New Trustee TrainingNew Trustee Training

November 11, 2008SACRS Fall Conference

Costa Mesa, California

November 11, 2008SACRS Fall Conference

Costa Mesa, California

WelcomeWelcome

SACRSSACRS

The Euro Star

From Paris to London

The Euro Star

From Paris to London

SACRSSACRS

Looking out the window at 210 miles per hour!Note to New Trustees:

Get in! Sit down! Hang on!

Looking out the window at 210 miles per hour!Note to New Trustees:

Get in! Sit down! Hang on!

New Trustee TrainingNew Trustee Training

Trustee’s Role In An Organization

A Short History of SACRS Fiduciary Responsibilities Additional Trustee Training Opportunities

Trustee’s Role In An Organization

A Short History of SACRS Fiduciary Responsibilities Additional Trustee Training Opportunities

VeniceVenice

Trustee’s Role Trustee’s Role

ORGANIZATIONAL ROLESORGANIZATIONAL ROLES

BOARD OF TRUSTEES EXECUTIVE OFFICER OPERATIONS STAFF

Purpose of Organization

Mission

Goals and Objectives

Policy Setting

Monitor Performance

Policy Implementation

Direction

Motivate

Accountable

Delegate Decision Making

Delegated Authority

Delegated Accountability

BuranoBurano

A Short HistoryA Short History

The State Association of County Retirement Systems

(SACRS)

The State Association of County Retirement Systems

(SACRS)

HistoryHistory

1889 First Public Pension in California

San Francisco Firefighters (30 Years longevity with a fixed benefit)

1889 First Public Pension in California

San Francisco Firefighters (30 Years longevity with a fixed benefit)

HistoryHistory

1935

Social Security Begins

1935

Social Security Begins

1929

The Great Depression

1929

The Great Depression

Architects of the ‘37 Act

Architects of the ‘37 Act

Howard Byram, L.A. County Treasurer

Judge Deasy, L.A. County Counsel

Edward “Ned” Gaylord, L.A. Deputy County Counsel

Howard Byram, L.A. County Treasurer

Judge Deasy, L.A. County Counsel

Edward “Ned” Gaylord, L.A. Deputy County Counsel

AthensAthens

1937 Retirement Act1937 Retirement Act

Implementation began with Los Angeles County in 1938

Nineteen other counties followed in the 1940’s and 50’s

All 20 systems operate under the County Employees Retirement Law of 1937 (CERL)

(An annual “must-read” for all CERL trustees)

Implementation began with Los Angeles County in 1938

Nineteen other counties followed in the 1940’s and 50’s

All 20 systems operate under the County Employees Retirement Law of 1937 (CERL)

(An annual “must-read” for all CERL trustees)

Board of TrusteesBoard of Trustees

Originally Five Members: Two elected employees Two members of the general public

County Treasurer Served as custodian and administrator

Originally Five Members: Two elected employees Two members of the general public

County Treasurer Served as custodian and administrator

SACRS.. Mid 1940’sSACRS.. Mid 1940’s

County Treasurers met in their capacity as Pension Administrators

Began in the cafeteria of L.A. County

Described as “shirt-sleeve” working sessions

County Treasurers met in their capacity as Pension Administrators

Began in the cafeteria of L.A. County

Described as “shirt-sleeve” working sessions

SACRS… 1947SACRS… 1947

Major re-write of the 1937 Act to establish Defined Benefit Retirement Plans

Major re-write of the 1937 Act to establish Defined Benefit Retirement Plans

SACRS…. 1950’sSACRS…. 1950’s

Harold Ostly, L.A. Treasurer Moved the group to become politically active

Became the lobbyist for the group

Wrote legislative bill analysis for the CERL systems

Harold Ostly, L.A. Treasurer Moved the group to become politically active

Became the lobbyist for the group

Wrote legislative bill analysis for the CERL systems

CERL ….the 1960’sCERL ….the 1960’s

Local safety members began to sponsor benefit enhancements

Pressed for an alternative safety member of the Board of Retirement

Legislature also added a public member, appointed by the Board of Supervisors

Local safety members began to sponsor benefit enhancements

Pressed for an alternative safety member of the Board of Retirement

Legislature also added a public member, appointed by the Board of Supervisors

1966 Constitutional Amendment

1966 Constitutional Amendment

Allowed public pensions in California to invest up to 25% in stocks

Led to stock brokers and investment advisors attending CERL conferences

Allowed public pensions in California to invest up to 25% in stocks

Led to stock brokers and investment advisors attending CERL conferences

SACRS… 1969/1970SACRS… 1969/1970

First Constitution for the organization was developed

First Constitution for the organization was developed

CERL… 1970’sCERL… 1970’s

Legislation provided representation for retirees on the Board of Retirement

An additional public member was added

This brought the Retirement Boards to nine members plus one alternate

Legislation provided representation for retirees on the Board of Retirement

An additional public member was added

This brought the Retirement Boards to nine members plus one alternate

CERL …. 1970’sCERL …. 1970’s

Legislation was passed to allow ‘37 Act systems to establish independent budgets and directly appoint the Retirement Administrator

