 % 8.92 % 6.71 %

LAFPP REIT Benchmark2

0.44 % 3.82 % 16.95 % 8.29 % 7.59 % 5.23 %

Total Commodities 0.64 % 2.77 % -2.12 % 11.06 % 0.66 % -3.49 %

Bloomberg Commodities Index TR 1.01 % -0.82 % -5.67 % 3.57 % -8.81 % -5.46 %

Footnote:1

LAFPP HY Benchmark: CS HY Index thru 12/31/11 & BofA ML US HY Master II Cnst Index thereafter.

2 LAFPP REIT Benchmark: Dow Jones US Select RE Securities Index thru 12/31/13, 50% FTSE EPRA/NAREIT Global RE Index & 50% Dow Jones

US Select RE Securities Index thereafter.

Preliminary Return Information as of February 28, 2019

5

(Data through February 28, 2019)

DISABILITY PENSIONS

*Claims filed include the following: Disability, Active Member Death, Dependent Child/Parent.

Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec

2017 2 0 3 2 0 0 1 1 2 0 1 4

2018 2 1 1 1 3 3 1 1 2 0 0 0

2019 1 0

0

1

2

3

4

5

Withdrawn Claims

32 24 5

6

*Claims include Surviving Spouse/Domestic Partner, Minor Child, Dependent Child/Parent.


2017 69 74 75 75 71 70 75 75 71 71 70 65

2018 67 70 69 70 67 63 65 64 63 64 66 66

2019 67 67

60

65

70

75

80

Total Claims Pending - All


2017 56 57 58 58 57 56 60 59 54 53 52 49

2018 49 49 48 49 46 44 45 47 47 48 48 49

2019 51 52

40

45

50

55

60

65

70

Total Claims Pending - Disability PensionsNew Applications and Review


2017 13 17 17 17 14 14 15 16 17 18 18 16

2018 18 21 21 21 21 19 20 17 16 16 18 17

2019 16 15

0

5

10

15

20

25

30

Total Claims Pending - Active Member Deaths*

7

*Claims include the following: Disability, Active Member Death, Dependent Child/Parent.

*Claims include the following: Disability, Active Member Death, Dependent Child/Parent. Months with

zero (0) indicate no claims presented to the Board that month.

Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Total

2017 1 1 4 2 4 2 1 2 5 1 4 1

2018 1 2 1 1 1 3 0 3 1 0 0 3

2019 1 2

0

1

2

3

4

5

6

7

8

9

Total Claims Presented to the Board*


2017 38.3 0.1 0.1 14 4.4 3.5 1.6 8.9 7.6 12.8 15 0.5

2018 39.7 0.4 20.2 18.9 0.1 14.5 0 10.4 31.7 0 0 5.8

2019 13.4 13.7

0.0

10.0

20.0

30.0

40.0

50.0

60.0

Mo

nth

s

Avg. Processing Time for Claims Presented to the Board*

3 11

28

166

8

DROP PROGRAM

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD

2017 4 86 26 22 29 17 65 38 16 11 11 3 328

2018 4 129 43 39 29 26 35 25 26 39 48 53 496

2019 248 3 251

0306090

120150180210240270

DROP Entries

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD

2017 40 30 29 23 19 19 15 16 16 4 4 11 226

2018 62 27 28 41 34 22 21 14 12 7 2 7 277

2019 73 38 111

Projected 2019 23 28 16 31 21 10

0

20

40

60

80

100DROP Exits

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2017 1,252 1,307 1,300 1,297 1,306 1,301 1,359 1,381 1,381 1,388 1,395 1,387

2018 1,329 1,431 1,447 1,445 1,439 1,443 1,455 1,466 1,482 1,513 1,558 1,604

2019 1,779 1,744

0200400600800

1,0001,2001,4001,6001,8002,000

DROP Participants

9

SERVICE PENSIONS

Current Month

Fiscal Year To Date

12 Month Moving Avg.

Service Pensions by Approval Date 9 70 8

SURVIVORSHIP PENSIONS

Current Month

Fiscal Year To Date


Surviving Spouse/Domestic Partner Pension Applications Processed 14 154 18

Survivor Benefit Purchase Program 1 8 1

Total Surviving Spouse/DP Applications Processed and Survivor Benefit Purchase Program Granted 15 162

ACTIVE MEMBER SERVICES

Refund of Contributions (Number Leaving Without Vesting)

Current Month

Fiscal Year To Date


Fire 4 10 1

Police 6 45 6

Harbor 0 1 0

Airport 0 0 0

Completed Basic Training Purchases

Fire 6 146 20

Police 15 286 34

Harbor 0 0 0

Airport 0 0 0

Public Service Purchases (PSP) Completed Purchases

1

9*

1

Avg. Years of Service (YOS) Purchased 3.55 1.92 1.80

Avg. Cost per YOS Purchased $59,594 $55,628 $54,893 *A purchase in Jan. 2019 was not included in the last report due to pension system conversion.

MEDICAL & DENTAL TRANSACTIONS February 28, 2019 Pension Roll

Current Month Fiscal YTD Last 12 Mos.

Total Subsidies Paid $10,835,807 $84,722,167 $125,840,094

Total Medicare Part B Reimbursements Paid $1,027,778 $7,443,710 $11,076,966

10

OUTREACH ACTIVITIES

Date Type of Outreach Number of

Participants Tier

Feb. 7, 2019 Recruit Talk: LAPD Graduates – Ahmanson Recruit Training Center

49 6

Feb. 20, 2019 Financial Planning Education Seminar: Late Career – Grace Simons Lodge

24 Multiple

Upcoming Events

Mar. 6, 2019 Financial Planning Education Seminar: DROP Exit – Grace Simons Lodge

TBD Multiple

Mar. 7, 2019 Recruit Talk: LAPD Graduates – Ahmanson Recruit Training Center

TBD 6

Mar. 14, 2019 Financial Planning Education Seminar: DROP Exit – Grace Simons Lodge

TBD Multiple

Mar. 20, 2019 Financial Planning Education Seminar: Late Career – Grace Simons Lodge

TBD Multiple

Outreach Activity Totals

Current Month Fiscal Year to Date

Members Reached 73 1,746

-# of Recruit Talks 1 8

-# of Financial Planning Education Seminars 1 12

-# of Other Outreach Events 0 32 Note: The number of participants for “Information Table” events is an estimate. Staff are available to answer questions, check

personal information and collect forms at these events.

NEW PROJECTS

ACTUARIAL AUDIT On May 3, 2018, the Board selected Segal Consulting to provide actuarial consulting services under a new three-year contract term. Segal has served as the Plan’s actuary since 2006 and Board policy requires that an actuarial audit be conducted every 5-7 years, unless the Plan has recently appointed, or is about to appoint, a new actuary around the time an actuarial audit is scheduled to be performed. The last actuarial audit was completed in November 2013. At the same May Board meeting, Milliman, Inc. was selected to conduct the next actuarial audit. Milliman will perform a full replication of the June 30, 2018 actuarial valuation performed by Segal to assure the actuarial condition of the Plan is accurately measured. They will also complete a thorough review of the assumptions to confirm that they are appropriate and reasonable, and will verify that the data and methods used are reasonable. As part of the audit, Staff has provided Milliman with the data files used by Segal for the June 30, 2018 valuation. The results of the actuarial audit are expected to be presented to the Board in June 2019.

UPDATED PROJECTS

2017-18 ANNUAL REPORT The 2018 Annual Report was posted on the website on January 24, 2019.

11

[UPDATE: During February 2019, announcement letters, including booklets, were distributed to the City Council and other stakeholders. The Annual Report has been referred to both the Budget and Finance Committee and the Personnel and Animal Welfare Committee.] MyLAFPP REDESIGN As part of the implementation of our new pension administration system, PARIS, Staff is working with the consultant on the redesign of MyLAFPP, our member self-service web portal. The redesign will include enhanced features and more self-service options for members. The current MyLAFPP site was disabled beginning January 1, 2019. The anticipated go-live date for the new MyLAFPP is Spring 2019. This information has been communicated to all members through newsletters, social media, and the website. [UPDATE: Staff worked with the consultant to review/update Build 1, which covered the design, layout, secure registration process, and basic features. Build 2 was delivered to staff in early March. A status update of MyLAFPP will be included with the March quarterly newsletters for Active/DROP and Retired members.] WEBSITE REDESIGN Staff has been working with Digital Deployment, our website design and maintenance consultant, to begin the redesign of the department website, www.LAFPP.com. Phase 1: Discovery, Phase 2: Design, and Phase 3: Implementation, have been completed. Phase 4: Migration and Test Environment Development, is still in progress. Phase 4 involves migrating all content on the current website to a test environment that will be used as a staging site for the new website. Staff attended a 2-day training to learn to use the updated content management system to make changes to the layout and content. [UPDATE: Staff attended a second in-depth training session conducted by the consultant

and continues to make the final edits/updates to the pre-launch site in preparation for the

new projected launch date of April 1, 2019.]

12

NEW PROJECTS

WORKFORCE SUCCESSION PLANNING

The Succession Planning Team (SPT) has met in February and determined that a

department-wide survey would be distributed in mid-March 2019 to seek input on levels

of interest for different types of workforce development programs. The SPT will meet in

in late March to review the survey results and find a more definitive direction to take with

the department succession plan, which is scheduled for implementation by June 2019.

The current succession plans (for General Manager, Chief Investment Officer, and

Assistant General Manager positions) will also be distributed to executive management

for updating in March.

UPDATED PROJECTS

2019 POLICE DEPARTMENT RETIRED MEMBER BOARD ELECTION

LAFPP provides for the election of employee and retired Board members in accordance

with the City Charter, Los Angeles Administrative Code (LAAC), Division 23, Chapter 5,

Articles 5 and 5.5, and Board rules. On February 7, 2019, the Board authorized staff to

administer the 2019 Police Department Retired Member Board Election scheduled for

April 23, 2019. Below are some key dates for the election:

March 6, 2019 through March 15, 2019

Members who wish to qualify for the ballot may file the following documents at the Office of the City Clerk – Election Division: 1) Notice of Intent to run for office; 2) Occupational Ballot Designation (Optional); and 3) Statement of Qualifications for office (Optional). Filing deadline is 5:00 p.m. on March 15, 2019.

March 27, 2019 The Office of the City Clerk mails ballots to eligible voters.

April 18, 2019 Deadline for candidates to submit an Observers List with the Office of the City Clerk by 5:00 p.m.

April 23, 2019 Election Day. All ballots must be received by the Office of the City Clerk - Election Division, by 5:00 p.m., in order to be counted.

May 16, 2019 Date of Board Report - Election Results.

July 1, 2019 New Police Department Retired Member of the Board term begins.

[UPDATE: The Office of the City Clerk has mailed the election notification and Notice of

Intent packets to eligible Police Department retired members. After the March 15, 2019

deadline for members to submit the Notice of Intent packets to qualify for the ballot, the

Office of the City Clerk will begin preparations to mail ballots to eligible voters.]

13

PENSION ADMINISTRATION SYSTEM REPLACEMENT

The Board awarded the contract to Conduent (formerly Xerox) on May 21, 2015 and implementation of the project began in July 2015. The new system that is being developed was later named PARIS (Pension and Retirement Information System). For the last couple of years, staff has worked with the Conduent team to setup the hosting environment, confirm and document the various specifications for PARIS, and deliver in phases, newly developed system functionality for testing and validation by LAFPP staff. The major system functionalities delivered include Core Calculations for Service Retirement, DROP, Disability, and Terminations as well as Secondary Calculations involving Service Purchases, Enrollment, Deaths, and QDROs. All discrepancies and defects were logged and addressed for resolution and re-testing.

[UPDATE: PARIS went live in January and has successfully processed the last two

Pension Rolls. We have received two post Go-Live support builds to address issues and

needed enhancements. Post support Build 1 was tested and recently deployed to

Production while Post support Build 2 is currently being tested by staff and is expected to

be deployed in time for the April pension roll. There are still a few reporting issues that

staff continues to work on. These reporting issues are expected to be addressed in the

next support Builds.

