June 16, 2016 Agenda

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  • An opportunity for the public to address the Board or Committee about any item on todays agenda for which there has been no previous opportunity for public comment will be provided before or during consideration of the item. Members of the public who wish to speak on any item on todays agenda are requested to complete a speaker card for each item they wish to address, and present the completed card(s) to the commission executive assistant. Speaker cards are available at the commission executive assistants desk. In compliance with Government Code Section 54957.5, non-exempt writings that are distributed to a majority or all of the Board or applicable Committee of the Board in advance of their meetings may be viewed at the office of the Los Angeles Fire and Police Pension System (LAFPP), located at 701 East 3rd Street, 2nd Floor, Los Angeles, California 90013, or by clicking on LAFPPs website at www.lafpp.com, or at the scheduled meeting. Non-exempt writings that are distributed to the Board or Committee at a scheduled meeting may be viewed at that meeting. In addition, if you would like a copy of any record related to an item on the agenda, please contact the commission executive assistant, at (213) 279-3038 or by e-mail at rhonda.ketay@lafpp.com. Sign language interpreters, communication access real-time transcription, assistive listening devices, or other auxiliary aids and/or services may be provided upon request. To ensure availability, you are advised to make your request at least 72 hours prior to the meeting you wish to attend. Due to difficulties in securing sign language interpreters, five or more business days notice is strongly recommended. For additional information, please contact the Department of Fire and Police Pensions, (213) 279-3000 voice or (213) 628-7713 TDD.

    A. ITEMS FOR BOARD ACTION

    1. CONSENT TO ASSIGNMENT OF THE KLEINWORT BENSON INVESTORS INTERNATIONAL LTDS CONTRACT AND POSSIBLE BOARD ACTION

    2. PROPOSED RENEWAL OF DARUMA CAPITAL MANAGEMENT, LLC SMALL CAP

    DOMESTIC EQUITY MANAGEMENT CONTRACT AND POSSIBLE BOARD ACTION 3. RECOMMENDATION TO AMEND CONTRACT WITH NOSSAMAN LLP FOR

    INVESTMENT AND REAL ESTATE LEGAL SERVICES AND POSSIBLE BOARD ACTION

    4. APPROVAL OF FINAL 2016-17 BUSINESS PLAN AND POSSIBLE BOARD ACTION

    AGENDA

    BOARD OF FIRE AND POLICE PENSION

    COMMISSIONERS

    June 16, 2016 8:30 a.m.

    Sam Diannitto Boardroom

    Los Angeles Fire and Police Pensions Building 701 East Third Street, Suite 400

    Los Angeles, CA 90013

    Commissioner Diannitto will participate telephonically from 4612 El Reposo Drive, Los Angeles, CA 90065

    http://www.lafpp.com/mailto:rhonda.ketay@lafpp.com

  • June 16, 2016 2

    5. APPROVAL OF 2016-17 FINAL BUDGET AND POSSIBLE BOARD ACTION 6. CITY ADMINISTRATIVE OFFICERS REQUEST FOR AIRPORT POLICE

    TRANSFER STUDY AND POSSIBLE BOARD ACTION 7. CHIEF INVESTMENT OFFICERS QUARTERLY REPORT OF ASSET ALLOCATION

    STATUS AND POSSIBLE BOARD ACTION 8. ASSET ALLOCATION ANALYSIS ACTIVE VERSUS PASSIVE AND POSSIBLE

    BOARD ACTION

    B. REPORTS TO THE BOARD 1. QUARTERLY PORTFOLIO PERFORMANCE REPORT BY RV KUHNS

    2. VERBAL UPDATE ON STATUS OF CITY PROPOSAL TO TRANSFER AIRPORT

    POLICE TO LOS ANGELES FIRE AND POLICE PENSIONS 3. Miscellaneous correspondence from money managers, consultants, etc. Received

    and Filed. 4. General Managers Report

    a. Monthly Report

    b. Marketing Cessation Information

    c. Benefits Actions approved by General Manager on June 2, 2016 d. Other business relating to Department operations

    C. CONSIDERATION OF FUTURE AGENDA ITEMS D. GENERAL PUBLIC COMMENT ON MATTERS WITHIN THE BOARDS JURISDICTION E. DISABILITY CASE Alternative 2 Firefighter III Joshua O. Dewall. Firefighter Dewall will be represented by Thomas J.

    Wicke, Esq., of Lewis, Marenstein, Wicke, Sherwin and Lee. F. CLOSED SESSION ITEMS FOR POSSIBLE BOARD ACTION

    1. CLOSED SESSION PURSUANT TO SUBDIVISIONS (a) AND (d)(1) OF GOVERNMENT CODE SECTION 54956.9 TO CONFER WITH LEGAL COUNSEL REGARDING PENDING LITIGATION, IN THE FOLLOWING CASE: The City of Los Angeles v. Bankrate, Inc, et al. (Case No. 9:14 cv-81323-DMM (S.D. Fla.)

  • DEPARTMENT OF FIRE AND POLICE PENSIONS

    701 E. 3rd Street, Suite 200 Los Angeles, CA 90013

    (213) 279-3000

    REPORT TO THE BOARD OF FIRE AND POLICE PENSION COMMISSIONERS

    DATE: JUNE 16, 2016 ITEM: A.1 FROM: RAYMOND P. CIRANNA, GENERAL MANAGER SUBJECT: CONSENT TO ASSIGNMENT OF THE KLEINWORT BENSON INVESTORS

    INTERNATIONAL LTDS CONTRACT AND POSSIBLE BOARD ACTION

    RECOMMENDATION That the Board consent to the assignment of the Kleinwort Benson Investors International Ltds (KBI) active commodity public equity contract. BACKGROUND KBI is one of the Boards two active commodity public equity managers and was hired in October 2014. The firm was formed in 1980, is based in Dublin, Ireland with 62 employees and sales offices in New York and B oston. KBI manages global equities for institutional clients, with total assets under management of approximately $8.6 billion as of March 31, 2016. The value of the Boards account as of May 24, 2016 was about $88.7 million. KBI is a subsidiary of BHF Kleinwort Benson Group, which is owned by Oddo & Cie (Oddo), an independent Franco-German financial services company. On May 23, 2016 i t was announced that Amundi would acquire 87.5% ownership of KBI from Oddo while the balance (12.5%) of the ownership would be pur chased by KBI management. Amundi is a global asset management firm based in Paris, France with AUM of about $1.1 trillion as of March 31, 2016. It is among the top ten asset managers in the world and is jointly owned by two large French banks, Credit Agricole and Societe Generale. The change in ownership of KBI is a triggering event within the terms of the Boards contract with the firm and the Boards approval for the assignment of the contract is required. DISCUSSION The transaction has the full support of KBIs management team. No change in personnel is expected at any level of the firm. Since this is an assignment of an existing contract, there will be no change in the terms of the original contract including the termination provision which allows the Board to terminate the contract with 30-days notice.

  • Board Report Page 2 June 16, 2016

    Staff believes the acquisition will have no impact on the management of the Boards portfolio and recommends that the Board approve the assignment. The General Consultant RVK concurs with Staffs recommendation. BUDGET Approval of this recommendation will have no budget impact. POLICY Approval of this recommendation will have no policy impact. This report was prepared by: Derek Niu Investment Officer RPC:TL:RR:DN Attachment: Announcement of KBI Acquisition by Amundi

  • AMUNDI, ODDO & CIE, KBI JOINT PRESS RELEASE

    Amundi and Oddo & Cie Reach an Agreement

    on the Acquisition of Kleinwort Benson Investors

    Paris 23 May 2016 Amundi, Oddo & Cie and Kleinwort Benson Investors (KBI) today announced

    that they have signed a definitive agreement whereby Amundi is to acquire an 87.5% stake in KBI from

    Oddo & Cie, while the management team of KBI will acquire a 12.5% stake.

    KBI, a subsidiary of BHF Kleinwort Benson Group which was recently acquired by the Oddo group, is

    a fast-growing equity management firm, headquartered in Dublin, Ireland with offices in Boston and

    New York and employing 62 people. Its highly experienced investment team manages 7.6 billion euros

    of assets as of 31 March 2016, mainly across global equity capabilities. KBI has delivered an excellent

    performance track record over the years, and enjoyed dynamic growth of its assets under management

    over the past few years (CAGR 2011-15: +28%).

    KBIs clients are well diversified between institutional, subadvisory and third party distributors. The firm

    has developed successfully in North America which represents 52% of assets under management by

    client domicile, while Ireland and UK account together for 26%, Continental Europe 14% and Asia 8%.

    In 2015 KBI posted net revenues of 31 million euros and a net income of 9 million euros.

    Amundi and KBI are highly complementary in terms of product and geographic focus. KBIs global

    equities expertise will strongly augment Amundis equity franchise. Likewise, KBI will leverage Amundis

    strong Retail and institutional presence in Europe, Asia and the Middle East.

    The transaction benefits from the full support of KBIs management team, who will hold a material stake

    in the company. Going forward KBI will retain its distribution, operating and portfolio management

    autonomy. Sean Hawkshaw will continue as Chief Executive Officer and Noel OHalloran as Chief

    Investment Officer. All employees are expected to remain with the firm.

    The transaction is fully in line with Amundis financial criteria for acquisitions: the deal will be

    immediately accretive to Amundis EPS and will comply with the target of an expected return on

    investment superior to 10% within three years.

    In parallel with this transaction, Amundi and Oddo & Cie will strengthen their cooperation, namely via

    the cross selling of their investment expertise.

  • AMUNDI, ODDO & CIE, KBI JOINT PRESS RELEASE

    Yves Perrier, CEO of Amundi stated: we are very pleased to add KBI as a new platform within Amundi

    Group. This acquisition is perfectly in line with Amundis strategy presented at the time of our recent

    IPO. It will strengthen our offer with a complementary and well-performing equity expertise, that will

    benefit our clients in Europe, Asia and the Middle-East.

    Sean Hawkshaw, Chief Executive Officer of KBI, commented Amundi is a highly regarded pure play

    asset manager and will be a solid long term partner for KBI. We are very excited about this next step in

    our growth. We believe that the combination of Amundi as a majority shareholder and a meaningful

    stake held by key employees offers an ideal ownership structure to continue to develop the firm while

    allowing us to deliver the best possible investment returns and service for our clients globally.

    Philippe Oddo, Managing Partner of Oddo & Cie, stated: Amundi will provide a high-quality support

    both to KBI teams and to their clients, and we are convinced that this co-operation will be successful.

    The transaction is subject to usual regulatory and client approvals, and is expected to close in the third

    quarter of 2016.

  • AMUNDI, ODDO & CIE, KBI JOINT PRESS RELEASE

    About Amundi

    Amundi is the leading European asset manager and among the top ten asset managers worldwide1,

    with 987 billion in assets under management (AuM) as of 31 March 2016. Amundi is a global player,

    operating through two business lines: Retail (management of saving solutions distributed in France and

    worldwide by the Crdit Agricole and Socit Gnrale group networks, worldwide by other banking

    networks through distribution agreements and managing joint-ventures, and in France and worldwide

    by third-party distributors) and Institutional (including sovereign funds, companies, insurers of the Crdit

    Agricole and Socit Gnrale groups and other institutional investors). Amundi has a presence in 30

    countries across 5 continents, developed through a combination of organic growth, acquisitions and

    long-term partnerships. www.amundi.com

    About Oddo & Cie Oddo & Cie is an independent Franco-German financial services group, founded over 160 years ago. Since 2015, Oddo Group has become a Franco-German entity following the acquisitions of Seydler in Frankfurt, Meriten Investment Management in Dusseldorf and BHF bank. With 2,500 employees, including 1,400 in Germany and 1,000 in France, and 100bn euros in assets under management, Oddo & Cie is active in investment banking and capital management in France and Germany, based on significant investment in market expertise. Analysts and IT staff account for 20% of the total headcount. The Group has a specific ownership structure as 60% of its capital is held by the Oddo family and 30% by employees. This partnership ethos guarantees the long-term involvement of its teams. At 31 December 2015, Oddo & Cie generated net banking income of 426 million euros, net profit after tax of 91.7 million euros and at 31 December 2015, the Group had over 740 million euros in shareholders' equity. www.oddo.eu

    About Kleinwort Benson Investors

    KBI is a specialist equity manager headquartered in Dublin, Ireland with sales offices in New York and

    Boston. KBI was formed in 1980 and has been managing assets, predominantly global equities for

    institutional clients for over 30 years. KBI has a global client base with mandates in the UK, Europe,

    North America and Asia. www.kleinwortbensoninvestors.com

    1 Amundi scope No.1 in total assets under management of investment companies with their main

    headquarters in Europe - Source: IPE Top 400 asset managers published in June 2015, based on assets under management at 31 December 2014

    http://www.amundi.com/http://www.oddo.eu/http://www.kleinwortbensoninvestors.com/

  • DEPARTMENT OF FIRE AND POLICE PENSIONS

    701 E. 3rd Street, Suite 200 Los Angeles, CA 90013

    (213) 279-3000

    REPORT TO THE BOARD OF FIRE AND POLICE PENSION COMMISSIONERS

    DATE: JUNE 16, 2016 ITEM: A.2 FROM: RAYMOND P. CIRANNA, GENERAL MANAGER SUBJECT: PROPOSED RENEWAL OF DARUMA CAPITAL MANAGEMENT, LLC SMALL CAP

    DOMESTIC EQUITY MANAGEMENT CONTRACT AND POSSIBLE BOARD ACTION

    RECOMMENDATION That the Board:

    1. Approve a n ew three-year contract with Daruma Capital Management, LLC for small cap equity advisory services;

    2. Authorize the General Manager to review and negotiate the terms and conditions with

    Daruma Capital Management, LLC for small cap equity advisory services for the period of August 1, 2016 through July 31, 2019; and,

    3. Authorize the President of the Board, on behalf of the Board, to execute the contract with

    Daruma Capital Management, LLC for small cap equity advisory services, subject to the approval of the City Attorney as to form and legality.

    BACKGROUND The Board currently has four Small Cap managers: Daruma Capital Management, LLC (Daruma), Frontier Capital Management, Channing Capital Management and Phocas Financial. Daruma was originally hired in August 1998 as an emerging manager and was funded with $20 million. The firm currently manages $502.5 million (as of May 30, 2016) for the Board. Darumas contract was renewed in 2001, 2004, 2007, 2010 and 2013. The current contract will expire on July 31, 2016 and policy provides that Staff prepare a due diligence report for the Boards consideration prior to renewal or replacement. DUE DILIGENCE REVIEW Staff requested that Daruma complete a comprehensive questionnaire as a component of the due diligence process. The questionnaire focused on areas of ownership, personnel, investment style, assets under management and investment performance. Additionally, Staff and the consultant RVK conducted a site visit at Darumas offices in January 2016.

  • Board Report Page 2 June 16, 2016

    OWNERSHIP Daruma was founded in New York City in 1995 by CEO and C IO Mariko Gordon. The firm is 100% employee owned by Ms. Gordon, Mark Miller and Robert Motch. Mr. Miller is the Senior Research Analyst and was promoted to partner in January 2014. Mr. Motch was promoted to partner in January 2015 an d is the firms Chief Financial Officer. Former principals who had ownership shares reverted back their shares to Mariko Gordon when they left the firm. In April 2012 Darumas ownership structure was changed from an S-Corp to a LLC structure in order to facilitate expanding ownership participation. The firm intends to expand ownership further. PERSONNEL Ms. Gordon is the portfolio manager for the account with a t eam of seven investment professionals who generate investment ideas as well as provide analytical research and stock selection recommendations. A few notable personnel changes have occurred since the contract was last renewed in August 2013. David Gerber, Chief Operating Officer (COO) of the firm, resigned in December 2014 to pursue other opportunities. Noreen McKee, a partner who had retired in 2007 rejoined the firm in January 2015 to assume the roles of COO and Director of Client Service, then retired again in May 2015 for medical reasons. Jeff Fisher came on in June 2014 as a consultant and became COO in June 2015. Martha Everett came on in May 2015 as the Director of Client Service. Daniel Sendrowitz joined the firm in April 2015 to fill the new position of Chief Compliance Officer. Two Senior Research Analysts also left during this period, while three Research Analysts were hired. INVESTMENT STYLE Daruma manages a Small-Cap product and a SMid-Cap product, and each is available as a separate account or in a comingled fund. The investment style for both products falls between deep value and core. The firm uses a fundamental, bottom-up investment process to build a concentrated, high conviction portfolio of 25-35 stocks. For the Small-Cap portfolio, Daruma buys stocks with market capitalizations of $2 billion or less at the time of purchase. Stock selections are based upon research that seeks to identify undervalued companies with accelerating earnings growth potential. Every holding in the portfolio is projected to have at least a 50% upside over a two year period with a reward to risk ratio of three to one. Daruma rarely holds more than a 5% position in a s ingle stock and avoids biotech companies and REITS. The annualized portfolio turnover since inception is 41% and a typical stock is held in the portfolio for 2 years. ASSETS UNDER MANAGEMENT In August 2013 Daruma managed a t otal of $2.18 billion in both products, spread across 42 accounts comprised of five corporations, two endowments, ten foundations, eight non-profits, five high-net-worth individuals, a Taft-Hartley account, nine public plans and the two comingled funds. Since then the firm has lost one consultant relationship that represented six accounts ($31 million), two institutional relationships, one that represented three accounts ($375 million) and another represented one account ($54 million), and a series of small individual accounts ($42

  • Board Report Page 3 June 16, 2016

    million). A nother three clients converted from separate accounts into the Daruma commingled account. The firm also gained an institutional account ($95 million). The client losses were for various reasons, concerns with staff turnover, the client changing from active to passive management and performance. As of March 31, 2016 Daruma managed a total of $1.69 billion in 19 accounts including three corporations, five foundations, two high-net-worth accounts, three non-profits, four public plans and two comingled funds. INVESTMENT PERFORMANCE All managers are expected to exceed the return of the median manager in the same investment style universe, and ar e also expected to beat the return of an ap propriate index. The Boards investment performance benchmark for Small Cap equity managers is the Russell 2000 Index. Calendar years 2014 and 2015 were challenging for Daruma, with the firm placing in the 89th and the 73rd percentiles respectively versus its peers and also underperforming the Russell 2000 index. Underperformance for two consecutive years resulted in the firm making a Watch List appearance before the Board at the meeting of June 2, 2016. However, recent performance has improved significantly and during the 1st quarter 2016 the firm is in the 46th percentile of its peers and is beating the benchmark by over 200 basis points net of fees. The trailing one year performance has the firm in the 31st percentile and exceeding its benchmark by 475 basis points net of fees. Since inception Daruma has performed well, beating the benchmark by an annualized 268 basis points net of fees and placing in the 43rd percentile amongst peers. Attachment I provides investment return information.

    CONCLUSION Staff and RVK conducted an on-site review of the firm in January. In addition to being concerned about the 2014 and 2015 performance, Staff was concerned about the organizational turnover at Daruma. During the on-site review Staff interviewed the three Research Analysts hired during the past contract period as well as the newly hired Chief Compliance Officer. All had impressive credentials and significant experience. Staff also reviewed the two significant operational changes that have been implemented by the firm since the last contract. One primary change was the restructure of the research team to eliminate the former senior analyst/junior (supporting) analyst structure. The new structure has all analysts at the same level and each responsible for specific sectors and stocks in the portfolio. The other major change is the addition of the Chief Compliance Officer position and the incorporation of compliance checks and balances. The intent of these changes is to enable the CIO and the Research Analysts to concentrate their efforts more effectively on s tock selection, while allowing the COO and CCO to better manage the firms business and operational issues. Staff believes that these changes have strengthened the firm. Daruma has outperformed its benchmark by 310 basis points gross of fees and 268 basis points net of fees on an annualized basis since inception, which equates to a $195 million gain net of fees above the Russell 2000 Index. Its blended manager fee is 42 basis points, which is approximately $2.1 million per year.

  • Board Report Page 4 June 16, 2016

    Given the firms improved recent performance, its excellent performance since inception and the recent operational improvements, Staff recommends that the Board approve a new three-year contract with Daruma Capital Management. R VK concurs with Staffs recommendation (Attachment II).

    BUDGET Approval of this recommendation is not anticipated to affect LAFPPs annual budget as Darumas management fees have already been projected and included in the budget. POLICY Approval of this recommendation will have no policy impact. This report was prepared by: Annie Chao, Investment Officer Investments Division

    RPC:TL:RR:PGP:AC Attachments: I. Darumas Performance Analysis II. RVK Recommendation Memo

  • ATTACHMENT I

    Inception Inception3-Month 1-Year 3-Year 5-Year 7-Year 10-Year Return * Date

    Daruma Asset Management (Gross of Fees) 0.60% -4.59% 5.94% 5.34% 17.49% 7.19% 10.19% 08/01/98Daruma Asset Management (Approx Net of Fees**) 0.49% -5.01% 5.52% 4.92% 17.07% 6.77% 9.77%Russell 2000 Index -1.52% -9.76% 6.84% 7.20% 16.42% 5.26% 7.09% Difference (Gross of Fees) 2.12% 5.17% -0.90% -1.86% 1.07% 1.93% 3.10% Difference (Net of Fees) 2.01% 4.75% -1.32% -2.28% 0.65% 1.51% 2.68%IM US Small Cap Equity (SA+CF) Median 0.23% -6.79% 8.61% 8.91% 18.23% 6.77% 9.78%Percentile Rank (Investment Metrics Universe) 46 31 84 91 64 42 43

    **Based on an annual fee average as of 4Q15, Daruma's fee was approximately 42 bps.

    2015 2014 2013 2012 2011 2010 2009 2008Daruma Asset Management (Gross of Fees) -4.91% -1.28% 43.53% 19.85% -9.90% 32.01% 43.35% -36.25%Daruma Asset Management (Approx Net of Fees**) -5.33% -1.70% 43.11% 19.43% -10.32% 31.59% 42.93% -36.67%Russell 2000 Index -4.41% 4.89% 38.82% 16.35% -4.18% 26.85% 27.17% -33.79% Difference (Gross of fees) -0.50% -6.17% 4.71% 3.50% -5.72% 5.16% 16.18% -2.46% Difference (Net of fees) -0.92% -6.59% 4.29% 3.08% -6.14% 4.74% 15.76% -2.88%IM US Small Cap Equity (SA+CF) Median -2.39% 5.38% 41.29% 16.51% -1.84% 27.95% 34.15% -36.39%Percentile Rank (Investment Metrics Universe) 73 89 36 25 91 22 27 50**Based on an annual fee average as of 4Q15, Daruma's fee was approximately 42 bps.

    Daruma's Performance InformationReturn Information as of March 31, 2016

    Daruma's Performance InformationCalender Year Annual Return Information from 2008 - 2015

    *Return information is from the inception date listed in the far right column

  • rvkuhns.com

    Recommendation RVK recommends that the Board renew the Daruma Small Cap US Equity (Daruma) contract. This is in agreement with the Staffs recommendation to the Board.

    Background The Daruma contract expires on July 31, 2016. As of March 31, 2016, LAFPP has approximately $499.4 million invested in the Daruma separate account pr oduct. This represents approximately 44.0% of the Small Cap US Equity allocation, 8.5% of the Domestic Equity allocation, and 2.7 % of the entire investment portfolio.

    Firm The firm was founded in 1995 by Mariko Gord on. Currently, Ms. Gord on owns 87% of the fir m and they are in the pro cess of broadening ownership to include other key personnel. CFO Rob Motch and senior analyst Mark Mill er own the remaining equity. The firm is 100% employe e owned.

    The firm and team are located in New York City. As of March 31, 2016, Daruma managed $1.7 billion in assets with the Small Cap Equity strategy accounting for $1. 6 billion. The remaining assets are managed in a SMid Cap Equity strategy.

    Team The investment team is led by founder Ms. Gordon, CEO & CIO, and much of the investment process is centered on supporting her final portfolio decisions.

    Mariko Gordon, CEO & CIO (Industry Start: 1985/Firm Start: 1995) Ron Viener, Director of Research (Industry Start: 2001/Firm Start: 2012) Mark Miller, Senior Analyst (Industry Start: 2000/Firm Start: 2009) Michael Bostler, Analyst (Industry Start: 2010/Firm Start: 2010) Bill Devereux, Analyst (Industry Start: 1988/Firm Start: 2015) James Leo, Analyst (Industry Start: 2006/Firm Start: 2015) Ruth Lin, Analyst (Industry Start: 2010/Firm Start: 2015)

    Senior analyst Neal Tully announced to the firm in June 2015 that he will be leaving the business. Senior analyst Brad Mc Gill was terminated due to performance relate d issues in July 2015. In response, 3 new analysts joined the firm. They started as consultants hired on a contract basis.

    Memorandum To The Los Angeles Fire and Police Pension System (LAFPP)

    From RVK, Inc. (RVK) Subject Daruma Small Cap Equity Contract Renewal Recommendation

    Date June 16, 2016

    37418Typewritten Text

    37418Typewritten TextATTACHMENT II

    37418Typewritten Text

    37418Typewritten Text

  • Bill Devereux became an employee on September 1, 2015 after being contracted in June 2015. James Leo and Ruth Li n, were hire d on contract in July a nd became full-time employees in October 2015. Ms. Gordon felt it was necessary to hire new employees to improve performance and rejuvenate the team.

    Product Strategy and Process The investment team attempts to understand change before other market participants and invest where value is likely to be created. Through selecting their top investment ideas for the portfolio the team b elieves that they can c onsistently outperform the index. Changes that the team identifies include new company management, unexpected inside ownership purchases, earnings surprises, large dislocations in stock valuation and significant stock price drawdowns. Screening for and investigating these types of changes is the main source of idea generation.

    Mariko Gordon is the creator and standard bearer for the investment process. She participates in the idea generation and research process. The final decisions made in the portfolio are driven by Ms. Gordon after extensive conversation with an analyst and her own further research. An analyst is expected to identify the potential key drivers for each co mpany researched. Ms. Gordon will then use this input to de cide if further research is necessary or if time would be bett er spent on other new ideas. For fu lly vetted stocks, an investment thesis is written which def ines the key points of the investment case, pinpoints how their opinion is different than the rest of the market, and outlines the expected improvements or milestones for the stock and details potential issues that could hinder the success of the investment. The investment thesis is paired with a valuation process which requires the analyst to set upside and downside targets. Where there is potential upside of at least 50% and an upsi de-to-downside ratio of at least 3-t o-1, the stock will be considered for purchase.

    The team meets multiple times d uring a week to discuss any issues with curren t or potentia l holdings. Initial position sizing tends to start at 2% and it w ill be tr immed once it reaches 6%. Stocks that decline meaningfully or release une xpected information that contradicts the teams thesis are reviewed and are normally candidates for sale unless the team can become comfortable with the new informatio n. If the sto ck price contracts significantly, typically 20% or more, within the first 90 days of purchase the team will make a decision to either buy more or sell the position. The team reviews their buy and sell decisions on an annual basis to determine if there are any biases evident in their portfolio changes or areas for improvement.

    Performance (as of March 31, 2016) The Daruma Small Cap separate a ccount has outperformed its benchmark by 268 basis poin ts per year si nce inception (August 1998), annualized and net of fees, and ranked in the 43 rd percentile within its peer group over that same period. Over the 3- and 5-year periods, Daruma

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  • underperformed its benchmark and ranked close to the bottom decile of its respective peer group. However, over the lon ger 7- and 10-year time periods, on a net of fees basis the manag er outperformed by 64 and 152 basis points per year on average, respectively. Over the more recent 1-year trailing period, the fund has strongly outperformed its benchmark by 475 basis points, net of fees, and ranked in the 31st percentile. Performance for calendar year periods is mixed, and shows the volatility of performance with sign ificant outperformance in strong years for the benchmark, but underperformance in relatively poor years for the benchmark. The table belo w details Darumas performance (gross and net of fees) as of March 31, 2016.

    Fees Based on the March 31, 2016 market value, the effective annual expense ratio is approximately 0.43%. This fee is well below median as comp ared to other Small Cap US Equity managers utilizing a separate account vehicle. The median fee for the corresponding eVestment Alliance universe is 75 basis points. Please see the attached manager profile page for additional information.

    2015 2014 2013 2012 2011 2010 2009 2008 2007 2006Daruma Small Cap Equity (SA) -4.91 -1.28 43.53 19.85 -9.90 32.01 43.35 -36.25 12.78 13.62Russell 2000 Index -4.41 4.89 38.82 16.34 -4.18 26.86 27.18 -33.79 -1.57 18.37 Difference -0.50 -6.17 4.71 3.51 -5.72 5.15 16.17 -2.46 14.35 -4.75Daruma Small Cap Equity (SA) - Net -5.33 -1.70 43.11 19.43 -10.32 31.59 42.93 -36.67 12.36 13.20Russell 2000 Index -4.41 4.89 38.82 16.34 -4.18 26.86 27.18 -33.79 -1.57 18.37 Difference -0.91 -6.59 4.29 3.08 -6.14 4.73 15.76 -2.88 13.93 -5.17IM U.S. Small Cap Equity (SA+CF) -2.39 5.38 41.28 16.51 -1.83 27.94 34.16 -36.45 2.59 15.75Daruma Small Cap Equity (SA) Rank 73 89 35 25 92 22 27 50 18 65

    CYTD FYTD 1 Year3

    Years5

    Years7

    Years10

    YearsSinceIncep.

