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HomeMy WebLinkAbout06.a.2) CCCERA updater I' C .... ...... .. . ... . ... .. . ........ . . .... ... .. .... . ... ..... .. .. ....... .. .. .. . ... .. ........ .. . .. ... March 10, 2011 TO: HONORABLE BOARD OF DIRECTORS VIA: JAMES M. KELLY, GENERAL MANAGER gJA FROM: RANDALL M. MUSGRAVES, DIRECTOR OF ADMI ISTRATION SUBJECT:. CONTRA COSTA COUNTY EMPLOYEES' RETIREMENT ASSOCIATION (CCCERA) 3/9/2011 BOARD MEETING Attached is a copy of the March 9, 2011 CcCERA Board meeting agenda and the associated agenda item material. Of particular interest are agenda items #8, #9 and #10. The items address proposed salary adjustments. Also attached are copies of the Contra Costa Times articles regarding the proposed CcCERA salary adjustments. #8 Consider and take possible action on staff recommendation regarding Retirement staff salaries and benefits. Item #8 addresses the separation of CcCERA employees from contra Costa County employees. The Chief Executive officer recommended that the CcCERA Board provide direction to -staff regarding the Board's desire for CcCERA to work with the County Human Resources Staff to implement the following: a. Maintain the pay of CcCERA employees at existing levels, exclusive of step levels already in the system. b. Maintain employer subvention levels. (the amount the employer currently pays for each employee's basic cost). c. Maintain the existing vacation sell back schedule for existing employees. If the county makes a change to this benefit, implement for new employees only. After lengthy deliberation in open and closed session, the CcCERA Board gave staff broad direction to express the Retirement Board's desire or recommendation to keep the current status quo for CcCERA employees.. #9 consider and take possible action on: a, Staff recommendation for salary adjustment for Retirement General Counsel and Retirement chief Investment Officer. b, Staff recommendation to perform a compensation study for represented positions. In 2008, a compensation and benefits analysis was performed for CCCERA unrepresented employees. Two positions, having the greater variance to comparative salaries,. have not received any adjustment as recommended by the 2008 study. 1. Retirement Chief Investment officer 2. Retirement General Counsel Staff recommended a 6% equity adjustment for both positions. After lengthy deliberation in open session, the CCCERA Board held the salary increases over to a future Board meeting. Staff received approval to perform a total compensation review, updating the 2008 study, of all unrepresented positions, estimated at approximately $10, 000, and report back at a later date. #10 consider and take possible action on recommendation for the ad hoc committee regarding Retirement CEO salary. The CCCERA received an exemplary performance rating by the CCCERA Board. A Committee was formed to evaluate the appropriate pay adjustment for the performance review. The Committee recommended a 4% salary increase to the full Board. The CEO requested that the item be tabled at this time until the study of unrepresented employees is completed. The CCCERA Board concurred. No further action by the CCCERA Board was taken. Staff was unable to attend the lengthy CCCERA Board meeting due to tasks addressing both the recent overflow and vehicle accident and the Gregory Village Claim. However, staff spoke with both the CEO and to obtain an understanding of the CCCERA Board's deliberations and actions. Staff will be available to answer any questions the Board may have at the larch 17 Board meeting. Employees Retirement Association 1355 willow way suite 221 concord ca 94520 925.521,3960 tax: 925,646,5747 RETIREMENT BOARD MEETING FIRST MONTHLY MEETING 9:00 a.m. March 9, 2011 Retirement Board Conference Room The willows Office Park 1355 Willow .way Suite 221. Concord, California THE RETIREMENT BOARD MAY DISCUSS AND TAKE ACTION ON THE FOLLOWING: 1. . Pledge of Allegiance 2. Accept comments from the public. 3. Approve minutes from the February 23, 2011 meeting. Attachment # 3 4. Routine items for March 9, 2011. a. Approve certifications of membership. b. Approve service and disability allowances. c. Accept disability applications and authorize subpoenas as required. d. Approve death benefits. Attachment # 4 5. Consider and take action to consider change date for the March 23, 201 land May 25, 2011 meetings. Attachment # 5 6. Update from staff on Application for IRS Letter of Determination. Attachment # d 7. Presentation of 2010 Cash Flow Report. Attachment # 7 7a. Consider and take possible action on staff recommendation for building management. and leasing services. Attachment # 7a S. Consider and take possible action on staff recommendation regarding Retirement staff salaries and benefits. 