san joaquin county employees retirement association · 2019. 7. 12. · 01 allum, et al. v. san...

San Joaquin County EmployeesRetirement Association

A G E N D ABOARD MEETING

SAN JOAQUIN COUNTY EMPLOYEES RETIREMENT ASSOCIATIONBOARD OF RETIREMENTFRIDAY, JULY 12, 2019

AT 9:30 AMLocation: SJCERA Board Room

6 S. El Dorado Street, Suite 400, Stockton, California

1.0 ROLL CALL2.0 PLEDGE OF ALLEGIANCE3.0 APPROVAL OF MINUTES

3.01 Approval of the minutes for the Board Meeting of June 7, 2019 53.02 Approval of the minutes for the Administrative Committee Meeting of June 20,

20199

3.03 Board to approve minutes4.0 PUBLIC COMMENT

4.01 The public is welcome to address the Board during this time on matters within theBoard’s jurisdiction. Members of the public are encouraged to complete a PublicComment form, which can be found near the entry to the Board Room. Publiccomment on items listed on the agenda may be heard at this time, or when theitem is called, at the discretion of the Chair.

Except as otherwise permitted by the Ralph M. Brown Act (California GovernmentCode Sections 54950 et seq.), no deliberation, discussion or action may be takenby the Board on items not listed on the agenda. Members of the Board may, butare not required to: (1) briefly respond to statements made or questions posed bypersons addressing the Board; (2) ask a brief question for clarification; or (3) referthe matter to staff for further information.

Public comment is expected to be civil and courteous and is limited to three (3)minutes.

5.0 CONSENT ITEMS5.01 Service Retirement (13) 125.02 Mid-Year Administrative Budget Update 145.03 Board Policy Amendments 17

01 Age Verification Policya Proposed revisions to Age Verification Policy - Mark-up 19b Proposed revisions to Age Verification Policy - Clean 22

02 Communications Policya Proposed revisions to Communications Policy - Mark-up 24b Proposed revisions to Communications Policy - Clean 28

6 South El Dorado Street, Suite 400 • Stockton, CA 95202(209) 468-2163 • [email protected] • www.sjcera.org

SJCERA Board Meeting • 7/12/2019 •

03 Computer Equipment Policya Proposed revisions to Computer Equipment Policy - Mark-up 32b Proposed revisions to Computer Equipment Policy - Clean 35

04 Conflict of Interest Policya Proposed revisions to Conflict of Interest Policy - Mark-up 38b Proposed revisions to Conflict of Interest Policy - Clean 42

05 Disability Retirement Policy and Procedurea Proposed revisions to Disability Retirement Policy and Procedure - Mark-up 46b Proposed revisions to Disability Retirement Policy and Procedure - Clean 67

06 Dissolution of Marriage or Registered Domestic Partnership Policya Proposed revisions to Dissolution of Marriage or Registered Domestic

Partnership Policy - Mark-up83

b Proposed revisions to Dissolution of Marriage or Registered DomesticPartnership Policy - Clean

86

07 Employer Termination Policya Proposed revisions to Employer Termination Policy - Mark-up 88b Proposed revisions to Employer Termination Policy - Clean 93

08 Staff Transportation and Travel Policya Proposed revisions to Staff Transportation and Travel Policy - Mark-up 98b Proposed revisions to Staff Transportation and Travel Policy - Clean 105

09 Trustee Education Policya Proposed revisions to Trustee Education Policy - Mark-up 109b Proposed revisions to Trustee Education Policy - Clean 113

10 Trustee and Executive Staff Travel Policya Proposed revisions to Trustee and Executive Staff Travel Policy - Mark-up 117b Proposed revisions to Trustee and Executive Staff Travel Policy - Clean 123

5.04 Proposed Resolution 2019-07-01 titled “Board Policy Amendments” 1285.05 Board to accept policy revisions and adopt Resolution 2019-07-01

6.0 CHIEF EXECUTIVE OFFICER PERFORMANCE REVIEW POLICY 1296.01 Proposed revisions to Chief Executive Officer Performance Review Policy - Mark-

up130

6.02 Proposed revisions to Chief Executive Officer Performance Review Policy - Clean 1346.03 Proposed Resolution 2019-07-02 titled “Chief Executive Officer Performance

Review Policy”138

6.04 Board to review proposed revisions, give direction to staff, and adopt Resolution2019-07-02

7.0 2019 PRELIMINARY VALUATION RESULTS AND EXPERIENCE STUDY


7.01 Presentation by Graham Schmidt of Cheiron on preliminary results of TriennialExperience Study for the three years ended 12/31/2018 and the Annual ActuarialValuation as of January 1, 2019

139

7.02 Board to discuss and give direction to staff and actuary as appropriate8.0 2019 ASSET LIABILITY STUDY

8.01 Presentation by David Sancewich on modeling and proposed portfolio options 1808.02 Board to discuss and give direction to staff and consultants as appropriate

9.0 CONSULTANT REPORTS9.01 Monthly Investment Performance Updates

01 Manager Performance Flash Report - May 2019 with a verbal update on June2019 performance

237

02 Capital Markets Outlook and Risk Metrics - June 2019 2409.02 Manager Due Diligence Meetings and Reports

01 Due Diligence Memo on meeting with AQR - July 2019 2699.03 Emerging Markets Request for Information - Verbal Update9.04 Investment Fee Transparency Report 2769.05 Board to accept and file reports

10.0 ACTUARIAL SERVICES CONTRACT EXPIRATION 28410.01 Cheiron Memo: Proposed Contract Extension 28610.02 Board to discuss and give direction to staff as appropriate

11.0 STAFF REPORTS11.01 Pending Retiree Accounts Receivable - Second Quarter 2019 29011.02 Legislative Summary Report 29111.03 Trustee and Executive Staff Travel

01 Conferences and Events Schedule for 2019 294a Nossaman Annual Fiduciaries’ Forum 295

02 Summary of Pending Trustee and Executive Staff Travel 296a Travel Requiring Approval (2)

03 Summary of Completed Trustee and Executive Staff Travel 29711.04 Board to accept and file reports and approve two pending travel requests as

required11.05 CEO Report 298

01 Pension System Enhancement Project 30111.06 Report from Committees

01 Committee Chair and staff will provide a brief summary of the outcome of the:a Real Estate Committee Meeting, June 7, 2019b Administrative Committee Meeting, June 14, 2019


c Real Estate Committee Meeting, July 12, 201912.0 CORRESPONDENCE

12.01 Letters Received12.02 Letters Sent12.03 Market Commentary/Newsletters/Articles

01 NCPERS The Monitor June 2019 30202 Research Affiliates June 2019 310

13.0 COMMENTS13.01 Comments from the Board of Retirement

14.0 CLOSED SESSION14.01 PURCHASE OR SALE OF PENSION FUND INVESTMENTS

CALIFORNIA GOVERNMENT CODE SECTION 54956.8114.02 PERSONNEL MATTERS

CALIFORNIA GOVERNMENT CODE SECTION 54957EMPLOYEE DISABILITY RETIREMENT APPLICATIONS (2)

14.03 PERSONNEL MATTERSCALIFORNIA GOVERNMENT CODE SECTION 5495701 Public Employee Appointment

Title: Retirement Investment Officer14.04 CONFERENCE WITH LEGAL COUNSEL - EXISTING LITIGATION

CALIFORNIA GOVERNMENT CODE SECTION 94956.9(d)(1)01 Allum, et al. v. San Joaquin County Employees’ Retirement Association et al.

San Joaquin County Superior Court Case No. STK-CV-UBC-2017-1069615.0 ELECTION OF OFFICERS

15.01 Board to select officers for 2019-202016.0 CALENDAR

16.01 Board Meeting, August 21, 2019 at 9:30 AM16.02 Special Meeting, August 22, 2019 - Lodi, CA at 8:00 AM

17.0 ADJOURNMENT


M I N U T E SBOARD MEETING

SAN JOAQUIN COUNTY EMPLOYEES RETIREMENT ASSOCIATIONBOARD OF RETIREMENT

FRIDAY, JUNE 7, 2019AT 9:30 AM

Location: SJCERA Board Room6 S. El Dorado Street, Suite 400, Stockton, California


1.0 ROLL CALL1.01 MEMBERS PRESENT: Phonxay Keokham (out at 1:07 p.m.), J.C. Weydert, Jennifer

Goodman, Michael Duffy, Chanda Bassett, Adrian Van Houten, Margo Praus,Raymond McCray, and Michael Restuccia presidingMEMBERS ABSENT: Katherine MillerSTAFF PRESENT: Chief Executive Officer Johanna Shick, Assistant Chief ExecutiveOfficer Kathy Herman, Financial Officer Lily Cherng, Management Analyst III GregFrank, Retirement Investment Accountant Felipa Maliwat, Department InformationSystems Analyst II Lolo Garza, and Retirement Administrative Assistant AndreaBonillaOTHERS PRESENT: Deputy County Counsel Jason Morrish, and David Sancewichof Meketa Investment Group

2.0 PLEDGE OF ALLEGIANCE2.01 Led by Michael Duffy

3.0 APPROVAL OF MINUTES3.01 Approval of the minutes for the Board Meeting of May 17, 20193.02 Approval of the minutes for the Audit Committee Meeting of May 17, 20193.03 The Board voted unanimously (8-0) to approve the Minutes of the Board and

Audit Committee Meetings of May 17, 2019. (Motion: Weydert; Second: McCray)4.0 PUBLIC COMMENT

4.01 There was no public comment.5.0 CONSENT ITEMS

5.01 Service Retirement (13)5.02 General (1)

01 Audit Committee Charter5.03 The Board voted unanimously (8-0) to approve the Consent Items. (Motion:

Duffy; Second: Weydert)6.0 FINANCIAL REPORTS FOR YEAR ENDING DECEMBER 31, 2018

6.01 Report to the Board of Retirement by Brown Armstrong Accountancy Corporation6.02 Annual Financial Report - December 31, 2018

6 South El Dorado Street, Suite 400 • Stockton, CA 95202(209) 468-2163 • [email protected] • www.sjcera.org

SJCERA Board Meeting • 6/7/2019 • Page 1

6.03 The Audit Committee recommended the Board accept and approve the Report to theBoard of Retirement and the Annual Financial Report for the Year Ended December31, 2018.

6.04 The Board voted unanimously (8-0) to accept and approve the reports. (Motion:Duffy; Second: Goodman)

7.0 INVESTMENT MANAGER PRESENTATIONS7.01 CRESTLINE

01 Portfolio Review and Current Investment Opportunities02 This was an informational item; the Board took no action nor gave direction

on this item.7.02 WHITE OAK

01 Portfolio Review and Current Investment Opportunities02 This was an informational item; the Board took no action nor gave direction

on this item.7.03 NOTE: Agenda Items 14.01 and 14.02 were taken out of order for discussion and

action by the Board

The Chair convened a Closed Session at 10:53 a.m. The Chair adjourned theClosed Session and reconvened the Open Session at 11:02 a.m.

8.0 TREASURY INFLATION-PROTECTED SECURITIES EDUCATION SESSION8.01 Presentation by Meketa Investment Group8.02 This was an informational item; the Board took no action nor gave direction on

this item.9.0 REAL ESTATE INVESTMENT TRUST EDUCATION SESSION

9.01 Presentation by Meketa Investment Group9.02 This was an informational item; the Board took no action nor gave direction on

this item.10.0 CONSULTANT REPORTS

10.01 QUARTERLY REPORTS FROM INVESTMENT CONSULTANT FOR PERIODENDED MARCH 31, 201901 Quarterly Investment Performance Analysis02 Manager Certification Report03 Manager Review Schedule04 David Sancewich of Meketa Investment Group reviewed and discussed the

reports in relation to the Board’s investment policies. The Total Portfolio netreturn was 5.7% for the quarter and 4.0% for the one-year period ended March31, 2019; performance exceeded the policy benchmark by 3.1% for the quarterand 1.7% for the one-year.

10.02 Monthly Investment Performance Updates01 Manager Performance Flash Report - April 2019 with a verbal update on May

2019 performance02 Capital Markets Outlook and Risk Metrics - May 2019


10.03 Board accepted and filed reports.11.0 STAFF REPORTS

11.01 Legislative Summary Report11.02 Trustee and Executive Staff Travel

01 Conferences and Events Schedule for 201902 Summary of Pending Trustee and Executive Staff Travel03 Summary of Completed Trustee and Executive Staff Travel

11.03 Board accepted and filed reports.11.04 CEO Report

In addition to the CEO Report, CEO Shick reported on the following: 1) There aresufficient candidates for the Investment Officer recruitment and interviews aretentatively scheduled for the week of June 24; 2) the County changed their NewEmployee Orientation process and SJCERA is working to get retirement formsincluded in their new packets; 3) she will be attending the RPESJC Picnic on June 13along with SJCERA staff members Marissa and Mary Chris.01 Action Plan Update

a CEO Shick stated she is impressed with the accomplishments during the firstfive months of 2019 and highlighted the following: decreased investmentmanagement fees, additional employers on board with decreasing theunfunded liability, revision of the Replacement Benefit Plan, documentation ofConflict of Interest and Proximity Procedures, and creating backup support forkey business functions.

02 Pension System Enhancement Projecta ACEO Herman reported that the recent onsite training was very successful

and productive and staff is looking forward to the next onsite visit later in June.11.05 Report from Committee

01 Committee Chair and staff will provide a brief summary of the outcome of the:a Audit Committee Meeting - May 17, 2019

An update for the committee meeting was not provided as the minutes for theAudit Committee Financial Reports for year ending December 31, 2018 wereapproved at today’s Board Meeting.

12.0 CORRESPONDENCE12.01 Letters Received12.02 Letters Sent12.03 Market Commentary/Newsletters/Articles

01 NCPERS PERSist Spring 201902 NCPERS The Monitor May 2019

13.0 COMMENTS13.01 Trustee McCray requested that staff or consultant distribute the “Value stocks are

trading at steepest discount in history” article by Chris Matthews.


14.0 CLOSED SESSION

THE CHAIR CONVENED A CLOSED SESSION AT 1:04 P.M. THE CHAIRADJOURNED THE CLOSED SESSION AND RECONVENED THE OPEN SESSION AT1:32 P.M.

14.01 PURCHASE OR SALE OF PENSION FUND INVESTMENTSCALIFORNIA GOVERNMENT CODE SECTION 54956.8101 Counsel noted there was nothing to report from closed session regarding this

subject.14.02 PERSONNEL MATTERS

CALIFORNIA GOVERNMENT CODE SECTION 54957EMPLOYEE DISABILITY RETIREMENT APPLICATION (1)01 Disability Retirement Consent (1)

Counsel reported that in Closed Session the Board took the following action onpersonnel matters:a Sheriff’s Captain

Service-Connected Disability

The Board voted unanimously (8-0) to grant the applicant a Service-Connected Disability Retirement. (Motion: Weydert; Second: Duffy)

14.03 PUBLIC EMPLOYEE PERFORMANCE EVALUATIONCALIFORNIA GOVERNMENT CODE SECTION 54957TITLE: RETIREMENT ADMINISTRATOR/CHIEF EXECUTIVE OFFICER01 Counsel noted there was nothing to report from closed session regarding this

subject.15.0 CALENDAR

15.01 Administrative Committee Meeting, June 14, 2019 at 11:00 AM15.02 Board Meeting, July 12, 2019 at 9:30 AM

16.0 ADJOURNMENT16.01 There being no further business the meeting was adjourned at 1:33 p.m.

Respectfully Submitted:

______________________Michael Restuccia, Chair

Attest:

_______________________Raymond McCray, Secretary


M I N U T E SADMINISTRATIVE COMMITTEE MEETING

SAN JOAQUIN COUNTY EMPLOYEES RETIREMENT ASSOCIATIONBOARD OF RETIREMENT

THURSDAY, JUNE 20, 2019AT 8:30 AM

Location: SJCERA Conference Room6 S. El Dorado Street, Suite 400, Stockton, California


1.0 ROLL CALL1.01 MEMBERS PRESENT: Chanda Bassett, Adrian Van Houten, and Raymond McCray

presidingMEMBERS ABSENT: Michael DuffySTAFF PRESENT: Chief Executive Officer Johanna Shick, Management Analyst IIIGreg Frank, and Retirement Administrative Assistant Andrea BonillaOTHERS PRESENT: Deputy County Counsel Jason Morrish

2.0 CONSENT ITEMS2.01 Board Policies with no Amendments

01 Correction of Errors or Omissions Policy02 Ex Parte Communications Policy03 Member Contributions and Interest Posting Policy

2.02 Board Policy Amendments01 Age Verification Policy

a Proposed revisions to Age Verification Policy - Mark-upb Proposed revisions to Age Verification Policy - Clean

02 Communications Policya Proposed revisions to Communications Policy - Mark-upb Proposed revisions to Communications Policy - Clean

03 Computer Equipment Policya Proposed revisions to Computer Equipment Policy - Mark-upb Proposed revisions to Computer Equipment Policy - Clean

04 Conflict of Interest Policya Proposed revisions to Conflict of Interest Code Policy - Mark-upb Proposed revisions to Conflict of Interest Code Policy - Clean

05 Dissolution of Marriage or Registered Domestic Partnership Policya Proposed revisions to Dissolution of Marriage or Registered Domestic

Partnership Policy - Mark-upb Proposed revisions to Dissolution of Marriage or Registered Domestic

Partnership Policy - Clean6 South El Dorado Street, Suite 400 • Stockton, CA 95202(209) 468-2163 • [email protected] • www.sjcera.org

SJCERA Administrative Committee Meeting • 6/20/2019 • Page 1

06 Employer Termination Policya Proposed revisions to Employer Termination Policy - Mark-upb Proposed revisions to Employer Termination Policy - Clean

07 Staff Transportation and Travel Policya Proposed revisions to Staff Transportation and Travel Policy - Mark-upb Proposed revisions to Staff Transportation and Travel Policy - Clean

08 Trustee Education Policya Proposed revisions to Trustee Education Policy - Mark-upb Proposed revisions to Trustee Education Policy - Clean

09 Trustee and Executive Staff Travel Policya Proposed revisions to Trustee and Executive Staff Travel Policy - Mark-upb Proposed revisions to Trustee and Executive Staff Travel Policy - Clean

2.03 The Committee approved the Consent Items in two separate motions as follows:01 The Committee voted unanimously (3-0) to approve Consent Items 2.01, 2.02

-01 and 2.02-03 thru 2.02-06. (Motion: Van Houten; Second: Bassett)02 After discussion, the Committee voted unanimously (3-0) to approve

Consent Items 2.02-02 and 2.02-07 thru 2.02-09 with edits to theCommunications, Staff Transportation and Travel, and Trustee andExecutive Staff Travel Policies. (Motion: Bassett; Second: Van Houten)

3.0 POLICY REVIEW3.01 Chief Executive Officer Performance Review Policy

01 Proposed revisions to Chief Executive Officer Performance Review Policy - Mark-up

02 Proposed revisions to Chief Executive Officer Performance Review Policy - Clean03 The Committee reviewed and voted unanimously (3-0) to approve the policy,

with revisions, and recommend the full Board of Retirement discuss anddecide the cap on incentive compensation. (Motion: Bassett; Second: VanHouten)

3.02 Disability Retirement Policy and Procedure01 Proposed revisions to Disability Retirement Policy and Procedure - Mark-up02 Proposed revisions to Disability Retirement Policy and Procedure - Clean03 The Committee reviewed and voted unanimously (3-0) to approve the policy,

with revisions. (Motion: Van Houten; Second: Bassett)4.0 COMMENTS

4.01 PUBLIC COMMENT - None4.02 COMMENTS FROM THE COMMITTEE - None

5.0 ADJOURNMENT


5.01 There being no further business, the meeting was adjourned at 9:46 a.m.

Respectfully Submitted:

__________________________________Raymond McCray, Committee Chairperson


San Joaquin County Employees RetirementAssociationJuly 2019

PUBLIC

5.01 Service Retirement ConsentPHILLIP ALDERETE-SALDANA Food Service Worker I

Hosp DietaryMember Type: GeneralYears of Service: 15y 05m 11dRetirement Date: 5/31/2019

01

SUSAN B AYALA AsstDeptyChiefProbationOfficeJuvenile Detention

Member Type: SafetyYears of Service: 27y 00m 28dRetirement Date: 6/1/2019

02

DORTHY J BEATTIE Sub Abuse Prevention Spec IISubstance Abuse Services

Member Type: GeneralYears of Service: 19y 08m 04dRetirement Date: 5/30/2019

03

JOY A FLOWERS Management Analyst IIIHuman Resources


04

EVETTE P JOHNSON Senior Office AssistantHosp Patient Accounting


05

SHARON E MCGUIRE Communications Dispatcher IVSheriff - Communications


06

GLORIA E MOFFET Department Payroll SpecialistHosp General Accounting


07

LILIA E MORA Mental Health Specialist IIMental Health-Adult Outpatient


08

PATRICIA A NELSON Administrative Assistant IIPublic Defender


09

7/3/2019 2:21:58 PM Page: 2

San Joaquin County Employees RetirementAssociationJuly 2019

PUBLIC

LARRY G NOLIN Special District Class CodeSJ Co Mosquito Abatement


10

ROBIN L RINGSTAD Deferred MemberN/A

Member Type: GeneralYears of Service: 07y 01m 03dRetirement Date: 6/8/2019Comments: Deferred from SJCERA since July 1997. Outgoing reciprocity and concurrent retirement withCalPERS.

11

LORETTA J SCOTT Eligibility Worker IIHSA - Eligibility Staff


12

LUANN SYSOUVANH Deferred MemberN/A

Member Type: GeneralYears of Service: 00y 11m 29dRetirement Date: 6/7/2019Comments: Deferred from SJCERA since December 1997. Outgoing reciprocity and concurrent retirement withSCERS.

13

7/3/2019 2:21:58 PM Page: 3

Board of Retirement Meeting San Joaquin County Employees’ Retirement Association

Agenda Item 5.02 July 12, 2019 SUBJECT: SJCERA 2019 Administrative Budget Mid-Year Review January 1 through June 30, 2019 SUBMITTED FOR: ___ CONSENT l__l ACTION _X_ INFORMATION RECOMMENDATION None; no action is required. Staff submits the mid-year administrative budget review for January 1 through June 30, 2019, for the Board’s information. PURPOSE This report compares actual and budgeted administrative expenses for SJCERA’s operations for the first six months of the fiscal year. DISCUSSION SJCERA’s projected expenses for the period January 1 through June 30, 2019, are 44 percent of budget, or $287,190 less than budgeted year-to-date. The attachment provides details for actual versus budgeted expenses by line item. Summary of Notable Differences At June 30, we would expect to be approximately 50 percent through our budget. The notable variances between actual year-to-date expenses as of June 30, 2019 as compared to the Administrative Budget for 2019 are summarized below.

Salaries and Benefits Actual Salaries and Benefits expense is 47 percent of the budgeted amount or $77,306 less than budgeted year-to-date. The primary reason is the vacant Retirement Investment Officer position.

Services and Supplies Actual Services and Supplies expenses are 35 percent of the budgeted amount or $212,746 under budget year-to-date. Additional information regarding components of Services and Supplies is provided below.

Due Diligence/Training: Actual expenses are 26 percent of budget, or $21,651 below budget. The primary reason is the actual expenses incurred for the CALAPRS and SACRS conferences were under budget.

July 12, 2019 Page 2 of 2 Agenda Item 5.02

!

Professional & Specialized Services: Actual expenses are 32 percent of budget ($92,132 below budget), primarily because a significant portion of the pension enhancement project costs will be incurred in the second half of the year. Professional Services - Disability: Actual expenses are 17 percent of budget, ($74,510 below budget) primarily due to delayed processing of disability cases. With the hiring of a second disability attorney, cases are moving forward and we expect these expenses will be incurred in the second half of the year. Software and Related Licenses: Actual expenses are 67 percent of budget ($17,756 over budget). The primary reason is the annual IT consultant license fee is paid in the first half of the year. These expenses are expected to be in line with the budget by the end of the year. Insurance - Casualty: Actual expenses are two percent of budget ($39,950 under budget). The primary reason is the annual fiduciary liability insurance premium is paid in the second half of the year.

County Wide – Indirect Charges: Actual expenses are 73 percent of budget, or $15,184 over budget. The Auditor-Controller’s Office quarterly bills SJCERA for our proportionate share of County overhead including: County HR, County Counsel, Facilities Management, Auditor-Controller, and Purchasing. The Auditor-Controller’s office had underbilled SJCERA for County Counsel’s portion of the overhead costs and has now adjusted the quarterly billings to reflect the underbilling.

Fixed Assets Actual Fixed Asset expenses are 53 percent of the budgeted amount or $2,862 over budget year-to-date.

ATTACHMENT Mid-Year Review of Actual vs. Budgeted Expenses as of June 30, 2019 ____________________ _________________________ JOHANNA SHICK GREG FRANK Chief Executive Officer Management Analyst III

YTD BUDGETED REMAINING YTD %ACCOUNT NO. DESCRIPTION EXPENSES AMOUNT BALANCE SPENT

6001000000 Salaries & Wages - Regular $804,775 $1,675,047 $870,272 48%6001100000 Salaries - Cafeteria $49,518 $109,500 $59,982 45%6001200000 Salaries - Car Allowance $3,510 $7,020 $3,510 50%6001210000 Admin Benefits (Vac sell back) $0 $14,324 $14,324 0%6010100000 Unemployment Comp Ins $1,151 $5,226 $4,075 22%6020000000 Retirement-Employer Share $334,116 $717,965 $383,849 47%6020600000 Health Ins for Retirees-SLB $12,104 $22,000 $9,896 55%6030000000 Social Security - OASDI $49,583 $100,191 $50,608 49%6030100000 Social Security - Medicare $11,615 $25,707 $14,092 45%6040000000 Life Insurance $538 $1,083 $545 50%6050000000 Health Insurance $122,541 $255,000 $132,459 48%6070000000 Dental Insurance $3,729 $7,875 $4,146 47%6080000000 Vision Care $513 $1,058 $545 48%

SALARIES & BENEFITS $1,393,692 $2,941,996 $1,548,304 47%

6201000000 Office Expense - General $11,130 $28,500 $17,370 39%6202000000 Office Expense - Postage $9,287 $18,000 $8,713 52%6203000000 Office Exp - Subs & Periodicals $742 $3,500 $2,758 21%6206000000 Communications $12,188 $20,000 $7,812 61%6209000000 Memberships $3,084 $9,250 $6,166 33%6211000000 Maintenance - Equipment $1,758 $8,250 $6,492 21%6214000100 Rents & Lease - Copy Machine $0 $4,000 $4,000 0%6217000000 Due Diligence/Training $23,724 $90,750 $67,026 26%6220000000 Prof & Specialized Serv $160,551 $505,365 $344,814 32%6220000100 Prof Services-Disability $37,990 $225,000 $187,010 17%6223000000 Publications & Legal Notices $0 $1,000 $1,000 0%6226016000 Software & Related Licenses $71,055 $106,600 $35,545 67%6243000000 Food $267 $7,250 $6,983 4%6264000000 Rent - Structures & Grounds $100,640 $204,827 $104,187 49%6269000000 Small Tools and Instruments $0 $500 $500 0%6295220700 Data Processing Charges-ISD $0 $500 $500 0%6295232000 Insurance - Workers Comp $0 $7,500 $7,500 0%6295236000 Insurance - Casualty $1,350 $82,600 $81,250 2%6295999900 County Wide - Indirect Charges $47,684 $65,000 $17,316 73%

SERVICES AND SUPPLIES $481,450 $1,388,392 $906,942 35%

6451000000 Equipment and Furniture $0 $3,000 $3,000 0%6453310100 PC Equipment and Upgrades $54,862 $101,000 $46,138 54%

FIXED ASSETS $54,862 $104,000 $49,138 53%

TOTAL EXPENDITURES $1,930,003 $4,434,387 $2,504,384 44%

CONTINGENCY RESERVE $0 $3,000,000 $3,000,000 0%

MID-YEAR REVIEW OF ACTUAL VS. BUDGETED EXPENSESSJCERA 2019 ADMINISTRATIVE BUDGET

AS OF JUNE 30, 2019


Agenda Item 5.03 July 12, 2019

SUBJECT: Board Policy Amendments

SUBMITTED FOR: _X_ CONSENT l___ ACTION ___ INFORMATION

RECOMMENDATION The Administrative Committee recommends to the Board the adoption of the proposed amendments to the policies described below.

PURPOSE To amend policies to ensure that they remain relevant, appropriate, and in compliance, per Section III.C of the Administrative Committee Charter.

DISCUSSION At the April 12, 2019 meeting, the Board approved modifying SJCERA’s policy review requirement to “at least once every three years”. In accordance with that policy requirement, staff reviewed one-third of the policies (fourteen in total) and met with the Administrative Committee on June 20 to discuss. The Administrative Committee and staff agree that no amendments are necessary to the following three policies:

• Corrections of Errors or Omissions Policy• Ex Parte Policy• Member Contributions and Interest Posting Policy

The Administrative Committee and staff propose amendments to the following ten policies: • Age Verification - Allow copies of birth certificates, expand the types of acceptable

documentation, grant the CEO discretion to allow exceptions, clarify procedures when no age documentation is on file or there are conflicting birth dates

• Communications Policy – Modify code citations• Computer Equipment Policy - Make various technical, non-substantive corrections• Conflict of Interest Code Policy – Amend per the County’s direction to send only a

certification list to Registrar of Voters and retain statements on all filers• Disability Retirement Policy and Procedure – add definitions and requirements that an

application must meet before being filed, allow the member to elect not to go tohearing, allow the use of depositions, clarify that mileage reimbursement may berequested for out-of-county travel to SJCERA-scheduled examinations, and specifythat SJCERA may determine an examination is not required in some cases

• Dissolution of Marriage or RDP Policy - Define nonmember, align the approvalprocess to current practice, and make other non-substantive changes


• Employer Termination Policy – Align with the Declining Employer Payroll Policyregarding potential initiation of termination by SJCERA

• Staff Travel Policy – Eliminate redundant text and the reference to volunteers,increase the cap on expenses, mileage reimbursement to and from workplace even ifthe employee departed from home

• Trustee Education Policy – Add Sexual Harassment Prevention Training inaccordance with Government Code section 53237.1 (AB 1661)

• Trustee and Executive Staff Travel Policy– Add customary gratuities for ground travel,mileage reimbursements for Appointed Trustees will be to and from home, mileagereimbursement for Elected Trustees will be to and from workplace even if Trusteedeparted from home, and make various technical, non-substantive corrections

ATTACHMENTS Age Verification Policy – clean and mark-up Communications Policy – clean and mark-up Computer Equipment Policy – clean and mark-up Conflict of Interest Policy – clean and mark-up Disability Retirement Policy and Procedure – clean and mark-up Dissolution of Marriage or RDP Policy – clean and mark-up Employer Termination Policy – clean and mark-up Staff Transportation & Travel Policy – clean and mark-up Trustee Education Policy – clean and mark-up Trustee & Executive Staff Travel – clean and mark-up

___________________ JOHANNA SHICK Chief Executive Officer

SJCERA BOARD POLICY / Age Verification Page 1 of 3

I. Purpose

A. This policy governs the management and operation of the retirement system with respect to the establishment of guidelines for age verification of its membership, including its retired members and their survivors, dependents, and beneficiaries.

II. Certified Birth Certificate Requirement A. Upon appointment to a permanent full-time position or opt-in confirmation of

elected officers, every employee who is eligible for membership in the SJCERA shall submit a legiblecertified copy of the employee’s birth certificate or, if unobtainable, other proof of age. This requirement shall be in addition to the Membership requirements set forth in the bylaws.

A.

B. A certified copy of the birth certificate is requested. No photocopies will be

accepted unless submitted with a “Birth Certificate Transmittal form”, completed by the employer. In the event of a discrepancy in age, the birth date resulting in the oldest age shall prevail.

B. Upon applying for a retirement benefit (including service, disability, or survivor), a legible copy of the birth certificate or, if unobtainable, other acceptable age verification documentation shall be submitted for the following individuals, if the documentation is not already on file with SJCERA: the member, any survivors/beneficiaries named to receive a continuance, and any dependents named for health insurance coverage.

1. Benefit payments and health plan enrollment shall not be processed without proof of age.

1.

III. Alternative Acceptable Age Verification Documents A. The following alternative documents will be acceptable:

1. Any one of the following:

BoardAdministrationPolicy

AgeVerification


a) A valid U.S. Passport issued within the last 10 years b) Infant baptismal certificate; c) Elementary Sschool age record d) Hospital birth record; e) Authenticated family record; or

2. Any two of the following: a) Marriage record, if age is shown; b) Military record; c) Child’s birth certificate showing age of parent; d) Affidavit by older member of family; d) Naturalization certificates issued by the U.S. Citizenship and

Immigration and Naturalization Services (USCIS). e) Expired U.S. Passport f) Valid non-U.S. Passport

B. If the member is unable to provide satisfactory Age Verification documentation, as

outlined in Sections II and III of this policy, the CEO is authorized to approve alternate documentation based on individual circumstances. In that instance, the CEO shall maintain a record describing the Age Verification procedure for the member and the reason for approval of alternate documentation. it is impractical for the CEO to determine from the records the age of any member, or if the member refuses or fails to give the Board a statement of the member’s age, the Board may estimate the member’s age for the purposes of the CERL.

B.

IV. Corrections A. In the event acceptable age verification documentation is not available, the birth

date provided by the employer will be accepted for actuarial valuation and contribution purposes.

B. Upon receipt of acceptable age verification documentation, any discrepancy between the documentation received and the birth date reported by the employer, will be corrected by SJCERA.

1. Any re-calculation and correction of over- or underpaid contributions will be processed pursuant to SJCERA’s Correction of Errors and Omissions Policy.If the CEO is satisfied that the applicant’s date of birth should be corrected on the records of the SJCERA, the CEO may recommend such


correction be made. The recommendation shall be in writing, shall summarize the evidence in support of the recommendation, and shall provide the total amount of contribution necessary to satisfy the correction, either additional or refundable.

V. Law Prevails

A. In the event a conflict between this policy and the County Employees Retirement Law, the Public Employees’ Pension Reform Act, or other applicable statute arises, the law shall prevail.

VI. Policy Review

A. Staff shall review this Policy at least once every three years to ensure that it remains relevant, appropriate, and in compliance. Any revisions or amendments to this policy must be approved by the Board of Retirement in accordance with the bylaws.

VII. History 03/01/2017 Bylaws Amended and Approved by the Board of Supervisors 12/08/2017 Bylaw Section 5.2.B.1. & 2, C & D Converted to Board Policy

06/29/2018 Reviewed, no content changes required; Staff updated format 04/12/2019 Policy Review section amended to at least once every three years 07/12/2019 Amended to allow copies of birth certificates, expand the types of

acceptable documentation, grant the CEO discretion to allow exceptions, clarify procedures when no age documentation is on file or there are conflicting birth dates.

Certification of Board Adoption

Clerk of the Board Date Related Statutes: California Government Code Sections 31531 and 31526.


I. Purpose A. This policy governs the management and operation of the retirement system with

respect to the establishment of guidelines for age verification of its membership, including its retired members and their survivors, dependents, and beneficiaries.

II. Birth Certificate Requirement A. Upon appointment to a permanent full-time position or opt-in confirmation of

elected officers, every employee who is eligible for membership in SJCERA shall submit a legible copy of the employee’s birth certificate or, if unobtainable, other proof of age. This requirement shall be in addition to the Membership requirements set forth in the bylaws.

B. Upon applying for a retirement benefit (including service, disability, or survivor), a legible copy of the birth certificate or, if unobtainable, other acceptable age verification documentation shall be submitted for the following individuals, if the documentation is not already on file with SJCERA: the member, any survivors/beneficiaries named to receive a continuance, and any dependents named for health insurance coverage.

1. Benefit payments and health plan enrollment shall not be processed without proof of age.

III. Alternative Acceptable Age Verification Documents A. The following alternative documents will be acceptable:

1. Any one of the following: a) A valid U.S. Passport issued within the last 10 years b) Infant baptismal certificate; c) Elementary school age record d) Hospital birth record; e) Authenticated family record; or

2. Any two of the following: a) Marriage record, if age is shown; b) Military record; c) Child’s birth certificate showing age of parent; d) Naturalization certificates issued by the U.S. Citizenship and

Immigration Services (USCIS). e) Expired U.S. Passport f) Valid non-U.S. Passport

B. If the member is unable to provide satisfactory Age Verification documentation, as

outlined in Sections II and III of this policy, the CEO is authorized to approve alternate documentation based on individual circumstances. In that instance, the


AgeVerification


CEO shall maintain a record describing the Age Verification procedure for the member and the reason for approval of alternate documentation.

IV. Corrections A. In the event acceptable age verification documentation is not available, the birth

date provided by the employer will be accepted for actuarial valuation and contribution purposes.

B. Upon receipt of acceptable age verification documentation, any discrepancy between the documentation received and the birth date reported by the employer, will be corrected by SJCERA.

1. Any re-calculation and correction of over- or underpaid contributions will be processed pursuant to SJCERA’s Correction of Errors and Omissions Policy.

V. Law Prevails

A. In the event a conflict between this policy and the County Employees Retirement Law, the Public Employees’ Pension Reform Act, or other applicable statute arises, the law shall prevail.

VI. Policy Review


VII. History 03/01/2017 Bylaws Amended and Approved by the Board of Supervisors 12/08/2017 Bylaw Section 5.2.B.1. & 2, C & D Converted to Board Policy

06/29/2018 Reviewed, no content changes required; Staff updated format 04/12/2019 Policy Review section amended to at least once every three years 07/12/2019 Amended to allow copies of birth certificates, expand the types of

acceptable documentation, grant the CEO discretion to allow exceptions, clarify procedures when no age documentation is on file or there are conflicting birth dates.

Certification of Board Adoption

Clerk of the Board Date Related Statutes: California Government Code Sections 31531 and 31526.

SJCERA BOARD POLICY / Communications Policy / Page 1 of 4

I. Purpose

A. The Board of Retirement recognizes that effective communication is integral to good governance. In order to achieve SJCERA’s mission and objectives, the Board must establish mechanisms for communicating clearly among Board members and with senior management, plan sponsors, plan members and external parties. The Board adopts this Policy to provide the Board as a whole, individual Board member, and staff with guidelines for the communications function of the Board.

II. Objectives

A. To encourage and facilitate open, accurate, timely and effective communications with all relevant parties.

B. To mitigate risks to SJCERA, the Board, and to Board members that may arise in connection with communications in areas such as governance, service quality, plan interpretation, adverse reliance by plan members and beneficiaries, and general public relations.

C. To balance the need to mitigate risk with the need for open and efficient communication.

III. Communications Among Board Members

A. The Board shall carry out its activities in accordance with the spirit of open governance, including the provisions of the Ralph M. Brown Act, California Government Code Section 54950, et. Sseq. (the “Brown Act”), which include, but are not limited to:

1. Properly noticing and posting an agenda for Board and Committee meetings (section 54954.2 of the Brown Act);

2. Allowing proper public comment on agenda items before or during consideration by the Board (section 54954.3 of the Brown Act);

3. Properly describing all items to be considered in closed session in the notice or agenda for the meeting (Section 54954.5 of the Brown Act);

4. Not conducting or participating in a series of communications one at a time or in a group that in total constitutes a quorum of the Board or Committee, either directly or through intermediaries or electronic devices, for the purpose of developing a concurrence as to the action to be taken (a serial or secret meeting prohibited by Section 54953 of the Brown Act); and

BoardGovernancePolicy

CommunicationsPolicy


5. Ensuring materials are properly made available to members of the public upon request without delay (Section 54957.5 of the Brown Act).

B. A member of the Board shall disclose information in his or her possession pertinent to the affairs of SJCERA to the entire Board in a timely manner.

C. During meetings of the Board and its Committees, Board members shall communicate in a straightforward, constructive manner with due respect and professionalism.

IV. Board Member Communications with Plan Members

A. Members of the Board shall mitigate the risk of miscommunication with plan sponsors, members and retirees, and potential liability through adverse reliance by third parties, by avoiding giving explicit advice, counsel, or education with respect to the technicalities of the plan provisions, policies, or processes.

B. Where explicit advice, counsel, or education with respect to the technicalities of the plan provisions, policies, or process is needed, Board members will refer inquiries to the Chief Executive OfficerRetirement Administrator or appropriate designee. The Chief Executive OfficerRetirement Administrator or such designee will inform the Board Member when and how the matter was resolved.

V. Board Member Communications with SJCERA Management

A. Board members with questions or concerns regarding any aspect of SJCERA operations shall direct them to the RChief Executive Officeretirement Administrator or the Retirement AdministratoChief Executive Officerr’s designee, who shall in turn direct staff as required.

B. Requests for information that require excessive expenditure of staff time or use of external resources, including professional service providers, shall, to the extent practicable:

1. Be consistent with the roles and responsibilities of the Board;

2. Be formally requested at Board or Committee meetings; and

3. Be directed to the Chief Executive OfficerRetirement Administrator.

C. The Retirement AdministratorChief Executive Officer shall ensure that information requested by one or more Board members is made available to the entire Board.

D. Board members shall share any information in their possession pertinent to the affairs of SJCERA with the Retirement AdministratorChief Executive Officer in a timely manner. Similarly, the Retirement AdministratorChief Executive Officer shall ensure that all relevant and pertinent information is disclosed to all of the Board members in a timely manner.

VI. Board Member Requests for Information and Records from Staff Generally

A. Ordinarily, individual Board members will not make direct requests from non-management staff for information or system records. On matters that are pending before the Board for consideration at a noticed meeting, a Board member seeking


information should direct his/her request to the Retirement AdministratorChief Executive Officer, who shall then provide the information to the Board member or seek further direction from the Chair or Vice Chair, as appropriate. Information provided in response to an inquiry from an individual Board member shall be provided in a timely manner to all other Board members.

VII. Member Records

A. SJCERA is obligated under various laws to keep member records confidential, except as disclosure may be necessary to the administration of the retirement system or as ordered by a court of competent jurisdiction. See., e.g., Government Code §Section 31532. Accordingly, disclosure of confidential member records to individual Board members should only be made for the purpose of the conduct of SJCERA’s business, upon the prior approval of the Chair or the Vice Chair, when the Chair is unavailable.

B. Board members shall take all steps reasonably necessary to assure that the disclosure of confidential member records to them does not result in further, non-privileged disclosure to third parties, whether directly or indirectly.

VIII. Board Member Communications with External Parties

A. In general, in communicating with external parties, the following guidelines will apply:

1. The purpose of any communications by members of the Board shall be consistent with their sole and exclusive fiduciary duty to represent the interests of all plan members;

2. Board members and SJCERA management are expected to respect the decisions and policies of the Board in external communications even if they may have opposed them or disagreed with them during Board deliberations;

3. Individual Board members shall not speak for the Board as a whole unless authorized by the Board to do so; and

4. In external communications, Board members are expected to disclose when they are not representing an approved position of the Board of Retirement.

B. When interviewed, or otherwise approached by the media for information concerning the affairs of SJCERA, members of the Board shall refrain from making any unilateral commitments on behalf of the Board or SJCERA.

C. All inquiries of members of the Board from any media source or publication shall be directed to the Retirement AdministratorChief Executive Officer for coordinated response or preparation of a news release.

D. To help ensure the accuracy of any material written for the purpose of publication by members of the Board, in their capacity as such, and to ensure that neither SJCERA, the Board, or such member of the Board is placed at risk thereby, all such material shall be reviewed by the Retirement AdministratorChief Executive Officer or legal counsel prior to being submitted for publication.


XII.IX. Policy Review

A. Staff shall review this Policy at least once every three years to ensure that it remains relevant, appropriate, and in compliance with section 81000 of the California Government Code. Any revisions or amendments to this policy must be approved by the Board of Retirement in accordance with the bylaws.

XIII.X. History

04/13/2007 Board adopted policy 06/29/2018 Reviewed, no content changes, staff updated format 04/12/2019 Policy Review section amended to at least once every three years xx07/xx12/2019 Modified outline numbering and code citations, non-

substantive corrections.

Certification of Board Adoption: 07/12/2019 Clerk of the Board Date


I. Purpose

A. The Board of Retirement recognizes that effective communication is integral to good governance. In order to achieve SJCERA’s mission and objectives, the Board must establish mechanisms for communicating clearly among Board members and with senior management, plan sponsors, plan members and external parties. The Board adopts this Policy to provide the Board as a whole, individual Board member, and staff with guidelines for the communications function of the Board.

II. Objectives

A. To encourage and facilitate open, accurate, timely and effective communications with all relevant parties.

B. To mitigate risks to SJCERA, the Board, and to Board members that may arise in connection with communications in areas such as governance, service quality, plan interpretation, adverse reliance by plan members and beneficiaries, and general public relations.

C. To balance the need to mitigate risk with the need for open and efficient communication.

III. Communications Among Board Members

A. The Board shall carry out its activities in accordance with the spirit of open governance, including the provisions of the Ralph M. Brown Act, California Government Code Section 54950, et seq. (the “Brown Act”), which include, but are not limited to:

1. Properly noticing and posting an agenda for Board and Committee meetings;

2. Allowing proper public comment on agenda items before or during consideration by the Board;

3. Properly describing all items to be considered in closed session in the notice or agenda for the meeting;

4. Not conducting or participating in a series of communications one at a time or in a group that in total constitutes a quorum of the Board or Committee, either directly or through intermediaries or electronic devices, for the purpose of developing a concurrence as to the action to be taken (a serial or secret meeting prohibited by the Brown Act); and

5. Ensuring materials are properly made available to members of the public upon request without delay.


CommunicationsPolicy


B. A member of the Board shall disclose information in his or her possession pertinent to the affairs of SJCERA to the entire Board in a timely manner.

C. During meetings of the Board and its Committees, Board members shall communicate in a straightforward, constructive manner with due respect and professionalism.

IV. Board Member Communications with Plan Members

A. Members of the Board shall mitigate the risk of miscommunication with plan sponsors, members and retirees, and potential liability through adverse reliance by third parties, by avoiding giving explicit advice, counsel, or education with respect to the technicalities of the plan provisions, policies, or processes.

B. Where explicit advice, counsel, or education with respect to the technicalities of the plan provisions, policies, or process is needed, Board members will refer inquiries to the Chief Executive Officer or appropriate designee. The Chief Executive Officer or such designee will inform the Board Member when and how the matter was resolved.

V. Board Member Communications with SJCERA Management

A. Board members with questions or concerns regarding any aspect of SJCERA operations shall direct them to the Chief Executive Officer or the Chief Executive Officer’s designee, who shall in turn direct staff as required.

B. Requests for information that require excessive expenditure of staff time or use of external resources, including professional service providers, shall, to the extent practicable:

1. Be consistent with the roles and responsibilities of the Board;

2. Be formally requested at Board or Committee meetings; and

3. Be directed to the Chief Executive Officer.

C. The Chief Executive Officer shall ensure that information requested by one or more Board members is made available to the entire Board.

D. Board members shall share any information in their possession pertinent to the affairs of SJCERA with the Chief Executive Officer in a timely manner. Similarly, the Chief Executive Officer shall ensure that all relevant and pertinent information is disclosed to all of the Board members in a timely manner.

VI. Board Member Requests for Information and Records from Staff Generally

A. Ordinarily, individual Board members will not make direct requests from non-management staff for information or system records. On matters that are pending before the Board for consideration at a noticed meeting, a Board member seeking information should direct his/her request to the Chief Executive Officer, who shall then provide the information to the Board member or seek further direction from the Chair or Vice Chair, as appropriate. Information provided in response to an inquiry from an individual Board member shall be provided in a timely manner to all other Board members.


VII. Member Records

A. SJCERA is obligated under various laws to keep member records confidential, except as disclosure may be necessary to the administration of the retirement system or as ordered by a court of competent jurisdiction. See, e.g., Government Code Section 31532. Accordingly, disclosure of confidential member records to individual Board members should only be made for the purpose of the conduct of SJCERA’s business, upon the prior approval of the Chair or the Vice Chair, when the Chair is unavailable.

B. Board members shall take all steps reasonably necessary to assure that the disclosure of confidential member records to them does not result in further, non-privileged disclosure to third parties, whether directly or indirectly.

VIII. Board Member Communications with External Parties

A. In general, in communicating with external parties, the following guidelines will apply:

1. The purpose of any communications by members of the Board shall be consistent with their sole and exclusive fiduciary duty to represent the interests of all plan members;

2. Board members and SJCERA management are expected to respect the decisions and policies of the Board in external communications even if they may have opposed them or disagreed with them during Board deliberations;

3. Individual Board members shall not speak for the Board as a whole unless authorized by the Board to do so; and

4. In external communications, Board members are expected to disclose when they are not representing an approved position of the Board of Retirement.

B. When interviewed, or otherwise approached by the media for information concerning the affairs of SJCERA, members of the Board shall refrain from making any unilateral commitments on behalf of the Board or SJCERA.

C. All inquiries of members of the Board from any media source or publication shall be directed to the Chief Executive Officer for coordinated response or preparation of a news release.

D. To help ensure the accuracy of any material written for the purpose of publication by members of the Board, in their capacity as such, and to ensure that neither SJCERA, the Board, or such member of the Board is placed at risk thereby, all such material shall be reviewed by the Chief Executive Officer or legal counsel prior to being submitted for publication.

IX. Policy Review



X. History

04/13/2007 Board adopted policy 06/29/2018 Reviewed, no content changes, staff updated format 04/12/2019 Policy Review section amended to at least once every three years 07/12/2019 Modified outline numbering and code citations, non-substantive

corrections


SJCERA BOARD POLICY / Computer Equipment Policy/ Page 1 of 3

I. Purpose

The purpose of this policy is to provide guidelines regarding the provision by SJCERA of computer hardware and software to Trustees and Staff in the conduct of business related to SJCERA.and arising from their responsibilities as members of the Board of Retirement.

