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Home My WebLink AboutMINUTES - 05311994 - H.B 12 Noon THE BOARD OR SUPERVISORS OF CONTRA COSTA COUNTY, CALIFORNIA Adopted this Order on May 31, 1994 by the following vote: AYES: Supervisors Bishop, DeSaulnier, Torlakson, Powers NOES: None ABSENT: Supervisor Smith ABSTAIN: None ----------------------------------------------------------------- ----------------------------------------------------------------- SUBJECT: Meeting with the Board of Retirement Members of the Board of Supervisors and the Board of Retirement met this day at noon at the George Gordon Building, 6th Floor Conference Room, 500 Court Street, Martinez. A copy of the agenda is attached and included as a part of this document. Pat Wiegert, Retirement Administrator, provided an overview of the financial condition of the Retirement Associa- tion, its investment portfolio, and the Retirement Board's policy on distribution of earnings in excess of the assumed rate. She noted that the Retirement Fund is earning approximately eight percent on its investments. Phil Batchelor, County Administrator, spoke on the deficit anticipated in the State Budget and' its impact on the County Budget that is projected to have a $14 million shortfall. He requested the Retirement Board to consider allocating some of its surplus earnings to the County. At the conclusion of the discussion, the Board APPOINTED Supervisors Bishop and Torlakson to meet with Edward Fleming and Richard Cabral, members of the Retirement Board, to address the allocation of undistributed earnings in the Retirement Fund. I hereby certify that this is a true and correct copy of an action taken and entered on the minutes of the Boars of Supervisors on the date shown. ATTESTED: Z741 y - PHIL BATCHEL R,Cierk of the Boaro of Supervisors and County Administrator Deputv cc: Retirement Board ((// County Administrator JOINT LUNCHEON MEETING BOARD OF SUPERVISORS & BOARD OF RETIREMENT Tuesday, May 31, 1994, 12:00 noon George Gordon Training Center ** 500 Court Street, 6th Floor Martinez, CA AGENDA 1. Introductory comments from any members of the Board of Supervisors and Retirement Board. 2. Brief review of the retirement system, Board composition, and operating environment. 3. Retirement trust portfolio review 4. Retirement system funding progress 5. Retirement Board policy on distribution of earnings in excess of the assumed rate. 6. Other issues of concern to the Board of Supervisors or Retirement Board. ** > Access to the 6th floor conference room is via elevator from tfie rear parking lot level. CONTRA COSTA COUNTY EMPLOYEES' RETIREMENT ASSOCIATION SUMMARY TOTAL ASSETS (as of 3/1/94) $ 1,487,031,000 FUNDING RATIO: Plan Termination Plan Continuation Basis Basis Before Pension Obligation 978 738 Bond After Pension Obligation 127.28 95.68 Bond INVESTMENT PORTFOLIO: - Well Diversified - Stocks, Bonds, Real Estate, Mortgages - Domestic, International - 19 Professional Investment Management Firms/Strategies INVESTMENT RETURNS: As 8 of As 8 of Year Book Value Market Value 1988 8.47 11.48 1989 11.39 19.22 1990 5.40 3.49 1991 9.94 19.58 1992 10.38 5.99 1993 11.21 7.53 avg. 9.47 11.22 MEMBERS SERVED: Still Working 7,458 Retired 4,154 Inactive, Vested 628 TOTAL 12,240 BOARD OF TRUSTEES: Years on Board Gerald Cruson 14.5 F. Robert Koenig 9.5 Ed Fleming 11 Appointed By Board Wayne Price 1.5 of Supervisors Richard Cabral 16 William Cullen 19 Sharon Naramore 2 Elected by Members Helen Shea 11 Bill Shinn (alternate) 13 Alfred P. Lomeli Ex-Officio DORN,HELLIESEN&COTTLE tier. As of March 31, 1994 CCCERA Asset Allocation Treasurers Fixed(0.8%)-1 Intl Equity(7.8%) Domestic Fixed(34.6%}—, Domestic Equity(44.8%) Intl Fixed(4.8%) Real Estate(7.1%)-J Target Asset Allocation Treasurers Fixed(1.0%h Intl Equity(7.5%) Domestic Fixed(34.0% , —Domestic Equity(40.0%) Intl Fixed(5.0% Real Estate(12.5%)J r ASSET ALLOCATION As of March 31, 1994 Market Value % of Portion % of Total Target EQUITY DOMESTIC Alliance $ 90,444,251 12.2% 6.4% 6.8% Boston 64,637,351 8.7 4.6 4.7 Chancellor 30,071,986 4.1 2.1 2.2 Hanson 90,242,380 12.2 6.4 6.8 Wentworth 51,007,690 6.9 3.6 4.7 Alliance Enhanced 55,062,629 7.4 3.9 4.4 Alliance Index 213,296,229 28.8 15.1 10.4 Alliance Temporary 36,605,314 4.9 2.6 0.0 TOTAL DOMESTIC $ 631,367,830 85.1 % 44.8% 40.0% Range: 30 - 50% INTERNATIONAL Cap Guardian $ 71,356,286 9.6% 5.1 % 5.0% BEA 32,725,593 4.4 2.3 2.5 Alliance Temporary 6,425,110 0.9 0.5 0.0 TOTAL EQUITY $ 741,874,819 100.0% 52.6% 47.5% Range: 33 - 60% FIXED DOMESTIC