9 Consider and take possible action on: Attachment # S a. Staff recommendation for salary adjustment for Retirement General Counsel and Retirement Chief Investment Officer. b. Staff recommendation to perform a compensation study for represented positions. Attachment # 9 F tirement Board will provide reasonable modations far persons with disabilities g to attend Board meetings who contact irement Office at least 24 hours before a meeting. 10. Consider and take possible action on recommendation from the ad hoc committee regarding Retirement CEO salary. Attachment # 10 11. Consider authorizing the attendance of Board and/or staff a. Symposium, SACRS, March 16, 2011, Huntington Beach, CA b. Spring Conference, SACRS, May 10 — 13, 2011, Santa Barbara, CA. c. CAPP Parts I and II, International Foundation, June 14 — 17 2011, Chicago, IL. d. Spring Conference, CRCEA, April 18 — 20, 2011, San Diego, CA. e. Public Pension Investment Management Program, SACRS, July I I -13, 2011, Berkeley, CA (note conflict With Board meeting). f. International Investment and Emerging Market, International Foundation, July 25 27, 2011; San Francisco, CA (note conflict with Board meeting). 12. Miscellaneous a. Staff Report b. outside Professionals' Report c. Trustees' comments The Retirement Board will provide reasonable accommodations for persons with disabilities planning to attend Board meetings who contact the Retirement Office at least 24 hours before a meeting. M—eetja 0.3 If A Item C CERA M c FJanu Y 77' r� iii fir May SSI M wan" WANAWN *WAWA F 4 5 61 7 8 119 10 H 2 3 4 5 6 7 8 9 10, 11 B I 13 14 15 16 1117 18 19 20 21 22 19 20 N 21 N 1 NI MIZ 24 25 26­1�� 27 28 29 2 6 31 2 8 e �L (11 )"V Oal, 'I �4otj ........ ............. 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Mr kommg • M MW LL LL 4 - oj 4 - t U- U V 0 V* 10-01 '01 toll, to M , U9 1 � ict CSI 0� a} C11 C'h Oct 't co kn 00 so I ID MWI 0 00 s Ln N lo� ui crZ to lq* ON ift) m 0 US U) K) 0 A 0, ro m vr ON 0 0 Ln 14: LO MEETING DATE _ ___ __ __ __ _ Date: March 9, 2011 MAR 0 9 2011 AGE I ILI ITEM To: CCCERA Board of Retirement Pow From: Mari3.yn Leedom, Retirement Chief Executive Officer ub j ect. Contra Costa County Retirement Association. (CCCERA) Employeees Salaries and Benefits R ecommendation: mend.ation.: please see options below Background The Board of the Contra Costa. County Retirement Asgociation has the exclusive authority for admini stering the retirement system. This adm ni.str tion includes the fiduciary responsibility for oversight of investments, along with admini stration of system operations, and most importantly, the timely payment of benefits. In 1 990, CCC obtained the Corcoran decision, which allows CCCERA to offer its employ a different retirement tier County employees, 'because the court foul. that CCCERA was the "gove�ng b ody" of its employees. C orcoran has since been in terpreted by our counsel. and County Counsel to include the right of the CCCERA Board to set salari e s and benefits for the employees of CCCERA. It is well knovvn that the County is facing financ difficulties and has discussed the possibility of many compensation reductions this ye ar, includimg at least a 5 % pay cut, the discontinuance of sub ention. (currently at 0% of the employee basic rate), and on of vacation' sell back for non employees. "ale the County ' is facing these culties, and the discussion on changes grows, th worldoad of CCC ERA employees has increased dramaticaUy due to an increase in retirement applications from many long time County and District employees. While staffing for 1 937 Act systems are subj to ci. vil service regulations, the Retirement Board is required to annually adopt a budget covering the entire expense (inc salarie of the admi stration of the retireme system. CCCE has di4gently worked over the last few years to bring our sting up to an acceptable level, both in epeence and 'the experience n6eded to successfully admi—nister a 5 billion pension fund.. is not easily gained. For example, the leaming and eperience track for a new retirement Counselor is at least 3 years, and up to 5 years, depending on prior retirement benefit experience. In addition, with the anticipated retiremcnt of two of our long term department managers, and a vacancy m our Deputy CEO position, retention of existing staff is crifical in order to provide successful and smooth implcmentation of benefits by CCC ERA. The . r ding.. of these benefits...