    Inception Date

    Daruma Small Cap Equity (SA) 0.60 -4.58 -4.59 5.94 5.34 17.49 7.19 10.19 08/01/1998Russell 2000 Index -1.52 -10.14 -9.76 6.84 7.20 16.42 5.26 7.09 Difference 2.12 5.56 5.17 -0.90 -1.86 1.07 1.93 3.10Daruma Small Cap Equity (SA) - Net 0.49 -4.90 -5.01 5.52 4.92 17.07 6.77 9.77 08/01/1998Russell 2000 Index -1.52 -10.14 -9.76 6.84 7.20 16.42 5.26 7.09 Difference 2.01 5.24 4.75 -1.32 -2.28 0.64 1.52 2.68IM U.S. Small Cap Equity (SA+CF) 0.23 -7.15 -6.79 8.61 8.91 18.19 6.75 9.78Daruma Small Cap Equity (SA) Rank 46 31 31 84 91 64 42 43

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  • Peer Group Scattergram - 10 Years Up/Down Markets - 10 Years

    Peer Group Analysis - Multi Statistics - 10 Years (Excess Return vs. Risk Free)

    Sector Weights (%)

    Performance

    Portfolio Characteristics and Dist. of Market Cap (%)

    QTD1

    Year3

    Years5

    Years7

    Years10

    Years2015 2014 2013 2012 2011

    Manager 0.60 -4.59 5.94 5.34 17.49 7.19 -4.91 -1.28 43.53 19.85 -9.90

    Benchmark -1.52 -9.76 6.84 7.20 16.42 5.26 -4.41 4.89 38.82 16.34 -4.18

    Difference 2.12 5.17 -0.90 -1.86 1.07 1.93 -0.50 -6.17 4.71 3.51 -5.72

    Peer Group Median 0.23 -6.79 8.61 8.91 18.19 6.75 -2.39 5.38 41.28 16.51 -1.83

    Rank 46 31 84 91 64 42 73 89 35 25 92

    Population 573 567 551 525 492 422 618 651 664 683 709

    ReturnStandardDeviation

    Manager 7.19 21.70

    Benchmark 5.26 20.17

    Median 6.75 20.38

    10.00

    12.00

    14.00

    16.00

    18.00

    DownsideRisk

    Manager 8.32 (33) 5.62 (58) 0.39 (34) 0.38 (46) 14.34 (29)

    Benchmark 6.12 (87) 0.00 (100) N/A 0.30 (81) 13.60 (47)

    Median 7.75 6.14 0.26 0.37 13.54

    Portfolio Benchmark

    Wtd. Avg. Mkt. Cap ($M) 2,101 1,897

    Median Mkt. Cap ($M) 1,843 652

    Price/Earnings Ratio 25.10 20.02

    Price/Book Ratio 2.63 2.29

    5 Yr. EPS Growth Rate (%) 5.73 10.59

    Current Yield (%) 0.81 1.57

    Beta (5 Years, Monthly) 1.06 1.00

    Number of Securities 30 1,959

    Daruma Small Cap Equity (SA)

    IM U.S. Small Cap Equity (SA+CF)

    As of March 31, 2016

    Peer Group:

    Benchmark: Russell 2000 Index

    Manager:

    Performance shown is gross of fees. Calculation is based on quarterly periodicity. Parenthesis contain percentile ranks.

    4

  • DEPARTMENT OF FIRE AND POLICE PENSIONS

    701 E. 3rd Street, Suite 200 Los Angeles, CA 90013

    (213) 279-3000

    REPORT TO THE BOARD OF FIRE AND POLICE PENSION COMMISSIONERS DATE: JUNE 16, 2016 ITEM: A.3 FROM: RAYMOND P. CIRANNA, GENERAL MANAGER SUBJECT: RECOMMENDATION TO AMEND CONTRACT WITH NOSSAMAN LLP FOR

    INVESTMENT AND REAL ESTATE LEGAL SERVICES AND POSSIBLE BOARD ACTION

    RECOMMENDATION That the Board:

    1) Extend the term of the contract for three additional months (June 15, 2016 September 16, 2016);

    2) Increase the annual expenditure limit by $80,000 to $365,000 for Year 3 of the contract

    (inclusive of the three month extension);

    3) Increase the total contract amount by $80,000 for a new total amount of $685,000; and,

    4) Authorize the General Manager, on behalf of the Board, to work with the City Attorneys Office to execute and approve the contract amendment.

    DISCUSSION On July 18, 2013, the Board of Fire and Police Pension Commissioners (Board) retroactively approved a three-year contract with Nossaman LLP (Nossaman) for outside investment and real estate counsel and authorized an annual expenditure of up to $185,000 for a total contract amount of $555,000 (Contract No. 123047). On July 16, 2015, the Board authorized an amendment to increase the total contract amount by $50,000 for a new total amount of $605,000. On March 18, 2016, the Board authorized the City Attorneys Office to issue a R equest for Proposal (RFP) for Outside Real Estate and Investment Counsel. This RFP process is still ongoing and at its June 2, 1016 meeting, the Board requested that all five finalists be interviewed by the full Board prior to outside counsel selection. The City Attorneys Office agreed and h as arranged for the five firms to be interviewed at the upcoming July 7, 2016 Board meeting. The most recent contract with Nossaman has an expiration date of June 15, 2016. Because the RFP process is ongoing and i nvestment and real estate outside counsel services are used regularly by Investments staff and the General Manager, staff is recommending that the contract be extended by an additional three months to ensure continuity of operations until new contracts are approved and executed.

  • Board Report Page 2 June 16, 2016

    Staff are also recommending that the contract amount be increased by an additional $80,000, and that it be allocated to the Year 3 expenditure limit of this contract. T his additional funding is necessary due to the increased volume of real estate and private equity activity as approved by the Board and unforeseen Headquarters activity relating to leases and the parking lot. Staff have received Nossaman invoices from the City Attorneys Office for legal services performed through March 2016 and have determined that the contract ceiling amount will soon be exceeded. Further, Nossaman has informed staff that they have performed approximately $52,000 in legal services through June 2016. The remaining amount ($28,000) will provide additional funds that may be needed during the three-month extension. BUDGET There are funds available in Account 3040 Contractual Services. POLICY There is no policy change. This report was prepared by: Stephanie Clements, Chief Management Analyst Administrative Operations Division

    RPC: WSR:SHC

  • DEPARTMENT OF FIRE AND POLICE PENSIONS

    701 E. 3rd Street, Suite 200 Los Angeles, CA 90013

    (213) 279-3000

    REPORT TO THE BOARD OF FIRE AND POLICE PENSION COMMISSIONERS

    DATE: JUNE 16, 2016 ITEM: A.4 FROM: RAYMOND P. CIRANNA, GENERAL MANAGER SUBJECT: FINAL 2016-17 BUSINESS PLAN AND POSSIBLE BOARD ACTION

    RECOMMENDATION That the Board approve the Final 2016-17 Business Plan (Attachment I). DISCUSSION On March 17, 2016, the Board approved the 2016-17 Proposed Business Plan (Attachment II) in conjunction with the 2016-17 Proposed Budget. The Plan includes twelve projects in support of the 2015-18 Three-Year Strategic Plan. In combination with the 2016-17 Final Budget (also on todays Board Agenda), staff recommends the Board approve the following revisions to the 2016-17 Proposed Business Plan. These revisions to the Proposed Business Plan would ensure the Projects are accurately updated prior to the start of the fiscal year (July 1, 2016).

    Project No. 1 Asset Allocation Plan Implementation - Project History was revised to note that the Board has started to discuss asset allocation at the meetings on May 5, 2016 and May 19, 2016 and will continue to do so as the year progresses.

    Project No. 8 Health Care Education and Research/Implement Options for Members Project Budget was revised from $30,000 to $90,000 to better reflect the additional funds that will be r equired for this project, including issuing/reviewing the RFPs and an y subsequent negotiations with insurers.

    Project No. 10 Administrative Manual Updates Project Duration was revised from a one-year to a two-year project to more adequately reflect the true scope and schedule of the project.

    BUDGET Funding for the proposed projects has been included in the 2016-17 Final Budget.

    POLICY No policy changes are recommended.

  • Board Report Page 2 June 16, 2016

    This report was prepared by: Diana Pointer Administrative Services Section RPC:WSR:SHC:DP Attachments: I. LAFPP Final 2016-17 Business Plan

    II. LAFPP 2016-17 Proposed Annual Business Plan Board Report dated March 17, 2016

  • LAFPP LOS ANGELES FIRE AND POLICE PENSIONS

    2016-17 BUSINESS PLAN AS ADOPTED BY THE BOARD: JUNE 16, 2016

    14935Typewritten Text

    14935Typewritten Text

    14935Typewritten TextAttachment I

    14935Typewritten Text

  • 2

    FISCAL YEAR 2016-17 BUSINESS PLAN INTRODUCTION

    Fiscal Year 2014-15 marked a renewed Strategic Planning process effort to more directly incorporate Board input into the triennial Strategic Plan process. Though various Strategic Plan facilitation sessions, the Board and Staff collaborated to develop the LAFPP vision and core values, and to refine our mission and long-term goals, goal objectives and strategic initiatives for the organization. The 2015-18 Three-Year Strategic Plan incorporates these major elements and was approved by the Board on February 5, 2015, including the new LAFPP Vision Statement:

    To be a leader and innovator in the public pension industry through an uncompromising

    dedication to excellence, customer service, transparency, and education The 2015-18 Three-Year Strategic Plan serves as a blueprint to guide LAFPP in the development of the annual 2016-17 Business Plan. The 2016-17 Business Plan methodically allocates resources to the most critical areas of our operations in order to successfully accomplish our mission: To advance the health and retirement security of those who dedicate their careers and risk their lives to protect the people of Los Angeles. Our Business Plan includes twelve projects, including five new projects and seven carried over from last year. We believe these twelve projects are the most critical to ensure we continue to meet the Departments five primary goals:

    1) Ensure a Financially Sound Retirement System 2) Manage Risk throughout the Organization 3) Enhance Customer Service to our Members 4) Pursue Operational Efficiencies 5) Enhance Communication Efforts and Outreach

    One of the most significant multi-year projects ever undertaken by the Department is the Pension Administration System Replacement Project, otherwise known as PARIS (Pension and Retirement Information System). This project started last fiscal year and is expected to span several years and will require a considerable amount of resources by the Department. This project was listed as the New Pension Administration System (PAS) Project in 2015-16. The PARIS Implementation project (No. 7) involves a complete transition of all member data and payment processing to a new system and will require a sustained, Department-wide effort for several years.

    Once again, I want to extend my deep appreciation to the Board and staff for its continued support for the Strategic and Business Plans over the years. Sincerely, Raymond P. Ciranna, General Manager

  • 3

    2016-17 BUSINESS PLAN PROJECT MATRIX SUMMARY

    GOAL I Ensure a Financially Sound Retirement System

    Project Title Workload Level

    Duration Project Objective

    (1) Asset Allocation Plan

    Implementation

    Lead: High

    Participants: High

    2016-17 To develop and implement a new asset allocation to optimize the Funds rate of return, commensurate with acceptable levels of risk and volatility.

    (2) Local and Sustainable Investment Reporting

    Lead: Moderate

    Participants: Moderate

    2016-17 To provide the Board and staff with regular information regarding LAFPPs Local and Sustainable Investments.

    (3) (NEW)

    Actuarial Trend Education

    Lead: Moderate

    Participants: Low

    2016-17 To provide the Board and staff with information on current industry practices and trends concerning actuarial assumptions and funding policies.

    GOAL II Manage Risk throughout the Organization

    Project Title Workload Level

    Duration Project Objective

    (4) Continuity Planning/

    Disaster Recovery Update and Testing

    Lead: Very High

    Participants: Moderate

    2016-17 To preserve member services and meet operational needs during uncontrolled events that disrupt business processes.

    (5) (NEW)

    ALGA Review Three-year Audit Peer

    Review

    Lead: High Participants: Moderate

    2016-17 To determine whether Internal Audit Sections quality control system is suitably designed, operates effectively, and produces quality work under both international internal auditing and government auditing standards.

  • 4

    2016-17 PROJECT SUMMARY MATRIX

    GOAL III Enhance Customer Service to our Members Project Title Workload

    Level Duration Project Objective

    (6) Health Care Education

    and Research/Implement Options for Members

    Lead: High Participants: High

    2016-17 To research alternative medical and dental insurance coverage options for those who currently receive their medical and/or dental insurance through LACERS or their health subsidy through the Health Insurance Premium Reimbursement Program.

    (7) PARIS

    (Pension and Retirement Information System)

    Implementation

    Lead: High Participants: High

    2016-17 2017-18 2018-19

    To design and implement a new Pension Administration System that will result in improved overall efficiency in the departments business operations and continued superior service to our membership.

    (8) (NEW)

    Implementation Pilot Program for Financial Planning Counseling

    Services

    Lead: High Participants: Moderate

    2016-17 To determine the scope and feasibility of offering individual financial planning counseling services.

    Goal IV Pursue Operational Efficiencies Project Title Workload

    Level Duration Project Objective

    (9) Employee Development

    and Training

    Lead: Moderate

    Participants: Moderate

    2016-17 To enhance employee development, recruitment and training to help retain and further develop our talented LAFPP workforce.

    (10) (NEW)

    Administrative Manual Updates

    Lead: Medium Participants: Moderate

    2016-17 2017-18

    To update Department-wide procedures, including those that affect operations in the new headquarters building.

    Goal V Enhance Communication Efforts and Outreach Project Title Workload

    Level Duration Project Objective

    (11) (NEW)

    Increase the Number of Outreach Events and

    Seminars

    Lead: High Participants: High

    2016-17 To provide members with thorough and timely information regarding our Plan, utilizing a range of communication methods.

    (12) Expand Multimedia Efforts

    Lead: High Participants: Moderate

    2016-17 To expand the range of communications methods used to reach members and other stakeholders.

  • 5

    GOAL I Ensure a Financially Sound Retirement System

    Project 1: Asset Allocation Plan Implementation (formerly Asset Liability Study & Recommendations)

    Duration: 2016-17 Project Lead: Tom Lopez, Chief Investment Officer, Investments Division Project Participants: Staff, Consultants, and the Board Stakeholders: Board Members, LAFPP Staff, LAFPP Members, and the City

    PROJECT OBJECTIVE

    Develop and implement a new Asset Allocation Plan.

    PROJECT HISTORY

    Per Board Investment Policy Section 1.6, an Asset Allocation Plan shall be adopted and implemented by the Board which provides adequate diversification and gives the expectation of the highest rate of return commensurate with an acceptable level of risk, or volatility. The Board normally implements a new asset allocation every three to five years which is considered a best practice. Another best practice opportunity is an Asset Liability (AL) Study. This type of Study evaluates probably growth and structure of System liabilities to help develop practical asset allocation recommendations that best meet liabilities over time . LAFPP had not performed a combined asset allocation and AL Study for many years, as noted in the 2012 Five-Year Management Audit. However, as part of the 2015-16 Business Plan, the AL Study has now been completed and presented to the Board. At our Board offsite meeting on March 3, 2016, Asset Allocation Plan education and training was provided to the Board in preparation of the development of an Asset Allocation Plan. Since then, the Board has discussed the asset allocation at the meetings on May 5 and May 19, 2016.

    2016-17 DELIVERABLES

    Complete the Asset Allocation review and if needed, implement a new Asset Allocation Plan by the end of June 2017.

    2016-17 MILESTONES

    BY SEPTEMBER 30, 2016: Board to complete an asset allocation review.

    BY DECEMBER 31, 2016: If needed, Board to approve a revised Asset Allocation Plan and timeline for the implementation of a new asset allocation.

    BY JUNE 30, 2017: If needed, complete the implementation of a new Asset Allocation Plan.

    2016-17 RESOURCES

    Existing staff resources, consultant resources and Board time will be necessary to complete the new Asset Allocation Plan. No additional resources will be required in 2016-17.

  • 6

    GOAL I Ensure a Financially Sound Retirement System

    Project 2: Local and Sustainable Investment Reporting

    Duration: 2016-17 Project Lead: Tom Lopez, Chief Investment Officer, Investments Division Project Participants: Investments Division Staff Stakeholders: Board Members, LAFPP Management, and the City

    PROJECT OBJECTIVE

    To regularly provide the Board and staff with information regarding LAFPPs Local and Sustainable Investments.

    PROJECT HISTORY

    The LAFPP portfolio includes some investments that support the Mayors back to basics priority outcomes of: 1) Promoting good jobs for Angelenos all across Los Angeles; and 2) Creating a more sustainable and livable city. Reports identifying local (LA City and California) and sustainable investments have been produced for the Board on a regular basis.

    2016-17 DELIVERABLES

    An annual Local and Sustainable Investment Report will be presented to the Board each calendar year.

    2016-17 MILESTONES

    BY DECEMBER 31, 2016: The 2016 Local and Sustainable Investment Report will be presented to the Board.

    2016-17 RESOURCES

    Reports will be prepared utilizing existing staff and consultants. No additional resources will be required in 2016-17.

  • 7

    GOAL I Ensure a Financially Sound Retirement System

    Project 3: NEW Actuarial Trend Education

    Duration: 2016-17 Project Lead: Greg Mack, Chief Benefits Analyst, Pensions Division Project Participants: Actuary, Staff, and the Board Stakeholders: Board Members, LAFPP Staff, LAFPP Members, and the City

    PROJECT OBJECTIVE

    To provide the Board and staff with information on current industry practices and trends concerning actuarial assumptions and/or funding policies.

    PROJECT HISTORY

    In accordance with Charter and Administrative Code provisions, every three years the Plan actuary conducts a study to review the actuarial assumptions adopted by the Board (Experience Study). The purpose of the Study is to compare the plans actual experience against the economic and non-economic actuarial assumptions established as a result of the last Experience Study and used by the actuary for subsequent annual valuations. Any changes recommended by the actuary are intended to bring the plans assumptions more in line with future expectations. The last actuarial Experience Study was completed by the actuary in July 2014 (for three-year period from July 1, 2010 June 30, 2013). The next actuarial Experience Study will be conducted after the completion of the June 30, 2016 valuation.

    A pension plan funding policy is designed to determine how much should be contributed each year in total by the employer and the active members to provide for the secure funding of benefits in a systematic fashion. It is made up of three components: actuarial cost method, asset smoothing method, and amortization policy. The Board adopted a comprehensive Actuarial Funding Policy in September 2012. The Boards funding policy had one minor amendment in October 2014 but has not undergone a complete review since it was adopted in 2012.

    2016-17 DELIVERABLES

    Complete the next three-year Actuarial Experience Study and the review of Economic Actuarial Assumptions to be used for the June 30, 2017 actuarial valuation.

    Review the current Actuarial Funding Policy and recommend changes if appropriate.

  • 8

    Project 3: NEW Actuarial Trend Education (Continued)

    2016-17 MILESTONES

    BY DECEMBER 31, 2016: Plan actuary to provide education and information to the Board and staff regarding industry practices and trends concerning actuarial assumptions.

    BY MARCH 31, 2017: Review the Boards Actuarial Funding Policy and recommend any changes.

    BY JUNE 30, 2017: Plan actuary to complete the next three-year Actuarial Experience Study and the review of Economic Actuarial Assumptions to be used for the June 30, 2017 actuarial valuation.

    2016-17 RESOURCES

    The Experience Study and the Actuarial Funding Policy review will require a substantial amount of Staff, Actuary, and Board time. Costs associated with the Actuarial Experience Study and related actuarial contractual services have been included in the 2016-17 Budget. No additional resources will be required in 2016-17.

  • 9

    GOAL II Manage Risk Throughout the Organization

    Project 4: Business Continuity Planning/Disaster Recovery Update and Testing

    Duration: 2016-17 Project Lead: Bob Yan, Director of Systems, Systems Section Project Participants: All Department Staff Stakeholders: Board Members, LAFPP Members and Beneficiaries, and LAFPP Staff

    PROJECT OBJECTIVE

    To preserve member services and continue to meet operational needs during uncontrolled events that disrupts business processes.

    PROJECT HISTORY

    LAFPP determined several years ago it needed to develop a plan to preserve member services during uncontrolled events such as hardware failures, fires, and earthquakes. In order to accomplish this goal, the first step - the development of the Business Impact Analysis (BIA) report for LAFPP critical business processes was completed in October 2011. The BIA report provided LAFPP with a high-level plan and recommendations to reduce risks and continue to provide services to our members during business disruptions.

    In September 2011, the Board approved staff to proceed with the next step to develop a Business Continuity Plan (BCP). The goal of the BCP is to create a detailed plan that allows LAFPP to quickly recover from an event that disrupts operations and to mitigate the impact to members. With the BCP completion in June 2012, LAFPP now has a detailed plan to quickly recover from various events and achieve the goal of preserving member services during business disruptions. In August 2014, the Board approved a vendor to provide off-site disaster recovery (DR) services. Some of the Department network infrastructure upgrades required for the DR solutions were also completed in August 2014, with the remaining upgrades scheduled for completion as part of the new headquarters build out in 2015-16.

    In October 2015, the vendor completed implementation of the off-site DR services. Due to the delay in the new headquarters build out and the reallocation of staffing resources to the new headquarters IT upgrades, the reconfiguration of the DR solution based on the new production network and the DR system validation testing was rescheduled for 2016-17 to ensure that services to the members will not be impacted during business disruptions. Lastly, reviewing and maintaining the BCP will occur annually to continuously meet the project objective as business processes change and evolve.

  • 10

    Project 4: Business Continuity Planning/Disaster Recovery Update and Testing (Continued)

    2016-17 DELIVERABLES

    a) Reconfigure the DR system based on the new production network at the new headquarters and perform DR system validation testing;

    b) Update the Business Continuity Plan with all new components of the LAFPPs off-site disaster recovery system; and

    c) Perform a real-time activation of the Business Continuity Plan to validate the accuracy of the plan and the disaster recovery system.

    2016-17 MILESTONES

    BY SEPTEMBER 30, 2016: 1) Reconfigure the DR system based on the new production network

    at the new headquarters. 2) Perform DR system validation testing including the new voice

    communication system (VoIP). BY DECEMBER 31, 2016: Review and update the BCP to ensure that all components of the LAFPPs offsite disaster recovery system and critical business processes are incorporated into the BCP.

    BY MARCH 31, 2017: Review, select, and plan one critical business function to perform a real-time business continuity/disaster recovery activation exercise.

    BY JUNE 30, 2017: 1) Review, plan, and perform a large-scale real-time business

    continuity/disaster recovery activation exercise involving Emergency Executive Team (EET) and multiple critical business functions.

    2) Validate and report on the results from the exercise.

    2016-17 RESOURCES

    Existing staff will be utilized to update the BCP. Funding for the DR system is included in the 2016-17 Budget.

  • 11

    GOAL II Manage Risk Throughout the Organization

    Project 5: NEW - ALGA Review Three-year Audit Peer Review

    Duration: 2016-17 Project Lead: Erin Kenney, Departmental Audit Manager Project Participants: Internal Audit Section Stakeholders: Board Members, LAFPP Staff, LAFPP Members, and the City

    PROJECT OBJECTIVE

    To determine whether Internal Audit Sections quality control system is suitably designed, operates effectively, and produces quality work under both international internal auditing and government auditing standards.

    PROJECT HISTORY

    Internal Audit Section (IAS) conducts its work pursuant to both International Standards for the Professional Practice of Internal Auditing (ISPPIA) and Government Auditing Standards (GAS). These standards require periodic external quality control assessments, also referred to as peer reviews.

    LAFPP is a member in good standing of the Association of Local Government Auditors (ALGA), the premiere professional audit association specific to local government auditing. A benefit of ALGA membership is access to its Peer Review Program.

    IAS successfully passed its first ALGA Peer Review under both ISPPIA and GAS in April 2014. Under GAS, external peer reviews are required at least once every three years, with the next peer review due in April 2017.

    2016-17 DELIVERABLES

    Undergo and successfully pass an ALGA Peer Review for ISPPIA and GAS and report ALGA Peer Review results to the Board.

    2016-17 MILESTONES

    BY DECEMBER 31, 2016: Contact ALGA to request a peer review for April 2017 (October 2016)

    BY MARCH 31, 2017: Provide required documentation to ALGA Peer Review Team for peer review preparation.

    BY JUNE 30, 2017: Undergo and successfully pass an ALGA Peer Review for ISPPIA and GAS (April 2017) and report ALGA Peer Review results to the Board (May 2017).

    2016-17 RESOURCES

    Review will be initiated by existing IAS Staff. Estimated costs of $8,950 to reimburse three ALGA volunteer peer reviewers for out-of-pocket expenses are included in the 2016-17 Budget.

  • 12

    GOAL III Enhance Customer Service to our Members

    Project 6: Health Care Education and Research/Implement Options for Members

    Duration: 2016-17 Project Lead: Kyle Susswain, Manager, Medical & Dental Benefits Project Participants: Medical & Dental Benefits Section Staff, LACERS, LAFPP Health

    Consultant, and the City Attorneys Office Stakeholders: LAFPP Management, LAFPP Retired Members, and Board-approved

    Medical and Dental Insurance Plan Providers (aka, Associations)

    PROJECT OBJECTIVE

    Research alternative medical and dental insurance coverage options for those who currently receive their medical and/or dental insurance through LAFPPs agreement with the Los Angeles City Employees Retirement System (LACERS) or their health subsidy through the LAFPP Health Insurance Premium Reimbursement Program (HIPR).

    PROJECT HISTORY

    A small group of LAFPP pensioners has received m e d i c a l / d e n t a l i n s u r a n c e coverage through LACERS health plans since LACERS took over civilian retiree health plan administration from the Personnel Department in 1999. Through its agreement with LACERS, LAFPP has offered coverage through LACERS health plans to Port Police a n d p o l i c e o f f i c e r s who retired under the Fire and Police Pension Plan, as well as retired firefighters who were not eligible to participate in plans offered by the United Firefighters of Los Angeles City or the Los Angeles Firemens Relief Association. LACERS has informed LAFPP that it wishes to end all LAFPP pensioner enrollment in its medical and dental plans as soon as possible. LACERS is concerned that it may lack the formal authority to administer health plans for sworn retirees, as well as the risk that LAFPP pensioners utilization patterns could adversely affect LACERS plan rates.

    Beginning with coverage in 2001, the HIPR program has allowed pensioners eligible for a subsidy, but who do not have access to coverage under a Board-approved HMO plan or reside outside of the state of California, to submit documentation of health plan premiums paid for reimbursement. Reimbursement is the lesser of the health plan premium paid or the pensioners subsidy eligibility. Retired members in Medicare are limited in their reimbursement to the Maximum Medicare Health Subsidy, with no additional amount paid for dependent coverage.

    At the November 19, 2015 Board meeting, LAFPPs health consultant, Keenan & Associates, presented various health care plan options for pensioners enrolled in the LACERS plans and HIPR. The Board directed staff to continue to research options for these retired members.

  • 13

    Project 6: Health Care Education and Research/Implement Options for Members (Continued)

    2016-17 DELIVERABLES

    a) Explore possible changes to the HIPR program (i.e., provide dependent subsidy for Medicare members, vision coverage) and implement changes as approved by the Board.

    b) Consult with the City Attorney in regards to possible Administrative

    Code revisions necessary to implement Medicare Exchanges and Health Reimbursement Accounts (HRA).

    c) Work with LAFPPs health consultant to prepare and issue Requests for

    Proposals (RFP) for: 1) group dental and/or vision plans, and 2) a private Medicare Exchange.

    2016-17 MILESTONES

    BY SEPTEMBER 30, 2016: Complete research of HIPR program amendments and recommend any necessary revisions to Board Rules.

    BY DECEMBER 31, 2016: Complete research of Medicare Exchanges and HRA implementation, as well as related Administrative Code changes.

    BY JUNE 30, 2017: Issue RFPs for group dental and/or vision plans, and for a Medicare Exchange.

    2016-17 RESOURCES

    The 2016-17 Budget now includes a total of $90,000 for health consulting services (revised from $30,000), to account for the estimated costs for issuing/reviewing the RFPs, the expanded scope of work, and any subsequent negotiations with insurers. As the contract with LAFPPs current health consultant expires on February 28, 2017, it may be necessary to request additional funds once the Board selects a new consultant and the project scope and consulting fees have been established.

  • 14

    GOAL III Enhance Customer Service to our Members

    Project 7: PARIS (Pension and Retirement Information System) Implementation

    (formerly Pension Administration System Replacement)

    Duration: 2016-17, 2017-18, and 2018-19 Project Lead: Alfred Domagat, Sr. Systems Analyst II, Systems Section Project Participants: LAFPP Staff, Consultants, Northern Trust, the Information

    Technology Agency, and Office of the Controller Stakeholders: LAFPP Staff and Management, and LAFPP Members and Beneficiaries

    PROJECT OBJECTIVE

    To design and implement a new Pension Administration System that will result in improved overall efficiency in the departments business operations and continued superior service to our membership.

    PROJECT HISTORY

    After a competitive bidding process, a consultant was selected in June 2013 to assist in evaluating our business operational needs against the capabilities of our current Pension Administration System. The selected consultant (LRWL) helped staff develop the business and technical requirements for the replacement of the current Pension Administration System (PAS). Based on these requirements, a Request for Proposal (RFP) was issued in July 2014 and bids were received in October 2014. An Evaluation Team comprised of several LAFPP staff evaluated the bids and the functionality of each proposed PAS system. After a comprehensive evaluation process, Xerox State and Local Systems, Inc. (Xerox) was identified as the top ranking vendor for the lowest cost. The Board awarded the contract to Xerox on May 21, 2015. The project to implement Xeroxs proprietary CPAS system kicked off in July 2015. The new system that is being developed was later named PARIS (Pension And Retirement Information System). During 2015-16, Staff completed the master work plan and established control standards to track and manage the project. The system hardware and software was also installed at the hosted site. Lastly, Staff has been reviewing the detailed system requirements in order for CPAS to begin programming of the new system.

    2016-17 DELIVERABLES

    1) Configure and deliver for testing the initial system functionality which includes Global Rules, Core and Secondary Calculations, and Active Payroll.

    2) Configure and deliver for testing additional system functionality for Batches processing, Disbursements processing, and Manage Data/Payees.

    3) Ongoing data cleansing and data conversion.

  • 15

    Project 7: PARIS (Pension and Retirement Information System) Implementation (Continued)

    2016-17 MILESTONES

    BY DECEMBER 31, 2016: Delivery and testing of initial system functionality which includes Global Rules, Core and Secondary Calculations, and Active Payroll.

    BY JUNE 30, 2017: Delivery and testing of system functionality for Batches processing, Disbursements processing, and Manage Data/Payees.