The Project Team continues to work on functionality that was intentionally deferred until

after the Phase 4A Go-Live implementation. These items will be completed over the next

few months. Additionally, staff has begun work on the next phases of the project which

are:

• Phase 4C – Member Self-Service: We have received two Phase 4C builds and staff is

currently testing this functionality. Staff expects to implement the web portal that will again

allow for member self-service in Spring 2019.

• Phase 4B – Document Imaging Integration and Workflow Implementation: This phase

has been deferred due to other more critical items related to Phase 4A and Phase 4C. It

is anticipated that this final stage of the project will be completed by Fall 2019.]

CREATION OF TWO NEW CLASSIFICATIONS – BENEFITS ANALYST & SENIOR BENEFITS ANALYST LAFPP began the effort to create two new classifications to bridge the gap between the

existing classifications of Benefits Specialist and Chief Benefits Analyst. This effort is

consistent with Goal 5 of the 2019-21 Three-Year Strategic Plan, Build and Support A

Talented Workforce, by establishing a career ladder in the Benefits series that would

provide advancement opportunity and help retain our employees. On September 27,

2018, the Board of Civil Service Commissioners officially approved the creation of the

new classes and class specifications for Benefits Analyst (Class Code 9108) and Senior

Benefits Analyst (Class Code 9109). On December 6, 2018, the Personnel Department

14

notified the Office of the City Administrative Officer (CAO) of the creation and requested

that they establish a salary for the new classes.

[UPDATE: Personnel Department, Benefits Section, LACERS and LAFPP has submitted

a joint memo to CAO with our recommendations.]

UNCHANGED PROJECTS

PERFORMANCE METRICS As part of the Mayor’s “Back to Basics” philosophy, the Mayor directed departments to submit performance metrics that will measure the effectiveness of the departments in key areas. Monthly, staff submits performance metrics and business plan project updates to Mayoral staff including data in following areas: payment of pension payments; disability applications; customer satisfaction; contractor disclosure; and investment benchmarks.

In addition, the General Manager has expanded the use of performance metrics to internally measure and track performance and assist management decision making, taking into consideration resource requirements needed to compile and analyze the data. These internal metrics are reviewed by management on a regular basis.

In 2017-18, Management reviewed its internal performance metrics and made some changes to its metrics for 2018-19 relating to Investments' due diligence reviews, DocuShare, and certain elements of Pension Administration operations. Staff will continue to meet regularly to review metrics performance and will continue to submit the Mayor’s performance metrics.

15

DEPARTMENT OF FIRE AND POLICE PENSIONS

BUDGET TO ACTUAL - RECEIPTS AND EXPENSESAs of February 28, 2019 (67% of year)

(A) (B) (C) (D) (E)

DIFFERENCE

(UNDER)/OVER VARIANCE

ACTUAL YEAR END PROJECTED %

BUDGET YEAR TO DATE PROJECTIONS (C - A = D) (D / A = E)

RECEIPTS

General Fund1 687,867,488$ 687,867,488$ 687,867,488$ -$ 0%

Less: Excess Benefit Plan1 (1,274,936) (1,274,936) (1,274,936) - 0%

Special Fund (Harbor) 4,967,756 4,967,756 4,967,756 - 0%

Special Fund (Airport) 1,337,008 1,337,008 1,337,008 - 0%

Member Contributions2,3 153,177,807 102,202,980 141,754,302 (11,423,505) -7%

Earnings on Investments 455,500,000 278,037,182 455,500,000 - 0%

Miscellaneous4 2,500,000 384,107 576,161 (1,923,840) -77%

Total Receipts 1,304,075,123$ 1,073,521,585$ 1,290,727,778$ (13,347,345)$ -1%

EXPENSES

Service Pensions 671,000,000$ 450,311,285$ 677,054,361$ 6,054,361$ 1%

Service Pensions - DROP payout 145,464,000 74,824,191 128,004,327 (17,459,673) -12%

Disability Pensions 115,000,000 74,905,721 111,922,021 (3,077,979) -3%

Surv. Spouse/Domestic Partner Pensions 127,000,000 86,230,335 129,574,355 2,574,355 2%

Minor/Dependent Pensions 3,000,000 2,993,666 3,933,958 933,958 31%

Refund of Contributions 4,500,000 2,289,606 3,434,409 (1,065,591) -24%

Subtotal Pension Benefits 1,065,964,000$ 691,554,804$ 1,053,923,431$ (12,040,569)$ -1%

Health Insurance Subsidy 122,000,000 80,995,001 121,741,333 (258,667) 0%

Dental Insurance Subsidy 4,500,000 2,852,606 4,277,382 (222,618) -5%

Medicare Reimbursement 13,500,000 7,443,710 11,554,822 (1,945,178) -14%

Health Insurance Reimbursement 1,500,000 880,562 1,761,124 261,124 17%

Subtotal Health Benefits 141,500,000$ 92,171,879$ 139,334,661$ (2,165,339)$ -2%

Total Benefits Expenses 1,207,464,000$ 783,726,683$ 1,193,258,092$ (14,205,908)$ -1%

Investment Management Expenses 103,621,611 26,254,230 99,843,301 (3,778,310) -4%

Administrative Expenses5 23,693,000 17,460,239 22,851,639 (841,361) -4%

Total Expenses 1,334,778,611$ 827,441,152$ 1,315,953,032$ (18,825,579)$ -1%

RECEIPTS OVER EXPENSES6 (30,703,488)$ 246,080,433$ (25,225,253)$ (5,478,235)$

YTD

CURRENT MOVING

MONTH AVERAGE

PENSION PAYROLL 106,362,063$ 97,679,635$

2 Includes 2017-18 Pay Period 26 and up to 2018-19 Pay Period 17.

3 Funds previously coded as Miscellaneous revenue for member buybacks have been reclassified as Member Contributions.

4 Reflects miscellaneous administrative fees.

5 Actual Year-to-Date reflects Year-to-Date commitments which include encumbrances and expenditures.


1Represents the City of Los Angeles General Fund Annual Required Contribution, including the amount earmarked to pay excess benefits and associated administrative costs in

compliance with IRC Section 415. On November 13, 2018, funds totaling $569,064.15 from the prior fiscal year were re-appropriated to the current year Excess Benefit Plan (EBP)

fund budgeted at $1,274,936. Since the EBP revenue is not transferred to LAFPP, it is excluded from the department's total revenue.

16

DEPARTMENT OF FIRE AND POLICE PENSIONSBUDGET TO ACTUAL - ADMINISTRATIVE AND INVESTMENT MANAGEMENT EXPENSES

As of February 28, 2019 (67% of year)

ADMINISTRATIVE EXPENSE (A) (B) (C) (D) (E) (F) (G) (H)

DIFFERENCE

ADJUSTED YEAR TO DATE REMAINING YR END (UNDER)/OVER VARIANCE

ADOPTED BUDGET BUDGET TOTAL BALANCE PROJECTED PROJECTED %1

ACCOUNT TITLE BUDGET CHANGES (A + B = C) COMMITTED (C - D = E) EXPENSES (F - C = G) (G / C = H)

Salaries-General2 12,009,000 (54,224) 11,954,776 7,111,988 4,842,788 11,296,000 (658,776) -6%

Salaries-As-Needed2, 3 39,000 54,224 93,224 63,676 29,548 108,224 15,000 16%

Overtime2 87,000 - 87,000 83,958 3,042 112,000 25,000 29%

Printing & Binding 72,000 - 72,000 72,000 - 72,000 - 0%

Travel 147,000 - 147,000 92,813 54,187 139,000 (8,000) -5%

Contractual Services 5,534,000 - 5,534,000 4,644,569 889,431 5,534,000 - 0%

Transportation 6,000 - 6,000 3,750 2,250 6,000 - 0%

Medical Services 300,000 - 300,000 300,000 - 300,000 - 0%

Health Insurance 1,417,000 - 1,417,000 1,417,000 - 1,373,000 (44,000) -3%

Dental Insurance 60,000 - 60,000 60,000 - 59,000 (1,000) -2%

Other Employee Benefits 40,000 - 40,000 40,000 - 34,000 (6,000) -15%

Retirement Contribution 3,081,000 - 3,081,000 3,080,362 638 3,081,000 - 0%

Medicare Contribution 176,000 - 176,000 68,207 107,793 136,415 (39,585) -22%

Election 25,000 - 25,000 17,757 7,243 43,000 18,000 72%

Office & Administrative 659,000 - 659,000 389,859 269,141 540,000 (119,000) -18%

Furniture, Office & Tech. - - - - - - - 0%

Tuition Reimbursement 41,000 - 41,000 14,300 26,700 18,000 (23,000) -56%

Unappropriated Balance - - - - - - - 0%

TOTAL ADMINISTRATIVE

EXPENSES 23,693,000$ -$ 23,693,000$ 17,460,239$ 6,232,761$ 22,851,639$ (841,361)$ -4%

TOTAL INVESTMENT

MANAGEMENT EXPENSES 103,621,611$ -$ 103,621,611$ 26,254,230$ 77,367,381$ 99,843,301$ (3,778,310)$ -4%

1 Percentage difference between projected expenses and the adjusted budget.

2 Year-to-Date Committed includes FY 2018-19, Pay Period 1 (July 1-7) through Pay Period 17.

3 One adjustment was made to the following accounts as authorized by the General Manager after the 2018-19 Adopted Budget was approved:

a) Funds totaling $54,224 were transferred from Salaries-General to Salaries-As-Needed to offset Salaries-As-Needed related costs, based on the June 21, 2018 Board authority to approve intra-

departmental transfers within the 2018-19 Administrative Expense Budget, commensurate with the limit released by the City Administrative Officer.

17


Active, Expired, and Upcoming Contracts

February 28, 2019

SEARCH Small Cap Equity TBD TBD 12/20/18 10/18/18

649PEN RVK, Inc.

(General Investment Consultant)

03/01/16 02/28/19 New Contract No. 721PEN is effective 03/01/19.

650PEN Portfolio Advisors, LLC

(Private Equity)


655PEN Brandes Investment Partners, LP

(International Equity)

08/01/16 07/31/19 02/15/19 Staff recommendation to the Board is scheduled for 05/16/2019.

659PEN Daruma Asset Management, Inc.

(Domestic Equity)

08/01/16 07/31/19

656PEN Fisher Asset Management, LLC


08/01/16 07/31/19 02/15/19 Staff recommendation to the Board is scheduled for 05/16/2019.

657PEN Scout Investments, Inc. - Reams Asset

Management Division (Fixed Income - TIPS)

09/01/16 08/31/19 Staff recommendation to the Board is scheduled for 07/03/2019.

658PEN AllianceBernstein, L.P.

(Commodities)


651PEN Northern Trust Company

(Custodian Bank)


662PEN Portfolio Advisors, LLC

(Private Equity - Specialized Manager)


663PEN Fairview Capital Partners

(Private Equity - Specialized Manager)


664PEN Robeco Investment Management, Inc.

(Boston Partners) (Domestic Equity)

11/01/16 10/31/19 Staff recommendation to the Board is scheduled for 08/15/2019

666PEN Principal Real Estate Investors, LLC

(Global REIT Manager)


665PEN Principal Real Estate Investors, LLC

(U.S. REIT Manager)



(Domestic Equity)


669PEN Harding Loevner

(International Emerging Markets)


671PEN Northern Trust Investments, Inc.

(Domestic Equity)


670PEN The Townsend Group

(Real Estate Consultant)


680PEN FIS Group, Inc.

(International Manager of Emerging Managers)

07/01/17 06/30/20

675PEN MacKay Shields, LLC

(Fixed Income - High Yield Bond)

07/01/17 06/30/20

679PEN Los Angeles Capital Management and Equity

Research, Inc. (Domestic Equity)

08/01/17 07/31/20

678PEN Payden & Rygel

(Unconstrained Fixed Income Manager)

08/01/17 07/31/20


Management Division (Unconstrained Fixed

Income Manager)

08/01/17 07/31/20


(Domestic Equity)

10/01/17 09/30/20

682PEN Westwood Management Corp.

(Domestic Equity)

10/01/17 09/30/20

690PEN AEW Capital Management, L.P.

(Real Estate Separate Account Manager)

01/01/18 12/31/20

689PEN Cohen & Steers Capital Management, Inc.

