MCERA INVESTMENT RETIREMENT BOARD MEETING AGENDA - AMENDED THURSDAY, MARCH 23, 2017 MERCED COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION 3199 “M” STREET, MERCED, CA 95348 Please turn your cell phone, beeper or other electronic device to non audible mode and please refrain from using them during the Board meeting. CALL TO ORDER: 8:15 A.M. ● ROLL CALL. ● APPROVAL OF MINUTES – March 9, 2017. PUBLIC COMMENT Members of the public may comment on any item under the Board’s jurisdiction. Matters presented under this item will not be discussed or acted upon by the Board at this time. For agenda items, the public may make comments at the time the item comes up for Board consideration. Persons addressing the Board will be limited to a maximum of five (5) minutes in total. Please state your name for the record. REGULAR CALENDAR 1 BOARD ACTION /DISCUSSION Pursuant to Govt. Code § 31594 and MCERA’s Investment Objectives & Policy Statement due diligence analysis requirement (unless noted otherwise): 1. Presentation and possible action on Auditing of Actuarial Valuation Report as of June 30, 2016 and Audit of Actuarial Experience Study for period July 1, 2013 through June 30, 2016 – Segal. 2. Approval of Actuarial Valuation Report as of June 30, 2016 and Experience Study for period July 1, 2013 through June 30, 2016 which establishes new employer and employee contribution rates and new demographic and economic assumptions for Fiscal Year 2017/2018 (effective July 1, 2017) – Staff. 3. Presentation and discussion of hedge fund – AQR. 4. Presentation and discussion of hedge fund - JPMorgan. 5. Discussion and possible action of hedge fund selection - Verus. 6. Presentation and discussion of the February 2017 Monthly and Quarterly Flash Investment Performance Report with possible board action on any underperforming funds - Verus. 7. Discussion and possible approval to negotiate contract including fees and scope of services with Cliffwater LLC for Private Equity and Hedge Fund Consulting Services - Staff. 8. Discussion and possible authorization to terminate the existing custodial banking services contract with Bank of New York Mellon and approve custodial banking services contract with Northern Trust conditioned on upon legal approval by MCERA’s County Counsel and outside counsel - Staff. 1 “Action” means that the Board may dispose of any item by any action, including but not limited to the following acts: approve, disapprove, authorize, modify, defer, table, take no action, or receive and file. 9. Discussion and possible action regarding nomination of officers for SACRS Board of Director election slate for 2017/2018. 10. Review calendar of any training sessions and authorize expenditures for trustees and plan administrator. Examples of upcoming training and educational sessions: a. Raven Annual Meeting, April 20, 2017, New York, NY. b. Dimensional Fund Advisor (DFA) Institutional Investment Symposium: April 24– 26, Austin, TX. c. SACRS Spring Conference, May 16 – 19, 2017, Napa, CA. d. Global Future of Retirement Training, June 25 – 27, 2017, New York, NY. e. Verus 2017 Client Summit, August 28-29, 2017, San Francisco, CA. f. Dimensional Fund Advisor (DFA) Institutional Investment Forum, July 27, 2017, Santa Monica, CA. g. Dimensional Fund Advisor (DFA) Institutional Investment Forum, October 12, 2017, New York, NY. h. Dimensional Fund Advisor (DFA) Institutional Investment Forum City), October 19, 2017, Chicago, IL. Pursuant to Govt. Code § 31522.8 and MCERA’s Trustees Education and Training Policy requirements. INFORMATION ONLY ADJOURNMENT All supporting documentation is available for public review in the office of the Merced County Employees’ Retirement Association, 3199 “M” Street, Merced, California, 95348 during regular business hours, 8:00 a.m. – 5:00 p.m., Monday through Friday. The Agenda is available online at www.co.merced.ca.us/retirement Any material related to an item on this Agenda submitted to the Merced County Employees’ Retirement Association, after distribution of the Agenda packet is available for public inspection in the office of the Merced County Employees’ Retirement Association. Persons who require