    2016-17 RESOURCES

    On May 21, 2015, the Board approved an amount not to exceed $9.02 million to implement a new Pension Administration System (PAS) (3 years) and provide post-implementation services (5 years) by Xerox State and Local Systems, Inc. The Board also approved LRWL, Inc. to provide oversight project management and quality assurance services for an amount not to exceed $1.16 million.

    Approximately $1.7 million for the PARIS Project is included in the 2016-17 Budget, consisting of $1,356,000 for Xerox State and Local Systems, Inc. and $390,000 for LRWL, Inc.

  • 16

    GOAL III Enhance Customer Service to our Members

    Project 8: NEW Pilot Program for Financial Planning Counseling Services

    Duration: 2016-17 Project Lead: Carol Tavares, Manager, Communications & Education Project Participants: Pensions Division Staff, City Attorney, financial planning

    consultant, and active LAFPP members Stakeholders: LAFPP Members

    PROJECT OBJECTIVE

    To determine the scope and feasibility of offering individual financial planning counseling services.

    PROJECT HISTORY

    LAFPP has provided financial planning education utilizing both staff and a consultant since 1989. The most recent financial planning Request for Proposal (RFP) released in July 2015, requested individual counseling services, in addition to the existing group education services. Based on the RFP responses, a new contract was executed for group financial planning education services, while staff continued to consider the scope and mechanics of offering individual financial planning counseling to members. It is expected that a member must first attend a financial planning education seminar and will then be offered a follow-up session with a financial planning counselor for a personalized review of their financial situation. This approach will allow members to build upon the education provided in the seminar to take the next step and develop a comprehensive financial plan.

    The financial planning counselor will be prohibited from providing, selling, or deriving any income from the sale of any investment products to members.

    2016-17 DELIVERABLES

    To research the level of interest in financial counseling services, report those findings to the Board and develop a pilot program as approved.

    2016-17 MILESTONES

    BY SEPTEMBER 30, 2016: Poll members on the level of counseling services they are interested in and the fees they are willing to pay (through surveys, focus groups, etc.).

    BY DECEMBER 31, 2016: Report findings to the Board and request to award a contract.

    BY JUNE 30, 2017: Develop a pilot Financial Planning Counseling Program as approved.

    2016-17 RESOURCES

    The 2016-17 Budget includes $123,000 in the Unappropriated Balance for the Financial Planning Counseling Program.

  • 17

    Goal IV Pursue Operational Efficiencies

    Project 9: Employee Development and Training

    Duration: 2016-17 Project Lead: Lindi Willhite, Sr. Personnel Analyst I, Human Resources Project Participants: All Sections Stakeholders: LAFPP Staff and Management

    PROJECT OBJECTIVE

    To enhance the LAFPP employee development, recruitment and training program in order to help retain and further develop our talented workforce, to encourage employee professional growth creating a culture of excellence required for the long term success of LAFPP.

    PROJECT HISTORY

    With approximately 40% of the current LAFPP workforce eligible to retire in the next few years, it is vital that LAFPP continue to support efforts to train, develop and recruit staff. LAFPPs training program is supported strongly by Executive Management and the Department has significantly increased the amount of training completed by staff. In 2012, a new LAFPP Employee Training Program matrix was developed to include in-house and external training resources for all LAFPP classifications. In 2014, LAFPP procured an annual training pass for staff to attend unlimited professional seminars to hone skills and assist with promotions. As part of the 2015-16 Business Plan Employee Development and Training Project, the training matrix was reviewed, updated and redistributed to provide staff in 2015-16 to assist staff with training options.

    In 2015-16, LAFPP continued with the annual Fred Pryor training passes and also promoted to staff Lynda.com, a free online program with a more technological focus. The Citys online training portal also offers many relevant topics and has been recently updated and expanded. One often under looked training resource is our own experienced and knowledgeable staff (both LAFPP and City-wide), but staff may have less opportunity to share that knowledge with others. In 2016-17, staff would propose Brown Bag lunches, an informal opportunity for employees to share and learn at work, and enhance employee knowledge transfer on specific issues and ideas.

    2016-17 DELIVERABLES

    Ensure all LAFPP staff take at least two (2) non-mandated training sessions of their choice and schedule two (2) Brown Bag Lunch sessions in 2016-17.

    2016-17 MILESTONES

    BY JUNE 30, 2017: Ensure all staff attend two training sessions of their choice and schedule two (2) Brown Bag Lunch sessions.

    2016-17 RESOURCES

    Funding totaling $16,000 i s e s t im a t ed for Annual Training programs and this amount is included in the 2016-17 Budget. There is also additional training, travel, and tuition reimbursement funding for professional development opportunities.

  • 18

    Goal IV Pursue Operational Efficiencies

    Project 10: NEW Administrative Manual Updates

    Duration: 2016-17, 2017-18 Project Lead: Diana Pointer, Sr. Management Analyst II, Administrative Services Project Participants: Administrative Services Stakeholders: LAFPP Staff and Management

    PROJECT OBJECTIVE

    To provide the Board and staff with LAFPPs manual updates on Department-wide procedures reflecting administrative operations and policies.

    PROJECT HISTORY

    Administrative Operations manuals are designed for standard tasks that encompass document imaging, style guides, contract administration, safety, emergency planning, building management, budget programs, and related projects. LAFPP Administrative Manuals exist but many need to be reviewed and updated. The manuals will also include new operations procedures as a result of our move into the new headquarters building.

    2016-17 DELIVERABLES

    Complete Department-wide operations manuals as related to the new headquarters building. Ensure timely completion and distribution to LAFPP through the DocuShare system as manuals are completed. Priorities will be placed on the new headquarters-related manuals, and then procedures/guidelines for DocuShare, Board elections processes, contract administration, and the various policies included in the LAFPP Administrative Manual.

    2016-17 MILESTONES

    BY MARCH 31, 2017: Complete new headquarters-related procedures and manuals.

    BY JUNE 30, 2017: Complete general operations-related manuals (DocuShare, Board Elections, Contracts Manual, etc.) given existing resources.

    2016-17 RESOURCES

    Existing staff will initiate new manuals and updates. No additional staff expenses will be required in 2016-17.

  • 19

    Goal V Enhance Communication Efforts & Outreach

    Project 11: NEW - Increase the Number of Outreach Events and Seminars

    Duration: 2016-17 Project Lead: Carol Tavares, Manager, Communications & Education Project Participants: Pensions Division Staff Stakeholders: LAFPP Members

    PROJECT OBJECTIVE

    To provide members with thorough and timely information regarding our Plan, utilizing a range of communication methods.

    PROJECT HISTORY

    In the last year, member interest in attending a Financial Planning Education (FPE) seminar has increased. To accommodate the growing interest, staff has worked diligently to increase the number of seminars from 2014-15 to 2015-16 by a total of 5 additional seminars (increase of 45%).

    A new contract with our financial planning education consultant was awarded in 2015 and includes a new mid-career format and retiree workshops, in addition to the already established early-career, late- career, and DROP Exit formats. These new formats must be developed and incorporated into the FPE Program. Various alternate locations throughout the City will be considered as venues for the education seminars to reach more members. Additional in-house training sessions will be considered with the use of the new Boardroom in our new office location.

    2016-17 DELIVERABLES

    Develop the new formats for the mid-career financial planning education seminar and a retiree workshop. Increase the total number of yearly seminars by 10% over the 2015-16target goal.

    2016-17 MILESTONES

    BY SEPTEMBER 30, 2016: a) Develop a mid-career seminar format for active members b) Research various locations throughout the City to host seminars

    BY JUNE 30, 2017: a) Add the mid-career seminar format to the roster b) Include new locations to host seminars c) Develop a workshop for retirees

    2016-17 RESOURCES

    Funding for a new LAFPP position and member education seminars is included in the 2016-17 Budget. No additional funds are anticipated at this time.

  • 20

    GOAL V Enhance Communication Efforts and Outreach

    Project 12: Expand Multimedia Efforts

    Duration: 2016-17 Project Lead: Carol Tavares, Manager, Communications & Education Project Participants: Pensions Division Staff Stakeholders: Board Members, LAFPP Staff, LAFPP Members, and the City

    PROJECT OBJECTIVE

    To expand the range of communications methods used to reach members and other stakeholders.

    PROJECT HISTORY

    This project is an expansion from the previous Business Plan project where staff focused on researching and employing technology enhancements to quickly route information and to educate members and other stakeholders. The website was reorganized for easy access to pertinent information and a library of informational videos is being created to post on the website. With the new Boardroom facility in place, research is necessary to consider posting or live streaming of Board meetings. Additional website enhancements may be required to house all new media.

    2016-17 DELIVERABLES

    Research new multimedia communication tools and the creation of a Multi- media section for the LAFPP website.

    2016-17 MILESTONES

    BY SEPTEMBER 30, 2016: a) Develop a multimedia section for the website to include videos, audio

    recordings, whiteboard videos, etc. b) Research options to live stream or post recordings of Board meetings

    on the website. BY MARCH 31, 2017:

    a) Establish a multimedia section of the website and communicate new multimedia tools to members and other stakeholders

    b) Develop plan to post Board meetings on the website BY JUNE 30, 2017: Post approved Board meeting format in the multimedia section.

    2016-17 RESOURCES

    Funding is included in the 2016-17 Budget. No additional funds are anticipated at this time.

  • DEPARTMENT OF FIRE AND POLICE PENSIONS

    360 East Second Street, Suite 400 Los Angeles, CA 90012

    (213) 978-4545

    REPORT TO THE BOARD OF FIRE AND POLICE PENSION COMMISSIONERS

    DATE: MARCH 17, 2016 ITEM: A.4 FROM: RAYMOND P. CIRANNA, GENERAL MANAGER SUBJECT: FISCAL YEAR 2016-17 PROPOSED ANNUAL BUSINESS PLAN AND POSSIBLE

    BOARD ACTION

    RECOMMENDATION That the Board approve the attached 2016-17 Proposed Business Plan.

    DISCUSSION Fiscal Year (FY) 2014-15 marked a renewed Strategic Planning process effort to more directly incorporate Board input into the triennial Strategic Plan process. Through various Strategic Plan facilitation sessions, the Board and Staff collaborated to develop the LAFPP vision and c ore values, and to refine our mission and long term goals for the organization. The 2015-18 Three-Year Strategic Plan (Attachment I) incorporates these major elements and was approved by the Board on February 5, 2015. The Strategic Plan serves as a blueprint to guide LAFPP in the development of the annual FY 2016-17 Business Plan. The Proposed Business Plan (Attachment II) consists of twelve projects, including seven projects carried over from FY 2015-16 and five new projects. The FY 2016-17 Proposed Business Plan was developed in conjunction with the FY 2016-17 Proposed Budget to ensure that all resources required to complete the Business Plan projects are incorporated into the budget development process. The Business Plan is organized pursuant to the following Departments primary goals to ensure that projects are prioritized relative to operational needs:

    1) Ensure a Financially Sound Retirement System 2) Manage Risk throughout the Organization 3) Enhance Customer Service to our Members 4) Pursue Operational Efficiencies 5) Enhance Communication Efforts and Outreach

    The seven multi-year projects continuing from the FY 2015-16 Business Plan include:

    1) Asset Allocation Plan Implementation (No. 1) (formerly The Asset Liability Study & Recommendations Project) to develop and implement a new asset allocation;

    2) Local and Sustainable Investment Reporting (No. 2) to continue to provide the Board and staff with regular information regarding LAFPPs Local and Sustainable Investments;

    3) Business Continuity Planning/Disaster Recovery Update and Testing (No. 4) to support continued emergency planning efforts to ensure business continuity;

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  • Board Report Page 2 March 17, 2016

    4) Health Care Education and Research/Implement Options for Members (No. 6) to research alternative health care coverage options for LAFPP members who currently receive health insurance through LACERS or a health subsidy through the LAFPP Health Insurance Premium Reimbursement Program;

    5) PARIS (Pension and Retirement Information System) Implementation (No. 7) (formerly The Pension Administration System (PAS) Replacement Project) to completely transition all member data and payment processing to a new PAS. This project is expected to span several years and requires a considerable amount of Department resources;

    6) Employee Development and Training (No. 9) to continue to enhance and track human resource efforts in the areas of staff training and development; and

    7) Expand Multimedia Efforts (No. 12) to expand the range of communications methods used to reach members and other stakeholders.

    The five new FY 2016-17 proposed Business Plan projects include:

    8) Actuarial Trend Education (No. 3) to provide the Board and staff with information on current industry practices and trends concerning actuarial assumptions and/or funding policies;

    9) ALGA Review Three-year Audit Peer Review (No. 5) to determine whether Internal Audit Sections quality control system is aligned with international internal auditing and government auditing standards;

    10) Pilot Program for Financial Planning Counseling Services (No. 8) to determine the scope and feasibility of offering individual financial planning counseling services;

    11) Administrative Manual Updates (No. 10) to update Department-wide procedures, including operations in the new headquarters building; and

    12) Increase the Number of Outreach Events and Seminars (No. 11) to provide members with thorough and t imely information regarding our Plan, utilizing a range of communication methods.

    The included workload level indicator in the Business Plan Project Summary Matrix (Attachment II, Pages 3-4) is intended to give the Board a sense of the workload staff is committed to completing next fiscal year. Staff will continue to track the progress of all projects in the Business Plan Quarterly Update reports to the Board, and through these reports any necessary changes in scheduling or budget will be recommended. This process allows the Board to measure progress and adjust periodically to reflect any changes that may occur.

    BUDGET Funding for the proposed projects has been included in the FY 2016-17 Proposed Budget.

  • Board Report Page 3 March 17, 2016

    POLICY

    There are no policy changes proposed in this report.

    This report was prepared by: Diana Pointer, Senior Management Analyst II Administrative Services Section RPC:WSR:SHC:DP Attachments: I. Three-Year 2015-18 Strategic Plan II. Fiscal Year 2016-17 Proposed Business Plan

  • DDEPARTMENT OF FIRE AND POLICE PENSIONS 360 East Second Street, Suite 400

    Los Angeles, CA 90012 (213) 978-4545

    REPORT TO THE BOARD OF FIRE AND POLICE PENSION COMMISSIONERS

    DATE: FEBRUARY 5, 2015 ITEM: B.4

    FROM: RAYMOND P. CIRANNA, GENERAL MANAGER

    SUBJECT: CONSIDERATION OF THE 2015-18 THREE YEAR STRATEGIC PLAN AND POSSIBLE BOARD ACTION

    RECOMMENDATION

    That the Board:

    1. Consider and approve the 2015-18 Three Year Strategic Plan, which includes the following elements: Vision, Mission, Values, Goals, Objectives and Strategic Initiatives (Attachment);

    2. Direct Staff to return to the Board with a 2015-16 Business Plan on March 19, 2015 that includes Business Plan Projects that will help to achieve LAFPP Goals, Objectives and Strategic Initiatives.

    DISCUSSION

    On December 4, 2014, the Board and LAFPP managers engaged in a second strategic planning session facilitated by an outside consultant (Alta Mesa Group). This session provided an opportunity for the Board and managers to w ork together to r eview and r evise our Mission Statement, Values, Goals, Objectives and Strategic Initiatives. At that meeting, staff were directed to return to the Board with a completed Strategic Plan for approval that would include all of theseelements.

    Mission Statement

    During the sessi on, the Board remarked that the cur rent LAFPP Mission is very similar to the Los Angeles Police Department motto To Protect and to Serve. Therefore, the Mission Statement language was revised to be more inclusive of our entire membership.

    Current: To advance the health and retirement security of those who dedicate their careers to serve and protect the people of Los Angeles.

    Proposed: To advance the health and retirement security of those who dedicate their careers andrisk their lives to protect the people of Los Angeles.

    14935Typewritten TextATTACHMENT I

  • Board Report Page 2 February 5, 2015

    Values

    Values are defined as LAFPP guiding principles, beliefs and a Code of Behavior that form an important part of the foundation on which LAFPP staff and the Board operate. Staff had previously proposed six Values: Accountability, Collaboration, Compassion, Dedication, Ethics and Transparency. At the December 4th meeting, the Board and managers approved these Values in concept and asked that each of the Values be defined. The Board also asked that Efficiency be added as a Value to reflect our commitment to operational efficiencies.

    Based on recent staff meetings to define these Values, staff now recommends adding Respectas a Value in-lieu of Compassion and Dedication. Staff believes Respect best encompasses how we treat each other, our members and stakeholders.

    Current Values: Not applicable; Values have not been codified previously.

    Proposed Values and Definitions:

    1) Accountability We recognize our responsibility to our members to deliver promised pension benefits. We ensure appropriate oversight to achieve excellence in service, operational and investment decision making.

    2) Collaboration We value teamwork to achieve success and enc ourage staff at all levels to share ideas and offer suggestions for improving operations. We are enriched by our engagement with the Board, our members and our stakeholders.

    3) Efficiency We continually search for ways to del iver quality services and r educe administrative expenses. We promote innovation throughout the organization and use performance measurement to drive decisions.

    4) Ethics We preserve the public trust by adhering to the et hical standards established by theState, the City, and our Board Policies.

    5) Respect We treat each other and our members with kindness and dignity. We promote a fair environment and support each other by sharing information and knowledge to ensur e we deliver quality services.

    6) Transparency We strive to alw ays provide clear, accurate and complete information andtransact business decisions in an open manner so that our members, the City, and the public can trust that our decisions are fair, honest and ethical.

    Goals, Objectives and Strategic Initiatives

    At the December 4th session, the General Manager proposed an expansion of the primary goals from three to five to more fully capture the breadth of the longer-term theme and objectives of the Board. The General Manager also presented Objectives and Strategic Initiatives designed to help LAFPP meet its Goals. During this session, the Board and managers broke into groups to discuss these Goals, Objectives and Str ategic Initiatives in greater detail and the results were presented to the full group. Based on these discussions, the Board and managers agreed to the five goals listed below with some minimal language revisions.

  • Board Report Page 3 February 5, 2015

    Current LAFPP Goals:1) Customer Service2) Risk Management3) Communications and Stakeholder Relations

    Proposed LAFPP Goals:1) Ensure a financially sound retirement system2) Manage risk throughout the organization3) Enhance customer service to our members4) Pursue operational efficiencies5) Enhance communication efforts and outreach

    Subsequent to the December 4th session, Executive staff met over several days and revised the Goal Objectives and Strategic Initiatives to incorporate comments from the break-out sessions,and consolidate and refine the language.

    Also, Executive staff determined that some of the items initially labeled as Strategic Initiatives should be removed from the Strategic Plan as they reflected specific projects that were better suited for future Business Plans. Strategic Initiatives generally reflect high-level, aspirational statements that will guide the organization over the next several years. Conversely, the annual Business Plans will include specific, measurable projects to help us achieve our Strategic Goals,Objectives and Initiatives (Attachment).

    BUDGET

    LAFPP has incurred $10,500 to date utilizing the Alta Mesa Group, inclusive of travel expenses.Budgetary impact of the 2015-16 Business Plan will be included in 2015-16 Budget to bepresented to the Board on March 19, 2015.

    POLICY

    No policy changes are being recommended.

    This report was prepared by:

    Stephanie Clements, Chief Management AnalystAdministrative Operations Division

    RPC:WSR:SHC

    Attachment

  • ATTACHMENT II

    1

    LOS ANGELES FIRE & POLICE PENSIONS 2015-18 THREE-YEAR STRATEGIC PLAN

    VisionTo be a leader and innovator in the public pension industry through an uncompromising dedication to excellence, customer service, transparency and education

    MissionTo advance the health and retirement security of those who dedicate their careers and risk their lives to protect the people of Los Angeles

    Goals

    1. Ensure a financially sound retirement system 2. Manage risk throughout the organization 3. Enhance customer service to our members 4. Pursue operational efficiencies 5. Enhance communication efforts and outreach

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  • Attachment

    2

    Values

    I) Accountability We recognize our responsibility to our members to deliver promised pension benefits. We ensure appropriate oversight to achieve excellence in service, operational and investment decision making.

    II) Collaboration We value teamwork to achieve success and encourage staff at all levels to shar e ideas and o ffer suggestions for improving operations. We are enriched by our engagement with the Board, our members and our stakeholders.

    III) Efficiency - We continually search for ways to deliver quality services and reduceadministrative expenses. We promote innovation throughout the organization and use performance measurement to drive decisions.

    IV) Ethics We preserve the publ ic trust by adhering to the ethi cal standards established by the State, the City, and our Board Policies.

    V) Respect - We treat each other and our members with kindness and dignity. Wepromote a fair environment and support each other by sharing information and knowledge to ensure we deliver quality services.

    VI) Transparency We strive to al ways provide clear, accurate and co mplete information and transact business decisions in an open manner so t hat our members, the City, and the public can trust that our decisions are fair, honest and ethical.

  • Attachment

    3

    Goals, Objectives and Strategic Initiatives

    Goal 1: Ensure a Financially Sound Retirement System

    ObjectiveAchieve our long-term investment performance targets.

    Strategic Initiatives a) Employ prudent risk-adjusted asset allocation strategies, measure portfolio

    performance against the appropriate benchmark(s) and take action when investment objectives are not met.

    Objective

    Pursue funding policies and strategies that fund our member benefits.

    Strategic Initiativesa) Adopt sound actuarial policies and assumptions that balance the goals of: 1) keeping

    contributions relatively stable; 2) equitably allocating the cost of benefits over the members period of actual service; and 3) achieving long-term full funding of the cost of benefits over time; and

    b) Explore local and sustainable investment opportunities that complement our portfolio objectives and comply with our investment goals concerning risk, return and diversification.

    Goal 2: Manage Risk Throughout the Organization

    Objective Maintain & promote a culture of risk awareness with an enterprise-wide view.

    Strategic Initiative a) Develop a top- down risk-intelligent culture that proactively identifies and acts to

    manage risk exposure, through enhanced governance, Board and staff training, and collaboration with stakeholders.

    _______________________________________________________________________

    ObjectiveActively monitor systems and processes to reduce or minimize risk.

    Strategic Initiativea) Assess and test our systems and processes through periodic audits, risk assessments

    and technology to help mitigate and minimize risk in our organization.

  • Attachment

    4

    Goal 3: Enhance Customer Service to our Members

    Objective Deliver superior customer service that is adaptive to our member needs.

    Strategic Initiativesa) Research and implement technology solutions to upgrade our business processes to

    better serve our members;b) Expand educational opportunities to our members regarding their benefits and our

    services so that they can make informed decisions about retirement security and health care; and

    c) Enhance member access to information regarding the cost of health care options andalternative methods of service delivery.

    _______________________________________________________________________

    Goal 4: Pursue Operational Efficiencies

    ObjectiveImplement industry best practices for continuous improvement.

    Strategic Initiativea) Research, identify and pursue best practice opportunities throughout the organization.

    ________________________________________________________________________

    Objective Foster a team approach or culture of collaboration within and outside the Departmentto facilitate innovation.

    Strategic Initiativea) Increase team engagement and encourage ideas and suggestions from the Board,

    employees and stakeholders to improve knowledge and communications.

    ________________________________________________________________________

    ObjectiveEnsure staff is provided the necessary support and tools for success.

    Strategic Initiativea) Develop and i mplement a co mprehensive strategy that i ncludes employee

    development, recruitment, retention, and succession planning.

    ________________________________________________________________________

  • Attachment

    5

    Goal 5: Enhance Communication Efforts and Outreach

    Objective Enhance our communication to members, the City, and the public regarding our Plan.

    Strategic Initiativea) Provide members, the City, and the public with thorough and timely information utilizing

    a range of communication methods to help promote our system and build good relations with our stakeholders; and

    b) Strengthen relationships and enhance interactions with the Police, Harbor and Fire Departments, along with other City agencies, employee unions and retiree associations.

    ________________________________________________________________________

    ObjectivePromote LAFPP's Emerging Manager Program as a leader in the pension industry

    Strategic Initiativesa) Continue building and elevating the profile of our LAFPP Emerging Manager Program. ________________________________________________________________________

  • LAFPP LOS ANGELES FIRE AND POLICE PENSIONS

    PROPOSED 2016-17 BUSINESS PLAN AS SUBMITTED TO THE BOARD: MARCH 17, 2016

    14935Typewritten TextATTACHMENT II

  • 2

    FISCAL YEAR 2016-17 BUSINESS PLAN INTRODUCTION

    Fiscal Year 2014-15 marked a renewed Strategic Planning process effort to more directly incorporate Board input into the triennial Strategic Plan process. Though various Strategic Plan facilitation sessions, the Board and Staff collaborated to develop the LAFPP vision and core values and to refine our mission and long-term goals, goal objectives and strategic initiatives for the organization. The 2015-18 Three-Year Strategic Plan incorporates these major elements and was approved by the Board on February 5, 2015, including the new LAFPP Vision Statement:

    To be a leader and innovator in the public pension industry through an uncompromising dedication to excellence, customer service, transparency, and education.

    The 2015-18 Three-Year Strategic Plan serves as a blueprint to guide LAFPP in the development of the proposed annual 2016-17 Business Plan. The 2016-17 Business Plan methodically allocates resources to the most critical areas of our operations in order to successfully accomplish our (revised) mission: To advance the health and retirement security of those who dedicate their careers and risk their lives to protect the people of Los Angeles. Our Business Plan includes twelve projects, including five new projects and seven carried over from last year. We believe these twelve projects are the most critical to ensure we continue to meet the Departments five primary goals:

    1) Ensure a Financially Sound Retirement System 2) Manage Risk Throughout the Organization 3) Enhance Customer Service to our Members 4) Pursue Operational Efficiencies 5) Enhance Communication Efforts and Outreach

    One of the most significant multi-year project ever undertaken by the Department is the PARIS (Pension and Retirement Information System) Implementation. This project, which began last fiscal year and is expected to span several years, will require a considerable amount of resources by the Department. This project was listed as the New Pension Administration System (PAS) Project in FY 2015-16. The PARIS Implementation project (No. 7) involves a complete transition of all member data and payment processing to a new system and will require a sustained, Department-wide effort for several years.

    Once again, I want to extend my deep appreciation to the Board and staff for its continued support for the Strategic and Business Plans over the years.

  • 3

    2016-17 BUSINESS PLAN PROJECT MATRIX SUMMARY

    GOAL I Ensure a Financially Sound Retirement System

    Project Title Workload Level

    Duration Project Objective

    Asset Allocation Plan Implementation

    Lead: High

    Participants: High

    2016-17

    To develop and implement a new asset allocation to optimize the Funds rate of return, commensurate with acceptable levels of risk and volatility.

    Local and Sustainable Investment Reporting

    Lead: Moderate Participants: Moderate

    2016-17 To provide the Board and staff with regular information regarding LAFPPs Local and Sustainable Investments.

    (NEW) Actuarial Trend Education

    Lead: Moderate Participants: Low

    2016-17 To provide the Board and staff with information on current industry practices and trends concerning actuarial assumptions and funding policies.

    GOAL II Manage Risk Throughout the Organization

    Project Title Workload Level

    Duration Project Objective

    Business Continuity Planning/Disaster Recovery Update and Testing

    Lead: Very High

    Participants: Moderate

    2016-17 To preserve member services and meet operational needs during uncontrolled events that disrupt business processes.

    (NEW) ALGA Review Three-year Audit Peer Review

    Lead: High Participants: Moderate

    2016-17 To determine whether Internal Audit Sections quality control system is suitably designed, operates effectively, and produces quality work under both international internal auditing and government auditing standards.

  • 4

    2016-17 PROJECT SUMMARY MATRIX GOAL III Enhance Customer Service to our Members

    Project Title Workload Level

    Duration Project Objective

    Health Care Education and Research/Implement Options for Members

    Lead: High Participants: High

    2016-17 To research alternative medical and dental insurance coverage options for those who currently receive their medical and/or dental insurance through LACERS or their health subsidy through the Health Insurance Premium Reimbursement Program.

    PARIS (Pension and Retirement Information System) Implementation

    Lead: High Participants: High

    2016-17 2017-18 2018-19

    To design and implement a new Pension Administration System that will result in improved overall efficiency in the departments business operations and continued superior service to our membership.

    (NEW) Pilot Program for Financial Planning Counseling Services

    Lead: High Participants: Moderate

    2016-17 To determine the scope and feasibility of offering individual financial planning counseling services.

    Goal IV Pursue Operational Efficiencies Project Title Workload

    Level Duration Project Objective

    Employee Development and Training

    Lead: Moderate

    Participants: Moderate

    2016-17 To enhance employee development, recruitment and training to help retain and further develop our talented LAFPP workforce.

    (NEW) Administrative Manual Updates

    Lead: Medium Participants: Moderate

    2016-17

    To update Department-wide procedures and to include those that affect operations in the new headquarters building.

    Goal V Enhance Communication Efforts and Outreach Project Title Workload

    Level Duration Project Objective

    (NEW) Increase the Number of Outreach Events and Seminars

    Lead: High Participants: High

    2016-17 To provide members with thorough and timely information regarding our Plan, utilizing a range of communication methods.

    Expand Multimedia Efforts

    Lead: High Participants: Moderate

    2016-17 To expand the range of communications methods used to reach members and other stakeholders.

  • 5

    GOAL I Ensure a Financially Sound Retirement System

    Project 1: Asset Allocation Plan Implementation (formerly Asset Liability Study & Recommendations)

    Duration: 2016-17 Project Lead: Tom Lopez, Chief Investment Officer, Investments Division Project Participants: Staff, Consultants, and the Board Stakeholders: Board Members, LAFPP Staff, LAFPP Members, and the City PROJECT OBJECTIVE

    Develop and implement a new Asset Allocation Plan.

    PROJECT HISTORY

    Per Board Investment Policy Section 1.6, an Asset Allocation Plan shall be adopted and implemented by the Board which provides adequate diversification and gives the expectation of the highest rate of return commensurate with an acceptable level of risk, or volatility. The Board normally implements a new asset allocation every three to five years which is considered a best practice. Another best practice opportunity is an Asset Liability (AL) Study. This type of Study consists of a Deterministic Forecast which provides a Plan analysis based on a fixed set of future assumptions, and a Stochastic Forecast which provides a Plan analysis under many capital market environments based on expected asset returns, inflation and expected volatility. LAFPP has not performed a combined asset allocation and AL Study for many years, as noted in the 2012 Five-Year Management Audit. As part of the Fiscal Year (FY) 2015-16 Business Plan, the AL Study has now been completed and presented to the Board. At our Board offsite meeting on March 3, 2016, Asset Allocation Plan education and training was provided to the Board in preparation of the development of an Asset Allocation Plan.