(Real Estate Investment Trust Manager

(Active))

01/01/18 12/31/20

688PEN Dimensional Fund Advisors, LP

(International Emerging Markets)

01/01/18 12/31/20

692PEN BlackRock Institutional Trust Company


02/01/18 01/31/21


(Global REIT)

03/02/18 02/28/21

694PEN Baillie Gifford Overseas Limited


03/01/18 02/28/21

698PEN Principal Global Investors, LLC


05/01/18 04/30/21

697PEN Victory Capital Management, Inc. (Trivalent

Investments a Victory Capital Investment

Franchise) (International Equity)

05/01/18 04/30/21

702PEN Frontier Capital Management Company, LLC

(Domestic Equity)

07/01/18 06/30/21

695PEN Gresham Investment Management

(Active Constrained Commodity Manager)

07/01/18 06/30/21

696PEN Goldman Sachs Asset Management

(Enhanced Index Commodity Manager)

07/16/18 07/15/21

706PEN LM Capital Group, LLC

(Fixed Income)

09/01/18 08/31/21

710PEN Channing Capital Management, LLC

(Domestic Equity)

10/01/18 09/30/21

711PEN Loomis, Sayles & Co., LP

(Fixed Income)

10/01/18 09/30/21

712PEN Boston Common Asset Management, LLC

(International Equity Emerging Manager)

10/01/18 09/30/21

713PEN Redwood Investments, LLC

(Domestic Equity)

10/01/18 09/30/21

Contract

Award /

Renewal

Date

INVESTMENTS

CommentsStart Date

Expiration

Date

New

Search

Date

Vendor/

Candidate

Finalist

Date

Contract Vendor / Services

Contract Term

Marketing

Cessation

Start Date1

Board Authorization Date

18



February 28, 2019

Contract

Award /

Renewal

Date

INVESTMENTS

CommentsStart Date

Expiration

Date

New

Search

Date

Vendor/

Candidate

Finalist

Date


Contract Term

Marketing

Cessation

Start Date1


716PEN Semper Capital Management, L.P.

(Fixed Income)

10/01/18 09/30/21

717PEN GIA Partners, LLC

(Domestic Fixed Income)

10/01/18 09/30/21

719PEN PHOCAS Financial Corporation

(Domestic Equity)

10/01/18 09/30/21

718PEN Northern Trust Investments, Inc.

(Fixed Income)

12/01/18 11/30/21


Management Division (Fixed Income)

12/01/18 11/30/21

722PEN Glass, Lewis, & Co., LLC

(Proxy Voting Services)

01/01/19 12/31/21

714PEN CEM Benchmarking, Inc.

(Pension Administration Benchmarking)

01/01/19 06/30/19

641PEN Haworth, Inc.

(HQ Furniture)

08/01/15 12/31/20 The Board approved a two-year extension to the current

contract. Consistent with the U.S. Communities Government

Purchasing Alliance Contract No. 4400003402, LAFPP contract

extension will be through 12/31/20. The amendment was

executed on 01/03/19.

701PEN Total Commercial Real Estate, Inc.

(Property Management Services - Neptune)

07/01/18 06/30/21

715PEN Segal Select Insurance Services, Inc.

(Governmental Side-A D&O Insurance)

11/01/18 11/01/21

724PEN DePasquale, Kelley & Company

(Property Tax Consultant)

01/17/19 01/15/22

676PEN Iron Mountain Secure Shredding, Inc.

(Secure Document Shredding)

07/01/17 06/30/19

683PEN SkillPath

(Professional Development Training)

10/01/17 09/30/20

RFP Health Law and Data Privacy tbd tbd 12/06/18 The Board authorized an RFP to be published in January 2019.

The RFP was published on 01/07/19; 10 responses were

received 01/28/19. Interviews and selection are to be

determined.

C-128417 Nossaman, LLP

(Outside Real Estate and Investment Counsel)

09/17/16 09/16/19

C-128402 Kutak Rock, LLP

(Outside Real Estate and Investment Counsel)

10/17/16 10/16/19

C-128928 K&L Gates, LLP

(Fiduciary Counsel)

11/17/16 11/16/19

C-128926 Olson Hagel & Fishburn, LLP

(Fiduciary Counsel)

12/15/16 12/14/19

C-131108 Cohen Milstein Sellers & Toll, PLLC

(Securities Litigation Monitoring Services)

03/01/18 02/28/21

C-131109 Labaton Sucharow, LLP


03/01/18 02/28/21

C-131110 Robbins Geller Rudman & Dowd, LLP


03/01/18 02/28/21

C-131107 Nossaman, LLP

(Fiduciary Services)

03/19/18 03/18/21

C-132366 Ice Miller, LLP

(Outside Tax Counsel)

09/21/18 09/20/21

C-132426 Reed Smith, LLP

(Outside Tax Counsel)

09/21/18 09/20/21

C-132346 Cohen Milstein Sellers & Toll PLLC 08/02/18 until

completionC-121678 Reed Smith, LLP

(Legal Representation)

08/02/12 until

completionC-126107 Morgan Lewis & Bockius, LLP (Bingham)

(Tribune Shareholders Legal Representation)

03/01/12 until

completion

648PEN Four Square Financial Literacy Partners, Inc.

(Financial Planning Education)

12/03/18 12/04/19 The 1st amendment to contract 648PEN for a one-year extension

was executed on 12/06/18.

723PEN Cambridge Financial Partners, LLC

(Financial Counseling Services)

12/10/18 12/09/19 A new one-year contract 723PEN was executed on 12/20/18.

700PEN The Cherry Hill Company

(Website Hosting and Maintenance Services)

04/01/18 03/31/19

652PEN Firedrill

(Graphic Design Services)

05/19/16 05/18/19 12/20/18 The Board authorized an RFP to be published in January 2019.

The RFP was released on 01/28/19 and responses are due by

03/01/19.

673PEN Something Special (Financial Planning

Education Seminar Program Catering Services)

03/16/17 03/15/20

685PEN Digital Deployment, Inc.

(Website Design and Support Services)

10/05/17 10/04/20

707PEN U.S. Legal Support

(Court Reporting)

07/01/18 06/30/19

628PEN CoventBridge (USA), Inc.

(Investigative Services Contractor)

09/15/15 09/14/19 08/16/18 The Board approved a one-year extension of the contract. An

RFP will be issued in April 2019.

704PEN ExamWorks, LLC

(Independent Medical Exam Services)

07/01/18 06/30/21

703PEN QTC Medical Group, Inc.

(Independent Medical Exam Services)

07/01/18 06/30/21

DISABILITY PENSIONS

ADMINISTRATIVE SERVICES

ADMINISTRATIVE OPERATIONS

COMMUNICATIONS & EDUCATION

CITY ATTORNEY'S OFFICE

19



February 28, 2019

Contract

Award /

Renewal

Date

INVESTMENTS

CommentsStart Date

Expiration

Date

New

Search

Date

Vendor/

Candidate

Finalist

Date


Contract Term

Marketing

Cessation

Start Date1


660PEN Simpson & Simpson Certified Public

Accountants

07/19/16 07/18/19

N/A Los Angeles City Employee Retirement System

(Health and Dental Plan Subgroups)

01/01/18 12/31/20

668PEN Keenan & Associates

(Health Consulting Services)

01/25/17 01/24/20

705PEN USI Insurance Services

(Health Consulting Services)

06/07/18 06/06/21

N/A Los Angeles Police Protective League

(Dental Insurance Administration)

07/01/18 06/30/23

N/A United Firefighters of Los Angeles City

(Medical and Dental Insurance Administration)

07/01/18 06/30/23

N/A Los Angeles Firemen's Relief Association

(Medical Insurance Administration)

07/01/18 06/30/23

N/A Los Angeles Police Relief Association

(Medical and Dental Insurance Administration)

07/01/18 06/30/23

708PEN The Segal Company (Western States), Inc.

(Actuarial Consulting Services)

07/01/18 06/30/21

709PEN Milliman, Inc.

(Actuarial Audit)

01/25/19 12/31/19

611PEN International Business Machines Corporation

(Disaster Recovery Services)

12/04/14 12/03/19 The contract was formerly awarded to Verizon Terremark. The

acquisition by International Business Machines (IBM) Corporation

was effective on 09/01/17. IBM contract extension through

12/03/19 was executed in December 2018.

552PEN Conduent State and Local Solutions, Inc.

(OnPoint Software)

05/01/15 04/30/19


(Benefit Payment System)

05/20/13 05/19/19

616PEN AT&T

(CALNET3 Phone)

11/15/13 06/30/20 The contract has been extended to 06/30/2020 by the State of

California.617PEN AT&T

(CALNET3 Data)


California.619PEN Verizon

(CALNET3 Phone)


California.575PEN LRWL, Inc. (Pension Administration System

Replacement Project Consulting Services)

06/01/13 06/30/19


(Integrated Disbursement Services)

10/05/17 10/04/20

626PEN Conduent State and Local Solutions, Inc.

(Pension Administration System Replacement

Project)

07/02/15 07/01/23 The contract was formerly awarded to Xerox State and Local

Solutions, Inc. The name change to Conduent State and Local

Solutions, Inc. was effective 02/16/17.

Subscription

Agreements

Bridgewater Associates, Inc.

(TIPS and Pure Alpha)

07/31/08 until

completion

on-going

1Marketing Cessation: The purpose of this policy is to prevent, and avoid the appearance of, undue influence on the Board or any of its members in the award of all Investments contracts. In accordance

with Section 9.0 of the Investment Policy, from the time the search begins with the Board’s approval of the minimum criteria for the search until the search ends with the selection of the firm(s) to receive

the contract(s), all direct marketing contact with firms that meet the search criteria will be limited to meetings with the Consultant, information sent to the Consultant or Department, questions about the

search directed to the Staff or Consultant, one meeting at the Department’s office with Staff and any site visits. The Board members, Department Staff or Consultant will accept no entertainment or gifts of

any kind from any firm qualifying for the search. This policy does not prohibit contact with potential interview candidates at group social events, educational seminars, conferences, or charitable events so

long as there is no direct marketing.

During the three months prior to the renewal of a contract with a firm currently under contract, the Board Members, Department Staff and Consultant will accept no entertainment or gifts from that firm

until the contract has been renewed or terminated by the Board. Firms who currently have contracts with the Los Angeles Fire and Police Pension System are allowed to continue contact related to the

existing contract with Staff and Consultant.

2Hedge Funds do not have contracts like our other managers. They have limited partnership agreements that do not have a fixed expiration date. They are on this list to include them in our regular three-

year manager review process.

HEDGE FUND PARTNERSHIP AGREEMENTS2

INTERNAL AUDIT

MEDICAL & DENTAL BENEFITS

SYSTEMS

PENSIONS DIVISION

20

M I N U T E S

OF THE


BOARD MEETING OF AUGUST 16, 2018

The Board of Fire and Police Pension Commissioners of the City of Los Angeles met in the LAFPP Sam Diannitto Boardroom, located at the Los Angeles Fire and Police Pensions Building, 701 East 3rd Street, Suite 400, Los Angeles 90013 on Thursday, August 16, 2018. COMMISSIONERS PRESENT: Corinne T. Babcock, President Adam Nathanson, Vice President Ken Buzzell Ruben Navarro Brian Pendleton Belinda Vega Robert von Voigt (participated telephonically) COMMISSIONERS ABSENT: George Aliano Pedram Salimpour, MD DEPARTMENT OF FIRE AND POLICE PENSIONS: Raymond P. Ciranna, General Manager William Raggio, Executive Officer Tom Lopez, Chief Investment Officer

Joseph Salazar, Assistant General Manager Rhonda Ketay, Commission Executive Assistant CITY ATTORNEY’S OFFICE: Anya Freedman, Deputy City Attorney President Babcock called the meeting to order at 8:31 a.m. All the above-listed Commissioners were present at the start of the meeting. The following item was taken out of order. F. DISABILITY CASES

DISABILITY CLAIM – DEPENDENT CHILD – TIER 2 Roy G. Young Dependent Child of deceased retired Engineer Thurman M. Young (F) Engineer As recommended by Staff and concurred in by the applicant, Roy G. Young, Dependent Child

status and benefits are granted. Motion made by Commissioner Vega, seconded by

14935

Typewritten Text

ITEM: C.1.a

Minutes of the Board of Fire and Police Pension Commissioners Meeting of August 16, 2018 Page 2

Commissioner Navarro and adopted by the following vote: ayes, Commissioners Buzzell, Navarro,

Nathanson, Pendleton, Vega, von Voigt, and President Babcock - 7; nays – none; absent, Commissioners Aliano and Salimpour. Mr. Young was not present nor was he represented.