II. Electronic Tablets and Data

Beginning June 2012, SJCERA will provide an electronic tablet, Cellular Data Service of up to 2 GB per month, and all applications needed to conduct Board business to each trustee and designated Staff members. If a trustee’s data usage exceeds 2 GB in a month, the user trustee will provide verification to the CEO SJCERA of the business reason for the excess usage. The device should only be used for SJCERABoard of Retirement business. The device should not be used as a hotspot for Internet activity, unless necessary to conduct SJCERA business. SJCERA will not provide or reimburse the cost of other services or supplies such as Internet, telephone, paper, toner, etc.

III. Use of Equipment and Software

A. Electronic devices provided by SJCERA are for SJCERA business use only and not for personal use. The devices are not to be used for personal reasons or by family members.

B. It is the user’s responsibility to ensure the security of the device at all times.

C. All information that is stored on the device is discoverable under law. There is no right to privacy with regard to the use of the device.

D. Downloading or installing software onto the device is not allowed without prior authorization from notification to SJCERA’s CEO or Information Systems Manager.

E. It is the user’s responsibility to ensure the equipment provided under this policy is being used only for SJCERA business and not for any other purpose.


ComputerEquipmentPolicy


F. Only retain six months’ worth of downloaded meeting agenda, recurring reports, or similar data on the provided devices.

G. SJCERA should immediately be notified if the device is lost or stolen and advise SJCERA staff of the contents on the device at that time, to the best of the trustee’s user’s ability.

H. Confidential information should be deleted from the device as soon as practicable. (Example: Agenda materials for a closed session of a Board or Committee meeting should be deleted as soon as possible following adjournment of the meeting during which the closed session was held.)

IV. Disposition of Electronic Tablet, Computer Equipment and Software

Pursuant to Rresolution 2009-05-05 the Board of Retirement authorizes the Chief Executive Officer to sell, donate, or dispose of surplus furniture and equipment.

When equipment is provided by SJCERA to a trustee pursuant to this policy as originally adopted or subsequently revised, is replaced with new equipment provided pursuant to this policy, or the usertrustee concludes his or her service to SJCERAas a member of the Board of Retirement, the trustee user shall return the equipment provided by SJCERA to SJCERA for redeployment or disposition using either County surplus or replicating the County’s policy of using a third party public auction site for sale of all surplus equipment or furniture.

V. Devices Not Owned by SJCERA

A trustee or staff member may use an electronic tablet or other equipment not owned or provided by SJCERA in the conduct of business related SJCERAto and arising from responsibilities as a member of the Board of Retirement. When a trustee or staff member uses such device(s) is used, the trustee or staff member will acknowledge and abide by the “Guidelines for Use of Electronic Devices Not Owned by SJCERA,” .”as may be revised periodically without formal revisions of this policy.

This policy shall apply to all trustees and to any staff member or counsel to whom equipment has been provided.

VI. Policy Review Staff shall review this Policy at least once every three years to ensure that it remains relevant, appropriate, and in compliance with section 81000 of the


California Government Code. Any revisions or amendments to this policy must be approved by the Board of Retirement in accordance with the bylaws.

VII. History 01/14/2011 Adopted by Rresolution 2011-01-01 06/08/2012 Amended by Rresolution 2012-06-02 02/12/2016 Amended by Rresolution 2016-02-01 04/13/2018 Amended by Rresolution 2018-04-01 06/29/2018 Staff reviewed, no content changes required; updated format 04/12/2019 Policy Review section amended to at least once every three

years 067/12/2019 Amended for technical adjustments

Certification of Adoption:

07/12/2019 04/12/2019 Clerk of the Board Date

Related Statutes: California Government Code Sections 8314 and 81000 et seq.


I. Purpose

The purpose of this policy is to provide guidelines regarding the provision by SJCERA of computer hardware and software to Trustees and Staff in the conduct of business related to SJCERA.

II. Electronic Tablets and Data

Beginning June 2012, SJCERA will provide an electronic tablet, Cellular Data Service of up to 2 GB per month, and all applications needed to conduct Board business to each trustee and designated Staff members. If data usage exceeds 2 GB in a month, the user will provide verification to the CEO of the business reason for the excess usage. The device should only be used for SJCERA business. The device should not be used as a hotspot for Internet activity, unless necessary to conduct SJCERA business. SJCERA will not provide or reimburse the cost of other services or supplies such as Internet, telephone, paper, toner, etc.

III. Use of Equipment and Software

A. Electronic devices provided by SJCERA are for SJCERA business use only and not for personal use. The devices are not to be used for personal reasons or by family members.

B. It is the user’s responsibility to ensure the security of the device at all times.

C. All information that is stored on the device is discoverable under law. There is no right to privacy with regard to the use of the device.

D. Downloading or installing software onto the device is not allowed without prior authorization from SJCERA’s CEO or Information Systems Manager.

E. It is the user’s responsibility to ensure the equipment provided under this policy is being used only for SJCERA business and not for any other purpose.

F. Only retain six months’ worth of downloaded meeting agenda, recurring reports, or similar data on the provided devices.


ComputerEquipmentPolicy


G. SJCERA should immediately be notified if the device is lost or stolen and advise SJCERA staff of the contents on the device at that time, to the best of the user’s ability.

H. Confidential information should be deleted from the device as soon as practicable. (Example: Agenda materials for a closed session of a Board or Committee meeting should be deleted as soon as possible following adjournment of the meeting during which the closed session was held.)

IV. Disposition of Electronic Tablet, Computer Equipment and Software

Pursuant to Resolution 2009-05-05 the Board of Retirement authorizes the Chief Executive Officer to sell, donate, or dispose of surplus furniture and equipment.

When equipment is provided by SJCERA pursuant to this policy, is replaced with new equipment, or the user concludes his or her service to SJCERA, the user shall return the equipment to SJCERA for redeployment or disposition using either County surplus or replicating the County’s policy of using a third party public auction site for sale of all surplus equipment or furniture.

V. Devices Not Owned by SJCERA

A trustee or staff member may use an electronic tablet or other equipment not owned or provided by SJCERA in the conduct of business related SJCERA. When such device(s) is used, the trustee or staff member will acknowledge and abide by the “Guidelines for Use of Electronic Devices Not Owned by SJCERA.”

This policy shall apply to all trustees and to any staff member or counsel to whom equipment has been provided.

VI. Policy Review Staff shall review this Policy at least once every three years to ensure that it remains relevant, appropriate, and in compliance. Any revisions or amendments to this policy must be approved by the Board of Retirement in accordance with the bylaws.

VII. History 01/14/2011 Adopted by Resolution 2011-01-01 06/08/2012 Amended by Resolution 2012-06-02 02/12/2016 Amended by Resolution 2016-02-01 04/13/2018 Amended by Resolution 2018-04-01


06/29/2018 Staff reviewed, no content changes required; updated format 04/12/2019 Policy Review section amended to at least once every three

years 07/12/2019 Amended for technical adjustments

Certification of Adoption:

07/12/2019 Clerk of the Board Date

Related Statutes: California Government Code Sections 8314 and 81000 et seq.

SJCERA BOARD POLICY / Conflict of Interest Policy / Page 1 of 4

I. Purpose

A. The Political Reform Act (Government Code Section 81000, et seq.), requires state

and local government agencies to adopt and promulgate Conflict of Interest Codes. The Fair Political Practices Commission has adopted a regulation, 2 Cal. Code of Regs. Section 18730, which contains the terms of a standard conflict of interest code. It can be incorporated by reference and may be amended by the Fair Political Practices Commission after public notice and hearings to conform to amendments in the Political Reform Act.

Therefore, the terms of Section 18730 of Article 2 of Chapter 7 of Division 6 of Title 2 of the California Code of Regulations and any amendments thereto adopted by the Fair Political Practices Commission are hereby incorporated by reference and, along with the Disclosure Categories, attached and incorporated herein as Attachment 1, constitute the Conflict of Interest Code of the San Joaquin County Employees' Retirement Association (SJCERA).

II. Filing Requirements A. Pursuant to Section 4 of the standard Conflict of Interest code (Section 18730),

persons identified in all Disclosure Categories shall file Statements of Economic Interest with SJCERA. Statements filed by Members of the Board of Retirement and the Chief Executive Officer will be forwarded to the County Registrar of Voters, with a copy retained by SJCERA. Statements filed by all other persons will be retained by SJCERA and listed in a certification filed with the County Registrar of Voters. All statements filed are public records open for public inspection and reproduction pursuant to Section 81008 of the California Government Code.

B. Pursuant to Section 87314 of the California Government Code as added by Chapter

702, Statutes of 2010, attached and incorporated herein is an Appendix entitled “Agency Positions that Manage Public Investments for the Purpose of Section 87200 of the Government Code.” Also as required, this Appendix shall remain posted on the SJCERA website in a manner that is easily identifiable and accessible.

C. Responsibility for accurately reporting disclosable interests rests solely with the

person(s) required to file pursuant to statute or this code and not with SJCERA.


ConflictofInterestPolicy


III. Policy Review


IV. History

08/091991 First Adopted by the Board of Retirement 02/09/1996 Disclosure Categories Revised by Resolution No. 1996-02-02 08/09/2002 Disclosure Categories Revised by Resolution No. 2002-08-01 07/14/2006 Disclosure Categories Revised by Resolution No. 2006-07-02 04/11/2008 Disclosure Categories Revised by Resolution No. 2008-04-04 (First

established standard policy format) 12/17/2010 Disclosure Categories Revised and Appendix Added by Resolution No.

2010-12-04 05/09/2014 Disclosure Categories, Statutory References, and Policy Wording

Revised by Resolution No. 2014-05-02 06/29/2018 Reviewed, no content changes, staff updated format 04/12/2019 Policy Review section amended to at least once every three years 07/xx/2019 Amended per County’s direction to send ROV certifications and retain

statements on all filers.

Certification of Board Adoption: Clerk of the Board Date


ATTACHMENT 1

SAN JOAQUIN COUNTY EMPLOYEES' RETIREMENT ASSOCIATION CONFLICT OF INTEREST CODE

DISCLOSURE CATEGORIES

Group A - Officials/Consultants: (Required to file pursuant to Government Code Section 87200)

Member of the Board of Retirement Investment Consultants

External Managers (as defined in Government Code Section 82025.3 as it may be amended from time to time)

Group B – Designated Employees: (Required to file pursuant to this Conflict of Interest Code)

Chief Executive Officer Assistant Chief Executive Officer

Chief Investment Officer Retirement Financial Officer

Departmental Systems Information Manager

Persons identified in all Disclosure Categories shall report on the following interests as defined in, and by completing, the California Fair Political Practices Commission’s Statement of Economic Interests Form 700:

a. Investments b. Interests in Real Property c. Income, Loans, and Business Positions d. Income – Gifts e. Travel Payments, Advances, and Reimbursements


APPENDIX


Agency Positions that Manage Public Investments for Purposes of Section 87200 of the California Government Code

Positions of the Board of Retirement:

First Member: San Joaquin County Treasurer-Tax Collector Second Member: Active General Member of SJCERA – elected Third Member: Active General Member of SJCERA – elected Fourth Member: Appointed by the Board of Supervisors Fifth Member: Appointed by the Board of Supervisors Sixth Member: Appointed by the Board of Supervisors - may be a

County supervisor Seventh Member: Active Safety Member of SJCERA – elected Alternate Seventh Member: Active Safety Member of SJCERA - elected Eighth Member: Retired Member of SJCERA – elected Alternate Retired Member: Retired Member of SJCERA – elected Ninth Member: Appointed by the Board of Supervisors


I. Purpose

A. The Political Reform Act (Government Code Section 81000, et seq.), requires state

and local government agencies to adopt and promulgate Conflict of Interest Codes. The Fair Political Practices Commission has adopted a regulation, 2 Cal. Code of Regs. Section 18730, which contains the terms of a standard conflict of interest code. It can be incorporated by reference and may be amended by the Fair Political Practices Commission after public notice and hearings to conform to amendments in the Political Reform Act.

Therefore, the terms of Section 18730 of Article 2 of Chapter 7 of Division 6 of Title 2 of the California Code of Regulations and any amendments thereto adopted by the Fair Political Practices Commission are hereby incorporated by reference and, along with the Disclosure Categories, attached and incorporated herein as Attachment 1, constitute the Conflict of Interest Code of the San Joaquin County Employees' Retirement Association (SJCERA).

II. Filing Requirements A. Pursuant to Section 4 of the standard Conflict of Interest code (Section 18730),

persons identified in all Disclosure Categories shall file Statements of Economic Interest with SJCERA. Statements will be retained by SJCERA and listed in a certification filed with the County Registrar of Voters. All statements filed are public records open for public inspection and reproduction pursuant to Section 81008 of the California Government Code.

B. Pursuant to Section 87314 of the California Government Code as added by Chapter

702, Statutes of 2010, attached and incorporated herein is an Appendix entitled “Agency Positions that Manage Public Investments for the Purpose of Section 87200 of the Government Code.” Also as required, this Appendix shall remain posted on the SJCERA website in a manner that is easily identifiable and accessible.

C. Responsibility for accurately reporting disclosable interests rests solely with the

person(s) required to file pursuant to statute or this code and not with SJCERA.


ConflictofInterestPolicy


III. Policy Review


IV. History

08/091991 First Adopted by the Board of Retirement 02/09/1996 Disclosure Categories Revised by Resolution No. 1996-02-02 08/09/2002 Disclosure Categories Revised by Resolution No. 2002-08-01 07/14/2006 Disclosure Categories Revised by Resolution No. 2006-07-02 04/11/2008 Disclosure Categories Revised by Resolution No. 2008-04-04 (First

established standard policy format) 12/17/2010 Disclosure Categories Revised and Appendix Added by Resolution No.

2010-12-04 05/09/2014 Disclosure Categories, Statutory References, and Policy Wording

Revised by Resolution No. 2014-05-02 06/29/2018 Reviewed, no content changes, staff updated format 04/12/2019 Policy Review section amended to at least once every three years 07/12/2019 Amended per County’s direction to send ROV certifications and retain

statements on all filers.



ATTACHMENT 1


DISCLOSURE CATEGORIES

Group A - Officials/Consultants: (Required to file pursuant to Government Code Section 87200)

Member of the Board of Retirement Investment Consultants

External Managers (as defined in Government Code Section 82025.3 as it may be amended from time to time)

Group B – Designated Employees: (Required to file pursuant to this Conflict of Interest Code)

Chief Executive Officer Assistant Chief Executive Officer

Chief Investment Officer Retirement Financial Officer

Departmental Systems Information Manager

Persons identified in all Disclosure Categories shall report on the following interests as defined in, and by completing, the California Fair Political Practices Commission’s Statement of Economic Interests Form 700:

a. Investments b. Interests in Real Property c. Income, Loans, and Business Positions d. Income – Gifts e. Travel Payments, Advances, and Reimbursements


APPENDIX


Agency Positions that Manage Public Investments for Purposes of Section 87200 of the California Government Code

Positions of the Board of Retirement:

First Member: San Joaquin County Treasurer-Tax Collector Second Member: Active General Member of SJCERA – elected Third Member: Active General Member of SJCERA – elected Fourth Member: Appointed by the Board of Supervisors Fifth Member: Appointed by the Board of Supervisors Sixth Member: Appointed by the Board of Supervisors - may be a

County supervisor Seventh Member: Active Safety Member of SJCERA – elected Alternate Seventh Member: Active Safety Member of SJCERA - elected Eighth Member: Retired Member of SJCERA – elected Alternate Retired Member: Retired Member of SJCERA – elected Ninth Member: Appointed by the Board of Supervisors

SJCERA BOARD POLICY / Disability Policy and Procedure Page 1 of 21

I. Purpose A. The purpose of this policy is to provide a procedure for acting upon

applications to the Board for rights, benefits and privileges inuring to memberMembers of SJCERA. It is intended that applications be fairly and expeditiously processed, that the applicant and the Board have fair notice of any required hearing, that the applicant have an opportunity to appear before the Board and present a case for approval of the application, that the Board is able to properly secure and consider sufficient facts to arrive at a true and fair decision on the application. For the purposes of a fair hearing, the Board shall act as an independent body, finding facts and applying law. Upon receipt of the CEO’s recommendation, the Board may approve, dismiss, or deny the application, or take other appropriate action authorized by the California Employees’ Retirement Law (CERL) or the Public Employees’ Pension Reform Act (PEPRA).

II. Definitions

Unless the context otherwise requires, the definitions in this section shall govern the construction of this policy and procedures.

A. “Interested Party” means any person, including an applicantApplicant, a memberMember to whom an applicationApplication pertains and, the Fund, and any authorized representatives of each of them, disclosed by the records of SJCERA or by the applicationApplication to have a properlegal interest in the subject matter of the hearing on the applicationApplication.

B. “Applicant” means aany memberMember of SJCERA, the head of the office or department in which the memberMember is or was last employed, the Board or its agents, or any other person on the member’s behalf, claiming benefits, rights, or privileges under the California Employees’ Retirement Law (CERL) or the Public Employees’ Pension Reform Act (PEPRA)..

C. “Application” means a written“Application” means a claim for benefits, rights, or privileges under CERL or PEPRA submitted to SJCERA by an applicantApplicant on a form authorized by SJCERA for that purpose.

D. “Application Packet” means the documents that an Applicant is required to provide to SJCERA before an Application will be deemed submitted or filed for processing and evaluation. These documents include: a completed and signed application form, completed and signed questionnaires, signed authorizations for release of information, all relevant medical records and reports, and such other documents and information reasonably required by SJCERA pursuant to


DisabilityRetirementPolicyandProcedure


this policy and procedure.

C.E. “Board” means the San Joaquin County Board of Retirement.

D.F. “Board’s Counsel” means the County Counsel or other counsel designated by the Board pursuant to Government Code Section 31529.9.

E.G. “The Fund” means the trust fund created by the Board pursuant to Government Code Section 31588 and administered under the CERL solely for the benefit of the memberMembers and retired memberMembers of the system and theirhis/her survivors and beneficiaries. The Fund shall be a real partyParty in interest at all disability hearings conducted under this policy and independent legal counsel shall represent the Fund in such hearings.

H. “Disability Medical Provider” means medical, psychiatric, or other healthcare experts retained by SJCERA to examine Members and provide opinion evidence regarding permanent disability and causation issues.

I. “Retirement Office” means the physical office of the San Joaquin County Employees’ Retirement Association (SJCERA) currently located at 6 South El Dorado Street Suite 400, Stockton, CA 95202.

J. “Member” means the SJCERA member who is the subject of the Application or on whose behalf the Application is filed.

K. “Fund’s Counsel” means the attorney retained by SJCERA to represent the interests of the Fund in investigating and evaluating Applications, providing recommendations to SJCERA, and representing the Fund before the Board.

L. References to written notice or any notice in writing from or by SJCERA mean that such notice may be delivered electronically, by first class mail or certified mail at the discretion of the CEO.

III. Representation by Counsel

A. Any Interested Party, at that partyParty’s expense, may hire and be represented by an attorney subject to the provisions of this section. No Applicant is required to have an attorney at any time. It is advised, however, that Applicants consider retaining an experienced attorney knowledgeable in CERL and disability retirement matters.

If

B. In General, any Interested Party becomes represented by an attorney, either such pParty or such attorney shall promptly file with the Retirement Office and serve upon all other Interested Parties written notice of such representation, including the attorney’s name, address, and telephone number. Unless appearing with an Interested Party at a hearing, an attorney shall not be deemed counsel of record until such notice of representation is duly filed and served. The Interested Party shall be deemed represented by said attorney until written


notice of withdrawal or substitution of said attorney is filed with SJCERA and served on all other Interested Parties.

C. The failure to retain an attorney or to provide written notice of representation by

such attorney shall in no event be considered good cause, in and of itself, to delay any proceeding under this policy and procedure.

IV. Communication with Individual Board Members

The Board is the decision-maker for all disability retirement applications. As such, communications concerning the merits or substance of an application between any Board member and any Interested Party or his/her representatives are forbidden until the Board’s decision is final and the time to appeal by writ or otherwise has expired. This prohibition shall remain in effect during the pendency of any writ, appeal, and rehearing. A copy of the Ex pParte cCommunication pPolicy can be found at www.sjcera.org.

V. Confidential Records

All individual records of Members (including, but not limited to, reports, sworn statements, medical reports and records, applications, notices, orders, and findings and decision relating to an application for disability retirement) are confidential and shall not be disclosed by SJCERA to anyone except as set forth in these procedures, upon order of a court of competent jurisdiction, or upon written authorization by the Member.

III.VI. Application Process

A. A. Case Files. Each case shall be listed in the files of SJCERA under the name of

the member for or through whom benefits, rights, or privileges are claimed, whether the member is the applicant or not. Reference to the case shall be by the name of the member and SJCERA’s case number, if any.

Notice of Examination(s). Within ten (10) calendar days of the date an application Disability retirement Applications may be filed by SJCERA Members, the head of the office or department in which the Member is or was last employed, the Board or its agents, any other person acting on a Member’s behalf, or as authorized by CERL.

A. Claim

B. A claim for disability retirement is filed with SJCERA, SJCERA shall notify the applicant at the address shown on the application, by certified mail, of the following:

a) Applicant shall furnish, within 90-days of the filed application a physicians’ report (III.C of this policy) and any evidence in the form of written reports, certificates, and other documents which will be used by the applicant in support of the application.


b) The member who is the subject of an application for disability retirement benefits shall report at specific date(s) and time(s) to the physician(s) designated by SJCERA for one or more medical examination(s), as the CEO deems necessary. The medical examination may be a general evaluation of the health of the member or a specific evaluation by a certified medical specialist relative to the medical conditions allegedly causing the claimed disability. Should the member be unable to appear for the medical examination(s), the member shall notify SJCERA at least seventy-two (72) hours in advance of the appointment. Failure to notify and appear for the medical examination may result in the Board assessing medical cancellation fees to the member if there is not sufficient cause given. The CEO may require the member to be examined by one or more private physicians, the cost of such examination, including mileage expense from within the San Joaquin County region to the physician’s office, to be borne by the Fund.

c) Refusal of any member to submit to a medical examination required by SJCERA shall result in the dismissal of the member’s application.

d) A copy of this policy & the Ex Parte’ Communication policy shall be included with the notice.

C. Physicians Report Guidelines. Physicians’ reports submitted by members as

evidence shall be in written form and shall contain, but not be limited to, the following information relating to the member: 1. History of the injury or illness;

2. The member’s medical complaints;

3. Past medical history;

4. Family medical history;

5. Source of all facts set forth in the history and complaints;

6. Findings on examination; Opinion as to whether the member is substantially incapacitated to

perform the member’s normal and usual duties of the member’s employment; with or without accommodation.shall be

7. If accommodation is required, identify the restrictions that must be accommodated.

8. Cause of the substantial incapacity, if any;

9. Medical treatment indicated;

10. Likelihood of permanent disability;

11. Opinion as to whether or not the member’s incapacity is a result of


an injury or disease arising out of and in the course of employment and whether such employment contributes substantially to the incapacity;

12. Opinion as to whether or not the member’s incapacity is due to in in- temperate use of alcoholic liquor or drugs, or so far as the medical examination discloses, willful misconduct;

13. Opinion as to whether or not the member’s incapacity would preclude the member from performing any employment in the county service; and

14. The reasons for these opinions.

15. Each physician’s report must be in affidavit form and include this statement signed by the physician: “I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct and that this report was made the ___day of ________, 20__, at ______, City of ______________, CA., (Signature)

D. Release of Medical Records

1. Every member to whom an application pertains for disability retirement or service- connected death benefits shall execute and deliver to SJCERA one or more written consents for release of the member’s medical records and pertinent information and provide a listing of names and addresses of all the member’s medical providers.

E. Medical Records Received Within 90-Days

1. All physicians’ reports must be received by SJCERA within 90-days of the by filing of the application or the application will be subject to dismissal by the Board for failure to diligently pursue the application. Applicants may request time extensions in writing to the Board. The Board may extend the application period for good cause. If the Board dismisses the application or denies the extension, the applicant may reapply, subject to a new application date for determination of benefits.with the Retirement Office a complete Application Packet. The Application shall not be deemed complete or filed until the Applicant has submitted all of the following to the Retirement Office:

F. Process Prior to Hearing. Before a hearing is set or an administrative

recommendation is made to the Board, the following shall be completed:

a) All medical information requested of the applicant by SJCERA shall be submitted to SJCERA. An Application, on a form approved by SJCERA for that purpose, signed and complete with all requested information therein. The Application shall include a specific description of the injuries, conditions, and diagnoses that give rise to that alleged


permanent incapacity. Signed authorizations

1. All medical records requested by the applicant or SJCERA as specified in section III have been completed and written reports thereof have been submitted to SJCERA and to the applicant or the applicant’s medical or legal representative.

2. All medical examinations required of the applicant have been completed and reports thereof have been submitted to SJCERA and the applicant or the applicant’s medical or legal representative.

a)b) The member’s written consents for release of medical records and pertinentother information have been submitted to SJCERA.deemed by SJCERA relevant to a full and complete evaluation of the Application.

3. Written notice from each party stating whether the party will be represented by legal counsel or other representative has been submitted to SJCERA. The notice shall contain the name, address, and telephone number of the party’s counsel or representative, if any. If a party will be represented by other than legal counsel, that party shall provide written notice to SJCERA authorizing the person to represent the member in relation to the member’s application for benefits from SJCERA.

c) Dismissal of ApplicationA physician's statement in a form approved by SJCERA for that purpose complete with all requested information therein, signed and dated by the physician, stating that the Member is permanently incapacitated.

d) Copies of all medical/psychiatric reports and records relevant to the claims made in the Application.

e) All other documents and information that support the granting of the Application.

f) An employer questionnaire on a form approved by SJCERA for that purpose completed with all requested information therein, signed and dated by the head of the office or department in which the memberMember is or was last employed.

B. Further Information Required from Applicant

1. If at any time during the pendency of the Application, the Applicant changes, in any material way, the facts or claims set forth in the Application, the Applicant shall immediately file with the Retirement Office and serve on all Parties written notice of such change. The failure to do so, may, in the


discretion of the Board, preclude the Applicant from asserting the facts so alleged or introducing evidence with respect thereto. Notice of any such amendment shall be given, in writing, to Retirement Office within ten (10) days of the date thereof, and in no event later than thirty (30) days prior to any proceeding before the Board or referee.

2. At any time during the pendency of an Application or in connection with any

re-evaluation of the memberMember’s disability status permitted under CERL, the Board or SJCERA may, by written notice to the Applicant or Member, require that the Applicant or Member produce within 30 days any or all of the following items. Said items shall be accompanied by a declaration (on a form approved by SJCERA for that purpose) signed by the Applicant or Member under penalty of perjury affirming that the Applicant or Member has made a diligent search and reasonable inquiry and that no other responsive items exist.

a) Copies of records, reports, notes, statements, documents, photographs,

or other writings, within the definition of Evidence Code Section 250.

b) A narrative report of the Member’s current medical condition, and a list of the names and contact information for all of the Member’s healthcare providers.

c) Written responses to written questions concerning any matter that is

reasonably calculated to lead to the discovery of evidence that would be admissible at a hearing. Said written responses shall be accompanied by a declaration (on a form approved by SJCERA for that purpose) signed by the Applicant or Member under penalty of perjury affirming the truthfulness and completeness of the responses.

3. Any Interested Party shall be entitled to notice and take oral depositions in the manner prescribed by the California Code of Civil Procedure, except that there shall be no distinction between the depositions of expert and non-expert witnesses, and the provisions of the California Code of Civil Procedure pertaining to the depositions of expert witnesses shall not apply. The pParty noticing a deposition shall pay any and all deposition costs and the fees to which a witness may be entitled.

4. If the Applicant or Member fails or refuses to comply with any notice or demand made pursuant to this section, SJCERA may do the following:

a) Suspend action on the Application until such time as the Applicant or

Member complies in full with all such requests. SJCERA shall give all Parties written notice of the suspension. During the period of suspension none of the applicable time limits with respect to the processing of the


Application shall apply.

b) If the Applicant or Member fails, after the passage of one hundred twenty (120) days, from the date of suspension as set forth above, within thirty (30) days thereafter, and further provided that there is an absence of good cause for the failure specified herein, the Board may declare that the Application is dismissed with prejudice.

C. Initial review of the Application Packet

Upon receiving a completed Application Packet, SJCERA shall, within thirty (30) days, based upon eligibility and evidence provided, notify the Applicant, of whether the application materials provided are sufficient to proceed and provide information the acceptance or rejection of his/her application and provide information regarding the next steps. :

Within () days notify the Applicant, of .

The failure of an Applicant to diligently pursue an Application

1. The failure of an applicant to diligently pursue an application, including the submission of any and all written documentation required by this policy, may result in the dismissal of the application. Such a dismissal may cause the loss of certain monetary benefits or other rights and privileges.Application. Upon the Board’s own motion or a recommendation by the CEO, and written notice to the applicantApplicant, the Board may dismiss any applicationApplication which the Board finds, upon consideration of the facts presented to it, is not being diligently pursued.

G.A. Setting the Matter for Hearing D. Investigation and Evaluation

Before an administrative recommendation is made to the Board or a hearing before a referee is set, the following shall be completed:

1. Within 90 days after an Application is filed, SJCERA will request any and all

records that may be relevant to the determination of the Application. These may include,, without limitation but are not necessarily limited to, the following: medical, psychiatric, psychological, chiropractic, physical therapy, and acupuncture records; radiology and ultrasound records; electrodiagnostic testing records; laboratory (blood, urine, pathology, etc.) testing records; psychological testing records; personnel and human resources records; incident and injury reports; reports prepared by any law


enforcement agency; the Member’s complete worker’s compensation file pertaining to the subject claim and other potentially related claims including all medical records, reports, deposition transcripts, etc.; HIV and alcohol treatment/testing records in cases where these conditions are at issue; etc.

2. All records pertaining to the Application will be provided to the Disability

Medical Provider and the Fund’s Counsel.

1. The If the physicians’ reports submitted to or obtained by SJCERA as described in this policy contain medical opinions that differ with regard to the existence, permanence, or cause of a disability claimed by the applicant, the CEO shall set the matter of a service or non-service connected disability retirement for an administrative hearing before a referee. The timing, notice, certifications, and any other conditions for the setting of such hearing shall be as specified in this policy.

3. Fund’s Counsel and/or the Disability Medical Provider will review and summarize the records. The Fund’s Counsel will coordinate independent medical examination(s) as necessary and appropriate.

4. Additional records may be requested or subpoenaed of the Applicant or others.

5. All medical examinations required of the Member are completed and reports thereof have been submitted to SJCERA.

6. The Fund’s Counsel will review medical findings and other evidence and make recommendations to the CEO.

7. Applicant is notified of pending action.

a) If the Fund’s Counsel determines the Applicant has met his/her burden of proof to show eligibility for a disability retirement benefit, staff will place the matter on the closed session consent calendar at a Board of Retirement meeting with a recommendation to grant the application.

b) If the Fund’s Counsel determines the Applicant has not met his/her burden of proof to receive a disability retirement benefit, the Applicant will be notified and given the option to request a hearing. (See below.)

E. Medical Examinations 1. Members willmay be required to undergo one or more medical or psychiatric


examinations by a physician or physicians of SJCERA’s choice as necessary to evaluate the conditions and diagnoses presented in the Application. Such examinations may be unnecessary in the following cases: (1) where the Member has already been examined by at least one qualified medical expert and there is overwhelming and undisputed medical evidence that the Member is permanently incapacitated, such that referring the Member to another examination would be futile; and (2) where the Applicant has not submitted any substantial medical evidence that the Member is permanently incapacitated, such that referring the Member to an examination would be unjustified.

2. Members must cooperate during the medical or psychiatric examination

process and, if requested, must promptly provide additional medical records and information, or submit to additional examinations.

3. SJCERA shall at least fifteen (15) days before the appointment date, serve

the Member (and all Parties) with written notice of the date, time and place of the medical or psychiatric examination Notice may be served electronically and/or by first-class mail through the US Postal Service. If the Member is unable to keep the examination appointment, the Member or his/her attorney shall notify SJCERA or the Fund’s Counsel in writing of such fact at least ten (10) calendar days before the scheduled examination. Failure to provide such notice and appear for the medical examination without good cause may result in the Board assessing medical cancellation fees against the Member.

4. The cost of such examinations shall be borne by SJCERA. If the examination

is at a facility located outside of San Joaquin County, Members may request reimbursement from SJCERA for mMileage, travel expenses, and other costs incurred to attend such examinations. shall be borne by the Member.

5. A Member’s failure to submit to a duly scheduled examination or failure to cooperate with the examination without good cause shall result in the dismissal of the Application with prejudice.

F. CEO’s Recommendation:

The CEO may recommend to the Board that a memberMember be retired for service-connected or nonservice-connected disability retirement benefits. The recommendation shall be in writing and include:

1. A determination of permanent physical or mental incapacity for the

performance of the member’sMember’s duties;

2. A determination whether the incapacity is the result of an injury or disease arising out of and in the course of the member’sMember’s employment;


3. A summary of the evidence in support of the recommendation.

G. Setting the Matter for Hearing H. Board Actions

1. Upon receipt of the CEO’s recommendation, the Board may approve, dismiss, or deny the application, or take other appropriate action authorized by the CERL.

I. Certification of Information

1. In the absence of an administrative recommendation that an application be approved, and before a hearing date is set, the applicant shall certify in writing to SJCERA that all information and evidence, including the name and address of all witnesses to be called, necessary for the determination of the issues raised by the application has been completed and disclosed to SJCERA. A written Statement of Issues shall be prepared by the CEO in conjunction with all other written evidence pertaining to the application. Upon request of the Board Chairperson, Board counsel shall assist in the Board determination of the issues.

J. Timeliness of Certification

1. Unless otherwise allowed by the Board upon a showing of good cause, the certification of information shall be filed with SJCERA within 180 days of the date the application was filed. Thereafter, no augmentation of the evidence, witness list, issues or other information necessary for a determination of the issues shall be allowed except by the Board or referee upon a showing of good cause. Any party failing to file the required certification within the time limits set by this policy or by the Board or referee shall be precluded from presenting any evidence or argument on that party’s behalf at any hearing on the application.

K. Hearings Set

1. Unless expressly waived in writing by the applicant, hearings shall be set for all applications for disability retirement, which are not otherwise approved by the Board or for any other matter in which the decision of the Board would cause a deprivation of any vested retirement right or benefit of the applicant or applicant’s beneficiary.

L. Scheduling the Hearing

1. A If, after investigation, SJCERAthe CEO or designeedetermines that the Applicant has failed to meet his/her burden of proof regarding any element legally necessary for the granting of the Application, SJCERA will notify the Applicant of its decision in writing, giving the applicant the following options, if applicable:


a) If the Applicant has met his/her burden of proof regarding permanent disabilityincapacity but not service connectedness, the Applicant may amend the Application from service connected to non-service connected to permit SJCERA to recommend that the Board grant a non-service connected disability retirement without need for hearing.

b) Stipulate to waive the right to hearing and withdraw the Application with prejudice.

c) Request a hearing on the applicationall issues presented by the Application.

2. If SJCERA does not receive a written response from the Applicant within thirty (30) calendar days after issuing the above referenced written notice, SJCERA will recommend that the Board deny the Application with prejudice for lack of diligence at the next available regularly scheduled meeting of the Board of Retirement.

3. In cases where SJCERA gives the Applicant the option of choosing to amend the Application from service connected to non-service connected disability retirement and the Applicant chooses to do so, SJCERA will recommend that the Board grant non-service connected disability retirement.

4. If the Applicant requests a hearing, the hearing on the Application shall be held at the earliest date agreeable to the parties. The hearing shall be Parties. SJCERA will set the Application for hearing before a referee as follows:

a) A letter will notify the Applicant that SJCERA has referred the matter to hearing before a referee unless the Board determines the hearing shall be before the Board. When the date of the hearing is set, SJCERA shall immediately and no less than 30 days prior to the hearing notify all parties in writing of the and that a referee will be appointed and a hearing date. Ascheduled as soon as SJCERA receives the certification (see below). The letter will further advise that if SJCERA does not receive the certification within 30 calendar days, SJCERA will recommend that the Board dismiss the Application with prejudice for lack of diligence

a)b) The letter to the Applicant will include a list of issues to be determined at the hearing dateand the names and contact information of all witness that may not be rescheduled except by SJCERA upon a showing of good cause. The party requesting the rescheduling shall bear any expense incurred by any party as a result of the rescheduling, unless the Board determines otherwise.be called by the Fund’s Counsel to testify at the hearing

c) The letter to the Applicant will include an electronic copy of all medical


records, reports, and other documents in SJCERA’s file that may be introduced as evidence at the hearing.

d) Enclosed with the letter to the Applicant will be a certification form which will require that the Applicant certify that the Applicant has no documents to introduce as evidence at the hearing other than those provided to the Applicant in electronic form along with SJCERA’s letter. If there are additional documents, the Applicant must provide them to SJCERA along with the signed certification form. Any documents not produced with the certification will be barred from introduction as evidence at hearing.

e) The certification form will require that the Applicant state whether the Applicant will be represented by an attorney at the hearing and, if so, the name and contact information for the attorney.

f) The certification form will require that the Applicant list the names and contact information for any witnesses the Applicant intends to call to testify at the hearing. Any witnesses not identified by the Applicant on the certification shall be barred from testifying at the hearing.

g) The letter will also enclose a copy of SJCERA’s Disability Retirement Policy and Procedures.

h) Ten (10) calendar days before the hearing, the Fund’s Counsel will serve a hearing brief on the Applicant and the hearing referee. The brief will identify the issues to be determined at hearing, summarize the relevant facts, cite the relevant law, and present argument. To the extent possible, the brief will include as exhibits the documents the Fund’s Counsel intends to introduce as evidence at hearing. The Applicant may, but is not required to, submit a hearing brief as well.

M.H. Hearing before a Referee

A. Selecting the Referee

1. The referee shall be provided by the Office of Administrative Hearings of the State of California or by a prescreened panel of acceptable referees selected by SJCERA. Compensation for the referee shall be determined by the CEO and shall be paid by SJCERA.

B. Hearing Conduct; Subpoenas

2. The referee shall conduct a hearing in accordance with the hearing procedures set forth in this policy for hearing before the Board. Subpoena powers shall be vested in the Board officers and/or the referee in accordance with Government Code Section 31535. with the term “Referee” substituted for “Board” wherever warranted by the context.

C. Evidence, Findings,Subpoena powers shall be vested in the Board officers,


the CEO and Recommendation B.

3. The hearing before the referee shall be conducted in the manner set forth in accordance with Government Code Section V below, with the term “referee” substituted for “Board” wherever warranted by the context.31535.

4. After closing the hearing, the referee will prepare a summary of the evidence received, findings of fact, conclusion of law, and a recommended decision. In accordance with the provisions of Government Code Section 31533, the findings of fact and proposed recommendation of the referee shall be served on the CEO, who in turn shall mail distribute a copy to all parties.

4.5. Either Pparty may submit written objections to the referee’s recommended decision to SJCERA within ten (10) calendar days from the date SJCERA mails distributes the notice to all parties. The written objections shall be incorporated into the record submitted to the Board for its consideration.

I. Board’s Decision: Upon receipt and review of the recommended decision of the referee and any filed objections and response from the referee thereto, the Board may:

1. Approve and adopt the recommended decision of the referee, or,

2. Refer the applicationApplication to the referee for further hearing and/or consideration, or,

3. Require a written transcript or summary of all testimony plus all other evidence received by the referee to be submitted by the CEO to the Board. Following its receipt and review of the transcript and evidence. The, the Board shall:

a) Take action as is appropriate to the evidence and the provisions of the

CERL, or,

b) Refer the matter back to the referee with or without instruction for further proceedings, or,

c) Set the matter for hearing de novo before itself. The Board shall hear and decide the matter as if it had not been referred to the referee. Unless otherwise allowed by the Board, the hearing shall be confined to the evidence, witnesses, and issues set forth in the


certificationscertification and statement required by Section III.K of this policy.

D. Compensation for Referee

Compensation for the referee shall be determined by the CEO and shall be paid by SJCERA. IV.VII. Hearing before the Board

A. Stenographic Recording Required

1. Unless waived by all parties, a stenographic reporter shall record the proceedings of all hearings before the Board at SJCERA’s cost. Any transcription and copies shall be charged to the requesting Pparty. The hearing shall be considered closed unless requested by the applicant or the applicant’s representativeApplicant that the matter be conducted in open (public) session.

A.B. DetermineDetermining Issues

1. The Board shall determine all issues set forth in the written statement of issues required by Section III.K of this policy by a preponderance of the evidence, including the following, if applicable:

a) Whether the memberMember was employed prior to January 1, 1981,

and was required as a condition to such employment to execute a waiver for the alleged disability under Government Code Section 31009;

b) Whether the memberMember is disabled, that is, whether there is a substantial mental or physical incapacity to perform the member’sMember’s normal and usual employment duties;

c) Whether the disability is permanent, that is, whether as a reasonable medical probability the disability is likely to persist indefinitely;

d) Whether, for non-service-connected disability, the memberMember has completed five (5) years of service;

e) Whether for a service-connected disability:

i. the incapacity is a result of injury or disease

ii. the injury or disease arose out of and in the course of the member’sMember’s employment; and

iii. the employment contributed substantially to the incapacity;

f) Whether, for membersMembers described in Government Code Sections 31720.5, 31720.6, 31720.7 or 31720.9 alleging heart trouble, cancer, blood-borne infectious disease, or illness due to exposure to


biochemical substances:

i. the memberMember has completed five (5) years of safety service, if required;

ii. the memberMember has the condition alleged;

iii. the condition developed while a qualified memberMember of SJCERA.;

iii.iv. and whether the presumption of the relevant Government Code Section has been rebutted

B.C. Hearing Process

1. All hearings before the Board shall require the attendance of at least the same seven (7) members of the Board throughout and shall proceed in the following manner:

a) The Chairperson shall announce the matter and ask for appearances

by all parties, which shall be recorded in the minutes and in the official file of the hearing. The Chairperson shall ask if all parties are ready to proceed and, if so, or if the Chairperson otherwise rules for good cause, the hearing shall be opened.

b) The Chairperson or Clerk shall mark for identification only, and not as evidence, all papers inexhibits submitted by the official fileparties, which should include:

i. the applicationcompleted Application Packet;

ii. the notice of hearing, with proof of service on the applicantApplicant;

iii. other documents in the official file required to be submitted by these this policy including, without limitation, relevant medical reports, medical records, employment records, worker’s compensation records, etc.

c) The Clerk or other person authorized by the Chairperson shall read the applicationApplication and the statement of issues.

d) Unless otherwise determined by the Board for good cause, the applicantApplicant shall have the burden of producing evidence necessary to establish the issues.

e) Each partyParty may make an opening statement.

f) Each other partyParty then shall present evidence, in the order determined by the Chairperson in accordance with each partyParty’s


burden of proof and burden of presenting evidence to establish such proof.

g) Each partyParty may cross-examine witnesses.

h) Rebuttal evidence may be presented.

i) Each partyParty may make closing arguments.

j) Upon the conclusion of all closing arguments, the Chairperson shall determine if all parties are ready to submit the matter for decision, and if so, or if the Chairperson otherwise orders for good cause, the Chairperson shall close the hearing and declare the matter submitted to the Board for decision upon the evidence and the instructions of law of its counselby the Board’s Counsel.

k) At the conclusion of the hearing, the Board may recess into closed session of the Board members and its Board counselthe Board’s Counsel to deliberate on the matter, to develop its findings and reach a decision.

l) At or before the next regularly scheduled meeting or specially called meeting, the Board shall render its decision orally, in open session.

m) Decision of the Board. Unless waived by all parties to the hearing, any finding or decision of the Board must be made by a majority vote of the members present throughout the hearing. A tie vote on any issue raised by the applicantApplication results in a failure to find in favor of that issue and constitutes a denial of the applicationApplication, or that portion of the applicationApplication, to which the issue relates. The alternate member may cast a ballot in the absence of a regular elected member if the alternate member has attended the entire hearing and has heard and considered all evidence and testimony involved.

C.D. Presiding Officer

The Chairperson shall preside over all hearings. The Chairperson shall exercise reasonable control over the proceedings and in addition to other duties, shall rule on the admissibility of evidence and shall order a partyParty to yield the floor when orderly and expeditious conduct of the hearing requires it. The Chairperson may permit questioning and other participation in the proceedings by Board members or others as will best serve the purpose of the hearing.

V.VIII. Rules of Evidence


A. Burden of Proof

The applicantApplicant has the burden of proving by a preponderance of the evidence each affirmative issue on which the applicationApplication depends as identified in the Statement of Issues submitted by the CEO.Fund’s Counsel. In addition, if the applicantApplicant seeks to assert one or more of the legislative presumptions afforded by Government Code Sections 31720.5 (heart trouble), 31720.6 (cancer), 31720.7 (blood-borne infectious disease), or 31720.9 (illness due to exposure to biochemical substances), then the applicantApplicant first must establish his/her or her entitlement to invoke the asserted presumption by offering prima facie evidence of each foundational element required by the applicable Government Code section(s), and the presumption(s) so invoked shall be rebuttable as provided in the applicable section(s).

B. Evidence

Oral evidence shall be taken only on oath or affirmation. Unless expressly waived by an opposing partyParty, all written evidence shall be sworn to or given under penalty of perjury, subject to Subsection E, below.

C. Witnesses

Each partyParty may call and examine witnesses, introduce exhibits, and cross-examine and impeach any witness on any matter relevant to the issues. If the applicantApplicant or any other partyParty does not testify on that partyParty’s own behalf, that partyParty may be called and examined as if under cross-examination under Evidence Code Section 776.

D. Refusal of Witness

Refusal by an applicantApplicant or partyParty to submit to examination or to answer relevant questions shall be grounds for considering those questions to be answered unfavorably to the refusing partyParty for the purpose of that hearing, and for denying the relief or benefits sought by the refusing partyParty.

E. Hearing Conduct

The hearing need not be conducted according to the technical rules of law relating to evidence and witnesses. Any relevant evidence shall be admitted if it is the sort of evidence on which responsible persons are accustomed to rely in the conduct of serious affairs, regardless of the existence of any common law or statutory rule that might make improper the admission of such evidence over objection in civil actions. Hearsay evidence may be used for the purpose of supplementing or explaining any direct evidence but shall not be sufficient in itself to support a finding unless it would be admissible over objection in civil actions.


F. Certified Copies

Certified copies of the reports and records of any governmental agency, division or bureau, will be accepted as evidence in lieu of the original thereof.

G. Deposition Transcripts/Video Recordings

Any PartyParty may offer, and the Board shall receive into evidence, any relevant deposition transcript and/or video recording thereof if: (1) the deposition was taken in the manner provided by law or by stipulation of the Parties; and (2) at least twenty (20) calendar days before the hearing the offering partyParty delivered a copy of the transcript and/or video recording of the deposition to all Parties along with notice of intent to introduce same into evidence. Nothing herein shall require or permit receiving into evidence any deposition testimony to which objection is property raised if such testimony would be inadmissible were the witness present and testifying at the hearing. Deposition transcripts/video recordings shall be admissible notwithstanding that the deponent is available to testify. Depositions of experts, including medical experts, may be introduced in lieu of live testimony pursuant to Code of Civil Procedure Section 2025.620(d)

G.H. Cross-Examination of Physician

The right of cross-examination of a physician on the physician’s written report shall be deemed waived and the report shall be considered direct non-hearsay evidence if the report has been filed with the Board in the form and manner required by Section III C above andtimely served uponon the parties on or before the date set for filing the certificationsas required by Section III.L of this policy, unless and the physiciandoctor is producednot called to testify as a witness at the hearing.

H. Medical Evidence from Applicant

1. The Board may require proof, including one or more medical examinations at the expense of the member, as it deems necessary or the Board upon its own motion may order a medical examination to determine the existence of the disability.

I. Subpoena Powers and Witness Fees

1. Subpoenas may be issued according to the CERL. Subpoenas shall be requested through the CEOBoard’s Counsel or the Fund’s Counsel who shall transmit the request to the Chairperson, Vice Chairperson or, Secretary or CEO for written approvalsignature. Subpoenas issued shall be transmitted to the partyParty requesting the subpoena, . The requestingwhich partyParty shall have the sole responsibility for serving and enforcing the subpoena. the requesting party shall be solely


responsibleand for paying all costs associated with the subpoena.

2. A written motion to quash a subpoena may be made to the Board on one or more of the following grounds, which shall be clearly and fully stated in the motion and supported by declarations under penalty of perjury:

a) Compliance will be unduly burdensome or against public policy.

b) The things subpoenaed are privileged by law.

c) The things subpoenaed are irrelevant or unnecessary to the proceedings.

d) The things subpoenaed have not been described with sufficient clarity to enable the witness to comply. Before it commences or continues with the proceeding, the Board shall wholly or partially grant or deny the motion to quash.

3. Witness fees and per diem. For expert witnesses, theThe partyParty making the requestcalling a witness to testify (whether by subpoena or otherwise) shall be solely responsible for allpaying any witness fees, mileage charges, and other costs associated with the witness’ testimony. Witness per diemNon-expert witness fees and mileage rates for subpoenaed witnessescharges shall be calculated as established by the Board from time-to-time.provided by law.

VI.IX. Rehearing Appeal

A. New Evidence. An applicantApplicant may petition for a rehearing before the

Board in the event additional evidence, which was not reasonably available to the applicantApplicant at the time of filing the applicationhearing, supports the disability retirement request. AApplication. A written petition for rehearing must be submittedfiled with the Retirement Office within sixty (60) days after the notification to the applicantApplicant of the decision of the Board is mailed to the applicantApplicant by U.S. mail;, first class postage prepaid.