accommodation for a disability in order to review an agenda, or to participate in a meeting of the Merced County Employees’ Retirement Association per the American Disabilities Act (ADA), may obtain assistance by requesting such accommodation in writing addressed to Merced County Employees’ Association, 3199 “M” Street, Merced, CA 95348 or telephonically by calling (209) 726-2724. Any such request for accommodation should be made at least 48 hours prior to the scheduled meeting for which assistance is requested. MCERA RETIREMENT BOARD MEETING MINUTES THURSDAY, MARCH 09, 2017 MERCED COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION 3199 “M” STREET, MERCED, CA 95348 ROLL CALL: 8:15 A.M. 3 234 2346 Board Members Present: Darlene Ingersoll , Michael Rhodes , Scott Johnston , Ronald 1234 16 56 46 Kinchloe , David Ness , Karen Adams , Jerald O’Banion, Al Peterson, Ryan Paskin , Jason Goins and Samuel Spangler. Counsel: Forrest Hansen. Staff: Kristie Santos, Angelo Lamas, Bren Horrocks, Michelle Lee and Sheri Villagrana. Absent: None. 1 Member of the Audit Committee 2 Member of the Budget Committee 3 Member of the Ad Hoc Special Assignment Committee 4 Member of the Investment Policy Ad Hoc Committee 5 Member of the Technology Ad Hoc Committee 6 Member of the Legislative Committee APPROVAL OF MINUTES: February 23, 2017 Motion to approve the February 23, 2017 minutes with noted correction Paskin/O’Banion U/A (9-0) PUBLIC COMMENT Leslie Howard provided a brief statement. CLOSED SESSION The meeting went into closed session. Trustee Ingersoll (Chair) recused herself from Jaclyn Valenzuela hearing. RETURN TO OPEN SESSION Motion to deny a service connected disability and deny a non-service connected disability for Jaclyn Valenzuela. Kinchloe/Paskin U/A (9-0) Trustee Spangler (Safety Alternate) voted in absence of Trustee Ingersoll. Motion to approve a service connected disability and deny a non-service connected disability for Leslie Howard. Ness/Paskin U/A (9-0) Trustee Spangler (Safety Alternate voted in absence of Trustee Rhodes. Trustee Rhodes (Vice-Chair) chaired Jaclyn Valenzuela hearing. Trustee Rhodes recused himself from Leslie Howard hearing. Trustee Ingersoll (Chair) chaired Leslie Howard hearing. No other action taken during closed session. MCERA Retirement Board Meeting Minutes – March 09, 2017 Page 2 CONSENT CALENDAR RETIREMENTS: All items of earnable compensation for service or disability retirements listed below are in compliance with the pay code schedule approved by the Board of Retirement. The retirement is authorized; however, administrative adjustments may be necessary to alter the amount due to: audit, late arrival of data, court order, etc. a. Martinez, Amparo H.S.A. 14 Yrs. Svc. Eff. 02/21/2017 b. Harvey, Marcia Env. Health 10 Yrs. Svc. Eff. 02/18/2017 c. Willems, Curtis Mental Health 4 Yrs. Svc. Eff. 02/19/2017 d. Palm, Frances H.S.A. 17 Yrs. Svc. Eff. 02/18/2017 e. Rough, Steven Public Works 32 Yrs. Svc. Eff. 03/02/2017 f. Fister, Janice (SCD) Probation 7 Yrs. Svc. Eff. 06/29/2015 * g. Guzman-Hernandez, Rosa Sheriff 10 Yrs. Svc. Eff. 02/18/2017 *Effective date per CERL section 31724 YTD fiscal year 2016/2017 retirees: 050 YTD fiscal year 2015/2016 retirees: 064 YTD fiscal year 2014/2015 retirees: 088 REFUND OF SERVICE PURCHASE: None. DEATH BENEFIT: a. Benne, John DOD 01/14/2017 Motion to approve Consent Calendar. O’Banion/Peterson U/A (9-0) REGULAR CALENDAR 1 BOARD ACTION /DISCUSSION 1. Monthly Budget Report for January 2017 (per Govt. Code § 31580.2 as part of the annual budget process and expenditure limitation) – Staff. Bren Horrocks, Fiscal Superviso,r provided an overview of the January 2017 Budget Report. No action taken. 2. Discussion and approval of Comprehensive Annual Financial Report (CAFR) for year ending June 30, 2016 - Staff. 