OF THE BOARD OF PENSION COMMISSIONERS MEETING OF JULy 30, 1992 The Board of Pension Commissioners of the City of Los Angeles met in Room 700, 360 East Second street, Brunswig Square Building, Thursday,. COMMISSIONERS PRESENT: Sam Diannitto, President Susan Steinhauser, Vice President Tong Soo Chung Paul Hudson Louis Moret Ken Staggs DEPARTMENT OF PENSIONS: Gary Mattingly, General Manager Allan Moore, Assistant Manager James J. McGuigan, Assistant Manager CITY ATTORNEY'S OFFICE: Eudon Ferrell, Assistant City Attorney Garcelle Jones, Deputy City Attorney President Diannitto called the meeting to order at 9:05 a.m. and referred to the first order of business on the agenda. ELECTION OF OFFICERS a. For Office of President: Commissioner Staggs nominated Susan Steinhauser for President, which motion was seconded by Commissioner Moret and adopted unanimously. b. For Office of Vice President: Commissioner Hudson nominated T. S. Chung for Vice President, which motion was seconded by Commissioner Moret and adopted unanimously. The newly elected President, Susan Steinhauser, presented a plaque to the out-going President, Sam Diannitto. Sam Diannitto stated that it has been a pleasure to serve everybody and appreciates all the cooperation he haa "had from staff and his fellow Commissioners. He said he is looking forward to a very productive year with Susan Steinhauser as President. Sam Diannitto did not relinquish the gavel to the newly-elected President but held office for the remainder of the meeting.
Page 2 D I S C U S S ION I T EMS INVESTMENTS a. The General Manager, Mr. Gary Mattingly, referred to the summary activity reports of stock, bond, short-term and option transactions received since the last regular meeting of the Board. b. Mr. Mattingly noted that Frontier capital, Husic capital, and Target Investors are all adding to their lists of potential stock purchases. No Board Action is required. COMMUNICATIONS TO THE BOARD a. Letter from Keith Comrie, City Administrative Officer, regarding Charter Amendment "G" Mr. Mattingly reported that the letter from the City Clerk is basically stating that Charter Amendment "G" was passed by the electorate and allows the City to exercise local bid preference in City contracts and domestic content requirements for City purchases. Those City departments having control over their own funds, which includes this Department, are to work cooperatively with the City Administrative Office in developing policies for expenditure of funds. Mr. Mattingly said he will work with the City Administrative Office in developing a Department policy and submit it to the full Board at a later date for approval. President Diannitto drew the Board's attention to a letter received from Time-Warner regarding the song "Cop Killer" by Ice-T. Even though Ice-T has pulled that particular song out of his new album, it is President Diannitto's personal feeling that Time- Warner has not accepted the responsibility of printing and distributing that particular album and that Time-Warner should be held accountable for their past actions. President Diannitto does not exonerate Time-Warner in their past or future actions. other pension funds throughout the United states want to guarantee this will not happen in the future; therefore, President Diannitto asked the Board members that if there is a time in the future for the Board to support some action that they do so. COMMITTEE REPORTS There were none today. SHORT-TERM INVESTMENT GUIDELINES Departmental staff manages a short-term investment portfolio. The City Charter requires that the Board retain an investment advisor to provide investment guidelines for this program. The Board recently terminated the advisor that had provided the service as an extension of its bond management responsibilities. Departmental staff manages a short-term investment portfolio with a daily balance that ranges between $200 to $500 million. Each quarter the Board approves the short-term investment guidelines for this activity based upon the recommendation of an investment advisor. Security Pacific Investment Managers (SPIM) provided these guidelines from 1978 until their termination for fixed income advisory services on March 31, 1992.
