New Trustee Training

1. New Trustee Training November 11, 2008 SACRS Fall Conference Costa Mesa, California

2. Welcome

3. SACRS The Euro Star From Paris to London

4. SACRS Looking out the window at 210 miles per hour! Note to New Trustees: Get in! Sit down! Hang on!

6. New Trustee Training • Trustee’s Role In An Organization • A Short History of SACRS • Fiduciary Responsibilities • Additional Trustee Training Opportunities

7. Venice

8. Trustee’s Role

9. ORGANIZATIONAL ROLES BOARD OF TRUSTEES EXECUTIVE OFFICER OPERATIONS STAFF Purpose of Organization Mission Goals and Objectives Policy Setting Policy Implementation Direction Motivate Accountable Delegate Decision Making Delegated Authority Delegated Accountability Monitor Performance

10. Burano

11. A Short History The State Association of County Retirement Systems (SACRS)

12. History 1889 First Public Pension in California San Francisco Firefighters (30 Years longevity with a fixed benefit)

13. 1935 Social Security Begins 1929 The Great Depression History

14. 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

15. Athens

16. 1937 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)

17. Board of Trustees • Originally Five Members: • Two elected employees • Two members of the general public • County Treasurer • Served as custodian and administrator

18. SACRS.. 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

19. SACRS… 1947 • Major re-write of the 1937 Act to establish Defined Benefit Retirement Plans

20. SACRS…. 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

21. CERL ….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

22. 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

23. SACRS… 1969/1970 • First Constitution for the organization was developed

24. CERL… 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

25. CERL …. 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

26. SACRS… 1970’s • Deavan Dickerson, San Diego Treasurer was the first to involve the financial community in hosting conference dinners and other entertainment

27. CERL… 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

28. 1984 Prudent Man LawProposition 21 • For all public pensions in California • Led to greater vendor participation in the activities of SACRS

29. SACRS … 1990’s • Voting process was changed from County Treasurers having their own vote to one vote for each system in the SACRS organization

30. CERL… 2000 • Alternate Retiree Member created • Each Board of Retirement to decide whether or not to add the position. • Duties and responsibilities to be defined

31. Ephesus

32. Fiduciary Responsibilities

33. 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……

34. 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

35. Rhodes

36. 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

37. Conflict of Interest • CERL requires that trustees receive bi-annual training on “Conflict of Interest” • SACRS provides the necessary training and certification at the conferences

38. Rome

39. Trustee Training Opportunities

40. 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

41. Mykonos

42. Front row seat at Delos Theatre

43. On Behalf of the SACRS Executive Board Welcome to SACRS