1. REVIEW OF SEMPER CAPITAL MANAGEMENT, LP’S CONTRACT FOR MBS FIXED

INCOME MANAGEMENT AND POSSIBLE BOARD ACTION The report was approved as submitted.

Resolution 19024 Commissioner Navarro moved that the Board:

1. Approve a three-year contract with Semper Capital Management, LP for Mortgage-Backed Securities (MBS) fixed income investment management services;

2. Authorize the General Manager to review and negotiate the terms and conditions with

Semper Capital Management, LP for MBS fixed income investment management services for the period October 1, 2018 to September 30, 2021; and,

3. Authorize the President of the Board, on behalf of the Board, to execute the contract with

Semper Capital Management, LP for MBS fixed income investment management services, subject to the approval of the City Attorney as to form and legality, which was seconded by Commissioner Pendleton and approved by the following vote: ayes, Commissioners Buzzell, Nathanson, Navarro, Pendleton, Vega, von Voigt, and President Babcock – 7; nays – none.

2. REVIEW OF GIA PARTNERS, LLC’S CONTRACT FOR FIXED INCOME MANAGEMENT

AND POSSIBLE BOARD ACTION The report was approved as submitted.


1. Approve a three-year contract with GIA Partners, LLC for core plus fixed income investment management services;

2. Authorize the General Manager to review and negotiate the terms and conditions with

GIA Partners, LLC for active core plus fixed income investment management services for the period October 1, 2018 to September 30, 2021; and,



GIA Partners, LLC for core plus fixed income investment management services, subject to the approval of the City Attorney as to form and legality, which was seconded by Commissioner Buzzell and approved by the following vote: ayes, Commissioners Buzzell, Nathanson, Navarro, Pendleton, Vega, von Voigt, and President Babcock – 7; nays – none.

3. CONSIDERATION OF GOVERNMENTAL SIDE-A FIDUCIARY LIABILITY INSURANCE

AND POSSIBLE BOARD ACTION The report was approved as submitted.

Resolution 19026 Commissioner Buzzell moved that the Board:

1) Direct staff to secure quotes for a new D&O liability insurance policy with a new term starting December 23, 2018;

2) Authorize the General Manager to negotiate and execute the required documents with

our current broker Segal Select Insurance Services, Inc., to purchase the new D&O liability insurance policy, at an annual cost not to exceed $40,000; and

3) Request a Waiver of Recourse Endorsement (estimated at $25 annually per insured

person) to be paid by the insured person and not by System assets, which was seconded by Commissioner Navarro and approved by the following vote: ayes, Commissioners Buzzell, Nathanson, Navarro, Pendleton, Vega, von Voigt, and President Babcock – 7; nays – none.

4. CONTRACT EXTENSIONS WITH ALPHA-ONE INVESTIGATIONS – RISK SERVICES,

INC. AND COVENTBRIDGE (USA), INC. AND POSSIBLE BOARD ACTION The report was approved as submitted.


1. Approve a one-year extension for the existing contract with Alpha-One Investigations – Risk Services (formerly ALPHA-ONE Investigation, Inc.), for an amount not to exceed $80,000;

2. Approve a one-year extension for the existing contract with CoventBridge (USA), Inc., for

an amount not to exceed $80,000; and


3. Authorize the President of the Board, on behalf of the Board, to execute the contract

amendments, subject to the approval of the City Attorney as to form, which was seconded by Commissioner von Voigt and approved by the following vote: ayes, Commissioners Buzzell, Nathanson, Navarro, Pendleton, Vega, von Voigt, and President Babcock – 7; nays – none.

5. APPROVAL OF ALIVE AND WELL AUDIT INVESTIGATIVE RESULTS AND POSSIBLE

BOARD ACTION The report was approved as submitted and the Board did not direct staff to expand the audit

to additional pensioners.

Resolution 19028

Commissioner von Voigt moved that the Board accept the staff report regarding the Alive and Well Audit of age 95+ pensioners, which was seconded by Commissioner Vega and approved by the following vote: ayes, Commissioners Buzzell, Nathanson, Navarro, Pendleton, Vega, von Voigt, and President Babcock – 7; nays – none.

6. INTEREST RATE TO BE CREDITED TO ACTIVE MEMBER ACCOUNTS AS OF JUNE 30,

2018 AND POSSIBLE BOARD ACTION The report was approved as submitted.

Resolution 19029

Commissioner Buzzell moved that the Board, in accordance with Board Rule 5.1, direct the General Manager to credit the interest rate of 1.29% to active members accounts as of June 30, 2018. which was seconded by Commissioner Navarro and approved by the following vote: ayes, Commissioners Buzzell, Nathanson, Navarro, Pendleton, Vega, von Voigt, and President Babcock – 7; nays – none.

7. GENERAL MANAGER PERFORMANCE EVALUATION FOR ONE-YEAR PERIOD ENDING

JUNE 30, 2018 AND POSSIBLE BOARD ACTION The item was tabled to the end of the meeting.

The Board recessed the regular meeting at 8:37 a.m. to convene the Special Board meeting. The regular meeting reconvened at 11:38 a.m.

The Board presented Ms. Barbara Nobregas, Management Analyst, Communications and Education Section with a certificate to honor her service with the City of Los Angeles and with the Fire and Police Pensions Department and congratulated her on her upcoming retirement.



1. Miscellaneous correspondence from money managers, consultants, etc. – Received and Filed. 2. General Manager’s Report

a. Monthly Report


c. Benefits Actions approved by General Manager on August 2, 2018

Pursuant to Resolution 04008, adopted by the Board of Fire and Police Pension Commissioners on August 7, 2003, the following benefit actions have been approved by the General Manager on August 2, 2018.

DISCONTINUED PENSIONS – TIER 1 – 2 Leah J. Porter Fire Widow Retired: 09-05-02 Died: 06-21-18

Genevieve L. Schwab Police Widow Retired: 06-25-09 Died: 06-25-18

DISCONTINUED PENSIONS – TIER 2 – 14 William C. Honohan Fire Service Retired: 01-14-80 Died: 07-05-18

James M. Mills Fire Service Retired: 06-26-78 Died: 05-26-18

Peter Borck Police Service Retired: 07-07-81 Died: 04-07-18

Albert A. Civitate Police Service Retired: 01-26-99 Died: 05-26-18

Ronald J. Code Police Service Retired: 02-04-96 Died: 06-30-18

Robert G. Wheeler Police Service Retired: 12-25-76 Died: 06-18-18

Clinton E. White Police Service Retired: 11-01-68 Died: 06-27-17

Dean E. Murray Fire Disability Retired: 06-10-82 Died: 07-05-18

Darryl E. Smart Police Disability Retired: 06-04-86 Died: 03-14-18

Elizabeth Parker Fire Widow Retired: 08-03-09 Died: 06-17-18

Beverly J. Bowser Police Widow Retired: 01-05-10 Died: 06-23-18

Katherine P. Brown Police Widow Retired: 06-04-07 Died: 05-26-18

Margaret E. Lauritzen Police Widow Retired: 07-29-05 Died: 06-17-18

Neoma E. Muchmore Police Widow Retired: 01-29-09 Died: 06-30-18

DISCONTINUED PENSIONS – TIER 5 – 1 Paul E. Enox Police Service Retired: 05-05-02 Died: 06-11-18

DISCONTINUED PENSIONS FORMER SPOUSE – TIER 2 – 1 Cathy Code Police Service Retired: 02-04-96 Member

Died: 06-30-18


PARTIAL PAYMENT OF PENSION – TIER 5 – 2 In accordance with the City Attorney’s advice, a designated proportion of the community property interest of the pension payable to Ignacio A. Mijares, Police Service Pensioner, is to be paid to his former spouse, Susan M. Mijares, effective July 8, 2018. Ms. Mijares will receive cost of living adjustments.

In accordance with the City Attorney’s advice, a designated proportion of the community property interest of the pension payable to Andrew P. Fox, Fire Service Pensioner, is to be paid to his former spouse, Phebe N. Moore, effective August 1, 2018. Ms. Moore will receive cost of living adjustments.

In accordance with the City Attorney’s advice, a designated proportion of the community property interest of the pension payable to Andrew P. Fox, Fire Service Pensioner, is to be paid to his former spouse, Phebe N. Moore, effective August 1, 2018. Ms. Moore will receive cost of living adjustments.

SERVICE PENSION – TIER 3 – 1

Police Brent M. Rygh Police Officer III +1 Eff: 07-22-18 25 Years 2 Days

SERVICE PENSION – TIER 4 - 1 Police Carolyn J. Halliday Police Officer II Eff: 07-08-18 20 Years 2 Days

SERVICE PENSION – TIER 5 – 5

Police Larry D. Barr Lieutenant II Eff: 07-08-18 20 Years 227 Days Charles L. Beck Chief of Police Eff: 06-28-18 41 Years 102 Days Ignacio A. Mijares Police Officer II Eff: 07-08-18 22 Years 143 Days Kin Y. Wong Police Officer II +2 Eff: 07-10-18 21 Years 1 Day Scott S. Young Police Detective I Eff: 07-08-18 24 Years 190 Days

SERVICE PENSION/DROP – TIER 3 – 2

Police Mark D. Lauderdale Police Officer II Eff: 07-01-18 27 Years 274 Days Steven D. Ross Police Officer III Eff: 07-03-18 30 Years 185 Days

SERVICE PENSION/DROP – TIER 5 – 8

Fire Alexander T. Arriola Captain II Eff: 03-04-18 32 Years 27 Days Police John C. Artes Sergeant II Eff: 07-02-18 28 Years 280 Days


Daniel Diaz

Police Officer III

Eff:

07-05-18

28

Years

31

Days

James P. Hutchins Police Officer II Eff: 07-01-18 30 Years 0 Days Richard Joaquin Sergeant I Eff: 07-01-18 29 Years 253 Days Aaron B. McCraney Captain I Eff: 06-01-18 26 Years 260 Days Fred Miller Sergeant II Eff: 07-01-18 30 Years 0 Days Jonathan L. Tippet Captain III Eff: 07-01-18 30 Years 23 Days

d. Other business relating to Department operations

General Manager Ciranna gave the following updates:

1. Reminded the Board to complete the City Attorney evaluation. 2. Reminded the Board to complete the survey for RVK.

C. CONSENT ITEM

1. APPROVAL OF TRAVEL AUTHORITY (BUZZELL) – NCPERS, 2018 PUBLIC SAFETY CONFERENCE

Resolution 19030

Commissioner von Voigt moved that the Board approve Commissioner Ken Buzzell’s request to attend the National Conference on Public Employee Retirement Systems (NCPERS), 2018 Public Safety Conference on October 28 – 31, 2018 in Las Vegas, NV (October 28th is a travel day), which was seconded by Commissioner Pendleton and approved by the following vote: ayes, Commissioners Buzzell, Nathanson, Navarro, Pendleton, Vega, von Voigt, and President Babcock – 7; nays – none.

D. CONSIDERATION OF FUTURE AGENDA ITEMS Commissioner Navarro requested that staff follow up on the Board’s discussion regarding the

number of members in the UFLAC High Deductible Health Plan. E. GENERAL PUBLIC COMMENT ON MATTERS WITHIN THE BOARD’S JURISDICTION There were no public comments. F. DISABILITY CASES

DISABILITY CLAIM – SURVIVING SPOUSE – TIER 5

Denise E. Reich Surviving Spouse of Robert S. Reich (P) Police Officer III


The prior Board Action of March 17, 2016 granting a nonservice-connected survivor pension at

30% is set aside and a service-connected survivor pension is granted at 75%. Motion made by Commissioner Pendleton, seconded by Commissioner Navarro and adopted by the following vote: ayes, Commissioners Buzzell, Nathanson, Navarro, Pendleton, von Voigt, and President Babcock – 6; nays – Commissioner Vega – 1; absent – Commissioners Aliano and Salimpour – 2. Mrs. Reich, Mr. Charles Thomas, retired LAPD, and Charles Weisman, M.D., testified regarding Officer Reich. Mrs. Reich was present and was represented by Thomas J. Wicke, Esq. of Lewis, Marenstein, Wicke, Sherwin and Lee.