1 “Action” means that the Board may dispose of any item by any action, including but not limited to the following acts: approve, disapprove, authorize, modify, defer, table, take no action, or receive and file. MCERA Retirement Board Meeting Minutes – March 09, 2017 Page 3 Motion to approve the MCERA Comprehensive Annual Financial Report (CAFR) for fiscal years ending June 30, 2016 and 2015. Adams/Kinchloe U/A (9-0) 3. Discussion and possible action on contract renewal for pension software CPAS – Staff. Plan Administrator discussed the renewal contracts for the pension administration software system. Motion to approve the renewal of contracts for CPAS pension administration software system. O’Banion/Adams U/A (9-0) 4. Discussion and possible action on legislation update – Staff. Plan Administrator provided an update on upcoming legislation. No action taken. 5. Review calendar of any training sessions and authorize expenditures for trustees and plan administrator. Examples of upcoming training and educational sessions: a. CALAPRS Advanced Principles of Pension Management for Trustees, March 29- 31, 2017, Los Angeles, CA. b. Raven Annual Meeting, April 20, 2017, New York, NY. c. Dimensional Fund Advisor (DFA) Institutional Investment Symposium: April 24- 26, Austin, TX. d. SACRS Spring Conference, May 16-19, 2017, Napa, CA. e. Global Future of Retirement Training, June 25-27, 2017, New York, NY. f. Verus 2017 Client Summit, August 28-29, 2017, San Francisco, CA. g. Dimensional Fund Advisor (DFA) Institutional Investment Forum, July 27, 2017, Santa Monica, CA. h. Dimensional Fund Advisor (DFA) Institutional Investment Forum, October 12, 2017, New York, NY. i. Dimensional Fund Advisor (DFA) Institutional Investment Forum City), October 19, 2017, Chicago, IL. Pursuant to Govt. Code § 31522.8 and MCERA’s Trustees Education and Training Policy requirements. No action taken. INFORMATION ONLY Trustee Johnston reported that thisy ear’s SACRS elections may be very eventfuel specially regarding the regarding the Secretary elections. County Counsel Forrest Hansen mentioned that MCERA Trustees may contact him as a legal resource for any MCERA related questions. Plan Administrator provided a reminder that SACRS, as well as other organizations, credit educational hours based on the evaluations completed by attendees, so please be sure to complete evaluation to receive proper educational hour credit and to provide valued feedback regarding educational programs. Retirement Officer Angelo Lamas stated that the 700 Form is due by April 3, 2017, and records indicate only 6 trustees have submitted the required form to date. MCERA Retirement Board Meeting Minutes – March 09, 2017 Page 4 ADJOURNMENT The meeting adjourned at 10:24 a.m. Respectfully submitted, _________________________ Darlene Ingersoll, Chair _________________________ Al Peterson, Secretary _________________________ Date 1 “Action” means that the Board may dispose of any item by any action, including but not limited to the following acts: approve, disapprove, authorize, modify, defer, table, take no action, or receive and file. Item 1 Merced County Employees’ Retirement Association Actuarial Audit of the June 30, 2016 Actuarial Valuation and Review of the 2013 – 2016 Experience Study March 23, 2017 Presented by: John Monroe, ASA, MAAA, EA Copyright © 2017 by The Segal Group, Inc. All rights reserved. 5478573v2 Project Outline The purpose of a “full scope” actuarial audit is to determine if results and conclusions determined by the valuation actuary are valid, appropriate and reasonable The audit of MCERA includes: • Review of 2013 – 2016 experience study • Reasonableness review of actuarial assumptions • Determination of validity of the data • Independent replication of liabilities valued in the 2016 actuarial valuation • Comparison of testlives • Peer review of June 30, 2016 actuarial valuation report for clarity and completeness We acknowledge and appreciate the helpful assistance from the MCERA staff and Cheiron on this project 1 Census Data 2 Census Data Overall, the data files provided are comprehensive enough to perform actuarial valuations and develop conclusions from the results Segal received the MCERA data file that was provided to Cheiron, and also the final data file that Cheiron used to complete the valuation We received the questions regarding the data that Cheiron asked MCERA along with a copy of the responses from MCERA • Verified that Cheiron correctly made edits to the data based on responses from MCERA 3