    2016-17 DELIVERABLES

    Complete the Asset Allocation review before and if needed, implement a new Asset Allocation Plan by the end of June 2017.

    2016-17 MILESTONES

    BY SEPTEMBER 30, 2016: Board to complete an asset allocation review. BY DECEMBER 31, 2016: If needed, Board to approve a revised Asset Allocation Plan and timeline for the implementation of a new asset allocation. BY JUNE 30, 2017: If needed, complete the implementation of a new Asset Allocation Plan.

    2016-17 RESOURCES

    Existing Staff resources, consultant resources and Board time will be necessary to complete the new Asset Allocation Plan. No additional resources will be required in FY 2016-17.

  • 6

    GOAL I Ensure a Financially Sound Retirement System

    Project 2: Local and Sustainable Investment Reporting Duration: 2016-17 Project Lead: Tom Lopez, Chief Investment Officer, Investments Division Project Participants: Investments Division Staff Stakeholders: Board Members, LAFPP Management, and the City PROJECT OBJECTIVE

    To regularly provide the Board and Staff with information regarding LAFPPs Local and Sustainable Investments.

    PROJECT HISTORY

    The LAFPP portfolio includes some investments that support the Mayors back to basics priority outcomes of: 1) Promoting good jobs for Angelenos all across Los Angeles; and 2) Creating a more sustainable and livable city. Reports identifying local (LA City and California) and sustainable investments have been produced for the Board on a regular basis.

    2016-17 DELIVERABLES

    An annual Local and Sustainable Investment Report will be presented to the Board each calendar year.

    2016-17 MILESTONES

    BY DECEMBER 31, 2016: The 2016 Local and Sustainable Investment Report will be presented to the Board.

    2016-17 RESOURCES

    Reports will be prepared utilizing existing staff and consultants. No additional resources will be required in FY 2016-17.

  • 7

    GOAL I Ensure a Financially Sound Retirement System

    Project 3: NEW Actuarial Trend Education Duration: 2016-17 Project Lead: Robyn Wilder, Chief Benefits Analyst, Pensions Division Project Participants: Actuary, Staff, and the Board Stakeholders: Board Members, LAFPP Staff, LAFPP Members, and the City

    PROJECT OBJECTIVE

    To provide the Board and staff with information on current industry practices and trends concerning actuarial assumptions and/or funding policies.

    PROJECT HISTORY

    In accordance with Charter and Administrative Code provisions, every three years the Plan actuary conducts a study to review the actuarial assumptions adopted by the Board (Experience Study). The purpose of the Study is to compare the plans actual experience against the economic and non-economic actuarial assumptions established as a result of the last Experience Study and used by the actuary for subsequent annual valuations. Any changes recommended by the actuary are intended to bring the plans assumptions more in line with future expectations. The last actuarial Experience Study was completed by the actuary in July 2014 (for three-year period from July 1, 2010 June 30, 2013). The next actuarial Experience Study will be conducted after the completion of the June 30, 2016 valuation. A pension plan funding policy is designed to determine how much should be contributed each year in total by the employer and the active members to provide for the secure funding of benefits in a systematic fashion. It is made up of three components: actuarial cost method, asset smoothing method, and amortization policy. The Board adopted a comprehensive Actuarial Funding Policy in September 2012. The Boards funding policy had one minor amendment in October 2014 but has not undergone a complete review since it was adopted in 2012.

    2016-17 DELIVERABLES

    Complete the next three-year Actuarial Experience Study and the review of Economic Actuarial Assumptions to be used for the June 30, 2017 actuarial valuation. Review the current Actuarial Funding Policy and recommend changes if appropriate.

  • 8

    Project 3: NEW Actuarial Trend Education (Continued)

    2016-17 MILESTONES

    BY DECEMBER 31, 2016: Plan actuary to provide education and information to the Board and staff regarding industry practices and trends concerning actuarial assumptions.

    BY MARCH 31, 2017: Review the Boards Actuarial Funding Policy and recommend any changes. BY JUNE 30, 2017: Plan actuary to complete the next three-year Actuarial Experience Study and the review of Economic Actuarial Assumptions to be used for the June 30, 2017 actuarial valuation.

    2016-17 RESOURCES

    The Experience Study and the Actuarial Funding Policy review will require a substantial amount of Staff, Actuary, and Board time. Costs associated with the Actuarial Experience Study and related actuarial contractual services have been budgeted in the FY 2016-17 Proposed Budget. No additional resources will be required in FY 2016-17.

  • 9

    GOAL II Manage Risk Throughout the Organization

    Project 4: Business Continuity Planning/Disaster Recovery Update and Testing

    Duration: 2016-17 Project Lead: Bob Yan, Director of Systems, Systems Section Project Participants: All Department Staff Stakeholders: Board Members, LAFPP Members and Beneficiaries, and LAFPP Staff

    PROJECT OBJECTIVE

    To preserve member services and continue to meet operational needs during uncontrolled events that disrupts business processes.

    PROJECT HISTORY

    LAFPP determined several years ago it needed to develop a plan to preserve member services during uncontrolled events such as hardware failures, fires, and earthquakes. In order to accomplish this goal, the first step - the development of the Business Impact Analysis (BIA) report for LAFPP critical business processes was completed in October 2011. The BIA report provided LAFPP with a high-level plan and recommendations to reduce risks and continue to provide services to our members during business disruptions.

    In September 2011, the Board approved staff to proceed with the next step to develop a Business Continuity Plan (BCP).The goal of the BCP is to create a detailed plan that allows LAFPP to quickly recover from an event that disrupts operations and to mitigate the impact to members. With the BCP completion in June 2012, LAFPP now has a detailed plan to quickly recover from various events and achieve the goal of preserving member services during business disruptions. In August 2014, the Board approved a vendor to provide off-site disaster recovery (DR) services. Some of the Department network infrastructure upgrades required for the DR solutions were also completed in August 2014, with the remaining upgrades scheduled for completion as part of the new headquarters build out in FY 2015-16.

    In October 2015, the vendor completed implementation of the off-site DR services. Due to the delay in the new headquarters build out and the reallocation of staffing resources to the new headquarters IT upgrades, the reconfiguration of the DR solution based on the new production network and the DR system validation testing was rescheduled for FY 2016-17 to ensure that services to the members will not be impacted during business disruptions. Lastly, reviewing and maintaining the BCP will occur annually to continuously meet the project objective as business processes change and evolve.

  • 10

    Project 4: Business Continuity Planning/Disaster Recovery Update and Testing (Continued)

    2016-17 DELIVERABLES

    a) Reconfigure the DR system based on the new production network at the new headquarters and perform DR system validation testing;

    b) Update the Business Continuity Plan with all new components of the LAFPPs off-site disaster recovery system; and

    c) Perform a real-time activation of the Business Continuity Plan to validate the accuracy of the plan and the disaster recovery system.

    2016-17 MILESTONES

    BY SEPTEMBER 30, 2016: 1) Reconfigure the DR system based on the new production network

    at the new headquarters. 2) Perform DR system validation testing including the new voice

    communication system (VoIP). BY DECEMBER 31, 2016: Review and update the BCP to ensure that all components of the LAFPPs offsite disaster recovery system and critical business processes are incorporated into the BCP.

    BY MARCH 31, 2017: Review, select, and plan one critical business function to perform a real-time business continuity/disaster recovery activation exercise.

    BY JUNE 30, 2017: 1) Review, plan, and perform a large-scale real-time business

    continuity/disaster recovery activation exercise involving Emergency Executive Team (EET) and multiple critical business functions.

    2) Validate and report on the results from the exercise. 2016-17

    RESOURCES Existing staff will be utilized to update the BCP. Funding for the DR system is included in the FY 2016-17 Proposed Budget.

  • 11

    GOAL II Manage Risk Throughout the Organization

    Project 5: NEW - ALGA Review Three-year Audit Peer Review

    Duration: 2016-17 Project Lead: Erin Kenney, Departmental Audit Manager Project Participants: Internal Audit Section Stakeholders: Board Members, LAFPP Staff, LAFPP Members, and the City

    PROJECT OBJECTIVE

    To determine whether Internal Audit Sections quality control system is suitably designed, operates effectively, and produces quality work under both international internal auditing and government auditing standards.

    PROJECT HISTORY

    Internal Audit Section (IAS) conducts its work pursuant to both International Standards for the Professional Practice of Internal Auditing (ISPPIA) and Government Auditing Standards (GAS). These standards require periodic external quality control assessments, also referred to as peer reviews. LAFPP is a member in good standing of the Association of Local Government Auditors (ALGA), the premiere professional audit association specific to local government auditing. A benefit of ALGA membership is access to its Peer Review Program. IAS successfully passed its first ALGA Peer Review under both ISPPIA and GAS in April 2014. Under GAS, external peer reviews are required at least once every three years, with the next peer review due in April 2017.

    2016-17 DELIVERABLES

    Undergo and successfully pass an ALGA Peer Review for ISPPIA and GAS and report ALGA Peer Review results to the Board.

    2016-17 MILESTONES

    BY DECEMBER 31, 2016: Contact ALGA to request a peer review for April 2017 (October 2016) BY MARCH 31, 2017: Provide required documentation to ALGA Peer Review Team for peer review preparation. BY JUNE 30, 2017: Undergo and successfully pass an ALGA Peer Review for ISPPIA and GAS (April 2017) and report ALGA Peer Review results to the Board (May 2017). 2016-17

    RESOURCES Review will be initiated by existing IAS Staff. Estimated costs of $8,950 to reimburse three ALGA volunteer peer reviewers for out-of-pocket expenses are included in the FY 2016-17 Proposed Budget.

  • 12

    GOAL III Enhance Customer Service to our Members

    Project 6: Health Care Education and

    Research/Implement Options for Members

    Duration: 2016-17 Project Lead: Kyle Susswain, Manager, Medical & Dental Benefits Project Participants: Medical & Dental Benefits Section Staff, LACERS, LAFPP Health

    Consultant, and the City Attorneys Office Stakeholders: LAFPP Management, LAFPP Retired Members, and Board-approved

    Medical and Dental Insurance Plan Providers (aka, Associations)

    PROJECT OBJECTIVE

    Research alternative medical and dental insurance coverage options for those who currently receive their medical and/or dental insurance through LAFPPs agreement with the Los Angeles City Employees Retirement System (LACERS) or their health subsidy through the LAFPP Health Insurance Premium Reimbursement Program (HIPR).

    PROJECT HISTORY

    A small group of LAFPP pensioners has received m e d i c a l / d e n t a l i n s u r a n c e coverage through LACERS health plans since LACERS took over civilian retiree health plan administration from the Personnel Department in 1999. Through its agreement with LACERS, LAFPP has offered coverage through LACERS health plans to Port Police who retired under the Fire and Police Pension Plan, as well as retired firefighters who were not eligible to participate in plans offered by the United Firefighters of Los Angeles City or the Los Angeles Firemens Relief Association. LACERS has informed LAFPP that it wishes to end all LAFPP pensioner enrollment in its medical and dental plans as soon as possible. LACERS is concerned that it may lack the formal authority to administer health plans for sworn retirees, as well as the risk that LAFPP pensioners utilization patterns could adversely affect LACERS plan rates.

    Beginning with coverage in 2001, the HIPR program has allowed pensioners eligible for a subsidy, but who do not have access to coverage under a Board-approved HMO plan or reside outside of the state of California, to submit documentation of health plan premiums paid for reimbursement. Reimbursement is the lesser of the health plan premium paid or the pensioners subsidy eligibility. Retired members in Medicare are limited in their reimbursement to the Maximum Medicare Health Subsidy, with no additional amount paid for dependent coverage. At the November 19, 2015 Board meeting, LAFPPs health consultant, Keenan & Associates, presented various health care plan options for pensioners enrolled in the LACERS plans and HIPR. The Board directed staff to continue to research options for retired Port Police members.

  • 13

    Project 6: Health Care Education and Research/Implement Options for Members (Continued)

    2016-17 DELIVERABLES

    a) Explore possible changes to the HIPR program (i.e., provide dependent subsidy for Medicare members, vision coverage) and implement changes as approved by the Board.

    b) Consult with the City Attorney in regards to possible Administrative

    Code revisions necessary to implement Medicare Exchanges and Health Reimbursement Accounts (HRA).

    c) Work with LAFPPs health consultant to prepare and issue Requests for Proposals (RFP) for: 1) group dental and/or vision plans, and 2) a private Medicare Exchange.

    2016-17 MILESTONES

    BY SEPTEMBER 30, 2016: Complete research of HIPR program amendments and recommend any necessary revisions to Board Rules. BY DECEMBER 31, 2016: Complete research of Medicare Exchanges and HRA implementation, as well as related Administrative Code changes. BY JUNE 30, 2017: Issue RFPs for group dental and/or vision plans, and for a Medicare Exchange.

    2016-17 RESOURCES

    The FY 2016-17 Proposed Budget includes $30,000 for health consulting services. Additional consulting funds may be needed for issuing/reviewing the RFPs and any subsequent negotiations with insurers. As the contract with LAFPPs current health consultant expires on February 28, 2017, it may be necessary to request additional funds once a new consultant is hired and the project scope and consulting fees have been established.

  • 14

    GOAL III Enhance Customer Service to our Members

    Project 7: PARIS (Pension and Retirement Information System) Implementation

    (formerly Pension Administration System Replacement)

    Duration: 2016-17, 2017-18, and 2018-19 Project Lead: Alfred Domagat, Sr. Systems Analyst II, Systems Section Project Participants: LAFPP Staff, Consultants, Northern Trust, the Information

    Technology Agency, and Office of the Controller Stakeholders: LAFPP Staff and Management, and LAFPP Members and Beneficiaries

    PROJECT OBJECTIVE

    To design and implement a new Pension Administration System that will result in improved overall efficiency in the departments business operations and continued superior service to our membership.

    PROJECT HISTORY

    After a competitive bidding process, a consultant was selected in June 2013 to assist in evaluating our business operational needs against the capabilities of our current Pension Administration System. The selected consultant (LRWL) helped staff develop the business and technical requirements for the replacement of the current Pension Administration System (PAS). Based on these requirements, a Request for Proposal (RFP) was issued in July 2014 and bids were received in October 2014. An Evaluation Team comprised of several LAFPP staff evaluated the bids and the functionality of each proposed PAS system. After a comprehensive evaluation process, Xerox State and Local Systems, Inc. (Xerox) was identified as the top ranking vendor for the lowest cost. The Board awarded the contract to Xerox on May 21, 2015. The project to implement Xeroxs proprietary CPAS system kicked off in July 2015. The new system that is being developed was later named PARIS (Pension And Retirement Information System).

    2016-17 DELIVERABLES

    1) Configure and deliver for testing the initial system functionality which includes Global Rules, Core and Secondary Calculations, and Active Payroll.

    2) Configure and deliver for testing additional system functionality for Batches processing, Disbursements processing, and Manage Data/Payees.

    3) Ongoing data cleansing and data conversion.

  • 15

    Project 7: PARIS (Pension and Retirement Information System) Implementation (Continued)

    2016-17 MILESTONES

    BY DECEMBER 31, 2016: Delivery and testing of initial system functionality which includes Global Rules, Core and Secondary Calculations, and Active Payroll. BY JUNE 30, 2017:

    Delivery and testing of system functionality for Batches processing, Disbursements processing, and Manage Data/Payees.

    2016-17 RESOURCES

    On May 21, 2015, the Board approved an amount not to exceed $9.02 million to implement a new Pension Administration System (PAS) (3 years) and provide post-implementation services (5 years) by Xerox State and Local Systems, Inc. The Board also approved LRWL, Inc. to provide oversight project management and quality assurance services for an amount not to exceed $1.16 million. Approximately $1.7 million for the PARIS Project is included in the FY 2016-17 Proposed Budget, consisting of $1,356,000 for Xerox State and Local Systems, Inc. and $390,000 for LRWL, Inc.

  • 16

    GOAL III Enhance Customer Service to our Members

    Project 8: NEW Pilot Program for Financial Planning Counseling Services

    Duration: 2016-17 Project Lead: Carol Tavares, Manager, Communications & Education Project Participants: Pensions Division Staff, City Attorney, financial planning

    consultant, and active LAFPP members Stakeholders: LAFPP Members PROJECT OBJECTIVE

    To determine the scope and feasibility of offering individual financial planning counseling services.

    PROJECT HISTORY

    LAFPP has provided financial planning education utilizing both staff and a consultant since 1989. The most recent financial planning Request for Proposal (RFP) released in July 2015, requested individual counseling services, in addition to the existing group education services. Based on the RFP responses, a new contract was executed for group financial planning education services, while staff continued to consider the scope and mechanics of offering individual financial planning counseling to members. It is expected that a member must first attend a financial planning education seminar and will then be offered a follow-up session with a financial planning counselor for a personalized review of their financial situation. This approach will allow members to build upon the education provided in the seminar to take the next step and develop a comprehensive financial plan. The financial planning counselor will be prohibited from providing, selling, or deriving any income from the sale of any investment products to members. 2016-17

    DELIVERABLES To research the level of interest in financial counseling services, report those findings to the Board and develop a pilot program as approved.

    2016-17 MILESTONES

    BY SEPTEMBER 30, 2016: Poll members on the level of counseling services they are interested in and the fees they are willing to pay (through surveys, focus groups, etc.). BY DECEMBER 31, 2016: Report findings to the Board and request to award a contract. BY JUNE 30, 2017: Develop a pilot Financial Planning Counseling Program as approved.

    2016-17 RESOURCES

    The FY 2016-17 Proposed Budget includes $123,000 in the Unappropriated Balance for the Financial Planning Counseling Program.

  • 17

    Goal IV Pursue Operational Efficiencies

    Project 9: Employee Development and Training

    Duration: 2016-17 Project Lead: Lindi Willhite, Sr. Personnel Analyst I, Human Resources Project Participants: All Sections Stakeholders: LAFPP Staff and Management

    PROJECT OBJECTIVE

    To enhance the LAFPP employee development, recruitment and training program in order to help retain and further develop our talented workforce, to encourage employee professional growth creating a culture of excellence required for the long term success of LAFPP.

    PROJECT HISTORY

    With approximately 40% of the current LAFPP workforce eligible to retire in the next few years, it is vital that LAFPP continue to support efforts to train, develop and recruit staff. LAFPPs training program is supported strongly by Executive Management and the Department has significantly increased the amount of training completed by staff. In 2012, a new LAFPP Employee Training Program matrix was developed to include in-house and external training resources for all LAFPP classifications. In 2014, LAFPP procured an annual training pass for staff to attend unlimited professional seminars to hone skills and assist with promotions. As part of the 2015-16 Business Plan Employee Development and Training Project, the training matrix will be reviewed, updated and redistributed to provide staff in FY 2015-16 to assist staff with training options. In FY 2015-16, LAFPP continued with the annual Fred Pryor training passes and also promoted to staff Lynda.com, a free online program with a more technological focus. The Citys online training portal also offers many relevant topics and has been recently updated and expanded. One often under looked training resource is our own experienced and knowledgeable staff (both LAFPP and City-wide), but staff may have less opportunity to share that knowledge with others. In 2016-17, staff would propose Brown Bag lunches, an informal opportunity for employees to share and learn at work, and enhance employee knowledge transfer on specific issues and ideas.

    2016-17 DELIVERABLES

    Ensure all LAFPP staff take at least two (2) non-mandated training sessions of their choice and schedule two (2) Brown Bag Lunch sessions in 2016-17. 2016-17

    MILESTONES BY JUNE 30, 2017: Ensure all staff attend two training sessions of their choice and schedule two (2) Brown Bag Lunch sessions.

    2016-17 RESOURCES

    Funding totaling $16,000 will be required for Annual Training programs and this amount is included in the FY 2016-17 Proposed Budget. There is also additional training, travel, and tuition reimbursement funding for additional staff training and development opportunities.

  • 18

    Goal IV Pursue Operational Efficiencies

    Project 10: NEW Administrative Manual Updates Duration: 2016-17 Project Lead: Diana Pointer, Sr. Management Analyst II, Administrative Services Project Participants: Administrative Services Stakeholders: LAFPP Staff and Management PROJECT OBJECTIVE

    To provide the Board and staff with LAFPPs manual updates on Department-wide procedures reflecting administrative operations and policies.

    PROJECT HISTORY

    Administrative Operations manuals are designed for standard tasks that encompass document imaging, style guides, contract administration, safety, emergency planning, building management, budget programs, and related projects. LAFPP Administrative Manuals exist but many need to be reviewed and updated. The manuals will also include new operations procedures as a result of our move into the new headquarters building.

    2016-17 DELIVERABLES

    Complete Department-wide operations manuals as related to the new headquarters building. Ensure timely completion and distribution to LAFPP through the DocuShare system as manuals are completed. Priorities will be placed on the new headquarters-related manuals, and then procedures/guidelines for Docushare, Board elections processes, contract administration, and the various policies included in the LAFPP Administrative Manual.

    2016-17 MILESTONES

    BY MARCH 31, 2017: Complete new headquarters-related procedures and manuals. BY JUNE 30, 2017: Complete general operations-related manuals (Docushare, Board Elections, Contracts Manual, etc.) given existing resources.

    2016-17 RESOURCES

    Existing staff will initiate new manuals and updates. No additional staff expenses will be required in FY 2016-17.

  • 19

    Goal V Enhance Communication Efforts & Outreach

    Project 11: NEW - Increase the Number of Outreach Events and Seminars

    Duration: 2016-17 Project Lead: Carol Tavares, Manager, Communications & Education Project Participants: Pensions Division Staff Stakeholders: LAFPP Members PROJECT OBJECTIVE

    To provide members with thorough and timely information regarding our Plan, utilizing a range of communication methods.

    PROJECT HISTORY

    In the last year, member interest in attending a Financial Planning Education (FPE) seminar has increased. To accommodate the growing interest, staff has worked diligently to increase the number of seminars from FY 2014-15 to FY 2015-16 by a total of 5 additional seminars (increase of 45%). A new contract with our financial planning education consultant was awarded in 2015 and includes a new mid-career format and retiree workshops, in addition to the already established early-career, late-career, and DROP Exit formats. These new formats must be developed and incorporated into the FPE Program. Various alternate locations throughout the City will be considered as venues for the education seminars to reach more members. Additional in-house training sessions will be considered with the use of the new Boardroom in our new office location.

    2016-17 DELIVERABLES

    Develop the new formats for the mid-career financial planning education seminar and a retiree workshop. Increase the total number of yearly seminars by 10% over the target goal for FY 2015-16.

    2016-17 MILESTONES

    BY SEPTEMBER 30, 2016: a) Develop a mid-career seminar format for active members b) Research various locations throughout the City to host seminars

    BY JUNE 30, 2017: a) Add the mid-career seminar format to the roster b) Include new locations to host seminars c) Develop a workshop for retirees

    2016-17 RESOURCES

    Funding for a new LAFPP position and member education seminars is included in the FY 2016-17 Proposed Budget. No additional funds are anticipated at this time.

  • 20

    GOAL V Enhance Communication Efforts and Outreach

    Project 12: Expand Multimedia Efforts Duration: 2016-17 Project Lead: Carol Tavares, Manager, Communications & Education Project Participants: Pensions Division Staff Stakeholders: Board Members, LAFPP Staff, LAFPP Members, and the City PROJECT OBJECTIVE

    To expand the range of communications methods used to reach members and other stakeholders.

    PROJECT HISTORY

    This project is an expansion from the previous Business Plan where staff focused on researching and employing technology enhancements to quickly route information and to educate members and other stakeholders. The website was reorganized for easy access to pertinent information and a library of informational videos is being created to post on the website. With the new Boardroom facility in place, research is necessary to consider posting or live streaming of Board meetings. Additional website enhancements may be required to house all new media.

    2016-17 DELIVERABLES

    Research new multimedia communication tools and the creation of a Multi-media section for the LAFPP website.

    2016-17 MILESTONES

    BY SEPTEMBER 30, 2016: a) Develop a multimedia section for the website to include videos, audio

    recordings, whiteboard videos, etc. b) Research options to live stream or post recordings of Board meetings

    on the website. BY MARCH 31, 2017:

    a) Establish a multimedia section of the website and communicate new multimedia tools to members and other stakeholders

    b) Develop plan to post Board meetings on the website BY JUNE 30, 2017: Post approved Board meeting format in the multimedia section.

    2016-17 RESOURCES

    Funding is included in the FY 2016-17 Proposed Budget. No additional funds are anticipated at this time.

  • DEPARTMENT OF FIRE AND POLICE PENSIONS

    701 E. 3rd Street, Suite 200 Los Angeles, CA 90013

    (213) 279-3000

    REPORT TO THE BOARD OF FIRE AND POLICE PENSION COMMISSIONERS

    DATE: JUNE 16, 2016 ITEM: A.5 FROM: RAYMOND P. CIRANNA, GENERAL MANAGER SUBJECT: APPROVAL OF 2016-17 FINAL BUDGET AND POSSIBLE BOARD ACTION

    RECOMMENDATION That the Board:

    1) Adopt the attached Fiscal Year 2016-17 Budget and authorize the General Manager to provide the Budget to the Mayor, City Administrative Officer (CAO) and the City Controller for their information (Attachment I);

    2) Adopt the Departmental Personnel Resolution shown in Attachment I, Schedule 7 and authorize two resolution authority positions (Management Assistant and Management Analyst II) to continue work on t he new Pension Administration System Replacement Project;

    3) Adopt the Travel Resolution shown in Attachment I, Schedule 10; and,

    4) Authorize Staff to make any technical corrections or clarifications to the 2016-17 Budget

    in order to effectuate the intent of the above-mentioned recommendations.

    BACKGROUND Pursuant to Section 2.1 of the Boards Operating Policies and Procedures, the Board of Fire and Police Pension Commissioners (Board) must approve the Los Angeles Fire and Police Pensions (LAFPP) Proposed Budget and present it to the Mayor, CAO, and City Controller before April 1 of each year. T he LAFPP Proposed Budget both estimates City and M ember Contributions (Receipts) and establishes the estimated Expenditures by category (e.g., Pensions Expense, Investment Management Expense, and Administrative Expense) for the ensuing fiscal year. On March 17, 2016, the Board approved the 2016-17 Proposed Budget (Attachment II). Following the Mayor and Council adopting the Citys Budget (May 19, 2016), the Board must adopt a final budget by June 30 of each year to update the sworn payroll amounts for the Harbor, Fire, and Police Departments, the City and Member Contributions, and other budget adjustments to reflect more up-to-date budgetary figures and actual expenditures. The updates from the 2016-17 Proposed Budget to the 2016-17 Final Budget are discussed in this report and are also attached in the budget schedules (Attachment I, Schedules 1 10).

  • Board Report Page 2 June 16, 2016

    DISCUSSION Receipts The following Receipts information was adjusted to reflect the latest Adopted Budget figures approved by the Mayor and Council on May 19, 2016. There are no changes to the estimated Investment receipts for 2016-17. However, there are changes to the City, Harbor and Member Contribution amounts. The information below compares the final budgets for 2015-16 and 2016-17. This comparison provides perspective on the year-to-year contribution amounts from the Citys General Fund, Harbor Special Fund, and Member Contributions. The City and Harbor Contribution - Annually, the LAFPP engages the services of an actuary to perform a v aluation study. These valuation studies report on LAFPP assets and liabilities, and establish the percent of sworn payroll used to calculate the required City and Harbor contribution to fund the pension system. The City uses the 2016-17 Adopted salaries for the Fire, Police and Harbor sworn payroll to estimate employee pension and health benefit costs. Below are details of the Citys General Fund Contribution for Fire and P olice and the Harbor Special Fund Contribution.

    The Citys General Fund (Fire and Police) Contribution The Citys Combined Contribution Rate is 44.54% (32.66% for pension benefits and 11.88% for health benefits). As reflected in the table below, although the sworn Fire and P olice payroll is increasing by $44.1 million (3.3%), the Citys General Fund Combined Contribution is decreasing by $7.2 million due to the Combined Contribution Rate decreasing by approximately two percent. The Citys Combined Contribution Rate decreased due to a greater than expected return on investments, and a lower than expected COLA increases for retirees, beneficiaries, and Deferred Retirement Option Plan (DROP) members. The Citys total 2016-17 contribution including the Citys Excess Benefit Plan payment is $616.2 million. The Excess Benefit Plan for 2016-17 increased from the Proposed Budget by approximately $500,000 as a result of additional members exceeding the IRS limit and Cost of Living Adjustment (COLA) increase approved by the Board on April 7, 2016.

    (See Attachment I Schedules 2 and 3)

    2015-16 Final Budget

    2016-17 Final Budget Change

    Percent Change

    Sworn Payroll $ 1,339,604,221 $ 1,383,703,751 $ 44,099,530 3.29% Combined Contribution Rate (Pension & Health) 46.51% 44.54% (1.97%) (4.24%) City General Fund Contribution $ 623,414,600 $ 616,234,998 $ (7,179,602) (1.15%)

    If the City contribution is made by July 15, 2016, the City will realize approximately $20.9 million in early payment savings. This discount is already reflected in the figures above.

    1) The Citys Special Fund (Harbor) Contribution - The Systems actuary calculates the Combined Contribution Rate separately for these members since the Harbor Department provides this contribution. The Harbors Combined Contribution Rate is 33.58% (26.78% for pension

  • Board Report Page 3 June 16, 2016

    benefits and 6.8% for health benefits). The 2016-17 Harbor Department Contribution is increasing as reflected in the table below.