Passage of Proposition 13 in 1978 sped up the process toward more independent retirement systems

Legislation was passed to allow ‘37 Act systems to establish independent budgets and directly appoint the Retirement Administrator

Passage of Proposition 13 in 1978 sped up the process toward more independent retirement systems

SACRS… 1970’sSACRS… 1970’s

Deavan Dickerson, San Diego Treasurer was the first to involve the financial community in hosting conference dinners and other entertainment

Deavan Dickerson, San Diego Treasurer was the first to involve the financial community in hosting conference dinners and other entertainment

CERL… 1980’sCERL… 1980’s

Collective bargaining led to employee non-contribution options

Benefit enhancements were sought from the state legislature and incorporated into the CERL

In turn, collective bargaining for benefit enhancement was negotiated at the local level

Collective bargaining led to employee non-contribution options

Benefit enhancements were sought from the state legislature and incorporated into the CERL

In turn, collective bargaining for benefit enhancement was negotiated at the local level

1984 Prudent Man LawProposition 21

1984 Prudent Man LawProposition 21

For all public pensions in California

Led to greater vendor participation in the activities of SACRS

For all public pensions in California

Led to greater vendor participation in the activities of SACRS

SACRS … 1990’sSACRS … 1990’s

Voting process was changed from County Treasurers having their own vote to one vote for each system in the SACRS organization

Voting process was changed from County Treasurers having their own vote to one vote for each system in the SACRS organization

CERL… 2000CERL… 2000

Alternate Retiree Member created

Each Board of Retirement to decide whether or not to add the position.

Duties and responsibilities to be defined

Alternate Retiree Member created

Each Board of Retirement to decide whether or not to add the position.

Duties and responsibilities to be defined

EphesusEphesus

Fiduciary Responsibilities

Fiduciary Responsibilities

Fiduciary Responsibilities

Fiduciary Responsibilities

Under ERISA, a fiduciary must discharge his or her duties solely in the interest of the participants and beneficiaries and for the exclusive purpose of providing benefits, while defraying reasonable expenses of the plan. The conduct of a fiduciary will be governed by the Prudent man or Prudent person standard……

Under ERISA, a fiduciary must discharge his or her duties solely in the interest of the participants and beneficiaries and for the exclusive purpose of providing benefits, while defraying reasonable expenses of the plan. The conduct of a fiduciary will be governed by the Prudent man or Prudent person standard……

Prudent Person Standard

Prudent Person Standard

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

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

RhodesRhodes

How to Stay Out of Trouble:

How to Stay Out of Trouble:

Do things right Monitor everything Communicate everything Keep good records If conflicted, Disqualify yourself No self-dealing or other dealing Find Fiduciary Liability Insurance

Do things right Monitor everything Communicate everything Keep good records If conflicted, Disqualify yourself No self-dealing or other dealing Find Fiduciary Liability Insurance

Conflict of InterestConflict of Interest

CERL requires that trustees receive bi-annual training on “Conflict of Interest”

SACRS provides the necessary training and certification at the conferences

CERL requires that trustees receive bi-annual training on “Conflict of Interest”

SACRS provides the necessary training and certification at the conferences

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Trustee Training Opportunities

Trustee Training Opportunities

Additional Training Additional Training

SACRS Semi-Annual Conferences CALAPRS/Stanford

“Principles of Pension Management”

Wharton School/ University of Pennsylvania

“Investment Strategies & Portfolio Management”

SACRS/UC Berkeley “Public Pension Investment Management Program

CALAPRS Annual General Assembly

SACRS Semi-Annual Conferences CALAPRS/Stanford

“Principles of Pension Management”

Wharton School/ University of Pennsylvania

“Investment Strategies & Portfolio Management”

SACRS/UC Berkeley “Public Pension Investment Management Program

CALAPRS Annual General Assembly

MykonosMykonos

Front row seat at Delos Theatre

Front row seat at Delos Theatre

On Behalf of the SACRS Executive

Board

On Behalf of the SACRS Executive

Board Welcome to SACRS Welcome to SACRS