- imd... confiaued.. ef Ecient.. opm4m -of Qw. PC x ' w . sy:� � #I A r._ - :. - ............ constitudonal man date., CCCERA's Board recently approved de-pooling the cost sharin re previously in pie for aid. employer plan sponsors of the This action,, along with tem ainai pay changes for new nembers, and �.ued developments state federal i�iatio makeseepg up nth the nuances of admi the system chaile�g for al employee levels at Ems.. Additionally, an unusually large number of members are considering retirement due to the prospect of benefit and/or salary reductions in the fture. Our counselors have been inundated with telephone calls, a mate requests, and complicated retire neht related questions, v�hfle dealing nth the traditional Spring retirement `'rush," Retirement office services touch every permanent employee, past and present, whoever worked for the County and Special District employers. This is a monumental trust, net only to financially maintain th futures, b ut also in providing individual service at the moment it is needed.. Vitout appropriate, experience staff we are unable to perform our mandated duties} The bottom fine is this -- CCCERA cannot afford to lose additional staff, other those already retiring, if the system is to tn its core functionality. The Board has a long tradition of strong suppDrt for oir employees. Because the County will soon be suggesting changes in new union contra and introducing a resolution for non.- represented and exempt employees, staff requests Board direction to work closely with the County's ii man Resou Department on these issues. 'Where are three different employee groups at C CEO with dir ection ection. needed on each group 1. Represented employees The 'CCC A Board may direct staff to work with the County l u nau Resources Department to establ ish a side agreement, w bich would: a. Main tain the pay of CCCE employees at existing levels, exclusive of step levels already in the system or, outside of contract, recogmi e E A's authority to institute a temporary pay increase for the contact period to ke salaries at current levels) h. Maintain employer subvention levels. (the amount the employer currently pays for each employees basic co st). 2 , Unrepresented employees While this area does not require additiond negotiation with County urna.111 Resources and the coalition, the Board may erect staff to take action to accopsh the followmgb l a�n ta ln...tbe.. pa .. of - �... a to ees... �- a isting - v.els . � e-xc1u-s1ve -, of -AV levels ............................. __.... already M the system. b. Maintain employer subvention levels. (the amount the em ployer currently pa ys f or each emploee�s basic cost). c. Maintain the existing vacation sell back schedule for existing employees. If the County des a cage to this benefit, implement for new employees only. 3. Exempt Employees: Chief Investment Officer, Genera. Counsel, Deputy CEO and CEO. Whil this area does not require additional negotiation with County Human Resources, the Board may direct staff to take action for the following: . a, Maintain the pay of CCCERA employees at existing levels,, exclusive of stop levels already m the system. b. Maintain employer subvention levels. (the amount the employer currently pays for each employee's basic cost). c. Maintain the emoting vacation sell back schedule for ex-isting employees. if the C ounty makes a cage to this benefit, implement for new employees only. Our " + strative expenses, in�l�d;ng salaries, are, by statute, charged against the earnings 0f the retirement system rather than the County's General Fund. However, if we are unable to retain our experienced, competent staff, th impact on the essential service provisions of the system will be substantial. Historl call , due to the functional and legislative separation. of CCCERA and the Cow of Contra Costa, the retirement system has not been subject to hiring freezes and layoffs. _ I respectfully recomm that the Board direct staff to work with Human resources . to unplernent the options listed above. From. Marilyn