    (See Attachment I Schedules 2 and 3)

    2015-16 Final Budget

    2016-17 Final Budget Change

    Percent Change

    Sworn Payroll $ 12,184,000 $ 13,541,223 $ 1,357,223 11.14% Combined Contribution Rate (Pension & Health) 34.77% 33.58% (1.19%) (3.42%) Harbor - Special Fund Contribution

    $ 4,237,083 $ 4,547,876 $ 310,793 7.34%

    If the Harbor contribution is made by July 15, 2016, the Harbor Department will realize approximately $152,000 in early payment savings. This discount is already reflected in the figures above.

    2) Member Contributions As reflected in the table below, the member contributions are

    estimated to increase due to the increase in 2016-17 sworn payroll budget amounts. Member contributions are paid by the members on a biweekly basis through the payroll process.

    (See Attachment I

    Schedule 3) 2015-16

    Final Budget 2016-17

    Final Budget Change Percent Change

    Police - General Fund $ 99,878,328 $ 103,814,339 $ 3,936,011 3.94% Fire - General Fund $ 35,681,478 $ 36,934,332 $ 1,252,854 3.51% Harbor - Special Fund $ 1,276,017 $ 1,411,888 $ 135,871 10.64% TOTAL Contributions $ 136,835,823 $ 142,160,559 $ 5,324,736 3.89%

    Expenditures There are no changes being recommended for Pension Benefits and Investment Management Expenses in the Final 2016-17 LAFPP Budget. However, there are some Administrative Expense changes compared to the LAFPPs 2016-17 Proposed Budget approved by the Board on March 17, 2016. The 2016-17 Proposed Budget included a $641,000 (-2.68%) decrease in Administrative Expenses from 2015-16. Staff is now reflecting additional savings of approximately $12,000 in the Final 2016-17 Budget. The total revised budgetary decrease from 2015-16 is now approximately $653,000 (-2.73%). The additional savings is a result of a net decrease for the items requested below:

    Medical and Dental Health Consultant Increase $60,000

    The Medical and Dental Benefits Section health consultant has industry knowledge and expertise to assist with any inquiries that may arise throughout the contract term regarding health reform, benefits administration, and related issues. As part of the 2016-17 Business Plan (Project 6: Health Care Education and Research/Implement Options for Members), LAFPP will enhance this service to focus on researching alternative medical and dental insurance coverage options for those who currently receive their medical and/or dental

  • Board Report Page 4 June 16, 2016

    insurance through LAFPPs agreement with the Los Angeles City Employees Retirement System (LACERS) or their health subsidy through the LAFPP Health Insurance Premium Reimbursement Program (HIPR). The increase will help fund the preparation and implementation for Request for Proposals for Dental and/or Vision group plans, and a private Medicare Exchange.

    Department Vehicle Increase $40,000

    The LAFPP owns two vehicles: one (1) 2001 Ford Taurus Wagon and one (1) 2001 Ford Focus. The Ford Taurus Wagon is 15 years old and is experiencing mechanical trouble that requires frequent maintenance. A representative from the General Services Department (GSD) Fleet Services Division recommends replacement of said vehicle to avoid frequent maintenance costs. The budget amount of $40,000 for one vehicle was not included in the Proposed Budget due to the subsequent arrival of the GSD recommendation. The replacement of the Ford Focus may be evaluated for possible inclusion in the 2017-18 Proposed Budget.

    LAFPP Employee Retirement Contribution Decrease ($134,000)

    The Los Angeles City Employees Retirement System (LACERS) requests LAFPP to transfer an a mount at the beginning of each fiscal year to pay for LAFPP employee retirement contributions. The amount was reduced for next fiscal year after excluding non-pensionable costs from LAFPP's overall salary budget ($40,000) and earning a credit in 2015-16 as a r esult of LACERS true-up exercise ($94,000). Further, the rate for City employees was reduced from 28.75% to 28.16% for Tier 1 employees and a new Tier 3 rate of 24.96% was established for newly hired employees to City.

    Financial Statements Auditor Decrease ($8,000) In the 2016-17 Proposed Budget, the Internal Audit Section requested funds in the amount of $98,000 to secure a contract for an external financial auditor. Now that the Board has selected a firm, the budget amount can been reduced to $90,000.

    Systems: Tablets Increase ($30,100) As part of the 2015-16 Business Plan (Project 9: Operational Best Practices), the Systems Section was provided $30,100 to cover the tablet replacement cycle and deploy new tablets to Section Managers. Currently, only LAFPP executives have tablets, which have been extremely valuable for Board meetings, mobile communication, productivity efforts, and reducing paper costs. Unfortunately, the tablets were not purchased due to staffing resources being reallocated to work on the new headquarters IT build out and move, and post-move system stabilization efforts. These funds are now being included in the 2016-17 Budget.

    Also included in this report are LAFPP key budget indicator graphs (Attachment II) reflecting historical trends of Investment Management Fees, Expenses, Receipt Contributions, Portfolio Asset Totals versus Management Fees, and DROP Participation Totals.

  • Board Report Page 5 June 16, 2016

    POLICY No policy changes are recommended.

    This report was prepared by: Mark Granado Administrative Services Section WPC:WSR:SHC:DP:MG Attachments: I. 2016-17 Final LAFPP Budget II. Key Budget Indicator Graphs III. 2016-17 Proposed Budget (Approved by the Board on March 17, 2016)

  • DEPARTMENT OF FIRE AND POLICE PENSIONSFiscal Year 2016-17 Budget

    Attachment I

    Schedule Page

    FISCAL YEAR 2016-17 BUDGET SCHEDULE 1 2

    DETAIL OF CITY AND HARBOR CONTRIBUTION REQUIREMENTS SCHEDULE 2 3

    DETAIL OF ESTIMATED PAYROLLS AND MEMBER CONTRIBUTIONS SCHEDULE 3 5

    DETAIL OF INVESTMENT MANAGEMENT EXPENSE SCHEDULE 4 6

    ADMINISTRATIVE EXPENSE SCHEDULE 5 8

    DETAIL OF ADMINISTRATIVE EXPENSE SCHEDULE 6 9

    PERSONNEL RESOLUTION SCHEDULE 7 12

    DETAIL OF PERSONNEL CHANGES SCHEDULE 8 14

    ORGANIZATION CHART SCHEDULE 9 15

    TRAVEL RESOLUTION SCHEDULE 10 19

    TABLE OF CONTENTS

    1 2016-17 Budget - June 16, 2016

  • DEPARTMENT OF FIRE AND POLICE PENSIONSFiscal Year 2016-17 Budget

    Attachment ISchedule 1

    Receipts 2014-15

    Adopted Budget 2015-16

    Estimated Receipts 2015-16

    Budget 2016-17

    Change from Budget2015-16

    % Change from Budget

    2015-16RECEIPTS

    624,974,315 623,414,600 622,851,100 Total General Fund 1 616,234,998 (7,179,602) -1.15%(551,000) (563,500) (1,018,273) less: Excess Benefit Plan (EBP)1 (1,303,600) (740,100) 131.34%

    624,423,315 622,851,100 621,832,827 General Fund to LAFPP 614,931,398 (7,919,702) -1.27%4,385,448 4,237,083 4,237,083 Special Fund (Harbor) 4,547,876 310,793 7.34%

    628,808,763 627,088,183 626,069,910 City Contribution (to LAFPP) 619,479,274 (7,608,909) -1.21%

    126,770,882 136,835,823 131,881,479 Member Contributions 142,160,559 5,324,735 3.89%593,209,996 355,440,000 375,164,672 Earnings on Investments 325,000,000 (30,440,000) -8.56%917,994,159 - - Gain (Loss) on Sale of Investments 2 - -

    4,849,056 1,000,000 3,317,335 Miscellaneous 2,000,000 1,000,000 100.00%

    2,271,632,856 1,120,364,006 1,136,433,395 Total Receipts 1,088,639,833 (31,724,174) -2.83%

    Expenditures 2014-15

    Adopted Budget 2015-16

    Estimated Expenditures

    2015-16Budget 2016-17

    Change from Budget2015-16

    % Change from Budget

    2015-16EXPENDITURES

    554,857,756 566,000,000 573,333,927 Service Pensions 590,000,000 24,000,000 4.24%126,625,940 176,000,000 175,000,000 Service Pensions - DROP payout 105,000,000 (71,000,000) -40.34%114,429,204 120,000,000 111,988,738 Disability Pensions 120,000,000 - 0.00%116,934,971 122,000,000 117,505,459 Surviving Spouse Pensions 121,000,000 (1,000,000) -0.82%

    2,315,407 2,000,000 2,259,469 Minor/Dependent Pensions 2,500,000 500,000 25.00%3,746,038 3,500,000 3,562,889 Refund of Contributions 3,500,000 - 0.00%

    96,198,577 108,000,000 102,047,211 Health Insurance Subsidy 113,000,000 5,000,000 4.63%3,728,940 4,100,000 3,868,447 Dental Insurance Subsidy 4,100,000 - 0.00%9,477,016 11,750,000 9,671,256 Medicare Reimbursement 11,500,000 (250,000) -2.13%1,005,936 1,300,000 1,287,161 Health Insurance Premium Reimb 1,300,000 - 0.00%

    75,764,990 88,221,206 85,179,196 Investment Management Expense 91,152,419 2,931,213 3.32%19,178,885 23,923,535 24,402,312 Administrative Expense 23,270,652 (652,883) -2.73%

    1,124,263,660 1,226,794,741 1,210,106,066 Total Expenditures 1,186,323,071 (40,471,670) -3.30%

    1,147,369,196 (106,430,734) (73,672,671) Increase (Decrease) in Fund Balance (97,683,238) 8,747,496 -8.22%

    2,271,632,856 1,120,364,006 1,136,433,395 Total Expenditures and Increase (Decrease) in Fund Balance 1,088,639,833 (31,724,174) -2.83%

    2 Gain (Loss) on Sale of Investments is recorded in LAFPP financial statements after the amount is audited.

    1 On May 6, 2010, the Board authorized a credit to be applied towards the City's Annual Required Contribution equal to the amount budgeted for theExcess Benefit Plan (EBP), as calculated by the actuary. As such, beginning in 2010-11, the total General Fund Contribution in a given Fiscal Year isthe sum of the General Fund and EBP line items. However, since EBP revenue is not transferred to LAFPP, it is excluded from the department's totalrevenue.

    2 2016-17 Budget - June 16, 2016

  • DEPARTMENT OF FIRE AND POLICE PENSIONSFiscal Year 2016-17 BudgetDetail of City and Harbor Contribution Requirements(Assuming Contributions Made on July 15, 2016)

    Attachment ISchedule 2

    % of Payroll

    Projected Payroll =

    Contribution 1

    RequiredTIER 1 requirements:

    1. Unfunded supplemental present value annual amount N/A N/A 15,019,337 2. Health subsidy unfunded actuarial accrued liability annual amount N/A N/A 1,845,779

    Subtotal 16,865,116 TIER 2 requirements:

    1. Entry age cost 25.00% 3,071,822 767,956 2. Unfunded supplemental present value annual amount* 0.78% 1,383,703,751 10,792,889 3. Pension Admin Expenses 0.91% 3,071,822 27,954 4. Health subsidy entry age cost 3.52% 3,071,822 108,128 5. Health subsidy unfunded actuarial accrued liability annual amount* 4.12% 1,383,703,751 57,008,595 6. Health Admin Expenses 0.06% 3,071,822 1,843

    Subtotal 68,707,364 * Unfunded Actuarial Accrued Liability (UAAL) expressed as a percent of payroll for all active members.

    TIER 3 requirements:1. Entry age cost 16.61% 93,372,329 15,509,144 2. Unfunded supplemental present value annual amount* 2.32% 1,383,703,751 32,101,927 3. Pension Admin Expenses 0.91% 93,372,329 849,688 4. Health subsidy entry age cost 4.41% 93,372,329 4,117,720 5. Health subsidy unfunded actuarial accrued liability annual amount* 0.34% 1,383,703,751 4,704,593 6. Health Admin Expenses 0.06% 93,372,329 56,023

    Subtotal 57,339,095 * Unfunded Actuarial Accrued Liability (UAAL) expressed as a percent of payroll for all active members.

    TIER 4 requirements:1. Entry age cost 17.38% 36,820,357 6,399,378 2. Unfunded supplemental present value annual amount* 1.17% 1,383,703,751 16,189,334 3. Pension Admin Expenses 0.91% 36,820,357 335,065 4. Health subsidy entry age cost 4.21% 36,820,357 1,550,137 5. Health subsidy unfunded actuarial accrued liability annual amount* 0.20% 1,383,703,751 2,767,408 6. Health Admin Expenses 0.06% 36,820,357 22,092

    Subtotal 27,263,414 * Unfunded Actuarial Accrued Liability (UAAL) expressed as a percent of payroll for all active members.

    TIER 5 requirements:1. Entry age cost 19.15% 1,164,013,106 222,908,510 2. Unfunded supplemental present value annual amount 8.49% 1,164,013,106 98,824,713 3. Pension Admin Expenses 0.91% 1,164,013,106 10,592,519 4. Health subsidy entry age cost 4.19% 1,164,013,106 48,772,149 5. Health subsidy unfunded actuarial accrued liability annual amount* 2.94% 1,164,013,106 34,221,985 6. Health Admin Expenses 0.06% 1,164,013,106 698,408

    Subtotal 416,018,284

    3 2016-17 Budget - June 16, 2016

  • DEPARTMENT OF FIRE AND POLICE PENSIONSFiscal Year 2016-17 BudgetDetail of City and Harbor Contribution Requirements(Assuming Contributions Made on July 15, 2016)

    Attachment ISchedule 2

    % of Payroll

    Projected Payroll =

    Contribution 1

    RequiredTIER 6 requirements:

    1. Entry age cost 15.67% 86,426,136 13,542,976 2. Unfunded supplemental present value annual amount 8.49% 86,426,136 7,337,579 3. Pension Admin Expenses 0.91% 86,426,136 786,478 4. Health subsidy entry age cost 6.69% 86,426,136 5,781,909 5. Health subsidy unfunded actuarial accrued liability annual amount* 2.94% 86,426,136 2,540,928 6. Health Admin Expenses 0.06% 86,426,136 51,856

    Subtotal 30,041,725

    NET CITY (GENERAL FUND) ACTUARIAL CONTRIBUTION REQUIREMENT 616,234,998 Early Payment Savings (relative to payment at the end of each pay period) 20,946,179

    TIER 5 Harbor requirements:1. Entry age cost 19.61% 12,513,850 2,453,966 2. Unfunded supplemental present value annual amount 6.62% 12,513,850 828,417 3. Pension Admin Expenses 0.91% 12,513,850 113,876 4. Health subsidy entry age cost 5.63% 12,513,850 704,530 5. Health subsidy unfunded actuarial accrued liability annual amount* 1.09% 12,513,850 136,401 6. Health Admin Expenses 0.06% 12,513,850 7,508

    Subtotal 4,244,698 TIER 6 Harbor requirements:

    1. Entry age cost 14.93% 1,027,373 153,387 2. Unfunded supplemental present value annual amount 6.62% 1,027,373 68,012 3. Pension Admin Expenses 0.91% 1,027,373 9,349 4. Health subsidy entry age cost 5.90% 1,027,373 60,615 5. Health subsidy unfunded actuarial accrued liability annual amount* 1.09% 1,027,373 11,198 6. Health Admin Expenses 0.06% 1,027,373 616

    Subtotal 303,178

    NET HARBOR (SPECIAL FUND) ACTUARIAL CONTRIBUTION REQUIREMENT 4,547,876 Early Payment Savings (relative to payment at the end of each pay period) 151,577

    GENERAL FUND TO LAFPP 614,931,398 GENERAL FUND: EXCESS BENEFIT PLAN 1,303,600

    616,234,998

    4,547,876

    TOTAL CITY CONTRIBUTION 620,782,874

    TOTAL SPECIAL FUND (HARBOR) CONTRIBUTION

    TOTAL GENERAL FUND CONTRIBUTION

    1 Figures may be rounded.

    4 2016-17 Budget - June 16, 2016

  • DEPARTMENT OF FIRE AND POLICE PENSIONSFiscal Year 2016-17 BudgetDetail of Estimated Payrolls and Member Contributions

    Attachment ISchedule 3

    Tier 2 Tier 3 Tier 4 Tier 5 Tier 6 TOTAL 4SWORNPAYROLL

    PENSIONABLE PAYFire 807,089 24,532,602 9,674,163 305,832,252 22,707,562 363,553,668 Police 2,264,733 68,839,728 27,146,194 858,180,854 63,718,574 1,020,150,083 Harbor - - - 12,513,850 1,027,373 13,541,223

    TOTAL 3,071,822 93,372,329 36,820,357 1,176,526,957 87,453,509 1,397,244,974 TOTAL General Fund 3,071,822 93,372,329 36,820,357 1,164,013,106 86,426,136 1,383,703,751 TOTAL Special Fund - - - 12,513,850 1,027,373 13,541,223

    2% OPT-IN (BASE PAY)1

    Fire 268,765 1,371,568 3,645,087 203,467,405 - 208,752,824 Police 622,863 58,355,685 18,970,276 516,558,411 - 594,507,236 Harbor - - - 8,631,518 - 8,631,518

    TOTAL 891,628 59,727,253 22,615,363 728,657,334 - 811,891,578 TOTAL General Fund 891,628 59,727,253 22,615,363 720,025,816 - 803,260,060 TOTAL Special Fund - - - 8,631,518 - 8,631,518

    MEMBER CONTRIBUTIONS

    PENSIONABLE PAYSeven Percent2 Eight Percent Eight Percent Nine Percent Eleven Percent TOTAL

    Fire - 1,962,608 773,933 27,524,903 2,497,832 32,759,276 Police - 5,507,178 2,171,695 77,236,277 7,009,043 91,924,194 H b 1 126 247 113 011 1 239 258

    5 2016-17 Budget - June 16, 2016

    Harbor - - - 1,126,247 113,011 1,239,258 TOTAL - 7,469,786 2,945,629 105,887,426 9,619,886 125,922,727

    2% OPT-IN (BASE PAY)3

    Two Percent Two Percent Two Percent Two Percent Two Percent TOTALFire 5,375 27,431 72,902 4,069,348 - 4,175,056 Police 12,457 1,167,114 379,406 10,331,168 - 11,890,145 Harbor - - - 172,630 - 172,630 TOTAL 17,833 1,194,545 452,307 14,573,147 - 16,237,832

    TOTAL 17,833 8,664,331 3,397,936 120,460,573 9,619,886 142,160,559 TOTAL General Fund 17,833 8,664,331 3,397,936 119,161,696 9,506,875 140,748,671 TOTAL Special Fund - - - 1,298,877 113,011 1,411,888

    1 The 2% Opt-In Payroll is provided for informational purposes only to calculate the additional 2% member contribution. This amount is alreadyincluded in the Pensionable Pay amounts provided under this section. Amounts based on 2015-16, Pay Period 21 (Base Pay).

    2 Pursuant to Charter Section 1420, pension benefit related deductions shall not be made from the salaries of Tier 2 System Members who havecompleted 30 years of service. Accordingly, as of 12/8/2010, Tier 2 members no longer make pension contributions.

    4 Figures may be rounded.

    3 The 2% Opt-In Payroll is provided for informational purposes only to calculate the additional 2% member contribution. Amounts based on 2015-16, Pay Period 21 (Base Pay).

    5 2016-17 Budget - June 16, 2016

  • DEPARTMENT OF FIRE AND POLICE PENSIONSFiscal Year 2016-17 BudgetDetail of Investment Management Expense

    Attachment ISchedule 4

    Adopted Budget2015-16

    Estimated Expenditures

    2015-16Budget 2016-17

    Change from 3

    2015-16Budget

    CONSULTANTSCustodian Bank Services (STIF) 278,660 276,534 275,338 (3,322) General Consultant 503,750 427,250 503,750 -

    CONSULTANT TOTAL 782,410 703,784 779,088 (3,322)

    ADVISORYPUBLIC EQUITY - LARGE CAP

    Alliance Bernstein S&P 500 Index 206,643 150,925 174,908 (31,735) Alliance Bernstein Russell 1000 Growth Index 211,032 195,701 213,594 2,563 Alliance Bernstein Russell 1000 Value Index 45,170 25,492 27,654 (17,516) Chicago Equity 699,590 500,075 530,939 (168,651) FIS Funds Mgmt - Domestic - - - - Future Emerging Manager - Large Cap 165,624 - - (165,624) OakBrook Investments - Large Cap Core - 139,480 148,969 148,969 Redwood Investments - Large Cap Core - 115,267 122,031 122,031 L.A. Capital 620,228 567,490 600,495 (19,733) Research Affiliates 1,010,210 1,066,441 - (1,010,210) PIMCO - 211,869 954,762 954,762 Robeco Investment Mgmt 852,170 730,684 798,386 (53,784)

    Subtotal 3,810,666 3,703,424 3,571,738 (238,928)

    PUBLIC EQUITY - SMALL CAPAttucks Asset Mgmt 717,504 - - (717,504) Daruma 2,493,036 2,166,446 2,357,838 (135,198) Frontier Capital Mgmt 3,601,154 2,133,628 3,472,935 (128,219) Future Emerging Manager - Small/Micro Cap 368,053 - - (368,053) Channing Capital Management - Small Cap - 387,823 421,264 421,264 Phocas Financial - Small Cap - 425,582 459,673 459,673 Granite Investment Partners - Micro Cap - 274,140 308,407 308,407

    Subtotal 7,179,747 5,387,618 7,020,117 (159,630)

    PUBLIC EQUITY - INTERNATIONALBaillie Gifford 2,336,265 2,094,050 2,267,805 (68,461) Blackrock 280,438 250,022 283,252 2,813 Boston Common 176,313 153,792 171,582 (4,731) Brandes Investment Advisors 3,861,335 3,427,321 3,735,275 (126,060) Del Rey 204,209 - - (204,209) FIS Funds Mgmt - International 676,057 601,114 666,085 (9,972) Fisher Investments 2,026,496 1,774,087 1,955,960 (70,536) Northern Trust Int'l Small Cap Index 243,688 236,376 261,543 17,855

    Subtotal 9,804,802 8,536,763 9,341,502 (463,300)

    EMERGING MARKETSDimensional Fund Advisors 2,410,466 1,917,572 1,689,060 (721,406) Harding Loevner 2,532,141 2,450,009 2,500,645 (31,496)

    Subtotal 4,942,607 4,367,582 4,189,705 (752,902)

    BONDS - INVESTMENT GRADEBridgewater PAMM 1,396,137 1,288,558 1,488,293 92,156 Bridgewater TIPS 1,451,352 1,368,441 1,438,994 (12,358) Future Emerging Manager - Fixed Income 121,458 - - (121,458) GIA Partners - 78,425 83,085 83,085 Semper Capital Management - 78,902 83,392 83,392

    6 2016-17 Budget - June 16, 2016

  • DEPARTMENT OF FIRE AND POLICE PENSIONSFiscal Year 2016-17 BudgetDetail of Investment Management Expense

    Attachment ISchedule 4

    Adopted Budget2015-16

    Estimated Expenditures

    2015-16Budget 2016-17

    Change from 3

    2015-16Budget

    BONDS - INVESTMENT GRADE (Continued)LM Capital Mgmt 391,465 312,527 360,827 (30,638) Loomis, Sayles & Co. 668,227 702,914 599,773 (68,454) Northern Trust Bond Index 197,661 192,639 207,276 9,615 Payden & Rygel 677,162 625,631 686,260 9,098 Reams Asset Mgmt 767,815 712,001 755,474 (12,341) Reams Asset Mgmt TIPS Index 102,939 95,746 111,485 8,546 Reams Asset Mgmt UFI 388,734 363,483 386,510 (2,224)

    Subtotal 6,162,949 5,819,268 6,201,368 38,419 BONDS - HIGH YIELD

    MacKay Shields 2,019,815 1,891,541 2,053,188 33,374 Subtotal 2,019,815 1,891,541 2,053,188 33,374

    PRIVATE EQUITYPortfolio Advisors 1,225,000 1,225,000 1,225,000 -Portfolio Advisors Specialized Mandate 45,000 45,000 45,000 - Private Equity Partnership Fees 27,777,587 28,114,507 29,871,455 2,093,868

    Subtotal 29,047,587 29,384,507 31,141,455 2,093,868

    COMMODITY-ENERGYAlliance Bernstein Commodity Index 236,289 245,281 255,272 18,983 Kleinwort Benson 538,694 446,509 481,341 (57,353) Mellon Capital 228,789 199,921 190,439 (38,350) New Commodities Futures/Derivatives Mgrs 1,115,313 - - (1,115,313) Gresham Investment Management - 484,090 529,436 529,436 Goldman Sachs - 111,908 124,412 124,412 Private Equity Partnership Fees 1 412,111 942,861 894,812 482,701

    Subtotal 2,531,195 2,430,570 2,475,712 (55,483)

    REAL ESTATEAlliance Bernstein REIT Index 123,118 81,446 64,367 (58,751) Heitman Asset Mgmt Fees 1,031,218 1,088,178 1,191,321 160,103 Pooled Funds Fees 2 16,267,677 16,940,287 17,698,790 1,431,113 Principal Global REIT 853,479 810,033 851,729 (1,750) Principal US REIT 1,611,201 1,591,375 1,642,506 31,305 Sentinel Asset Mgmt Fees 1,112,234 1,230,888 1,342,634 230,400 Sentinel - Neptune (Headquarters) - 154,734 530,000 530,000 Separate Account Acquisition, Disposition, Perf. 640,300 757,000 757,000 116,700 Townsend 300,200 300,200 300,200 -

    Subtotal 21,939,428 22,954,141 24,378,547 2,439,119

    ADVISORY TOTAL 87,438,796 84,475,412 90,373,331 2,934,535

    TOTAL INVESTMENT MANAGEMENT EXPENSE 88,221,206 85,179,196 91,152,419 2,931,213

    Partnership fees do not include performance fees. Generally performance fees take 20% of the profit. In some cases, they can go as high as30%.

    3 Figures may be rounded.

    2 Pooled Fund fees do not include performance fees. Generally performance fees take 20% of the profit. In some cases, they can go as high as30%.

    7 2016-17 Budget - June 16, 2016

  • DEPARTMENT OF FIRE AND POLICE PENSIONSFiscal Year 2016-17 BudgetAdministrative Expense

    Attachment ISchedule 5

    Actual Adopted Estimated % ChangeAcct Exp Budget1 Exp2 Budget from BudgetNo. 2014-15 2015-16 2015-16 Account Titles 2016-17 2015-16

    641010 10,168,719 10,952,000 10,406,000 Salaries - General 11,800,000 7.74%

    641070 96,732 111,000 123,000 Salaries - As-Needed 107,000 -3.60%

    641090 73,476 89,515 87,000 Overtime 69,715 -22.12%10,338,927 11,152,515 10,616,000 Sub-total Salaries 11,976,715 7.39%

    642120 24,537 36,154 36,000 Printing and Binding 36,654 1.38%

    642130 76,184 162,635 130,000 Travel Expense 159,443 -1.96%

    643040 3,740,262 6,581,312 6,574,312 Contractual Expense 4,932,150 -25.06%

    643310 6,000 6,000 6,000 Transportation 6,000 0.00%

    643310 225,800 200,000 350,000 Medical Services 330,000 65.00%

    645180 1,105,787 1,360,000 1,256,000 Health Insurance 1,300,000 -4.41%

    645190 47,783 55,000 54,000 Dental Insurance 55,000 0.00%

    645200 35,000 40,000 39,000 Other Employee Benefits 40,000 0.00%

    645360 2,783,865 3,108,000 3,108,000 Retirement Contribution3 3,175,000 2.16%

    645370 130,000 160,000 160,000 Medicare Contribution 173,000 8.13%

    645417 21,585 - - Election Expense 25,000 -

    646010 467,179 771,919 600,000 Office and Administrative Expense 728,690 -5.60%

    649570 2,137 20,000 10,000 Tuition Reimbursement 20,000 0.00%8,666,119 12,501,020 12,323,312 Sub-total Expense 10,980,937 -12.16%

    647300 173,839 - 1,463,000 Total Furniture, Office, & Tech Equip. 60,000 -

    649500 - 270,000 - Unappropriated Balance 253,000 -6.30%

    19,178,885 23,923,535 24,402,312 TOTAL ADMINISTRATIVE EXPENSE 23,270,652 -2.73%

    1 Various adjustments were made to the following accounts as authorized by the Board after the 2015-16 Adopted Budget was approved:

    a) $1,272,000 appropriated for the new Headquarters (HQ): $153,000 to Contractual Expense (Account 643040), $16,000 to Office and Administrative Expense(Account 646010), and $1,103,000 to Furniture, Office, & Tech Equip. (Account 647300) in July 2015; and

    b) $10,000 approved for transfer from Contractual Expense (Account 643040) to Furniture, Office & Tech Equip. (Account 647300) in September 2015; $150,000approved for transfer from Contractual Expense (Account 643040) to Medical Services (Account 644230) in January 2016 and $20,000 approved for transfer fromSalaries - General (Account 641010) to Salaries - As Needed (Account 641070) in February 2016; and

    c) $350,000 transferred to Furniture, Office & Tech Equip. (Account 647300) offset HQ related costs; $160,000 from Salaries - General (Account 641010),$10,000 from Travel (Account 642130), and $180,000 from the Unappropriated Balance (Account 649500) in March 2016. The funds were processed based onJuly 16, 2015 Board authority to move funds between line items as needed for the HQ Project; and

    d) $211,000 transferred to Contractual Expense (Account 643040) offset HQ related costs; $150,000 from Salaries - General (Account 641010) and $61,000 fromthe Unappropriated Balance (Account 649500) in June 2016. The funds are being processed based on July 16, 2015 Board authority to move funds between lineitems as needed for the HQ Project.

    2 Estimated Expenditures for 2015-16 includes Headquarters expenses approved by the Board after the 2015-16 Adopted Budget was approved.

    3 Beginning 2014-15, LAFPP makes payments to LACERS for LAFPP employee retirement contributions pursuant to the released audit of the City Contribution toLACERS and LAFPP (Account 645360).