B. Judicial Review. – In those cases where a partyParty or applicantApplicant is entitled to a judicial review of the proceedings before the Board, theany petition (Writfor writ of Mandate) to the Courtmandate shall be filed with the superior court within ninety (90) days from the date the notice of this Board’s decision is mailed to the partyParty or applicantApplicant or is delivered to the partyParty or applicantApplicant. Where a timely petition for rehearing is filed as provided in (a)A above, the time for filing an actiona petition for writ of mandate seeking judicial review shall expire ninety (90) days after SJCERA mails to the Applicant or partyParty (1) notice that the petition for rehearing is denied or (2) notice of the Board’s decision following a rehearing, whichever occurs later.


X. Law Prevails

A. In the event a conflict between this policy and the County Employees Retirement

Law, the Public Employees’ Pension Reform Act, or other applicable statutes arises, the law shall prevail.

VII.XI. Policy Review

A. Staff shall review this Policy at least oncepolicy every three years to ensure that it remains relevant, appropriate, and in compliance. Any revisions or amendments to this policy must, be approved by the Board of Retirement in accordance with the bylaws. Effective upon adoption.

VIII.XII. History

03/013/1/2018 Bylaw Sections 8, 9, 10 & 11 Converted to Board Policy and Board

of Supervisor approved Bylaws 06/28/2018 Staff updated format 08/10/2018 Modified the definitions of Applicant and Application to conform with

SJCERA’s adopted code sections 07/12/04/12/2019 Policy Review section amended to at least once every three

years

2019 Revised to include definitions, add requirements that an application must meet before being filed, allow the member to elect not to go to hearing, allow the use of depositions, clarify mileage reimbursement may be requested for out-of-county travel to SJCERA-scheduled examinations, and specify that SJCERA may determine an examination is not required in some cases.

Certification of Board Adoption:

Clerk of the Board Date


I. Purpose A. The purpose of this policy is to provide a procedure for acting upon

applications to the Board for rights, benefits and privileges inuring to Members of SJCERA. It is intended that applications be fairly and expeditiously processed, that the applicant and the Board have fair notice of any required hearing, and consider sufficient facts to arrive at a true and fair decision on the application. For the purposes of a fair hearing, the Board shall act as an independent body, finding facts and applying law. Upon receipt of the CEO’s recommendation, the Board may approve, dismiss, or deny the application, or take other appropriate action authorized by the California Employees’ Retirement Law (CERL) or the Public Employees’ Pension Reform Act (PEPRA).

II. DefinitionsUnless the context otherwise requires, the definitions in this section shall governthe construction of this policy and procedures.

A. “Interested Party” means any person, including an Applicant, a Member towhom an Application pertains, the Fund, and any authorized representatives of each of them, disclosed by the records of SJCERA or by the Application to have a legal interest in the subject matter of the Application.

B. “Applicant” means any Member of SJCERA, the head of the office or department in which the Member is or was last employed, the Board or its agents, or any other person claiming benefits, rights, or privileges under the CERL or PEPRA.

C. “Application” means a claim for benefits, rights, or privileges under CERL or PEPRA submitted to SJCERA by an Applicant on a form authorized by SJCERA for that purpose.

D. “Application Packet” means the documents that an Applicant is required to provide to SJCERA before an Application will be deemed submitted or filed for processing and evaluation. These documents include: a completed and signed application form, completed and signed questionnaires, signed authorizations for release of information, all relevant medical records and reports, and such other documents and information reasonably required by SJCERA pursuant to this policy and procedure.

E. “Board” means the San Joaquin County Board of Retirement.

F. “Board’s Counsel” means the County Counsel or other counsel designated by


DisabilityRetirementPolicyandProcedure


the Board pursuant to Government Code Section 31529.9.

G. “The Fund” means the trust fund created by the Board pursuant to Government Code Section 31588 and administered under the CERL solely for the benefit of the Members and retired Members of the system and his/her survivors and beneficiaries. The Fund shall be a real Party in interest at all disability hearings conducted under this policy and independent legal counsel shall represent the Fund in such hearings.

H. “Disability Medical Provider” means medical, psychiatric, or other healthcare experts retained by SJCERA to examine Members and provide opinion evidence regarding permanent disability and causation issues.

I. “Retirement Office” means the physical office of the San Joaquin County Employees’ Retirement Association (SJCERA) currently located at 6 South El Dorado Street Suite 400, Stockton, CA 95202.

J. “Member” means the SJCERA member who is the subject of the Application or on whose behalf the Application is filed.

K. “Fund’s Counsel” means the attorney retained by SJCERA to represent the interests of the Fund in investigating and evaluating Applications, providing recommendations to SJCERA, and representing the Fund before the Board.

L. References to written notice or any notice in writing from or by SJCERA mean that such notice may be delivered electronically, by first class mail or certified mail at the discretion of the CEO.

III. Representation by Counsel A. Any Interested Party, at that Party’s expense, may hire and be represented by

an attorney subject to the provisions of this section. No Applicant is required to have an attorney at any time. It is advised, however, that Applicants consider retaining an experienced attorney knowledgeable in CERL and disability retirement matters.

B. If any Interested Party becomes represented by an attorney, either such Party

or such attorney shall promptly file with the Retirement Office and serve upon all other Interested Parties written notice of such representation, including the attorney’s name, address, and telephone number. Unless appearing with an Interested Party at a hearing, an attorney shall not be deemed counsel of record until such notice of representation is duly filed and served. The Interested Party shall be deemed represented by said attorney until written notice of withdrawal or substitution of said attorney is filed with SJCERA and served on all other Interested Parties.

C. The failure to retain an attorney or to provide written notice of representation by

such attorney shall in no event be considered good cause, in and of itself, to


delay any proceeding under this policy and procedure.

IV. Communication with Individual Board Members The Board is the decision-maker for all disability retirement applications. As such, communications concerning the merits or substance of an application between any Board member and any Interested Party or his/her representatives are forbidden until the Board’s decision is final and the time to appeal by writ or otherwise has expired. This prohibition shall remain in effect during the pendency of any writ, appeal, and rehearing. A copy of the Ex Parte Communication Policy can be found at www.sjcera.org.

V. Confidential Records

All individual records of Members (including, but not limited to, reports, sworn statements, medical reports and records, applications, notices, orders, and findings and decision relating to an application for disability retirement) are confidential and shall not be disclosed by SJCERA to anyone except as set forth in these procedures, upon order of a court of competent jurisdiction, or upon written authorization by the Member.

VI. Application Process

Disability retirement Applications may be filed by SJCERA Members, the head of the office or department in which the Member is or was last employed, the Board or its agents, any other person acting on a Member’s behalf, or as authorized by CERL.

A. Claim

1. A claim for disability retirement shall be made by filing with the Retirement Office a complete Application Packet. The Application shall not be deemed complete or filed until the Applicant has submitted all of the following to the Retirement Office:

a) An Application, on a form approved by SJCERA for that purpose, signed and complete with all requested information therein. The Application shall include a specific description of the injuries, conditions, and diagnoses that give rise to that alleged permanent incapacity.

b) Signed authorizations for release of medical and other information deemed by SJCERA relevant to a full and complete evaluation of the Application.

c) A physician's statement in a form approved by SJCERA for that purpose complete with all requested information therein, signed and dated by the physician, stating that the Member is permanently incapacitated.


d) Copies of all medical/psychiatric reports and records relevant to the claims made in the Application.

e) All other documents and information that support the granting of the Application.

f) An employer questionnaire on a form approved by SJCERA for that purpose completed with all requested information therein, signed and dated by the head of the office or department in which the Member is or was last employed.

B. Further Information Required from Applicant

1. If at any time during the pendency of the Application, the Applicant changes, in any material way, the facts or claims set forth in the Application, the Applicant shall immediately file with the Retirement Office and serve on all Parties written notice of such change. The failure to do so, may, in the discretion of the Board, preclude the Applicant from asserting the facts so alleged or introducing evidence with respect thereto. Notice of any such amendment shall be given, in writing, to Retirement Office within ten (10) days of the date thereof, and in no event later than thirty (30) days prior to any proceeding before the Board or referee.

2. At any time during the pendency of an Application or in connection with any

re-evaluation of the Member’s disability status permitted under CERL, the Board or SJCERA may, by written notice to the Applicant or Member, require that the Applicant or Member produce within 30 days any or all of the following items. Said items shall be accompanied by a declaration (on a form approved by SJCERA for that purpose) signed by the Applicant or Member under penalty of perjury affirming that the Applicant or Member has made a diligent search and reasonable inquiry and that no other responsive items exist.

a) Copies of records, reports, notes, statements, documents, photographs,

or other writings, within the definition of Evidence Code Section 250.

b) A narrative report of the Member’s current medical condition, and a list of the names and contact information for all of the Member’s healthcare providers.

c) Written responses to written questions concerning any matter that is

reasonably calculated to lead to the discovery of evidence that would be admissible at a hearing. Said written responses shall be accompanied by a declaration (on a form approved by SJCERA for that purpose) signed by the Applicant or Member under penalty of perjury affirming the truthfulness and completeness of the responses.


3. Any Interested Party shall be entitled to notice and take oral depositions inthe manner prescribed by the California Code of Civil Procedure, exceptthat there shall be no distinction between the depositions of expert and non-expert witnesses, and the provisions of the California Code of CivilProcedure pertaining to the depositions of expert witnesses shall not apply.The Party noticing a deposition shall pay any and all deposition costs andthe fees to which a witness may be entitled.

4. If the Applicant or Member fails or refuses to comply with any notice ordemand made pursuant to this section, SJCERA may do the following:

a) Suspend action on the Application until such time as the Applicant orMember complies in full with all such requests. SJCERA shall give allParties written notice of the suspension. During the period of suspensionnone of the applicable time limits with respect to the processing of theApplication shall apply.

b) If the Applicant or Member fails, after the passage of one hundred twenty(120) days, from the date of suspension as set forth above, within thirty(30) days thereafter, and further provided that there is an absence ofgood cause for the failure specified herein, the Board may declare thatthe Application is dismissed with prejudice.

C. Initial review of the Application Packet

Upon receiving a completed Application Packet, SJCERA shall, within thirty(30) days, based upon eligibility and evidence provided, notify the Applicant, of whether the application materials provided are sufficient to proceed and provide information regarding the next steps.

1. The failure of an Applicant to diligently pursue an Application,including the submission of any and all written documentation requiredby this policy, may result in the dismissal of the Application. Upon theBoard’s own motion or a recommendation by the CEO, and writtennotice to the Applicant, the Board may dismiss any Application whichthe Board finds, upon consideration of the facts, is not being diligentlypursued.

D. Investigation and Evaluation

Before an administrative recommendation is made to the Board or a hearing before a referee is set, the following shall be completed:

1. Within 90 days after an Application is filed, SJCERA will request any and all


records that may be relevant to the determination of the Application. These may include, but are not necessarily limited to, the following: medical, psychiatric, psychological, chiropractic, physical therapy, and acupuncture records; radiology and ultrasound records; electrodiagnostic testing records; laboratory (blood, urine, pathology, etc.) testing records; psychological testing records; personnel and human resources records; incident and injury reports; reports prepared by any law enforcement agency; the Member’s complete worker’s compensation file pertaining to the subject claim and other potentially related claims including all medical records, reports, deposition transcripts, etc.; HIV and alcohol treatment/testing records in cases where these conditions are at issue; etc.

2. All records pertaining to the Application will be provided to the DisabilityMedical Provider and the Fund’s Counsel.

3. The Fund’s Counsel and/or the Disability Medical Provider will review and summarize the records. The Fund’s Counsel will coordinate independent medical examination(s) as necessary and appropriate.

4. Additional records may be requested or subpoenaed of the Applicant orothers.

5. All medical examinations required of the Member are completed andreports thereof have been submitted to SJCERA.

6. The Fund’s Counsel will review medical findings and other evidence andmake recommendations to the CEO.

7. Applicant is notified of pending action.

a) If the Fund’s Counsel determines the Applicant has met his/herburden of proof to show eligibility for a disability retirement benefit,staff will place the matter on the closed session consent calendar ata Board of Retirement meeting with a recommendation to grant theapplication.

b) If the Fund’s Counsel determines the Applicant has not met his/herburden of proof to receive a disability retirement benefit, the Applicantwill be notified and given the option to request a hearing. (See below.)

E. Medical Examinations

1. Members may be required to undergo one or more medical or psychiatricexaminations by a physician or physicians of SJCERA’s choice asnecessary to evaluate the conditions and diagnoses presented in theApplication. Such examinations may be unnecessary in the following cases:(1) where the Member has already been examined by at least one qualifiedmedical expert and there is overwhelming and undisputed medical evidence


that the Member is permanently incapacitated, such that referring the Member to another examination would be futile; and (2) where the Applicant has not submitted substantial medical evidence that the Member is permanently incapacitated, such that referring the Member to an examination would be unjustified.

2. Members must cooperate during the medical or psychiatric examination

process and, if requested, must promptly provide additional medical records and information, or submit to additional examinations.

3. SJCERA shall at least fifteen (15) days before the appointment date, serve

the Member (and all Parties) with written notice of the date, time and place of the medical or psychiatric examination Notice may be served electronically and/or by first-class mail through the US Postal Service. If the Member is unable to keep the examination appointment, the Member or his/her attorney shall notify SJCERA or the Fund’s Counsel in writing of such fact at least ten (10) calendar days before the scheduled examination. Failure to provide such notice and appear for the medical examination without good cause may result in the Board assessing medical cancellation fees against the Member.

4. The cost of such examinations shall be borne by SJCERA. If the examination

is at a facility located outside of San Joaquin County, Members may request reimbursement from SJCERA for mileage costs incurred to attend such examination.

5. A Member’s failure to submit to a duly scheduled examination or failure to cooperate with the examination without good cause shall result in the dismissal of the Application with prejudice.

F. CEO’s Recommendation

The CEO may recommend to the Board that a Member be retired for service-connected or nonservice-connected disability retirement benefits. The recommendation shall be in writing and include:

1. A determination of permanent physical or mental incapacity for the

performance of the Member’s duties;

2. A determination whether the incapacity is the result of an injury or disease arising out of and in the course of the Member’s employment;

3. A summary of the evidence in support of the recommendation.

G. Setting the Matter for Hearing

1. If, after investigation, the CEO determines that the Applicant has failed to meet his/her burden of proof regarding any element legally necessary for the


granting of the Application, SJCERA will notify the Applicant of its decision in writing, giving the applicant the following options, if applicable:

a) If the Applicant has met his/her burden of proof regarding permanent incapacity but not service connectedness, the Applicant may amend the Application from service connected to non-service connected to permit SJCERA to recommend that the Board grant a non-service connected disability retirement without need for hearing.

b) Stipulate to waive the right to hearing and withdraw the Application with prejudice.

c) Request a hearing on all issues presented by the Application.

2. If SJCERA does not receive a written response from the Applicant within thirty (30) calendar days after issuing the above referenced written notice, SJCERA will recommend that the Board deny the Application with prejudice for lack of diligence at the next available regularly scheduled meeting of the Board of Retirement.

3. In cases where SJCERA gives the Applicant the option of choosing to amend the Application from service connected to non-service connected disability retirement and the Applicant chooses to do so, SJCERA will recommend that the Board grant non-service connected disability retirement.

4. If the Applicant requests a hearing, the hearing on the Application shall be held at the earliest date agreeable to the Parties. SJCERA will set the Application for hearing before a referee as follows:

a) A letter will notify the Applicant that SJCERA has referred the matter to hearing before a referee and that a referee will be appointed and a hearing scheduled as soon as SJCERA receives the certification (see below). The letter will further advise that if SJCERA does not receive the certification within 30 calendar days, SJCERA will recommend that the Board dismiss the Application with prejudice for lack of diligence

b) The letter to the Applicant will include a list of issues to be determined at the hearing and the names and contact information of all witness that may be called by the Fund’s Counsel to testify at the hearing

c) The letter to the Applicant will include an electronic copy of all medical records, reports, and other documents in SJCERA’s file that may be introduced as evidence at the hearing.

d) Enclosed with the letter to the Applicant will be a certification form which will require that the Applicant certify that the Applicant has no documents to introduce as evidence at the hearing other than those provided to the Applicant in electronic form along with SJCERA’s letter. If there are


additional documents, the Applicant must provide them to SJCERA along with the signed certification form. Any documents not produced with the certification will be barred from introduction as evidence at hearing.

e) The certification form will require that the Applicant state whether the Applicant will be represented by an attorney at the hearing and, if so, the name and contact information for the attorney.

f) The certification form will require that the Applicant list the names and contact information for any witnesses the Applicant intends to call to testify at the hearing. Any witnesses not identified by the Applicant on the certification shall be barred from testifying at the hearing.

g) The letter will also enclose a copy of SJCERA’s Disability Retirement Policy and Procedures.

h) Ten (10) calendar days before the hearing, the Fund’s Counsel will serve a hearing brief on the Applicant and the hearing referee. The brief will identify the issues to be determined at hearing, summarize the relevant facts, cite the relevant law, and present argument. To the extent possible, the brief will include as exhibits the documents the Fund’s Counsel intends to introduce as evidence at hearing. The Applicant may, but is not required to, submit a hearing brief as well.

H. Hearing before a Referee

1. The referee shall be provided by the Office of Administrative Hearings of the State of California or by a prescreened panel of acceptable referees selected by SJCERA. Compensation for the referee shall be determined by the CEO and shall be paid by SJCERA.

2. The referee shall conduct a hearing in accordance with the hearing procedures set forth in this policy for hearing before the Board with the term “Referee” substituted for “Board” wherever warranted by the context.

3. Subpoena powers shall be vested in the Board officers, the CEO and the referee in accordance with Government Code Section 31535.

4. After closing the hearing, the referee will prepare a summary of the evidence received, findings of fact, conclusion of law, and a recommended decision. In accordance with the provisions of Government Code Section 31533, the findings of fact and proposed recommendation of the referee shall be served on the CEO, who in turn shall distribute a copy to all parties.

5. Either Party may submit written objections to the referee’s recommended decision to SJCERA within ten (10) calendar days from the date SJCERA distributes the notice to all parties. The written objections shall be incorporated into the record submitted to the Board for its consideration.


I. Board’s Decision

Upon receipt and review of the recommended decision of the referee and any filed objections and response from the referee thereto, the Board may:

1. Approve and adopt the recommended decision of the referee, or

2. Refer the Application to the referee for further hearing and/or consideration, or

3. Require a written transcript or summary of all testimony plus all other evidence received by the referee to be submitted by the CEO to the Board. Following its receipt and review of the transcript and evidence, the Board shall:

a) Take action as is appropriate to the evidence and the provisions of the

CERL, or

b) Refer the matter back to the referee with or without instruction for further proceedings, or

c) Set the matter for hearing de novo before itself. The Board shall hear and decide the matter as if it had not been referred to the referee. Unless otherwise allowed by the Board, the hearing shall be confined to the evidence, witnesses, and issues set forth in the certification and statement required by this policy.

VII. Hearing before the Board

A. Stenographic Recording Required

1. Unless waived by all parties, a stenographic reporter shall record the proceedings of all hearings before the Board at SJCERA’s cost. Any transcription and copies shall be charged to the requesting Party. The hearing shall be considered closed unless requested by the Applicant that the matter be conducted in open (public) session.

B. Determining Issues

1. The Board shall determine all issues set forth in the written statement of issues required by this policy by a preponderance of the evidence, including the following, if applicable:

a) Whether the Member was employed prior to January 1, 1981, and was

required as a condition to such employment to execute a waiver for the alleged disability under Government Code Section 31009;

b) Whether the Member is disabled, that is, whether there is a substantial


mental or physical incapacity to perform the Member’s normal and usual employment duties;

c) Whether the disability is permanent, that is, whether as a reasonable medical probability the disability is likely to persist indefinitely;

d) Whether, for non-service-connected disability, the Member has completed five (5) years of service;

e) Whether for a service-connected disability:

i. the incapacity is a result of injury or disease

ii. the injury or disease arose out of and in the course of the Member’s employment; and

iii. the employment contributed substantially to the incapacity;

f) Whether, for Members described in Government Code Sections 31720.5, 31720.6, 31720.7 or 31720.9 alleging heart trouble, cancer, blood-borne infectious disease, or illness due to exposure to biochemical substances:

i. the Member has completed five (5) years of safety service, if

required;

ii. the Member has the condition alleged;

iii. the condition developed while a qualified Member of SJCERA;

iv. and whether the presumption of the relevant Government Code Section has been rebutted

C. Hearing Process

1. All hearings before the Board shall require the attendance of at least the same seven (7) members of the Board throughout and shall proceed in the following manner:

a) The Chairperson shall announce the matter and ask for appearances

by all parties, which shall be recorded in the minutes and in the official file of the hearing. The Chairperson shall ask if all parties are ready to proceed and, if so, or if the Chairperson otherwise rules for good cause, the hearing shall be opened.

b) The Chairperson or Clerk shall mark for identification only, and not as evidence, all exhibits submitted by the parties, which should include:

i. the completed Application Packet;

ii. the notice of hearing, with proof of service on the Applicant;


iii. other documents required to be submitted by this policy including, without limitation, relevant medical reports, medical records, employment records, worker’s compensation records, etc.

c) The Clerk or other person authorized by the Chairperson shall read the Application and the statement of issues.

d) Unless otherwise determined by the Board for good cause, the Applicant shall have the burden of producing evidence necessary to establish the issues.

e) Each Party may make an opening statement.

f) Each other Party then shall present evidence, in the order determined by the Chairperson in accordance with each Party’s burden of proof and burden of presenting evidence to establish such proof.

g) Each Party may cross-examine witnesses.

h) Rebuttal evidence may be presented.

i) Each Party may make closing arguments.

j) Upon the conclusion of all closing arguments, the Chairperson shall determine if all parties are ready to submit the matter for decision, and if so, or if the Chairperson otherwise orders for good cause, the Chairperson shall close the hearing and declare the matter submitted to the Board for decision upon the evidence and the instructions of law by the Board’s Counsel.

k) At the conclusion of the hearing, the Board may recess into closed session of the Board members and the Board’s Counsel to deliberate on the matter, to develop its findings and reach a decision.

l) At or before the next regularly scheduled meeting or specially called meeting, the Board shall render its decision orally, in open session.

m) Unless waived by all parties to the hearing, any finding or decision of the Board must be made by a majority vote of the members present throughout the hearing. A tie vote on any issue raised by the Application results in a failure to find in favor of that issue and constitutes a denial of the Application, or that portion of the Application, to which the issue relates. The alternate member may cast a ballot in the absence of a regular elected member if the alternate member has attended the entire hearing and has heard and considered all evidence and testimony involved.

D. Presiding Officer

The Chairperson shall preside over all hearings. The Chairperson shall


exercise reasonable control over the proceedings and in addition to other duties, shall rule on the admissibility of evidence and shall order a Party to yield the floor when orderly and expeditious conduct of the hearing requires it. The Chairperson may permit questioning and other participation in the proceedings by Board members or others as will best serve the purpose of the hearing.

VIII. Rules of Evidence

A. Burden of Proof

The Applicant has the burden of proving by a preponderance of the evidence each affirmative issue on which the Application depends as identified in the Statement of Issues submitted by the Fund’s Counsel. In addition, if the Applicant seeks to assert one or more of the legislative presumptions afforded by Government Code Sections 31720.5 (heart trouble), 31720.6 (cancer), 31720.7 (blood-borne infectious disease), or 31720.9 (illness due to exposure to biochemical substances), then the Applicant first must establish his/her or her entitlement to invoke the asserted presumption by offering prima facie evidence of each foundational element required by the applicable Government Code section(s), and the presumption(s) so invoked shall be rebuttable as provided in the applicable section(s).

B. Evidence

Oral evidence shall be taken only on oath or affirmation. Unless expressly waived by an opposing Party, all written evidence shall be sworn to or given under penalty of perjury, subject to Subsection E, below.

C. Witnesses

Each Party may call and examine witnesses, introduce exhibits, and cross-examine and impeach any witness on any matter relevant to the issues. If the Applicant or any other Party does not testify on that Party’s own behalf, that Party may be called and examined as if under cross-examination under Evidence Code Section 776.

D. Refusal of Witness

Refusal by an Applicant or Party to submit to examination or to answer relevant questions shall be grounds for considering those questions to be answered unfavorably to the refusing Party for the purpose of that hearing, and for denying the relief or benefits sought by the refusing Party.

E. Hearing Conduct

The hearing need not be conducted according to the technical rules of law relating to evidence and witnesses. Any relevant evidence shall be admitted if it is the sort of evidence on which responsible persons are accustomed to rely


in the conduct of serious affairs, regardless of the existence of any common law or statutory rule that might make improper the admission of such evidence over objection in civil actions. Hearsay evidence may be used for the purpose of supplementing or explaining any direct evidence but shall not be sufficient in itself to support a finding unless it would be admissible over objection in civil actions.

F. Certified Copies

Certified copies of the reports and records of any governmental agency, division or bureau, will be accepted as evidence in lieu of the original thereof.

G. Deposition Transcripts/Video Recordings

Any Party may offer, and the Board shall receive into evidence, any relevant deposition transcript and/or video recording thereof if: (1) the deposition was taken in the manner provided by law or by stipulation of the Parties; and (2) at least twenty (20) calendar days before the hearing the offering Party delivered a copy of the transcript and/or video recording of the deposition to all Parties along with notice of intent to introduce same into evidence. Nothing herein shall require or permit receiving into evidence any deposition testimony to which objection is property raised if such testimony would be inadmissible were the witness present and testifying at the hearing. Deposition transcripts/video recordings shall be admissible notwithstanding that the deponent is available to testify. Depositions of experts, including medical experts, may be introduced in lieu of live testimony pursuant to Code of Civil Procedure Section 2025.620(d)

H. Cross-Examination of Physician

The right of cross-examination of a physician on the physician’s written report shall be deemed waived and the report shall be considered direct non-hearsay evidence if the report has been timely served on the parties as required by this policy and the doctor is not called to testify as a witness at the hearing.

I. Subpoena Powers and Witness Fees

1. Subpoenas may be issued according to the CERL. Subpoenas shall be requested through the Board’s Counsel or the Fund’s Counsel who shall transmit the request to the Chairperson, Vice Chairperson, Secretary or CEO for signature. Subpoenas issued shall be transmitted to the Party requesting the subpoena. The requesting Party shall have the sole responsibility for serving and enforcing the subpoena and for paying all costs associated with the subpoena.

2. A written motion to quash a subpoena may be made to the Board on one or more of the following grounds, which shall be clearly and fully stated in the motion and supported by declarations under penalty of perjury:


a) Compliance will be unduly burdensome or against public policy.

b) The things subpoenaed are privileged by law.

c) The things subpoenaed are irrelevant or unnecessary to the proceedings.

d) The things subpoenaed have not been described with sufficient clarity to enable the witness to comply. Before it commences or continues with the proceeding, the Board shall wholly or partially grant or deny the motion to quash.

3. The Party calling a witness to testify (whether by subpoena or otherwise) shall be solely responsible for paying any witness fees, mileage charges, and other costs associated with the witness’ testimony. Non-expert witness fees and mileage charges shall be calculated as provided by law.

IX. Rehearing Appeal

A. New Evidence. An Applicant may petition for a rehearing before the Board in

the event additional evidence, which was not reasonably available to the Applicant at the time of the hearing, supports the disability retirement Application. A written petition for rehearing must be filed with the Retirement Office within sixty (60) days after the notification to the Applicant of the decision of the Board is mailed to the Applicant by U.S. mail, first class postage prepaid.

B. Judicial Review. In those cases where a Party or Applicant is entitled to judicial review of the proceedings before the Board, any petition for writ of mandate shall be filed with the superior court within ninety (90) days from the date the notice of this Board’s decision is mailed to the Party or Applicant or is delivered to the Party or Applicant. Where a timely petition for rehearing is filed as provided in A above, the time for filing a petition for writ of mandate seeking judicial review shall expire ninety (90) days after SJCERA mails to the Applicant or Party (1) notice that the petition for rehearing is denied or (2) notice of the Board’s decision following a rehearing, whichever occurs later.

X. Law Prevails

A. In the event a conflict between this policy and the County Employees Retirement

Law, the Public Employees’ Pension Reform Act, or other applicable statutes arises, the law shall prevail.

XI. Policy Review

A. Staff shall review this policy every three years to ensure that it remains relevant, appropriate, and in compliance. Any revisions or amendments to this policy must, be approved by the Board of Retirement in accordance with the bylaws. Effective upon adoption.


XII. History

3/1/2018 Bylaw Sections 8, 9, 10 & 11 Converted to Board Policy and Board of

Supervisor approved Bylaws 06/28/2018 Staff updated format 08/10/2018 Modified the definitions of Applicant and Application to conform with

SJCERA’s adopted code sections 07/12/2019 Revised to include definitions, add requirements that an application must

meet before being filed, allow the member to elect not to go to hearing, allow the use of depositions, clarify mileage reimbursement may be requested for out-of-county travel to SJCERA-scheduled examinations, and specify that SJCERA may determine an examination is not required in some cases.


07/12/19 Clerk of the Board Date

SJCERA BOARD POLICY / Dissolution of Marriage or RDP Page 1 of 3

II.I. Purpose

A. This policy governs the management and operation of the retirement system with respect to the Dissolution of Marriage or Registered Domestic Partnership (RDP) for the benefit of its membership, including its retired members and their survivors, dependents, and beneficiaries.

III.II. Community Property

A. Effective August 1, 1997, pursuant to Resolution N. 97-474 of the Board of Supervisors of San Joaquin County, SJCERA shall accept orders pertaining to the division of the community property interest in a member’s account only if such orders are issued (1) by a court of competent jurisdiction, (2) in conformance with the provisions of Family Code Section 2610 and (3) in conformance with the provisions of Article 8.4 of the CERL, commencing at Government Code Section 31685. SJCERA shall return orders, which are not in conformance with these criteria to the parties for revision.

III. Non-member Rights

A. For the purposes of this policy, the former spouse/partner of the employee member is referred to as the nonmember.

B. A non-membernonmember who, pursuant to an appropriate court order, elects to establish a separate account, as authorized by Article 8.4 of the CERL, may exercise the rights of a member, except that (a) a nonmember is not eligible to apply for or receive a disability retirement allowance, (b) a nonmember’s pre-retirement death benefits shall consist of return of the contributions and interest in the nonmember’s account, and (c) a non-member is not eligible to participate in the election of Board members.

C. Pursuant to Section 31685 (c), the non-membernonmember is entitled to the following:

ii.i. The right to a retirement allowance.

iii.ii. The right to a refund of accumulated retirement contributions. iv.iii. The right to redeposit accumulated retirement contributions that are eligible

for redeposit by the member. v.iv. The right to purchase service credit that is eligible for purchase by the

member. vi.v. The right to designate a beneficiary to receive his or her accumulated


DissolutionofMarriageorRegisteredDomesticPartnership


contributions payable at the time of the nonmember’s death. vii.vi. The right to designate a beneficiary for any unpaid allowance payable at

the time of the nonmember’s death.

IV. Election of Optional Allowances

A. A nonmember may retire pursuant to the provisions of the CERL and/or PEPRA, and may elect any of the optional retirement allowances, set forth therein in the CERL, subject to the limitations thereof by the CERL. A.

VI.V. Actuarial Equivalency

A. Benefits determined pursuant to this policy shall be determined on the basis of the actuarial economic and demographic assumptions and values prescribed by the Board of Retirement. Under no circumstances shall SJCERA be required to make payments in any manner that will result in an increase in the amount of benefits provided under the plan.

The CEO is responsible for ascertaining that the combined benefits payable to the member and non-member are the actuarial equivalent of the value of the benefit to which the member would have been eligible had no division of the community property interest occurred, per Government Code Section 31685.95.

VII.VI. Approval

A. All joinders of SJCERA in dissolution of marriage proceedings and domestic relations orders resulting therefrom are subject to legal review and approval. All applications for nonmember benefits submitted pursuant to this section shall be subject to review and approval by the Board. The CEO shall placed the applications on the Board of Retirement ’s agenda for ratification of staff’s actions.

VII. Law Prevails

A. In the event of a conflict between this policy and the County Employees

Retirement Law, the Public Employees’ Pension Reform Act, or other applicable statutes arises, the law shall prevail.

VIII. Policy Review



IX. History

03/01/2017 Bylaws Amended and Approved by the Board of Supervisors 12/08/2017 Bylaw Section 12 Converted to Policy 06/28/2018 Reviewed, no changes required; Staff updated format

04/12/2019 Policy Review section amended to at least once every three years 07/12/2019 Amended to define nonmember, align the approval process to current

practice, and make other non-substantive changes.

Certification of Board Adoption: 07/12/2019



I. Purpose

A. This policy governs the management and operation of the retirement system with respect to the Dissolution of Marriage or Registered Domestic Partnership (RDP) for the benefit of its membership, including its retired members and their survivors, dependents, and beneficiaries.

II. Community Property

A. Effective August 1, 1997, pursuant to Resolution N. 97-474 of the Board of Supervisors of San Joaquin County, SJCERA shall accept orders pertaining to the division of the community property interest in a member’s account only if such orders are issued (1) by a court of competent jurisdiction, (2) in conformance with the provisions of Family Code Section 2610 and (3) in conformance with the provisions of Article 8.4 of the CERL, commencing at Government Code Section 31685. SJCERA shall return orders which are not in conformance with these criteria to the parties for revision.

III. Nonmember Rights

A. For the purposes of this policy, the former spouse/partner of the employee member is referred to as the nonmember.

B. A nonmember who, pursuant to an appropriate court order, elects to establish a separate account, as authorized by Article 8.4 of the CERL, may exercise the rights of a member, except that (a) a nonmember is not eligible to apply for or receive a disability retirement allowance, (b) a nonmember’s pre-retirement death benefits shall consist of return of the contributions and interest in the nonmember’s account, and (c) a non-member is not eligible to participate in the election of Board members.

C. Pursuant to Section 31685 (c), the nonmember is entitled to the following: i. The right to a retirement allowance. ii. The right to a refund of accumulated retirement contributions. iii. The right to redeposit accumulated retirement contributions that are eligible

for redeposit by the member. iv. The right to purchase service credit that is eligible for purchase by the

member. v. The right to designate a beneficiary to receive his or her accumulated

contributions payable at the time of the nonmember’s death. vi. The right to designate a beneficiary for any unpaid allowance payable at

the time of the nonmember’s death.


DissolutionofMarriageorRegisteredDomesticPartnership


IV. Election of Optional Allowances

A. A nonmember may retire pursuant to the provisions of the CERL and/or PEPRA and may elect any of the optional retirement allowances, set forth therein subject to the limitations thereof.

V. Actuarial Equivalency A. Benefits determined pursuant to this policy shall be determined on the basis of

the actuarial economic and demographic assumptions and values prescribed by the Board of Retirement. Under no circumstances shall SJCERA be required to make payments in any manner that will result in an increase in the amount of benefits provided under the plan.

VI. Approval

A. All joinders of SJCERA in dissolution of marriage proceedings and domestic relations orders resulting therefrom are subject to legal review and approval. All applications for nonmember benefits submitted pursuant to this section shall be placed on the Board of Retirement agenda for ratification of staff’s actions.

VII. Law Prevails

A. In the event of a conflict between this policy and the County Employees

Retirement Law, the Public Employees’ Pension Reform Act, or other applicable statutes arises, the law shall prevail.

VIII. Policy Review


IX. History

03/01/2017 Bylaws Amended and Approved by the Board of Supervisors 12/08/2017 Bylaw Section 12 Converted to Policy 06/28/2018 Reviewed, no changes required; Staff updated format

04/12/2019 Policy Review section amended to at least once every three years 07/12/2019 Amended to define nonmember, align the approval process to current

practice, and make other non-substantive changes.

Certification of Board Adoption: 07/12/2019


SJCERA BOARD POLICY / Employer Termination Policy Page 1 of 5


EmployerTerminationPolicy

I. PURPOSE AND SCOPE

A. In accordance with section 31564.2 of the California Government Code, the guidelines set forth herein are effective as of May 12, 2017 and establish practices of the San Joaquin County Employees' Retirement Association (“SJCERA”, the “Association”) with respect to the a district’s termination of participation, by a district. whether initiated by the district, or by SJCERA in accordance with the Declining Employer Payroll Policy. .

A.B. The objectives of this policy are, among other things, to ensure compliance with County Employees Retirement Law of 1937, California Government Code sections 31450 et seq., as amended (“CERL”) and other applicable provisions of law: 1. Pursuant to CERL sections 31564.2, 31580.1, 31584, 31585 and other applicable

provisions of law, a district remains liable, and must make the required appropriations and transfers, to SJCERA for the district’s share of liabilities attributable to its officers and employees who are and may be entitled to receive retirement, disability and related benefits from SJCERA.

2. CERL section 31564.2(d) provides, in part, that “[t]he funding of the retirement benefits for the employees of a withdrawing agency is solely the responsibility of the withdrawing agency or the board of supervisors. Notwithstanding any other provision of the law, no contracting agency shall fail or refuse to pay the employer’s contribution required by this chapter within the applicable time limitations. In dealing with a withdrawing district, the Board of Retirement shall take whatever action is needed to ensure the actuarial soundness of the retirement system.”

3. This policy is intended to assure that a participating SJCERA employer will fully

fund the benefits of its members, such that the other participating employers will not be expected to have their funding requirements increased as a result of the district’s termination of participation in the Association.

B.C. The general principle applied in this policy is to establish the funding obligation of

terminating employers as: 1. The present value of all future benefits expected to be paid by SJCERA to the

terminating employer’s employees, retirees, beneficiaries, and terminated members as of the termination date; minus


2. The value of SJCERA assets allocated to the terminating employer as of the termination date.

C.D. The policy provides the specific procedures to be used in determining the above

components.

II. TERMINATION CONDITIONS A. The Board shall require the terminating employer to reimburse SJCERA for the

actuarial consulting fees incurred for the purpose of determining its terminal funding obligation, if the termination is initiated by the district.

B. The terminating employer must choose aThe termination date must be as of the end of a Plan year.

C. In the event that the terminating employer becomes a participating employer with a reciprocal system, the terminating employer must provide SJCERA with updated employee census data in the years following the employer’s termination, as requested by SJCERA for use in determining liabilities and preparing, among other things, SJCERA’s actuarial valuation.

D. As part of the termination process, the Board of Retirement and the terminating employer will enter into an agreement stipulating the provisions for the settlement of the funding obligation.

III. PRESENT VALUE OF BENEFITS A. The benefits payable to SJCERA current and former employees of the terminating

employer will be as follows:

1. All active members on the termination date will receive SJCERA benefits for their credited service up to the termination date. As a result, they will take on the same status as terminated members.

2. All vested terminated members and retired members (and their beneficiaries) as of the termination date will receive future benefits from SJCERA.

B. The future benefits to be paid to SJCERA members of the terminating employer will

include those payable to: 1. Existing retirees (and their beneficiaries) of the employer;


2. Employees (and their beneficiaries) of the employer as of the termination date; and 3. Former employees of the employer entitled to either deferred vested benefits or a

refund of their accumulated contributions plus credited interest.

B.C. The present value of benefits will be determined based on: 1. The service retirement and other benefits associated with their years of service in

SJCERA as of the employer’s termination date, for which they are entitled to SJCERA benefits;

2. Expected future cost-of-living adjustments on those benefits;

3. For employees and deferred vested members, expected final average earnings

(including the effect of any reciprocity benefits);

4. For employees and deferred vested members, their expected age at retirement; and

5. For retired members and beneficiaries of retirees, the SJCERA benefits earned

from service with the terminating employer.

C.D. The determination of the present value of future benefits shall be based upon the actuarial assumptions most recently adopted by the Board of Retirement at the time of the determination. 1. However, future benefit payments will be discounted to the termination date using

market-based interest rate assumptions, based on whichever of the following two assumptions produces the higher present value:

a. The discount rate(s) used by the Pension Benefit Guarantee Corporation

(PBGC) to measure the sufficiency of assets for a corporate employer that is terminating its single-employer defined benefit pension plan, or

b. 2.5%

2. The PBGC discount rate(s) shall be determined based on the most recent rates

published as of the termination date.

3. There will be no reassessment of the terminating employer’s funding obligation after the termination date.


4. No consideration will be given to future Board of Retirement provided benefits, such as supplemental cost-of-living adjustments, when determining the present value of benefits.

IV. DETERMINATION OF TERMINATING EMPLOYER’S ASSETS

A. SJCERA is a cost-sharing multiple employer plan. As a result, there is no ongoing separate accounting of SJCERA’s assets by employer. The SJCERA assets attributable to the terminating employer and its employees will be determined as follows: 1. Determine the Actuarial Accrued Liability of the terminating employer as of

SJCERA’s most recent actuarial valuation, irrespective of the employer’s anticipated termination.

2. Determine the Actuarial Value of Assets attributable to the employer as of

SJCERA’s most recent actuarial valuation, based on the amount which would result in the Unfunded Actuarial Liability contribution rates for the non-withdrawing employers being unaffected by the removal of the withdrawing employer’s Actuarial Assets, Accrued Liability and covered payroll from the funding calculations reflected in the most recent actuarial valuation. If the Unfunded Actuarial Liability for SJCERA is being amortized using multiple layers with individual amortization schedules, the Unfunded Actuarial Liability for the withdrawing employer shall be applied as a pro-rata share of each existing layer.

A. Determine the accumulated assets at the termination date as:

1. Step 2 Amount x Ratio A, where:

a. Ratio A = (Total SJCERA valuation assets at market value as of the most recent actuarial valuation date) divided by (Total SJCERA valuation assets at actuarial value as of the most recent valuation date).

The Valuation Assets shall not include any reserves or designations from which the terminating employer shall not benefit, such as a pre-funding reserve established by another employer, or a contingency reserve not included in the Plan’s valuation assets for the purpose of determining the unfunded liability amortization payments in the current actuarial valuation.

b.

V. SETTLEMENT OF FUNDING OBLIGATION


A. The terminating employer’s funding obligation will be the excess, if any, of the present value of future benefits over the employer’s accumulated assets, as determined by this policy.

B. It is the past practice of SJCERA to require that the funding obligation of a terminating employer be paid as a single lump sum, and this policy reaffirms this practice, and stipulates that an extended payment schedule shall only be agreed to if the Board determines that such an arrangement would best service the Plan’s interests.

C. If the obligation is settled by the withdrawing employer more than 90 days following the

termination date, interest will be applied to the funding obligation, based on the discount rate used in the determination of the terminating employer’s present value of future benefits as specified under this policy.

D. The settlement of the employer’s funding obligation under this policy shall represent a

full settlement of the employer’s funding obligation for benefits provided to its members by SJCERA, with the exception that the employer shall still be responsible for providing the necessary information needed for SJCERA to administer the Plan and to complete the Plan’s annual funding valuation and disclosure requirements.

V. Review


VI. HISTORY

05/12/2017 Policy adopted by the Board of Retirement 06/29/2018 Reviewed, no required content changes; staff updated format

04/12/2019 Policy Review section amended to at least once every three years 07/12/2019 Aligned with the Declining Employer Payroll Policy regarding potential

initiation of termination by SJCERA. Certification of Board Adoption

07/12/2019




EmployerTerminationPolicy

I. PURPOSE AND SCOPE

A. In accordance with section 31564.2 of the California Government Code, the guidelines set forth herein are effective as of May 12, 2017 and establish practices of the San Joaquin County Employees' Retirement Association (“SJCERA”, the “Association”) with respect to a district’s termination of participation, whether initiated by the district, or by SJCERA in accordance with the Declining Employer Payroll Policy.

B. The objectives of this policy are, among other things, to ensure compliance with County Employees Retirement Law of 1937, California Government Code sections 31450 et seq., as amended (“CERL”) and other applicable provisions of law: 1. Pursuant to CERL sections 31564.2, 31580.1, 31584, 31585 and other applicable

provisions of law, a district remains liable, and must make the required appropriations and transfers, to SJCERA for the district’s share of liabilities attributable to its officers and employees who are and may be entitled to receive retirement, disability and related benefits from SJCERA.

2. CERL section 31564.2(d) provides, in part, that “[t]he funding of the retirement benefits for the employees of a withdrawing agency is solely the responsibility of the withdrawing agency or the board of supervisors. Notwithstanding any other provision of the law, no contracting agency shall fail or refuse to pay the employer’s contribution required by this chapter within the applicable time limitations. In dealing with a withdrawing district, the Board of Retirement shall take whatever action is needed to ensure the actuarial soundness of the retirement system.”

3. This policy is intended to assure that a participating SJCERA employer will fully

fund the benefits of its members, such that the other participating employers will not be expected to have their funding requirements increased as a result of the district’s termination of participation in the Association.

C. The general principle applied in this policy is to establish the funding obligation of

terminating employers as: 1. The present value of all future benefits expected to be paid by SJCERA to the

terminating employer’s employees, retirees, beneficiaries, and terminated members as of the termination date; minus


2. The value of SJCERA assets allocated to the terminating employer as of the termination date.

D. The policy provides the specific procedures to be used in determining the above

components.

II. TERMINATION CONDITIONS A. The Board shall require the terminating employer to reimburse SJCERA for the

actuarial consulting fees incurred for the purpose of determining its terminal funding obligation, if the termination is initiated by the district.

B. The termination date must be as of the end of a Plan year.

C. In the event that the terminating employer becomes a participating employer with a reciprocal system, the terminating employer must provide SJCERA with updated employee census data in the years following the employer’s termination, as requested by SJCERA for use in determining liabilities and preparing, among other things, SJCERA’s actuarial valuation.

D. As part of the termination process, the Board of Retirement and the terminating employer will enter into an agreement stipulating the provisions for the settlement of the funding obligation.

III. PRESENT VALUE OF BENEFITS A. The benefits payable to SJCERA current and former employees of the terminating

employer will be as follows:

1. All active members on the termination date will receive SJCERA benefits for their credited service up to the termination date. As a result, they will take on the same status as terminated members.

2. All vested terminated members and retired members (and their beneficiaries) as of the termination date will receive future benefits from SJCERA.

B. The future benefits to be paid to SJCERA members of the terminating employer will

include those payable to: 1. Existing retirees (and their beneficiaries) of the employer; 2. Employees (and their beneficiaries) of the employer as of the termination date; and


3. Former employees of the employer entitled to either deferred vested benefits or a refund of their accumulated contributions plus credited interest.

C. The present value of benefits will be determined based on: 1. The service retirement and other benefits associated with their years of service in

SJCERA as of the employer’s termination date, for which they are entitled to SJCERA benefits;

2. Expected future cost-of-living adjustments on those benefits;

3. For employees and deferred vested members, expected final average earnings

(including the effect of any reciprocity benefits);

4. For employees and deferred vested members, their expected age at retirement; and

5. For retired members and beneficiaries of retirees, the SJCERA benefits earned

from service with the terminating employer.

D. The determination of the present value of future benefits shall be based upon the actuarial assumptions most recently adopted by the Board of Retirement at the time of the determination. 1. However, future benefit payments will be discounted to the termination date using

market-based interest rate assumptions, based on whichever of the following two assumptions produces the higher present value:

a. The discount rate(s) used by the Pension Benefit Guarantee Corporation

(PBGC) to measure the sufficiency of assets for a corporate employer that is terminating its single-employer defined benefit pension plan, or

b. 2.5%

2. The PBGC discount rate(s) shall be determined based on the most recent rates

published as of the termination date.

3. There will be no reassessment of the terminating employer’s funding obligation after the termination date.

4. No consideration will be given to future Board of Retirement provided benefits, such

as supplemental cost-of-living adjustments, when determining the present value of benefits.


IV. DETERMINATION OF TERMINATING EMPLOYER’S ASSETS

A. SJCERA is a cost-sharing multiple employer plan. As a result, there is no ongoing separate accounting of SJCERA’s assets by employer. The SJCERA assets attributable to the terminating employer and its employees will be determined as follows: 1. Determine the Actuarial Accrued Liability of the terminating employer as of

SJCERA’s most recent actuarial valuation, irrespective of the employer’s anticipated termination.

2. Determine the Actuarial Value of Assets attributable to the employer as of

SJCERA’s most recent actuarial valuation, based on the amount which would result in the Unfunded Actuarial Liability contribution rates for the non-withdrawing employers being unaffected by the removal of the withdrawing employer’s Actuarial Assets, Accrued Liability and covered payroll from the funding calculations reflected in the most recent actuarial valuation. If the Unfunded Actuarial Liability for SJCERA is being amortized using multiple layers with individual amortization schedules, the Unfunded Actuarial Liability for the withdrawing employer shall be applied as a pro-rata share of each existing layer.

A. Determine the accumulated assets at the termination date as:

1. Step 2 Amount x Ratio A, where:

a. Ratio A = (Total SJCERA valuation assets at market value as of the most recent actuarial valuation date) divided by (Total SJCERA valuation assets at actuarial value as of the most recent valuation date).

b. The Valuation Assets shall not include any reserves or designations from which the terminating employer shall not benefit, such as a pre-funding reserve established by another employer, or a contingency reserve not included in the Plan’s valuation assets for the purpose of determining the unfunded liability amortization payments in the current actuarial valuation.

V. SETTLEMENT OF FUNDING OBLIGATION A. The terminating employer’s funding obligation will be the excess, if any, of the present

value of future benefits over the employer’s accumulated assets, as determined by this policy.


B. It is the past practice of SJCERA to require that the funding obligation of a terminating employer be paid as a single lump sum, and this policy reaffirms this practice, and stipulates that an extended payment schedule shall only be agreed to if the Board determines that such an arrangement would best service the Plan’s interests.

C. If the obligation is settled by the withdrawing employer more than 90 days following the

termination date, interest will be applied to the funding obligation, based on the discount rate used in the determination of the terminating employer’s present value of future benefits as specified under this policy.