Commissioner Buzzell recused himself from closed session Item G.2.

G. CLOSED SESSION Item G.2 was taken out of order.

2. CLOSED SESSION PURSUANT TO SUBDIVISIONS (A) AND (D)(4) OF GOVERNMENT CODE SECTION 54956.9 TO CONFER WITH, AND/OR RECEIVE ADVICE FROM, LEGAL COUNSEL REGARDING PENDING LITIGATION, AND POSSIBLE BOARD ACTION, IN THE FOLLOWING CASE: WESTON V. PG&E CORPORATION ET.AL, CASE NO. 3:18-cv-03509 (N.D.CAL.)

The Board met in closed session.

Commissioner Buzzell rejoined the meeting at this time. 1. CLOSED SESSION PURSUANT TO GOVERNMENT CODE SECTION 54957(b)(1):

GENERAL MANAGER 2017-18 PERFORMANCE EVALUATION SURVEY RESULTS AND POSSIBLE BOARD ACTION


Upon reconvening in open session, President Babcock stated there was nothing to report.

A. ITEMS FOR BOARD ACTION – CONTINUED

7. GENERAL MANAGER PERFORMANCE EVALUATION FOR ONE-YEAR PERIOD ENDING

JUNE 30, 2018 AND POSSIBLE BOARD ACTION

Upon reconvening in open session, President Babcock stated that the Board approved General Manager Ciranna’s salary increase by a unanimous vote.

RESOLUTION 19031

Commissioner Nathanson moved that the Board in accordance with the Board Governance

Policy, Section 12.0:


1. Determine that the General Manager’s performance for Fiscal Year 2017-18 exceeded

expectations or was outstanding; and

2. Grant the General Manager a merit pay increase of 3% effective July 1, 2018, which was seconded by Commissioner Buzzell and approved by the following vote: ayes, Commissioners Buzzell, Nathanson, Navarro, Pendleton, Vega, von Voigt, and President Babcock – 7; nays – none.

At the request of Commissioner Buzzell, the meeting was adjourned at 1:50 p.m. in memory of Mr. Paul Enox, retired LAPD Captain.

President Secretary

M I N U T E S

OF THE


BOARD MEETING OF SEPTEMBER 20, 2018

The Board of Fire and Police Pension Commissioners of the City of Los Angeles met in the LAFPP Sam Diannitto Boardroom, located at the Los Angeles Fire and Police Pensions Building, 701 East 3rd Street, Suite 400, Los Angeles 90013 on Thursday, September 20, 2018. COMMISSIONERS PRESENT: Corinne T. Babcock, President Adam Nathanson, Vice President George Aliano Ken Buzzell Ruben Navarro Brian Pendleton Robert von Voigt (participated telephonically) COMMISSIONERS ABSENT: Pedram Salimpour, MD Belinda Vega DEPARTMENT OF FIRE AND POLICE PENSIONS: Raymond P. Ciranna, General Manager William Raggio, Executive Officer Tom Lopez, Chief Investment Officer

Joseph Salazar, Assistant General Manager Rhonda Ketay, Commission Executive Assistant CITY ATTORNEY’S OFFICE: Anya Freedman, Deputy City Attorney President Babcock called the meeting to order at 8:35 a.m. All the above-listed Commissioners were present at the start of the meeting. A. ITEMS FOR BOARD ACTION

1. CONSIDERATION OF ASSUMPTIONS FOR THE JUNE 30, 2018 RETIREE HEALTH ACTUARIAL VALUATION AND POSSIBLE BOARD ACTION

Ms. Robyn Wilder, Chief Benefits Analyst, Pensions Division discussed the report with the

Board and introduced Mr. Paul Angelo, FSA, MAAA, FCA, EA, Senior Vice President and Actuary and Ms. Melissa Bissett, FSA, MAAA, Senior Health Consultant and Actuary from Segal Consulting who presented their report to the Board.

Ms. Elsa Moy provided public comment.

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Minutes of the Board of Fire and Police Pension Commissioners Meeting of September 20, 2018 Page 2

Resolution 19044 Commissioner Pendleton moved that the Board adopt the retiree health assumptions for the

June 30, 2018 Retiree Health Valuation as recommended by Segal Consulting, which was seconded by Commissioner Buzzell and approved by the following vote: ayes, Commissioners Aliano, Buzzell, Nathanson, Navarro, Pendleton, von Voigt, and President Babcock – 7; nays – none.

2. REVISIONS TO BOARD POLICY SECTION 10.0: ACTUARIAL FUNDING POLICY AND

POSSIBLE BOARD ACTION The report was approved as submitted.

Resolution 19045 Commissioner Nathanson moved that the Board approve a revision to Board Policy Section

10.0: Actuarial Funding Policy to include the Airport Department in the Amortization Policy section, which was seconded by Commissioner Pendleton and approved by the following vote: ayes, Commissioners Aliano, Buzzell, Nathanson, Navarro, Pendleton, von Voigt, and President Babcock – 7; nays – none.

3. OFFICE OF THE CITY CLERK – ELECTION DIVISION’S CERTIFICATION OF THE POLICE

DEPARTMENT EMPLOYEE MEMBER OF THE BOARD SPECIAL ELECTION RESULTS AND BOARD DECLARATION OF ELECTED MEMBER

Ms. Wendy Kamayatsu, Management Analyst, and Mr. T.J. Knight, Senior Management Analyst I, Administrative Services Section presented the report to the Board.

Resolution 19046

Commissioner Buzzell moved that the Board declare Paul Michael Weber the elected Police

Department Employee Member of the Board of Fire and Police Pension Commissioners for the unexpired term beginning October 1, 2018 and ending June 30, 2020, based on the official election results provided by the Office of the City Clerk – Election Division (City Clerk), which was seconded by Commissioner von Voigt and approved by the following vote: ayes, Commissioners Aliano, Buzzell, Nathanson, Navarro, Pendleton, von Voigt, and President Babcock – 7; nays – none.

4. CONSIDERATION OF AND POSSIBLE CHANGES TO BOARD GOVERNANCE POLICIES

7.1, 8.1, AND 14.2, REGARDING ELECTION OF BOARD OFFICERS AND POSSIBLE BOARD ACTION

Mr. William Raggio, Executive Officer, Administrative Operations Division discussed the report

with the Board.


Resolution 19047 Commissioner Navarro moved that the Board adopt the changes to Governance Policy Section

14.2 Board Officers as approved by the Board on September 6, 2018, along with the related policy revisions to Section 7.1 Duties and Responsibilities of the President and Section 8.1 Duties and Responsibilities of the Vice President, which was seconded by Commissioner Pendleton and approved by the following vote: ayes, Commissioners Nathanson, Navarro, Pendleton, von Voigt, and President Babcock – 5; nays, Commissioners Aliano and Buzzell – 2.

5. AMENDMENTS TO BOARD OPERATING POLICIES AND PROCEDURES SECTION 1.0 –

ETHICS RESPONSIBILITIES FOR BOARD MEMBERS, THE GENERAL MANAGER, AND STAFF AND POSSIBLE BOARD ACTION

Mr. T.J. Knight, Senior Management Analyst I, Administrative Services Section was available for questions. The report was approved as submitted.


1. Approve the proposed amendments to Board Operating Policies and Procedures, Section 1.0: Ethics Responsibilities for Board Members, the General Manager, and Staff (Attachment); and

2. Authorize staff to make technical corrections or clarifications to the Policies and Procedures

to effectuate the intent of the Board, which was seconded by Commissioner Aliano and approved by the following vote: ayes, Commissioners Aliano, Buzzell, Nathanson, Navarro, Pendleton, von Voigt, and President Babcock – 7; nays – none.

Item B.1 was taken out of order


1. ADDITIONAL INFORMATION FOR DISCUSSION OF PROPOSED FLAT-RATE MEDICARE

DEPENDENT SUBSIDY Mr. Greg Mack, Chief Benefits Analyst, Pensions Division discussed the report with the Board. Mr. Tony Gamboa from UFLAC and Mr. Bob Steinbacher from LAFRA provided public

comment.

A. ITEMS FOR BOARD ACTION - CONTINUED 6. CONTINUED DISCUSSION OF FLAT-RATE FOR MEDICARE DEPENDENT SUBSIDY AND

POSSIBLE BOARD ACTION


Commissioner Navarro moved that the Board table the item with the caveat that the Board can go into closed session to obtain legal advice from the City Attorney, which was seconded by Commissioner Aliano.

After discussing closed session requirements with the City Attorney, the Board did not vote on

the motion. . Commissioner von Voigt moved that the Board table the item until all health and dental plan

contracts have been signed, which was not seconded.

Resolution 19049 Commissioner Navarro moved that the Board table the item to the next Board meeting on

October 4, 2018, which was seconded by Commissioner Aliano and approved by the following vote: ayes, Commissioners Aliano, Buzzell, Nathanson, Navarro, Pendleton, and President Babcock – 6; nays, Commissioner von Voigt – 1.

7. REVIEW OF NORTHERN TRUST INVESTMENTS, INC. CONTRACT FOR FIXED INCOME

INDEX INVESTMENT MANAGEMENT AND POSSIBLE BOARD ACTION

Ms. Carmen Velazquez, Management Analyst, Investments Division presented the report to the Board.

Commissioner Buzzell was concerned that Northern Trust Investments has not met the

benchmark for several years. Mr. Tom Lopez, Chief Investment Officer, Investments Division, Mr. Jim Voytko, President and Senior Consultant and Mr. Ryan Sullivan, Consultant from RVK discussed underperformance and fees with the Board.

Resolution 19050

Commissioner Navarro moved that the Board:

1. Approve a three-year contract with Northern Trust Investments, Inc. for fixed income index investment management services;

2. Authorize the General Manager to approve the terms and conditions with Northern Trust

Investments, Inc. for fixed income index investment management services for the period December 1, 2018 to November 30, 2021; and,


Northern Trust Investments, Inc. for fixed income index investment management services, subject to the approval of the City Attorney as to form and legality, which was seconded by Commissioner Aliano and approved by the following vote: ayes, Commissioners Aliano, Buzzell, Nathanson, Navarro, Pendleton, von Voigt, and President Babcock – 7; nays – none.


8 REVIEW OF PHOCAS FINANCIAL CORPORATION DOMESTIC SMALL CAP VALUE EQUITY CONTRACT AND POSSIBLE BOARD ACTION

Ms. Annie Chao, Investment Officer, Investments Division presented the report to the Board. The Board discussed fees, markets and benchmarks with Mr. Jim Voytko, President and

Senior Consultant and Mr. Ryan Sullivan, Consultant from RVK.

Motion Commissioner Aliano moved that the Board terminate the Phocas Financial Corporation

contract, which was seconded by Commissioner Buzzell and failed by the following vote: ayes, Commissioner Buzzell - 1; nays, Commissioners Aliano, Nathanson, Navarro, Pendleton, von Voigt, and President Babcock – 6.

Resolution 19051

Commissioner Pendleton moved that the Board:

1. Approve a three-year contract with Phocas Financial Corporation for domestic small cap value equity management services;

2. Authorize the General Manager to approve the terms and conditions with Phocas Financial

Corporation for domestic small cap value equity management services for the period October 1, 2018 through September 30, 2021; and,


Phocas Financial Corporation for domestic small cap value equity management services, subject to a fee discount, and subject to the approval of the City Attorney as to form and legality, which was seconded by Commissioner von Voigt and approved by the following vote: ayes, Commissioners Aliano, Nathanson, Navarro, Pendleton, von Voigt, and President Babcock – 6; nays – Commissioner Buzzell - 1.

President Babcock recessed the meeting for a break at 10:27 a.m. and reconvened at 10:36 a.m.