    8 2016-17 Budget - June 16, 2016

  • DEPARTMENT OF FIRE AND POLICE PENSIONSFiscal Year 2016-17 BudgetDetail of Administrative Expense

    Attachment ISchedule 6

    AdoptedAcct Budget1 Budget Change fromNo. Account Titles 2015-16 2016-17 2015-16

    641010 Salaries - General 10,952,000 11,800,000 848,000641070 Salaries - As-Needed 111,000 107,000 (4,000)641090 Overtime 89,515 69,715 (19,800)

    Total Salaries 11,152,515 11,976,715 824,200

    642120 Printing and Binding 36,154 36,654 500642130 Travel Expense 162,635 159,443 (3,192)643040 Contractual Expense

    City AttorneyCity Attorney Staff 685,000 740,000 55,000 City Attorney Expense Paid to LACERS 34,000 35,700 1,700 Legal Services: Real Estate and Investment Counsel 235,000 235,000 - Legal Services: Fiduciary Counsel 150,000 150,000 - Legal Services: Securities Litigation Counsel 100,000 50,000 (50,000) Legal Services: Legal Representation 100,000 100,000 - Legal Services: Tax Counsel 100,000 100,000 -

    Subtotal 1,404,000 1,410,700 6,700

    Communications and EducationFinancial Planning Education - Venue 15,000 15,000 - Financial Planning Education Consultant 75,000 70,000 (5,000) Graphic Design Services 26,000 26,000 - Pre-Retirement Seminar Caterer 35,000 35,000 - Survey Consulting Services 14,000 14,000 - Web Site Support Services 60,000 30,000 (30,000)

    Subtotal 225,000 190,000 (35,000)

    Department-wideContracted Training 5,000 5,000 - HQ Contingency - 75,000 75,000 Office Space Lease 824,000 - (824,000) Photocopiers 20,000 20,000 - Records Retention 5,000 5,000 - Secure Shredding Services 4,500 4,500 - Vehicle Maintenance 5,000 5,000 - Workers Compensation 90,000 60,000 (30,000)

    Subtotal 953,500 174,500 (779,000)

    Disability PensionHearing Reporter 20,000 20,000 - Investigative Services 75,000 100,000 25,000

    Subtotal 95,000 120,000 25,000

    ExecutiveActuarial Services 325,000 325,000 - Annual Retreat Services 7,500 8,000 500 Fiduciary Liability Insurance 50,000 50,000 - Governance Consultant 20,000 20,000 -

    Subtotal 402,500 403,000 500

    Internal AuditALGA Peer Review - 8,950 8,950 Financial Audit 85,000 90,000 5,000

    Subtotal 85,000 98,950 13,950

    9 2016-17 Budget - June 16, 2016

  • DEPARTMENT OF FIRE AND POLICE PENSIONSFiscal Year 2016-17 BudgetDetail of Administrative Expense

    Attachment ISchedule 6

    AdoptedAcct Budget1 Budget Change fromNo. Account Titles 2015-16 2016-17 2015-16

    InvestmentsProxy Service (Transferred from 646010) - 40,000 40,000

    Subtotal 0 40,000 40,000

    Medical and Dental BenefitsBackfile Conversion of On-Site Documents (Viatron) 50,000 - (50,000) Health Consultant 30,000 90,000 60,000

    Subtotal 80,000 90,000 10,000

    SystemsDisaster Recovery - Verizon Terremark 86,000 73,000 (13,000) Document Management System (Documentum) 68,000 - (68,000) EMC/AT&T 24,000 24,000 - IT Network Security Penetration Test - 20,000 20,000 IT Systems Security 30,000 30,000 - Offsite Media Storage 12,000 12,000 - OnPoint Enhancements 50,000 25,000 (25,000) OnPoint License & Maintenance 175,000 175,000 - Pension Administration System Consultant (LRWL) 386,667 390,000 3,333 Pension Administration System (Xerox State & Local Solutions) 2,204,645 1,356,000 (848,645) Retiree Benefit Payment Services 300,000 300,000 -

    Subtotal 3,336,312 2,405,000 (931,312)

    Total Contractual Expense 6,581,312 4,932,150 (1,649,162)

    643310 Transportation 6,000 6,000 - 644230 Medical Services (Disability Cases) 200,000 330,000 130,000 645180 Health Insurance 1,360,000 1,300,000 (60,000) 645190 Dental Insurance 55,000 55,000 - 645200 Other Employee Benefits 40,000 40,000 - 645360 Retirement Contribution2 3,108,000 3,175,000 67,000 645370 Medicare Contribution 160,000 173,000 13,000 645417 Election Expense - 25,000 25,000

    646010 Office and Administrative Expense

    646010-01 Office & Administrative Expense 367,443 306,349 (61,094) 646010-02 Office Supplies 74,497 76,747 2,250 646010-03 Telephone, Internet, and Tablet Devices 123,200 142,300 19,100 646010-05 Training Expense 72,155 79,450 7,295 646010-06 Dues & Subscriptions 63,624 29,844 (33,780) 646010-530 Computer & Peripheral 71,000 94,000 23,000

    Total Office & Admin Expense 771,919 728,690 (43,229)

    649570 Tuition Reimbursement 20,000 20,000 -

    Total Expense 12,501,020 10,980,937 (1,520,083)

    647300 Total Furniture, Office, & Technical Equip. > $5,000 - 60,000 60,000

    10 2016-17 Budget - June 16, 2016

  • DEPARTMENT OF FIRE AND POLICE PENSIONSFiscal Year 2016-17 BudgetDetail of Administrative Expense

    Attachment ISchedule 6

    AdoptedAcct Budget1 Budget Change fromNo. Account Titles 2015-16 2016-17 2015-16

    649500 Unappropriated Balance (UB)

    Data Backup System 30,000 - (30,000) Financial Planning Counseling Program - 123,000

    Internal Audit Consultant 90,000 90,000 - Salary Contingency 150,000 - (150,000)

    Vehicle - 40,000 40,000

    Total Unappropriated Balance 270,000 253,000 (17,000)

    TOTAL ADMINISTRATIVE EXPENSE 23,923,535 23,270,652 (652,883)

    1 Various adjustments were made to the following accounts as authorized by the Board after the 2015-16 Adopted Budget was approved:

    a) $1,272,000 appropriated for the new Headquarters (HQ): $153,000 to Contractual Expense (Account 643040), $16,000 to Office andAdministrative Expense (Account 646010), and $1,103,000 to Furniture, Office, & Tech Equip. (Account 647300) in July 2015; and

    b) $10,000 approved for transfer from Contractual Expense (Account 643040) to Furniture, Office & Tech Equip. (Account 647300) in September2015; $150,000 approved for transfer from Contractual Expense (Account 643040) to Medical Services (Account 644230) in January 2016 and$20,000 approved for transfer from Salaries - General (Account 641010) to Salaries - As Needed (Account 641070) in February 2016; and

    c) $350,000 transferred to Furniture, Office & Tech Equip. (Account 647300) offset HQ related costs; $160,000 from Salaries - General (Account641010), $10,000 from Travel (Account 642130), and $180,000 from the Unappropriated Balance (Account 649500) in March 2016. The fundswere processed based on July 16, 2015 Board authority to move funds between line items as needed for the HQ Project; and

    d) $211,000 transferred to Contractual Expense (Account 643040) offset HQ related costs; $150,000 from Salaries - General (Account 641010)and $61,000 from the Unappropriated Balance (Account 649500) in June 2016. The funds are being processed based on July 16, 2015 Boardauthority to move funds between line items as needed for the HQ Project.

    2 Beginning 2014-15, LAFPP makes payments to LACERS for LAFPP employee retirement contributions pursuant to the released audit of theCity Contribution to LACERS and LAFPP (Account 645360).

    11 2016-17 Budget - June 16, 2016

  • DEPARTMENT OF FIRE AND POLICE PENSIONSFiscal Year 2016-17 BudgetPersonnel Resolution

    Attachment ISchedule 7

    FIRE AND POLICE PENSIONS

    2015-16 2016-17 Change Code Title

    2 2 0 1116 Secretary ( 48,108 - 70,324 )2 2 0 1117-2 Executive Administrative Assistant II ( 57,879 - 84,627 )1 1 0 1117-3 Executive Administrative Assistant III ( 62,034 - 90,703 )1 1 0 1170-1 Payroll Supervisor I ( 58,610 - 85,671 )1 0 -1 1170-2 Payroll Supervisor II ( 62,536 - 91,392 )1 1 0 1201 Principal Clerk ( 51,010 - 74,583 )18 19 1 1203 Benefits Specialist ( 51,010 - 74,583 )6 5 -1 1358 Administrative Clerk ( 35,809 - 52,409 )13 14 1 1368 Senior Administrative Clerk ( 44,245 - 64,707 )1 1 0 1431-3 Programmer Analyst III ( 72,370 - 105,778 )1 0 -1 1431-5 Programmer Analyst V ( 84,313 - 123,276 )1 1 0 1455-2 Systems Programmer II ( 86,339 - 126,199 )1 1 0 1455-3 Systems Programmer III ( 93,522 - 136,743 )7 7 0 1513-2 Accountant II ( 50,738 - 74,166 )1 1 0 1523-2 Senior Accountant II ( 63,768 - 93,229 )1 1 0 1525-1 Principal Accountant I ( 73,289 - 107,156 )1 1 0 1525-2 Principal Accountant II ( 77,340 - 113,086 )0 1 1 1539 Management Assistant ( 45,957 - 67,192 )1 1 0 1555-1 Fiscal Systems Specialist I ( 81,014 - 118,452 )1 1 0 1593-3 Departmental Chief Accountant III ( 108,764 - 159,022 )6 6 0 1596-2 Systems Analyst II ( 64,665 - 94,503 )2 3 1 1597-1 Senior Systems Analyst I ( 76,463 - 111,812 )2 2 0 1597-2 Senior Systems Analyst II ( 94,586 - 138,309 )1 1 0 1610 Departmental Audit Manager ( 117,408 - 171,654 )1 1 0 1625-4 Internal Auditor IV ( 94,566 - 138,288 )3 3 0 9146-1 Investment Officer I ( 87,967 - 128,600 )3 3 0 9146-2 Investment Officer II ( 109,578 - 160,212 )1 1 0 9146-3 Investment Officer III ( 137,808 - 201,492 )1 1 0 9147 Chief Investment Officer ( 170,861 - 249,808 )1 2 1 9151 Chief Benefits Analyst ( 117,408 - 171,654 )1 1 0 9167-1 Senior Personnel Analyst I ( 79,532 - 116,281 )5 5 0 9171-1 Senior Management Analyst I ( 76,379 - 111,624 )7 7 0 9171-2 Senior Management Analyst II ( 94,566 - 138,288 )1 1 0 9182 Chief Management Analyst ( 117,408 - 171,654 )2 2 0 9184-1 Management Analyst I ( 54,810 - 80,137 )15 17 2 9184-2 Management Analyst II ( 64,665 - 94,503 )1 1 0 9267 General Manager ( 155,389 - 275,449 )2 2 0 9269 Assistant General Manager ( 130,354 - 190,572 )1 1 0 9375 Director of Systems ( 117,408 - 171,654 )1 1 0 9734-2 Commission Executive Assistant II ( 64,665 - 94,503 )

    118 122 4

    A resolution authorizing the employment of personnel in the Department of Fire and Police Pensions of the City of LosAngeles

    Salary Range

    BE IT RESOLVED, that:

    Section 1. Effective July 1, 2016, the number and classification of positions listed below are authorized within the Los Angeles Fire and Police Pension System:

    (a) Regular Positions:

    12 2016-17 Budget - June 16, 2016

  • DEPARTMENT OF FIRE AND POLICE PENSIONSFiscal Year 2016-17 BudgetPersonnel Resolution

    Attachment ISchedule 7

    (b) Resolution Authority Positions:

    2015-16 2016-17 Change Code Title

    1 1 0 1539 Management Assistant ( 45,957 - 67,192 )1 1 0 9184-2 Management Analyst II ( 64,665 - 94,503 )

    2 2 0

    (c) To be Employed As Needed in Such Numbers as Required:

    0820 Administrative Trainee1133 Relief Retirement Worker1501 Student Worker1502 Student Professional Worker1535-1 Administrative Intern I1535-2 Administrative Intern II

    (d) Commissioner Positions:

    9 0101-2 Commissioner9

    Section 5. The General Manager may employ persons and assign duties appropriate to the employees classification andpay grade in any class of position specified in Schedule "A" of Los Angeles Administrative Code Section 4.61 in lieu of vacantpositions in a related occupational series which vacant positions have a salary or salary range equal to or higher than the salary orsalary range for the class of position in which the persons are to be employed; provided, however, that at no time shall the totalnumber of persons employed in the department exceed the total number of positions authorized.

    Section 6. The personnel authority contained in this resolution shall be limited by the amount of money available on therecords of the Departmental Chief Accountant for the payment of salaries and wages in the appropriate departmental account.

    Section 2. One Assistant General Manager (Class Code 9269), when designated by the General Manager to assume theadditional administrative and supervisory duties of Executive Officer, shall be compensated at the fourth premium level rate abovethe appropriate step rate or premium level rate of the incumbent. Upon approval of the General Manager, one additional AssistantGeneral Manager (Class Code 9269) may receive salary up to the fourth premium level rate above the appropriate step rate of theprescribed salary range.

    Section 4. Upon approval of the General Manager, substitute and resolution authority positions may be activated and filledusing any class of position specified in Schedule "A" of Los Angeles Administrative Code Section 4.61 or approved Memorandumof Understanding. This approval shall specify the period during which the position shall be filled. The General Manager shallmaintain a record of the substitute and resolution authority positions approved for filling.

    Section 3. Whenever the General Manager is authorized pursuant to Charter Section 1164(b) to employ a person who isretired from City service, the employee may be employed at any step within the salary range prescribed for the class that isdetermined by the General Manager to be commensurate with, and based upon, the extent, responsibility, and importance of thework to be assigned and the experience, skill and ability of the employee.

    Salary Range

    13 2016-17 Budget - June 16, 2016

  • DEPARTMENT OF FIRE AND POLICE PENSIONSFiscal Year 2016-17 BudgetDetail of Personnel Changes

    Attachment ISchedule 8

    CHANGE No. REASON FOR CHANGE

    ADD/DELETE POSITION

    Administrative Operations DivisionManagement Assistant 1 The requested Management Assistant is to support the Division

    (Accounting, Systems, HR and Administrative Services) on Headquartersclose-out and various special projects.

    Administrative ServicesSenior Administrative Clerk 1

    Administrative Clerk -1

    Communications & EducationBenefits Specialist 1 The requested Benefits Specialist is to support the expansion of

    communication and outreach efforts to LAFPP members andstakeholders.

    Disability PensionManagement Analyst II 1 The requested Management Analyst II is to assist and facilitate Disability

    application processing for service/nonservice-connected disabilities, aswell as survivor benefits for dependent children and parents.

    Pensions DivisionChief Benefits Analyst 1 The requested Chief Benefits Analyst will support the Division with

    oversight of seven Sections by sharing the responsibilities and dutieswith the other Chief Benefits Analyst.

    Retirement ServicesManagement Analyst II 1

    Payroll Supervisor II -1

    SystemsSenior Systems Analyst I 1

    Programmer Analyst V -1

    NET NUMBER OF POSITIONS 4

    Alignment of duties and requirements of position with properclassification of overseeing the DocuShare Unit, supervising (2)Administrative Clerks, and providing support to the Section.

    Alignment of duties and requirements of position with properclassification of supervising (4) Senior Administrative Clerks and providesupport and oversight to the Section on pensioner information andsupport services.

    Alignment of duties and requirements of position with properclassification of overseeing the Business Continuity and DisasterRecovery Program and providing system project support.

    14 2016-17 Budget - June 16, 2016

  • Members

    DEPARTMENT OF FIRE AND POLICE PENSIONS

    Fiscal Year 2016-2017 Budget

    Organization Chart

    Board of Fire and Police Pension

    Commissioners

    Internal Audit

    1 Departmental Audit Manager

    Erin Kenney

    1 Internal Auditor IV

    James Yeung

    1 Senior Management Analyst II

    Caroline Dinu

    General Manager - #041

    Raymond P. Ciranna

    1 Executive Administrative Assistant III Martha Martinez1 Secretary Joni Chavez

    Pensions Division

    Assistant General Manager -

    Joseph Salazar

    Chief Investment Officer -

    Thomas LopezExecutive Officer -

    William S. Raggio

    Authorized

    122

    LAFPP TOTAL POSITIONS

    Filled

    112

    *Sub-Authorities Filled

    5

    4

    **As Needed7

    2016-17 Budget June 16, 2016

    Investments DivisionAdminstrative Operations Division

    4

    City Attorney

    1 Assistant City Attorney

    Alan M. Manning

    2 Deputy City Attorney IV

    John C. Blair

    James H. Napier

    2 Deputy City Attorney III

    Anya J. Freedman

    Joshua M. Geller

    1 Legal Secretary II

    Julie Cruz

    *Resolution -Authorities2

    Filled

    2

    #075

    #119

    #104

    #009

    #086

    #077 #083 #042

    Attachment

    Schedule 9

    15

    Robert von Voigt President

    Pedram Salimpour Vice President

    George V. Aliano

    Sam Diannitto

    Adam Nathanson

    Ruben Navarro

    Brian Pendleton

    Corinne E. Tapia

    Belinda M. Vega

  • Ally Tang (Accountant I in-lieu)

    DEPARTMENT OF FIRE AND POLICE PENSIONS

    Fiscal Year 2016-2017 Budget

    Organization Chart Executive Officer

    William S. Raggio

    1 Commission Executive Assistant II Rhonda Ketay

    1 Director of Systems

    1 Principal Accountant II Danny Coloso

    1 Principal Accountant I Cecilia De Los Angeles 1 Senior Accountant II

    4 Accountant II

    1 Payroll Supervisor I Annett Anderson

    1 Administrative Clerk Laura Navarro

    Relief Retirement Worker** Niela Chavez 1

    1 Senior Personnel Analyst I

    Lindi Willhite

    1 Management Analyst II Jennifer Barnych (Mgmt. Asst. in-lieu)

    Narciso Magno Jr. (Sr. Acct. I in-lieu)

    3 Accountant II Felicitas De La Cruz Maria Nina De Leon-Tabangin John Strand

    General Accounting/Pension Roll

    1 Sr. Administrative Clerk Rita Harper

    ConSEPP

    1 Senior Systems Analyst II Alfredo Domagat 1 Senior Systems Analyst I

    1 Fiscal Systems Specialist I Pat Kho

    1 Systems Analyst II

    Server and Help Desk

    1 Senior Systems Analyst II David Liu

    1 Senior Systems Analyst I

    1 Systems Programmer II Tarralyn Rose

    4 Systems Analyst II

    1

    1 Programmer Analyst III

    Systems Analyst II*

    Network and Security

    1 Systems Programmer III Jimmy Lindsey

    1 Systems Analyst II Apollo Victoria

    Robin Woo

    Lingying Hwang (Accountant I in-lieu)

    Elaine Good Ramirez

    Teresa Guerrero

    Amorfina Stubblefield

    Jack Huang

    Alvaro Marin

    Kien Trieu

    James Kawashima

    Jazmin Erenas (Accountant I in-lieu)

    Management Assistant NEW 16-171

    1 Department Chief Accountant IV* Yolanda Huang

    Vacant Held for Sub-Authority

    Jennifer Shimatsu

    Sylvia Whelan

    Cynthia Gomez

    1 Senior Management Analyst II

    1 Senior Management Analyst I

    2 Management Analyst II Wendy Kamayatsu

    1 Principal Clerk Erick Kurimoto (Sr. Admin Clerk in-lieu)

    2 Sr. Administrative Clerk

    1 Administrative Clerk Krystle Gill

    Relief Retirement Worker**

    Administrative Unit

    Administrative Support Unit

    Sr. Admin. Clerk NEW 16-17

    James Pineda

    2 Administrative Clerk Julie Guan Timothy Morita

    Relief Retirement Worker**2

    Thushara Poozhikala

    Mark Granado

    Carissa Takahashi (Mgmt. Asst. in-lieu)

    Diana Pointer

    Vacant

    1

    Document Imaging Unit

    Accounting

    Vacant

    Vacant

    1 Executive Administrative Assistant II

    Evange Masud (Secretary in-lieu)

    2016-17 Budget June 16, 2016

    Bob Yan (Info Systems Manager II in-lieu)

    #069

    #011

    #128

    #077

    #064

    #109

    #073

    #074

    #079

    #092

    SA49

    #114

    #044

    #094

    #116

    #110

    #046

    #103

    #095

    #115

    #049

    #037

    #091

    SA52

    #036

    #018

    #034

    RRW6

    #062#033

    #093

    #035

    #032#100

    #014

    #117

    #057

    #118

    #051

    #061

    #105

    #085

    #056

    #012

    #015

    #106

    1

    RRW7

    #101#017

    #016

    Principal Accountant II Vacant 1 SA60

    Attachment

    Schedule 9

    16

    Vacant #088

    RRW5

    RRW1

    Systems

    Human Resources

    Administrative Services

    1 Chief Management Analyst

    Stephanie Clements

    Payroll/Investment Accounting

    ADMINISTRATIVE OPERATIONS DIVISION

    1 Department Chief Accountant III

    Vacant

    1 Senior Systems Analyst I New 16-17 #102

  • INVESTMENTS DIVISION

    Support

    1 Secretary Marie Prieto

    1 Sr. Administrative Clerk

    1 Investment Officer III

    Richard Rogers

    1 Investment Officer II

    Paul Palmer

    2 Investment Officer I Annie Chao Daren Perlstein

    1 Investment Officer II

    1 Investment Officer I

    1 Investment Officer II

    Derek Niu

    Asset Class Management

    2016-17 Budget June 16, 2016

    Relief Retirement Worker**1

    Vacant (Hold for Sub-Authority)

    Catherine Taylor-Gomez (Admin Clerk in-lieu)

    DEPARTMENT OF FIRE AND POLICE PENSIONS

    Fiscal Year 2016-2017 Budget

    Organization Chart

    #083

    RRW 11

    #008

    #019

    #039

    #108

    #120#084

    #040

    #038

    #107

    Susan Liem

    Attachment

    Schedule 9

    17

    1 Management Analyst II #052

    Miki Shaler 1 Sr. Management Analyst I SA58

    Vacant

    Vacant

    Chief Investment Officer

    Thomas Lopez

    Private Equity & Performance Mgmt. Commodities, Cash & Fixed IncomePublic Equity & Real Estate

  • Paul Guevara (Admin. Clerk in-lieu)

    Assistant General Manager - #042

    Joseph Salazar

    PENSIONS DIVISION

    1 Executive Administrative Assistant II

    Lee Tsubaki

    Disability Pension

    1 Senior Management Analyst II

    Chris Annala2 Senior Management Analyst I Loanne Truong Tina Zipper 4 Management Analyst II Carmen Steward Lady Smith

    1 Benefits Specialist Carleen Guzman1 Sr. Administrative Clerk Anthony Samaniego (Admin. Clerk in-lieu)

    1 Senior Management Analyst II

    2 Management Analyst II Joe McGlinchey

    2 Benefits Specialist Jorge Saenz

    1 Sr. Administrative Clerk

    1 Senior Management Analyst II Diana Anderson

    1 Senior Management Analyst I

    1 Management Analyst II Kimberly McCullough

    1 Management Analyst I

    3 Benefits Specialist Kimberly Boyd Leneva Cobb Angela Espino

    1 Administrative Clerk

    1 Senior Management Analyst II Myo Thedar

    1 Management Analyst II Naomi Sukimoto 3 Benefits Specialist Deborah Campos Laura Gonzalez Ellis Lea Villero

    4 Sr. Administrative Clerk

    1 Senior Management Analyst II

    Gregory Mack

    Communications & Education

    1 Senior Management Analyst I Carol Tavares 2 Management Analyst II

    1 Sr. Administrative Clerk

    2 Management Analyst II Jackie Pallas May Simmons

    1 Benefits Specialist

    1 Sr. Administrative Clerk Elizabeth Lopez

    Relief Retirement Worker**2

    Counseling and Application Processing

    1 Management Analyst I

    3 Benefits Specialist Lourdes (Lis) Burog Jesse Hernandez Roel Villanueva

    1 Benefits Specialist Diane Barragan

    3 Benefits Specialist Carin Batista Sandy Davis

    Service Purchase

    Refund of Contributions

    Pensioner Benefits Administration

    Sue Wells

    Vacant

    Rhodora Silverman

    Nicole Horn

    Management Analyst II* RA1

    Management Assistant*RA2

    Benefits Specialist Bernice Ortiz

    Erika Robinson

    Alma Rosas

    1

    1

    2

    Usha Papa (Mgmt. Analyst I in-lieu)

    Barbara NobregasConroy Gibson (Mgmt. Analyst I in-lieu)

    Jennifer Chan

    Laura Morales (Mgmt. Analyst I in-lieu)

    Anthony Torres

    Edwina Valencia

    Travis King

    Kyle Susswain

    Lorraine Chan (Mgmt. Asst. in-lieu)

    Adam Perez (Mgmt. Asst. in-lieu)

    Samantha Jew (Mgmt. Asst. in-lieu) New 16-17

    Pam Dacoff

    Ramiro Lopez

    1 Management Analyst II New 16-17

    1 Sr. Administrative Clerk

    2016-17 Budget June 16, 2016

    DEPARTMENT OF FIRE AND POLICE PENSIONS

    Fiscal Year 2016-2017 Budget

    Organization Chart

    Stephen Bayutas New 16-17

    #010

    #059

    #078

    #124

    #112

    #082

    #029

    #063

    #031

    #025

    #050

    #111

    #127

    #054#125

    #053

    #023

    RRW9

    #099

    #022

    #098#071

    #126

    #121

    #097

    #113#089

    #070#060

    #065#058

    #047

    #028

    #027

    #048#055

    #129

    #096

    #081

    #030

    #090

    #087

    #080

    #045

    #021#026#122#066

    #020#024#072#123

    #013

    1 Chief Benefits Analyst - New 16-17

    Vacant

    1 Chief Benefits Analyst - #043

    Robyn WIlder

    #131

    #130

    Attachment

    Schedule 9

    18

    Luis Pelayo

    Daniel De Vera RRW14

    PAS Coordination

    Pensioner Information & Support Services

    Medical and Dental Benefits

    Retirement ServicesDROP/Service Pensions

    Active Member Services

    Vacant

    #076Elizabeth Hong

  • DEPARTMENT OF FIRE AND POLICE PENSIONSFiscal Year 2016-17 BudgetTravel Resolution

    Attachment ISchedule 10

    Business Trips

    1. To meetings with investment advisors, a master custodian bank and various consultants under contract in connection with the management of fund assets.2. To the offices of investment advisors and consultants who are under consideration to be hired.3. To the site of proposed real estate property investments.

    B. Pension related conferences, business meetings and educational programs held or sponsored by the following organizations:

    Association of Asian American Investment Managers (AAAIM)Association of Local Government Auditors (ALGA)Association of Public Pension Fund AuditorsCalifornia Association of Public Retirement Systems (CALAPRS)California Public Employees' Retirement System (CalPERS)California Society of Municipal Finance Officers (CSMFO)California State Teachers' Retirement System (CalSTRS)Callan Investment InstituteChartered Financial Analyst Institute (CFA Institute)Client conferences of current contractorsEMC CorporationGovernment Finance Officers Association (GFOA)Institute for Fiduciary EducationInstitute of Internal AuditorsInstitutional Investor InstituteInstitutional Limited Partners AssociationInternational Foundation of Employee Benefit Plans (IFEBP)Markets GroupNational Association of Investment Companies (NAIC)National Association of Public Pension AttorneysNational Association of Securities Professionals (NASP)National Conference on Public Employee Retirement Systems (NCPERS)New America Alliance (NAA)Opal Financial Group ConferencesPension Real Estate AssociationPublic Safety Employees Pension and Benefits ConferenceStanford Law School - Fiduciary CollegeState Association of County Retirement Systems (SACRS)Sworn active employee or retired member associationsXerox State and Local Solutions, Inc. (Pension Administration System)Wharton School (Partnership w/ IFEBP)

    C. Pension industry organization meetings of officers and directors, when a Commissioner or staff member is an officer in thatorganization and expenses are not reimbursable by the organization.

    D. Other educational or continuing education training and seminars (not listed in B above), approved by the General Manager up to$4,500 per staff member per trip.

    BE IT RESOLVED, that the Board of Fire and Police Pension Commissioners and staff are authorized to travel and incurrequired expenses to the functions and for the reasons listed below, adopted effective July 1, 2016. Travel under thefollowing categories (A, B and C) is automatically approved to a maximum of four Commissioners (Board OperatingPolicies and Procedures, Section 2.6).

    Travel expenses incurred by any Commissioner or General Manager shall require the approval of the Board President.

    19 2016-17 Budget - June 16, 2016

  • $1,879.0

    $1,274.8 $1,511.2

    $375.2 $325.0

    $121.8

    $124.4

    $126.8

    $131.9 $142.2

    $509.2

    $579.9

    $629.4

    $626.1 $619.5

    $2.7

    $3.1

    $4.8

    $3.3 $2.0

    $2,512.6 $1,982.2 $2,272.2 $1,136.4 $1,088.6

    $-

    $500

    $1,000

    $1,500

    $2,000

    $2,500

    $3,000

    2012-13 Actual

    2013-14 Actual

    2014-15 Actual

    * 2015-16 Projected

    * 2016-17 Budget

    Mill

    ions

    Five-Year History of LAFPP Receipts

    Investment Earnings Member Contributions City (Employer) Contribution Miscellaneous

    Total

    LAFPP Key Budget Indicators 2016-17 Adopted Budget - June 16, 2016

    * The Investment Earnings do include gain/loss on sale of investments. This amount is recorded in LAFPP financial statements after the amount is audited.