D. The settlement of the employer’s funding obligation under this policy shall represent a

full settlement of the employer’s funding obligation for benefits provided to its members by SJCERA, with the exception that the employer shall still be responsible for providing the necessary information needed for SJCERA to administer the Plan and to complete the Plan’s annual funding valuation and disclosure requirements.

V. Review


VI. HISTORY

05/12/2017 Policy adopted by the Board of Retirement 06/29/2018 Reviewed, no required content changes; staff updated format

04/12/2019 Policy Review section amended to at least once every three years 07/12/2019 Aligned with the Declining Employer Payroll Policy regarding potential

initiation of termination by SJCERA. Certification of Board Adoption

07/12/2019


SJCERA BOARD POLICY / Staff Transportation and Travel Policy / Page 1 of 7

I. Travel Outside the State

A. When such travel is considered in the best interest of SJCERA, approval must

be obtained in advance from the Board of Retirement.

B. It is recognized that due to emergency circumstances, there may be a need for travel that arises precluding prior approval by the Board. In those situations, the Chief Executive Officer (CEO) will consult with the Board Chair to determine the appropriateness of the travel. If approval of the requested travel is granted, the CEO shall, upon receipt of written approval by the Board Chair, authorize travel on behalf of the Board.

C. Trips to the Tahoe basin/Reno area are considered under the instate policies.

II. Travel Outside the County

A. Except for emergency and one-day trips (see Sections I and VIII), all official

travel outside the County of San Joaquin but within the State of California by staff shall have prior approval of the Chief Executive Officer (CEO).

B. Request for official travel outside the County of San Joaquin shall, except in

emergencies, be submitted at least two weeks in advance of such trip. C. Emergency trips will be reported to the CEO as soon as possible.

III. One-Day Trips

A. One-day trips (inside or outside of county) shall not require a Travel Request form where the following provisions apply:

1. The travel is required by SJCERA in the performance of its normal

functions and is in the course of the staff member’s regularly assigned duties.

2. Maximum duration of the trip is one day.

3. Transportation by private vehicle.

4. Total expenses other than mileage do not exceed $200.

5. There is no lodging expense. B. SJCERA will be required to keep adequate records of any of the above trips

authorized so that the necessity of the trip can be audited.


StaffTransportationandTravelPolicy


III.IV. Chief Executive Officer’s Responsibility A. The CEO is charged with the responsibility to approve or disapprove staff

requests for authorized travel on official SJCERA business.

B. Requests requiring approval of the Board of Retirement shall be submitted to the Board.

IV.V. Authorized Travel at SJCERA Expense

A. Except for one-day trips (see Section VIII), staff claims for expenses incurred

while traveling on behalf of SJCERA must be supported by a SJCERA Travel Request Form, which has been approved by the CEO or designee.

B. No travel or travel reimbursement for staff shall be authorized unless such

travel is determined in the best interests of SJCERA.

C. Travel by private car may be authorized by the CEO when determined to be to the best advantage of SJCERA.

V.VI. Submission of SJCERA Travel Request Form

A. The SJCERA Travel Request Form shall be used for all out-of-state and out-

of-county travel, except as authorized under Sections I and VIII.

B. Requests for Advance may be made for up to 75 percent% of the total expected expenses for meals, shuttles or taxis, and lodging pursuant to guidelines herein. The minimum request for a travel advance is $50 and maximum is $2,000 per traveler. Approved travel advances shall be made by check payable to the traveler.

C. The CEO or designee is authorized to sign all SJCERA travel requests.

VI. VII. Travel Arrangements and Policies

A. When a staff member has an approved travel request, he/she should work

with the CEO’s administrative support staff when making the necessary travel arrangements to ensure compliance with the provisions herein.

B. Staff is expected to take advantage of the lowest fare when the conditions of

such travel are practical.

C. Staff is urged to take advantage of special rates available for car rentals and corporate and/or government rates for hotels and other incidental travel requirements.


D. Staff who are renting cars should purchase the optional liability and collision, or similar insurance offered by the rental agency, the costs of which will be reimbursed by SJCERA.

E. Airfare, lodging, and conference registration fees areis normally the only

services expenses paid directly by SJCERA on behalf of the traveler. Staff should expect to cover expenses for other servicesitems, which will be reimbursed by SJCERA in accordance with this policy after completion of travel according to this policy.

VII. Outside-of-County One-Day Trips

A. Out-of-county travel on one-day trips shall not require a Travel Request form

where the following provisions apply:

1. The travel is required by SJCERA in the performance of its normal functions and is in the course of the staff member’s regularly assigned duties.




5. There is no lodging expense. B. SJCERA will be required to keep adequate records of any of the above trips

authorized so that the necessity of the trip can be audited.

VIII. VIII. Reimbursement for Authorized Travel Expenses A. Claims for reimbursement of travel expenses shall be signed by CEO or

designeeor designee and shall be submitted to the Auditor-Controller for payment.

B. Each staff member traveling on behalf of SJCERA shall maintain and submit

such records and receipts whichthat are required to substantiate the request for reimbursement.

C. When submitting a claim for reimbursement of travel expenses, the staff

member shall include receipts or vouchers as follows:

1. 1. TransportationCommon carrier tickets to and from destination.

a. Public Transportation - Actual cost is reimbursable.

b. Use of Private Vehicles - Shall be reimbursed at the standard rate adopted by the Internal Revenue Service at the time the expenses


were incurred. Mileage payments for the use of private vehicles will be limited to an air travel equivalent, unless otherwise authorized by the CEO. Mileage reimbursements will be from the employee’s workplace to the event and back regardless if the employee actually departed from his/her home when embarking on the trip.

2. Convention Conference rRegistration fees.

3. 3. Lodging (for out-of-county, multi-day travel) expenses.

a. Actual cost, at the Government rate (or conference event rate, if less).

a. If a discounted rate is not available, actual cost not to exceed the reasonable costs, upon approval of the CEO on the Travel Request form. b. If a discounted rate is not available, actual cost not to exceed the

amount approved by the CEO on the Travel Request form. b.c. When an expense for a second guest is included in the official

receipt, the rate to be claimed by the staff member shall be the rate charged for single occupancy. In the absence of the verification of the single occupancy rate, one-half of the rate charged according to the official receipts shall be charged.

4. 4. Meals. a. For each day of out-of-county travel, actual and reasonable meal

expenses, including gratuities up to 20 percent, will be paid or reimbursed when traveling on official SJCERA business, not to exceed a maximum of $65 per person. Original receipts will be required to document meal expenses under this provision.

b. Any request for reimbursement of actual and reasonable expenses in excess of $65 per person per day of travel may be authorized by the CEO. No allowance will be paid or reimbursed for meals that are included as part of an organization's scheduled program.

c. Expenses for alcoholic beverages will not be paid or reimbursed by SJCERA.

5. Actual cost for other allowable expenses as authorized by the CEO.

6. Personal Expenses such as laundry, barbering, valet services, etc. shall

not be allowed. D. In the event that receipts are not available, a signed affidavit statement for

the amount and the reason for no receipt shall be included.

IX. Reimbursement - Outside of County A. Transportation

1. Public Transportation - Actual cost is reimbursable.


2. Use of Private Vehicles - Shall be reimbursed at the standard rate adopted

by the Internal Revenue Service at the time the expenses were incurred. Mileage payments for the use of private vehicles will be limited to an airfare equivalent, unless otherwise authorized by the CEO.

B. Meals

1. For each day of travel actual and reasonable meal expenses, including

gratuities up to 20%, will be paid or reimbursed when traveling on official SJCERA business, not to exceed a maximum of $65 per person. Receipts will be required to document meal expenses under this provision.

2. Any request for reimbursement of actual and reasonable expenses in excess of $65 per person per day of travel may be authorized by the CEO. No allowance will be paid or reimbursed for meals that are included as part of an organization's scheduled program.

3. Expenses for alcoholic beverages will not be paid or reimbursed by

SJCERA.

C. Lodging

1. Actual cost up to a maximum of $125 per day. Where an expense for a second member of the family is included in the official receipt, the rate to be claimed by the staff member shall be the rate charged for single occupancy. In the absence of the verification of the single occupancy rate, one-half of the rate charged according to the official receipts shall be allowed.

2. The foregoing maximum allowance for lodging may be increased by a

total not to exceed the actual and reasonable costs, upon the approval of the CEO on the Travel Request or Expense Reimbursement.

D. Other Allowable Expenses 1. Actual cost.

E. Personal Expenses

1. Personal expenses such as laundry, barbering, valet services, etc. shall not be

allowed.

X. Reimbursement - Within the County A. Transportation

1. Public Transportation - Actual cost.


2. Use of Private Vehicles - Shall be reimbursed at the standard rate

adopted by the Internal Revenue Service at the time the expenses were incurred.

B. Meals

1. Same as Section IX. Reimbursement – Out of County

C. Lodging

1. None.

D. Other Allowable Expenses

1. Actual cost.

XI. IX. Auditor-Controller's Responsibilities A. The Auditor-Controller shall be responsible for auditing and payment of all

Travel Reimbursement Claims and shall determine whether the expenses on a the Travel Request form conform to the guidelines herein.

B. Items in claims that are questionable charges shall be referred to the

CEOSJCERA staff for explanation. The CEO shall make the determination, in consultation with the Auditor-Controller, if a charge should be eliminated from a Travel Reimbursement Claim or Travel Request form.

C. The amounts of any items so eliminated by the CEO shall be deducted from

the total of the claim before the Auditor-Controller draws the warrant processes the payment..


XII.Volunteers Working for SJCERA A. The above provisions shall apply to the volunteers working for SJCERA. All

necessary travel by volunteers shall be submitted on a separate Travel Request form. The word VOLUNTEER shall be typed prominently on the Travel Request form in box #4, alongside the title. No travel advances will be allowed for volunteers.

XIII. X. Board of Retirement and Executive Staff

The rules governing travel for the Board of Retirement and Executive Staff of SJCERA are contained in the Trustee and Executive Staff Travel Policy Policy - ADMIN 0101, adopted on July 11, 2008 by Resolution 2008-07-01.

A.

XIV. XI. Policy Review

XV. Staff shall review this Policy at least once every three years to ensure that it remains relevant, appropriate, and in compliance. Any revisions or amendments to this policy must be approved by the Board of Retirement in accordance with the bylaws. XII. History

06/11/1993 Adopted 11/07/2008 Revised 06/29/2018 Reviewed, no content changes required; Staff corrected

section cross-references and modified format. 04/12/2019 Policy Review section amended to at least once every three

years Xx/xx/07/12/2019 Amended to eliminate redundancy, references to

volunteers.

Certification of Board Adoption: 04/12/201907/12/2019 Clerk of the Board Date


I. Travel Outside the State

A. When such travel is considered in the best interest of SJCERA, approval must be obtained in advance from the Board of Retirement.

B. It is recognized that due to emergency circumstances, there may be a need for travel that arises precluding prior approval by the Board. In those situations, the Chief Executive Officer (CEO) will consult with the Board Chair to determine the appropriateness of the travel. If approval of the requested travel is granted, the CEO shall, upon receipt of written approval by the Board Chair, authorize travel on behalf of the Board.

C. Trips to the Tahoe basin/Reno area are considered under the instate policies.

II. Travel Outside the County

A. Except for emergency and one-day trips (see Sections I and III), all official travel outside the County of San Joaquin but within the State of California by staff shall have prior approval of the CEO.

B. Request for official travel outside the County of San Joaquin shall, except in emergencies, be submitted at least two weeks in advance of such trip.

C. Emergency trips will be reported to the CEO as soon as possible.

III. One-Day Trips

A. One-day trips (inside or outside of county) shall not require a Travel Request form where the following provisions apply:

1. The travel is required by SJCERA in the performance of its normal functions and is in the course of the staff member’s regularly assigned duties.




5. There is no lodging expense.

B. SJCERA will be required to keep adequate records of any of the above trips authorized so that the necessity of the trip can be audited.

IV. Chief Executive Officer’s Responsibility

A. The CEO is charged with the responsibility to approve or disapprove staff requests for authorized travel on official SJCERA business.


StaffTransportationandTravelPolicy


B. Requests requiring approval of the Board of Retirement shall be submitted to the Board.

V. Authorized Travel at SJCERA Expense

A. Except for one-day trips (see Section III), staff claims for expenses incurred while traveling on behalf of SJCERA must be supported by a SJCERA Travel Request Form, which has been approved by the CEO or designee.

B. No travel or travel reimbursement for staff shall be authorized unless such travel is determined in the best interests of SJCERA.

C. Travel by private car may be authorized by the CEO when determined to be to the best advantage of SJCERA.

VI. Submission of SJCERA Travel Request Form A. The SJCERA Travel Request Form shall be used for all out-of-state and out-of-

county travel, except as authorized under Sections I and III.

B. Requests for Advance may be made for up to 75 percent of the total expected expenses for meals, shuttles or taxis, and lodging pursuant to guidelines herein. The minimum request for a travel advance is $50 and maximum is $2,000 per traveler. Approved travel advances shall be made by check payable to the traveler.

C. The CEO or designee is authorized to sign all SJCERA travel requests.

VII. Travel Arrangements and Policies

A. When a staff member has an approved travel request, he/she should work with the CEO’s administrative support staff when making the necessary travel arrangements to ensure compliance with the provisions herein.

B. Staff is expected to take advantage of the lowest fare when the conditions of such travel are practical.

C. Staff is urged to take advantage of special rates available for car rentals and corporate and/or government rates for hotels and other incidental travel requirements.

D. Staff who are renting cars should purchase the optional liability and collision, or similar insurance offered by the rental agency, the costs of which will be reimbursed by SJCERA.

E. Airfare, lodging, and registration fees are normally the only expenses paid directly by SJCERA on behalf of the traveler. Staff should expect to cover expenses for other items, which will be reimbursed by SJCERA in accordance with this policy after completion of travel.


VIII. Reimbursement for Authorized Travel Expenses

A. Claims for reimbursement of travel expenses shall be signed by CEO or designee and shall be submitted to the Auditor-Controller for payment.

B. Each staff member traveling on behalf of SJCERA shall maintain and submit such records and receipts that are required to substantiate the request for reimbursement.

C. When submitting a claim for reimbursement of travel expenses, the staff member shall include receipts or vouchers as follows:

1. Transportation

a. Public Transportation - Actual cost is reimbursable.

b. Use of Private Vehicles - Shall be reimbursed at the standard rate adopted by the Internal Revenue Service at the time the expenses were incurred. Mileage payments for the use of private vehicles will be limited to an air travel equivalent, unless otherwise authorized by the CEO. Mileage reimbursements will be from the employee’s workplace to the event and back regardless if the employee actually departed from his/her home when embarking on the trip.

2. Registration fees

3. Lodging (for out-of-county, multi-day travel)

a. Actual cost, at the Government rate (or event rate, if less). b. If a discounted rate is not available, actual cost not to exceed the amount

approved by the CEO on the Travel Request form. c. When an expense for a second guest is included in the official receipt,

the rate to be claimed by the staff member shall be the rate charged for single occupancy. In the absence of the verification of the single occupancy rate, one-half of the rate charged according to the official receipts shall be charged.

4. Meals a. For each day of out-of-county travel, actual and reasonable meal

expenses, including gratuities up to 20 percent, will be paid or reimbursed when traveling on official SJCERA business, not to exceed a maximum of $65 per person. Original receipts will be required to document meal expenses under this provision.




5. Actual cost for other allowable expenses as authorized by the CEO. 6. Personal Expenses such as laundry, barbering, valet services, etc. shall not be

allowed.

D. In the event that receipts are not available, a signed affidavit for the amount and the reason for no receipt shall be included.

IX. Auditor-Controller's Responsibilities

A. The Auditor-Controller shall be responsible for auditing and payment of all Travel Reimbursement Claims and shall determine whether the expenses on the Travel Request form conform to the guidelines herein.

B. Items in claims that are questionable charges shall be referred to the SJCERA staff for explanation. The CEO shall make the determination, in consultation with the Auditor-Controller, if a charge should be eliminated from a Travel Reimbursement Claim.

C. The amounts of any items so eliminated by the CEO shall be deducted from the total of the claim before the Auditor-Controller processes the payment.

X. Board of Retirement and Executive Staff

The rules governing travel for the Board of Retirement and Executive Staff of SJCERA are contained in the Trustee and Executive Staff Travel Policy.

XI. Policy Review

Staff shall review this Policy at least once every three years to ensure that it remains relevant, appropriate, and in compliance. Any revisions or amendments to this policy must be approved by the Board of Retirement in accordance with the bylaws.

XII. History

06/11/1993 Adopted 11/07/2008 Revised 06/29/2018 Reviewed, no content changes required; Staff corrected section

cross-references and modified format. 04/12/2019 Policy Review section amended to at least once every three years 07/12/2019 Amended to eliminate redundancy, references to volunteers.


07/12/2019


SJCERA BOARD POLICY / Trustee Education Policy / Page 1 of 4

I. Statement of Purpose

A. The purpose of this Trustee Education Policy is to establish guidelines and procedures for members of the Board of Retirement (Board) of the San Joaquin County Employees’ Retirement Association that recognize and affirm the importance of education to a Trustee’s success in fulfilling his or her fiduciary responsibilities.

II. Policy Objectives

A. Enable Trustees to gain the knowledge they need to carry out their fiduciary responsibilities and engage in effective group discussion, debate and decision making with regard to SJCERA.

B. Provide newly appointed or elected Trustees with the general introductory knowledge they need to effectively participate in Board and Committee deliberations in a timely manner.

C. Provide Trustees opportunities to learn through networking with trustees and staff of other public retirement systems and learn of alternative approaches to common issues and problems.

III. Board Education Guidelines A. Appropriate educational topics for trustees include, but are not limited to:

1. Fiduciary responsibilities 2. Ethics 3. Pension fund investments and investment program management 4. Actuarial matters 5. Pension funding 6. Benefits administration 7. Disability evaluation 8. Fair hearings 9. Pension fund governance 10. New trustee orientation, and. 11. Sexual harassment prevention training

B. A variety of educational sources, venues, and methods are necessary and appropriate since no single method of Trustee education is optimal.


TrusteeEducationPolicy


C. Educational seminars sponsored by state or national public pension fund organizations and seminars sponsored by accredited academic institutions shall be deemed to meet Trustee education requirements. (Exhibit A lists the organizations and institutions that provide educational programs to the public pension community.)

D. This Policy is not intended to dictate that Trustees attend only specific conferences or programs. The Policy is a framework for the types of educational opportunities available to Trustees.

E. The Board will periodically review the programs, training or educational sessions that qualify for trustee education.

F. The CEO shall review and evaluate available educational conferences and bring to the attention of the Board those believed to be valuable and appropriate for Trustee education and compliance with the requirements of this policy. Trustees may also bring forward appropriate educational conferences for consideration.

G. Standards for determining the appropriateness of a potential educational opportunity shall include:

1. The extent to which the opportunity is expected to provide Trustees with the knowledge they need to carry out their roles and responsibilities;

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

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

IV. Trustee Education Requirements

A. Each Trustee must receive a minimum of twenty-four (24) hours of trustee education within the first two years of assuming office and for every subsequent two-year period the Trustee continues as a member of the Board.

1. As part of the twenty-four (24) hours of required education, each Trustee must receive a minimum of at least two (2) hours of sexual harassment prevention training within the first six (6) months of assuming office and for every subsequent two-year period the Trustee remains on the Board.

B. The Board shall maintain a record of Trustee compliance with this policy. This Trustee Education Policy and an annual report on Trustee compliance will be placed on SJCERA’s website.


V. Policy Review A. Staff shall review this Policy at least once every three years to ensure that it

remains relevant, appropriate, and in compliance with Section 31522.8 and of the California Government Code. Any revisions or amendments to this policy must be approved by the Board of Retirement in accordance with the bylaws.

VI. History

09/28/2012 Adopted 01/13/2017 Reviewed by Board of Retirement 06/29/2018 Staff reviewed, no content changes required; updated format. 04/12/2019 Policy Review section amended to at least once every three years 07/ 12 /2019 Added Sexual Harassment Prevention Training per Government Code

section 53237.1 (AB 1661)

Certification of Board Adoption: 07/12/2019 Clerk of the Board Date Relevant References Government Code Sections 31522.8 and 53237.1


EXHIBIT A State or National Pension Fund Organizations and Programs

1. California Association of Public Retirement Systems (CALAPRS): a. Annual board member training held at the Stanford University campus b. Annual General Assembly c. Quarterly Trustee Roundtables

2. Statewide Association of County Retirement Systems (SACRS): a. Spring and Fall Conferences for member systems b. UC Berkeley Haas School of Business course on pension investment

management

3. International Foundation of Employee Benefit Programs (IFEBP)

4. National Conference on Public Employee Retirement

5. National Association of State Retirement Administrators

6. Wharton School of Business, University of Pennsylvania: a. Investment Strategies and Portfolio Management

7. Other Educational Events or Program Providers (include, but are not limited to:)

a. Pension and Investments b. Institutional Investors c. Institutional Real Estate Investment, Inc. (IREI) d. SJCERA Annual Investment Manager Roundtable e. Board education/presentations from retained actuary, auditor, general or

specialist investment consultants, investment managers and advisors f. Investor conferences presented by managers, advisors, or general

partners of funds/strategies in which SJCERA invests


I. Statement of Purpose

A. The purpose of this Trustee Education Policy is to establish guidelines and procedures for members of the Board of Retirement (Board) of the San Joaquin County Employees’ Retirement Association that recognize and affirm the importance of education to a Trustee’s success in fulfilling his or her fiduciary responsibilities.

II. Policy Objectives

A. Enable Trustees to gain the knowledge they need to carry out their fiduciary responsibilities and engage in effective group discussion, debate and decision making with regard to SJCERA.

B. Provide newly appointed or elected Trustees with the general introductory knowledge they need to effectively participate in Board and Committee deliberations in a timely manner.

C. Provide Trustees opportunities to learn through networking with trustees and staff of other public retirement systems and learn of alternative approaches to common issues and problems.

III. Board Education Guidelines A. Appropriate educational topics for trustees include, but are not limited to:

1. Fiduciary responsibilities 2. Ethics 3. Pension fund investments and investment program management 4. Actuarial matters 5. Pension funding 6. Benefits administration 7. Disability evaluation 8. Fair hearings 9. Pension fund governance 10. New trustee orientation, and 11. Sexual harassment prevention training

B. A variety of educational sources, venues, and methods are necessary and appropriate since no single method of Trustee education is optimal.


TrusteeEducationPolicy


C. Educational seminars sponsored by state or national public pension fund organizations and seminars sponsored by accredited academic institutions shall be deemed to meet Trustee education requirements. (Exhibit A lists the organizations and institutions that provide educational programs to the public pension community.)

D. This Policy is not intended to dictate that Trustees attend only specific conferences or programs. The Policy is a framework for the types of educational opportunities available to Trustees.

E. The Board will periodically review the programs, training or educational sessions that qualify for trustee education.

F. The CEO shall review and evaluate available educational conferences and bring to the attention of the Board those believed to be valuable and appropriate for Trustee education and compliance with the requirements of this policy. Trustees may also bring forward appropriate educational conferences for consideration.

G. Standards for determining the appropriateness of a potential educational opportunity shall include:

1. The extent to which the opportunity is expected to provide Trustees with the knowledge they need to carry out their roles and responsibilities;

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

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

IV. Trustee Education Requirements

A. Each Trustee must receive a minimum of twenty-four (24) hours of trustee education within the first two years of assuming office and for every subsequent two-year period the Trustee continues as a member of the Board.

1. As part of the twenty-four (24) hours of required education, each Trustee must receive a minimum of at least two (2) hours of sexual harassment prevention training within the first six (6) months of assuming office and for every subsequent two-year period the Trustee remains on the Board.

B. The Board shall maintain a record of Trustee compliance with this policy. This Trustee Education Policy and an annual report on Trustee compliance will be placed on SJCERA’s website.


V. Policy Review A. Staff shall review this Policy at least once every three years to ensure that it

remains relevant, appropriate, and in compliance. Any revisions or amendments to this policy must be approved by the Board of Retirement in accordance with the bylaws.

VI. History

09/28/2012 Adopted 01/13/2017 Reviewed by Board of Retirement 06/29/2018 Staff reviewed, no content changes required; updated format. 04/12/2019 Policy Review section amended to at least once every three years 07/12 /2019 Added Sexual Harassment Prevention Training per Government Code

section 53237.1 (AB 1661)

Certification of Board Adoption: 07/12/2019 Clerk of the Board Date Relevant References Government Code Sections 31522.8 and 53237.1


EXHIBIT A State or National Pension Fund Organizations and Programs

1. California Association of Public Retirement Systems (CALAPRS): a. Annual board member training held at the Stanford University campus b. Annual General Assembly c. Quarterly Trustee Roundtables

2. Statewide Association of County Retirement Systems (SACRS): a. Spring and Fall Conferences for member systems b. UC Berkeley Haas School of Business course on pension investment

management

3. International Foundation of Employee Benefit Programs (IFEBP)

4. National Conference on Public Employee Retirement

5. National Association of State Retirement Administrators

6. Wharton School of Business, University of Pennsylvania: a. Investment Strategies and Portfolio Management

7. Other Educational Events or Program Providers (include, but are not limited to:)

a. Pension and Investments b. Institutional Investors c. Institutional Real Estate Investment, Inc. (IREI) d. SJCERA Annual Investment Manager Roundtable e. Board education/presentations from retained actuary, auditor, general or

specialist investment consultants, investment managers and advisors f. Investor conferences presented by managers, advisors, or general

partners of funds/strategies in which SJCERA invests

SJCERA BOARD POLICY / Trustee and Executive Staff Travel Policy / Page 1 of 6

I. Purpose

A. The Board of Retirement (Board) and designated staff have a fiduciary duty to

obtain education on matters of public pension investments and administration, to monitor the investments and administration of the Trust, and to monitor the work of those to whom the Board has delegated authority to manage and administer Trust assets.

B. To execute this oversight, Trustees and/or Executive Staff may be required to

participate in business meetings, educational programs, conferences and seminars and conduct due diligence visits on behalf SJCERA in or outside of the state of California.

C. For purposes of this policy Executive Staff are defined as:

1. Chief Executive Officer (CEO) 2. Assistant Chief Executive Officer 3. Chief Retirement Investment Officer 4. Deputy County Counsel assigned as counsel to the Board

D. Trustees and Executive staff are entitled to reimbursement for usual and reasonable expenses incurred in fulfilling their leadership role and it is the purpose of this policy to establish guidelines for approval and reimbursement of travel and related expenses that are incurred while fulfilling those roles.

II. Requests for Travel A. To assist the Board and Executive Staff in the planning of travel, the CEO is

responsible for developing and managing education and travel expense programs consistent with the best interests of SJCERA. A schedule of upcoming conferences, meetings and seminars will be developed, maintained and provided as part of the Board’s monthly meeting agenda.

B. Any Board or Executive Staff member requesting to attend an event that requires an overnight stay must notify the CEO or designee in advance. A formal Travel Request for attendance at the event will be completed by SJCERA staff. The Travel Request will identify the event, dates, location, proposed SJCERA attendees, and estimated costs, with the event agenda and schedule attached, if available.

C. Requests to attend conferences, meetings, seminars or special sessions sponsored by the State Association of County Retirement Systems (SACRS)


TrusteeandExecutiveStaffTravelPolicy


and the California Association of Public Retirement Systems (CALAPRS) are considered approved travel without further action of the Board.

D. All travel requests shall be summarized on thea “Summary of Pending Trustee and Executive Staff Travel” report, updated and included in the Board’s monthly meeting agenda for information or action as appropriate. The reportlist will include the status of the travel request approval. and the approver(s).

E. Trustees and Executive Staff shall notify the CEO or designee of any changes in travel or accommodation arrangements in a timely manner. Failure to do so may result in the Trustee or Executive Staff member being held responsible for any additional costs incurred as a result of changes or cancellation.

III. Approval of Travel A. All requests for travel subject to this policy require approval in advance by the

Board. 1. Exception: It is recognized that due to emergency circumstances, there

may be a need for travel that arises precluding prior approval by the Board. In those situations, the CEO will consult with the Board Chair to determine the appropriateness of the travel. If approval of the requested travel is granted, the CEO shall, upon receipt of written approval by the Board Chair, authorize travel on behalf of the Board.

B. In determining the priority and approval for attendance at conferences, meetings and seminars, the Board shall consider: 1. The extent to which the participants’ capacity to carry out his/her duties as

a Trustee or Executive Staff of SJCERA will be enhanced in a significant manner (including speaking engagements where the participant can enhance his/her capacity through attendance at the event);

2. The cost-effectiveness of the opportunity; and 3. The timeliness and relevance of the opportunity.

C. In-State Travel is defined as travel within California or to the Tahoe basin/Reno area.

D. Out-of-State Travel is defined as travel outside of California but within the fifty United States.

E. International Travel is defined as travel outside of the fifty United States. 1. In consideration of SJCERA’s asset allocation to non-U.S. investments, the

Board may authorize one or more Trustees or Executive Staff to travel outside the United States. Any request for international travel will be presented as an action item on a Board meeting agenda. Approval for international travel will require a vote by the Board.

F. All requests for travel listed on the “Summary of Pending Trustee and Executive Staff Travel” that are pending approval by the Board may be approved by


consent at a Board meeting. A Board member may request that an item on the travel list be removed for separate consideration and action from the rest of the travel requests pending approval. All travel requests pending Board approval, whether on the “consent” travel list or considered as a separate item, must be approved by a vote of the Board.

G. All approved requests for travel require the completion of a SJCERA Travel Request Form prior to the commencement of travel and is required for reimbursement of travel expenses.

H. The CEO or designee is authorized to sign SJCERA Travel Request Forms.

IV. Reimbursement of Travel Expenses A. SJCERA shall only pay or reimburse valid travel and related expenses incurred

directly by SJCERA Trustees and Executive Staff. All other expenses shall be the responsibility of the respective Trustee or Executive Staff member.

B. Travel and related expenses that may be paid on behalf of or reimbursed to Trustees and Executive Staff include, but are not limited to, the following: 1. Coach Class Airfare

a. Actual costs for air travel as evidenced by airline itinerary and receipt. Travelers are expected to take advantage of the lowest airfare.

2. Ground Transportation: a. Actual reasonable fares for taxis, shuttles, trains, buses, subways,

and customary gratuities, if any, up to 20% etc., as evidenced by receipts.

b. Rental cars - Actual reasonable costs as evidenced by receipt. When renting cars for official SJCERA business, travelers are expected to take advantage of discounted and/or special government rates if available. Travelers are expected to purchase available optional liability and collision, or similar insurance offered by the rental agency. The cost of such insurance will be reimbursed by SJCERA.

c. Personal automobile - Mileage shall be reimbursed for in state travel at the standard adopted by the Internal Revenue Service at the time the expenses were incurred. Mileage reimbursements for Appointed Trustees will be to and from the Trustee’s home address. Mileage reimbursements for Elected Trustees and Executive Staff will be to and from SJCERA regardless of where they actually departed from when embarking on the trip.

3. Lodging (single occupancy):


a. The actual reasonable cost for lodging expense will be paid or reimbursed.

b. Travelers are expected to take advantage of group discounts or special government rates for lodging when available.

c. When a traveler is attending an event held at a specific hotel, generally the traveler is expected to arrange lodging will stay at the event hotel.

i. However, some conferences are held at high cost luxury hotels. In these situations, if alternate, lower cost, conveniently located lodging is available, travelers are expected to take advantage of such lower cost lodging alternatives.

4. Meal expenses: a. For each day of travel actual and reasonable meal expenses,

including gratuities up to 20%, will be paid or reimbursed when traveling on official SJCERA business not to exceed a maximum of $65 per person. Receipts will be required to document meal expenses under this provision.



5. Telephone calls and business services (photocopies, faxes, computer services etc.). Actual reasonable expenses incurred as evidenced by receipts.

6. The limitations on reimbursement specified herein shall not apply when Trustees and/or Executive Staff attend annual investor meetings sponsored by an investment manager or general partner under contract with SJCERA or any other instance or event for which SJCERA receives and pays an invoice from the meeting or event sponsor(s) for lodging, meals or other allowable expenses for SJCERA attendee(s).

C. Requests for reimbursement must be accompanied by actual receipts and submitted to the CEO for approval and reimbursement within ninety days (90) from the time the expenses were incurred.

1. If actual receipts are not readily available, such as for gratuities, parking meters, and bridge toll, the requestor may submit a substitute receipt or form, certifying by signature that the receipt was not available to submit.


D. The CEO shall approve all requests for reimbursement of Trustees and Executive Staff travel expenses, excluding the CEO’s. The Board Chair shall approve the CEO’s requests for reimbursement of expenses.

E. Claims for reimbursement of travel expenses shall be submitted to the Auditor-Controller.

F. Reimbursements submitted more than ninety days after the end of the calendar year in which the expense was incurred may be denied.

V. Travel Reports A. A “Summary of Completed Trustee and Executive Staff Travel” report will be

provided to the Board no less than on a quarterly basis. This report shall identify the event, the individual Trustee or Executive Staff who attended, the location, purpose and cost of travel. This report will be cumulative for a calendar year.

B. Trustees or Executive Staff members, who attend a seminar, on-site visitation or conference, except as specified in II C, should prepare a written report on the content and the continuing value for future attendance by other Board or staff members. These reports will be provided to the Board in a meeting agenda.

VI. Political Reform Act Requirements A. Trustees and Executive staff have the responsibility to ascertain and comply

with their obligations under the Political Reform Act.

VII. Policy Review


VIII. History

076/113/2008 Board Adopted 11/07/2008 Board Revised 12/17/2010 Board Revised 03/22/2013 Board Revised to include invoiced-event exemption to

reimbursement limitations 06/29/2018 Staff reviewed, no content changes required; updated format 04/12/2019 Policy Review section amended to at least once every three years Xx/xx/2019 Added customary gratuities for ground travel and made various

technical, non-substantive corrections


Certification of Board Adoption: Clerk of the Board Date


I. Purpose

A. The Board of Retirement (Board) and designated staff have a fiduciary duty to

obtain education on matters of public pension investments and administration, to monitor the investments and administration of the Trust, and to monitor the work of those to whom the Board has delegated authority to manage and administer Trust assets.

B. To execute this oversight, Trustees and/or Executive Staff may be required to

participate in business meetings, educational programs, conferences and seminars and conduct due diligence visits on behalf SJCERA in or outside of the state of California.

C. For purposes of this policy Executive Staff are defined as:

1. Chief Executive Officer (CEO) 2. Assistant Chief Executive Officer 3. Retirement Investment Officer 4. Deputy County Counsel assigned as counsel to the Board

D. Trustees and Executive staff are entitled to reimbursement for usual and reasonable expenses incurred in fulfilling their leadership role and it is the purpose of this policy to establish guidelines for approval and reimbursement of travel and related expenses that are incurred while fulfilling those roles.

II. Requests for Travel A. To assist the Board and Executive Staff in the planning of travel, the CEO is

responsible for developing and managing education and travel expense programs consistent with the best interests of SJCERA. A schedule of upcoming conferences, meetings and seminars will be developed, maintained and provided as part of the Board’s monthly meeting agenda.

B. Any Board or Executive Staff member requesting to attend an event that requires an overnight stay must notify the CEO or designee in advance. A formal Travel Request for attendance at the event will be completed by SJCERA staff. The Travel Request will identify the event, dates, location, proposed SJCERA attendees, and estimated costs, with the event agenda and schedule attached, if available.

C. Requests to attend conferences, meetings, seminars or special sessions sponsored by the State Association of County Retirement Systems (SACRS) and the California Association of Public Retirement Systems (CALAPRS) are considered approved travel without further action of the Board.


TrusteeandExecutiveStaffTravelPolicy


D. All travel requests shall be summarized on the “Summary of Pending Trustee and Executive Staff Travel” report, updated and included in the Board’s monthly meeting agenda for information or action as appropriate. The report will include the status of the travel request approval.

E. Trustees and Executive Staff shall notify the CEO or designee of any changes in travel or accommodation arrangements in a timely manner. Failure to do so may result in the Trustee or Executive Staff member being held responsible for any additional costs incurred as a result of changes or cancellation.

III. Approval of Travel A. All requests for travel subject to this policy require approval in advance by the

Board. 1. Exception: It is recognized that due to emergency circumstances, there

may be a need for travel that arises precluding prior approval by the Board. In those situations, the CEO will consult with the Board Chair to determine the appropriateness of the travel. If approval of the requested travel is granted, the CEO shall, upon receipt of written approval by the Board Chair, authorize travel on behalf of the Board.

B. In determining the priority and approval for attendance at conferences, meetings and seminars, the Board shall consider: 1. The extent to which the participants’ capacity to carry out his/her duties as

a Trustee or Executive Staff of SJCERA will be enhanced in a significant manner (including speaking engagements where the participant can enhance his/her capacity through attendance at the event);

2. The cost-effectiveness of the opportunity; and 3. The timeliness and relevance of the opportunity.

C. In-State Travel is defined as travel within California or to the Tahoe basin/Reno area.

D. Out-of-State Travel is defined as travel outside of California but within the fifty United States.

E. International Travel is defined as travel outside of the fifty United States. 1. In consideration of SJCERA’s asset allocation to non-U.S. investments, the

Board may authorize one or more Trustees or Executive Staff to travel outside the United States. Any request for international travel will be presented as an action item on a Board meeting agenda. Approval for international travel will require a vote by the Board.

F. All requests for travel listed on the “Summary of Pending Trustee and Executive Staff Travel” that are pending approval by the Board may be approved by consent at a Board meeting. A Board member may request that an item on the travel list be removed for separate consideration and action from the rest of the travel requests pending approval. All travel requests pending Board approval, whether on the “consent” travel list or considered as a separate item, must be approved by a vote of the Board.


G. All approved requests for travel require the completion of a SJCERA Travel Request Form prior to the commencement of travel and is required for reimbursement of travel expenses.

H. The CEO or designee is authorized to sign SJCERA Travel Request Forms.

IV. Reimbursement of Travel Expenses A. SJCERA shall only pay or reimburse valid travel and related expenses incurred

directly by SJCERA Trustees and Executive Staff. All other expenses shall be the responsibility of the respective Trustee or Executive Staff member.

B. Travel and related expenses that may be paid on behalf of or reimbursed to Trustees and Executive Staff include, but are not limited to, the following: 1. Coach Class Airfare

a. Actual costs for air travel as evidenced by airline itinerary and receipt. Travelers are expected to take advantage of the lowest airfare.

2. Ground Transportation: a. Actual reasonable fares for taxis, shuttles, trains, buses, subways,

and customary gratuities, if any, up to 20% etc., as evidenced by receipts.

b. Rental cars - Actual reasonable costs as evidenced by receipt. When renting cars for official SJCERA business, travelers are expected to take advantage of discounted and/or special government rates if available. Travelers are expected to purchase available optional liability and collision, or similar insurance offered by the rental agency. The cost of such insurance will be reimbursed by SJCERA.

c. Personal automobile - Mileage shall be reimbursed for in state travel at the standard adopted by the Internal Revenue Service at the time the expenses were incurred. Mileage reimbursements for Appointed Trustees will be to and from the Trustee’s home address. Mileage reimbursements for Elected Trustees and Executive Staff will be to and from SJCERA regardless of where they actually departed from when embarking on the trip.

3. Lodging (single occupancy): a. The actual reasonable cost for lodging expense will be paid or

reimbursed. b. Travelers are expected to take advantage of group discounts or

special government rates for lodging when available. c. When a traveler is attending an event held at a specific hotel,

generally the traveler will stay at the event hotel. i. However, some conferences are held at high cost luxury

hotels. In these situations, if alternate, lower cost,


conveniently located lodging is available, travelers are expected to take advantage of such lower cost lodging alternatives.

4. Meal expenses: a. For each day of travel actual and reasonable meal expenses,

including gratuities up to 20%, will be paid or reimbursed when traveling on official SJCERA business not to exceed a maximum of $65 per person. Receipts will be required to document meal expenses under this provision.



5. Telephone calls and business services (photocopies, faxes, computer services etc.). Actual reasonable expenses incurred as evidenced by receipts.

6. The limitations on reimbursement specified herein shall not apply when Trustees and/or Executive Staff attend annual investor meetings sponsored by an investment manager or general partner under contract with SJCERA or any other instance or event for which SJCERA receives and pays an invoice from the meeting or event sponsor(s) for lodging, meals or other allowable expenses for SJCERA attendee(s).

C. Requests for reimbursement must be accompanied by actual receipts and submitted to the CEO for approval and reimbursement within ninety days (90) from the time the expenses were incurred.

1. If actual receipts are not readily available, the requestor may submit a substitute receipt or form, certifying by signature that the receipt was not available to submit.

D. The CEO shall approve all requests for reimbursement of Trustees and Executive Staff travel expenses, excluding the CEO’s. The Board Chair shall approve the CEO’s requests for reimbursement of expenses.

E. Claims for reimbursement of travel expenses shall be submitted to the Auditor-Controller.

F. Reimbursements submitted more than ninety days after the end of the calendar year in which the expense was incurred may be denied.

V. Travel Reports A. A “Summary of Completed Trustee and Executive Staff Travel” report will be

provided to the Board no less than on a quarterly basis. This report shall


identify the event, the individual Trustee or Executive Staff who attended, the location, and cost of travel. This report will be cumulative for a calendar year.

B. Trustees or Executive Staff members, who attend a seminar, on-site visitation or conference, except as specified in II C, should prepare a written report on the content and the continuing value for future attendance by other Board or staff members. These reports will be provided to the Board in a meeting agenda.

VI. Political Reform Act Requirements A. Trustees and Executive staff have the responsibility to ascertain and comply

with their obligations under the Political Reform Act.

VII. Policy Review


VIII. History

07/11/2008 Board Adopted 11/07/2008 Board Revised 12/17/2010 Board Revised 03/22/2013 Board Revised to include invoiced-event exemption to

reimbursement limitations 06/29/2018 Staff reviewed, no content changes required; updated format 04/12/2019 Policy Review section amended to at least once every three years Xx/xx/2019 Added customary gratuities for ground travel and made various

technical, non-substantive corrections



San Joaquin County Employees' Board of Retirement Retirement Association Resolution

RESOLUTION TITLE: BOARD POLICY AMENDMENTS

RESOLUTION NO. 2019-07-01

WHEREAS, the Board of Retirement for the San Joaquin County Employees’ Retirement Association (“SJCERA”) administers SJCERA for the benefit of its members and their beneficiaries; and

WHEREAS, pursuant to Government Code Sections 31525, 31526 and 31527, the

Board may make regulations, set policy and develop procedures to administer the system; and

WHEREAS, Board policies are reviewed at least once every three years to ensure

they remain relevant, appropriate, and in compliance; and WHEREAS, SJCERA staff and the Administrative Committee have proposed

amendments to the following policies, as reflected in the History section of each policy: Age Verification Policy Communication Policy Computer Equipment Policy Conflict of Interest Policy Disability Retirement Policy and Procedure Dissolution of Marriage or Registered Domestic Partner Policy Employer Termination Policy Staff Transportation and Travel Policy Trustee Education Policy Trustee and Executive Staff Travel NOW, THEREFORE BE IT RESOLVED that the Board hereby approves the proposed

amendments and adopts the above-referenced Board policies as amended. PASSED AND APPROVED by the Board of Retirement of the San Joaquin County

Employees' Retirement Association on the 12th day of July 2019.

AYES:

NOES: ____________________________ MICHAEL RESTUCCIA, Chair ABSENT: Attest: ABSTAIN: ____________________________ RAYMOND McCRAY, Secretary


Agenda Item 6.0 July 12, 2019 SUBJECT: CEO Performance Review Policy SUBMITTED FOR: ___ CONSENT l__X_ ACTION ___ INFORMATION RECOMMENDATION The Administrative Committee recommends to the Board the adoption of the revised CEO Performance Review Policy, as modified by the Ad Hoc CEO Performance Review Committee. PURPOSE To clarify the CEO Performance Review process, and increase the involvement of the Committee in developing the review. DISCUSSION The CEO Performance Review policy was developed in 2018 and used the first time in 2019. After using the policy, the Ad Hoc Performance Review committee identified opportunities for improvement that will assist future trustees in following the policy. On June 20, staff brought those amendments to the Administrative Committee and a summary of the changes follows:

• Make the CEO Performance Review Committee a standing committee, and identify appointment considerations, including a rotation of members.

• Redesign the Performance Review Worksheet to reduce the risk of evaluators inadvertently skipping questions.

• Create templates for the consolidated trustees’ feedback and the performance review memo. • Clarify that the memo is the final review and trustees must destroy all other work product

created to provide input and/or otherwise develop the memo. • Clarify the committee’s role in developing the review memo. • Integrate compensation review into the process.

The overall process remains the same. The changes refine the process in order to provide additional structure and clarity. Amendments made by the Administrative Committee in addition to the Ad Hoc Committee’s changes are highlighted in yellow. Additional staff-suggested changes identified following the Committee meeting are highlighted in blue. Staff and the Administrative Committee agree that a limit should be placed on the incentive pay referenced in the policy. The Administrative Committee felt the limit should be a matter for discussion with the full Board and requested staff provide examples of other public employment incentive compensation to assist with that discussion. The samples that were found range between three percent and 25 percent, encompassing both County and State employers. ATTACHMENTS CEO Performance Review Policy – clean and mark-up JOHANNA SHICK Chief Executive Officer

I. Purpose A. To fulfill the Board of Retirement’s fiduciary duties of loyalty, skill, care and diligence

across all facets of SJCERA governance, including assuring effective executive management, this policy provides guidelines and procedures for the systematic assessment of Chief Executive Officer (CEO) performance.

B. To support SJCERA’s mission, vision and values by enhancing CEO and

organizational effectiveness, this policy seeks to ensure that SJCERA’s mandates are being carried out appropriately, that the working relationship between the Board and the CEO is effective and strong, and that the CEO is provided with specific expectations and feedback regarding his/her performance.

II. Frequency and Content

A. CEO performance is evaluated annually against clearly defined objectives and

expectations, which are developed jointly by the CEO and trustees.

1. Objectives and expectations may include SJCERA’s achievement of financial and organizational goals, and service targets, as well as effective human resource management, progress on implementing SJCERA strategy, and other Board directives.

III. Objectives

A. The CEO Performance Review includes two objectives: assessment of performance

during the past fiscal year and development of goals for the upcoming year. The evaluation should document past successes and targeted achievements, future objectives and goals, and also the CEO’s ability, vision, strategy and resources to achieve those aims.

IV. Process and Timeline

A. The CEO Performance Review will proceed according to the following process and

timeline: 1. October

a. The CEO presents to the Board of Retirement for their approval written goals for the upcoming calendar year.

b. Goals should include performance targets and personal/development goals.

BoardAdministrativePolicyChiefExecutiveOfficerPerformanceReview

SJCERA BOARD POLICY / CEO Performance Review Policy / Page 2 of 4

c. The Aapproved goals arewill be incorporated into the staff goals and budget, and considered by the Board and the CEO Performance Review Committee in the performance and compensation review process.

2. December

a. The Board Chair appoints an ad hoc committee for yearly CEO Performance Review. In making committee appointments, the Board Chair shall consider, to the extent possible, the following factors: retention of no more than 50 percent of the previous year’s committee; membership mix of elected and appointed trustees; and inclusion of a trustee with knowledge of County human resources practices.

a.b. The CEO presents a budget, which identifies necessary funding to

achieve approved goals.

3. January

a. The CEO reports on accomplishments on prior-year goals to the full board at its regularly scheduled meeting in open session.

b. In closed session, the CEO provides to all Board members a self-evaluation for the Board’s consideration in completing their overall evaluation.

c. CEO Performance Feedback Worksheets (Attachment A) are distributed to all Board members.

d. The CEO Performance Review Ad Hoc Committee meets and appoints a Committee Chair. The Committee Chair is responsible for gathering the Worksheets, compiling/summarizing results, relaying trustee comments during review discussions, and, in collaboration with the committee, drafting the performance review memo.

e. The Worksheets shall be returned to the Ad Hoc Committee Chair. The Chair shall set a due date that is no later than month-end. i. The Ad Hoc Committee Chair consolidates feedback into one the

Consolidated Trustee Feedback form (Attachment B) and drafts a memo using the Memo Template (Attachment C) reflecting the composite of the feedbackcollective assessment of the CEO’s performance. The Committee Chair distributes the consolidated feedback and draft memo to the CEO Performance Review Committee.

ii. The Ad Hoc Committee Chair may have one-on-one discussions as

needed to clarify trustees’ individual input, provided appropriate care is taken to ensure compliance with the Brown Act.


4. February/March

a. The committee meets, without staff present, to review and provide input on

the memo based on the consolidated feedback, including assisting with summarizing the feedback, determining the key accomplishments, and making suggestions for further development (if any) to include in the memo. The committee will also formulate a recommendation regarding compensation in accordance with Section IV(A)(4)(g) of this policy and the CEO’s employment agreement.

a.b. The Ad Hoc Committee Chair distributes the summarized feedback and committee-approved draft memo to the trustees and the CEO. i. The trustees may have one-on-one discussions with the Ad Hoc

Committee Chair as needed regarding the draft memo, provided appropriate care is taken to ensure compliance with the Brown Act.

b.c. The Board Chair and the Ad Hoc Committee Chair meet with the CEO to discuss the feedback.

c. In consultation with the CEO and the Ad Hoc Committee, the Ad Hoc Committee Chair may modify the draft memo and shall finalize it as the CEO Performance Review Memo for distribution to the Board and the CEO.

d. The CEO meets with the Board in closed session to discuss the performance review memo and feedback.

e. Upon completion of the closed session, the Board Cchair signs the memo, obtains the CEO signature acknowledging receipt, provides a copy of the review memo to the CEO, and submits the original signed memo to the County Human Resources Department (44 North San Joaquin Street, Suite 330, Stockton, CA 95202) for inclusion in the CEO’s personnel file.

e.f. Upon completion of the closed session, the Committee Cchair and all committee Board members shall shred or otherwise destroy all feedback, notes, drafts, emails, and any other related documents and correspondence, whether paper or electronic, that were produced or obtained, sent or received, as part of the CEO Review Process.

g. The Board subsequently authorizes merit, equity, or incentive compensation increases, if any, based on performance. Such increases, if any, shall be in addition to any COLA increases awarded to the Executive Unit. i. Compensation for the CEO position shall be included in a market survey

of total compensation every three years, to ensure its competiveness. 1. The County Human Resources Division conducts total compensation

surveys for County department heads. SJCERA should request that the CEO position be included in the survey.