9. CHIEF INVESTMENT OFFICER’S QUARTERLY REPORT OF ASSET ALLOCATION

STATUS AND POSSIBLE BOARD ACTION Mr. Tom Lopez, Chief Investment Officer, Investments Division discussed the report with the

Board. The report was approved as submitted.

Resolution 19052 Commissioner Navarro moved that the Board approve the actual asset allocation of the Fund

and Staff’s plans for bringing asset classes currently outside of their target allocation ranges back within their allocation ranges, which was seconded by Commissioner Aliano and approved by the following vote: ayes, Commissioners Aliano, Buzzell, Nathanson, Navarro, Pendleton, von Voigt, and President Babcock – 7; nays – none.


B. REPORTS TO THE BOARD - CONTINUED

2. VERBAL UPDATE: STATUS OF UNITED FIREFIGHTERS OF LOS ANGELES CITY CONTRACT

General Manager Ciranna updated the Board on the current status of contract negotiations.

The Board requested a report at the October 4, 2018 Board meeting. 3. VERBAL UPDATE: STATUS OF LOS ANGELES FIREMEN’S RELIEF ASSOCIATION, LOS

ANGELES POLICE RELIEF ASSOCIATION, AND LOS ANGELES POLICE PROTECTIVE LEAGUE CONTRACTS

General Manager Ciranna updated the Board on the current status of contract negotiations.

4. Miscellaneous correspondence from money managers, consultants, etc. – Received and Filed. 5. General Manager’s Report

a. Monthly Report


c. Benefits Actions approved by General Manager on September 6, 2018 Pursuant to Resolution 04008, adopted by the Board of Fire and Police Pension Commissioners on August 7, 2003, the following benefit actions have been approved by the General Manager on September 6, 2018.

DISCONTINUED PENSIONS – TIER 1 – 4 R. D. Stufflebeam Fire Disability Retired: 08-01-66 Died: 07-17-18

Vina S. Harvey Police Widow Retired: 05-27-87 Died: 08-02-18

Alice Perkins Police Widow Retired: 01-16-16 Died: 04-15-18

Dorothy A. Pollard Police Widow Retired: 05-03-90 Died: 07-11-18

DISCONTINUED PENSIONS – TIER 2 – 22 James N. Jeffery Fire Service Retired: 11-08-87 Died: 07-23-18

Thomas J. Young Fire Service Retired: 04-09-78 Died: 07-21-18

Frank W. Borowitz Police Service Retired: 07-05-69 Died: 06-18-18

Robert L. Funk Police Service Retired: 07-04-79 Died: 07-16-18

Donald I. Lynch Police Service Retired: 09-01-72 Died: 07-19-18

Donald E. Mc Elrea Police Service Retired: 07-08-89 Died: 08-11-18

Charles W. Merritt Police Service Retired: 08-03-97 Died: 07-22-18

Martin J. Crowe Police Disability Retired: 01-10-84 Died: 07-26-18

Norman C. Wintjen Police Disability Retired: 08-11-91 Died: 06-28-18


Jonet Caplan Fire Widow Retired: 01-29-81 Died: 08-03-18

Eileen C. Fass Fire Widow Retired: 08-30-01 Died: 04-15-18

Faye J. Hines Fire Widow Retired: 09-18-15 Died: 04-25-18

Carol A. Fox Police Widow Retired: 08-06-17 Died: 07-16-18

Laureita M. Chabrajez Police Widow Retired: 01-27-00 Died: 07-14-18

Minnie M. Gatlin Police Widow Retired: 01-08-17 Died: 02-20-17

Mary V. Hamner Police Widow Retired: 06-29-12 Died: 08-16-17

Dolores C. Harte Police Widow Retired: 12-04-16 Died: 02-18-18

Bernice L. Hogan Police Widow Retired: 08-19-86 Died: 07-16-18

Violet A. Hossfeld Police Widow Retired: 03-21-14 Died: 06-29-18

Roberta B. Marshall Police Widow Retired: 07-16-03 Died: 04-13-18

Mary E. Nolan Police Widow Retired: 01-20-10 Died: 07-27-18

Glenda J. Tosti Police Widow Retired: 11-11-09 Died: 07-01-18

DISCONTINUED PENSIONS – TIER 5 – 2 George A. Lamy Police Service Retired: 02-06-05 Died: 07-17-18

Charles E. Mahaffey Police Service Retired: 08-01-02 Died: 07-19-18

DEFERRED SERVICE PENSION – TIER 3 – 1 Police Erick A. Yepes Police Officer II Eff: 08-06-18 20 Years 90 Days

SERVICE PENSION – TIER 3 – 1 Police Kenneth D. Greene Police Officer II Eff: 08-19-18 23 Years 363 Days SERVICE PENSION – TIER 5 – 5 Police David J. Budek Sergeant II Eff: 08-05-18 20 Years 56 Days

Billy M. Gilbert Sergeant I Eff: 08-05-18 22 Years 268 Days

Alan E. Little Police Officer II Eff: 08-06-18 22 Years 0 Days Timothy S. Schey Detective I Eff: 08-19-18 20 Years 10 Days Rhoadell D. Sudduth Police Officer II Eff: 03-18-16 20 Years 153 Days

SERVICE PENSION/DROP – TIER 5 – 7 Police Douglas J. Datria Police Officer III Eff: 08-01-18 28 Years 88 Days Robert E. Deamer Police Officer III Eff: 08-01-18 28 Years 11 Days Robert W. Long Police Captain III Eff: 08-01-18 28 Years 138 Days Gabriel F. Muñoz Detective III Eff: 08-01-18 28 Years 99 Days


Rafael Ramirez Police Captain III Eff: 08-01-18 28 Years 145 Days Alan Y. Solomon Detective II Eff: 07-09-18 30 Years 25 Days John M. Vasquez Sergeant II Eff: 08-02-18 41 Years 155 Days

SURVIVORSHIP PENSION ADJUSTED – TIER 5 Name Member’s Rank Percentage Effective Date Board Date Denise E. Reich (Robert S. Reich)

Police Officer III From: NSC w/o prejudice: 30% + 1 minor child To: Service Connected 75% + 1 minor child

01-04-16 01-04-16

03-17-16 08-16-18

d. Other business relating to Department operations General Manager Ciranna gave the following updates:

1. The LAFPP website is being redesigned with an expected completion date of December 2018.

2. A “soft” Go-Live of our new pension administration system, PARIS, is expected to be active on October 31, 2018. A complete rollout of PARIS is planned for January 1, 2019; this will allow us to issue one rather than two 1099-R tax forms to pensioners for the 2018 tax year.

3. Recent Board approvals to pursue potential purchases of Colton Commerce Center and Port 95 Distribution Portfolios were unsuccessful. The seller did not accept the Board’s bids for the properties.

4. DROP is at its highest level with 1,466 participants. Enrollment in 2018 is currently at 330.

5. The Board meeting scheduled for October 4, 2018 is anticipated to be lengthy. In anticipation, some of the investment reports may be moved to October 18, 2018.

C. CONSENT ITEM 1. Findings of Fact a. Jennifer N. Blomeley – Tier 5

Motion

Commissioner Navarro moved that the Board approve the consent item, which was seconded by Commissioner Pendleton and approved by the following vote: ayes, Commissioners Aliano, Buzzell, Nathanson, Navarro, Pendleton, and von Voigt, and President Babcock – 7; nays – none.


D. CONSIDERATION OF FUTURE AGENDA ITEMS Commissioner Buzzell requested that a Benefits Committee recommendation to the Board that

was tabled on March 7, 2013 be placed on the agenda of a future Board meeting. E. GENERAL PUBLIC COMMENT ON MATTERS WITHIN THE BOARD’S JURISDICTION There were no public comments. The Board recessed the regular meeting at 11:11 a.m. to convene the Special Board meeting. The regular meeting reconvened at 11:12 a.m. F. CLOSED SESSION

1. CLOSED SESSION PURSUANT TO GOVERNMENT CODE SECTION 54957(b)(1): BOARD REVIEW OF THE CITY ATTORNEY ANNUAL PERFORMANCE EVALUATION AND POSSIBLE BOARD ACTION


Upon reconvening in open session, President Babcock stated there was no public report. The meeting was adjourned at 12:19 p.m.

President Secretary

M I N U T E S

OF THE


SPECIAL BOARD MEETING OF SEPTEMBER 6, 2018

The Board of Fire and Police Pension Commissioners of the City of Los Angeles met in the LAFPP Sam Diannitto Boardroom, located at the Los Angeles Fire and Police Pensions Building, 701 East 3rd Street, Suite 400, Los Angeles 90013 on Thursday, September 6, 2018. COMMISSIONERS PRESENT: Corinne T. Babcock, President Adam Nathanson, Vice President George Aliano Ken Buzzell Brian Pendleton Ruben Navarro Pedram Salimpour, MD Belinda Vega Robert von Voigt (participated telephonically) DEPARTMENT OF FIRE AND POLICE PENSIONS: Raymond P. Ciranna, General Manager

William Raggio, Executive Officer Tom Lopez, Chief Investment Officer Joseph Salazar, Assistant General Manager

Rhonda Ketay, Commission Executive Assistant CITY ATTORNEY’S OFFICE: Anya Freedman, Assistant City Attorney President Babcock called the special meeting to order at 8:35 a.m. All the above-listed Commissioners were present at the start of the meeting. Item E was taken out of order. E. DISABILITY CASE

DISABILITY CLAIMS – NEW CLAIMS – TIER 5 Joseph J. Roznowski (P) Police Officer II As recommended by staff and concurred in by the applicant, a service-connected disability

pension is granted at 45%, with no foreseeable purpose for review. Motion made by Commissioner Buzzell, seconded by Commissioner Navarro and adopted by the following vote: ayes, Commissioners Aliano, Buzzell, Nathanson, Navarro, Pendleton, Salimpour, Vega, von

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Minutes of the Board of Fire and Police Pension Commissioners Special Meeting of September 6, 2018 Page 2

Voigt, and President Babcock – 9; nays, none. Officer Roznowski was not present but was represented by his attorney Thomas J. Wicke, Esq. of Lewis, Marenstein, Wicke, Sherwin and Lee.


1. CONSIDERATION OF AND POSSIBLE CHANGES TO BOARD GOVERNANCE POLICIES

7.1, 8.1, AND 14.2, REGARDING QUALIFICATIONS AND ELECTION OF BOARD OFFICERS AND POSSIBLE BOARD ACTION

Mr. Dave Wagner provided public comment. Commissioner Aliano, President Babcock, Commissioner Vega, and Commissioner Navarro

discussed past and current policy with Mr. Wagner. Commissioner Buzzell requested that the Board go into closed session.

The Board recessed into closed session pursuant to Government Code Section 54956.9(d)(2)

and (e)(5) in order to confer with legal counsel regarding a significant exposure to and threat of litigation (one case).

Upon reconvening in open session, President Babcock stated there was nothing to report.

Motion Commissioner Navarro moved that the Board adopt an open voting policy, which was

seconded by Commissioner Pendleton and failed by the following vote: ayes, Commissioner von Voigt – 1; nays, Commissioners Aliano, Buzzell, Nathanson, Navarro, Pendleton, Salimpour, Vega, and President Babcock – 8.

Resolution 19032

Commissioner Pendleton moved that the Board amend Governance Policy Section 14.2

Board Officers as proposed on July 19, 2018, along with the related policy revisions to Section 7.1 Duties and Responsibilities of the President and Section 8.1 Duties and Responsibilities of the Vice President as follows:

1. Board members shall not serve more than one term consecutively as President or Vice President;

2. The President is prohibited from being elected to the Office of Vice President immediately upon completion of their term as President;

3. Board members shall decide those positions by majority vote, which was seconded by Commissioner Nathanson and approved by the following vote: ayes, Commissioners Aliano, Buzzell, Nathanson, Navarro, Pendleton, Salimpour, Vega, von Voigt, and President Babcock – 9; nays – none.


2. ELECTION OF OFFICERS OF PRESIDENT AND VICE PRESIDENT UNDER CHARTER SECTION 503(c) AND BOARD GOVERNANCE POLICIES 7.1, 8.1, AND 14.2, AS MAY BE AMENDED PER AGENDA ITEM 1, ABOVE; AND POSSIBLE BOARD ACTION

After a brief discussion, the Board used Roberts Rules of Order regarding elections to call for

all nominations first and then vote by roll call for each candidate nominated for office. Commissioner Nathanson nominated Commissioner Babcock for the Office of Board

President.