    Attachment II

  • $957.8 $963.4 $1,029.3

    $1,100.5 $1,071.9

    $55.6 $70.0 $75.8

    $85.2 $91.2 $13.0 $14.9

    $19.2

    $24.4 $23.2

    $1,095.7 $1,048.3 $1,124.3 $1,210.1 $1,186.3

    $-

    $200

    $400

    $600

    $800

    $1,000

    $1,200

    $1,400

    2012-13 Actual

    2013-14 Actual

    2014-15 Actual

    2015-16 Projected

    2016-17 Budget

    Mill

    ions

    Five-Year History of LAFPP Expenses (In $ Millions)

    Pension Benefits Expenses Investment Management Expense Administrative Expense

    Total

    LAFPP Key Budget Indicators 2016-17 Adopted Budget - June 16, 2016

    Attachment II

  • LAFPP Key Budget Indicators 2016-17 Adopted Budget - June 16, 2016

    $519.9 $541.1 $554.9 $573.3 $590.0

    $105.6 $79.8 $126.6

    $175.0 $105.0 $117.2 $117.6

    $114.4 $112.0

    $120.0 $98.3 $104.4

    $110.4 $116.9

    $129.9 $113.6 $117.6 $119.3

    $119.8 $123.5 $3.3 $3.0 $3.7

    $3.6 $3.5

    $957.8 $963.4 $1,029.3 $1,100.5 $1,071.9

    $0

    $200

    $400

    $600

    $800

    $1,000

    $1,200

    2012-13 Actual

    2013-14 Actual

    2014-15 Actual

    2015-16 Projected

    2016-17 Budget

    Mill

    ions

    Five-Year History of Pension Benefits Expenses (In $ Millions)

    Service Pensions Service Pensions - DROP Payouts Disability Pensions Health and Dental Insurance Subsidy, Medicare and Health Insurance Premium Reimbursement Surviving Spouse and Minor/Dependent Pensions Refund of Contributions

    Total

    Attachment II

  • 246

    220

    287

    362

    151

    100

    150

    200

    250

    300

    350

    400

    2012-13 Actual

    2013-14 Actual

    2014-15 Actual

    2015-16 Projected

    2016-17 Budget

    Num

    ber o

    f Par

    ticip

    ants

    Five-Year History of DROP Participant Exits

    LAFPP Key Budget Indicators 2016-17 Adopted Budget - June 16, 2016

    Attachment II

  • LAFPP Key Budget Indicators 2016-17 Adopted Budget - June 16, 2016

    $15.8

    $18.3 $18.7 $18.5 $19.9

    0.08% 0.08% 0.10% 0.13% 0.12%

    0.35% 0.38% 0.40%

    0.46% 0.46%

    $0.0

    $5.0

    $10.0

    $15.0

    $20.0

    $25.0

    0.00%

    0.20%

    0.40%

    0.60%

    0.80%

    1.00%

    2012-13 2013-14 2014-15 2015-16 2016-17

    Port

    folio

    Ass

    et S

    ize

    (Bill

    ions

    )

    Perc

    enta

    ge o

    f Ass

    et V

    alue

    Five-Year History of

    Investment Management and Administrative Expense / Net Asset Value

    Asset Size Administrative Expense Investment Management Expense

    1

    Attachment II

    2

    1 As of April 30, 2016, Portfolio Monthly Report 2 This amount includes an assumed 7.5% Rate of Return

  • DDEPARTMENT OF FIRE AND POLICE PENSIONS 360 East Second Street, Suite 400

    Los Angeles, CA 90012 (213) 978-4545

    REPORT TO THE BOARD OF FIRE AND POLICE PENSION COMMISSIONERS

    DATE: MARCH 17, 2016 ITEM: A.5

    FROM: RAYMOND P. CIRANNA, GENERAL MANAGER

    SUBJECT: FISCAL YEAR 2016-17 PROPOSED BUDGET AND POSSIBLE BOARD ACTION

    RECOMMENDATION

    That the Board approve the Fiscal Year (FY) 2016-17 Proposed Budget (Attachment) and instruct staff to submit it to the City Administrative Officer (CAO) and the Mayors Office for inclusion in the Mayors FY 2016-17 Proposed Budget.

    DISCUSSION

    The LAFPP is tasked with administering the defined benefit retirement plan for all sworn employees of the City of Los Angeles in an efficient manner. Consequently, we have sustained a disciplined approach to stay within our current year budget and we are confident that the FY 2016-17 Proposed Budget will continue to support our efforts to pr ovide excellent customer service and help us maintain the health and retirement security of our members.

    The LAFPP Proposed Budget includes the estimated Citys annual required contributions to prefund LAFPP retirement and healthcare benefits, member (employee) contributions, investment earnings, pension benefit payments, investment management fees, and the esti mated departmental administrative expenses for FY 2016-17. A final LAFPP Budget will be submitted for Board approval on June 16, 2016 to include the Citys Adopted Budget contribution receipts from the City and estimated member contributions.

    Last year, the Board, along with staffs assistance, adopted a new Vision Statement and Values, arevised Mission Statement, and a new Three-Year Strategic Plan. In the development of this proposal, we used the new Three-Year Strategic Plan as a r oadmap to continue to mov e our Department forward and pursue our new Vision:

    To be a leader and innovator in the public pension industry through an uncompromising dedication to excellence, customer service, transparency and education

    FY 2016-17 marks the third year of the Mayors goal to improve the lives of the Citys residents and businesses, with his vision and back to b asics priority outcomes. Our new Strategic Plan is consistent with the Mayors four priority outcomes for FY 2016-17, which are provided below:

    1. Make Los Angeles the best run big city in America2. Promote creation of good jobs for Angelenos all across Los Angeles3. Create a more livable and sustainable city4. Ensure our communities are the safest in the nation

    375436Typewritten TextAttachment III, Page 1

    375436Typewritten Text

  • Board Report Page 2 March 17, 2016

    In formulating the Proposed Budget, we aligned our priorities with the goals adopted in our Strategic Plan. In addition, several departmental budget priorities were outlined to provide guidance to staff in development of this proposal:

    Continue Funding Existing Business Plan Projects New Business Plan Projects that Meet our Strategic GoalsPursue Innovative Technology SolutionsRisk AssessmentCustomer ServiceEmployee Development and Training

    Looking forward, 2016-17 will continue to be a very busy year for us as we settle into the new headquarters building and r emain focused on several multi-year projects that are critical to o ur operations. The Pension Administration System Replacement Project will be in its second year, the DocuShare digitizing project will continue to enhance our records retention and file management,and communication and outreach efforts will continue to expand next fiscal year.

    RECEIPTS

    The System receives revenue primarily from three sources; the Citys contribution, member contributions, and investment earnings. Collectively for FY 2016-17, these sources are estimated at $1.06 billion, a decrease of $56 million (-5.00%) from the FY 2015-16 Budget.

    1) Citys Contribution (Schedules 1 & 2)

    The Citys total FY 2016-17 contribution including the C itys Excess Be nefit Plan payment is estimated to be $600.4 million, a decrease of $26.7 million (-4.26%) from the FY 2015-16 Budget(Schedule 2). It is comprised of the Citys General Fund contribution and the Special Fund (Harbor Department) contribution.

    The Citys total contribution is based on the application of the actuarial calculated rates for each Tier to the b udgeted sworn payroll. Each y ear, the LAFP P Board adopts a c ontribution rate that is applied to the sworn payroll in order to fund the retirement and retiree health care benefits promised by the City to its sworn LAFPP members. On November 19, 2015, the Board adopted the pension and health valuation reports for the period ending June 30, 2015 that established the Citys combined contribution rate of 44.54% for sworn members of the Los Angeles Fire and Police Departments and 26.78% for the Harbor Port Police. These figures mark decreases of (-2.68%) and (-1.63%) from FY 2015-16 respectively, due to l ower than ex pected Cost of Living Adjustment (COLA) during the FY 2014-15 for retirees, beneficiaries, and Deferred Retirement Option Plan (DROP) members, lower than expected salary increases for active members, as well as higher thanexpected return on the valuation value of assets.

    The Citys actual FY 2016-17 contribution amount will be adjusted after the FY 2016-17 Adopted Budget for sworn payroll accounts is approved by the City Council and the Harbor Commission. The revised amount will be included in the LAFPP FY 2016-17 Fin al Budget to be presented to t he Board on June 16, 2016.

    375436Typewritten TextAttachment III, Page 2

  • Board Report Page 3 March 17, 2016

    2) Member Contributions (Schedule 3)

    Total member contributions are estimated at $136.9 million, an increase of $107,337 (0.08%) from the FY 2015-16 Budget (Schedule 3). The proposed member contribution amount will also be adjusted after the Citys FY 2016-17 Budget is adopted.

    Member contributions are calculated based on the members obligation or contribution rate for each Tier. These rates range from 7% to 9% for members in Tiers 2 through 5 while members in Tier 6 contribute 11% of salary. In addi tion, the City Council adopted an ordinance on July 15, 2011 to permanently freeze the health subsidies and reimbursements for members of Tiers 2 through 5 retiring or entering DROP on or after July 15, 2011, and for those employees who opt not to make a contribution for vesting increases in the Maximum Medical Subsidy as al lowed by an applicable Memorandum of Understanding. As a r esult, those members electing to opt- in by contributing an additional 2% of their base salary for retiree health subsidy benefits will not be subject to the freeze.

    3) Investment Earnings (Schedule 1)

    The third major source of revenue for the System is derived from investment earnings, which consists of Earnings on Investments and Gain (Loss) on Sale of Investments.

    Earnings on Investments - includes interest and dividends, real estate income, securities lending income and miscellaneous income. Earnings on I nvestments for FY 2016-17 are estimated at $325.0 million, a decre ase of $30.4 million (-8.56%) from FY 2015-16. The decrease is due to relatively low interest rates resulting in lower earnings.

    Gain (Loss) on Sale of Investments - includes capital gains/losses as investments are sold. These estimated receipts are not i ncluded in the Pr oposed Budget because staff cannot determine which investments will be sold within the year. Additionally, the gains and losses will fluctuate significantly from year to year. As such, gains/losses on sale of investments get recorded in our financial statements and future budget cycles after the amount is audited.

    56.5%

    12.9%

    30.6%FY 2016-17 Budget - Receipts*

    City (Employer) Contribution

    Member Contributions

    Investment Earnings

    375436Typewritten TextAttachment III, Page 3

  • Board Report Page 4 March 17, 2016

    EXPENDITURES

    1) Pension Benefits Expenses (Schedule 1)

    FY 2016-17 pension benefits expenses represent 90.4% of total FY 2016-17 estimated expenditures and are projected at $1.07 billion, a net decrease of $42.8 million (-3.84%) from the FY 2015-16 Budg et. Expenses include s ervice pensions, DROP distributions, disability and survivorship pensions, refunds of contributions, and health/dental subsidies and Medicare reimbursements. The most significant benefit expense decreases are in:

    DROP Distributions projected decrease of $71.0 million (-40.34%) based on a project ed decrease in mandatory exits. Over 180 mandatory exits are projected in FY 2016-17;

    $-

    $500

    $1,000

    $1,500

    $2,000

    $2,500

    $3,000

    FY 2012-13 Actual

    (13.01% Return)

    FY 2013-14 Actual

    (17.86% Return)

    FY 2014-15 Actual

    (4.15% Return)

    FY 2015-16 Budget

    FY 2016-17 Proposed

    Budget

    In Millions

    Five-Year Receipts History*

    Investment Earnings Member Contributions City (Employer) Contribution

    *Budget Amounts do not include Gain (Loss) on Sale of Investments

    246

    220

    287

    317

    182

    150

    200

    250

    300

    350

    FY2012-13 Actual

    FY2013-14 Actual

    FY2014-15 Actual

    FY2015-16 Projected*

    FY2016-17 Projected

    Five-Year DROP Exit History

    Five-Year DROP Exit

    *For FY 2015-16, actuals from July to January were combined with the projected estimates for February to June.

    375436Typewritten TextAttachment III, Page 4

  • Board Report Page 5 March 17, 2016

    Surviving Spouse P ensions decrease of $1.0 million (-.82%) based on a three-year average of rate changes in actual expenditures; andMedicare Reimbursement decrease of $250,000 (-2.13%) to more accurately reflect estimated FY 2016-17 expenditures. The decrease in bu dget still incorporates a 5.0% increase in Medicare Part B premium rates effective January 2017 as well as an increase in member participation.

    Despite the overall net decrease for pension expenditures, there are benefit expenses that are expected to increase:

    Service Pensions increase of $24.0 million (4.24%) based on a three-year average of rate changes in actual expenditures; Health Insurance Subsidy increase of $5.0 million (4.63%) based on the maximum available rate of increase of 6.50% effective July 2016 for non-Medicare members (this item will be considered at a subsequent Board meeting and staff will adjust the Proposed Budgetaccording to Board action) and a 6.50% projected rate of increase effective December 2016 for Medicare members (pursuant to Administrative Code Section 4.1154(c), this subsidy is linked to the highest Medicare plan premium for Los Angeles City Employees Retirement System (LACERS) members); andMinor/Dependent Pensions increase of $500,000 (25.00%) based on a three-year average of rate changes in actual expenditures.

    2) Investment Management Expense (Schedule 4)

    FY 2016-17 Investment management expenses represent 7.7% of total FY 2016-17 estimated expenditures and are projected at $91.2 million, an increase of $2.9 million (3.32%) from the FY 2015-16 Budget. Actual payments to investment managers depend on the amount of assets under management, the portfolio performance, the period in which the fee is calculated, and the terms and conditions of the individual contracts as approved by the Board. These investment management expenses are reasonable and in line with the growth in the private equity and real estate assets of the portfolio.

    This change is primarily attributed to the following (amounts have been rounded):

    Public Equity - $862,000 decrease due to a decline in asset value in FY 2015-16, which in turn lowered the FY 2016-17 starting asset value for these accounts; Private Equity $2.6 million increase due to an increase in private equity commitments,including commodities markets; Real Estate $2.4 million increase mostly due to an increase in real estate commingled fund commitments and asset value growth; Emerging Markets $753,000 decrease due to a decline in asset value in FY 2015-16, which in turn lowered the FY 2016-17 starting asset value for these accounts; andBonds $72,000 increase mainly due to the addition of two new unconstrained fixed income managers; andCommodities - $538,000 decrease due to negotiated Commodities Futures Manager fees costing less than what was previously budgeted in FY 2015-16.

    375436Sticky NoteMarked set by 375436

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  • Board Report Page 6 March 17, 2016

    3) Administrative Expense (Schedules 5 and 6)

    FY 2016-17 Administrative Expenses represent 2.0% of the Departments total estimated expenditures and are projected at $23.3 million. Administrative Expenses include staff salaries and benefits, operating costs, and the Unappropriated Balance for contingencies. The proposed budget aims to maintain critical programs that are prioritized as ma ndatory and essenti al to th e Departments business operations. The budget proposes a $726,700 increase in non-discretionary charges, offset by a significant decrease of approximately $1.4 million in discretionary charges, for a total net decrease of approximately $641,000 (-2.68%) from the FY 2015-16 Budget. Further details of these changes are listed below.

    Non-Discretionary Changes $726,700 Increase

    Salaries, General increase by $516,000. Mandatory staff salary increases due to the COLA for non-represented employees and employees represented by the Engineers and Architects Union (EAA) and salary step i ncreases ($366,000), and expected retirement and sick payouts ($150,000).Employee Benefits net i ncrease by $154,000 due to increases in LAFPP employee retirement contribution rates to LACERS and to more accurately reflect estimated FY 2016-17 expenditures for employee Flexible Benefits.Contractual Expense City Attorney/Legal - increase by $56,700 to fully fund s alary and benefit cost increases ($55,000) for the Departments share of ongoing City Attorney services and an anticipated increase in reimbursement of City Attorneys expenses to L ACERS ($1,700).

    Discretionary Changes $1.4 Million Decrease

    Salaries, General net increase by $332,000 to add the following four positions:o (1) Benefit Specialist for the Communications & Education (formerly Communications

    and Special Projects) Section to support the expansion of communications and outreach efforts to LAFPP members and stakeholders;

    o (1) Management Assistant for the Administrative Operations Division (Accounting, Systems, Administrative Services, Human Resources and Board) to supp ort the Division on the he adquarter building close-out and various special projects assigned to the Division;

    o (1) Management Analyst II f or the Disability Pension Section to assist and help address the increase in disability applications ; and

    o (1) Chief Benefits Analyst to Pensi ons Division to support the Division with the necessary oversight. This position will share management duties with one other Chief Benefits Analyst to o versee seven Sections (Retirement Services, DROP/Service Pensions, Medical and Dental Benefits, Active Member Services, Communications and Education, Disability Pension, and Pension Administration System Coordination), in addition to actuary and tax compliance responsibilities.

    Salaries, As-Needed decrease by $4,000 due to current projects such as the headquarters move being completed in FY 2015-16. Overtime decrease by $19,800 due to proposed staff additions to fulfill expected workflow needs and to more closely align with actual overtime expectations. Travel Expense decrease by $3,192 due to additional CALAPRS trainings being held locally.

    375436Sticky NoteUnmarked set by 375436

    375436Typewritten TextAttachment III, Page 6

  • Board Report Page 7 March 17, 2016

    Contractual Expense decrease by $1.8 Million. Details of significant changes include: o $848,645 decrease due to elimination of one-time costs associated with the Pension

    Administration System Replacement Project;o $824,000 decrease due to the elimination of Brunswig building lease expenses;o $75,000 increase for new headquarter building contingencies for FY 2016-17;o $68,000 decrease due to t he elimination of the previous Document Management

    System;o $50,000 decrease in outside counsel contractual expenses due to anticipated

    reduction in securities litigation efforts in FY 2016-17;o $50,000 decrease for back-file conversion document services no longer required;o $35,000 decrease in financial planning education expenses (-$5,000) and a

    reduction in web site support services (-$30,000); o $30,000 decrease in anticipated LAFPP employee Workers Compensation charges; o $25,000 increase in Investigative Services expense for Disability cases; ando $21,950 increase anticipated for financial audit services ($13,000) and for the

    triennial Internal Audit Peer Review in conformance with the Association of Local Government Auditors (ALGA) ($8,950).

    Medical Expense increase by $130,000 due to higher rates for medical exams and testingand increased Disability caseloads. Office and Administrative Expense decrease by $73,329 due to one-time expenditures related to the headquarters move being completed in FY 2015-16 and a reallocation of the proxy services line item to the Contractual Expense account. Election Expenses i ncrease by $25,000 due to one scheduled election for Active Fire Members in FY 2016-17.Furniture, Office and Technical Equipment i ncrease by $60,000 to fund an Intr usionPrevention System at the new headquarters building. Unappropriated Balance (UB) decrease by $57,000 to $213,000, to be reserved in the UB for the following: 1) Financial Planning Counseling Program ($123,000); and 2) Internal Audit Consultant ($90,000). Funds in the UB cannot be expended without receiving prior authority from the Board.

    2.0% 7.7%

    10.9%

    0.3%

    10.4%

    10.1%

    8.9%

    49.7%

    FY 2016-17 Budget - Expenditures

    Administrative Expense

    Investment Management Expense

    Health Insurance Subsidy, Dental Insurance, Medicare & Health Insurance Reimbursement

    Refund of Contributions

    Surviving Spouse and Minors/Dependents Pensions

    Disability Pensions

    Service Pensions - DROP payout

    Service Pensions

    375436Sticky NoteMarked set by 375436

    375436Typewritten TextAttachment III, Page 7

  • Board Report Page 8 March 17, 2016

    This report was prepared by:

    Mark Granado, Senior Management Analyst IAdministrative Services Section

    RPC:WSR:SHC:DP:MG

    Attachment: FY 2016-17 Proposed Budget Schedules

    $200

    $400

    $600

    $800

    $1,000

    $1,200

    $1,400

    FY 2012-13 Actual

    FY 2013-14 Actual

    FY 2014-15 Actual

    FY 2015-16 Budget

    FY 2016-17 Proposed

    Budget

    In Millions

    Five-Year Expenditure History

    Administrative Expense

    Investment Management Expense

    Health Insurance Subsidy, Dental Insurance, Medicare & Health Insurance Reimbursement

    Refund of Contributions

    Surviving Spouse and Minor/Dependent Pensions

    Disability Pensions

    Service Pensions - DROP payout

    Service Pensions

    375436Sticky NoteMarked set by 375436

    375436Typewritten TextAttachment III, Page 8

  • DEPARTMENT OF FIRE AND POLICE PENSIONSFiscal Year 2016-17 Proposed Budget

    Attachment

    Schedule Page

    FISCAL YEAR 2016-17 BUDGET SCHEDULE 1 2

    DETAIL OF CITY AND HARBOR CONTRIBUTION REQUIREMENTS SCHEDULE 2 3

    DETAIL OF ESTIMATED PAYROLLS AND MEMBER CONTRIBUTIONS SCHEDULE 3 5

    DETAIL OF INVESTMENT MANAGEMENT EXPENSE SCHEDULE 4 6

    ADMINISTRATIVE EXPENSE SCHEDULE 5 8

    DETAIL OF ADMINISTRATIVE EXPENSE SCHEDULE 6 9

    PERSONNEL RESOLUTION SCHEDULE 7 12

    DETAIL OF PERSONNEL CHANGES SCHEDULE 8 14

    ORGANIZATION CHART SCHEDULE 9 15

    TRAVEL RESOLUTION SCHEDULE 10 19

    TABLE OF CONTENTS

    1 FY 2016-17 Proposed Budget - March 17, 2016

    375436Sticky NoteMarked set by 375436

    375436Typewritten TextAttachment III, Page 9

  • DEPARTMENT OF FIRE AND POLICE PENSIONSFiscal Year 2016-17 Proposed Budget

    AttachmentSchedule 1

    Receipts 2014-15

    Adopted Budget 2015-16

    Estimated Receipts 2015-16

    Budget 2016-17

    Change from Budget2015-16

    % Change from Budget

    2015-16RECEIPTS

    624,974,315 623,414,600 622,851,100 Total General Fund 1 597,132,694 (26,281,906) -4.22%(551,000) (563,500) (815,868) less: Excess Benefit Plan (EBP)1 (847,700) (284,200) 50.43%

    624,423,315 622,851,100 622,035,232 General Fund to LAFPP 596,284,994 (26,566,106) -4.27%4,385,448 4,237,083 4,237,083 Special Fund (Harbor) 4,091,977 (145,106) -3.42%

    628,808,763 627,088,183 626,272,315 City Contribution (to LAFPP) 600,376,971 (26,711,212) -4.26%

    126,770,882 136,835,823 131,790,940 Member Contributions 136,943,161 107,337 0.08%593,209,996 355,440,000 441,711,572 Earnings on Investments 325,000,000 (30,440,000) -8.56%917,994,159 - - Gain (Loss) on Sale of Investments 2 - -

    4,849,056 1,000,000 4,532,858 Miscellaneous 2,000,000 1,000,000 100.00%

    2,271,632,856 1,120,364,006 1,204,307,684 Total Receipts 1,064,320,132 (56,043,875) -5.00%

    Expenditures 2014-15

    Adopted Budget 2015-16

    Estimated Expenditures

    2015-16Budget 2016-17

    Change from Budget2015-16

    % Change from Budget

    2015-16EXPENDITURES

    554,857,756 566,000,000 571,688,066 Service Pensions 590,000,000 24,000,000 4.24%126,625,940 176,000,000 175,000,000 Service Pensions - DROP payout 105,000,000 (71,000,000) -40.34%114,429,204 120,000,000 112,347,105 Disability Pensions 120,000,000 - 0.00%116,934,971 122,000,000 117,340,516 Surviving Spouse Pensions 121,000,000 (1,000,000) -0.82%

    2,315,407 2,000,000 2,242,844 Minor/Dependent Pensions 2,500,000 500,000 25.00%3,746,038 3,500,000 4,875,226 Refund of Contributions 3,500,000 - 0.00%

    96,198,577 108,000,000 101,724,237 Health Insurance Subsidy 113,000,000 5,000,000 4.63%3,728,940 4,100,000 3,850,591 Dental Insurance Subsidy 4,100,000 - 0.00%9,477,016 11,750,000 9,804,789 Medicare Reimbursement 11,500,000 (250,000) -2.13%1,005,936 1,300,000 1,558,404 Health Insurance Premium Reimb 1,300,000 - 0.00%

    75,764,990 88,221,206 78,788,522 Investment Management Expense 91,152,419 2,931,213 3.32%19,178,885 23,923,535 24,588,182 Administrative Expense 23,282,552 (640,983) -2.68%

    1,124,263,660 1,226,794,741 1,203,808,482 Total Expenditures 1,186,334,971 (40,459,770) -3.30%

    1,147,369,196 (106,430,734) 499,202 Increase (Decrease) in Fund Balance (122,014,839) (15,584,105) 14.64%

    2,271,632,856 1,120,364,006 1,204,307,684 Total Expenditures and Increase (Decrease) in Fund Balance 1,064,320,132 (56,043,875) -5.00%

    2 Gain (Loss) on Sale of Investments is recorded in LAFPP financial statements after the amount is audited.

    1 On May 6, 2010, the Board authorized a credit to be applied towards the City's Annual Required Contribution equal to the amount budgeted for the Excess Benefit Plan (EBP), ascalculated by the actuary. As such, beginning in FY 2010-11, the total General Fund Contribution in a given Fiscal Year is the sum of the General Fund and EBP line items. However,since EBP revenue is not transferred to LAFPP, it is excluded from the department's total revenue.

    2 FY 2016-17 Proposed Budget - March 17, 2016

    375436Sticky NoteMarked set by 375436

    375436Typewritten TextAttachment III, Page 10

  • DEPARTMENT OF FIRE AND POLICE PENSIONSFiscal Year 2016-17 Proposed BudgetDetail of City and Harbor Contribution Requirements(Assuming Contributions Made on July 15, 2016)

    AttachmentSchedule 2

    % of Payroll

    Projected Payroll =

    Contribution 1

    RequiredTIER 1 requirements:

    1. Unfunded supplemental present value annual amount N/A N/A 15,019,337 2. Health subsidy unfunded actuarial accrued liability annual amount N/A N/A 1,845,779

    Subtotal 16,865,116 TIER 2 requirements:

    1. Entry age cost 25.00% 2,973,921 743,480 2. Unfunded supplemental present value annual amount* 0.78% 1,339,604,221 10,448,913 3. Pension Admin Expenses 0.91% 2,973,921 27,063 4. Health subsidy entry age cost 3.52% 2,973,921 104,682 5. Health subsidy unfunded actuarial accrued liability annual amount* 4.12% 1,339,604,221 55,191,694 6. Health Admin Expenses 0.06% 2,973,921 1,784

    Subtotal 66,517,616 * Unfunded Actuarial Accrued Liability (UAAL) expressed as a percent of payroll for all active members.

    TIER 3 requirements:1. Entry age cost 16.61% 90,396,493 15,014,857 2. Unfunded supplemental present value annual amount* 2.32% 1,339,604,221 31,078,818 3. Pension Admin Expenses 0.91% 90,396,493 822,608 4. Health subsidy entry age cost 4.41% 90,396,493 3,986,485 5. Health subsidy unfunded actuarial accrued liability annual amount* 0.34% 1,339,604,221 4,554,654 6. Health Admin Expenses 0.06% 90,396,493 54,238

    Subtotal 55,511,661 * Unfunded Actuarial Accrued Liability (UAAL) expressed as a percent of payroll for all active members.

    TIER 4 requirements:1. Entry age cost 17.38% 35,646,868 6,195,426 2. Unfunded supplemental present value annual amount* 1.17% 1,339,604,221 15,673,369 3. Pension Admin Expenses 0.91% 35,646,868 324,387 4. Health subsidy entry age cost 4.21% 35,646,868 1,500,733 5. Health subsidy unfunded actuarial accrued liability annual amount* 0.20% 1,339,604,221 2,679,208 6. Health Admin Expenses 0.06% 35,646,868 21,388

    Subtotal 26,394,511 * Unfunded Actuarial Accrued Liability (UAAL) expressed as a percent of payroll for all active members.