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Highlight

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Highlight

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Highlight


ii. The Board may authorize incentive compensation if it determines the goals approved pursuant to Section IV.A.1 have been achieved. Such incentive compensation shall not exceed __% of the CEO’s annual base salary, increase base pay, or be included as part of the CEO’s retirement-eligible compensation.

iii. Discussion or action on proposed compensation increases shall occur in compliance with the requirements of the Brown Act.

5. June

a. CEO provides mid-year progress report on calendar year goals presented to the Board pursuant to Section IV(A)(1).

b. Board discusses mid-year progress and performance with CEO present in closed session. i. This meeting is intended to assist the Board in monitoring the

organization’s progress toward the annual goals, to provide an opportunity to adjust expectations in light of new circumstances, and to provide the opportunity for the CEO to make adjustments, if needed, during the second half of the calendar year.

V. Policy Review

A. Staff shall review this Policy annually to ensure that it remains relevant, appropriate,

and in compliance. Any revisions or amendments to this policy must be approved by the Board of Retirement in accordance with the bylaws.

VI. History

06/08/2018 Adopted Policy 06/29/2018 Staff updated format MM07/DD12/2019 Amended to make Committee a standing committee with appointment

considerations, clarified Committee’s role, and integrated compensation review into the process ….


I. Purpose A. To fulfill the Board of Retirement’s fiduciary duties of loyalty, skill, care and diligence

across all facets of SJCERA governance, including assuring effective executive management, this policy provides guidelines and procedures for the systematic assessment of Chief Executive Officer (CEO) performance.

B. To support SJCERA’s mission, vision and values by enhancing CEO and

organizational effectiveness, this policy seeks to ensure that SJCERA’s mandates are being carried out appropriately, that the working relationship between the Board and the CEO is effective and strong, and that the CEO is provided with specific expectations and feedback regarding his/her performance.

II. Frequency and Content

A. CEO performance is evaluated annually against clearly defined objectives and

expectations, which are developed jointly by the CEO and trustees.

1. Objectives and expectations may include SJCERA’s achievement of financial and organizational goals, and service targets, as well as effective human resource management, progress on implementing SJCERA strategy, and other Board directives.

III. Objectives

A. The CEO Performance Review includes two objectives: assessment of performance

during the past fiscal year and development of goals for the upcoming year. The evaluation should document past successes and targeted achievements, future objectives and goals, and also the CEO’s ability, vision, strategy and resources to achieve those aims.

IV. Process and Timeline

A. The CEO Performance Review will proceed according to the following process and

timeline: 1. October

a. The CEO presents to the Board of Retirement for their approval written goals for the upcoming calendar year.

b. Goals should include performance targets and personal/development goals.

BoardAdministrativePolicyChiefExecutiveOfficerPerformanceReview


c. The approved goals will be incorporated into the staff goals and budget, and considered by the Board and the CEO Performance Review Committee in the performance and compensation review process.

2. December

a. The Board Chair appoints a committee for yearly CEO Performance Review. In making committee appointments, the Board Chair shall consider, to the extent possible, the following factors: retention of no more than 50 percent of the previous year’s committee; membership mix of elected and appointed trustees; and inclusion of a trustee with knowledge of County human resources practices.

b. The CEO presents a budget, which identifies necessary funding to achieve

approved goals.

3. January

a. The CEO reports on accomplishments on prior-year goals to the full board at its regularly scheduled meeting in open session.

b. In closed session, the CEO provides to all Board members a self-evaluation for the Board’s consideration in completing their overall evaluation.

c. CEO Performance Feedback Worksheets (Attachment A) are distributed to all Board members.

d. The CEO Performance Review Committee meets and appoints a Committee Chair. The Committee Chair is responsible for gathering the Worksheets, compiling/summarizing results, relaying trustee comments during review discussions and, in collaboration with the committee, drafting the performance review memo.

e. The Worksheets shall be returned to the Committee Chair. The Chair shall set a due date that is no later than month-end. i. The Committee Chair consolidates feedback into the Consolidated

Trustee Feedback form (Attachment B) and drafts a memo using the Memo Template (Attachment C) reflecting the collective assessment of the CEO’s performance. The Committee Chair distributes the consolidated feedback and draft memo to the CEO Performance Review Committee.

ii. The Committee Chair may have one-on-one discussions as needed to

clarify trustees’ individual input, provided appropriate care is taken to ensure compliance with the Brown Act.

4. February/March


a. The committee meets, without staff present, to review and provide input on

the memo based on the consolidated feedback, including assisting with summarizing the feedback, determining the key accomplishments, and making suggestions for further development (if any) to include in the memo. The committee will also formulate a recommendation regarding compensation in accordance with Section IV(A)(4)(g) of this policy and the CEO’s employment agreement.

b. The Committee Chair distributes the summarized feedback and committee-approved draft memo to the trustees and the CEO. i. The trustees may have one-on-one discussions with the Committee

Chair as needed regarding the draft memo, provided appropriate care is taken to ensure compliance with the Brown Act.

c. The Board Chair and the Committee Chair meet with the CEO to discuss the feedback.

d. The CEO meets with the Board in closed session to discuss the performance review memo and feedback.

e. Upon completion of the closed session, the Board Chair signs the memo, obtains the CEO signature acknowledging receipt, provides a copy of the review memo to the CEO, and submits the original signed memo to the County Human Resources Department (44 North San Joaquin Street, Suite 330, Stockton, CA 95202) for inclusion in the CEO’s personnel file.

f. Upon completion of the closed session, all Board members shall shred or otherwise destroy all feedback, notes, drafts, emails, and any other related documents and correspondence, whether paper or electronic, that were produced or obtained, sent or received, as part of the CEO Review Process.

g. The Board subsequently authorizes merit, equity, or incentive compensation increases, if any, based on performance. Such increases, if any, shall be in addition to any COLA increases awarded to the Executive Unit. i. Compensation for the CEO position shall be included in a market survey

of total compensation every three years, to ensure its competiveness. 1. The County Human Resources Division conducts total compensation

surveys for County department heads.

ii. The Board may authorize incentive compensation if it determines the goals approved pursuant to Section IV.A.1 have been achieved. Such incentive compensation shall not exceed __% of the CEO’s annual base salary, increase base pay, or be included as part of the CEO’s retirement-eligible compensation.


iii. Discussion or action on proposed compensation increases shall occur in compliance with the requirements of the Brown Act.

5. June

a. CEO provides mid-year progress report on calendar year goals presented to the Board pursuant to Section IV(A)(1).

b. Board discusses mid-year progress and performance with CEO present in closed session. i. This meeting is intended to assist the Board in monitoring the

organization’s progress toward the annual goals, to provide an opportunity to adjust expectations in light of new circumstances, and to provide the opportunity for the CEO to make adjustments, if needed, during the second half of the calendar year.

V. Policy Review

A. Staff shall review this Policy annually to ensure that it remains relevant, appropriate,

and in compliance. Any revisions or amendments to this policy must be approved by the Board of Retirement in accordance with the bylaws.

VI. History

06/08/2018 Adopted Policy 06/29/2018 Staff updated format 07/12/2019 Amended to make Committee a standing committee with appointment

considerations, clarified Committee’s role, and integrated compensation review into the process


San Joaquin County Employees' Board of Retirement Retirement Association Resolution

RESOLUTION TITLE: CEO PERFORMANCE REVIEW POLICY

RESOLUTION NO. 2019-07-02

WHEREAS, the Board of Retirement for the San Joaquin County Employees’ Retirement Association (“SJCERA”) administers SJCERA for the benefit of its members and their beneficiaries; and

WHEREAS, pursuant to Government Code Sections 31525, 31526 and 31527, the Board may make regulations, set policy and develop procedures to administer the system; and

WHEREAS, Board policies are reviewed at least once every three years to ensure

they remain relevant, appropriate, and in compliance; and WHEREAS, the Chief Executive Officer (CEO) is appointed by, and serves at the

pleasure of, the Board pursuant to Government Code Section 31522.2; and WHEREAS, the Board hereby amends the CEO Performance Review Policy as

follows: 1) Make the CEO Performance Review Committee a standing committee, and

identify appointment considerations, including a rotation of members 2) Redesign the Performance Review Worksheet to reduce risk of evaluators

inadvertently skipping questions 3) Create templates for the consolidated trustees’ feedback and the performance

review memo 4) Clarify that the memo is the final review and trustees must destroy all other work

product created to provide input and/or otherwise develop the memo 5) Clarify the committee’s role in developing the review memo 6) Integrate compensation review into the process 7) Limit the incentive pay referenced in the policy NOW, THEREFORE BE IT RESOLVED that the Board hereby approves the proposed

amendments and adopts the above-referenced CEO Performance Review Policy as amended.

PASSED AND APPROVED by the Board of Retirement of the San Joaquin County

Employees' Retirement Association on the 12th day of July 2019.

AYES:

NOES: ____________________________ MICHAEL RESTUCCIA, Chair ABSENT: Attest: ABSTAIN: ____________________________ RAYMOND McCRAY, Secretary

2019 Preliminary Valuation Results and Experience Study

Graham A. Schmidt, ASA, EA, FCA, MAAA Anne D. Harper, FSA, EA, MAAA

San Joaquin County Employees’ Retirement System

July 12, 2019

July 12, 2019

Topics for Discussion

1

Preliminary 2019 Valuation Results • Executive Summary and Highlights • Changes Since Last Valuation

Demographic Assumptions

Projections Under Alternative Economic Assumptions

Next Steps

July 12, 2019

Executive Summary

2

January 1, 2018 January 1, 2019

Actuarial Liability (AL) $ 4,497.0 $ 4,705.3

Actuarial Value of Assets (AVA)1 2,913.2 3,044.9

Unfunded Actuarial Liability (UAL)1 $ 1,583.8 $ 1,660.4

Funded Ratio (AVA) 64.8% 64.7%

Funded Ratio (MVA)1

63.6% 60.4%

Inactive Funded Ratio 63.3% 64.6%

Contributions as a Percentage of Payroll

Employer Normal Cost Rate 14.91% 14.37%

Unfunded Actuarial Liability Rate2 29.73% 31.47%

Administrative Expense 0.86% 0.84%

Total Employer Contribution Rate 45.50% 46.68%

1

2

San Joaquin County Employees' Retirement Association

Summary of Key Plan Results

Prior to Assumption Changes

Includes the additional County and MVCD Contribution Reserves

Based on Actuarial Value of Assets that does not include the additional Contribution Reserves

July 12, 2019

Highlights

3

• The overall contribution rate increased by 1.18%, primarily due to the asset experience.

• The return on market assets was -2.0%, net of investment expenses, compared to the 7.25% assumed rate of return

• The actuarial return on valuation assets was 3.9%, resulting in a $96M loss and increasing the contribution rate by 1.69% of pay, or $8.0M

• There are approximately $204M in deferred asset losses not yet recognized in the smoothed asset value

July 12, 2019

Highlights

4

• Costs were expected to increase approximately $6.4M due to expected active payroll growth of 3.15%

• Active payroll grew more than expected (by 5.0%) compared to the assumed 3.15%. This decreased the overall contribution rate by about 0.58% of pay, since the UAL payments are spread out over a smaller payroll base than expected

• However, Safety member payroll grew less than expected (2.7%), so Safety rate went up slightly (by 0.25% of pay)

• Actual salaries for continuing members increased less than expected, which decreased plan cost by about 0.17% of pay

July 12, 2019

Highlights

4

• Contributions lower than the Actuarial Cost (due to 12 month lag in implementation of contribution rates) increased the cost by 0.30% of pay

• All other factors had only a small impact on cost, increasing the average rate by about 0.37% of pay

July 12, 2019

5

Changes Since Last Valuation

General

Employer Cost

General

Employer

Contribution

Rate (% Payroll)

Safety

Employer

Cost

Safety Employer

Contribution

Rate (% Payroll)

Total

Employer

Cost

Employer

Contribution

Rate (% Payroll)

January 1, 2018 $ 149.0 39.50% $ 54.7 77.68% $ 203.7 45.50%

Change in Cost Due to:Expected Change (Pay Growth) 4.7 0.00% 1.7 0.00% 6.4 0.00% Asset Experience 5.7 1.44% 2.2 3.03% 8.0 1.69% Contrib Gain/Loss (Rate Delay) 1.1 0.29% 0.3 0.34% 1.4 0.30% Demographic Experience 1.5 0.38% 0.4 0.49% 1.9 0.37% Salary Experience 0.8 ( 0.04%) (0.7) ( 0.91%) 0.1 ( 0.17%)Payroll Amortization 0.0 ( 0.62%) 0.0 0.25% 0.0 ( 0.58%)PEPRA Transition (1.4) ( 0.37%) (0.5) ( 0.73%) (1.9) ( 0.43%)

Total Cost as of January 1, 2019 $ 161.5 40.58% $ 58.1 80.15% $ 219.6 46.68%

Preliminary Summary of Changes in Plan Cost from Prior Review

$ in Millions, Numbers May Not Add Due to Rounding

July 12, 2019

Demographic Assumptions • Review experience from 2016-2018:

– Combine with experience from prior study (2013-2015) where appropriate

• For each assumption calculate: – Exposures: number of members who could potentially leave the

population each year, for each possible cause

– Decrements: number of members who left for each possible cause

– Actual / Expected Ratio: ratio of 100% indicates assumption accurately predicted number of decrements

– Confidence interval: range within which the “true” rate falls with 90% confidence

• For mortality, weight exposures / decrements by benefit amounts, not headcount, since mortality tied to benefit size

6

July 12, 2019

Mortality Assumptions

• Current assumptions

• New developments

– Society of Actuaries Retirement Plan Experience Committee (RPEC) Pub-2010 Study

– RPEC MP-2018 Study

• Recommendation

7

July 12, 2019

Mortality Assumptions • Current assumptions

– Service retirees & beneficiaries:

• CalPERS Healthy Annuitant Mortality Tables

• Generational improvements projected using Scale MP-2015

– Disabled retirees:

• CalPERS Disabled Annuitant Mortality Tables

• Generational improvements projected using Scale MP-2015

8

July 12, 2019

Mortality Assumptions • New Developments

– RPEC published new sets of mortality tables for public plan experience

• Pub-2010 covered 35 public systems with 78 plans

– RPEC published new sets of mortality improvement tables

• MP-2018 mortality improvement tables

• Reflects three additional years of data since MP-2015 released

• Lower, but still positive, expectations of future improvement

9

July 12, 2019


10

Healthy Annuitant Mortality - Base Table for General Males

Age Actual Weighted Weighted Deaths A/E Ratios

Band Exposures Deaths Exposures Actual Current Proposed Current Proposed

50 - 54 126 1 1,911,873 10,990 9,943 6,063 111% 181%

55 - 59 411 5 10,518,541 85,007 71,661 50,130 119% 170%

60 - 64 1,149 11 48,611,636 256,179 421,524 328,533 61% 78%

65 - 69 2,035 24 86,535,076 752,073 1,007,880 847,165 75% 89%

70 - 74 1,646 27 65,364,322 838,177 1,243,283 1,036,736 67% 81%

75 - 79 1,046 40 34,206,638 954,539 1,105,815 964,929 86% 99%

80 - 84 721 44 20,050,480 1,129,211 1,188,157 1,041,703 95% 108%

85 - 89 477 49 13,015,290 1,156,448 1,328,963 1,191,961 87% 97%

90 - 94 207 42 5,244,879 1,127,907 902,251 814,738 125% 138%

95 + 67 15 1,455,796 289,129 365,974 346,464 79% 83%

Total 7,885 258 286,914,531 6,599,659 7,645,451 6,628,420 86% 100%

July 12, 2019


11

Healthy Annuitant Mortality - Base Table for General Females



50 - 54 356 2 5,862,054 14,567 27,952 15,259 52% 95%

55 - 59 1,248 7 29,743,510 171,492 138,505 102,015 124% 168%

60 - 64 2,629 22 84,039,373 701,243 465,276 391,962 151% 179%

65 - 69 3,376 26 108,364,526 638,305 872,840 778,537 73% 82%

70 - 74 2,737 34 74,109,101 844,657 1,012,840 916,888 83% 92%

75 - 79 1,807 43 42,280,748 742,340 1,013,342 943,684 73% 79%

80 - 84 1,258 67 27,354,359 1,375,697 1,154,744 1,130,480 119% 122%

85 - 89 881 76 18,812,430 1,723,528 1,456,458 1,450,580 118% 119%

90 - 94 638 85 11,792,756 1,376,783 1,625,302 1,618,782 85% 85%

95 + 248 54 4,602,243 1,002,215 1,057,992 1,025,857 95% 98%

Total 15,178 416 406,961,100 8,590,826 8,825,251 8,374,042 97% 103%

July 12, 2019


12

Healthy Annuitant Mortality - Base Table for Safety Males



50 - 54 215 1 12,935,724 7,399 72,753 30,705 10% 24%

55 - 59 408 2 30,565,724 198,267 222,577 120,744 89% 164%

60 - 64 481 4 36,645,309 205,562 344,289 243,268 60% 85%

65 - 69 598 4 44,647,446 184,252 567,029 489,548 32% 38%

70 - 74 447 12 27,423,651 578,972 567,200 502,584 102% 115%

75 - 79 202 9 10,098,454 452,063 346,392 325,160 131% 139%

80 - 84 95 10 4,775,624 559,475 318,938 299,783 175% 187%

85 - 89 56 7 3,894,068 502,565 444,432 424,126 113% 118%

90 - 94 8 1 586,408 48,467 102,820 98,510 47% 49%

95 + 0 0 0 0 0 0 0% 0%

Total 2,510 50 171,572,408 2,737,022 2,986,430 2,534,428 92% 108%

July 12, 2019


13

Healthy Annuitant Mortality - Base Table for Safety Females



50 - 54 107 0 5,603,612 0 29,366 12,160 0% 0%

55 - 59 187 1 10,549,429 39,069 53,561 37,424 73% 104%

60 - 64 199 2 10,153,628 95,468 61,069 58,782 156% 162%

65 - 69 219 3 9,893,654 135,256 88,097 93,369 154% 145%

70 - 74 177 5 7,490,619 194,091 113,901 120,666 170% 161%

75 - 79 126 3 4,985,425 29,514 134,194 142,543 22% 21%

80 - 84 105 6 4,482,969 286,884 208,750 222,289 137% 129%

85 - 89 69 7 2,598,232 253,239 220,508 221,700 115% 114%

90 - 94 21 4 628,003 124,408 85,563 82,511 145% 151%

95 + 2 2 49,966 49,966 11,591 10,584 431% 472%

Total 1,212 33 56,435,537 1,207,895 1,006,601 1,002,029 120% 121%

July 12, 2019


14

Disabled Annuitant Mortality - Base Table for General Males



50 - 54 70 2 1,623,698 24,087 28,651 29,765 84% 81%

55 - 59 116 2 2,708,545 25,178 62,940 65,095 40% 39%

60 - 64 173 3 4,365,849 45,441 123,280 124,654 37% 36%

65 - 69 224 6 6,213,975 103,157 197,951 208,712 52% 49%

70 - 74 86 3 2,608,940 253,992 103,737 107,875 245% 235%

75 - 79 30 8 755,171 225,278 42,774 41,958 527% 537%

80 - 84 23 1 627,452 22,468 60,033 53,353 37% 42%

85 - 89 8 4 123,236 71,932 17,388 15,102 414% 476%

90 - 94 3 0 22,282 0 4,050 3,910 0% 0%

95 + 0 0 0 0 0 0 0% 0%

Total 733 29 19,049,148 771,533 640,804 650,425 120% 119%

July 12, 2019


15

Disabled Annuitant Mortality - Base Table for General Females



50 - 54 101 1 1,943,075 22,544 24,685 34,007 91% 66%

55 - 59 246 2 5,089,216 36,196 69,613 103,785 52% 35%

60 - 64 313 8 6,850,857 146,051 111,603 148,424 131% 98%

65 - 69 287 12 5,732,217 211,118 121,386 139,542 174% 151%

70 - 74 198 7 4,001,678 160,196 117,555 129,475 136% 124%

75 - 79 109 7 2,211,039 133,268 93,544 102,977 142% 129%

80 - 84 36 5 725,814 122,462 47,516 50,128 258% 244%

85 - 89 12 3 264,907 79,728 31,201 30,450 256% 262%

90 - 94 19 5 404,773 66,403 73,177 64,795 91% 102%

95 + 0 0 0 0 0 0 0% 0%

Total 1,321 50 27,223,576 977,965 690,280 803,582 142% 122%

July 12, 2019


16

Disabled Annuitant Mortality - Base Table for Safety Males



50 - 54 113 1 5,256,978 47,831 26,892 21,420 178% 223%

55 - 59 161 2 8,471,143 75,855 56,285 50,730 135% 150%

60 - 64 157 2 9,160,474 51,667 93,562 86,845 55% 59%

65 - 69 158 4 9,548,144 182,187 144,332 138,029 126% 132%

70 - 74 104 4 5,218,181 199,111 123,249 115,617 162% 172%

75 - 79 56 2 2,687,017 64,393 113,280 104,838 57% 61%

80 - 84 27 2 1,316,285 189,473 91,659 85,589 207% 221%

85 - 89 20 3 1,314,691 130,435 141,367 145,526 92% 90%

90 - 94 4 1 242,153 46,625 40,181 43,046 116% 108%

95 + 0 0 0 0 0 0 0% 0%

Total 800 21 43,215,066 987,577 830,805 791,640 119% 125%

July 12, 2019


17

Disabled Annuitant Mortality - Base Table for Safety Females



50 - 54 74 0 3,349,005 0 15,923 12,151 0% 0%

55 - 59 43 0 2,034,420 0 9,685 11,174 0% 0%

60 - 64 60 0 2,235,912 0 16,282 18,148 0% 0%

65 - 69 59 1 2,057,187 18,128 22,845 22,996 79% 79%

70 - 74 20 0 933,557 0 17,384 15,801 0% 0%

75 - 79 3 0 153,058 0 4,018 3,431 0% 0%

80 - 84 2 0 75,981 0 4,834 4,166 0% 0%

85 - 89 4 0 166,127 0 13,664 12,778 0% 0%

90 - 94 0 0 0 0 0 0 0% 0%

95 + 0 0 0 0 0 0 0% 0%

Total 265 1 11,005,247 18,128 104,636 100,646 17% 18%

July 12, 2019

Mortality Assumptions • Overall SJCERA mortality experience has improved (i.e.,

lower mortality rates), but expectations of future reductions in mortality have been lowered based on US-wide slowing of improvement

• Recommendations – overall – Use new public sector base tables (based on the General and

Safety versions for those groups, respectively) – Apply partial adjustments to reflect SJCERA member experience

for the past six years • SJCERA experience not fully “credible” to perform full adjustments

(i.e., those that would result in A/E = 100%) • 1,000 deaths typically needed for full adjustment; even General female

healthy annuitants (largest group) had less than ½ this number

– Apply generational improvements using MP-2018 from 2010 (mid-point of the Pub-2010 study period)

18

July 12, 2019

Mortality Assumptions • Recommendations – General

– Use PubG-2010 Above-Median Income tables for employees and healthy retirees/survivors and PubG-2010 Disabled Annuitant mortality.

• Increase healthy female retirees’ base mortality rates by 4%

– SJCERA General female retirees have slightly higher rates of death than those in the SOA data

• No adjustment for healthy male retirees’ base mortality rates

– SJCERA General male retiree experience almost exactly matches published table on average

• Increase disabled annuitant rates by 7% for females from base table and 4% for males.

• Increase active employee rates by 5% for females, no adjustment for males

19

July 12, 2019

Mortality Assumptions • Recommendations – Safety

– Use PubS-2010 tables for employees and healthy retirees/survivors and PubS-2010 Disabled Annuitant mortality for disabled retirees • Increase healthy male retiree rates by 2% and

5% for females

• Increase disabled annuitant rates by 4% for males from base table, and decrease 2% for females

• Decrease active employee rates by 2% for males, and increase 6% for females

20

July 12, 2019

Retirement Rates • Current rates split by General (male and female) and Safety

– Further split at various service levels, since members with higher service levels tend to have higher likelihood of retirement

• <10 Years of Service (YOS), 10-29, 30+ for General

• <20, 20+ YOS for Safety

– Continue to use current retirement assumptions for PEPRA members, even though some speculation that PEPRA members may retire later on average

• By the time of next experience study, should start to have some data over which to compare Tier 1 vs. Tier 2 behavior, at least at lower service levels

• Recent experience reasonably close to current assumptions

– Recommending small adjustments at various age/service levels

21

July 12, 2019

Retirement Rates

22

July 12, 2019

Retirement Rates

23

July 12, 2019

Retirement Rates

24

July 12, 2019

Retirement Rates

25

July 12, 2019

Termination Rates • Termination rates refer to departures for all causes other than service and

disability retirements, or active deaths

– Terminations can either reflect withdrawal of contributions or termination with a deferred vested benefit (with or without reciprocity)

• Current rates split by General (same assumptions for male and female) and Safety

– Termination rates tend to be more correlated with service than age

– Only apply termination assumptions until members eligible for retirement • Unlikely that members eligible for retirement will choose to take a refund of contributions

– Further divided between likelihood of withdrawing contributions, and establishing reciprocity

• Recent experience very close to current assumptions

– Recommending small adjustments at various service levels for Safety only

– Increase % of members assumed to take a reciprocal benefit at some service levels

26

July 12, 2019

Termination Rates

27

July 12, 2019

Withdrawals, Vested Deferrals, or Reciprocity

• Recommendation – General – No change to withdrawal rates (60% withdraw with <5

years of service; 30% for 5-14 years; 10% for 15 or more) – Increase assumed reciprocity for members with a deferred

benefit from 25% to 75% for members with <5 years of service; and to 30% for members with 15 or more years

• Recommendation – Safety – No change to withdrawal rates for members with <5 years

of service at 60%; 5-9 years increase from 10% to 30%; 10+ years increase from 0% to 15%

– Increase assumed reciprocity for members with a deferred benefit from 50% to 67 for members with <5 years of service; and keep at 50% for members with 5 or more years

28

July 12, 2019

Disability Rates

• No changes recommended • Current experience reasonably close to

expectations, especially given sparse data (only 67 General and 42 Safety disabilities, over a six year period)

29

Disability Incidence RatesDisabilities Actual to Expected Ratios

Group Exposures Actual Current Recommended Current Recommended

General Males 8,685 28 37 37 76% 76%General Females 21,090 39 72 72 54% 54%Safety Males 3,654 26 25 25 106% 106%Safety Females 1,234 16 9 9 183% 183%Total 34,663 109 142 142 77% 77%

July 12, 2019

Merit Salary Increases – General

• Merit/longevity salary increases are those based on increases above base wage increases

• Proposing higher rates for General members for those with less than 15 years of service, and those with 30+ years

30

July 12, 2019

Merit Salary Increases – Safety

• Proposing higher rates for Safety members for those with less than 5 years of service

31

July 12, 2019

Miscellaneous Assumptions • Vested deferral commencement age

– Changing outgoing Safety members with reciprocity from 50 to 53

• Family Composition – Spouses of male employees currently assumed to be

4 years younger – Recommending change to 3 years – Married percentage remains reasonable (75% for

males; 55% for females) • Reviewed final average pay used in recent benefit

calculations – Consistent with prior studies, no evidence of

significant “spiking” – No terminal earnings load recommended

32

July 12, 2019

Results Under Proposed Assumptions

33

General

Employer Cost

General

Employer

Contribution

Rate (% Payroll)

Safety

Employer

Cost

Safety

Employer

Contribution

Rate (% Payroll)

Total

Employer

Cost

Employer

Contribution

Rate (% Payroll)

Baseline Cost as of January 1, 2019 $ 161.5 40.58% $ 58.1 80.15% $ 219.6 46.68%

Change in Cost Due to:Salary Merit / Longevity Scale 2.9 0.73% 0.1 0.06% 3.0 0.62% Mortality Rates 1.9 0.47% 0.6 0.89% 2.5 0.54% Retirement Rates (0.0) ( 0.01%) (0.4) ( 0.49%) (0.4) ( 0.08%)Termination Rates 0.1 0.05% (0.2) ( 0.28%) (0.1) ( 0.01%)Disability Rates 0.1 0.04% 0.0 0.03% 0.2 0.04% Deferral Age Changes (0.0) 0.00% (0.2) ( 0.22%) (0.2) ( 0.04%)Sps Age Difference Changes (0.3) ( 0.08%) (0.2) ( 0.27%) (0.5) ( 0.10%)New Employee Contribution Rates (0.7) ( 0.19%) (0.1) ( 0.11%) (0.8) ( 0.19%)

Total Change due to Demographic Assump 4.1 1.01% (0.2) ( 0.39%) 3.8 0.78%


Before Econ Assumption Change

Alternative Economic Assumptions 9.7 2.44% 3.8 5.25% 13.5 2.87%


After Econ Assumption Change

(7.00% discount rate, 2.75 inflation, 3.00% wage growth)

$ in Millions, Numbers May Not Add Due to Rounding

Preliminary Summary of Changes in Plan Cost from Assumption Changes

July 12, 2019

Employer Contribution Rate Projections

• Based on the preliminary 2019 valuation results

• Include impact of all recommended demographic assumption changes

• Investments projected to earn 7.00% each year

• Baseline projections: 7.25% discount rate • Alternative Assumptions: 7.00% discount

rate

32

July 12, 2019

Employer Contribution Rate Projection

• In the first 15 years, the contribution rate under the alternative assumptions (7% discount rate) remains higher than the baseline by approximately 1% - 3%

• By 2034, the rate using the 7% discount rate is lower than the baseline by about 2%-3%

• The difference over time will continue to gradually increase

34

July 12, 2019


35

• In the first 15 years, the contribution rate under the alternative assumptions (7% discount rate) remains higher than the baseline by approximately 1% - 2.5%

• By 2034, the rate using the 7% discount rate is lower than the baseline by about 1.5%-3%


July 12, 2019


36

• In the first 15 years, the contribution rate under the alternative assumptions (7% discount rate) remains higher than the baseline by approximately 2% - 5%

• By 2034, the rate using the 7% discount rate is lower than the baseline by about 3%-5.5%


July 12, 2019

Next Steps

37

Finalize Actuarial Valuation results Results shown are preliminary. Still proceeding

with peer review.

Receive direction from Board regarding economic assumptions

Present results by Tier and General / Safety

August Board Meeting Adopt full Experience Study Report

Adopt January 1, 2019 Actuarial Valuation and CY2020 Contribution Rates

July 12, 2019

Required Disclosures

38

The purpose of this presentation is to present the preliminary results of the annual actuarial valuation and experience study of the San Joaquin County Employees’ Retirement Association. This presentation is for the use of the San Joaquin County Employees’ Retirement Board in accordance with applicable law. A full peer review of these results has not yet been completed and are therefore subject to change. In preparing our presentation, we relied on information (some oral and some written) supplied by the San Joaquin County Employees’ Association. This information includes, but is not limited to, the plan provisions, employee data, and financial information. We performed an informal examination of the obvious characteristics of the data for reasonableness and consistency in accordance with Actuarial Standard of Practice No. 23. This presentation and its contents have been prepared in accordance with generally recognized and accepted actuarial principles and practices that are consistent with the Code of Professional Conduct and applicable Actuarial Standards of Practice set out by the Actuarial Standards Board as well as applicable laws and regulations. Furthermore, as credentialed actuaries, we meet the Qualification Standards of the American Academy of Actuaries to render the opinion contained in this presentation. This presentation does not address any contractual or legal issues. We are not an attorneys, and our firm does not provide any legal services or advice. This presentation was prepared exclusively for the San Joaquin County Employees’ Retirement Board for the purpose described herein. This presentation is not intended to benefit any third party, and Cheiron assumes no duty or liability to any such party. The actuarial assumptions, data and methods are those that will be used in the preparation of the actuarial valuation report as of January 1, 2019. The assumptions reflect our understanding of the likely future experience of the Plans, and the assumptions as a whole represent our best estimate for the future experience of the Plans. The results of this presentation are dependent upon future experience conforming to these assumptions. To the extent that future experience deviates from the actuarial assumptions, the true cost of the plan could vary from our results.

Graham A. Schmidt ASA, EA, FCA, MAAA Consulting Actuary

Anne D. Harper FSA, EA, MAAA Consulting Actuary

M E K E T A I N V E S T M E N T G R O U P

www.meketagroup.com

B OSTONM A S S A CHU S E T T S

C H I C AGOI L L I N O I S

M I AM I

F L O R I DA

N EW Y ORKN EW Y ORK

P ORTLANDO R E GON

S AN D I E GO

C A L I F O RN I AL ONDON

U N I T E D K I N G DOM

San Joaquin County Employees’ Retirement Association (SJCERA)

2019 Asset-Liability Study – Model Portfolio Review

2019 Asset-Liability Study

Prepared by Meketa Investment Group


Agenda

1. Summary of 2019 Asset-Liability Study Output

2. Allocation Concepts Review

3. Modeling Methodology & Assumptions

4. Model Output & Discussion

5. Next Steps

6. Appendix

Page 2 of 57

Summary of 2019 Asset-LiabilityStudy Output

Page 3 of 57




What is Strategic Allocation?

— The percentage of plan assets that are allocated to high-level classes/buckets of strategies.

— Does not relate to managers/implementation.

Goal of Strategic Allocation:

— To review and possibly modify the strategic investment allocation policy:

Projecting liabilities (future payments).

Reflecting the tolerance for investment risk as defined by the Board of Trustees.

Incorporating the appropriate investment classes available to the plan.

Typically conducted every two-to-five years or after material fund changes

Strategic Allocation selection sets the foundation for the long-term management structure of a fund’sinvestment assets

— Strategic Allocation is the most critical driver of investment success.

Academic/empirical studies attribute ≈90% of portfolio risk and ≈100% of portfolio return tostrategic allocation.

Page 4 of 57




Recommended Options to Review – Asset Allocation Comparison

While allocations differ across the four options, each of the portfolio’s expected returns equal SJCERA’sactuarial investment return assumption of 7.25% with similar risk characteristics.

Strategic Classes A B C D CLTP*Aggressive Growth 9.0 10.0 10.0 9.0 8.0Traditional Growth 30.0 33.0 32.0 35.0 30.0Risk Parity 10.0 0.0 5.0 0.0 14.0Credit 18.0 18.0 17.0 18.0 14.0Core Real Assets 8.0 8.0 8.0 8.0 4.0Principal Protection 10.0 11.0 8.0 15.0 10.0Inflation Protection 0.0 5.0 5.0 0.0 0.0CRO 15.0 15.0 15.0 15.0 20.010 Year Simulation Stats A B C D CLTP*Median Scenario Compound Return 7.25% 7.25% 7.25% 7.25% 7.15%Average Scenario Standard Deviation 8.7% 8.8% 8.8% 9.0% 8.4%

* CLTP = Current Long-term Policy.

Page 5 of 57




Themes From Proposed Options

Compared to the SJCERA’s current long-term policy targets, the themes across the potential options are:

— Increased allocation to Private Markets.

— Increased Overall Growth exposure to target a slightly higher return.

— Some shift from portfolio offsets to protection (CRO to Inflation / Principal Protection).

Focused on meeting the 7.25% actuarial investment return assumption.

Page 6 of 57




Summary Stats for Options


All portfolio projections exhibit similar expected risk and return characteristics

Integrated Asset-Liability projection are also similar across the portfolio

Strategic Classes A B C D CLTP*Aggressive Growth 9.0 10.0 10.0 9.0 8.0Traditional Growth 30.0 33.0 32.0 35.0 30.0Risk Parity 10.0 0.0 5.0 0.0 14.0Credit 18.0 18.0 17.0 18.0 14.0Core Real Assets 8.0 8.0 8.0 8.0 4.0Principal Protection 10.0 11.0 8.0 15.0 10.0Inflation Protection 0.0 5.0 5.0 0.0 0.0CRO 15.0 15.0 15.0 15.0 20.010 Year Simulation Stats A B C D CLTP*Median Scenario Compound Return 7.25% 7.25% 7.25% 7.25% 7.15%Average Scenario Standard Deviation 8.7% 8.8% 8.8% 9.0% 8.4%Sharpe Ratio 0.8 0.8 0.8 0.8 0.8Average Compound Return of bottom 10% 1.6% 1.5% 1.5% 1.4% 1.8%Average Compound Return of top 10% 12.0% 12.0% 12.0% 12.1% 11.7%Percent of Compound Returns < 7.25% 49.8% 50.0% 49.9% 50.0% 52.0%Percent of Compound Returns < 2.9% 8.4% 8.8% 8.8% 9.1% 7.8%Best Calendar Year 24.1% 24.2% 24.5% 24.2% 24.2%Worst Calendar Year -18.0% -18.4% -18.4% -18.6% -15.6%Asset-Liability Statistics A B C D CLTP*Funded Ratio >85% after 15 years 71.3% 70.6% 71.2% 71.1% 69.7%Average # of Years Funded Ratio is < 60% 1.85 1.86 1.87 1.91 1.78Average Employer Contribution over 15 Years 44.7% 44.8% 44.7% 44.8% 45.2%Average # of Years Employer Contribution is >55% 3.51 3.56 3.53 3.58 3.52Avg. of Worst 10% Avg. Employer Contribution over 15 Years 64.3% 64.5% 64.5% 64.8% 63.7%Median Funded Ratio in 15 Years 97.4% 97.0% 97.3% 97.2% 96.4%Average of Worst 10% Funded Ratio in 15 Years 63.9% 63.7% 63.6% 63.3% 64.4%Median Funded Ratio in 3 Years 65.1% 65.0% 65.1% 65.0% 64.8%Average of Worst 10% Funded Ratio in 3 Years 50.0% 49.8% 49.8% 49.6% 50.8%

Page 7 of 57

Allocation Concepts Review

Page 8 of 57




Key Concepts – Functional Framework

Risk-taking assets/strategies that produce high total returns relative to other classes

Often utilize significant levels of financial/economic leverage. Often linked closely to overall economic success/failure. Long-term holding periods often result in significant growth in purchasing power/wealth.

Growth

Page 9 of 57




Key Concepts – Functional Framework

Diversification

Low volatility (e.g., 2-6%) Known source of liquidity at all times Typically cash + 0-2% returns Not powerful/volatile enough to materially

rebalance away from and into Public Equity

Two Forms of Diversification

High volatility (e.g., 10-20%) / capital efficient Zero-to-negative conditional correlation to

Public Equity Certain implementations work in inflationary

crises and others work in deflationary crises Can be rebalanced away from and into Public

Equity

OffsetAnchor

Page 10 of 57




Reallocating Current Strategies

Current Allocation Framework Proposed Allocation FrameworkClass Strategy

Global Equity

US Equity

Non-US Equity

REITs

Private Appreciation

Private Equity

Private Real Estate

Stable Fixed Income Investment Grade Fixed Income

Credit

Liquid Global Credit

Private Credit

Risk Parity Risk Parity

Crisis Risk Offset (CRO)

Long Duration

Systematic Trend Following

Alternative Risk Premia

New High-Level Class

New Mid-Level

Component Strategy

Broad Growth

Aggressive GrowthPrivate Equity / Non-Core Real

Assets

Traditional

Growth

US Equity

Non-US Equity

REITs

Stabilized

Growth

Risk Parity

Liquid Credit

Private Credit

Private Core Real Assets

Diversifying Strategies

Principal Protection Core Fixed Income

Crisis Risk Offset

Long Duration



Page 11 of 57




Risk-oriented, Functional Allocation Framework

Proposed Allocation Framework


New Mid-Level

Component Strategy

Broad Growth


Assets

Traditional

Growth

US Equity

Non-US Equity

REITs

Stabilized

Growth

Risk Parity

Liquid Credit

Private Credit

Private Core Real Assets


Inflation Protection TIPS


Crisis Risk Offset

Long Duration



Potentially Eliminate Class

Potential New Class

Reevaluate Class Role

Page 12 of 57

Modeling Methodology & Assumptions

Page 13 of 57




Meketa utilized a proprietary, customizable simulation model. Classes/time series maintain historical relationships and behavior but are tailored to expected risk/return

specifications. Portfolio statistics are based on thousands of multi-year simulations. Process requires significant time and computing power but allows for custom modeling and performance

statistics. Differs from traditional mean-variance optimization.

— Mean-Variance Optimization:

Workhorse for asset allocation analysis since the 1950s.

Single-period model.

Assumes normal distributions and linear relationships.

Only examines risk under standard deviation lens.

Doesn’t incorporate crisis situation (i.e., correlations moving to 1).

Fails to accurately reflect potential outliers.

Page 14 of 57




-4.0%

-3.5%

-3.0%

-2.5%

-2.0%

-1.5%

-1.0%

-0.5%

0.0%

$(20.00)

$(18.00)

$(16.00)

$(14.00)

$(12.00)

$(10.00)

$(8.00)

$(6.00)

$(4.00)

$(2.00)

$-

2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 2045

Net Contributions [LHS] Net Contributions as % of Actuarial Value of Assets (AVA) [RHS]

GrowthIncomeProtection

Counter-Balance

Goals, Preferences &

Concerns

Stress the Role &

Function of Assets

Modeling: Simulation-

based Optimization

Key aspect of examining alternatives: probabilities of achieving/missing key client-defined thresholds.

2025, 70%

2035, 82%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

2013 2016 2019 2022 2025 2028 2031 2034 2037 2040 2043 2046AB 1469 Funding Trajectory Actual Trajectory

Page 15 of 57




Risk-based Class/Component Asset Class/Strategy

Expected Geometric Compound Nominal Annual ReturnExpected Risk of Nominal

Returns

(Standard Deviation)

2019Meketa* 10-year

Adjusted to match Cheiron’s

Inflation

Aggressive Growth Private Equity/Non-Core RA 8.05 8.70 27.00

Traditional GrowthU.S. Equity** 6.00 6.65 19.00

Non-U.S. Equity 7.15 7.80 21.50

Stabilized Growth

Risk Parity 5.50 6.15 10.00

Liquid Credit 5.25 5.90 13.00

Private Credit 6.75 7.40 15.00

Core Real Assets*** 5.35 6.00 12.75

Principal Protection TIPS 3.25 3.90 7.00

Inflation Protection Core Fixed Income 3.65 4.30 5.50

Crisis Risk Offset

Long Treasuries 3.10 3.75 16.00

Alternative Risk Premia 4.50 5.15 10.00

Systematic Trend Following 4.50 5.15 15.00

Cash 2.50 3.15 1.25

Inflation 2.25 2.90 1.50

* Legacy PCA

** US Large-Mid Cap Equity and US Small Cap Equity are modeled together.

*** 2019 = ODCE Leverage (i.e., actual implementation).

2019 Return/Risk AssumptionsModeling Assumptions – Asset Class/Strategy Return/Risk

Page 16 of 57




We impose constraints on the model because “Unconstrained” models typically produce impractical orimprudent allocations with commonalities such as:

‒ Large allocations to private markets strategies.‒ Meaningful allocations to liquid strategies that have return advantages.‒ Concentration of assets.‒ Offsets the concentrated risk-oriented positions with concentrated positions in certain diversifying

strategies. Imposing well-designed constraints assists in creating a more logical portfolio. Final portfolio should pass quantitative and qualitative tests.

‒ i.e., “almost optimal” portfolio.

Page 17 of 57




Final constraints

As a new strategy, Inflation Protection (TIPS) was given a minimum of 0%. Private markets were constrained due to realistic minimums and maximums.

* US and Non-US Equity combined into Traditional Growth at ~50/50 weighting.

** Weighting tilted towards private credit reflecting the current structure.

*** Weighting 1/3 each to each of the CRO components reflecting the current structure.

Risk-based

Class/Component Asset Class/Strategy Current Target Minimum Maximum

Aggressive Growth Private Equity/Non-Core RA 8 6 10

Traditional Growth US/Non-US Equity* 30 30 60

Stabilized Growth

Risk Parity 14 0 10

Credit* 14 5 20

Core Real Assets 4 3 8

Principal Protection TIPS --- 0 10

Inflation Protection Core Fixed Income 10 5 15

Crisis Risk Offset Long Duration/STF/ARP*** 20 0 15

Cash --- --- ---

Page 18 of 57

Model Output & Discussion

Page 19 of 57




Before We Begin…

“All models are wrong, but some are useful.”- George Box, 1978

“It is difficult to make predictions, especially about the future.”- Attributed to a variety of individuals/groups

A key aspect of any financial modeling is that the results are more indicative than they are precise.

The final portfolios are based on the optimizations/modeling but incorporate minor alterations by Meketa.

— A large benefit of the risk-based, functional framework is that strategies within the same componentsare somewhat interchangeable.

Page 20 of 57




Model Output: Unconstrained Model

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

#1 #2 #3 #4 #5 #6 #7 #8 #9 #10 #11 #12 #13 #14 #15 #16 #17 #18 #19 #20 CLTP*

Portfolio AllocationsGrowth Diversification/Protection

Strategic Classes #1 #2 #3 #4 #5 #6 #7 #8 #9 #10Aggressive Growth 7.4 11.2 16.4 20.2 23.4 26.4 29.6 36.0 42.0 47.7Traditional Growth 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0Risk Parity 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0Credit 0.0 41.6 50.7 56.8 62.0 66.8 70.4 64.0 58.0 52.3Core Real Assets 14.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0Principal Protection 49.7 4.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0Inflation Protection 8.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0CRO 19.8 43.1 32.8 23.1 14.6 6.8 0.0 0.0 0.0 0.010-Year Simulation Stats #1 #2 #3 #4 #5 #6 #7 #8 #9 #10Compound Return 5.4% 6.9% 7.4% 7.6% 7.8% 8.0% 8.2% 8.3% 8.4% 8.5%Standard Deviation 4.3% 5.5% 6.7% 7.9% 9.1% 10.3% 11.5% 12.7% 13.9% 15.1%


Page 21 of 57





0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

#1 #2 #3 #4 #5 #6 #7 #8 #9 #10 #11 #12 #13 #14 #15 #16 #17 #18 #19 #20 CLTP*



Strategic Classes #11 #12 #13 #14 #15 #16 #17 #18 #19 #20 CLTP*Aggressive Growth 53.3 58.7 64.1 69.4 74.6 79.7 84.8 89.9 95.0 100.0 8.0Traditional Growth 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 30.0Risk Parity 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 14.0Credit 46.7 41.3 35.9 30.7 25.4 20.3 15.2 10.1 5.0 0.0 14.0Core Real Assets 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.0Principal Protection 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 10.0Inflation Protection 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0CRO 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 20.010-Year Simulation Stats #11 #12 #13 #14 #15 #16 #17 #18 #19 #20 CLTP*Compound Return 8.6% 8.7% 8.7% 8.7% 8.7% 8.7% 8.7% 8.7% 8.7% 8.7% 7.15%Standard Deviation 16.3% 17.4% 18.6% 19.8% 21.0% 22.2% 23.4% 24.6% 25.8% 27.0% 8.4%

Page 22 of 57




“Unconstrained” models typically exhibit commonalities:

— Large allocations to private markets strategies.

— Meaningful allocations to liquid strategies that have return advantages.

— Concentration of assets.

— Offsets the concentrated risk-oriented positions with concentrated positions in certain diversifyingstrategies.

Imposing well-designed constraints assists in creating a more logical portfolio.

Final portfolio should pass quantitative and qualitative tests.

— i.e., “almost optimal” portfolio.