Resolution 19033 Commissioner Nathanson nominated Commissioner Babcock for the Office of Board

President; elected by the following roll call vote: ayes, Commissioners Aliano, Buzzell, Nathanson, Navarro, Pendleton, Salimpour, Vega, von Voigt, and President Babcock – 9; nays – none.

Commissioner von Voigt nominated Commissioner Buzzell for the Office of Board Vice

President and Commissioner Vega nominated Commissioner Nathanson for the Office of Board Vice President.

Commissioner Buzzell lost by the following vote: ayes, Commissioners Aliano, Buzzell,

Navarro, and von Voigt – 4; nays, Commissioners Nathanson, Pendleton, Salimpour, Vega, and President Babcock – 5.

Resolution 19034

Commissioner Vega nominated Commissioner Nathanson for the Office of Board Vice

President; elected by the following roll call vote: ayes, Commissioners Nathanson, Navarro, Pendleton, Salimpour, Vega, von Voigt, and President Babcock – 7; nays – Commissioners Aliano and Buzzell - 2.

Mr. Garrett Zimmon provided public comment. 3. 2017-18 GOVERNANCE COMPLIANCE, 2016-17 GOVERNANCE COMPLIANCE STATUS,

VARIOUS BOARD POLICIES UPDATES AND POSSIBLE BOARD ACTION The report was approved as submitted.


1. Approve the status update of the 2016-17 Governance Compliance Report items as summarized on Attachment I-A;


2. Approve the related policy revisions to the Governance Policy Sections (3.8 and 9.15) as contained on Attachment I-B;

3. Approve the 2017-18 Governance Compliance Report as summarized on Attachment II-

A; 4. Approve the related policy revisions to the Governance Policy, Section 15.0 as contained

on Attachment II-B; 5. Approve the various Board Policy revisions as summarized on Attachment III-A to update

Governance Policy Sections (3.13(C), 3.15(B), 9.12(B), 14.27 and 20.0) and Operating Policies and Procedures Sections (2.1 and 9.0) contained on Attachment III-B; and,

6. Authorize staff to make technical corrections or clarifications to the Policies to effectuate

the intent of the Board, which was seconded by Commissioner Navarro and approved by the following vote: ayes, Commissioners Aliano, Buzzell, Nathanson, Navarro, Pendleton, Salimpour, Vega, von Voigt, and President Babcock – 9; nays – none.

4. REVIEW OF OAKBROOK INVESTMENTS, LLC’S CONTRACT FOR DOMESTIC LARGE

CAP EQUITY MANAGEMENT AND POSSIBLE BOARD ACTION Mr. Nathan Chang, Investment Officer, and Mr. Tom Lopez, Chief Investment Officer,

Investments Division and General Manager Ciranna answered questions from the Board. Ms. Rebecca Gratsinger, CFO and Senior Consultant and Mr. Ryan Sullivan, Consultant from RVK were available for questions from the Board.

Ms. Janice Hanson, Oakbrook Investments, LLC provided public comment.


1. Decline to renew the contract with Oakbrook Investments, LLC for domestic large cap equity management services; and,

2. Allocate the proceeds of the Oakbrook Investments account to the two fixed income

emerging managers, GIA Partners and Semper Capital Management, which was seconded by Commissioner Salimpour and approved by the following vote: ayes, Commissioners Aliano, Buzzell, Nathanson, Navarro, Pendleton, Salimpour, Vega, and von Voigt – 8; nays, President Babcock – 1.

5. RESULTS FROM THE INVESTMENT CONSULTANT EVALUATION SURVEY AND

POSSIBLE BOARD ACTION Mr. Paul Palmer, Investment Officer III, and Mr. Tom Lopez, Chief Investment Officer,

Investments Division discussed the report with the Board. The report was received and filed.


6. ANNUAL INVESTMENT POLICIES REVIEW AND POSSIBLE BOARD ACTION Mr. Paul Palmer, Investment Officer III, and Mr. Tom Lopez, Chief Investment Officer,

Investments Division were available for questions from the Board. The report was approved as submitted.

Resolution 19037

Commissioner Buzzell moved that the Board:

1. Approve the proposed amendments to Section 1.0 - Investment Guidelines Policy; 2. Approve the proposed amendments to Section 2.0 - Private Equity Policy; 3. Reaffirm the previously adopted amendments to Section 3.0 - Real Estate Policy from May

17, 2018; 4. Approve the proposed amendments to Section 4.0 - Commodities Policy; 5. Approve the proposed amendments to Section 5.0 - Emerging Managers Policy; 6. Approve the proposed amendments to Section 7.0 - Proxy Voting Policy; 7. Approve the proposed amendments to Section 9.0 - Marketing Cessation Policy; 8. Approve all the remaining formatting, grammatical, ordering and clarifying amendments to

the overall Board Investment Policies; and 9. Authorize Staff to make technical corrections or clarification to the Policies to effectuate

the intent of the Board, which was seconded by Commissioner Navarro and approved by the following vote: ayes, Commissioners Aliano, Buzzell, Nathanson, Navarro, Pendleton, Salimpour, Vega, von Voigt, and President Babcock – 9; nays – none.

Commissioner Pendleton stepped out of the board room at this time.

7. APPROVAL OF TRAVEL AUTHORITY (VEGA) – LABATON SUCHAROW’S WOMEN’S

INITIATIVE, INSTITUTIONAL INVESTING WITH WOMEN AND MINORITY-OWNED INVESTMENT FIRMS

The report was approved as submitted.

Resolution 19038 Commissioner Nathanson moved that the Board consider and approve Commissioner Belinda

Vega’s request to attend the Labaton Sucharow’s Women’s Initiative, Institutional Investing with Women and Minority-Owned Investment Firms on September 27 - 29, 2018 in New York,


NY (September 27th & 29th are travel days), which was seconded by Commissioner Salimpour and approved by the following vote: ayes, Commissioners Aliano, Buzzell, Nathanson,

Navarro, Salimpour, Vega, von Voigt, and President Babcock – 8; nays – none. 8. OPPOSITION TO PROPOSED LEGISLATION H.R. 6290, PUBLIC EMPLOYEE PENSION

TRANSPARENCY ACT AND POSSIBLE BOARD ACTION The report was approved as submitted.


1. Oppose H.R. 6290: Public Employee Pension Transparency Act (PEPTA), as currently drafted; and

2. Direct the General Manager to communicate the Board’s position to the Office of the Chief

Legislative Analyst, which was seconded by Commissioner von Voigt and approved by the following vote: ayes, Commissioners Aliano, Buzzell, Nathanson, Navarro, Salimpour, Vega, von Voigt, and President Babcock – 8; nays – none.

President Babcock recessed the meeting for a break at 10:03 a.m., and reconvened at 10:16 a.m. Commissioner Pendleton rejoined the meeting at this time.

9. STATUS OF CONTRACT WITH UNITED FIREFIGHTERS OF LOS ANGELES CITY FOR HEALTH AND DENTAL PLAN ADMINISTRATION AND POSSIBLE BOARD ACTION

General Manager Ciranna discussed the report with the Board. Mr. Greg Mack, Chief Benefits

Analyst, Pensions Division briefly discussed past Board action regarding HSA and Medicare Advantage Plans with the Board. The Board took no action on this item.

10. STATUS OF CONTRACT WITH LOS ANGELES POLICE PROTECTIVE LEAGUE FOR

DENTAL PLAN ADMINISTRATION AND POSSIBLE BOARD ACTION General Manager Ciranna discussed the report with the Board. The Board took no action on

this item.

Commissioner Salimpour recused himself from Items A.11, A.12, and A.13 and left the Board room.

11. STATUS OF CONTRACT WITH LOS ANGELES FIREMEN’S RELIEF ASSOCIATION FOR HEALTH PLAN ADMINISTRATION AND POSSIBLE BOARD ACTION

General Manager Ciranna discussed the report with the Board. The Board took no action on

this item.


12. STATUS OF CONTRACT WITH LOS ANGELES POLICE RELIEF ASSOCIATION FOR HEALTH AND DENTAL PLAN ADMINISTRATION AND POSSIBLE BOARD ACTION

General Manager Ciranna discussed the report with the Board. The Board took no action on

this item. 13. USI PRESENTATION OF FEASIBILITY TO ESTABLISH NEW LAFPP-MANAGED KAISER

PERMANENTE HMO PLAN AND POSSIBLE BOARD ACTION Mr. Greg Mack, Chief Benefits Analyst, Pensions Division and Mr. Gary Delany, Health

Consultant from USI discussed the report with the Board. The report was received and filed.

President Babcock recessed the meeting for a break at 11:23 a.m., and reconvened at 11:30 a.m. Commissioner Salimpour rejoined the meeting at this time.

14. CONTINUATION OF FLAT-RATE FOR MEDICARE DEPENDENT SUBSIDY AND

POSSIBLE BOARD ACTION Commissioner Navarro started the discussion by making the following motion.

Motion Commissioner Navarro moved that the Board consider the Ad Hoc Committee

recommendation to approve: A modification to the formula to determine subsidies for members enrolled in multi-party

Medicare plans using a flat-rate calculation to resolve the inequity between similarly situated retirees, amending the rate for family coverage from 2.5 to 3 times the retiree’s single-party Medicare subsidy, effective January 1, 2019 for Fire and July 1, 2019 for Police, and only include the possibility of application of a “Y-rate” threshold after the Associations have explored other options, which was seconded by Commissioner Pendleton. There was no vote at this time.

Ms. Corina Lee from LAPPL, and Mr. Tony Gamboa from UFLAC provided public comment

and discussed the report with the Board. After discussing the report at length, the Board chose to table the item to a future meeting to

allow time for advice from the City Attorney.

Motion Commissioner Navarro moved that the Board table the motion to September 20, 2018, which

was seconded by Commissioner Aliano and approved by the following vote: ayes, Commissioners Aliano, Buzzell, Nathanson, Navarro, Pendleton, Salimpour, Vega, von Voigt, and President Babcock – 9; nays – none.


15. CONSIDERATION OF OUTSIDE TAX COUNSEL FOR THREE YEAR CONTRACT(S) EFFECTIVE SEPTEMBER 21, 2018 AND POSSIBLE BOARD ACTION

Mr. James Yeung, Internal Auditor IV, Internal Audit Section stated that Internal Audit Section

received the required disclosure information regarding gifts, campaign contributions, and charitable contributions; and that there is nothing to report under LAFPP’s contractor disclosure policy.

The Board approved the recommended actions without further discussion.

Resolution 19040 Commissioner Aliano moved that the Board authorize the City Attorney’s Office to negotiate

contracts with Reed Smith LLP, and Ice Miller LLP, to assist the City Attorney in providing tax law advice to the Los Angeles Fire and Police Pensions plan (the Plan) for a three-year term beginning September 21, 2018, which was seconded by Commissioner von Voigt and approved by the following vote: ayes, Commissioners Aliano, Buzzell, Nathanson, Pendleton, Salimpour, Vega, von Voigt, and President Babcock – 8; nays – none.

Deputy City Attorney Joshua Geller took the City Attorney Chair at this time.


1. PRESENTATION BY PHOCAS FINANCIAL CORPORATION DOMESTIC SMALL CAP

VALUE EQUITY MANAGER Messrs. William Schaff, CFA, CEO and Portfolio Advisor, and Kevin Granger, Principal and

Portfolio Advisor from Phocas Financial gave their presentation to the Board. The report was received and filed.

2. CONTRACTOR DISCLOSURE POLICY: SECOND QUARTER 2018 REPORT Mr. James Yeung, Internal Auditor IV, Internal Audit Section presented the report to the Board.

The report was received and filed. 3. President Babcock asked if any Board Member made any expenditure to influence State

legislative or administrative action to which their reply was negative. 4. Miscellaneous correspondence from money managers, consultants, etc. – Received and

Filed. 5. General Manager’s Report a. Benefits Actions approved by General Manager on August 16, 2018

Pursuant to Resolution 04008, adopted by the Board of Fire and Police Pension Commissioners on August 7,


2003, the following benefit actions have been approved by the General Manager on August 16, 2018.