Leedom, Retirement Chief Executive Officer Subject; Contra Costa County Retirement Association (CCCERA) Emplo ees' salaries and Benefits R ecommendation: provide equity adjustment of 6% to two exempt positions as listed below. Approve a compensation study for all represented positions. Background In late October 2008, Fox Lawson completed a Compensation and Benefits Analysis for all CCBA unrepresented positions. Mr. Lason presented the study to the Board at the November 5, 2008 Board meeting. Although the Board was appreci of the detail and in formation provided in the Fax Lawson -study, no action was taken.. In fact, the Board deferred the matter and �ed staff to return to the Bo at a future bate to discuss th nd m of this report. As a follow up to this study, a recent discussion. with Brave Lawson of Foy. Lawson indicated that he believes sdari.es have remained flat over the last 2 years, but he does see pending . increases in 2011 of I to 3 %. Discussion at the December 2008 Board meeting revolved around the results of the Fox Lawson report for the unrepresented positions, and the need to complote salary surveys for represented positions through a sib ar, third party process, During the initil review of the Compensation study, Mr. Lawson pointed out that CBA's salmies are more competitive in the lover end of the salary ranges, but less competitive in. the upper end of the range. While most of our unrepresented positions were under the median pay scale w hen compared to both public/non-profit and the private sector, there were some positions that were more out of line than others. The Board .approved 4% adjustment for two of these positions in early 2009 Accounting Manager and Benefits Manager). There are two remauning crucial positions that have not been adjusted since the Fox Lawson study and had sigfi-c ant pay differences when compared to both the CALAPRS systems and the Non-profit sectors. Due to I gcs m current management staff and the increased complexities in investrn.en.t and legal requirements, the retention and support of investment and legal executive staff is crucial. It is appropriate to work towards bringing the salary of these exempt positions In line with those paid by other comparable systems. - fhe two above mentioned BRA positions compare in the compensation study as follows* 1. Retirement Chief Investment Officer — Comparing CCCERA midpoints to tie CALAPRS and Non-profit midpoints refit M. a disparity of 11.5% and 15-64% res cti l . Comp * g CCCERA top step salary to .7 � percentile of CALAPRS and Non - profit res is M' a disparity of 9. d 68% respectively, 2 . Retirement general Counsel. — Comparing CCCERA midpoints to the CALAPRS and Ton- profit midpoints rests in a disparity of 4.39% and 11 .07% respecdvely. omp g C CCERA top step to the 75 h pereentile of CALAPRS an Non- profit results M a disparity of 5.2% and 27.95% respectively. *note: private seer figures have been removed from this comparison, but woWd increase th ese disparity numbers. CCCE has been fortunate to retain the current team throes marry investment and leg4l changes and chaUenges. It is of utmost * i mp o r nee. #o kwp th current team intact as the system continues to meet these eh.enges and the mereasmg eomplexty ahead* Therefore, I respecMMY recommend salary increases of % for both of these positions. .ln &tion, in order to complete our sdary survey for aH positions, I recommend contracting with Fox Lawson & Associates to survey and report on all represented positions. Note that some of the currently represented positions were previously surveyed as unrepresented. positions and *M not need additional review. The cost to pfrfonn . survey will net exceed $10,000. r1 LA Ln CS LM 4" 0 CL 1� �i CL 4W Ln N Ln t L Im Ch V4 N c LM rf T4 Q� CL L N: "CL tu u fn Ln f" in m &n Ln t n Ln Ln 0 CLI LU c c u tn u 0 m 0 E 0 ilk! u x tA g co � co �� wart �.rN Vl- 0 CL 1� �i CL 4W Ln N Ln t L Im Ch V4 N c LM rf T4 Q� CL L N: "CL tu u fn Ln f" in m u CL CL V t n Ln Ln 0 4 1. c c u u m 0 0 ilk! x tA 45- �� wart �.rN 0-0** 10-4 zo: *"MO* C o l o to _IE ..... .... .......... - ..... ... .................. . ...... .. ............ Date. ma� % ... 