Page 23 of 57




Model Output: Final Constrained Model

Strategic Classes #1 #2 #3 #4 #5 #6 #7 #8 #9 #10Aggressive Growth 6.0 6.0 6.5 7.3 8.8 10.0 10.0 10.0 10.0 10.0Traditional Growth 30.0 30.0 30.0 30.0 30.0 30.6 33.2 36.3 39.4 42.2Risk Parity 0.0 2.0 5.9 9.1 10.0 10.0 8.8 5.7 2.6 0.0Credit 16.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0Core Real Assets 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0Principal Protection 15.0 14.1 12.7 10.6 8.2 6.4 5.0 5.0 5.0 5.0Inflation Protection 10.0 4.9 1.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0CRO 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 14.810-Year Simulation Stats #1 #2 #3 #4 #5 #6 #7 #8 #9 #10Compound Return 6.9% 7.0% 7.1% 7.3% 7.3% 7.4% 7.5% 7.5% 7.5% 7.6%Standard Deviation 7.4% 7.8% 8.1% 8.4% 8.8% 9.1% 9.4% 9.8% 10.1% 10.5%


0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

#1 #2 #3 #4 #5 #6 #7 #8 #9 #10 #11 #12 #13 #14 #15 #16 #17 #18 #19 #20 CLTP*


Page 24 of 57






0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

#1 #2 #3 #4 #5 #6 #7 #8 #9 #10 #11 #12 #13 #14 #15 #16 #17 #18 #19 #20 CLTP*


Strategic Classes #11 #12 #13 #14 #15 #16 #17 #18 #19 #20 CLTP*Aggressive Growth 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 8.0Traditional Growth 44.0 45.7 47.4 49.1 50.8 52.5 54.2 55.9 57.7 60.0 30.0Risk Parity 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 14.0Credit 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 20.0 14.0Core Real Assets 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 7.3 5.0 4.0Principal Protection 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 10.0Inflation Protection 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0CRO 13.0 11.3 9.6 7.9 6.2 4.5 2.8 1.1 0.0 0.0 20.010-Year Simulation Stats #11 #12 #13 #14 #15 #16 #17 #18 #19 #20 CLTP*Compound Return 7.6% 7.6% 7.7% 7.7% 7.7% 7.7% 7.7% 7.8% 7.8% 7.8% 7.15%Standard Deviation 10.8% 11.2% 11.5% 11.8% 12.2% 12.5% 12.9% 13.2% 13.6% 13.9% 8.4%

Page 25 of 57




Strategic Classes #4 #5 #6 #7 #8 CLTP*Aggressive Growth 7.3 8.8 10.0 10.0 10.0 8.0Traditional Growth 30.0 30.0 30.6 33.2 36.3 30.0Risk Parity 9.1 10.0 10.0 8.8 5.7 14.0Credit 20.0 20.0 20.0 20.0 20.0 14.0Core Real Assets 8.0 8.0 8.0 8.0 8.0 4.0Principal Protection 10.6 8.2 6.4 5.0 5.0 10.0Inflation Protection 0.0 0.0 0.0 0.0 0.0 0.0CRO 15.0 15.0 15.0 15.0 15.0 20.010 Year Simulation Stats #4 #5 #6 #7 #8 CLTP*Median Scenario Compound Return 7.25% 7.30% 7.40% 7.45% 7.50% 7.15%Average Scenario Standard Deviation 8.4% 8.8% 9.1% 9.4% 9.8% 8.4%Sharpe Ratio 0.9 0.8 0.8 0.8 0.8 0.8Average Compound Return of bottom 10% 1.7% 1.6% 1.5% 1.3% 1.2% 1.8%Average Compound Return of top 10% 11.7% 12.0% 12.3% 12.6% 12.8% 11.7%Percent of Compound Returns < 7.25% 50.1% 49.2% 48.3% 47.9% 47.2% 52.0%Percent of Compound Returns < 2.9% 8.2% 8.4% 8.9% 9.4% 9.9% 7.8%Best Calendar Year 23.1% 24.1% 24.9% 25.6% 26.2% 24.2%Worst Calendar Year -17.7% -18.3% -19.0% -19.8% -20.6% -15.6%


Descriptions/definitions of

statistics are provided in the

Appendix


Meketa determined that reasonable portfolio options fell within #4-8.— All portfolios exhibit improved long term return expectations.

Page 26 of 57




5.00%

5.25%

5.50%

5.75%

6.00%

6.25%

6.50%

6.75%

7.00%

7.25%

7.50%

7.75%

8.00%

4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0%

Com

poun

d R

etur

n

Annual Volatility

10-Year Efficient Frontier

Constrained CLTP* Actuarial Rate


Based on the constraints used, SJCERA’s portfolio is near the efficient frontier but below the actuarial rate ofreturn

Potential portfolio options


Page 27 of 57





Based on the general takeaways of portfolios #4-8, Meketa created four portfolio options forconsideration– Portfolio A = Most similar to current under final constraints– Portfolio B = No Risk Parity, Includes TIPS– Portfolio C = Mid-points between A and D– Portfolio D = No Risk Parity, No TIPS

At a high-level, the optimization/engineering process does the heavy lifting and the final qualitativeadjustments reflect additional logic

Other portfolios were also included for reference to show the impact of more aggressive or conservativeportfolio allocations

Page 28 of 57




Model Output: Recommended Portfolios

Meketa proposes that the Board consider the following four portfolios (A-D)

* CLTP = Current Long-term Policy. Source: Meketa, Cheiron.

Strategic Classes A B C D CLTP* ↓ Risk ↑ ReturnAggressive Growth 9.0 10.0 10.0 9.0 8.0 6.0 10.0Traditional Growth 30.0 33.0 32.0 35.0 30.0 30.0 60.0Risk Parity 10.0 0.0 5.0 0.0 14.0 0.0 0.0Credit 18.0 18.0 17.0 18.0 14.0 16.0 20.0Core Real Assets 8.0 8.0 8.0 8.0 4.0 8.0 5.0Principal Protection 10.0 11.0 8.0 15.0 10.0 15.0 5.0Inflation Protection 0.0 5.0 5.0 0.0 0.0 10.0 0.0CRO 15.0 15.0 15.0 15.0 20.0 15.0 0.010 Year Simulation Stats A B C D CLTP* ↓ Risk ↑ ReturnMedian Scenario Compound Return 7.25% 7.25% 7.25% 7.25% 7.15% 6.85% 7.80%Average Scenario Standard Deviation 8.7% 8.8% 8.8% 9.0% 8.4% 7.4% 13.9%Sharpe Ratio 0.8 0.8 0.8 0.8 0.8 0.9 0.6Average Compound Return of bottom 10% 1.6% 1.5% 1.5% 1.4% 1.8% 2.0% -1.4%Average Compound Return of top 10% 12.0% 12.0% 12.0% 12.1% 11.7% 10.8% 15.6%Percent of Compound Returns < 7.25% 49.8% 50.0% 49.9% 50.0% 52.0% 56.2% 45.9%Percent of Compound Returns < 2.9% 8.4% 8.8% 8.8% 9.1% 7.8% 7.5% 17.2%Best Calendar Year 24.1% 24.2% 24.5% 24.2% 24.2% 21.8% 32.0%Worst Calendar Year -18.0% -18.4% -18.4% -18.6% -15.6% -15.6% -31.6%

Page 29 of 57




A

B

CD

CLTP*

↓ Risk

↑ Return

5.00%

5.25%

5.50%

5.75%

6.00%

6.25%

6.50%

6.75%

7.00%

7.25%

7.50%

7.75%

8.00%

4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0%

Com

poun

d R

etur

n

Annual Volatility


Constrained Actuarial Rate A B C D CLTP* ↓ Risk ↑ Return


All of the four considered portfolios target SJCERA’s 7.25% actuarial return assumption near the efficientfrontier and have similar projected risk characteristics


Page 30 of 57




Integrated Liability Model: Intro

To asses the impact that different asset allocations might have on the projected liabilities of the plan, theunderlying return and risk assumptions were incorporated by Cheiron as part of a multi-year simulationprocess– The asset returns and assumptions are the same as those used in the Meketa model but utilize

1,000 scenarios instead of 10,000 This analysis focused on the same areas that were reviewed and emphasized during the 2015 asset

liability study and center around:

– Funded ratio, and;

– Employer contributions

Page 31 of 57




Source: Cheiron.

If all economic assumptions are met each year, SCJERA is projected to reach a funded ratio of 96%+ inthe next 15-years

This assumes a return of 7.25% each year with no year-to-year volatility

40%

50%

60%

70%

80%

90%

100%

Funded Ratio Projection: 7.25% Return Each Year

Deterministic

Page 32 of 57




However, this assumption is not realistic, and while the median expectations is in-line with the deterministicprojection, there is a wide dispersion of potential outcomes

Due to SJCERA’s 15 year assumed amortization period, even the 5th percentile of outcomes results inminimal funding progress over the horizon

40%

50%

60%

70%

80%

90%

100%

Funded Ratio Projection: CLTP*

Deterministic

95th Percentile

75th Percentile

Median

25th Percentile

5th Percentile

* CLTP = Current Long-term Policy. Source: Cheiron.

Page 33 of 57




Potential Portfolios improve on long-term funded ratio success but reduce downside protection Low (↓) Risk and High (↑) Return Portfolios are meant to show the tradeoffs of making major changes

in either direction to the portfolio relative to the CLTP– Each of these options produces suboptimal results relative to the CLTP and four additional portfolio

options

Integrated Liability Model: Output


Asset-Liability Statistics A B C D CLTP* ↓ Risk ↑ ReturnFunded Ratio >85% after 15 years 71.3% 70.6% 71.2% 71.1% 69.7% 67.4% 69.7%Average # of Years Funded Ratio is < 60% 1.85 1.86 1.87 1.91 1.78 1.71 2.78Average Employer Contribution over 15 Years 44.7% 44.8% 44.7% 44.8% 45.2% 46.7% 42.4%Average # of Years Employer Contribution is >55% 3.51 3.56 3.53 3.58 3.52 3.67 4.06Avg. of Worst 10% Avg. Employer Contribution over 15 Years 64.3% 64.5% 64.5% 64.8% 63.7% 63.3% 72.3%Median Funded Ratio in 15 Years 97.4% 97.0% 97.3% 97.2% 96.4% 93.5% 103.9%Average of Worst 10% Funded Ratio in 15 Years 63.9% 63.7% 63.6% 63.3% 64.4% 65.2% 53.3%Median Funded Ratio in 3 Years 65.1% 65.0% 65.1% 65.0% 64.8% 64.4% 66.2%Average of Worst 10% Funded Ratio in 3 Years 50.0% 49.8% 49.8% 49.6% 50.8% 51.2% 42.8%

Page 34 of 57




At the median, all portfolio options produce similar long-term funded ratio projections As expected, lower risk / higher return asset allocations would be expected to have lower / higher funded

ratio projections

40%

50%

60%

70%

80%

90%

100%

Funded Ratio Projection Comparisons: Median

A

B

C

D

CLTP*

↓ Risk

↑ Return

All four portfolio options


Page 35 of 57




0%

10%

20%

30%

40%

50%

60%

Employer Contribution Rate Projection Comparisons: Median

A

B

C

D

CLTP*

↓ Risk

↑ Return

At the median, all portfolio options produce similar long-term contribution rate projections As expected, lower risk / higher return asset allocations would be expected to have higher / lower employer

contribution projections



Page 36 of 57




40%

50%

60%

70%

80%

90%

100%

Funded Ratio Projection Comparisons: 10th Percentile

A

B

C

D

CLTP*

↓ Risk

↑ Return

At the 10th percentile of outcomes, all portfolio options also produce similar long-term funded ratioprojections

Lower risk portfolio allocations would be projected to produce similar worst case outcomes (largely due tothe 15-year amortization period and offsetting contributions)

However, the higher return portfolio allocation materially changes the worst case outcome



Page 37 of 57




40%

50%

60%

70%

80%

90%

100%

Employer Contribution Rate Projection Comparison: 10th Percentile

A

B

C

D

CLTP*

↓ Risk

↑ Return

At the 10th percentile of outcomes, all portfolio options also produce similar long-term contribution rateprojections

Similar to the prior slide on funded ratio, only the higher return portfolio allocation materially changes theworst case outcome



Page 38 of 57




All options improve funded ratio probabilities but slightly increase the average number of years with fundedratio of <60%

CLTP*

A

B

C

D

↓ Risk

↑ Return

67.0%

68.0%

69.0%

70.0%

71.0%

72.0%

42.0%43.0%44.0%45.0%46.0%47.0%48.0%49.0%50.0%51.0%52.0%

Pro

babi

lity

of F

R >

85%

afte

r 15

-yea

rs

Average of Worst 10% Funded Ratio in 3-Years

15-year Integrated AL Statistics

CLTP* A B C D ↓ Risk ↑ Return

Short-term risk metric: Higher is Better

Lo

ng

-ter

m s

ucc

ess

risk

met

ric:

Hig

her

is B

ette

r


Page 39 of 57




CLTP*

A

B

C

D

↓ Risk

↑ Return

42.0%

43.0%

44.0%

45.0%

46.0%

47.0%

62.0% 63.0% 64.0% 65.0% 66.0% 67.0% 68.0% 69.0% 70.0% 71.0% 72.0% 73.0%

Ave

rage

Em

ploy

er C

ontr

ibut

ion

over

15

Yea

rs

Average of Worst 10% Average Employer Contribution over 15 Years

15-year Integrated AL Statistics

CLTP* A B C D ↓ Risk ↑ Return

Long-term risk metric: Lower is Better

All options reduce the average ER Contribution over 15-years.

Lo

ng

-ter

m s

ucc

ess

risk

met

ric:

Lo

wer

is B

ette

r


Page 40 of 57






Strategic Classes A B C D CLTP* ↓ Risk ↑ ReturnAggressive Growth 9.0 10.0 10.0 9.0 8.0 6.0 10.0Traditional Growth 30.0 33.0 32.0 35.0 30.0 30.0 60.0Risk Parity 10.0 0.0 5.0 0.0 14.0 0.0 0.0Credit 18.0 18.0 17.0 18.0 14.0 16.0 20.0Core Real Assets 8.0 8.0 8.0 8.0 4.0 8.0 5.0Principal Protection 10.0 11.0 8.0 15.0 10.0 15.0 5.0Inflation Protection 0.0 5.0 5.0 0.0 0.0 10.0 0.0CRO 15.0 15.0 15.0 15.0 20.0 15.0 0.010 Year Simulation Stats A B C D CLTP* ↓ Risk ↑ ReturnMedian Scenario Compound Return 7.25% 7.25% 7.25% 7.25% 7.15% 6.85% 7.80%Average Scenario Standard Deviation 8.7% 8.8% 8.8% 9.0% 8.4% 7.4% 13.9%Sharpe Ratio 0.8 0.8 0.8 0.8 0.8 0.9 0.6Average Compound Return of bottom 10% 1.6% 1.5% 1.5% 1.4% 1.8% 2.0% -1.4%Average Compound Return of top 10% 12.0% 12.0% 12.0% 12.1% 11.7% 10.8% 15.6%Percent of Compound Returns < 7.25% 49.8% 50.0% 49.9% 50.0% 52.0% 56.2% 45.9%Percent of Compound Returns < 2.9% 8.4% 8.8% 8.8% 9.1% 7.8% 7.5% 17.2%Best Calendar Year 24.1% 24.2% 24.5% 24.2% 24.2% 21.8% 32.0%Worst Calendar Year -18.0% -18.4% -18.4% -18.6% -15.6% -15.6% -31.6%Asset-Liability Statistics A B C D CLTP* ↓ Risk ↑ ReturnFunded Ratio >85% after 15 years 71.3% 70.6% 71.2% 71.1% 69.7% 67.4% 69.7%Average # of Years Funded Ratio is < 60% 1.85 1.86 1.87 1.91 1.78 1.71 2.78Average Employer Contribution over 15 Years 44.7% 44.8% 44.7% 44.8% 45.2% 46.7% 42.4%Average # of Years Employer Contribution is >55% 3.51 3.56 3.53 3.58 3.52 3.67 4.06Avg. of Worst 10% Avg. Employer Contribution over 15 Years 64.3% 64.5% 64.5% 64.8% 63.7% 63.3% 72.3%Median Funded Ratio in 15 Years 97.4% 97.0% 97.3% 97.2% 96.4% 93.5% 103.9%Average of Worst 10% Funded Ratio in 15 Years 63.9% 63.7% 63.6% 63.3% 64.4% 65.2% 53.3%Median Funded Ratio in 3 Years 65.1% 65.0% 65.1% 65.0% 64.8% 64.4% 66.2%Average of Worst 10% Funded Ratio in 3 Years 50.0% 49.8% 49.8% 49.6% 50.8% 51.2% 42.8%

Page 41 of 57

Next Steps

Page 42 of 57




Next Steps

1. Select / approve an asset allocation

Or request additional analysis / discussion

2. Meketa will develop an implementation plan that could include:

Funding of new strategies

Timing to reach new targets

Performing structural reviews of underlying classes

Update the investment policy statement

Revising the performance report to reflect new structure

Page 43 of 57

Appendix

Page 44 of 57





Strategic Classes A B C D CLTP* ↓ Risk ↑ Return 70-30 7.50% 7.75%Aggressive Growth 9.0 10.0 10.0 9.0 8.0 6.0 10.0 0.0 10.0 10.0Traditional Growth 30.0 33.0 32.0 35.0 30.0 30.0 60.0 70.0 40.0 56.0Risk Parity 10.0 0.0 5.0 0.0 14.0 0.0 0.0 0.0 5.0 0.0Credit 18.0 18.0 17.0 18.0 14.0 16.0 20.0 0.0 17.0 20.0Core Real Assets 8.0 8.0 8.0 8.0 4.0 8.0 5.0 0.0 8.0 8.0Principal Protection 10.0 11.0 8.0 15.0 10.0 15.0 5.0 30.0 5.0 5.0Inflation Protection 0.0 5.0 5.0 0.0 0.0 10.0 0.0 0.0 0.0 0.0CRO 15.0 15.0 15.0 15.0 20.0 15.0 0.0 0.0 15.0 1.010 Year Simulation Stats A B C D CLTP* ↓ Risk ↑ Return 70-30 7.50% 7.75%Median Scenario Compound Return 7.25% 7.25% 7.25% 7.25% 7.15% 6.85% 7.80% 6.90% 7.50% 7.75%Average Scenario Standard Deviation 8.7% 8.8% 8.8% 9.0% 8.4% 7.4% 13.9% 12.7% 10.2% 13.2%Sharpe Ratio 0.8 0.8 0.8 0.8 0.8 0.9 0.6 0.5 0.7 0.6Average Compound Return of bottom 10% 1.6% 1.5% 1.5% 1.4% 1.8% 2.0% -1.4% -1.2% 0.9% -1.0%Average Compound Return of top 10% 12.0% 12.0% 12.0% 12.1% 11.7% 10.8% 15.6% 14.1% 13.1% 15.1%Percent of Compound Returns < 7.25% 49.8% 50.0% 49.9% 50.0% 52.0% 56.2% 45.9% 53.1% 47.3% 46.0%Percent of Compound Returns < 2.9% 8.4% 8.8% 8.8% 9.1% 7.8% 7.5% 17.2% 19.2% 10.5% 16.0%Best Calendar Year 24.1% 24.2% 24.5% 24.2% 24.2% 21.8% 32.0% 32.0% 27.1% 30.8%Worst Calendar Year -18.0% -18.4% -18.4% -18.6% -15.6% -15.6% -31.6% -27.0% -21.3% -30.4%Asset-Liability Statistics A B C D CLTP* ↓ Risk ↑ Return 70-30 7.50% 7.75%Funded Ratio >85% after 15 years 71.3% 70.6% 71.2% 71.1% 69.7% 67.4% 69.7% 63.4% 72.0% 69.9%Average # of Years Funded Ratio is < 60% 1.85 1.86 1.87 1.91 1.78 1.71 2.78 3.01 2.09 2.66Average Employer Contribution over 15 Years 44.7% 44.8% 44.7% 44.8% 45.2% 46.7% 42.4% 45.6% 43.4% 42.5%Average # of Years Employer Contribution is >55% 3.51 3.56 3.53 3.58 3.52 3.67 4.06 4.59 3.57 3.96Avg. of Worst 10% Avg. Employer Contribution over 15 Years 64.3% 64.5% 64.5% 64.8% 63.7% 63.3% 72.3% 72.0% 66.1% 71.4%Median Funded Ratio in 15 Years 97.4% 97.0% 97.3% 97.2% 96.4% 93.5% 103.9% 96.1% 99.9% 102.8%Average of Worst 10% Funded Ratio in 15 Years 63.9% 63.7% 63.6% 63.3% 64.4% 65.2% 53.3% 53.5% 61.4% 54.5%Median Funded Ratio in 3 Years 65.1% 65.0% 65.1% 65.0% 64.8% 64.4% 66.2% 64.4% 65.4% 66.2%Average of Worst 10% Funded Ratio in 3 Years 50.0% 49.8% 49.8% 49.6% 50.8% 51.2% 42.8% 44.1% 48.2% 43.5%

Page 45 of 57






All of the four considered portfolios target SJCERA’s 7.25% actuarial return assumption and are on or close to the efficient frontier

A

B

CD

5.00%

5.25%

5.50%

5.75%

6.00%

6.25%

6.50%

6.75%

7.00%

7.25%

7.50%

7.75%

8.00%

-50.0%-45.0%-40.0%-35.0%-30.0%-25.0%-20.0%-15.0%-10.0%-5.0%0.0%

Com

poun

d R

etur

n

Worst Calendar Year


Constrained CLTP Actuarial Rate A B C D

Page 46 of 57




SJCERA Current Policy Portfolio Expected Return

The Current SJCERA Policy Portfolio is expected to have a ~7.10% return over the next 10-years with astandard deviation of ~8.4%

52.0% of the time through 10,000 simulations, the portfolio’s total return was below 7.25%

Simulation Statistic Median

Median Scenario Compound Return 7.10%

Average Scenario Standard Deviation 8.4%

Sharpe Ratio 0.50

Avg Compound Return of bottom 10% 1.8%

Avg Compound Return of top 10% 11.7%

Std Dev of Compound Returns 2.8%

Percent of Compound Returns < 7.25% 52.0%

Percent of Compound Returns < 2.90% 7.8%

Percent of Compound Returns < 0% 0.7%

Best Calendar Year 24.2%

Worst Calendar Year -15.6%

Integrated Asset-Liability Statistics

Probability of FR >85% in 15-years 69.7%

Average # of Years FR<60% (15-years) 1.8

Average Employer Contribution (EC) 15-years 45.2%

Average # of EC >55% 15-years 3.5

SJCERA

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0%

10-Y

ear

Med

ian

Com

poun

d R

etur

n

10-Year Median Standard Deviation

10,000 Simulations

Page 47 of 57




Only Private Equity, Non-US Equity, and Private Credit have higher expected returns than the actuarialinvestment return assumption of 7.25%

Private Equity/Non-Core RA

U.S. Equity

Non-U.S. Equity

Risk ParityLiquid Credit

Private Credit

Core Real Assets

TIPS

Core Fixed Income

Long Treasuries

Alternative Risk Premia Systematic Trend Following

CashInflation

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

10.00%

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00%

10-Y

ear

Exp

ecte

d C

ompo

und

Ret

urn

10-Year Expected Standard Deviation

SJCERA 2019 Capital Market Assumptions

Actuarial Investment Return Assumption = 7.25%

Page 48 of 57




-2.00%

-1.00%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

Changes in Capital Market Assumptions*

Risk-Free Rate

Duration Premium

US Equity Premium

Non-US vs. US Equity Premium

Illiquidity Premium

CMA Trends

Non-US is more attractive relative to US Equity and illiquidity risk premiums have trended downwards

* Generic Assumptions developed by Meketa prior to the merger with Meketa.

Definitions:

Real Risk-Free Rate = Cash Return Assumption – Inflation Assumption, Duration Premium = Core Fixed Income Return Assumption – Cash Return Assumption.

US Equity Premium = US Equity Return Assumption – Cash Return Assumption, Non-US vs US Equity Premium = Non-US Equity Return Assumption – US Equity Return Assumption.

Illiquidity Premium = Private Equity Return Assumption – Global Equity Return Assumption (US Equity Assumption prior to 2009).

Real Risk-Free Rate

Page 49 of 57




Simulation Statistics Definitions/Descriptions

Simulation Statistic Definition/Description

Expected Compound ReturnThis is a portfolio’s expected geometric/compound return. This metric is analogous to an actuarial assumed rate of return. This is

calculated as the median geometric/compound return from all 10,000 simulations.

Annual Standard DeviationThis is a portfolio’s expected volatility (i.e., a common measure of risk). This is calculated as the average volatility from all 10,000

simulations.

Sharpe RatioThis is a measure of a portfolio’s efficiency (i.e., return per unit of risk). It is calculated as the portfolio’s expected compound return less the

return on cash, all divided by the portfolio’s expected volatility. Ex: (6% return minus 2.25% cash return) / 10% volatility = 0.375 Sharpe.

Avg Comp Return of Bottom 10%This is the average compound return of the worst 10% (1,000) simulations. This is a gauge of the portfolio’s downside risk. Generally

speaking, for two portfolios with the same expected return, a portfolio with a higher volatility will have a lower average compound return of

the worst 10%.

Avg Comp Return of Top 10%This is the average compound return of the best 10% (1,000) simulations. This is a gauge of the portfolio’s upside potential. Generally

speaking, for two portfolios with the same expected return, a portfolio with a higher volatility will have a higher average compound return of

the best 10%.

Percent of Comp Returns < 7.25%This metric describes how many (in percent) of the 10,000 simulations had geometric/compound returns less than 6.75% (SJCERA’s

assumed rate of return).

Percent of Comp Returns < 2.90%This metric describes how many (in percent) of the 10,000 simulations had geometric/compound returns less than 2.50% (SJCERA’s

assumed rate of inflation).

Best Calendar Year This is the best annual return of each portfolio as found in the simulations. This is a gauge of the portfolio’s upside potential.

Worst Calendar Year This is the worst annual return of each portfolio as found in the simulations. This is a gauge of the portfolio’s downside risk.

Note: Each portfolio is run through 10,000 simulations that are 10-years in length. The statistics are derived from these simulation results.

Page 50 of 57




Descriptions of SJCERA’s Custom Integrated Asset-Liability MetricsDecision Factor Description

Seek Funding Improvement Long-term measure. Portfolios are ranked by counting the number of times the funding ratio achieves the 85% level after a 15-year

period. The higher the frequency of occurrences the higher (better) the rank.

Avoid Funding Deterioration

Single-period measure. Rank is determined by counting the number of years a portfolio causes the Plan funded ratio to fall below

(breaches) 65%. A 15-year horizon is utilized and each portfolio is examined across 1,000 simulated 15-year periods. The higher the

count of breaches, the lower (worse) the portfolio ranking.

Seek Lower Average Employer

Costs

Long-term measure. Portfolios are ranked by the level of average annual employer costs the Plan incurs as a result of the portfolio’s

investment results over a 15-year period. The lower the employer cost the higher (better) the rank.

Avoid Employer Cost Spikes

Single-period measure. Rank is determined by counting the number of years a portfolio causes the Plan employer cost to exceed

(breaches) 50% of pay. A 15-year horizon is utilized and each portfolio is examined across 1,000 simulated 15-year periods. The higher

the count of breaches, the lower (worse) the portfolio ranking.

Return Oriented

Return / Risk Balanced

Page 51 of 57




Risk-based Class/Component Asset Class/Strategy

Expected Geometric Compound Nominal Annual ReturnExpected Risk of Nominal

Returns

(Standard Deviation)

2019Meketa 10-year

Adjusted to match Cheiron’s

Inflation

Aggressive Growth Private Equity/Non-Core RA 8.05 8.70 27.00

Traditional GrowthU.S. Equity* 6.00 6.65 19.00

Non-U.S. Equity 7.15 7.80 21.50

Stabilized Growth

Risk Parity 5.50 6.15 10.00

Liquid Credit 5.25 5.90 13.00

Private Credit 6.75 7.40 15.00

Core Real Assets** 5.35 6.00 12.75

Principal Protection TIPS 3.25 3.90 7.00

Inflation Protection Core Fixed Income 3.65 4.30 5.50

Crisis Risk Offset

Long Treasuries 3.10 3.75 16.00

Alternative Risk Premia 4.50 5.15 10.00

Systematic Trend Following 4.50 5.15 15.00

Cash 2.50 3.15 1.25

Inflation 2.25 2.90 1.50

2019 Return/Risk Assumptions

* US Large-Mid Cap Equity and US Small Cap Equity are modeled together.

** 2019 = ODCE Leverage (i.e., actual implementation).

Modeling Assumptions – Asset Class/Strategy Return/Risk

Page 52 of 57




Strategies within New Framework


New Mid-Level

Component Strategy Current Manager / Group

Broad Growth


Assets

Ocean Avenue II

Ocean Avenue III

Morgan Creek III

Morgan Creek V

Morgan Creek VI

Non-Core & Value Add Private Real Estate

Traditional

US Equity

BlackRock Russell 1000 Index

Capital Prospects

BlackRock Russell 2000 Growth Index Fund

Non-US Equity

BlackRock International Stock Index

PIMCO RAE Fundamental International

PIMCO RAE Fundamental Emerging Markets

REITsInvesco All Equity REIT

BlackRock Developed ex-US REIT

Page 53 of 57






New Mid-Level


Broad Growth Stabilized Growth

Risk ParityBridgewater All Weather

PanAgora Diversified Risk Multi-Asset

Liquid Credit

Neuberger Berman Global Credit

Stone Harbor Absolute Return

Stone Harbor Bank Loans

Private Credit

Mesa West RE Income III

Mesa West RE Income IV

Crestline Opportunity II

Marinus Opportunity

Oaktree

Raven Opportunity II

Raven Opportunity III

Medley Opportunity II

White Oak Summit Peer Fund

Core Real Assets Core Private Real Estate

Page 54 of 57





New Mid-Level



Inflation Protection TIPS N/A


Dodge & Cox

Doubleline Capital

PRIMA

Crisis Risk Offset

Long Duration Dodge & Cox Long Duration

Systematic Trend FollowingMt. Lucas Managed Futures

Graham Tactical Trend


AQR Style Premia

PE Diversified Global Macro

Lombard Odier


Page 55 of 57

July 2, 2019

Actuarial Certification•The purpose of the actuarial projections is to analyze the impact of potential asset allocations for the San Joaquin County Employees’ Retirement Association (the Plan). These projections are for the use of PCA/Meketaand the Plan.

•In preparing our projections, we relied on the results of our January 1, 2018 actuarial valuation and capital market assumptions provided by PCA/Meketa. A summary of the data, assumptions, methods, and plan provisions used to prepare the valuation results can be found in the January 1, 2018 actuarial valuation report.

•Future results may differ significantly from the results presented in these projections due to such factors as the following: plan experience differing from that anticipated by the assumptions; changes in assumptions; and changes in plan provisions or applicable law.

•These projections have been prepared in accordance with generally recognized and accepted actuarial principles and practices and our understanding of the Code of Professional Conduct and applicable Actuarial Standards of Practice set out by the Actuarial Standards Board as well as applicable laws and regulations. Furthermore, as credentialed actuaries, we meet the Qualification Standards of the American Academy of Actuaries to render the opinion contained in this presentation. This presentation does not address any contractual or legal issues. We are not attorneys, and our firm does not provide any legal services or advice.

•These projections were prepared exclusively for PCA/Meketa and the Plan for the purpose described herein. Other users of this presentation are not intended users as defined in the Actuarial Standards of Practice, and Cheiron assumes no duty or liability to any other user.

Graham A. Schmidt, ASA, EA, FCA, MAAA Anne D. Harper, FSA, EA, MAAAConsulting Actuary Consulting Actuary




WE HAVE PREPARED THIS REPORT (THIS “REPORT”) FOR THE SOLE BENEFIT OF THE INTENDED RECIPIENT(THE “RECIPIENT”).

SIGNIFICANT EVENTS MAY OCCUR (OR HAVE OCCURRED) AFTER THE DATE OF THIS REPORT AND THAT IT IS NOTOUR FUNCTION OR RESPONSIBILITY TO UPDATE THIS REPORT. ANY OPINIONS OR RECOMMENDATIONSPRESENTED HEREIN REPRESENT OUR GOOD FAITH VIEWS AS OF THE DATE OF THIS REPORT AND ARE SUBJECTTO CHANGE AT ANY TIME. ALL INVESTMENTS INVOLVE RISK. THERE CAN BE NO GUARANTEE THAT THESTRATEGIES, TACTICS, AND METHODS DISCUSSED HERE WILL BE SUCCESSFUL.

INFORMATION USED TO PREPARE THIS REPORT WAS OBTAINED FROM INVESTMENT MANAGERS, CUSTODIANS,AND OTHER EXTERNAL SOURCES. WHILE WE HAVE EXERCISED REASONABLE CARE IN PREPARING THIS REPORT,WE CANNOT GUARANTEE THE ACCURACY OF ALL SOURCE INFORMATION CONTAINED HEREIN.

CERTAIN INFORMATION CONTAINED IN THIS REPORT MAY CONSTITUTE “FORWARD - LOOKING STATEMENTS,”WHICH CAN BE IDENTIFIED BY THE USE OF TERMINOLOGY SUCH AS “MAY,” “WILL,” “SHOULD,” “EXPECT,” “AIM”,“ANTICIPATE,” “TARGET,” “PROJECT,” “ESTIMATE,” “INTEND,” “CONTINUE” OR “BELIEVE,” OR THE NEGATIVESTHEREOF OR OTHER VARIATIONS THEREON OR COMPARABLE TERMINOLOGY. ANY FORWARD - LOOKINGSTATEMENTS, FORECASTS, PROJECTIONS, VALUATIONS, OR RESULTS IN THIS PRESENTATION ARE BASED UPONCURRENT ASSUMPTIONS. CHANGES TO ANY ASSUMPTIONS MAY HAVE A MATERIAL IMPACT ONFORWARD - LOOKING STATEMENTS, FORECASTS, PROJECTIONS, VALUATIONS, OR RESULTS. ACTUAL RESULTSMAY THEREFORE BE MATERIALLY DIFFERENT FROM ANY FORECASTS, PROJECTIONS, VALUATIONS, OR RESULTSIN THIS PRESENTATION.

PERFORMANCE DATA CONTAINED HEREIN REPRESENT PAST PERFORMANCE. PAST PERFORMANCE IS NOGUARANTEE OF FUTURE RESULTS.

Page 57 of 57

San Joaquin County Employees Retirement Associaton (SJCERA)Preliminary Monthly Flash Report (Net)1

Commitment

($000)Sub-Segment

Market Value

($000)

Physical

% of

Total

% of

Total +

Overlay

Policy

Target %1-Mo 3-Mos YTD 1-Yr 3-Yrs 5-Yrs SI Return SI Date

TOTAL PLAN1 3,001,303$ 100.0% 100.0% 100.0% -1.3 1.5 5.6 3.3 6.7 4.0 7.7 Apr-90

Policy Benchmark 2-0.6 2.2 4.7 3.7 7.6 5.2 7.5

Difference: -0.7 -0.7 0.9 -0.4 -0.9 -1.2 0.2

60/40 Portfolio 3-2.9 0.7 7.8 2.4 7.1 4.8 7.2

Difference: . 1.6 0.8 -2.2 0.9 -0.4 -0.8 0.5

Global Public Equity 898,584$ 29.9% 29.9% 30.0% -5.4 -2.0 8.9 -1.7 9.6 4.8 8.2 Jan-90

MSCI ACWI 16.2% -5.8 -1.3 9.4 -0.8 9.7 5.8 7.2Difference: 13.8% 0.4 -0.7 -0.5 -0.9 -0.1 -1.0 1.0

BlackRock Russell 1000 Index Large Cap US 382,564$ 12.7% -6.4 -0.9 11.1 3.5 11.7 9.5 13.2 Oct-09

Russell 1000 Index -6.4 -0.9 11.0 3.5 11.7 9.5 13.1Difference: 0.0 0.0 0.1 0.0 0.0 0.0 0.1

Capital Prospects Small Cap Value US 41,256$ 1.4% -8.0 -6.9 9.0 -11.5 7.9 5.1 6.9 Jul-06

Russell 2000 Value Index -8.2 -7.4 6.7 -11.3 7.7 5.0 5.7Difference: 0.2 0.5 2.3 -0.2 0.2 0.1 1.2

BlackRock Russell 2000 Growth Index Fund Small Cap Growth US 35,442$ 1.2% -7.4 -5.9 11.8 -6.7 --- --- 8.2 Mar-17

Russell 200 Growth Index -7.4 -5.9 11.8 -6.9 --- --- 8.0

Difference: 0.0 0.0 0.0 0.2 --- --- 0.2

BlackRock International Stock Index Non-US Developed 133,233$ 4.4% -4.6 -1.3 8.5 -5.1 6.3 1.5 5.0 Oct-09

MSCI World ex-US Index Net -4.7 -1.5 8.2 -5.4 5.8 1.2 4.6Difference: 0.1 0.2 0.3 0.3 0.5 0.3 0.4

PIMCO RAE Fundamental International Non-US Enhanced 138,563$ 4.6% -5.9 -4.2 4.2 -9.1 5.6 -0.2 3.3 Apr-06

MSCI EAFE Index -4.7 -1.2 8.0 -5.3 6.3 1.8 3.3Difference: -1.2 -3.0 -3.8 -3.8 -0.7 -2.0 0.0

PIMCO RAE Fundamental Emerging Markets Emerging Markets 95,834$ 3.2% -4.4 -4.1 3.0 -8.5 13.0 2.1 4.3 Apr-07

MSCI Emerging Markets Index -7.2 -4.4 4.2 -8.3 10.3 2.2 3.3Difference: 2.8 0.3 -1.2 -0.2 2.7 -0.1 1.0

Public Real Estate Public Real Estate 71,692$ 2.4% 0.3 3.8 14.9 9.9 7.1 6.0 7.1 Aug-04

Custom Public RE Benchmark 0.0 2.4 13.9 9.7 6.2 6.2 8.4Difference: 0.3 1.4 1.0 0.2 0.9 -0.2 -1.3

Invesco All Equity REIT Core US REIT 42,095$ 1.4% 0.8 5.7 18.1 15.5 7.7 8.4 9.5 Aug-04

FTSE NARIET Equity Index 0.2 3.3 16.3 14.6 6.1 7.9 9.0Difference: 0.6 2.4 1.8 0.9 1.6 0.5 0.5

BlackRock Developed ex-US REIT Value Add Intl REIT 29,597$ 1.0% -0.3 1.2 10.6 2.8 6.4 --- 3.4 Aug-14

FTSE ERPA/NAREIT Global ex-US REIT Index -0.4 1.0 10.3 2.3 6.0 --- 3.0Difference: 0.1 0.2 0.3 0.5 0.4 --- 0.4

Private Appreciation4 387,514$ 12.9% 12.9% 12.0% 2.4 2.4 12.5 12.5 9.6 10.5 3.4 Feb-05

MSCI ACWI + 200 bps 0.6 4.9 12.5 12.5 16.3 11.4 10.1Difference: 1.8 -2.5 0.0 0.0 -6.7 -0.9 -6.7

Total Private Real Estate $400,122 Private Real Estate 254,584$ 8.5% 1.8 1.8 8.4 8.4 8.0 9.7 3.2 Nov-04

NCREIF ODCE Net + 1% 0.7 2.1 8.8 8.8 8.9 10.8 9.2Difference: 1.1 -0.3 -0.4 -0.4 -0.9 -1.1 -6.0

Ocean Avenue II $40,000 PE Buyout FOF 37,721$ 1.3% 3.9 3.9 24.2 24.2 19.0 --- 9.4 May-13

MSCI ACWI + 200 bps Blend 5 0.6 2.1 8.9 8.9 9.0 --- 9.0Difference: 3.3 1.8 15.3 15.3 10.0 --- 0.4

Ocean Avenue III $50,000 PE Buyout FOF 40,062$ 1.3% 5.9 5.9 54.6 54.6 --- --- 21.5 Apr-16

MSCI ACWI + 200 bps Blend 5 0.6 2.1 8.9 8.9 --- --- 9.0Difference: 5.3 3.8 45.7 45.7 --- --- 12.5

Morgan Creek III $10,000 Multi-Strat FOF 11,522$ 0.4% 1.0 1.0 15.9 15.9 --- --- 3.1 Feb-15

MSCI ACWI + 200 bps Blend 5 0.6 2.1 8.9 8.9 --- --- 9.0Difference: 0.4 -1.1 7.0 7.0 --- --- -5.9

Morgan Creek V $12,000 Multi-Strat FOF 11,082$ 0.4% 4.4 4.4 13.9 13.9 9.0 --- 13.6 Jun-13

MSCI ACWI + 200 bps Blend 5 0.6 2.1 8.9 8.9 9.0 --- 9.0Difference: 3.8 2.3 5.0 5.0 0.0 --- 4.6

Morgan Creek VI $20,000 Multi-Strat FOF 21,403$ 0.7% 3.0 3.0 18.1 18.1 --- --- 2.0 Feb-15

MSCI ACWI + 200 bps Blend 5 0.6 2.1 8.9 8.9 --- --- 9.0Difference: 2.4 0.9 9.2 9.2 --- --- -7.0

Oaktree $20,000 MMDL 11,142$ 0.4% 1.6 1.6 --- --- --- --- -5.0 Mar-18MSCI ACWI + 200 bps Blend 5 0.6 2.1 --- --- --- --- 5.1

Difference: 1.0 -0.5 --- --- --- --- -10.1

3 60% MSCI ACWI, 40% BB Universal

4 Total class and underlying manager returns are as of 12/31/2018, and lagged 1 quarter. 5 12/1/2018 to present benchmark is MSCI ACWI +200 basis points (lagged). Prior to 12/1/2018 the benchmark was 9% Annual.

2 1/1/16 to present benchmark is 30% MSCI ACWI, 10% BB Aggregate Bond Index, 14% 50% BB High Yield, 50% S&P Leveraged Loans, 14% T-Bill + 4%, 12% MSCI ACWI + 200 bps, 20% CRO Custom Benchmark. Prior to 1/1/16 benchmark is legacy policy benchmark.

1 Returns are preliminary and are finalized during each quartlerly reporting cycle. Monthly returns since previous quarter are provided by the managers. Market values are provided by Northern Trust.

May 2019


Commitment

($000)Sub-Segment

Market Value

($000)

Physical

% of

Total

% of

Total +

Overlay

Policy


May 2019

Stable Fixed Income 317,905$ 10.6% 10.6% 10.0% 0.8 2.3 3.2 4.9 4.0 3.9 6.9 Oct-90BB Aggregate Bond Index 1.8 3.8 4.8 6.4 2.5 2.7 6.1

Difference: -1.0 -1.5 -1.6 -1.5 1.5 1.2 0.8

Dodge & Cox Core Fixed Income 106,631$ 3.6% 0.8 3.1 5.0 6.2 4.0 3.4 7.2 Oct-90

BB Aggregate Bond Index 1.8 3.8 4.8 6.4 2.5 2.7 6.1Difference: -1.0 -0.7 0.2 -0.2 1.5 0.7 1.1

Doubleline Capital MBS 107,020$ 3.6% 1.6 3.4 4.1 6.0 4.3 4.4 5.5 Feb-12

BB Aggregate Bond Index 1.8 3.8 4.8 6.4 2.5 2.7 2.5Difference: -0.2 -0.4 -0.7 -0.4 1.8 1.7 3.0

PRIMA Comm. Mortgage 104,254$ 3.5% 0.0 0.5 0.5 2.5 3.8 4.0 4.3 Jul-08

BB Aggregate Bond Index -0.1 2.9 2.7 3.2 1.7 2.3 3.6

Difference: 0.1 -2.4 -2.2 -0.7 2.1 1.7 0.7

Credit2 380,057$ 12.7% 12.7% 14.0% 1.0 1.0 1.6 1.6 3.7 3.1 3.9 Jul-0650% BB High Yield, 50% S&P/LSTA Leveraged Loans 0.6 2.1 4.1 4.1 6.7 4.8 6.2

Difference: 0.4 -1.1 -2.5 -2.5 -3.0 -1.7 -2.3

Stone Harbor Absolute Return Absolute Return 88,664$ 3.0% 0.9 2.5 1.2 1.2 5.3 2.5 2.8 Apr-08

3-Month Libor Total Return 0.2 0.7 2.5 2.5 1.5 1.0 1.4Difference: 0.7 1.8 -1.3 -1.3 3.8 1.5 1.4

Stone Harbor Bank Loans Bank Loans 59,504$ 2.0% 1.6 1.9 3.4 3.4 5.6 3.1 3.1 Mar-14

S&P/LSTA Leveraged Loans Index -0.2 4.0 3.0 3.0 5.7 3.6 3.7Difference: 1.8 -2.1 0.4 0.4 -0.1 --- -0.6

Neuberger Berman Global Credit 50,480$ 1.7% 0.7 --- --- --- --- --- 1.7 Feb-1933% ICE BofA HY Constrained, 33% S&P/LSTA LL, 33% JPM EMBI Glbl Div. 0.7 --- --- --- --- --- 2.2

Difference: 0.0 --- --- --- --- --- -0.5

Mesa West RE Income III3 $45,000 Comm. Mortgage 7,229$ 0.2% 2.2 2.2 10.6 10.6 9.8 --- 6.2 Sep-13

CPI + 6% Annual Blend 4 0.6 1.6 8.7 8.7 8.9 --- 8.9Difference: 1.6 0.6 1.9 1.9 0.9 --- -2.7

Mesa West RE Income IV3 $75,000 Comm. Mortgage 23,740$ 0.8% 2.6 2.6 9.7 9.7 --- --- 7.5 Jun-17

CPI + 6% Annual Blend 4 0.6 1.6 8.7 8.7 --- --- 8.8Difference: 2.0 1.0 1.0 1.0 --- --- -1.3

Crestline Opportunity II3 $45,000 Opportunistic 27,066$ 0.9% 0.2 0.2 3.1 3.1 6.9 --- 7.7 Nov-13

CPI + 6% Annual Blend 4 0.6 1.6 8.7 8.7 8.9 --- 8.9Difference: -0.4 -1.4 -5.6 -5.6 -2.0 --- -1.2

Raven Opportunity II3 $50,000 Direct Lending 15,675$ 0.5% 2.1 2.1 14.6 14.6 -1.6 --- -3.5 Aug-14

CPI + 6% Annual Blend 4 0.6 1.6 8.7 8.7 8.9 --- 9.0Difference: 1.5 0.5 5.9 5.9 -10.5 --- -12.5

Raven Opportunity III3 $50,000 Direct Lending 34,553$ 1.2% 2.4 2.4 11.8 11.8 --- --- -0.8 Aug-15

CPI + 6% Annual Blend 4 0.6 1.6 8.7 8.7 --- --- 8.9

Difference: 1.8 0.8 3.1 3.1 --- --- -9.7

Medley Opportunity II3 $50,000 Direct Lending 25,128$ 0.8% -6.8 -6.8 -12.4 -12.4 -2.2 --- 2.8 Jul-12

CPI + 6% Annual Blend 4 0.6 1.6 8.7 8.7 8.9 --- 8.9Difference: -7.4 -8.4 -21.1 -21.1 -11.1 --- -6.1

White Oak Summit Peer Fund3 $50,000 Direct Lending 48,020$ 1.6% 2.3 2.3 8.6 8.6 --- --- 8.4 Mar-16

CPI + 6% Annual Blend 4 0.6 1.6 8.7 8.7 --- --- 9.0Difference: 1.7 0.7 -0.1 -0.1 --- --- -0.6

2 Total class returns are as of12/31/2018 and lagged 1 quarter.3 Manager returns are as of 12/31/2018, and lagged 1 quarter. 49% Annual until 7/1/2018 then CPI +6% Annual thereafeter.

1 Returns are preliminary and are finalized during each quartlerly reporting cycle. Monthly returns since previous quarter are provided by the managers. Market values are provided by Northern Trust.


Commitment

($000)Sub-Segment

Market Value

($000)

Physical

% of

Total

% of

Total +

Overlay

Policy


May 2019

Risk Parity 404,011$ 13.5% 13.5% 14.0% -0.4 3.0 9.7 2.8 6.4 2.3 3.9 Mar-12

T-Bill + 4% 0.6 1.6 2.7 6.3 5.4 4.9 4.5Difference: -1.0 1.4 7.0 -3.5 1.0 -2.6 -0.6

Bridgewater All Weather Risk Parity 196,406$ 6.5% -1.1 1.6 7.5 1.7 6.3 3.0 4.1 Mar-12

T-Bill + 4% 0.6 1.6 2.7 6.3 5.4 5.5 5.7Difference: -1.7 0.0 4.8 -4.6 0.9 -2.5 -1.6

PanAgora Diversified Risk Multi-Asset Risk Parity 207,605$ 6.9% 0.3 4.3 11.9 3.7 6.6 --- 6.6 Apr-16

T-Bill + 4% 0.6 1.6 2.7 6.3 5.4 --- 5.3Difference: -0.3 2.7 9.2 -2.6 1.2 --- 1.3

Crisis Risk Offset 524,593$ 17.5% 17.5% 20.0% 1.7 4.9 4.1 7.1 1.9 5.6 7.3 Jan-05

CRO Custom Benchmark 2 1.8 5.4 5.0 6.4 2.2 3.8 4.6Difference: -0.1 -0.5 -0.9 0.7 -0.3 1.8 2.7

Long Duration 187,533$ 6.2% 6.2 9.7 9.1 11.5 2.8 --- 2.4 Feb-16

BB US Long Duration Treasuries 6.5 10.1 9.5 11.0 2.9 --- 3.6Difference: -0.3 -0.4 -0.4 0.5 -0.1 --- -1.2

Dodge & Cox Long Duration Long Duration 187,533$ 6.2% 6.2 9.7 9.1 11.5 2.8 --- 2.4 Feb-16

BB US Long Duration Treasuries 6.5 10.1 9.5 11.0 2.9 --- 3.6Difference: -0.3 -0.4 -0.4 0.5 -0.1 --- -1.2

Systematic Trend Following 147,351$ 4.9% -2.4 5.1 0.0 -2.2 -5.1 10.9 8.4 Jan-05

BTOP50 Index -1.5 4.6 3.3 2.9 -1.7 0.5 4.2Difference: -0.9 0.5 -3.3 -5.1 -3.4 10.4 4.2

Mt. Lucas Managed Futures - Cash Systematic Trend Following 73,601$ 2.5% -2.5 0.6 -5.6 -2.1 -7.8 9.0 7.8 Jan-05

BTOP50 Index -1.5 4.6 3.3 2.9 -1.7 0.5 4.2Difference: -1.0 -4.0 -8.9 -5.0 -6.1 8.5 3.6

Graham Tactical Trend Systematic Trend Following 73,750$ 2.5% -2.3 10.1 6.2 -2.3 -3.1 --- -3.8 Mar-16

SG Trend Index -2.5 7.2 4.6 3.6 -1.2 --- -3.1Difference: 0.2 2.9 1.6 -5.9 -1.9 --- -0.7

Alternative Risk Premia 189,709$ 6.3% 0.9 0.5 2.9 10.9 6.5 2.8 9.8 Aug-06

5% Annual 0.4 1.2 2.1 5.0 5.0 7.2 6.6Difference: 0.5 -0.7 0.8 5.9 1.5 -4.4 3.2

AQR Style Premia Alternative Risk Premia 35,121$ 1.2% -3.3 -5.5 -4.4 -14.9 --- --- -2.4 May-16

5% Annual 0.4 1.2 2.1 5.0 --- --- 5.0Difference: -3.7 -6.7 -6.5 -19.9 --- --- -7.4

PE Diversified Global Macro Alternative Risk Premia 73,868$ 2.5% 8.5 8.3 8.8 26.1 --- --- 7.0 Jul-16

5% Annual 0.4 1.2 2.1 5.0 --- --- 5.0Difference: 8.1 7.1 6.7 21.1 --- --- 2.0

Lombard Odier Alternative Risk Premia 80,720$ 2.7% -3.6 -3.3 0.9 --- --- --- 0.9 Jan-19

5% Annual 0.4 1.2 2.1 --- --- --- 5.0Difference: -4.0 -4.5 -1.2 --- --- --- -4.1

Cash* 88,639$ 3.0% 3.0% 0.0% 0.2 0.4 0.7 1.3 1.0 0.7 2.5 Sep-94

US T-Bills 0.2 0.6 1.0 2.3 1.3 0.8 2.5Difference: 0.0 -0.2 -0.3 -1.0 -0.3 -0.1 0.0

Northern Trust STIF Collective Govt. Short Term 83,833$ 2.8% 0.2 0.5 0.8 1.5 1.1 0.7 2.8 Jan-95

US T-Bills 0.2 0.6 1.0 2.3 1.3 0.8 2.5Difference: 0.0 -0.1 -0.2 -0.8 -0.2 -0.1 0.3

Parametric PIOS Cash Overlay 4,805$ 0.2% 0.0 0.3 1.9 1.9 1.2 0.7 0.1 Mar-06

US T-Bills 0.2 0.6 1.0 2.3 1.3 0.8 1.1Difference: -0.2 -0.3 0.9 -0.3 -0.1 -0.1 -1.0

1 Retuns are preliminary and are finalized during each quartlerly reporting cycle. Monthly returns since previous quarter are provided by the managers. Market values are provided by Northern Trust.