AFL-CIO S 9,852,559 1.8% 0.7% 0.5 % Sporl 93,900,464 16.9 6.7 7.3 Scudder 173,319,463 31.1 12.3 13.1 Wells Fargo 173,885,108 31.2 12.3 13.1 Alliance Temporary 37,559,800 6.7 2.7 0.0 TOTAL DOMESTIC S 488,517,394 87.8% 34.6% 34.0% Range: 30 -50% INTERNATIONAL Brinson $ 68,122,949 12.2% 4.8% 5.0% TOTAL FIXED $ 556,640,343 100.0% 39.5% 39.0% Range: 33 - 57% REAL ESTATE FFCA $ 12,402,015 12.3 % 0.9% - Mellon[McMahan 47,290,044 47.0 3.4 - Metric Apt. Fund 10,254,829 10.2 0.7 - Prudential 16,561,582 16.4 1.2 - Zell/ML, II 11,549,000 11.5 0.8 - Ze1UML III 2.641,000 2.6 0.2 - TOTAL REAL ESTATE $ 100,698,470 100.0% 7.1 % 12.5 % Range: 7- 16% TREASURER'S FIXED $ 11,490,000 100.0% 0.8% 1.0% Range: 0 - 2% TOTAL ASSETS $ 1,410,703,632 100.0% 100.0% 100.0% CONTRA COSTA COUNTY EMPLOYEES' RETIREMENT ASSOCIATION FUNDING STATUS BEFORE POB AFTER POB (000's) (000's) As Of 12/31/93 3/1/94 Pension Benefit Obligation $1,479,380 $1,479,380 Market Value of Assets Available to Pay Benefits 1,080,522 1.414.246 Unfunded Pension Benefit Obligation ($ 398,858) ($ 65,134) Unfunded Portion as a % of Pension Benefit Obligation 27.0% 4.4% Percent that Pension Benefit Obligation is Funded 73.0% 95.6% The county is 100% funded. Other employers in the system are -73% funded, yeilding a blended funded ratio of 95.6%. CONTRA COSTA COUNTY EMPLOYEES RETTRFxF'-NT ASSOCIATION POLICY TO DISTRIBUTE EARNINGS IN EXCESS OF THE ASSUMED RATE (UNDISTRIBUTED EARNINGS) Adopted 9/11/90 . DEFINITIONS: GROSS RATE - The actual, unsubsidized contribution rate required from the employer and employee. NET RATE - The GROSS RATE after reduction by any subsidy from the Board. In other words, the contribution rate actually paid. SUBSIDY SPREAD - The difference between the GROSS. RATE and NET RATE for 1990. In other words, the 1990 subsidy expressed as a percent of salary. POLICY: 1. First, transfer a sufficient amount of undistributed earnings to the contingency reserve to maintain it at 3%. 2. Next, compute how much it would cost it provide a supplemental Cost of Living adjustment as authorized by Government Code Section 31681.8 to eligible retirees. The amount of the COL adjustment will be sufficient to preserve the value of $4 per month per tear of service, using 1990 as the base year, and indexed to inflation each year. However, in no year will the inflationary increase exceed 10%. 3. Next, compute the subsidy amount: The amount needed to either maintain the NET RATE effective July 1, 1990 or to continue the SUBSIDY SPREAD computed July 1, 1990, whichever produces a lower NET RATE. However, in no case will the subsidy amount exceed the COL component of the GROSS RATE. 4. If undistributed earnings are sufficient to cover the amounts computed in steps 2 and 3, distribute the remainder as follows: a. Distribute either the entire remainder or 1% of the book value of assets, whichever is less, to the Reserve to Offset Liabilities. b. Any remaining earnings will be distributed at the discretion of the Board. 5. If undistributed earnings are not sufficient to cover the amounts computed in steps 2 and 3, reduce the Contingency Reserve by an amount equal to what funds are yet needed, but in no event will the Contingency Reserve be reduced below 1% of assets. 6. If the total of: undistributed earnings plus the funds generated from reducing the Contingency Reserve in step 5 is not sufficient to cover the amounts computed in steps 2 and 3, distribute what funds are available to retirees, employees and the employer on a pro-rata basis. TRANSFERS FROM UNDISTRIBUTED EARNINGS Eff. To Subsidize Contributions Supplmntl. Year Employer Employee Retiree COLA Total 81-82 $ 2,500,000 $1,000,000 $1,001,002 $ 4,501,002 82-83 2,725,000 1,500,000 1,110,056 5,335,056 83-84 7,282,000 3,546,511 864,315 11,692,826 84-85 8,005,000 3,166,000 486,794 11,657,794 85-86 3,750,000 2,750,000 1,050,000 7,550,000 86-87 5,739,000 2,942,000 1,453,494 10,134,494 87-88 10,711,000 3,490,000 1,605,156 15,806,156 88-89 7,231,966 3,615,983 1,561,436 12,409,385 89-90 4,943,333 2,471,667 960,490 8,375,490 90-91 5,181,420 2,640,710 2,071,371 9,893,501 91-92 5,743,481 3,007,877 1,565,433 10,316,791 92-93 5,090,058 2,462,804 1,565,294 9,118,156 93-94 17,538,988 3,269,676 2,550,721 23,359,385 TOTAL $86,441,246 $35,863,228 $17,845,562 $140,150,036 r c n�•' O n A m a� N Y i r ^m Z m s� Q+ a � I iA � N p o> +w ado Yn ^� 17 N u wA 'n z A .• tt` � � n M � IoM b 3^ m� N A A U A f'r` S r i G N O V G n N --- !i r ),L.'--!/A^ ------------------ 1► �`onzla -- -- --- - -- -----.-- - ------------