201"1 ....... .. ........... I1�Jl'a� i _ � � MAR 0 9 2011 FoLoard Ad hoe Committee ( Jerr y Telles, Man Hast, Jerr Holcombe and kussell Watts) r # no, V At the Januar 12, 201, 1, Board meetin the Board met *in closed session to review the P erformance of the Retirement CI)ief Executive Officer ( CEO). In open session, the Board C com-mented on, the favorable discussion, and Affiat the Board had g iven the CEO an exemplar performance ratin An ad hoc committee was formed to consider an correspondin salar adjustment. RecoM- 1 7.1 n salar for this position In other Ba Area s sUlLis-- substantiall hi than that of CCCERA" s CiEO, and, m view of the past excellent performance ! M 10 1 of the incumbent, the conamittee unammowl a to recommend that the full Board consider and approve a modest merit and market comparabilit ad The c o m m i t t e e recommends the Board of Retirement adopt an annual salar ase *in the I amount of 4% of pia retroactive to Januar 1, 201 and that tbe Board include an annual salar 0 review, thou not necessaril an adjustment, M' the future for the CEO alon with the anntial performance! evaluation,. Format Dynamics :: C1eanPrint .: http:// www. mercurynews.com /rss /ci_17575483 ?source... Page 1 of 2 WrcuryNewsim Con Costa pension 12 employees who are not represented by unions. The last survey was done in 2008. p Leedom is seeking a 6 percent raise for her chief investment officer and general counsel. The board tabled a. proposal to give Leedom a 4 percent raise until the survey is completed. B y Rick Ra Contr Costa Tires Posted: 03/09/2011 03:32:31 PM PST Updated: 03/09/2011 0515:28 PM PST CONCORD -- Contra Costa's pension system board on Wednesday expressed its desire to maintain the pay and benefits of its 40 union employees in the face of possible pay and benefit cuts for other county workers. The recommendation to the county was inspired in part by a letter to the board from Contra Costa County Employees' Retirement Association CEO Marilyn Leedom that described the difficulty in finding employees qualified to administer a pension fund with more than $5 million in assets. Two long -term employees are expected to retire this year, and a deputy CEO position is unfilled. Recent changes to the system and growing. retirements are requiring employees to work more efficiently to keep up with demand, Leedom said. "The bottom line is this -- (the system) cannot afford to lose additional staff, other than those already retiring, if it is to maintain its core functionality," she said. The. board's moves come at a time when the county is preparing for negotiations with employee unions for pay cuts of up to 5 percent and increased_ worker contribution to pension costs. The county has hinted that it may be targeting its so- called "subvention" of pension contributions. It has traditionally split pension costs with workers fifty -fifty, but supervisors agreed to pay 50 percent of the employee share, making the county's share 75 percent. In addition, stock market losses since 2008 have forced Contra Costa to contribute more to pensions to maintain promised payouts. These extra payments have worsened a projected $50 million budget deficit over the next five years. The recommendation passed by a 7 -2 vote, with the board's two county officials, Supervisor John Oioia and Treasurer Russell watts, opposed. The seven other board members were appointed by retiree and employee groups. Oioia said he doubted that possible pay cuts and benefit cuts would make it difficult to find qualified employees at a time when average wages are being squeezed by the recession. Gi 3 fts tn. AV om- ri 71. io in _nt Print Po wered B � �;�� . w :,� : �,- yn cS . \'. ..l iiii' ri+ Yii++ vl+% Y.' P[ QP• iP���»".+;+^ v++ F?++1+:+•+ t:;++' f(+>:+' n\, T: y .+riri3':vri�:n:Iii /i %i % / / / / /ii +!/ Format Dynamics :: CieanPrint :: http:ll www. mercurynews.com/rss /ei_I7575453 ?source... Page 2 of 2 A ercur,�,�ews other employees," said Gioia, who is one of five supervisors directing county negotiators. "Asking employees to pick up a little more of their pension costs is not an unreasonable thing to ask." Contact Rick Radin at 925- 779 - 7166. Advertisement �: C Print Powered B .,.. Contra Costa pension board seeks to maintain pa benefits for workers - ContraCostaTim... Pa I of 2 Si In 1 Re Newsletters eEditiont Subscriber Services tike 2K ........ ....... Mobile i TAlobile Alerts RSS Part of the Ba Area News Group Home Nem, t%IvTown Sports Business Entertainment Livin Columns Opinion Fle)p Jobs Cars Homes Classifieds Shop ...................... Site Web Search b AH ©O Walnut Creek, CA Now:639F Hi Low:40OF 1citY or zi�­­� .......... I ....... ......... ............... ........ .............. ....... ...... .................................. S,�gn Up to see what y our friends recommend. Most Viewed Most E-Mailed ............ ..... ...... ....... ( From the last 12 hours) 1 Double stabbin outside Brentwood BART park-and- Contra Costa pension board. seeks to maintain pa ride lot benefits for workers 2. Millions of dead fish blanket Redondo's Kin B Rick Radin Harbor Marina contris Costa TiMes - 3. Famil still hopeful -'2:40 PM PST of findin missin upda ted: 03/09/2011 04:01:11 PM. PST Castro Valle man 4. Man drives car at CONCORD -- Contra Costa's pension s board on Wednesda woman in apparent expressed its desire to maintain the pa and benefits of its 40 union emplo in the face of possible pa and fit of road ra in benefit cuts for other count workers. Palo Alto 5. East Ba The recommendation to the count was inspired in part b a letter to the board from Contra Costa Count counselor a Emplo Retirement Association CEO Maril Leedom that described the difficult in findin emplo q ualified fu after to administer a pension fund with more than $5 million in assets, fleein molestation Two lon -term emplo are expected to retire this y ear, and a deput CEO position is unfilled. trial 6. Realtors complain Recent chan to the s and g rowin g retirements are re emplo to work more efficientl to keep up that banks make short sales difficult with demand, Leedom said. "The bottom line is this (the s cannot afford to lose additional staff, other than those alread retirin if it is to .... ............... .. . maintain its core functionalit she said. ........... ....... ­­1 ........................ Top Classifieds The board also voted to do a total compensation surve of other a to compare avera salaries before . ...... decidin on pa and benefits for its 12 emplo who are not represented b unions. The last surve was done in RENTALS JC,305 REAL AUTOS 2008. ESTATE, ............ ................ Leedom is seekin a 6 percent raise for her chief investment officer and g eneral counsel. The board tabled a DODGE proposal to g ive Leedom a 4 percent raise until the surve is completed. HONDA 2004 Odys— LEXUS 2003 EX30... The board's moves come at a time when the count is preparin for ne with emplo unions for pa cuts FORD 1927 BODIED TRACK of up ROADSTER to 5 percent and increased worker contribution to CADrUAC 2000 F1 Dorado pension costs. ESC, Advertisement WET & DWY 13— ..... . The count has hinted that it ma be tar its 3RD Arigival Swap Meet & so -ailed "subvention" of pension cont6butions. It has traditionall split pension costs with workers 50/50, but supervisors a to pa 50 percent of All Ust�n . ......... . .. ... .... . . ...... ........ the emplo sha ................ .. . re, makin the coup t share 75 .... . . .. ................... . . ........ . .. . . .... percent. In addition, stock market losses since 2008 have forced Contra Costa to contribute more to k .. . ...... ... pensions to maintain promised pa These V. extra pa have worsened a projected $50 million bud deficit over the next five y ears. Restaurcmts Spas a Events & Moref. -2 vote, with The recommendation passed b a 7 the board's two count officials, Supervisor John .......... _.A Z ............ ... . .... Gioia and Treasurer Russell Wafts, opposed. . ... ... . .. ....... .. ................... ................ ................ .......... . .. .............. .......... The seven other board members were appointed . ........... . ................. ......... by retiree and emplo g roups. Gioia said he doubted that possible pa cuts and benefit cuts would make it difficult. to find q ualified emplo at a time when avera wa are bein s b the recession. "We should not sin out (pension s emplo to g et better wa and benefits than other emplo said Gioia, who is one five supervisors directin count ne "Askin emplo to pick up a little more of their pension costs is not an unreasonable thin to ask." Board member Richard Cabral said the initiative onl expressed a wish and did not amount to involvement in ne "We want the status q uo to be maintained, but we'll live with whatever comes back," Cabral said. Contact Rick Radin at 779-7166. I Reprint ................... W, ................ Print Email -A� Font Resize Return to Top L; �, A .U;,U,GN. :' - Readers: Let us know what y ou think of the new commentin system http://www.contracost,n,L,tlimes.com/top-.stories/ci 17575484?.nclick check=1 3/9/2011