Page 3 On June 4, 1992, the Board approved the extension of the short-term guidelines established by SPIM until staff had completed discussions with two of the System's fixed income managers (The Boston Company Institutional Advisors and Loomis Sayles & Company) and its custodian bank (Bankers Trust Company) on providing this service. Staff had discussions with The Boston Company; Loomis, Sayles and Company; and Bankers Trust relative to their willingness and capabilities of providing the short-term guidelines. All three firms were prepared to assist the Board with the quarterly preparation of the guidelines. From staff's review, Bankers Trust offers the highest level of capability among the three firms. The Bank currently manages the Board's Short-Term Investment Fund (STIF) and also $40 billion in short-term products for other clients. The Bank has 11 full time professional staff persons dedicated to its short-term products. The Board's other managers are not as focused in short-term maturity products. The Bank prepared a guideline for staff's review. Staff believes that the guidelines are comprehensive and respond to Departmental requirements. Staff proposes an annual fee of $25,000 for this service. The fee is reasonable for the service. It is proposed that the service be added as a amendment to the existing Bankers Trust contract which currently provides for custody services and short-term investment management in the STIF account. Commissioner Staggs moved that the Board: RESOLUTION NO. 921035 1. Authorize the General Manager to negotiate the terms and fee of an amendment to the Bankers Trust contract to provide short-term guidelines; 2. Authorize the President of the Board, on behalf of the Board, to approve the amendment to the current Bankers Trust contract to provide short-term investment guidelines subject to the approval of the City Attorney as to form and legality; and, 3. Authorize the Short-Term Investment Policy Guidelines proposed by Bankers Trust; which motion was seconded by Commissioner Chung and adopted by the following vote: Commissioners Chung, Hudson, Moret, Staggs, Steinhauser and President Diannitto - 6; none. ayes, noes, During the above discussion, Mr. Mattingly had to interrupt in order to introduce Ms. Kathy Mendenhall. Mr. Mattingly told the Board that Gary Boze is no longer the Mayor's liaison to this Board but that Ms. Mendenhall is. She is also the Mayor's sports liaison and is liaison between other departments as well, including City Employees Retirement System. Ms. Mendenhall apologized for the interruption but said she has to leave the meeting and wanted to introduce herself.
MINUTES Page 4 EOUITY INDEX FUND MANAGER The Board's three year contract with Alliance Capital Management for the management of a Standard and Poor's (S&P) 500 equity index fund will expire December 31, 1992. Approximately $750 million is currently managed in the equity index fund. The General Manager is recommending that the Board direct him with the assistance of the Board's Investment Committee, to initiate an S&P 500 Index manager search; and that the Board make a determination as to whether to initiate an emerging manager search. President Diannitto said he is going to separate those two recommendations and have two separate motions. MOT ION Commissioner Hudson moved that the Board direct the General Manager, with the assistance of the Board's Investment Committee to initiate an S&P 500 Index manager search, which motion was seconded by Commissioner Steinhauser and adopted by the following vote: ayes, Commissioner Chung, Hudson, Moret, Steinhauser and President Diannitto 5; noes, Commissioner Staggs - 1. MOT ION Commissioner Hudson moved that a search for emerging manager be initiated, which motion was seconded by Commissioner Steinhauser and adopted by the following vote: ayes, Commissioners Chung, Hudson, Moret and Steinhauser - 4; noes, Commissioner Staggs and President Diannitto - 2. Mr. Mattingly mentioned that he will work with the Investment Committee on the above matters. FUTURE AGENDA ITEMS There were none today. Public Comments Mr. Mattingly announced that he is a member of the Los Angeles City Managers Association and has recently been elected First Vice President. The Board congratulated him. Commissioner Staggs said he has heard that a letter was sent from this Pension Board to Time Warner's stock holders throughout the United States encouraging the stockholders to heavily invest in Time Warner stock so as to take control and oust the Executive Officer and the Chief Executive Officer at Time Warner. No one had any knowledge of this letter being sent. This statement was made after the Consent Items but for purposes of continuity it is reported here. Mr. Don Ferrell, Assistant City Attorney, introduced Ms. Porsha Anderson to the Board. Porsha is with the Summer Youth Program is helping out the City Attorney's Office. Mr. Ferrell is very pleased with her work.