DISCONTINUED PENSIONS – TIER 1 – 3 Goldie Gaska Fire Widow Retired: 01-01-69 Died: 07-01-17

Marie E. Skersick Fire Widow Retired: 10-08-12 Died: 07-09-18

Helen Greninger Police Widow Retired: 12-12-99 Died: 06-19-16

DISCONTINUED PENSIONS – TIER 2 – 14 Melvin L. Leydecker Fire Service Retired: 04-07-91 Died: 07-12-18

James J. O’Neill Fire Service Retired: 01-20-96 Died: 07-20-18

Loren D. Prohaska Fire Service Retired: 06-19-77 Died: 07-09-18

David M. Johnson Police Service Retired: 08-04-96 Died: 07-21-18

Ronald E. Traurig Police Service Retired: 07-04-79 Died: 07-06-18

John R. Woodrum Police Service Retired: 10-26-97 Died: 06-26-18

Donald E. Brian Fire Disability Retired: 12-07-87 Died: 07-05-18

William D. Tamblyn Police Disability Retired: 03-30-78 Died: 07-06-18

Mary V. Baxter Fire Widow Retired: 10-01-17 Died: 07-15-18

Helen I. Flemming Fire Widow Retired: 10-09-99 Died: 07-22-18

Margaret Planagan Fire Widow Retired: 08-14-03 Died: 07-25-18

Anita A. Fernald Police Widow Retired: 04-20-18 Died: 06-19-18

Ella May Floren Police Widow Retired: 05-16-11 Died: 07-19-18

Alice C. Morgan Police Widow Retired: 04-26-03 Died: 07-08-18

DISCONTINUED PENSIONS FORMER SPOUSE – TIER 2 – 2 Rosemary L. Peck Fire Service Retired: 01-20-96 Member Died: 07-20-18

Sharlene M. Schnoor Police Service Retired: 10-26-97 Member Died: 06-26-18

ELIGIBLE SURVIVING SPOUSE’S PENSION – TIER 2 – 11 Name Deceased Member Member’s Class Effective Date Virginia B. Honohan William C. Honohan Fire Service 07-06-18 Diane J. Leydecker Melvin L. Leydecker Fire Service 07-13-18 Beverly J. Prohaska Loren D. Prohaska Fire Service 07-10-18 Marion L. Switzer William R. Switzer Fire Service 06-14-18 Patricia M. Johnson David M. Johnson Police Service 07-22-18 Donna L. Traurig Ronald E. Traurig Police Service 07-07-18 Shirlee R. Wheeler Robert G. Wheeler Police Service 06-19-18 Nancy G. Woodrum John R. Woodrum Police Service 06-27-18 Margaret A. Brian Donald E. Brian Fire Disability 07-06-18 Carole A. Murray Dean E. Murray Fire Disability 07-06-18 Audrey M. Tamblyn William D. Tamblyn Police Disability 07-07-18


ELIGIBLE SURVIVING SPOUSE’S PENSION – TIER 5 – 1 Name Deceased Member Member’s Class Effective Date Cheryl A. Enox Paul E. Enox Police Service 06-12-18

SURVIVOR BENEFIT PURCHASE PROGRAM – TIER 2 – 1 Name Member’s Class Effective Date Survivor Benefit % Elias De La Hoz Fire Service 08-01-18 100% SURVIVOR BENEFIT PURCHASE PROGRAM – TIER 5 – 1 Name Member’s Class Effective Date Survivor Benefit % Lisa J. Governo Hurd Police Service 08-01-18 40%

ELIGIBLE SURVIVOR BENEFIT PURCHASE PROGRAM PENSION – TIER 2 – 1 Name Deceased Member Member’s Class Effective Date Stephanie D. Code Ronald J. Code Police Service 07-01-18 REINSTATE SURVIVING CHILD’S PENSION – TIER 3 – 1

Pension payable to Bryan P. Esparza, surviving child of deceased Detective II, Jeffery T. Esparza, reinstated effective August 1, 2018. Documentation has been submitted for full-time student status.

DECREASE SURVIVING CHILD’S PENSION – TIER 3 – 1

Decrease the pension payable to Clayton C. Esparza, surviving child of deceased Detective II, Jeffery T. Esparza, due to the full-time student status by Bryan P. Esparza, effective August 1, 2018.

PARTIAL PAYMENT OF PENSION – TIER 4 – 1 In accordance with the City Attorney’s advice, a designated proportion of the community property interest of the pension payable to Matthew J. Blake, Police Service Pensioner, is to be paid to his former spouse, Jennifer J. Blake, effective August 1, 2018. Ms. Blake will receive cost of living adjustments.

PARTIAL PAYMENT OF PENSION – TIER 5 – 1

In accordance with the City Attorney’s advice, a designated proportion of the community property interest of the pension payable to Eduard M. Hengst, Fire Service Pensioner, is to be paid to his former spouse, Marta M. Hengst, effective June 27, 2018. Ms. Hengst will receive cost of living adjustments.


PARTIAL PAYMENT OF SURVIVING SPOUSE’S PENSION – TIER 2 – 1

In accordance with the City Attorney’s advice, a designated proportion of the community property interest of the Surviving Spouse’s Pension payable to Nancy G. Woodrum, surviving spouse of deceased Police Service Pensioner, John R. Woodrum, is to be paid to his former spouse, Sharlene M. Schnoor, effective June 27, 2018. Ms. Schnoor will receive cost of living adjustments.

CONSERVATORSHIP –TIER 5 – 1 A certified copy of the Letters of Conservatorship for the Person and the Estate of Ann T. Mc Carthy, issued in the Superior Court of California, County of Los Angeles, Case Number 17STPB09685, appointing Megan McCarthy, Conservator for the person and the Estate of Ann T. Mc Carthy, retired Police Service Pensioner, effective June 12, 2018, has been filed with this office. Pension payments will be paid to Megan McCarthy for the benefit of Ann T. Mc Carthy, effective August 1, 2018.

DEFERRED SERVICE PENSION – TIER 3 – 1

Police Kari L. Davis Police Officer II Eff: 04-17-14 12 Years 193 Days

SERVICE PENSION – TIER 5 – 1 Police A.J. De Bellis Sergeant I Eff: 04-18-16 24 Years 243 Days SERVICE PENSION/DROP – TIER 5 – 4

Police James M. Antenucci Lieutenant II Eff: 06-01-18 29 Years 0 Days Darnell D. Davenport Captain I Eff: 07-01-18 30 Years 28 Days Enrique R. Gutierrez Police Officer III Eff: 07-01-18 28 Years 6 Days Michael L. Jones Police Officer III Eff: 07-02-18 29 Years 18 Days

DISCONTINUE DROP – TIER 3 – 1 Police David A. Love Retired: 03-01-18 Exit Close of: 08-31-18

DISCONTINUE DROP – TIER 5 – 13 Fire Donald F. Darby Retired: 08-30-13 Exit Close of: 08-29-18

Vincent E. Jenkins Retired: 03-01-14 Exit Close of: 07-27-18 Patricia E. Morse Retired: 08-03-13 Exit Close of: 08-02-18


Police Kenneth W. Baxter Retired: 09-01-13 Exit Close of: 08-31-18 Jose Camejo Retired: 05-02-16 Exit Close of: 08-31-18 Rudolfo S. Chong Retired: 02-01-17 Exit Close of: 08-31-18 Melvin A. Gamble Retired: 08-01-15 Exit Close of: 08-31-18 Thomas R. Gonzales Retired: 02-02-15 Exit Close of: 08-31-18 Murrel J. Pettway Retired: 06-09-14 Exit Close of: 08-31-18 John C. Porras Retired: 09-01-13 Exit Close of: 08-31-18 Luis Rivera Retired: 05-01-14 Exit Close of: 08-03-18 Edmund D. Russell Retired: 09-01-13 Exit Close of: 08-31-18 Stephen O. Showler Retired: 04-02-15 Exit Close of: 08-31-18

ELIGIBLE SURVIVING SPOUSE APPLICATION – TIER 5 – 1 Name Member’s Rank Type % Rate Effective Date Debra A. Scire (Paul M. Scire)

Detective III Service Pension Continuance: 60%

07-07-18

b. Other business relating to Department operations General Manager Ciranna gave the following updates:

1. Although the results are still unofficial, Captain Paul Weber has been elected as the next Active Police Board member. His first meeting will be on October 4, 2018.

2. Opening briefs to the Appellate Court for the LAPPL and UFLAC trial have been made and a quick resolution is expected.

3. A subsidy discussion will be agendized on September 20, 2018. 4. The Board meeting scheduled for October 4, 2018 will have a greater focus on

investments.

C. CONSIDERATION OF FUTURE AGENDA ITEMS The Board requested reports on 1) the factors for determining annual increases in the maximum

retiree health subsidy, and 2) follow-up on the establishment of an Internal Revenue Code Section 115 trust for funding retiree health program benefits.

D. GENERAL PUBLIC COMMENT ON MATTERS WITHIN THE BOARD’S JURISDICTION There were no public comments. F. CLOSED SESSION Items F.3 and F.2 were taken out of order.



CONSIDER THE SALE OF ONE (1) PARTICULAR, SPECIFIC FUND INVESTMENT AND POSSIBLE BOARD ACTION



CONSIDER THE SALE OF ONE (1) PARTICULAR, SPECIFIC FUND INVESTMENT AND POSSIBLE BOARD ACTION



CONSIDER THE PURCHASE OF ONE (1) PARTICULAR, SPECIFIC FUND INVESTMENT AND POSSIBLE BOARD ACTION


Upon reconvening in open session, President Babcock stated there was no public report. The special meeting was adjourned at 12:54 p.m.

President Secretary

M I N U T E S

OF THE


SPECIAL BOARD MEETING OF SEPTEMBER 20, 2018

The Board of Fire and Police Pension Commissioners of the City of Los Angeles met in the LAFPP Sam Diannitto Boardroom, located at the Los Angeles Fire and Police Pensions Building, 701 East 3rd Street, Suite 400, Los Angeles 90013 on Thursday, September 20, 2018. COMMISSIONERS PRESENT: Corinne T. Babcock, President Adam Nathanson, Vice President George Aliano Ken Buzzell Brian Pendleton Ruben Navarro Robert von Voigt (participated telephonically) COMMISSIONERS ABSENT: Pedram Salimpour, MD Belinda Vega DEPARTMENT OF FIRE AND POLICE PENSIONS: Raymond P. Ciranna, General Manager

William Raggio, Executive Officer Tom Lopez, Chief Investment Officer Joseph Salazar, Assistant General Manager

Rhonda Ketay, Commission Executive Assistant CITY ATTORNEY’S OFFICE: Anya Freedman, Assistant City Attorney President Babcock called the special meeting to order at 11:11 a.m. All the above-listed Commissioners were present at the start of the meeting.

1. APPROVAL OF TRAVEL AUTHORITY (TAPIA BABCOCK) – HARVARD KENNEDY SCHOOL, LEADERSHIP DECISION MAKING: OPTIMIZING ORGANIZATIONAL PERFORMANCE

The report was approved as submitted.

Resolution 19053

Commissioner Pendleton moved that the Board approve Commissioner Corinne Tapia Babcock’s request to attend the Harvard Kennedy School, Leadership Decision Making: Optimizing Organizational Performance on October 13 – 19, 2018 in Cambridge, MA (October 13th is a travel day), which was seconded by Commissioner Navarro and approved by the following vote: ayes, Commissioners Aliano, Buzzell, Nathanson, Navarro, Pendleton, von Voigt, and President Babcock – 7; nays – none.

14935

Typewritten Text

ITEM: C.1.b


2. GENERAL PUBLIC COMMENT ON MATTERS WITHIN THE BOARD’S JURISDICTION There were no public comments.

The special meeting was adjourned at 11:12 a.m.

President Secretary

Documents

BOARD OF FIRE AND POLICE PENSION COMMISSIONERS · 2019-12-16 · 3. annual cost of living adjustments to pensions and possible board action 4. excess benefit plan payment coordination