* Includes lagged cash

2 Benchmark is (1/3) BB Long Duration Treasuries, (1/3) BTOP50 Index, (1/3) 5% Annual.

Capital Markets Outlook & Risk Metrics



Capital Market Outlook - Takeaways

May provided a quick flashback to the experiences of October and December 2018, as most equity market indices across the globe were down by roughly 5-10%. Despite this challenging month, year-to-date returns for most equity market indices remain at levels that are in-line with or higher than annual expectations.

As implications from the trade wars and worries about global economic growth have reverberated throughout the capital markets, safe-haven assets (i.e., U.S. Treasury Bonds) have produced significant returns in 2019 as interest rates have trended down across most parts of the yield curve. Long U.S. Treasury Bonds, for example, have generated a year-to-date return of nearly 10%.

A large area of interest over the near- and intermediate-terms will be the Federal Reserve’s positioning on interest rates. Currently, markets are projecting interest rate cuts to likely occur in 2019, and this notion will continue to be discussed among policy makers over the coming months.

U.S. equity markets remain expensive whereas Non-U.S. equity markets remain reasonably valued.

Despite a material drawdown in risk-oriented assets in May, implied equity market volatility (i.e., VIX) was at or below its historical average (≈19%) throughout the vast majority of the month.

The Market Sentiment Indicator1 returned to neutral (grey) as a result of year-over-year changes in equity markets.

Market uncertainty appears to be increasing. Diverging global economic growth, nuanced monetary policies, and ongoing geopolitical turmoil has resulted in increased uncertainty in the global capital markets.

1 See Appendix for the rationale for selection and calculation methodology used for the risk metrics.



Risk Overview/Dashboard (1)



Risk Overview/Dashboard (2)



Market Sentiment Indicator (All History)



Market Sentiment Indicator (Last Three Years)



U.S. Equity Cyclically Adjusted P/E



Small Cap P/E vs. Large Cap P/E



Growth P/E vs. Value P/E



Developed International Equity Cyclically Adjusted P/E



Emerging Market Equity Cyclically Adjusted P/E



Private Equity Multiples



Core Real Estate Spread vs. Ten-Year Treasury



REITs Dividend Yield Spread vs. Ten-Year Treasury



Credit Spreads



Equity Volatility



Systemic Risk and Volatile Market Days1

1 Source: Meketa Investment Group, as of April 30, 2019. Volatile days are defined as the top 10 percent of realized turbulence which is a multivariate distance between asset returns.



Yield Curve Slope (Ten Minus Two)



Ten-Year Breakeven Inflation



Total Return Given Changes in Interest Rates (bps)1

Total Return for Given Changes in Interest Rates (bps) Statistics

-100 -50 0 50 100 150 200 250 300 Duration YTW

Barclays U.S. Short Treasury (Cash) 2.5% 2.4% 2.3% 2.1% 2.0% 1.8% 1.7% 1.5% 1.4% 0.29 2.25%

Barclays U.S. Treasury 1-3 Yr. 4.1% 3.1% 2.1% 1.2% 0.2% -0.7% -1.7% -2.7% -3.6% 1.92 2.14%

Barclays U.S. Treasury Intermediate 5.9% 3.9% 1.9% 0.0% -1.8% -3.6% -5.3% -7.0% -8.6% 3.85 1.94%

Barclays U.S. Treasury Long 22.5% 12.0% 2.6% -5.9% -13.3% -19.7% -25.0% -29.4% -32.7% 17.91 2.56%

1 Data represents the expected total return from a given change in interest rates (shown in basis points) over a 12-month period assuming a parallel shift in rates. Data is as of May 1, 2019 via Barclays, Bloomberg, and Meketa Investment Group.

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

-100 -50 0 50 100 150 200 250 300

Barclays U.S. Short Treasury (Cash) Barclays U.S. Treasury 1-3 Yr. Barclays U.S. Treasury Intermediate



Long-Term Outlook1

1 Twenty-year expected returns based upon Meketa Investment Group’s 2019 Annual Asset Study.

0%

2%

4%

6%

8%

10%

12%



Appendix – Data Sources and Explanations All Data as of May 31, 2019

U.S. Equity Cyclically Adjusted P/E on S&P 500 Index – Source: Robert Shiller and Yale University. Small Cap P/E (Russell 2000 Index) vs. Large Cap P/E (Russell 1000 Index) - Source: Russell Investments.

Earnings figures represent 12-month “as reported” earnings. Growth P/E (Russell 3000 Growth Index) vs. Value (Russell 3000 Value Index) P/E - Source: Bloomberg,

MSCI, and Meketa Investment Group. Earnings figures represent 12-month “as reported” earnings. Developed International Equity (MSCI EAFE ex Japan Index) Cyclically Adjusted P/E – Source: MSCI and

Bloomberg. Earnings figures represent the average of monthly “as reported” earnings over the previous ten years.

Emerging Market Equity (MSCI Emerging Markets Index) Cyclically Adjusted P/E – Source: MSCI and Bloomberg. Earnings figures represent the average of monthly “as reported” earnings over the previous ten years

Private Equity Multiples – Source: S&P LCD Average EBITDA Multiples Paid in All LBOs Core Real Estate Spread vs. Ten-Year Treasury – Source: Real Capital Analytics, U.S. Treasury, Bloomberg,

and Meketa Investment Group. Core Real Estate is proxied by weighted sector transaction based indices from Real Capital Analytics and Meketa Investment Group.

REITs Dividend Yield Spread vs. Ten-Year Treasury – Source: NAREIT, U.S. Treasury. REITs are proxied by the yield for the NAREIT Equity index.

Credit Spreads – Source: Barclays Capital. High Yield is proxied by the Barclays High Yield index and Investment Grade Corporates are proxied by the Barclays U.S. Corporate Investment Grade index.



Appendix – Data Sources and Explanations (Continued) All Data as of May 31, 2019

Equity Volatility – Source: Bloomberg, and Meketa Investment Group. Equity Volatility proxied by VIX Index, a Measure of implied option volatility for U.S. equity markets.

Systemic Risk and Volatile Market Days – Source: Meketa Investment Group, as of April 30, 2019. Volatile days are defined as the top 10 percent of realized turbulence, which is a multivariate distance between asset returns.

Systemic Risk, which measures risk across markets, is important because the more contagion of risk that exists between assets, the more likely it is that markets will experience volatile periods.

Yield Curve Slope (Ten Minus Two) – Source: Bloomberg, and Meketa Investment Group. Yield curve slope is calculated as the difference between the 10-Year U.S. Treasury Yield and 2-Year U.S. Treasury Yield.

Ten-Year Breakeven Inflation – Source: U.S. Treasury and Federal Reserve. Data is as of May 1, 2019 for TIPS and Treasuries. Inflation is measured by the Consumer Price Index (CPI-U NSA).

Meketa Market Sentiment Indicator

Explanation, Construction and Q&A



Meketa has created the MIG Market Sentiment Indicator (MIG-MSI) to complement our valuation-focused Risk Metrics. This measure of sentiment is meant to capture significant and persistent shifts in long-lived market trends of economic growth risk, either towards a risk-seeking trend or a risk-aversion trend. This appendix explores:

What is the Meketa Market Sentiment Indicator? How do I read the indicator graph? How is the Meketa Market Sentiment Indicator constructed? What do changes in the indicator mean?



Meketa has created a market sentiment indicator for monthly publication (the MIG-MSI – see below) to complement Meketa’s Risk Metrics. Meketa’s Risk Metrics, which rely significantly on standard market measures of relative valuation, often provide valid early signals of increasing long-term risk levels in the global investment markets. However, as is the case with numerous valuation measures, the Risk Metrics may convey such risk concerns long before a market corrections take place. The MIG-MSI helps to address this early-warning bias by measuring whether the markets are beginning to acknowledge key Risk Metrics trends, and / or indicating non-valuation based concerns. Once the MIG-MSI indicates that the market sentiment has shifted, it is our belief that investors should consider significant action, particularly if confirmed by the Risk Metrics. Importantly, Meketa believes the Risk Metrics and MIG-MSI should always be used in conjunction with one another and never in isolation. The questions and answers below highlight and discuss the basic underpinnings of the Meketa MIG-MSI:

What is the Meketa Market Sentiment Indicator (MIG-MSI)? The MIG-MSI is a measure meant to gauge the market’s sentiment regarding economic growth risk. Growth risk cuts across most financial assets, and is the largest risk exposure that most portfolios bear. The MIG-MSI takes into account the momentum (trend over time, positive or negative) of the economic growth risk exposure of publicly traded stocks and bonds, as a signal of the future direction of growth risk returns; either positive (risk seeking market sentiment), or negative (risk averse market sentiment).



How do I read the Meketa Market Sentiment Indicator graph? Simply put, the MIG-MSI is a color-coded indicator that signals the market’s sentiment regarding economic growth risk. It is read left to right chronologically. A green indicator on the MIG-MSI indicates that the market’s sentiment towards growth risk is positive. A gray indicator indicates that the market’s sentiment towards growth risk is neutral or inconclusive. A red indicator indicates that the market’s sentiment towards growth risk is negative. The black line on the graph is the level of the MIG-MSI. The degree of the signal above or below the neutral reading is an indication the signal’s current strength. Momentum as we are defining it is the use of the past behavior of a series as a predictor of its future behavior.



How is the Meketa Market Sentiment Indicator (MIG-MSI) Constructed? The MIG-MSI is constructed from two sub-elements representing investor sentiment in stocks and bonds:

Stock return momentum: Return momentum for the S&P 500 Equity Index (trailing 12-months) Bond yield spread momentum: Momentum of bond yield spreads (excess of the measured bond yield over

the identical duration U.S. Treasury bond yield) for corporate bonds (trailing 12-months) for both investment grade bonds (75% weight) and high yield bonds (25% weight).

Both measures are converted to Z-scores and then combined to get an “apples to apples” comparison without the need of re-scaling.

The black line reading on the graph is calculated as the average of the stock return momentum measure and the bonds spread momentum measure.1 The color reading on the graph is determined as follows:

If both stock return momentum and bond spread momentum are positive = GREEN (positive) If one of the momentum indicators is positive, and the other negative = GRAY (inconclusive) If both stock return momentum and bond spread momentum are negative = RED (negative)

1 Momentum as we are defining it is the use of the past behavior of a series as a predictor of its future behavior. “Time Series Momentum” Moskowitz, Ooi, Pedersen, August 2010. http://pages.stern.nyu.edu/~lpederse/papers/TimeSeriesMomentum.pdf



What does the Meketa Market Sentiment Indicator (MIG-MSI) mean? Why might it be useful? There is strong evidence that time series momentum is significant and persistent. In particular, across an extensive array of asset classes, the sign of the trailing 12-month return (positive or negative) is indicative of future returns (positive or negative) over the next 12-month period. The MIG-MSI is constructed to measure this momentum in stocks and corporate bond spreads. A reading of green or red is agreement of both the equity and bond measures, indicating that it is likely that this trend (positive or negative) will continue over the next 12 months. When the measures disagree, the indicator turns gray. A gray reading does not necessarily mean a new trend is occurring, as the indicator may move back to green, or into the red from there. The level of the reading (black line) and the number of months at the red or green reading, gives the user additional information on which to form an opinion, and potentially take action.

M E M O R A N D U M


411 NW PARK AVENUE SUITE 401 PORTLAND OR 97209 503 226 1050 fax 503 226 7702 www.meketagroup.com

To: Johanna Shick, CEO SJCERA Board of Retirement

From: David Sancewich, Ryan Lobdell, CAIA Meketa Investment Group

Date: July 12, 2019

Re: AQR Style Premia Update Memo

Summary and Recommendation

As a result of the 2015 Asset-Liability Study, a manager search was conducted to find suitable candidate investment firms to manage a portion of the Alternative Risk Premia (“ARP”) allocation within strategic Crisis Risk Offset (“CRO”) class resulting in the hiring of AQR in May of 2016. The ARP sleeve is designed to be liquid and produce positive long-term returns that have low correlation to equities, fixed income, and Systematic Trend Following (“STF”). ARP strategies use transparent rules in liquid markets across various asset groups (equities, fixed income, currencies, and commodities). ARP strategies invest long and short in securities and markets in a market-neutral fashion, to isolate returns from ARP (such as value, carry, momentum, and low-volatility).

AQR has one of the longest track records of ARP providers in what is a still an emerging space within the broader alternatives industry. The Style Premia strategy is AQR’s flagship ARP strategy providing exposure to four of the most well-known ARP: 1) Value, 2) Momentum, 3) Carry, and 4) Defensive (i.e., low volatility). These strategies are implemented across equity indices, single stocks and industries, fixed income, currencies, and commodities. As of the end of May 2019, the Plan had $35.1 million invested in Style Premia which is approximately 19% of the ARP sub-component of CRO.

Due to AQR’s recent poor performance over the last 12-to-18-months, Meketa is providing an update on the strategy to SJCERA. AQR has underperformed SJCERA’s 5.0% annual benchmark since inception, producing a return of -2.5% annualized over that period. This poor performance has been driven by negative performance over the last 16-months (mostly as a result of poor performance of the Value factor). However, this poor performance has been largely in-line with its industry peers, representative benchmarks, and expected return / risk expectations. Given this, along with no material changes in the investment process / philosophy, Meketa does not recommend taking any action due to the recent performance issues. Meketa continues to have high confidence in the firm and strategy in its ability to deliver upon its performance objectives over the long-term.

Memorandum July 12, 2019 Page 2 of 7

AQR Style Premia Review Status Recommendation

Product and Organization Review Summary

Reason for Update Areas of Potential Impact

Failed Performance Criteria

Organizational Changes

Scheduled Under Review Update

Level of Concern

^

Investment process

(client portfolio)

Investment Team

Perf. Track

Record

Team/

Firm Culture

Product

Key people changes Low -- -- -- --

Changes to team structure/

individual’s roles None -- -- -- --

Product client gain/losses Low -- -- -- --

Changes to the investment process None -- -- -- --

Personnel turnover None -- -- -- --

Organization

Ownership changes None -- -- -- --

Key people changes None -- -- -- --

Firm wide client gain/losses None -- -- -- --

^None, low or high

Review and Recommendation History

Date Meketa Findings and Recommendation Board of Retirement

07/2019 Meketa does not recommended taking any action due to recent performance issues given the continued high confidence in the firm and strategy in its ability to deliver upon its performance objectives over the long-term.

Pending

Background As a result of the 2015 Asset-Liability Study, AQR was hired in May of 2016 following a manager search to find suitable candidate investment firms to manage a portion of the ARP allocation within strategic CRO class. The role of the CRO class is to provide an offset to the portfolio’s economic growth risk through liquid exposures to systematic market and non-market based risk premiums. Strategies dominated by economic growth risk have risk and return attributes that are closely linked with economic success or failure (e.g., public equities, REITs, high yield bonds, etc.). The exposure to systematic risk premiums in the CRO class are expected to exhibit offsetting behavior to growth investments (the most dominant risk in the SJCERA portfolio) during most periods of significant drawdowns.


The CRO class includes investments in three separate strategies: Long Duration, STF, and ARP. The ARP sleeve is designed to be liquid and produce positive long-term returns that have low correlation to equities, fixed income, and other CRO components. ARP strategies use transparent rules in liquid markets across various asset groups (equities, fixed income, currencies, and commodities). ARP strategies invest long and short in securities and markets in a market-neutral fashion, to isolate returns from ARP (such as value, carry, momentum, and low-volatility)

Investment Philosophy and Process: Style Premia is AQR’s flagship ARP strategy and it provides exposure to four of the most well known ARP: 1) Value, 2) Momentum, 3) Carry, and 4) Defensive (i.e., low volatility). These strategies are implemented across equity indices, single stocks and industries, fixed income, currencies, and commodities. The strategy has an emphasis on Value and Momentum (arguably the two most well-known ARP) given they are implemented in every asset group, and an emphasis on public equites through Stock & Industries and Equity Indices due to the breadth of the underlying universe relative to opportunity sets in the other asset groups.

These ARP are expected to be uncorrelated both with traditional markets and each other. Combining them into one portfolio reduces the overall volatility that investor would experience when investing in any one ARP and is expected to provide an attractive long-term performance results which are broadly uncorrelated with the main parts of most investor portfolios. Brief descriptions of each of the individual ARP are listed below:.

- Value: based on the tendency of relatively cheap assets outperforming relatively expensive ones.

- Momentum: based on the tendency of recent winners continuing to do well and recent losers continuing to perform poorly (in relative terms).

- Carry: tries to capture the return spread generated between high yielding assets and low yielding assets.

- Defensive: based on the empirical tendency of lower risk and higher quality assets generating higher risk adjusted returns than higher risk and lower quality assets.

Performance Overview Negative performance for an ARP strategy is not in and of itself a cause for concern. Risk and return are inherently related and all risk premiums (traditional and alternative) exist because of periods where the risk materializes in negative (or under) performance. To receive a positive risk premium (i.e. return) in the market, you must bear the risk of the potential for poor performance. As such, investors in alternative risk preima strategies should expect to experience periods of poor absolute performance from time-to-time in order to achieve positive long-term results. Underperformance is most concerning when driven by a change in process, people, or the market dynamics that allow a strategy to be


effective. Since inception of the SJCERA account, AQR has stayed true to their investment process, and the organization has been stable. Meketa does not currently have any material concerns with the long-term efficacy of ARP strategies and still views AQR as one of the top providers in the space.

Since inception of the SJCERA account, as of May 31, 2019, AQR has underperformed the SJCERA policy benchmark of 5.0% annual by -7.5% annualized, net of fees. AQR has also trailed its benchmark over all other trailing periods. It is important to note that the 5.0% annual benchmark is uninvestable, and as a result, there can be significant deviations from the benchmark over short-to-medium time-periods.

Preliminary Performance Statistics as of May 31, 2019, Net of Fees

QTD YTD 1-Year 3-Year* StDev Return/Risk

AQR Style Premia -3.5 -4.4 -14.9 -2.5 7.2 -0.3

5.0% Annual 0.8 2.1 5.0 5.0 -- --

*Since Inception (“SI”) date is June of 2016. Account was funded May27, 2016.

Given the challenges of comparing AQR against its policy benchmark over shorter time periods, two other indices were used to gain a sense of if the general direction of AQR’s performance is in-line with the broader industry. The chart on the following page shows calendar year periods for AQR, the Eurekahedge Multi-Factor Risk Premia Index, and the SG Multi Alternative Risk Premia Index. The Eurekahedge Multi-Factor Risk Premia Index is comprised of quantitative risk premia strategies managed by large banks while the SG Multi Alternative Risk Premia Index is comprised of 10 of the largest ARP managers who are open to new investment and provide daily returns. As mentioned before, these benchmarks are only meant to give a sense of if the general direction of AQR’s performance is in-line with the industry and are not apples-to-apples comparisons. Both of these indices are also, generally speaking, uninvestable. Differences in the underlying ARP that are harvested as a part of the indices can materially drive performance dispersions between AQR and the indices. For example, both indices includes managers or strategies that include systematic trend following and volatility premia, which can often be large drivers of short-term performance results due to their directionality. As shown in the chart below, AQR’s performance has been in-line with these two indices, including in 2018, its worst calendar year.


Calendar Year Return Comparison*

*Both indices are adjusted to match the volatility of AQR over the full time period from June of 2016 to May of 2019 **May 2016 to December of 2016 Source: AQR, Eurekahedge, Societe Generale

Meketa also performed a more in-depth peer comparison of results since inception of the SJCERA account by analyzing the performance of other specific funds within the ARP space that have had live performance histories for at least the same period of which SCJERA has been invested. Similar to the prior index comparison, many of the selected managers include systematic trend following and volatility strategies, which can often be large drivers of shorter-term performance results. Similar to the prior review of the indices above, AQR’s performance has been broadly in-line with most of their peers.

In addition to comparing AQR against its policy benchmark, representative indices, and peers, we also examine their results relative to their risk and return expectations. The chart on the following page shows the gross of fees results of the AQR portfolio since inception relative to a SJCERA’s 2019 Capital Market Assumptions. The graph shows the cumulative expected return in excess of cash of 2.25% (in grey), and upper (in green) and lower (in red) bands of expectations based upon an expected volatility of 10.0%. Ninety percent (90%) of potential outcomes are expected to fall between these bands. If the target volatility is higher (lower) the bands would be wider (narrower) as the more volatile a strategy is, the larger potential deviations are expected to be above or below its target return. Since SPF’s inception in September of 2012, AQR has exceeded this return target. When performing the analysis only for the period of which SJCERA has been invested with AQR, has not met its return expectation but has performed within expectations.

1.3%

13.3%

-15.5%

-4.4%-1.4%

0.2%

-18.4%

5.8%7.5%11.7%

-9.0%

3.7%

-25.0%

-20.0%

-15.0%

-10.0%

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2016** 2017 2018 2019 YTD

AQR SPF Eurekahedge Multi-Factor Risk Premia Index SG Multi Alternative Risk Premia Index


*Based upon SJCERA’s 2019 10-year compound return and risk expectation for the ARP class. **Confidence intervals (“CI”) around the absolute risk/return expectations. Ninety percent (90%) of portfolio outcomes are expected to fall within these upper and lower bands.

Turning from these relative comparisons to identifying the main drivers of the current drawdown for the fund we review performance of the one of the largest ARP that is harvested by AQR - Value. Value, which accounts for approximately 1/3rd of the target risk allocation for the fund, has historically been one of the most volatile ARP harvested by AQR, experiencing more frequent and larger drawdowns. In addition, Value has been the worst performing factor in more recent periods, which has been widely discussed across the investment industry. However, there have been periods where drawdowns in Value have not resulted in drawdowns for AQR. Historically, poor performance for Value has been more than offset by the other ARP.

For example, AQR’s other largest target ARP allocation, Momentum, which is typically negatively correlated to Value (i.e., generally expected to produce positive results when Value is negative) has not provided as much as an offset over the last 18-months. Of the two other ARP not yet discussed, Carry has not contributed positively or negatively to performance during this period while Defensive has been a strong positive contributor to performance. Due to the lower target risk allocation of Defensive relative to Value and Momentum, it has not been able to significantly offset the negative performance of Value within the fund.

As discussed previously, each of these ARP have a long-term positive return expectations driven by investors bearing the risk of potential poor performance. This, combined with the long-term expectation of low to zero correlation amongst the ARPs, implies that that

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AQR SPF Gross of Fes vs. Risk/Return Expectations*Since SCJERA Account Inception

SPF Gross

CI Upper bound 95%**

Expected CumulativeCompound Return

CI Lower bound 5%**


will be times when multiple ARPs drawdown coincidentally (or fail to offset each other) resulting in poor performance for ARP strategies. However, over the long-term, the expectation of positive performance remains. In addition, AQR has also met SJCERA’s expectation of providing uncorrelated results relative to traditional assets and the other CRO components since inception of the SJCERA account.

In summary, while AQR has underperformed SJCERA’s 5.0% annual benchmark since inception, their performance has been largely in-line with its industry peers, representative benchmarks, and expected return / risk expectations. Given this, along with no material changes in the investment process / philosophy, Meketa does not recommend taking any action due to the recent performance issues. Meketa continues to have high confidence in the firm and strategy in its ability to deliver upon its performance objectives over the long-term.


www.meketagroup.com

B O S TONM A S SA CHU S E T T S

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San Joaquin County Employees Retirement Association (SJCERA)

California Code 7514.7 Disclosure – Calendar year 2018

July 2019

7514.7 Fee Disclosure



• California Assembly Bill 2833 was introduced in 2016 and became effective January 1, 2017 as California Government Code 7514.7 (the “Code”).

• The Code is intended to require California public pension plans (“California Plans”) to obtain and publicly disclose annually certain additional fee and expense data and information.

• The law applies to any private fund that is an alternative investment vehicle whose contract with a California Plan was entered into on or after January 1, 2017, or for any existing contract as of December 31, 2016 for which an additional capital commitment is made on or after January 1, 2017.

• For all other existing contracts, California Plans are required to use reasonable efforts to acquire the information necessary to make the required annual disclosures.

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3

Code Disclosure Requirements

(1) The fees and expenses that the California Plan pays directly to the alternative investment vehicle, the fund manager, or related parties.

(2) The California Plan’s pro rata share of fees and expenses not included in paragraph (1) that are paid from the alternative investment vehicle to the fund manager or related parties. The California Plan may independently calculate this information based on information contractually required to be provided by the alternative investment vehicle to the public investment fund. If the California Plan independently calculates this information, then the alternative investment vehicle shall not be required to provide the information identified in this paragraph.

(3) The California Plan’s pro rata share of carried interest distributed to the fund manager or related parties.

(4) The California Plan’s pro rata share of aggregate fees and expenses paid by all of the portfolio companies held within the alternative investment vehicle to the fund manager or related parties.

(5) Any additional information described in subdivision (b) of Section 6254.26 of the Code.

– (b) Every California Plan shall disclose the information provided pursuant to subdivision (a) at least onceannually in a report presented at a meeting open to the public. The California Plan’s report requiredpursuant to this subdivision shall also include the gross and net rate of return of each alternative investmentvehicle, since inception, in which the California Plan participates. The California Plan may report the grossand net rate of return and information required by subdivision (a) based on its own calculations or based oncalculations provided by the alternative investment vehicle.




CODE SECTION 6254.26 requirements:

(1) The name, address, and vintage year of each alternative investment vehicle.

(2) The dollar amount of the commitment made to each alternative investment vehicle by the California Plan since inception.

(3) The dollar amount of cash contributions made by the California Plan to each alternative investment vehicle since inception.

(4) The dollar amount, on a fiscal yearend basis, of cash distributions received by the California Plan from each alternative investment vehicle.

(5) The dollar amount, on a fiscal year-end basis, of cash distributions received by the California Plan plus remaining value of partnership assets attributable to the California Plan's investment in each alternative investment vehicle.

(6) The net internal rate of return of each alternative investment vehicle since inception.

(7) The investment multiple of each alternative investment vehicle since inception.

(8) The dollar amount of the total management fees and costs paid on an annual fiscal year-end basis, by the California Plan to each alternative investment vehicle.

(9) The dollar amount of cash profit received by California Plans from each alternative investment vehicle on a fiscal year-end basis.

4

Alternative Investments - Non Real Estate




Code 7514.7 Disclosure Requirement: 2018 Calendar Year Data

Investrment Firm CommitmentEnding Market Value

Management Fee

Partnership Expenses Offsets

Other Fees and Expenses paid to the GP

Carried Interest paid

Fees and Expenses Paid to Affiliates

Fees Paid to Underlying Funds/Companies

Total Fees Paid

Crestline Fund II* $50,000,000 $27,065,605 --- --- --- --- --- --- --- ---

Medley Fund II* $50,000,000 $25,127,559 --- --- --- --- --- --- --- ---

Mesa West Fund III $45,000,000 $7,228,860 $170,232 $47,803 $0 $0 $0 $0 $0 $218,035

Mesa West Fund IV $75,000,000 $23,739,605 $1,012,500 $123,343 $0 $0 $0 $0 $0 $1,135,843

Morgan Creek Fund III $10,000,000 $11,521,708 $100,000 $86,277 $0 $0 $0 $0 $0 $186,277

Morgan Creek Fund V $12,000,000 $11,841,434 $41,235 $56,163 $0 $0 $0 $0 $0 $97,398

Morgan Creek Fund VI $20,000,000 $22,047,457 $98,109 $131,910 $0 $0 $0 $0 $0 $230,019

Oaktree $50,000,000 $11,141,759 $45,446 $476,272 $0 $71,346 $0 $0 $0 $593,064

Ocean Avenue Fund II $40,000,000 $39,975,674 $340,000 $57,212 $0 $0 $0 $0 $1,258,776 $1,655,988

Ocean Avenue Fund III $50,000,000 $38,594,451 $375,000 $91,358 $0 $0 $0 $0 $536,769 $536,769

Raven Fund II $45,000,000 $15,674,659 $425,115 $78,088 $0 $0 $0 $0 $0 $503,203

Raven Fund III $50,000,000 $34,553,232 $814,762 $187,435 $0 $0 $0 $0 $0 $1,002,197

White Oak - Summit Fund $50,000,000 $47,337,433 $187,702 $169,268 $0 $25,000 $0 $0 $31,825 $413,795

*Manager did not provide data

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Code Section 6254.26 Disclosure Requirement: Since Inception Date

Investment Firm Address Vintage Commitment Contributions DistributionsEnding Market Value Since Inception IRR

Net Equity Multiple

Crestline Fund II Dallas, TX 2013 $50,000,000 $32,440,403 $15,076,943 $27,065,605 7.1 1.3

Medley Fund II San Francisco, CA 2012 $50,000,000 $48,334,093 $47,063,375 $25,127,559 3.8 1.2

Mesa West Fund III Los Angeles,CA 2013 $45,000,000 $34,064,721 $36,757,622 $7,228,860 9.0 1.3

Mesa West Fund IV Los Angeles,CA 2016 $75,000,000 $23,333,333 $2,194,195 $23,739,605 7.9 1.1

Morgan Creek Fund III Raleigh, NC 2015 $10,000,000 $9,900,000 $643,253 $11,521,708 6.6 1.2

Morgan Creek Fund V Raleigh, NC 2013 $12,000,000 $10,665,809 $4,800,000 $11,841,434 13.7 1.6

Morgan Creek Fund VI Raleigh, NC 2015 $20,000,000 $15,600,000 $33,203 $22,047,457 12.7 1.4

Oaktree New York, NY 2018 $50,000,000 $11,400,000 $0 $11,141,759 -3.1 1.0

Ocean Avenue Fund II Los Angeles,CA 2013 $40,000,000 $33,600,000 $13,386,584 $39,975,674 15.7 1.6

Ocean Avenue Fund III Los Angeles,CA 2016 $50,000,000 $28,000,000 $5,500,000 $38,594,451 34.2 1.5

Raven Fund II Los Angeles,CA 2014 $45,000,000 $42,866,667 $25,587,954 $15,674,659 -0.5 1.0

Raven Fund III Los Angeles,CA 2015 $50,000,000 $40,388,333 $9,124,232 $34,553,232 5.1 1.1

White Oak - Summit Fund San Francisco, CA 2016 $50,000,000 $47,587,323 $25,168,788 $47,337,433 8.2 1.1

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WE HAVE PREPARED THIS REPORT (THIS “REPORT”) FOR THE SOLE BENEFIT OF THE INTENDED RECIPIENT(THE “RECIPIENT”).

SIGNIFICANT EVENTS MAY OCCUR (OR HAVE OCCURRED) AFTER THE DATE OF THIS REPORT AND THAT IT IS NOTOUR FUNCTION OR RESPONSIBILITY TO UPDATE THIS REPORT. ANY OPINIONS OR RECOMMENDATIONSPRESENTED HEREIN REPRESENT OUR GOOD FAITH VIEWS AS OF THE DATE OF THIS REPORT AND ARE SUBJECTTO CHANGE AT ANY TIME. ALL INVESTMENTS INVOLVE RISK. THERE CAN BE NO GUARANTEE THAT THESTRATEGIES, TACTICS, AND METHODS DISCUSSED HERE WILL BE SUCCESSFUL.

INFORMATION USED TO PREPARE THIS REPORT WAS OBTAINED FROM INVESTMENT MANAGERS, CUSTODIANS,AND OTHER EXTERNAL SOURCES. WHILE WE HAVE EXERCISED REASONABLE CARE IN PREPARING THIS REPORT,WE CANNOT GUARANTEE THE ACCURACY OF ALL SOURCE INFORMATION CONTAINED HEREIN.

CERTAIN INFORMATION CONTAINED IN THIS REPORT MAY CONSTITUTE “FORWARD - LOOKING STATEMENTS,”WHICH CAN BE IDENTIFIED BY THE USE OF TERMINOLOGY SUCH AS “MAY,” “WILL,” “SHOULD,” “EXPECT,” “AIM”,“ANTICIPATE,” “TARGET,” “PROJECT,” “ESTIMATE,” “INTEND,” “CONTINUE” OR “BELIEVE,” OR THE NEGATIVESTHEREOF OR OTHER VARIATIONS THEREON OR COMPARABLE TERMINOLOGY. ANY FORWARD - LOOKINGSTATEMENTS, FORECASTS, PROJECTIONS, VALUATIONS, OR RESULTS IN THIS PRESENTATION ARE BASED UPONCURRENT ASSUMPTIONS. CHANGES TO ANY ASSUMPTIONS MAY HAVE A MATERIAL IMPACT ONFORWARD - LOOKING STATEMENTS, FORECASTS, PROJECTIONS, VALUATIONS, OR RESULTS. ACTUAL RESULTSMAY THEREFORE BE MATERIALLY DIFFERENT FROM ANY FORECASTS, PROJECTIONS, VALUATIONS, OR RESULTSIN THIS PRESENTATION.

PERFORMANCE DATA CONTAINED HEREIN REPRESENT PAST PERFORMANCE. PAST PERFORMANCE IS NOGUARANTEE OF FUTURE RESULTS.

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Agenda Item 10.0 July 12, 2019 SUBJECT: Cheiron Contract Expiration SUBMITTED FOR: ___ CONSENT _X_l ACTION ___ INFORMATION RECOMMENDATION Staff recommends that the Board either direct staff to extend the term of Cheiron’s actuarial services contract through December 31, 2024 or issue a Request for Proposal (RFP). PURPOSE To enter into an agreement for actuarial services beyond the current contract expiration of December 31, 2019. DISCUSSION In 2006, the Board selected EFI through a competitive solicitation process to provide all routine and special actuarial services to SJCERA as the retained actuary. In January 2013, EFI Actuaries merged with Cheiron, Inc., and SJCERA’s contract with EFI was assigned to Cheiron by mutual written agreement of all parties. In effect, SJCERA has used the same actuarial consulting firm for 13 years. As a public entity SJCERA has a fiduciary duty to be aware of the available services in the market and the costs for those services. Best practice is to conduct a competitive search periodically. The two primary actuarial consulting firms among the 20 County retirement plans are Cheiron and Segal. Graham Schmidt and the team at Cheiron who are assigned to the SJCERA account are highly qualified, knowledgeable, and experienced professionals. Cheiron’s consistent support and responsiveness on issues of concern to SJCERA is valued and appreciated. The past two actuarial audits performed by Gabriel Roeder Smith confirm the accuracy and appropriateness of the results of the actuarial studies performed by Cheiron. Staff compared the proposed fee schedule to five other sister systems of approximate size and the fees are comparable or less than the other systems. A few notable differences in Cheiron’s proposed fee schedule compared to their current contract follow.


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• Cheiron discontinued charging SJCERA for performing separate contribution rates and trends for General and Safety plans and now routinely includes that information in our valuation. Annual savings: $5,000

• SJCERA discontinued having Cheiron perform benefit projections for all active members for use on the annual member statements. Annual savings: $5,775 in 2019

• The remaining proposed fee schedule includes annual increases of approximately 2.3 percent per year from the previous contract

Extending the contract retains a well-respected, experienced resource, with significant knowledge and understanding gained from years of working with SJCERA. Additionally, familiarity brings efficiencies for staff in terms of anticipating data and other requirements. This is particularly relevant now because of the system enhancements made to streamline pulling our data. A new vendor may have different requirements. Were it not for the considerable length of time that SJCERA has worked with Cheiron, staff would have recommended to extend the contract; however, in light of the length of the existing engagement, staff seeks the Board’s direction. If the Board elects to extend the contract, Cheiron will provide its proposed contract amendment to SJCERA for review by staff and counsel. Our agreement allows SJCERA to terminate the contract with Cheiron at will with 30 days’ written notice. Alternatively, issuing an RFP allows SJCERA to survey the market to assess the competitiveness of vendors’ prices and services. The process does not prohibit re-hiring the existing vendor if they are the best fit; however, if a different vendor were selected, a fresh perspective can lead to new insights. If the Board elects not to extend the contract, staff will issue an RFP for actuary services. SJCERA would be able to evaluate all proposals (including Cheiron’s, if they submit one), and select the vendor we believe best fits our needs. ATTACHMENTS Cheiron’s proposed fee schedule dated June 26, 2019 Cheiron’s prior fee schedule ____________________ _________________________ JOHANNA SHICK GREG FRANK Chief Executive Officer Management Analyst III

Via Electronic Mail June 26, 2019 Ms. Johanna Shick Chef Executive Officer San Joaquin County Employees Retirement Association 6 El Dorado Street, Suite 400 Stockton, California 95202 Re: Proposed Extension of Cheiron Contract Dear Johanna: As requested, we are sending you this email to present our proposed fees for an extension of the contract for actuarial services. The fees have been increased by approximately 2.3% per year from the fees in the previous contract, consistent with the rate of increase reflected in the last contract. Actuarial services not included in the projects listed on the next page will continue to be billed based on our standard hourly rates. Please let us know if you have any questions or need any additional information. Thanks, and we look forward to continue working with you, the rest of the Staff at SJCERA and the Board. Sincerely, Cheiron Graham Schmidt, ASA, EA, FCA, MAAA Consulting Actuary Attachment

Ms. Johanna Shick June 26, 2019 Page 2

Project List

Project 2020 2021 2022 2023 2024

1) Annual Retainer Fee, payable quarterly

$ 11,000 $ 11,250 $ 11,500 $ 11,775 $ 12,050

2) Annual Fee for calculation of benefit limits under Section 415 of the Internal Revenue Code, payable quarterly

7,425 7,600 7,775 7,980 8,150

3) Annual Actuarial Valuation of Pension Plan

54,750 56,000 57,250 58,500 60,000

4) Stand-alone Annual GASB Report, including roll forward of liabilities and related computations

13,825 14,150 14,475 14,800 15,150

5) Actuarial Experience Studies for the Plan years from 2019 through 2022

N/A N/A 58,000 N/A N/A

Ms. Johanna Shick June 26, 2019 Page 2

Project 2020 2021 2022 2023 2024

Hourly Rates for services outside of the retainer services listed above will be as follows:

Principal Consulting Actuaries

$374-$519 $383-$531 $392-$543 $401-$555 $410-$568

Consulting Actuaries $281-$447 $288-$457 $294-$468 $301-$479 $308-$490

Associate Actuaries $189-$292 $194-$298 $198-$305 $203-$312 $207-$319

Senior Actuarial Analysts

$179-$224 $183-$229 $187-$234 $192-$240 $196-$245

Actuarial Analysts $153-$194 $157-$199 $161-$203 $164-$208 $168-$213

Administrative Staff $106-$117 $109-$119 $111-$122 $114-$125 $117-$128

Item 2015 2016 2017 2018 2019

Annual Retainer Fee, payable quarterly $9,750 $9,975 $10,225 $10,500 $10,750

Annual Fee for calculation of benefit limits under Section 415 of the Internal Revenue Code, payable quarterly

6,575 6,725 6,900 7,075 7,250

Annual Actuarial Valuation of Pension Plan 49,000 50,125 51,250 52,375 53,500

Stand-alone Annual GASB Report, including roll forward of liabilities and related computations

12,500 12,750 13,000 13,250 13,500

Actuarial Experience Studies for the Plan years from 2013 through 2015 and 2016 through 2018

50,125 54,000

Benefit projections for all active members to be used for annual statements

5,225 5,350 5,500 5,625 5,775

Category 2015 2016 2017 2018 2019

Senior Actuarial Staff $265-$475 $275-$490 $280-$500 $285-$515 $295-$525

Assistant Actuarial Staff/ Senior Analytical Staff

$165-$265 $170-$275 $170-$280 $175-$285 $180-$295

Analytical/Clerical Staff $85-$185 $90-$190 $90-$195 $95-$200 $95-$205


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Agenda Item 11.01 July 12, 2019

SUBJECT: Pending Retiree Accounts Receivable – 2nd Quarter

SUBMITTED FOR: ___ CONSENT __l ACTION __X_ INFORMATION

RECOMMENDATION

This report is submitted for the Board’s information.

PURPOSE

To report the quarterly summary of pending accounts receivables for SJCERA retirees as of June 30, 2019.

DISCUSSION

No new receivables have been initiated since the last report on April 12, 2019.

______________________ ______________________ KATHY HERMAN GREG FRANK Asst. Chief Executive Officer Management Analyst III

2nd Quarter APRIL TO JUNE 2019

Employee Retirement Total Payments Current Monthly Payment Payments First Reportedor Mbr ID Date Receivable Began Balance Payment Description will End To Board

1 214605 07/15/09 11,475.48 05/01/11 $10,018.93 $16.30 10% of May 2017 allow 12/1/2082 Jul-11

2 215257 09/01/12 13,580.90 02/01/14 $11,332.34 $36.66 10% of May 2017 allow 4/1/2050 Apr-14

3 202011 05/19/02 35,537.23 11/01/15 $25,839.30 $261.72 10% of May 2017 allow 12/1/2027 Jan-16

2019 LEGISLATIONLast Updated: 06/25/2019

LASTBILL ACTIONNO. DATE

Legislation Impacting SJCERA:AB 5 Gonzalez

(New)This bill would codify the decision of the California Supreme Court in Dynamex Operations West v. Superior Court of Los Angles (2018) that presumes a worker is an employee (not independent contractor) unless a hiring entity satisfies a three factor test. The three factors: 1) the person is free from the control and direction of the hiring entity in connection with performance of the work, 2) the person performs work that is outside the usual course of the hiring entity's business, 3) the person is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed. Certain occupations are exempt from the test.

6/12/19 Senate L, PE&R Comm.

AB 287 Voepel This bill would require each state and local pension or retirement system to post a concise annual report of the investments and earnings on the website no later than the 90th day following the annual audit's completion.

2/07/19 Assembly PE&R

AB 672 Cervantes This bill would prohibit a PERS member who has retired for disability from being employed by any employer without reinstatement from retirement if the position is the position from which the person retired or if the position includes duties or activities that the person was previously restricted from performing at the time of retirement. If a PERS disability retiree is employed by an employer without reinstatement, the employer would be required to provide to the PERS board the nature of the employment and the duties and activities the person will perform.

6/24/19 Senate 2nd reading pursuant to

Senate Rule 28.8 and ordered to

Consent Calendar

AB 992 Mullin The Brown Act generally requires that the meetings of legislative bodies of local agencies be conducted openly and prohibits members, outside a meeting, from using communications of any kind to discuss, deliberate, or take action on matters within the body's jurisdiction. This bill would provide that the Brown Act does not apply to participation in an internet-based social media platform, by a majority of the members of a legislative body, provided that majority of the members do not discuss among themselves business of a specific nature that is within the subject matter of jurisdiction of the legislative body of the local agency.

5/01/19 Assembly L Gov Comm.

AB 1184 Gloria CPRA requires a public agency to make public records available for inspection and specifies records include any writing containing information relating to the conduct of the public's business, including email. Existing law authorizes agencies to destroy/dispose of duplicate records that are less than two years old. This bill would require agencies to retain and preserve for at least two years every writing containing information relating to the conduct of the public's business prepared, owned, or used by an agency that is transmitted by electronic email.

06/06/19 Senate JUD Comm.

AB 1212 Levine This bill would require a state agency that is responsible for infrastructure projects to produce a list of priority infrastructure projects to retirement boards of CalPERS, Cal STRS and 1937 Act retirement systems for funding consideration by those boards. The state agency would also be required to provide further project information to a board upon request.


SPONSORAUTHOR DESCRIPTION LOC

!



AB 1819 Comm. on Judiciary

The California Public Records Act requires state and local agencies to make records available that reasonably describe an identified record not otherwise exempt. This bill would grant the requestor the right to use the requestor's equipment to photograph, copy, or reproduce any record on the premises of the agency, unless it would result in damage to the record, or unauthorized access to a computer system or secured network of the agency. This bill constitutes a state-mandated local program.


SB 430 Wieckowski PEPRA currently applies to "new members", defined as those who become a member of a public retirement system for the first time on or after January 1, 2013. Existing law creates the Judges Retirement System II for the retirement to specified judges. This bill would grant a judge who was elected to office in 2012, but did take office until on or after January 1, 2013, the option of making a one-time, irrevocable election to have a pre-January 1, 2013 membership status in the Judges Retirement System II.

5/30/19 Assembly PE& R Comm.

SB 615 Hueso The California Public Records Act requires a public agency to make its public records available for public inspection and to make copies available upon request and payment of a fee, unless the public records are exempt from disclosure. This bill would require a person to meet and confer with the agency before instituting legal action against the agency for improperly withholding records.


SB 783 Comm. on L, PE&R (Chair Sen Hill)

This bill would correct several erroneous and obsolete cross-references within the CERL.

5/16/19 Assembly PE&R Comm.

SACRS

Other Bills of Interest:AB 181 Rodriguez This bill would require PERS and STRS Boards to provide an annual status

report on emerging managers achieving their objectives.06/06/19 Senate

Rules Comm.

AB 462 Rodriguez This bill would require CalPERS & CalSTRS to provide a status report to the Legislature, commencing March 1, 2021, on the achievements of emerging investment managers in their portfolios.

05/21/19 Senate RLS Comm.

AB 472 Voepel This bill would make nonsubstantive changes to PEPRA GC Section 7522.56 regarding limits on service after retirement without reinstatement into the applicable retirement system.

2/12/19 From Printer

AB 664 Cooper This bill would require peace officers in the County of Sacramento, for purposes of determining permanent incapacity, be evaluated by the existing procedure established by the retirement system to determine if they can perform all the usual and customary duties. This bill would require the board of retirement to develop a method of tracking the costs of providing permanent disability retirement to the members who become eligible for disability retirement. Provisions of the bill would be repealed 12/31/2024.


AB 1198 Stone This bill would except transit workers hired before January 1, 2016, from PEPRA by removing the federal district court contingency language from the provision excepting certain transit workers from PEPRA.

04/24/19 Assembly Hearing canceled at req of author



SB 266 Leyva This bill would establish new procedures under PERL for cases in which benefits are based on compensation that conflicts with PEPRA, and would make the procedures applicable retroactively to 1/1/2017. The bill would require the employer to cease reporting disallowed compensation and that contributions on disallowed contributions be credited against future contributions. For members whose benefits are based on disallowed final compensation, the bill would require adjusting their benefits to reflect the exclusion of the disallowed compensation. In in some cases the employer would be required to repay the retirement system and pay the retired member the difference between the two benefits.

6/17/19 Assembly PE&R Comm.

SB 341 Morell This bill would require the Boards of CalPERS and CalSTRS to make annual reports to the Legislature and Governor under various assumptions including a calculation of liabilities using a discount rate equal to the yield on a 10-year US Treasury note. The UC Regents would be required to provide a annual report of annual investment return for the past 20 years including information regarding rate of return by asset type. This bill would also appropriate $1 billion from the General Fund for transfer to the Teachers’ Retirement Fund to reduce CalSTRS' unfunded liability, and appropriate another $1 billion if the Legislative Analyst determines (in the May revision to the 2019-20 Budget) that the State has collected more than $1 billion in unanticipated General Fund revenue.

3/27/19 Senate Failed passage in

Committee; reconsideration

granted

Federal Legislation:

HR 1994 Neal (New)

This bill would modify the requirements for employer-provided retirement plans. A key provisions of this bill impacting SJCERA would be increasing the Required Minimum Distribution (RMD) age from 70.5 to 72.

05/23/19 Passed House

Jan 31

Feb 22 Last day for new bills to be introducedApr 11 Spring Recess begins upon adjournmentMay 31Jun 15 Budget Bill must be passed by midnightJul 12 - Aug 11 Summer Recess upon adjournment provided budget bill passedSept 6 Last day to amend bills on the floorSept 13 Last day for each house to pass bills; Interim Study Recess begins upon adjournmentOct 13 Last day for Governor to sign or veto bills.