-' Page 5 CON S E N T I T EMS Mr. Mattingly read a correction into the record. Detective Terry Kirkbride has withdrawn his service pension application. DISCONTINUE PENSIONS - ARTICLE XVII - 2 Donald W. Older Delia M. Stiles Fire Disability Police Widow 11-12-69 02-01-69 06-30-92 06-16-92 DISCONTINUE PENSIONS - ARTICLE XVIII - 2 James C. Atkinson Doris L. Killion Fire Service Police Service 06-01-72 01-01-77 05-21-92 06-01-92 SERVICE PENSIONS - ARTICLE XVIII - 3 Police Detective II Appt'd: 02-04-63 29 Years 16 Days 67.1233% Steve G. Slazes Eff: 03-09-92 NPB: $4,866.78 $3,266.74 Police Captain I Appt'd: 06-28-71 21 Years 28 Days 42.1534% Paul R. Coble Eff: 07-26-92 NPB: $6,660.72 $2,807.72 Police Officer III Appt'd: 03-20-72 20 Years 114 Days 40.6247% Aaron D. Henson Eff: 07-26-92 NPB: $4,470.06 $1,815.95 ELIGIBLE SURVIVING SPOUSE'S PENSION - ARTICLE XVII - 1 Member's Normal Rate Effective Monthly Name Class Pen Base % Date Amount Muriel I. Older Fire $ 966.00 50.0000% 07-01-92 $ 483.00 (Donald W. Older) Disability Member's CIL 1,029.36 $1,512.36 FINDINGS OF FACT - ARTICLE XVIII - 2 Police a. Ernest H. Lucero b. Raymond J. Paik The above consent items were approved. Motion made by Commissioner staggs, seconded by Commissioner Chung and adopted by the following vote: ayes, Commissioners Chung, Hudson, Moret, Staggs, Steinhauser and President Diannitto - 6; noes, none. At this point in the meeting, President Diannitto recessed the meeting for a short while.
'- Page 6 D I S A B I LIT Y A P P L I CAT ION S DISABILITY CLAIM - REQUEST FOR REHEARING & REHEARING - ARTICLE XVIII - 1 Manuel Ornelas (P) Grant the request for rehearing and proceed with the rehearing at this time. Motion made by Commissioner Steinhauser, seconded by Commissioner Chung and adopted by the following vote: ayes, Commissioners Chung, Hudson, Moret, Steinhauser and President Diannitto - 5; noes, none; disqualified, Commissioner Staggs. Continued. President Diannitto directed that this case be continued and send the latest treating physician's report to the pension doctors for a supplemental report. Mr. Ornelas was present and was represented by his attorney, Michael T. Roberts. DISABILITY CLAIMS - NEW - ARTICLE XVIII - 3 Anthony B. Pfalzgraf (P) Detective III () Application withdrawn at the hearing by the applicant's attorney. Bob J. Norton (F) Fire Captain I Service-connected disability pension granted in the amount of $3,743.60 or 68.7671% of $5,443.88. Motion made by Commissioner Staggs, seconded by Commissioner Hudson and adopted by the following vote: ayes, Commissioners Chung, Hudson, Moret, staggs, Steinhauser and President Diannitto 6; noes, none. Capt. Richard George, Medical Liaison, Fire Department, testified regarding Mr. Norton. Mr. Norton was present and represented himself. Commissioner Hudson left the boardroom for the day. Philip P. Hobson (F) Fire Captain I Service-connected disability pension granted in the amount of $3,266.33 or 60% of $5,443.88 with a review in two to three years. Motion made by Commissioner Chung, seconded by Commissioner Moret and adopted by the following vote: ayes, Commissioners Chung, Moret, Staggs, Steinhauser and President Diannitto - 5; noes, none. Capt. Richard George, Medical Liaison, Fire Department, testified regarding Mr. Hobson. Mr. Hobson was present and was represented by his attorney, Michael T. Roberts. At this point in the proceedings, President Diannitto called for adjournment. The meeting adjourned at 11:00 a.m. president