2019 State Legislative Calendar

Last day for each house to pass bills introduced in that house during the first year of the 2018-19 session

Last day for bills to be passed out of the house of origin

Printed 6/27/19 2:13 PM

REG. WEBLINK

BEGIN END FEE FOR MORE INFO

Jul 22 Jul 24 SACRS Public Pension Investment Management Program

SACRS Berkeley, CA $2,500 sacrs.org 24 hrs*

Aug 26 Aug 29 Principles of Pension Governance for Trustees at Pepperdine

CALAPRS Malibu, CA $3,000 calaprs.org 12 - 14 hrs*

Sep 4 Sep 5 Annual Fiduciaries' Forum** Nossaman Berkeley, CA $395 nossaman.com 8 hrs*

Sep 16 Sep 19 2019 Institute Client Education Seminar PIMCO Newport Beach, CA N/A pimco.com 24 hrs*

Oct 25 Oct 25 Trustees' Roundtable CALAPRS Oakland, CA $125 calaprs.org 5 hrs*

Nov 12 Nov 15 SACRS Fall Conference SACRS Monterey, CA $120 sacrs.org 11 - 14 hrs*

Dec 4 Dec 4 7th Annual California Institutional Forum Markets Group Santa Rosa, CA N/A marketsgroup.com 7 hrs*

* Estimates based on prior agendas** To avoid a quorum of the Board, a maximum of 4 Trustees may attend this event

2019 CONFERENCES AND EVENTS SCHEDULE 2019

EVENT DATES 2019 EVENT TITLE EVENT SPONSOR LOCATIONEST. BOARD EDUCATION

HOURS

6/27/19, 2)03 PMPlease Join Us for Nossamanʼs 2019 Fiduciariesʼ Forum: Evolving Demands on Public Plan Fiduciaries

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SEPTEMBER 4-5, 2019 | CLAREMONT CLUB & SPA | BERKELEY, CA

Please Join Us for Nossaman’s 2019 Fiduciaries’ Forum:Evolving Demands on Public Plan Fiduciaries.

Now in its 14th year, registration is finally open for the annual, invitation-only event hosted byNossaman LLP’s Public Pensions and Investments Practice Group. This year’s program willtake an in-depth look at:

Roles and Responsibilities of Public Pension Trustees, Staff, Consultants, Managers,Investors/LPACs, and MoreEmerging Issues for Public Pension Fund Trustees, Chief Executives, Investment Staff,and General Counsel in Insurance Coverage, Cyber Challenges and Plan DesignImplementationCourts’ Perspectives on Pension Plan Litigation

We invite trustees (less than a quorum), executive staff, investment officers and in-housecounsel of retirement system clients and colleagues to join us for this opportunity to learn,network and share best practices with their peers in a relaxed setting that encourages an openflow of communication and meaningful discussion.

This year’s event will include a cocktail reception and dinner featuring a keynote speaker onWednesday, September 4 beginning at 5:30 p.m. and a full day of educational content onThursday, September 5, concluding at 5:00 p.m.

Register by August 14, 2019 to receive a discounted early bird rate and to ensure ourdiscounted hotel room rate at the Claremont Club & Spa.

Should you have additional questions or concerns, please contact Jessica Ku [email protected] or 949.477.7667.

Thank you,

Ashley K. Dunning

Yuliya A. Oryol

Ashley DunningPartnerNossaman LLP

Yuliya OryolPartnerNossaman LLP

Registration FeesEarly Bird Discount through August14, 2019: $395After August 14, 2019: $450

Location Claremont Club & Spa41 Tunnel RoadBerkeley, CA 94705MAP

Hotel RoomsNossaman has reserved a limitednumber of rooms at a discountedrate at the newly-remodeled historicClaremont Club & Spa, which is ashort drive from the Oakland Airport.

Pricing information and a roomreservation link will be provided inthe confirmation email you willreceive after registering for theForum using the above registrationlink.

Room availability is limited andrates cannot be guaranteed afterAugust 14, 2019.

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2019 Estimated BOR ApprovalEvent Dates Sponsor / Event Description Location Traveler(s) Cost Date

Jul 22 - 24 SACRS Public Pension Investment Management Program

Berkeley, CA Keokham $4,000 N/A

Sep 4 - 5 Nossaman Annual Fiduciaries' Forum* Berkeley, CA Shick $1,000 Pending

Oct 20 - 23 Public Pension Financial Forum 2019 Annual Conference

Salt Lake City, UT Cherng $2,175 Pending

Nov 12 - 15 SACRS Fall Conference Monterey, CAMcCray, Restuccia,

Weydert, Shick, Herman

$5,460 N/A

* To avoid a quorum of the Board, a maximum of 4 Trustees may attend this event

SAN JOAQUIN COUNTY EMPLOYEES' RETIREMENT ASSOCIATION

SUMMARY OF PENDING TRUSTEE AND EXECUTIVE STAFF TRAVEL

Event Estimated Actual Event ReportDates Sponsor / Event Description Location Traveler(s) Cost Cost Filed2019

Jan 22 - 24 IREI 2019 Visions, Insights & Perspectives Dana Point, CA Restuccia, Weydert $3,600 $2,720 2/8/2019

Jan 25 CALAPRS Administrators Roundtable Burbank, CA Shick $890 $476 N/A

Mar 2 - 5 CALAPRS General Assembly Monterey, CA

McCray, Restuccia, Van Houten, Weydert,

Shick, Herman, Calkins

$7,800 TBD N/A

Apr 9 - 11 IREI Editorial Advisory Board Meeting Ojai, CA Weydert $1,000 $424 Pending

May 7 - 10 SACRS Spring Conference Lake Tahoe, CA

Bassett, Goodman, Keokham, McCray,

Praus, Restuccia, Van Houten, Weydert,

Shick, Morrish

$15,260 TBD N/A

SAN JOAQUIN COUNTY EMPLOYEES' RETIREMENT ASSOCIATION

SUMMARY OF COMPLETED TRUSTEE AND EXECUTIVE STAFF TRAVEL

6 South El Dorado Street, Suite 400 • Stockton, CA 95202 (209) 468-2163 • [email protected] • www.sjcera.org


July 3, 2019 TO: Board of Retirement FROM: Johanna Shick Chief Executive Officer SUBJECT: Chief Executive Officer Report Strengthen Fund Stability Investment Manager Update. Staff, in consultation with Meketa, approved extending the term of the partnership for Raven Asset-Based Opportunity Fund II LP by one year, through June 30, 2020. Raven believes it is in the best interest of the partnership to extend the term to allow the Fund to maximize the value of the remaining investments and feels confident that over the next 12 months that they will be able to realize greater value for the Limited Partners. The assets will continue to generate current income over this period, which will be distributed on a quarterly basis to all Limited Partners. Employer Contributions. In June, the San Joaquin County Superior Court contributed an additional $1.375 million toward their portion of the unfunded liability. This substantial contribution represents about 10 percent of their total pension liability, and is 18.6 percent of their total 2018 employer contributions. Budget Update. We’re about halfway through the budget year, and actual expenses are tracking at 44 percent of budget, a savings of $287,190. Management Analyst III, Greg Frank, prepared a detailed analysis comparing actuals to the budget, which is in the Board materials on the Consent Calendar. Cash Flow. Staff has begun discussions with Meketa regarding how SJCERA manages cash in the portfolio, including whether it would be beneficial to make changes to our Cash Management and Liquidity Policy. Having cash available to handle expenses and retiree payroll eliminates the need to sell assets in order to achieve the necessary liquidity. However, holding more cash than needed also represents lost investment opportunity. During 2018 and 2019, SJCERA has held between $41M and more than $100M in cash, with some of the higher balances being in anticipation of needing to fund new investments. Investment Accountant, Fe Maliwat, maintains ongoing projections of cashflow with estimates of capital calls and distributions, monitors our compliance with SJCERA’s Cash Management and Liquidity Policy, which requires maintaining a reserve of at least one-month’s retiree payroll (approximately $20 million). The projections indicate that in fourth quarter 2019, we may need to rebalance. Staff will work with Meketa as necessary following the asset liability study to coordinate the need for cash with any transition of assets that may occur following the Board’s decision regarding asset allocation. We will also use this opportunity to explore modifying the policy to include instructions for investing excess cash. Any proposed changes to the policy would be submitted to the Board for consideration as part of the 2020 policy review. Accurate Reporting Thanks to Lily Cherng, Fe Maliwat, Stephanie Conner and many others whose work contributed to publishing the Comprehensive Annual Financial Report (CAFR) and the condensed (four-page) Popular Annual Financial Report (PAFR) for the year ended December 31, 2018. Both the CAFR and the PAFR have been submitted to the Government Finance Officers Association (GFOA) for the Excellence in Financial Reporting award, and the CAFR has also been submitted to the Public Pension Coordinating

CEO Report July 3, 2019 Page


2

Council (PPCC) for the Plan Funding and Administration award. Both the CAFR and PAFR are posted on our website, and links to them have been emailed to active members, RPESJC, participating employers, and Trustees. We plan to mail printed PAFRs to retired and deferred members in August. Stakeholder Relations Board of Supervisors Presentation. The presentation of SJCERA’s 2018 Audited Financial Report to Board of Supervisors on June 11, was generally well received by the Supervisors. I provided a summary of the financial reports, and David Sancewich and Graham Schmidt addressed questions about investment performance and the impact on funded status and employer contribution rates. Trustees Chanda Bassett and Michael Duffy were also present. A video of the presentation and discussion is available on https://www.sjgov.org/department/bos/archive/. The Supervisors’ comments were primarily focused on attaining better investment returns because insufficient returns place a burden on the employers. In particular, Supervisor Winn, asked that we share with the Board of Retirement his concern that the funding is not going the right direction, noting that we need to do better. He also observed that SJCERA seems heavily focused on preserving existing assets, rather than growth. He suggested SJCERA review Stanislaus and Merced counties retirement systems’ portfolios because they are similar to our county and generally have received higher returns. Supervisor Elliott encouraged SJCERA to reassess our asset allocation to ensure we hit our assumed rate of return. Supervisor Patty, noted that SJCERA has made no significant improvement in funded ratio in the last eight years. Supervisor Miller explained that the extra contributions the County has made are having a positive impact by allowing the portfolio to ride out market volatility. SJCERA didn’t have to sell assets (and incur associated costs) in order to pay for benefits during the fourth quarter market decline. In addition, Supervisor Winn suggested that perhaps in the future there may be an opportunity to explore a defined contribution plan that might offer greater flexibility and portability, and Supervisor Miller encouraged her fellow supervisors to attend the investment roundtable, particularly CAO Monica Nino’s presentation regarding the County’s perspective on pension funding. Ms. Nino noted that every one-percent increase in retirement contributions equates to about $4.9 million in County costs, of which $1.7 million come from the General Fund. In comparison, every one-percent salary increase equates to $6 million, of which $2.1 million come from the General Fund. Finally, Ms. Nino raised the issue of demographics’ impact on pension costs using the County Employee Statistics slide. Investment Roundtable Preparations for the Investment Roundtable on August 22 are progressing on schedule with the agenda, room set-up, speaker preparations, audio-visual, food and other logistics coming together. We expect the final speaker confirmations shortly. SACRS Spring Conference Videos SACRS videotapes the Conference presentations and provides them to the member retirement systems on an SD card. SJCERA has received the videos of the SACRS Spring Conference 2019 presentations. It is available for all staff and trustees to view for educational purposes; however, the presentations are not intended for distribution or copying. Taped presentations include the following: Retirement Readiness for Life After Full-Time Work; Risks and Opportunities in the Current Macro Environment; China: The Great Disruptor; The Enterprise Risks Facing California’s Pension Systems; Five Challenges and a Cry for Help, a presentation by General Wesley Clark; a presentation by Robert Smith, Vista Equity Partners; An Insider’s View of Washington, D.C. by Gloria Borger, CNN Political Analyst; The Case for Non-US

CEO Report July 3, 2019 Page


3

Equities; Why Public Fund Investors Should Consider Renewable Energy; The California Rule and Public Employee Pensions with Linda M. Ross, Timothy K. Talbot, and Ashley Dunning, representing the employer, labor and retirement system perspectives; Private Equity Primary Investment Opportunities and Considerations; Legislative Update 2019; Private Market Investment in Infrastructure; and the SACRS Business meeting. If you are interested in viewing any of these videos, please let me know. Deliver Excellent Service Retirement Service Officers, Melinda DeOliveira and Debra Khan presented two, half-day, mid-career seminars in June. In addition to SJCERA benefit information, speakers from Social Security and the County’s Deferred Compensation Program Administrators, Mass Mutual, provide presentations explaining those benefits. Currently all retirement seminars are held downtown; however, to make them more accessible, staff is investigating periodically conducting them at the San Joaquin General Hospital or the Agricultural Center. Additionally, Retirement Service Associate, Ron Banez, explained SJCERA retirement benefits to 95 new employees at the County’s New Employee Orientation, held at the Ag Center in June. In addition to meeting with our IT vendor to assist with the pension system upgrade, staff (Debra Khan, Melinda DeOliveira, and Ron Banez) processed 15 retirements, 66 estimates, and calculated and mailed 30 service purchase contracts. I am also happy to report that the necessary system and process changes were implemented to accommodate both the new retiree health plan option and the County’s additional administrative fee. Interestingly, although the staff fielded many calls regarding new plan, premium increases, providers and forms, only 26 people signed up for the new plan. As of the July 1 retiree payroll, 1,336 retirees and dependents are enrolled in one of the County-sponsored health insurance plans, 1,561 in a vision plan, and 1,148 in a dental plan. In summary, approximately 22 percent of the retiree population participates in the insurance program. High-Performing Workforce Employee of the Month. Andrea Bonilla and Greg Frank were named employees of the month for flawlessly handling a very busy June calendar—in particular, June 14 had two public meetings (Real Estate Committee and the Board meeting), that same day the Administrative Committee materials had to be distributed and posted, and it was the day Andrea processes (and Greg approves) staff payroll. By working together and preparing as much as possible in advance, it all went off without a hitch. Well done and congratulations Andrea and Greg! Two staff members, Melinda DeOliveira and Marta Gonzalez participated in the CALAPRS Benefits Roundtable in Burbank on June 7, which provides an opportunity for Retirement System Benefits Staff to learn from each other and build their network of benefits experts. Investment Officer Recruitment. There were sufficient qualified Investment Officer candidates to necessitate multiple interviews. Kathy Herman and I conducted telephone interviews as an initial screening, in order to select those candidates with whom to conduct in-person interviews. The interview panel for the finalists will include myself and individuals with pension related investment expertise. In accordance with our bylaws, I will submit to the Board for its concurrence and approval the selection and appointment of the successful candidate. Conclusion Whether you feel bullish or bearish, I eagerly anticipate the Board’s asset allocation discussion and decision, and I wish you a happy, and safe Fourth of July.



June 28, 2019 TO: Board of Retirement FROM: Kathy Herman Assistant Chief Executive Officer SUBJECT: Pension System Enhancement Project Update The software vendor IG Inc. was on site June 25 through June 28. With the continued absence of our IT manager, Jordan Regevig coordinated the four-day event, kept all on task and documented everything. The focus included additional requirement discussions to clarify many of the detailed processes required to accurately process a service purchase including calculations and payment functionality, refund processing, reciprocity and Domestic Relation Orders. Prior to the onsite visit, Marta Gonzalez coordinated multiple sessions including all benefits staff to test, review and give feedback on new screens and functionality. Work continues; however, user and parallel testing has not yet started. In order to remove all of the manual processes used to close each month in the pension system, considerable new programing is being put into place. While this project is far behind schedule, it’s important to note progress is being made and that payments are based upon deliverables. Staff and vendor are committed to a successful implementation. Ron Banez and Melinda DeOliveria, selected experts on refunds, service purchases and reciprocity issues spent several hours with IGI drilling down into the details in each of these areas. Marta Gonzalez reviewed staff feedback and concerns. Stephanie Conner and Fe Maliwat, carefully reviewed the new pay period processes.

MONITORThe Latest in Legislative News

THE NCPERS

June 2019

CONTINUED ON PAGE 6

NATIONAL CONFERENCE ON PUBLIC EMPLOYEE RETIREMENT SYSTEMS

Latest Potshots from Pew Are Based on Outdated Analysis of Public Pensions

It’s difficult to drive forward if you’re only going to look in the rear view mirror. The latest study on municipal pensions by the Pew Charitable Trusts paints a gloomy picture of growing public pension shortfalls using—wait for it—2015 data.

That’s right. Four-year-old data, which ignores the significant steps undertaken by public pension systems in the intervening years to improve their funding levels and overall operations and efficiency.

In a study of 33 cities, Pew found that their total pension debt rose 64 percent, to $147 billion, from 2009 to 2015, while their funded ratio fell from 74 percent to 66 percent. At the same time, funded ratios for the states fell from 78 percent to 72 percent. These are fascinating figures for students of history, but they are flawed as tools for meaningful analysis.

In This Issue2 Executive Directors Corner

This month, we will highlight Illinois, Kentucky, Pennsylvania, and Oregon.

4 Around the Regions

Andrew Biggs is at it again with an attack on the Secure Choice retirement savings model than can only be described as contemptuous. In his view, low-wage earners lack the will, the discipline, and the intelligence to think ahead and prepare for their own retirement.

Photo Illustration ©

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Congratulations to our new NCPERS Secretary:

Carol G. Stukes- Baylor!

Also congrats to our Executive Board Members:

Richard Ingram, David Kazansky, Ralph Securo & James Sklenar!

2 | NCPERS MONITOR | JUNE 2019

Andrew Biggs is at it again with an attack on the Secure Choice retirement savings model than

can only be described as contemptuous. In his view, low-wage earners lack the will, the discipline, and the intelligence to think ahead and prepare for their own retirement.

The title of the latest paper by the American Enterprise Institute pundit, “How Hard Should We Push the Poor to Save for Retirement,” tells you almost everything you need to know. This is an exercise in us-versus-them thinking that is intended to divide, not unite. As usual for Biggs, it is long on rhetoric and short on facts.

It’s not uncommon for Biggs to get one thing right, and in this case he accomplishes that much. He argues—and no one would dispute—that research is needed to show the effects of Secure Choice programs on participants. But of course, that particular facet of research can only be conducted once there is something to test. And thus far, only one state—Oregon—has a program up and running. But duly noted, Mr. Biggs. We expect to learn a great deal more about the impact of Secure Choice in years to come, but all signs point to the conclusion that helping people to save more for retirement would be overwhelmingly positive.

In the here and now, however, Biggs continues to demonstrate willful ignorance about the Secure Choice movement.

Executive Directors CornerNCPERS

Dissecting the Criticism: What’s Wrong with the Latest Attacks on Secure Choice

Let’s start with his assertion that state and city governments have flocked to Secure Choice as a way to establish automatic retirement savings plans aimed at low-income workers. That is simply incorrect. Secure Choice was developed as a solution for private-sector workers who lack access to retirement savings programs at work; it is not

specifically designed for low-wage earners.

He also supposes that he is coming with fresh and original questions about how the programs would work. Sorry to let you down, Mr. Biggs, but numerous commissions and studies were conducted by states and cities for all the programs that have been approved or are under consideration. The states were well informed

In the here and now, however, Biggs continues to demonstrate willful ignorance about the

Secure Choice movement.

CONTINUED ON PAGE 7


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JUNE 2019 | NCPERS MONITOR | 3


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Where Leaders EngageNCPERSJUNE!"#!–!"%&!#'"(WESTIN!MICHIGAN!AVENUECHICAGO&!IL

NCPERS CHIEF OFFICERS SUMMIT

E D U C A T I O NA D V O C A C Y R E S E A R C H

NATIONAL CONFERENCE ON PUBLIC EMPLOYEE RETIREMENT SYSTEMS

REGISTRATION OPENVisit www.NCPERS.org or call 202-624-1456 for more information

Follow Us on Twitter #NCPERSCEO19

https://www.ncpers.org/cos


Around the RegionsNCPERS

MIDWEST:Illinois

The administration of Illinois Governor J.B. Pritzker, a Democrat, has canceled plans to

re-amortize the state’s pension funding schedule. The move would have reduced the state’s 2020 pension contribution by $1.1 billion.

In a May 7 letter, the heads of the governor’s department of revenue and the office of management

and budget credited the decision to the fact that Illinois received “significantly stronger-than-expected revenues in April.” General tax revenues increased 38% in the year ending April 30, 2019, the administration said.

As a result, the state was able to cover budget shortfalls and meet its funding commitment to the retirement systems for fiscal year 2019.

This month, we will highlight Illinois, Kentucky, Pennsylvania, and Oregon

The Bond Buyer reported that the proposal had concerned some analysts, who believed it threatened the state’s investment-grade status. The state also eliminated plans to issue $2 billion of pension obligation bonds, although that measure was not viewed as a rating threat.

The Pritzker Administration recommended that additional revenues to be dedicated to the state’s fiscal year 2018 pension payment. As a result, “the state will be able to meet the current funding commitment to the retirement systems without extending the ramp this year, the administration said. “The Governor remains committed to finding ways to fund our pension commitments in a sustainable manner.”

CONTINUED ON PAGE 5


Two task forces created by the governor’s administration—the Pension Asset Value and Transfer Task Force and the Pension Consolidation Task Force—are expected to issue comprehensive reports on the state’s pensions and other retirement systems. Pritzker expressed hope that the task forces, in consultation of the Colonel, would devise long-term pension reforms.

SOUTH:Kentucky

At press time, Kentucky Governor Matt Bevin remains short of the votes he needs

in the state House of Representatives to pass his alternative pension bill at a special session of the legislature, several news organizations have reported. As a

result, the Republican governor has not yet made good on his April 25 to convene a

special session to consider alternatives to the pension bill he vetoed April 9.

And time is running out: Without action, more than 100 entities, including regional universities, county health departments and other quasi-governmental entities, face a massive spike in pension costs on July 1. Legislators are concerned now about logistical challenges in calling the legislature back to work with only a few weeks until the new fiscal year.

Bevin, meanwhile, still says he will call the special session, but has not provided a timetable. He appears to have support for his proposal in the state Senate, but Iacks the 51 votes needed to pass the bill through the House, despite the fact that it is controlled by his Republican party.

Republican lawmakers are trying to “find the sweet spot” that balances the impact of a reform bill on taxpayers, employees and agencies that provide vital services, said State Rep. Jerry Miller, a Republican. House Democrats, meanwhile, have been advocating for freezing current pension contribution rates and coming back to the topic of reform legislation in January to make other changes.

NORTHEAST:Pennsylvania

When it comes to pensions, walking the walk appears to be optional for Pennsylvania

legislators. The state’s lawmakers have embraced 401(k)-style retirement plans for government and school employees’ pensions—but they have different ideas

about what they want for themselves.

Under a 2017 law, state government employees hired on or after January 1, 2019 —and school employees hired after July 1, 2019—could no longer choose a traditional guaranteed pension plan. Instead, their choice is between a 401(k)-style plan or one of two hybrid plans that combine a 401(k)-style plan with a traditional pension plan.

Lawmakers had until March 31, 2019, to decide whether they would make the switch. As of April 1, 198 out of 218 lawmakers elected to continue in the traditional guaranteed pension plan; the figure includes 43 freshman lawmakers who signed up or pension benefits for the first time. By contrast, only 20 lawmakers chose to switch to a 401(k)-style plan option. None of the lawmakers picked either of the hybrid options.

Pennsylvania in 2017 modified two statewide public pension systems to curb pension-plan costs for school districts. The state was facing approximately $70 billion in unfunded liabilities, more than twice the size of the state’s general fund.

WEST:OREGON

Oregon’s House of Representatives on May 30 narrowly passed a Senate-approved bill that

would require the state’s employees to redirect a portion of retirement benefits to shore up the pension system. The legislation, which passed the chamber

31-29, now goes to Governor Kate Brown, a Democrat, who is expected to sign it.

Oregon is currently one of two states that don’t require workers

AROUND THE REGIONS CONTINUED FROM PAGE 4

CONTINUED ON PAGE 7


More recent data is far more illuminating. For example, our 2018 Public Retirement Systems Study, released in February 2019, examined real-time responses from 167 state and local government pension funds and market assets exceeding $2.6 trillion. The majority—62 percent—were local (city and county) pension funds, while the remaining 38 percent were state-wide funds.

Our study also showed that pension plans racked up strong on-year returns averaging 13.4 percent in 2018, reflecting robust market conditions. Additionally, the study showed that 65 percent of pension plans had fine-tuned their annual investment return assumptions, lowering assumptions by 15 basis points on average, and 18 percent were considering doing so.

LATEST POTSHOTS FROM PEW CONTINUED FROM PAGE 1

Importantly, our study also showed that contribution rates to pension funds remain stable. Among study respondents who participated two years in a row, employer contribution rates edged down to 20 percent of payroll in 2018, from 21 percent in 2017. Employee contribution rates were unchanged.

Attacks on public pensions are old news. And when they are based on old data, it’s hard to take them seriously. The reality is that our public pension systems are constantly adapting plan designs, revisiting assumptions, and strengthening governance. Through these and myriad other steps, public pensions are delivering on their promise to provide a secure retirement for millions of retired public servants. u

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as to how these programs would work. And California specifically examined what the program would do for participants’ eligibility for various social welfare programs.

Biggs also leans heavily on the idea that poor people may need money for other things than retirement savings. They might indeed, and if they did, they would have lots of choices. They can opt-out, as many people at the poverty line might very well do. Participants who realize they need to free up cash flow could reduce or eliminate their automatic enrollment. Those who have begun to amass retirement savings could withdraw money and, if applicable, pay any early-withdrawal penalties, just as anyone with an IRA could.

What comes shining through Biggs’ analysis is his elitist disdain for wage earners. He completely ignores the issue of financial insecurity and the corrosive effect it has on people. Instead, his

solution seems to be that low-wage earners are better off spending their money now and living off Social Security in retirement.

His rhetoric is tiresome, it’s callous, and it’s just wrong. Early indications from the Secure Choice programs are very positive—enthusiasm for these programs is high. Amassing even a modest retirement nest egg is a plus for workers, because when workers defer drawing on their Social Security for even a few months, they are accumulating higher monthly benefits down the road. Reforming welfare and Social Security are ideas worth considering—but states and cities are responding to a retirement crisis that exists here and now, and they don’t control federal legislation.

When it comes to Secure Choice, the facts speak for themselves. After intensive study and analysis, cities and states are embracing an innovative way to help millions of Americans help themselves be better prepared for retirement. What’s not to like about that? u

to contribute to their pension benefits. Under the new regime, a portion of the retirement contributions that employees currently make to a supplemental 401K-like savings plan would instead go toward pension benefits. In all, 2.5 percent of pay for employees hired before August 28, 2003, and 0.75 percent for employees hired after would go to support pension benefits.

The bill, SB 1049, would defer immediate action on the state’s $27 billion pension shortfall by extending the minimum payment schedule for eight years. The bill would reduce the ending balances in employees’ supplemental retirement accounts and trim a 30-year employee’s overall retirement benefits by 1 percent to 2 percent of pay. The contributions would apply only to employees $30,000 or more annually. The redirection to the pension plan would cease if the pension system’s funded status reaches at least 90 percent. u

AROUND THE REGIONS CONTINUED FROM PAGE 5

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Dismiss MMT at Your PerilBy Chris Brightman, CFA

Don’t dismiss Modern Monetary Theory (MMT) as unlikely to influence policy. This heterodox economic doctrine advocates sharply increased fiscal expenditures backed by money creation. An alluring promise of MMT is that it directly confronts a perceived flaw in today’s conduct of monetary policy:

June 2019

April 2019

Strike the Right Balance in Multi-Factor Strategy DesignFeifei Li, PhD, FRM, and Joseph Shim

February 2019

Alice’s Adventures in Factorland: Three Blunders That Plague Factor Investing Campbell Harvey, PhD, Rob Arnott,

Vitali Kalesnik, PhD, and

Juhani Linnainmaa, PhD

Key Points1. Modern Monetary Theory (MMT) argues that governments with fiat

currencies should coordinate treasury and central bank actions to fund

government programs by directly printing money, unconstrained by tax

receipts or borrowing capacity.

2. Progressive politicians embrace MMT because the doctrine allows them

to advocate substantial increases in social spending without imposing

the taxes traditionally assumed necessary to fund such spending.

3. MMT is attracting a growing following because it also promises to

reverse the contribution to wealth inequality of today’s conventional

monetary policy.

4. Historical experience with policies similar to MMT has resulted in

periods of high and volatile inflation, which depresses the real returns of

mainstream stocks and bonds.

5. Savers and investors may wish to revise financial plans to allow for

the heightened risk of inflation given that policies influenced by MMT

appear to be increasingly likely.

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June 2019 . Brightman . Dismiss MMT at Your Peril 2

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pumping liquidity into financial markets as the standard response to stock market and economic turbulence inflates asset price bubbles and thereby exacerbates income inequality.

Recognize that monetary policy–fueled bull markets only benefit the few who own stocks. Three US billionaires are now collectively worth more than the 160 million Americans in the bottom half of the wealth distribution. A dramatic increase in social spending as proscribed by MMT advocates may well help alleviate some of this inequality.

Investors, however, should be aware that MMT-inspired policy raises the risk of inflation. Unexpected inflation shocks cause the prices of stocks and bonds to plummet. Proponents of MMT may interpret destruction of financial wealth as necessary and beneficial because few of the bottom 160 million hold any stocks or bonds. A burst of inflation will help level the playing field.

Many prominent politicians currently embrace MMT more as political strategy than economic policy. Over recent decades, Republicans have successfully prevented an expansion of US government spending to fund European levels of social benefits by cutting taxes and raising deficits when in power, and then demanding austerity to remedy the accumulating debt when Democrats are in power. Having learned from this gambit, prominent members of the progressive wing of the Democratic party are now turning the tables. MMT allows them to promote a massive expansion in government spending without admitting that a corresponding tax increase (likely a European-style VAT) will become necessary to offset that spending.

The frightening problem with this political game of chicken is that we may end up with a rerun of the Great Stagflation of the 1970s and its dismal capital market returns. Younger readers who have become accustomed to the recent stable inflation rate achieved through independent central banks may not appreciate the misery inflicted by high and volatile inflation. I’m old enough to remember. When I began my first college economics course, the US inflation rate was racing at double digits, while the unemployment rate was headed to nearly 11%, its post-WWII high. Diagnosing the cause of that miserable inflation disease and administering a cure was the most important practical problem for economic policy of the time.

In this article, I summarize the past six decades of monetary policy in the United States to remind readers of the cause of the Great Stagflation of the 1970s and the pain of repairing the damage in the early 1980s. I note that technological advances have since rendered the clear rules of monetarism obsolete. I discuss why today’s complex econometric models invite heterodox new theories. I briefly touch upon a potentially more sensible cousin to MMT, the fiscal theory of the price level (FTPL). I note where MMT departs from economic orthodoxy and highlight the harsh assessment of prominent economists, notably including those from the political left. I conclude by referencing the terrible capital market returns of the 1970s. In that decade, cash and bonds provided negative real returns, while stocks provided a real return of about zero.

Keynesian Policy and Inflation During the 1960sThe fiscal and monetary policies of my childhood foreshadowed MMT. In 1964, Congress cut income tax rates by approximately 20% to boost growth and raise employment, enacting a policy originally proposed by the recently assassinated President Kennedy. This tax cut, paired with large increases in government spending for the moon shot, the War on Poverty, and the undeclared (but nonetheless all too real) war in Vietnam, fueled an economic boom along with a jump in the inflation rate. From 1963 to 1966, unemployment declined from 6% to below 4%, while inflation more than doubled from less than 1.5% to 3%.

“Relying on Congress to manage inflation through tax policy seems recklessly naïve.”



Can tax policy control the inflationary impact of a too-aggressive fiscal policy, as asserted by today’s MMT proponents? In an explicit effort to control the rapidly rising inflation rate following the fiscal stimulus of the mid-1960s, Congress reversed course to enact a large tax increase, the Revenue and Expenditure Control Act of 1968. While this led to a tiny and temporary budget surplus, as discussed at length by Arthur Okun (1971) the effort to control inflation through taxation utterly failed.

Stagflation of the 1970s and the Failure of Wage and Price ControlsRepublicans made a bad situation worse. In 1971, President Nixon ended convertibility of the US dollar into gold, imposed wage and price controls, and raised tariffs. In 1972, Nixon pressured Fed Chairman Arthur Burns to ease monetary policy in order to boost the economy heading

into the election of 1972 despite the elevated inflation rate. The economy duly strengthened and Nixon was re-elected in a landslide.

This episode teaches us about the risks of politicizing conduct of monetary policy. Nixon’s wage and price controls paired with politically motivated easy money propelled inflation much higher. The Consumer Price Index (CPI) doubled from 3% in 1972 to 6% in 1973. The next huge step-up in prices coincided with the oil price shocks of 1973 and 1974. CPI soared to 11% by 1974.

Following Nixon, President Ford tried to control the then-raging rate of inflation by urging patriotic, voluntary action to reduce consumption and increase savings, passing out WIN (Whip Inflation Now) buttons. In 1978, President Carter instituted voluntary wage and price controls, which proved as futile as Ford’s WIN buttons.

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Source: Research Affiliates, LLC, using data from Economic Data, Federal Reserve Bank of St. Louis (FRED).

US Fiscal Policy, 1960–2018

Over the last half-century, tax revenues have largely failed to cover spending and control the inflationary impact of fiscal policy.



Through the latter half of the 1970s and into the early 1980s, high and volatile inflation coincided with rising unemployment. The unemployment rate rose from less than 4% in 1969 to nearly 11% by 1982. Whether this Great Stagflation was caused by rapid expansion of money or by oil price shocks remains a subject of debate to this day. Beyond debate was the human suffering. To quantify the suffering of that time, Arthur Okun invented the “misery index” as the sum of the inflation and unemployment rates, which peaked at over 22% in the early 1980s.

Volcker Tames Inflation with MonetarismMilton Friedman famously stated: “Inflation is always and everywhere a monetary phenomenon....” By the time I began my study of economics, events proved Friedman and his collaborator Anna Schwartz prescient. Following Friedman and Schwartz, I was taught that excessive growth in the money supply caused the inflation of the 1970s. The

growth rate of money, as measured by M2, rose from 1.5% in 1960 to 3% in 1970, to 4% in 1975, and then to 10% by the early 1980s. Correspondingly, CPI rose from below 2% in 1960 to a peak of over 14% by 1980.

When I entered high school in the 1970s, monetarism had already gained influence among Fed economists. Simply stated, monetarism teaches that an increase in the supply of money causes rising prices. The theory is summarized by the well-known equation MV = PQ, where M is the aggregate money supply; V is the velocity of money, or the number of times an average unit of money is used to purchase goods and services in a given period; P is the general price level, for example, the level of CPI; and Q is the quantity of real goods and services produced, or real annual GDP.

From the vantage point of the 1970s, tight regulation of banks and interest rates had produced a sufficiently stable velocity of money such that economists assumed V was

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www.researchaffiliates.com, which are fully incorporated by reference as if set out herein at length.

Source: Research Affiliates, LLC, using data from Economic Data, Federal Reserve Bank of St. Louis (FRED).

US s a la io a s, c 1960–F 2019

Control of the money supply finally, but painfully, reduced the high inflation and interest rates of the late 1970s and early 1980s.



approximately a constant. If V is constant, then a change in M equals the change in PQ (growth of the nominal economy). Further, when the economy is operating at potential, real growth is constrained by real resources: land, labor, and capital. If both V and Q are effectively constant over the short run, then a change in M equals a change in P, which is inflation.

Monetarism solved the inflation puzzle: growth of the money supply in excess of the growth of the real economy causes rising prices. To control inflation, the Federal Reserve would need to slow the growth of money.

A month before I began my university studies in 1979, President Carter nominated the then President of the Federal Reserve Bank of New York, Paul Volcker, to chair the Federal Reserve Board of Governors. Volcker embraced monetarism, intentionally slowed the growth of the money supply, and allowed market interest rates to rise above the double-digit level of inflation. After two nasty recessions in the early 1980s, coinciding with a spike in interest rates into the mid-teens, the growth rate of money, inflation, and nominal interest rates all began their decades’ long decline to the lows of recent years.

Contemporary Monetary PolicyComplicating monetary theory and the conduct of monetary policy, advances in financial technology have dramatically changed the nature of money. Today, nearly a billion people, many without bank accounts, transact using smart phones. The money supply now defies practical measurement and theoretical definition. Velocity of money no longer appears stable. Because central banks cannot control a money supply they cannot measure, growth of money no longer provides a practical guide to the conduct of monetary policy.

In place of monetarism’s simple target for the growth of money, central banks now target a low and stable rate of inflation, with an emphasis on expectations and forward guidance. Actual conduct of monetary policy to achieve this inflation-targeting objective relies on the subjective judgment of policy makers informed by well-known models

including the Phillips Curve and the Taylor Rule. As became obvious in the Great Recession and its aftermath, however, the inputs to such simple models cannot be estimated with the accuracy necessary to provide a precise operational guide to setting monetary policy.

The present state of orthodox monetary theory provides little help. Staff economists at central banks (and those in academia who advise them) produce complex models—as a class they are labeled dynamic stochastic general equilibrium (DSGE) models. DSGE models synthesize several branches of economic theory including rational expectations, an endogenous private sector operating within competitive markets, sticky prices, and multi-period analysis. In theory DSGE models inform policy by forecasting employment, output, and inflation in response to alternative policy decisions. In practice, DSGE models seem devilishly complex to most of us, and the experts who might comprehend them express little confidence in their forecasts.

Ben Bernanke expressed the absence of a well-accepted theory to guide monetary policy with his pithy quip: “Well, the problem with QE [quantitative easing] is it works in practice, but it doesn’t work in theory.” If current monetary policy appears to be a set of ad hoc practices in search of an applicable theory, then we shouldn’t be surprised that heterodox theories are receiving increasing attention.

The Fiscal Theory of the Price LevelJohn Cochrane (2019) asks: “Is there a theory of inflation that continues to work as we move to electronic transactions and a money-less economy?” His answer is the fiscal theory of the price level (FTPL).

“We may end up with a rerun of the Great Stagflation of the 1970s and its dismal capital market returns.”



In common with MMT, the FTPL holds that a government spending its own fiat currency has no nominal budget constraint. Most debt issued by governments is nominal, not real. (Real government debt includes inflation-linked bonds and borrowing denominated in a currency backed by a real asset such as gold.) Increases in nominal government borrowing that exceed the real value of future primary budget surpluses necessary to repay that debt will increase the price level (inflation) to keep the real value of the borrowing equal to the real value of the future budget surpluses.

More formally, the FTPL posits that B/P = present value of future budget surpluses, where B is the nominal amount of government borrowing and P is the price level. This simple equation provides an intuitive sense of why borrowing more than can be repaid from future tax receipts produces inflation.

The FTPL helps explain why QE has not yet caused inflation. In our twenty-first century economy, central banks have accumulated enormous quantities of government debt on the asset side of their balance sheets, matched by bank reserves and currency on the liability side of their balance sheets. Correspondingly, commercial banks possess enormous quantities of excess reserves on the asset side of their balance sheets. Because central banks now pay interest on bank reserves at rates approximately equal to the yield on short-term government debt, when a central bank conducts open market operations, it merely swaps bank reserves for government debt, both obligations of the government paying the same rate of interest.

As I have explained, such swapping of equivalent financial instruments, as in QE, has no direct effect on the money supply or the rate of inflation. The FTPL explains why even the proportionally larger QE undertaken in Japan has

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Note: MBS is mortgage-backed securities. Source: Research Affiliates, LLC, using data from FactSet.

US F al s ala c S , 200 –2018

The dramatic increase in central bank assets after the last decade of QE was matched by a similar expansion in liabilities.

https://www.researchaffiliates.com/en_us/publications/articles/364_whats_up_quantitative_easing_and_inflation.html



not produced inflation. Japanese debt monetization has coincided with a tightening of fiscal policy and declining deficits.

As its name explicitly asserts, the key insight of the FTPL is the importance of fiscal policy to the determination of the price level and the rate of inflation. A corollary is the relative impotence of monetary policy. John Cochrane concludes his 2018 essay “Four Heresies of Monetary Policy” with the statement: “The Fed is nowhere near as powerful as conventional wisdom suggests.” These assertions of the impotence of monetary policy and the primacy of fiscal policy are echoed by MMT.

Modern Monetary TheoryI attempt an explanation of MMT with some trepidation. Little of MMT is published in the traditional manner. MMT’s promoters communicate their ideas primarily through blogs and podcasts. Even progressive economists, who support a larger role for government and downplay concerns about deficit spending, struggle to explain it. Paul Krugman has likened his engagement with MMT advocates as playing Calvinball, a fictitious game in which the rules are constantly changing. Nonetheless, here I go.

In common with Abba Lerner’s theory of functional finance, MMT argues that governments should coordinate monetary and fiscal policy to ensure full employment. Stephanie Kelton (2019) explains Lerner’s approach: “The government should use its fiscal powers (spending, taxing and borrowing) in whatever manner best enables it to maintain full employment….” So far, such a description of MMT seems to align with mainstream Keynesian proscriptions for fiscal policy.

A seemingly more sensational claim of MMT is that governments with fiat currencies can fund any amount of government spending simply by creating new money. We might reasonably assume that such a radical change in policy would require abolishing central bank independence. MMT advocates do not explicitly promote this change, so far as I can find. Rather, they envision a consolidated treasury and central bank. In the US context, Congress would direct the Fed or its successor to create whatever

amount of money is necessary to fund government spending.

Released from the constraint to fund government spending with taxes, promoters of MMT back a massive increase in government control of the economy, from universal healthcare and free college education to an immediate transition to clean energy as well as government jobs for all of the unemployed. MMT acknowledges that too much government spending might cause inflation, but that taxes and regulation can and will prevent it. Relying on Congress to manage inflation through tax policy seems recklessly naïve regardless of whether it would be theoretically possible.

To be fair, when markets fail to provide sufficient investment in public goods—such as infrastructure, research, education, and healthcare—then government spending for such programs may well provide an economic return above the foregone alternative private investments. Advocating an expansion of government investment thus resides well within the bounds of conventional macroeconomics.

Where then does MMT depart from orthodoxy? MMT asserts that government investment doesn’t crowd out private investment because government spending creates bank reserves, which lowers interest rates. The obvious objection to this heterodox assertion is that real resources are finite. To the extent that government directs investment of finite real economic resources, less of those finite resources will be available for private investment. As Fed Chairman Jerome Powell recently testified before Congress:

“The idea that deficits don’t matter for countries that can borrow in their own currencies I think is just wrong.... We’re going to have to either spend less or raise more revenue.”

“If MMT becomes policy, we can expect high and volatile inflation leading to negative real returns for bonds and cash.”



James Mackintosh (2019) wryly observes that MMT is neither modern, monetary, nor a theory. Nonetheless, the embrace of MMT by influential progressive politicians has compelled many prominent economists to publicly warn of its dangers. Kenneth Rogoff (2019) refers to MMT as “nonsense.” Paul Krugman (2019), though deeply sympathetic to progressive policy goals and deficit spending, says unequivocally that “the MMT people are just wrong.” Larry Summers (2019) calls MMT a “recipe for disaster.”

As Bill Dudley (2019) explains:

MMT hasn’t worked out well for other countries. Consider Germany in the 1920s, or Venezuela and Zimbabwe more recently. The US tried a milder version in the 1960s and 1970s, when the government tried to pay simultaneously for the Vietnam War and Lyndon Johnson’s Great Society programs. The result was inflation, America’s withdrawal from the gold standard and the demise of the Bretton Woods system of fixed exchange rates. The Fed had to increase interest rates to double digits in the late 1970s and early 1980s, at great economic cost, to get inflation back under control.

Dudley’s warning resonates with me. I vividly recall the stagflation of the 1970s, the pain measured by the misery index, and the two recessions of the early 1980s as I began my first professional job search.

Financial Market Implications of MMTWhat does a return to stagflation, similar to that of the late 1970s, imply for capital market returns? For the full decade of the 1970s, bonds and cash provided negative real returns as unexpected inflation turned real rates negative. If MMT becomes policy, then we can expect a similar bout of high and volatile inflation leading to negative real returns for bonds and cash.

Would the mighty US stock market provide protection from high and volatile inflation? Not if history is our guide. High inflation is associated with declining stock prices. Stocks provided a real return barely above zero for the decade of the 1970s. The Shiller P/E of the US stock market dropped from an average valuation of 17 at the start of the decade to below 10 in 1977, and then remained in a range between 6 and 10 until 1984. From the present Shiller P/E of 31, this historical valuation implies a plunge in stock prices of 70%, even before considering the damage to corporate profits!

Real assets provide a measure of inflation protection. TIPS, commodities, and REITs may appreciate as and when investors attempt to reposition for an inflationary regime. Unfortunately, today TIPS provide real yields below 1%, commodities pay no real yield at all, and REIT prices are highly correlated with the US stock market.

Repositioning portfolios to hold capital assets domiciled in countries with more conservative policies provides an alternative approach to protecting portfolios from inflation. Such protection comes at a cost. The premium the wealthy willingly pay to protect real purchasing power at least partly explains the current negative real interest rates charged on Swiss bank deposits.

One way or the other, a return to high and volatile inflation can be expected to depress future capital market returns. Informed investors can prepare by paring back positions in mainstream stocks and bonds, diversifying into real assets, and revising down future real return expectations.

“Real assets provide a measure of inflation protection.”

https://www.researchaffiliates.com/documents/IWM_Jan_Feb_2012_Expected_Return.pdf

https://www.researchaffiliates.com/en_us/publications/journal-papers/374-king-of-the-mountain-the-shiller-pe-and-macroeconomic-conditions.html




ReferencesArnott, Robert, Tzee Chow, and Denis Chaves. 2017. “King of the Mountain:

The Shiller P/E and Macroeconomic Conditions.” Journal of Portfolio Management, vol. 44, no. 1 (Fall):55–68.

Brightman, Christopher. 2012. “Expected Return.” Investments & Wealth Monitor (January/February).

———. 2015. “What’s Up? Quantitative Easing and Inflation,” Research Affiliates Fundamentals (January).

Cochrane, John H. 2018. “Four Heresies of Monetary Policy.” Defining Ideas, Hoover Institution (March 1).

———. 2019. The Fiscal Theory of the Price Level. Self-published.

Dudley, Bill. 2019. “Budget Deficits Still Matter.” Bloomberg (February 19).

Kelton, Stephanie. 2019. “Modern Monetary Theory Is Not a Recipe for Doom.” Bloomberg Opinion (February 21).

Krugman, Paul. 2019. “MMT, Again.” The Conscience of a Liberal Blog, New York Times (August 15).

Mackintosh, James. 2019. “What Modern Monetary Theory Gets Right and Wrong.” Streetwise, Wall Street Journal (April 2).

Okun, Arthur M. 1971. “The Personal Tax Surcharge and Consumer Demand, 1968–70.” Brookings Papers on Economic Activity, Brookings Institution, vol. 1:167–211.

Rogoff, Kenneth. 2019. “Modern Monetary Nonsense.” Project Syndicate (March 4).

Summers, Lawrence. 2019. “The Left’s Embrace of Modern Monetary Theory Is a Recipe for Disaster.” Washington Post (March 4).

For more information about:Increases in government spending in the 1960sFederal Reserve Bank of Cleveland. 1970. “Patterns of Federal Government Outlays and Revenues.” Economic Review (November):3–14.

Nixon-era: End of convertibility of US dollar to gold and wage/price controlsGhizoni, Sandra Kollen. 2013. “Nixon Ends Convertibility of US Dollars to Gold and Announces Wage/Price Controls.” FederalReserveHistory.org (November 22).

Oil price shocks of 1973–74Corbett, Michael. 2013. “Oil Shock of 1973–74.” FederalReserveHistory.org (November 22).

Carter-era: Wage and price controlsFarnsworth, Clyde H. 1978. “Carter Economic Message Asks Voluntary Price and Wage Brake.” New York Times (January 21).

Mid-1970s velocity of moneyEconomic Research, Federal Reserve Bank of St. Louis (FRED). Velocity of M2 Money Stock.

Phillips CurveFederal Reserve Bank of San Francisco. 2008. “Dr. Econ, What Is the Relevance of the Phillips Curve to Modern Economies?” frbsf.org (March).

Taylor RuleBernanke, Ben S. 2015. “The Taylor Rule: A Benchmark for Monetary Policy?” Ben Bernanke Blog, Brookings.edu (April 28).

DSGE modelsFernández-Villaverde, Jesús. 2009. “The Econometrics of DSGE Models.” NBER Working Paper No. 14677, National Bureau of Economic Research (January).

Interest paid by Federal Reserve on commercial bank reservesFagan, Doreen. 2018. “Why the Fed Pays Interest on Banks’ Reserves.” Open Vault Blog, Federal Reserve Bank of St. Louis (April 11).

Open market operationsBoard of Governors of the Federal Reserve System. “Credit and Liquidity Programs and the Balance Sheet.” FederalReserve.gov.

Functional FinanceLerner, Abba. 1943. “Functional Finance.” Bradford Delong’s Grasping Reality. www.bradford-delong.com.



https://www.researchaffiliates.com/documents/IWM_Jan_Feb_2012_Expected_Return.pdf

https://www.researchaffiliates.com/en_us/publications/articles/364_whats_up_quantitative_easing_and_inflation.html

https://www.hoover.org/research/four-heresies-monetary-policy

https://faculty.chicagobooth.edu/john.cochrane/research/papers/fiscal_theory_book.pdf

https://www.bloomberg.com/opinion/articles/2019-02-19/budget-deficits-still-matter-sorry-mmt-proponents

https://www.bloomberg.com/opinion/articles/2019-02-21/modern-monetary-theory-is-not-a-recipe-for-doom

https://www.bloomberg.com/opinion/articles/2019-02-21/modern-monetary-theory-is-not-a-recipe-for-doom

https://krugman.blogs.nytimes.com/2011/08/15/mmt-again/

https://www.wsj.com/articles/what-modern-monetary-theory-gets-right-and-wrong-11554177661

https://www.wsj.com/articles/what-modern-monetary-theory-gets-right-and-wrong-11554177661

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