    TIER 5 requirements:1. Entry age cost 19.15% 1,126,915,259 215,804,272 2. Unfunded supplemental present value annual amount 8.49% 1,126,915,259 95,675,105 3. Pension Admin Expenses 0.91% 1,126,915,259 10,254,929 4. Health subsidy entry age cost 4.19% 1,126,915,259 47,217,749 5. Health subsidy unfunded actuarial accrued liability annual amount* 2.94% 1,126,915,259 33,131,309 6. Health Admin Expenses 0.06% 1,126,915,259 676,149

    Subtotal 402,759,514

    3 FY 2016-17 Proposed Budget - March 17, 2016

    375436Typewritten TextAttachment III, Page 11

  • DEPARTMENT OF FIRE AND POLICE PENSIONSFiscal Year 2016-17 Proposed BudgetDetail of City and Harbor Contribution Requirements(Assuming Contributions Made on July 15, 2016)

    AttachmentSchedule 2

    % of Payroll

    Projected Payroll =

    Contribution 1

    RequiredTIER 6 requirements:

    1. Entry age cost 15.67% 83,671,680 13,111,352 2. Unfunded supplemental present value annual amount 8.49% 83,671,680 7,103,726 3. Pension Admin Expenses 0.91% 83,671,680 761,412 4. Health subsidy entry age cost 6.69% 83,671,680 5,597,635 5. Health subsidy unfunded actuarial accrued liability annual amount* 2.94% 83,671,680 2,459,947 6. Health Admin Expenses 0.06% 83,671,680 50,203

    Subtotal 29,084,276

    NET CITY (GENERAL FUND) ACTUARIAL CONTRIBUTION REQUIREMENT 597,132,694 Early Payment Savings (relative to payment at the end of each pay period) 20,296,726

    TIER 5 Harbor requirements:1. Entry age cost 19.61% 11,258,016 2,207,697 2. Unfunded supplemental present value annual amount 6.62% 11,258,016 745,281 3. Pension Admin Expenses 0.91% 11,258,016 102,448 4. Health subsidy entry age cost 5.63% 11,258,016 633,826 5. Health subsidy unfunded actuarial accrued liability annual amount* 1.09% 11,258,016 122,712 6. Health Admin Expenses 0.06% 11,258,016 6,755

    Subtotal 3,818,719 TIER 6 Harbor requirements:

    1. Entry age cost 14.93% 925,984 138,249 2. Unfunded supplemental present value annual amount 6.62% 925,984 61,300 3. Pension Admin Expenses 0.91% 925,984 8,426 4. Health subsidy entry age cost 5.90% 925,984 54,633 5. Health subsidy unfunded actuarial accrued liability annual amount* 1.09% 925,984 10,093 6. Health Admin Expenses 0.06% 925,984 556

    Subtotal 273,258

    NET HARBOR (SPECIAL FUND) ACTUARIAL CONTRIBUTION REQUIREMENT 4,091,977 Early Payment Savings (relative to payment at the end of each pay period) 136,383

    GENERAL FUND TO LAFPP 596,284,994 GENERAL FUND: EXCESS BENEFIT PLAN 847,700

    597,132,694

    4,091,977

    TOTAL CITY CONTRIBUTION 601,224,671

    TOTAL SPECIAL FUND (HARBOR) CONTRIBUTION

    TOTAL GENERAL FUND CONTRIBUTION

    1 Figures may be rounded.

    4 FY 2016-17 Proposed Budget - March 17, 2016

    375436Typewritten TextAttachment III, Page 12

  • DEPARTMENT OF FIRE AND POLICE PENSIONSFiscal Year 2016-17 Proposed BudgetDetail of Estimated Payrolls and Member Contributions

    AttachmentSchedule 3

    Tier 2 Tier 3 Tier 4 Tier 5 Tier 6 TOTAL 3SWORNPAYROLL1

    PENSIONABLE PAYFire 784,254 23,838,510 9,400,456 297,179,455 22,065,106 353,267,781 Police 2,189,667 66,557,983 26,246,413 829,735,803 61,606,574 986,336,440 Harbor - - - 11,258,016 925,984 12,184,000

    TOTAL 2,973,921 90,396,493 35,646,868 1,138,173,275 84,597,664 1,351,788,221 TOTAL General Fund 2,973,921 90,396,493 35,646,868 1,126,915,259 83,671,680 1,339,604,221 TOTAL Special Fund - - - 11,258,016 925,984 12,184,000

    BASE PAY (2% OPT-IN)Fire 268,765 1,705,400 3,636,630 204,228,415 - 209,839,211 Police 622,863 5,865,075 18,520,456 512,452,842 - 537,461,235 Harbor - - - 8,617,267 - 8,617,267

    TOTAL 891,628 7,570,475 22,157,086 725,298,525 - 755,917,713 TOTAL General Fund 891,628 7,570,475 22,157,086 716,681,257 - 747,300,446 TOTAL Special Fund - - - 8,617,267 - 8,617,267

    MEMBER CONTRIBUTIONS

    PENSIONABLE PAYSeven Percent2 Eight Percent Eight Percent Nine Percent Eleven Percent TOTAL

    Fire - 1,907,081 752,036 26,746,151 2,427,162 31,832,430 Police - 5,324,639 2,099,713 74,676,222 6,776,723 88,877,297 H b 1 013 221 101 858 1 115 080

    5 FY 2016-17 Proposed Budget - March 17, 2016

    Harbor - - - 1,013,221 101,858 1,115,080 TOTAL - 7,231,719 2,851,749 102,435,595 9,305,743 121,824,807

    BASE PAY (2% OPT-IN)Two Percent Two Percent Two Percent Two Percent Two Percent TOTAL

    Fire 5,375 34,108 72,733 4,084,568 - 4,196,784 Police 12,457 117,301 370,409 10,249,057 - 10,749,225 Harbor - - - 172,345 - 172,345 TOTAL 17,833 151,409 443,142 14,505,970 - 15,118,354

    TOTAL 17,833 7,383,129 3,294,891 116,941,565 9,305,743 136,943,161 TOTAL General Fund 17,833 7,383,129 3,294,891 115,755,998 9,203,885 135,655,736 TOTAL Special Fund - - - 1,185,567 101,858 1,287,425

    1 The Base Pay (2% opt-in) Payroll is provided for informational purposes only to calculate the additional 2% member contribution. This base payamount is already included in the Pensionable Pay amounts provided under this section. Amounts based on FY 2015-16, Pay Period 15.

    2 Pursuant to Charter Section 1420, pension benefit related deductions shall not be made from the salaries of Tier 2 System Members who havecompleted 30 years of service. Accordingly, as of 12/8/2010, Tier 2 members no longer make pension contributions.

    3 Figures may be rounded.

    5 FY 2016-17 Proposed Budget - March 17, 2016

    375436Typewritten TextAttachment III, Page 13

  • DEPARTMENT OF FIRE AND POLICE PENSIONSFiscal Year 2016-17 Proposed BudgetDetail of Investment Management Expense

    AttachmentSchedule 4

    Adopted Budget2015-16

    Estimated Expenditures

    2015-16Budget 2016-17

    Change from 3

    2015-16Budget

    CONSULTANTSCustodian Bank Services (STIF) 278,660 273,110 275,338 (3,322) General Consultant 503,750 427,250 503,750 -

    CONSULTANT TOTAL 782,410 700,360 779,088 (3,322)

    ADVISORYPUBLIC EQUITY - LARGE CAP

    Alliance Bernstein S&P 500 Index 206,643 159,097 174,908 (31,735) Alliance Bernstein Russell 1000 Growth Index 211,032 189,722 213,594 2,563 Alliance Bernstein Russell 1000 Value Index 45,170 24,864 27,654 (17,516) Chicago Equity 699,590 733,167 530,939 (168,651) FIS Funds Mgmt - Domestic - 97,351 - - Future Emerging Manager - Large Cap 165,624 - - (165,624) OakBrook Investments - Large Cap Core - 101,071 148,969 148,969 Redwood Investments - Large Cap Core - 88,347 122,031 122,031 L.A. Capital 620,228 542,931 600,495 (19,733) Research Affiliates 1,010,210 861,520 954,762 (55,448) Robeco Investment Mgmt 852,170 731,477 798,386 (53,784)

    Subtotal 3,810,666 3,529,547 3,571,738 (238,928)

    PUBLIC EQUITY - SMALL CAPAttucks Asset Mgmt 717,504 333,998 - (717,504) Daruma 2,493,036 2,097,204 2,357,838 (135,198) Frontier Capital Mgmt 3,601,154 1,443,801 3,472,935 (128,219) Future Emerging Manager - Small/Micro Cap 368,053 - - (368,053) Channing Capital Management - Small Cap - 294,286 421,264 421,264 Phocas Financial - Small Cap - 318,248 459,673 459,673 Granite Investment Partners - Micro Cap - 211,862 308,407 308,407

    Subtotal 7,179,747 4,699,399 7,020,117 (159,630)

    PUBLIC EQUITY - INTERNATIONALBaillie Gifford 2,336,265 2,069,570 2,267,805 (68,461) Blackrock 280,438 258,036 283,252 2,813 Boston Common 176,313 155,540 171,582 (4,731) Brandes Investment Advisors 3,861,335 3,455,895 3,735,275 (126,060) Del Rey 204,209 - - (204,209) FIS Funds Mgmt - International 676,057 603,646 666,085 (9,972) Fisher Investments 2,026,496 1,809,646 1,955,960 (70,536) Northern Trust Int'l Small Cap Index 243,688 173,477 261,543 17,855

    Subtotal 9,804,802 8,525,809 9,341,502 (463,300)

    EMERGING MARKETSDimensional Fund Advisors 2,410,466 2,031,584 1,689,060 (721,406) Harding Loevner 2,532,141 1,250,704 2,500,645 (31,496)

    Subtotal 4,942,607 3,282,288 4,189,705 (752,902)

    BONDS - INVESTMENT GRADEBridgewater PAMM 1,396,137 1,293,515 1,488,293 92,156 Bridgewater TIPS 1,451,352 1,304,560 1,438,994 (12,358) Future Emerging Manager - Fixed Income 121,458 - - (121,458) GIA Partners - 55,752 83,085 83,085 Semper Capital Management - 56,356 83,392 83,392 LM Capital Mgmt 391,465 292,069 360,827 (30,638) Loomis, Sayles & Co. 668,227 554,030 599,773 (68,454)

    6 FY 2016-17 Proposed Budget - March 17, 2016

    375436Typewritten TextAttachment III, Page 14

  • DEPARTMENT OF FIRE AND POLICE PENSIONSFiscal Year 2016-17 Proposed BudgetDetail of Investment Management Expense

    AttachmentSchedule 4

    Adopted Budget2015-16

    Estimated Expenditures

    2015-16Budget 2016-17

    Change from 3

    2015-16Budget

    BONDS - INVESTMENT GRADE (Continued)Northern Trust Bond Index 197,661 132,674 207,276 9,615 Payden & Rygel 677,162 615,334 686,260 9,098 Reams Asset Mgmt 767,815 684,660 755,474 (12,341) Reams Asset Mgmt TIPS Index 102,939 100,870 111,485 8,546 Reams Asset Mgmt UFI 388,734 348,926 386,510 (2,224)

    Subtotal 6,162,949 5,438,746 6,201,368 38,419 BONDS - HIGH YIELD

    MacKay Shields 2,019,815 1,835,966 2,053,188 33,374 Subtotal 2,019,815 1,835,966 2,053,188 33,374

    PRIVATE EQUITYPortfolio Advisors 1,225,000 1,011,328 1,225,000 -Portfolio Advisors Specialized Mandate 45,000 40,500 45,000 - Private Equity Partnership Fees 27,777,587 26,630,100 29,871,455 2,093,868

    Subtotal 29,047,587 27,681,928 31,141,455 2,093,868

    COMMODITY-ENERGYAlliance Bernstein Commodity Index 236,289 241,593 255,272 18,983 Kleinwort Benson 538,694 434,142 481,341 (57,353) Mellon Capital 228,789 184,101 190,439 (38,350) New Commodities Futures/Derivatives Mgrs 1,115,313 - - (1,115,313) Gresham Investment Management - 441,205 529,436 529,436 Goldman Sachs - 152,404 124,412 124,412 Private Equity Partnership Fees 1 412,111 676,581 894,812 482,701

    Subtotal 2,531,195 2,130,026 2,475,712 (55,483)

    REAL ESTATEAlliance Bernstein REIT Index 123,118 36,709 64,367 (58,751) Heitman Asset Mgmt Fees 1,031,218 1,201,671 1,191,321 160,103 Pooled Funds Fees 2 16,267,677 15,611,218 17,698,790 1,431,113 Principal Global REIT 853,479 749,334 851,729 (1,750) Principal US REIT 1,611,201 1,414,391 1,642,506 31,305 Sentinel Asset Mgmt Fees 1,112,234 831,895 1,342,634 230,400 Sentinel - Neptune (Headquarters) - 154,734 530,000 530,000 Separate Account Acquisition, Disposition, Perf 640,300 739,500 757,000 116,700 Townsend 300,200 225,000 300,200 -

    Subtotal 21,939,428 20,964,452 24,378,547 2,439,119

    ADVISORY TOTAL 87,438,796 78,088,162 90,373,331 2,934,535

    TOTAL INVESTMENT MANAGEMENT EXPENSE 88,221,206 78,788,522 91,152,419 2,931,213

    Partnership fees do not include performance fees. Generally performance fees take 20% of the profit. In some cases, they can go as high as30%.

    3 Figures may be rounded.

    2 Pooled Fund fees do not include performance fees. Generally performance fees take 20% of the profit. In some cases, they can go as high as30%.

    7 FY 2016-17 Proposed Budget - March 17, 2016

    375436Typewritten TextAttachment III, Page 15

  • DEPARTMENT OF FIRE AND POLICE PENSIONSFiscal Year 2016-17 Proposed BudgetAdministrative Expense

    AttachmentSchedule 5

    Actual Adopted Estimated % ChangeAcct Exp Budget1 Exp2 Budget from BudgetNo. 2014-15 2015-16 2015-16 Account Titles 2016-17 2015-16

    641010 10,168,719 10,952,000 10,738,735 Salaries - General 11,800,000 7.74%641070 96,732 111,000 130,248 Salaries - As-Needed 107,000 -3.60%641090 73,476 89,515 74,644 Overtime 69,715 -22.12%

    10,338,927 11,152,515 10,943,627 Sub-total Salaries 11,976,715 7.39%

    642120 24,537 36,154 36,154 Printing and Binding 36,654 1.38%642130 76,184 162,635 166,398 Travel Expense 159,443 -1.96%643040 3,740,262 6,581,312 6,214,312 Contractual Expense 4,880,150 -25.85%643310 6,000 6,000 6,000 Transportation 6,000 0.00%644230 225,800 200,000 350,000 Medical Services 330,000 65.00%645180 1,105,787 1,360,000 1,497,344 Health Insurance 1,300,000 -4.41%645190 47,783 55,000 65,934 Dental Insurance 55,000 0.00%645200 35,000 40,000 36,439 Other Employee Benefits 40,000 0.00%645360 2,783,865 3,108,000 3,108,000 Retirement Contribution3 3,309,000 6.47%645370 130,000 160,000 160,000 Medicare Contribution 173,000 8.13%645417 21,585 - - Election Expense 25,000 - 646010 467,179 771,919 787,919 Office and Administrative Expense 698,590 -9.50%649570 2,137 20,000 13,054 Tuition Reimbursement 20,000 0.00%

    8,666,119 12,501,020 12,441,554 Sub-total Expense 11,032,837 -11.74%

    8 FY 2016-17 Proposed Budget - March 17, 2016

    647300 173,839 - 1,113,000 Total Furniture, Office, & Tech Equip. 60,000 -

    649500 - 270,000 90,000 Unappropriated Balance 213,000 -21.11%

    19,178,885 23,923,535 24,588,182 TOTAL ADMINISTRATIVE EXPENSE 23,282,552 -2.68%

    1 Various adjustments were made to the following accounts as authorized by the Board after the FY 2015-16 Adopted Budget was approved:a) $1,272,000 appropriated for the new Headquarters (HQ): $153,000 to Contractual Expense (Account 643040), $16,000 to Office and Administrative Expense (Account646010), and $1,103,000 to Furniture, Office, & Tech Equip. (Account 647300) in July 2015; andb) $10,000 approved for transfer from Contractual Expense (Account 643040) to Furniture, Office & Tech Equip. (Account 647300) in September 2015; $150,000 approved fortransfer from Contractual Expense (Account 643040) to Medical Services (Account 644230) in January 2016 and $20,000 approved for transfer from Salaries - General (Account641010) to Salaries - As Needed (Account 641070) in February 2016.

    2 Estimated Expenditures for FY 2015-16 includes Headquarters expenses approved by the Board after the FY 2015-16 Adopted Budget was approved.

    3 Beginning FY 2014-15, LAFPP makes payments to LACERS for LAFPP employee retirement contributions pursuant to the released audit of the City Contribution to LACERSand LAFPP (Account 645360).

    8 FY 2016-17 Proposed Budget - March 17, 2016

    375436Typewritten TextAttachment III, Page 16

  • DEPARTMENT OF FIRE AND POLICE PENSIONSFiscal Year 2016-17 Proposed BudgetDetail of Administrative Expense

    AttachmentSchedule 6

    AdoptedAcct Budget1 Budget Change fromNo. Account Titles 2015-16 2016-17 2015-16

    641010 Salaries - General 10,952,000 11,800,000 848,000641070 Salaries - As-Needed 111,000 107,000 (4,000)641090 Overtime 89,515 69,715 (19,800)

    Total Salaries 11,152,515 11,976,715 824,200

    642120 Printing and Binding 36,154 36,654 500642130 Travel Expense 162,635 159,443 (3,192)643040 Contractual Expense

    City AttorneyCity Attorney Staff 685,000 740,000 55,000 City Attorney Expense Paid to LACERS 34,000 35,700 1,700 Legal Services: Real Estate and Investment Counsel 235,000 235,000 - Legal Services: Fiduciary Counsel 150,000 150,000 - Legal Services: Securities Litigation Counsel 100,000 50,000 (50,000) Legal Services: Legal Representation 100,000 100,000 - Legal Services: Tax Counsel 100,000 100,000 -

    Subtotal 1,404,000 1,410,700 6,700

    Communications and EducationFinancial Planning Education - Venue 15,000 15,000 - Financial Planning Education Consultant 75,000 70,000 (5,000) Graphic Design Services 26,000 26,000 - Pre-Retirement Seminar Caterer 35,000 35,000 - Survey Consulting Services 14,000 14,000 - Web Site Support Services 60,000 30,000 (30,000)

    Subtotal 225,000 190,000 (35,000)

    Department-wideContracted Training 5,000 5,000 - HQ Contingency - 75,000 75,000 Office Space Lease 824,000 - (824,000) Photocopiers 20,000 20,000 - Records Retention 5,000 5,000 - Secure Shredding Services 4,500 4,500 - Vehicle Maintenance 5,000 5,000 - Workers Compensation 90,000 60,000 (30,000)

    Subtotal 953,500 174,500 (779,000)

    Disability PensionHearing Reporter 20,000 20,000 - Investigative Services 75,000 100,000 25,000

    Subtotal 95,000 120,000 25,000

    ExecutiveActuarial Services 325,000 325,000 - Annual Retreat Services 7,500 8,000 500 Fiduciary Liability Insurance 50,000 50,000 - Governance Consultant 20,000 20,000 -

    Subtotal 402,500 403,000 500

    9 FY 2016-17 Proposed Budget - March 17, 2016

    375436Typewritten TextAttachment III, Page 17

  • DEPARTMENT OF FIRE AND POLICE PENSIONSFiscal Year 2016-17 Proposed BudgetDetail of Administrative Expense

    AttachmentSchedule 6

    AdoptedAcct Budget1 Budget Change fromNo. Account Titles 2015-16 2016-17 2015-16

    Internal AuditALGA Peer Review - 8,950 8,950 Financial Audit 85,000 98,000 13,000

    Subtotal 85,000 106,950 21,950

    InvestmentsProxy Service (Transferred from 646010) - 40,000 40,000

    Subtotal 0 40,000 40,000

    Medical and Dental BenefitsBackfile Conversion of On-Site Documents (Viatron) 50,000 - (50,000) Health Consultant 30,000 30,000 -

    Subtotal 80,000 30,000 (50,000)

    SystemsDisaster Recovery - Verizon Terremark 86,000 73,000 (13,000) Document Management System (Documentum) 68,000 - (68,000) EMC/AT&T 24,000 24,000 - IT Network Security Penetration Test - 20,000 20,000 IT Systems Security 30,000 30,000 - Offsite Media Storage 12,000 12,000 - OnPoint Enhancements 50,000 25,000 (25,000) OnPoint License & Maintenance 175,000 175,000 - Pension Administration System Consultant (LRWL) 386,667 390,000 3,333 Pension Administration System (Xerox State & Local Solutions) 2,204,645 1,356,000 (848,645) Retiree Benefit Payment Services 300,000 300,000 -

    Subtotal 3,336,312 2,405,000 (931,312)

    Total Contractual Expense 6,581,312 4,880,150 (1,701,162)

    643310 Transportation 6,000 6,000 - 644230 Medical Services (Disability Cases) 200,000 330,000 130,000 645180 Health Insurance 1,360,000 1,300,000 (60,000) 645190 Dental Insurance 55,000 55,000 - 645200 Other Employee Benefits 40,000 40,000 - 645360 Retirement Contribution2 3,108,000 3,309,000 201,000 645370 Medicare Contribution 160,000 173,000 13,000 645417 Election Expense - 25,000 25,000

    646010 Office and Administrative Expense

    646010-01 Office & Administrative Expense 367,443 306,349 (61,094) 646010-02 Office Supplies 74,497 76,747 2,250 646010-03 Telephone, Internet, and Tablet Devices 123,200 112,200 (11,000) 646010-05 Training Expense 72,155 79,450 7,295 646010-06 Dues & Subscriptions 63,624 29,844 (33,780) 646010-530 Computer & Peripheral 71,000 94,000 23,000

    Total Office & Admin Expense 771,919 698,590 (73,329)

    649570 Tuition Reimbursement 20,000 20,000 -

    Total Expense 12,501,020 11,032,837 (1,468,183)

    10 FY 2016-17 Proposed Budget - March 17, 2016

    375436Typewritten TextAttachment III, Page 18

  • DEPARTMENT OF FIRE AND POLICE PENSIONSFiscal Year 2016-17 Proposed BudgetDetail of Administrative Expense

    AttachmentSchedule 6

    AdoptedAcct Budget1 Budget Change fromNo. Account Titles 2015-16 2016-17 2015-16

    647300 Total Furniture, Office, & Technical Equip > $5,000 - 60,000 60,000

    649500 Unappropriated Balance (UB)

    Data Backup System 30,000 - (30,000) Financial Planning Counseling Program - 123,000

    Internal Audit Consultant 90,000 90,000 - Salary Contingency 150,000 - (150,000)

    Total Unappropriated Balance 270,000 213,000 (57,000)

    TOTAL ADMINISTRATIVE EXPENSE 23,923,535 23,282,552 (640,983)

    1 Various adjustments were made to the following accounts as authorized by the Board after the FY 2015-16 Adopted Budget was approved:a) $1,272,000 appropriated for the new Headquarters (HQ): $153,000 to Contractual Expense (Account 643040), $16,000 to Office and Administrative Expense(Account 646010), and $1,103,000 to Furniture, Office, & Tech Equip. (Account 647300) in July 2015; andb) $10,000 approved for transfer from Contractual Expense (Account 643040) to Furniture, Office & Tech Equip. (Account 647300) in September 2015; $150,000approved for transfer from Contractual Expense (Account 643040) to Medical Services (Account 644230) in January 2016 and $20,000 approved for transfer fromSalaries - General (Account 641010) to Salaries - As Needed (Account 641070) in February 2016.

    2 Beginning FY 2014-15, LAFPP makes payments to LACERS for LAFPP employee retirement contributions pursuant to the released audit of the City Contribution toLACERS and LAFPP (Account 645360).

    11 FY 2016-17 Proposed Budget - March 17, 2016

    375436Typewritten TextAttachment III, Page 19

    375436Typewritten Text

  • DEPARTMENT OF FIRE AND POLICE PENSIONSFiscal Year 2016-17 Proposed BudgetPersonnel Resolution

    AttachmentSchedule 7

    FIRE AND POLICE PENSIONS

    2015-16 2016-17 Change Code Title

    2 2 0 1116 Secretary ( 49,423 - 70,324 )2 2 0 1117-2 Executive Administrative Assistant II ( 59,466 - 84,627 )1 1 0 1117-3 Executive Administrative Assistant III ( 63,747 - 90,703 )1 1 0 1170-1 Payroll Supervisor I ( 58,610 - 85,671 )1 0 -1 1170-2 Payroll Supervisor II ( 62,536 - 91,392 )1 1 0 1201 Principal Clerk ( 51,010 - 74,583 )18 19 1 1203 Benefits Specialist ( 51,010 - 74,583 )6 5 -1 1358 Administrative Clerk ( 36,791 - 52,409 )13 14 1 1368 Senior Administrative Clerk ( 45,456 - 64,707 )1 1 0 1431-3 Programmer Analyst III ( 74,354 - 105,778 )1 1 0 1431-5 Programmer Analyst V ( 86,631 - 123,276 )1 1 0 1455-2 Systems Programmer II ( 86,339 - 126,199 )1 1 0 1455-3 Systems Programmer III ( 93,522 - 136,743 )7 7 0 1513-2 Accountant II ( 50,738 - 74,166 )1 1 0 1523-2 Senior Accountant II ( 63,768 - 93,229 )1 1 0 1525-1 Principal Accountant I ( 73,289 - 107,156 )1 1 0 1525-2 Principal Accountant II ( 77,340 - 113,086 )0 1 1 1539 Management Assistant ( 45,957 - 67,192 )1 1 0 1555-1 Fiscal Systems Specialist I ( 81,014 - 118,452 )1 1 0 1593-3 Departmental Chief Accountant III ( 111,750 - 159,022 )6 6 0 1596-2 Systems Analyst II ( 64,665 - 94,503 )2 2 0 1597-1 Senior Systems Analyst I ( 76,463 - 111,812 )2 2 0 1597-2 Senior Systems Analyst II ( 94,586 - 138,309 )1 1 0 1610 Departmental Audit Manager ( 120,645 - 171,654 )1 1 0 1625-4 Internal Auditor IV ( 94,566 - 138,288 )3 3 0 9146-1 Investment Officer I ( 87,967 - 128,600 )3 3 0 9146-2 Investment Officer II ( 109,578 - 160,212 )1 1 0 9146-3 Investment Officer III ( 137,808 - 201,492 )1 1 0 9147 Chief Investment Officer ( 175,559 - 249,808 )1 2 1 9151 Chief Benefits Analyst ( 120,645 - 171,654 )1 1 0 9167-1 Senior Personnel Analyst I ( 79,532 - 116,281 )5 5 0 9171-1 Senior Management Analyst I ( 76,379 - 111,624 )7 7 0 9171-2 Senior Management Analyst II ( 94,566 - 138,288 )1 1 0 9182 Chief Management Analyst ( 120,645 - 171,654 )2 2 0 9184-1 Management Analyst I ( 54,810 - 80,137 )15 17 2 9184-2 Management Analyst II ( 64,665 - 94,503 )1 1 0 9267 General Manager ( 155,389 - 275,449 )2 2 0 9269 Assistant General Manager ( 130,354 - 190,572 )1 1 0 9375 Director of Systems ( 120,645 - 171,654 )1 1 0 9734-2 Commission Executive Assistant II ( 64,665 - 94,503 )

    118 122 4

    A resolution authorizing the employment of personnel in the Department of Fire and Police Pensions of the City of LosAngeles

    Salary Range

    BE IT RESOLVED, that:

    Section 1. Effective July 1, 2016, the number and classification of positions listed below are authorized within the Los Angeles Fire and Police Pension System:

    (a) Regular Positions:

    12 FY 2016-17 Proposed Budget - March 17, 2016

    375436Typewritten TextAttachment III, Page 20

  • DEPARTMENT OF FIRE AND POLICE PENSIONSFiscal Year 2016-17 Proposed BudgetPersonnel Resolution

    AttachmentSchedule 7

    (b) Resolution Authority Positions:

    2015-16 2016-17 Change Code Title

    1 1 0 1539 Management Assistant ( 45,957 - 67,192 )1 1 0 9184-2 Management Analyst II ( 64,665 - 94,503 )

    2 2 0

    (c) To be Employed As Needed in Such Numbers as Required:

    0820 Administrative Trainee1133 Relief Retirement Worker1501 Student Worker1502 Student Professional Worker1535-1 Administrative Intern I1535-2 Administrative Intern II

    (d) Commissioner Positions:

    9 0101-2 Commissioner9

    Section 5. The General Manager may employ persons and assign duties appropriate to the employees classification andpay grade in any class of position specified in Schedule "A" of Los Angeles Administrative Code Section 4.61 in lieu of vacantpositions in a related occupational series which vacant positions have a salary or salary range equal to or higher than the salary orsalary range for the class of position in which the persons are to be employed; provided, however, that at no time shall the totalnumber of persons employed in the department exceed the total number of positions authorized.

    Section 6. The personnel authority contained in this resolution shall be limited by the amount of money available on therecords of the Departmental Chief Accountant for the payment of salaries and wages in the appropriate departmental account.

    Section 2. One Assistant General Manager (Class Code 9269), when designated by the General Manager to assume theadditional administrative and supervisory duties of Executive Officer, shall be compensated at the fourth premium level rate abovethe appropriate step rate or premium level rate of the incumbent. Upon approval of the General Manager, one additional AssistantGeneral Manager (Class Code 9269) may receive salary up to the fourth premium level rate above the appropriate step rate of theprescribed salary range.

    Section 4. Upon approval of the General Manager, substitute and resolution authority positions may be activated and filledusing any class of position specified in Schedule "A" of Los Angeles Administrative Code Section 4.61 or approved Memorandumof Understanding. This approval shall specify the period during which the position shall be filled. The General Manager shallmaintain a record of the substitute and resolution authority positions approved for filling.

    Section 3. Whenever the General Manager is authorized pursuant to Charter Section 1164(b) to employ a person who isretired from City service, the employee may be employed at any step within the salary range prescribed for the class that isdetermined by the General Manager to be commensurate with, and based upon, the extent, responsibility, and importance of thework to be assigned and the experience, skill and ability of the employee.

    Salary Range

    13 FY 2016-17 Proposed Budget - March 17, 2016

    375436Typewritten TextAttachment III, Page 21

  • DEPARTMENT OF FIRE AND POLICE PENSIONSFiscal Year 2016-17 Proposed BudgetDetail of Personnel Changes

    AttachmentSchedule 8

    CHANGE No. REASON FOR CHANGE

    ADD/DELETE POSITION

    Administrative Operations DivisionManagement Assistant 1 The requested Management Assistant is to support the Division

    (Accounting,Systems, HR and Administrative Services) on Headquartersclose-out and various special projects.

    Administrative ServicesSenior Administrative Clerk 1

    Administrative Clerk -1

    Communications & EducationBenefits Specialist 1 The requested Benefits Specialist is to support the expansion of

    communication and outreach efforts to LAFPP members andstakeholders.

    Disability PensionManagement Analyst II 1 The requested Management Analyst II is to assist and facilitate Disability

    application processing for service/nonservice-connected disabilities, aswell as survivor benefits for dependent children and parents.

    Pensions DivisionChief Benefits Analyst 1 The requested Chief Benefits Analyst will support the Division with

    oversight of seven Sections by sharing the responsibilities and dutieswith the other Chief Benefits Analyst.

    Retirement ServicesManagement Analyst II 1

    Payroll Supervisor II -1

    NET NUMBER OF POSITIONS 4

    Alignment of duties and requirements of position with properclassification of overseeing the Docushare Unit, supervising (2)Administrative Clerks, and providing support to the Section.

    Alignment of duties and requirements of position with properclassification of supervising (4) Senior Administrative Clerks and providesupport and oversight to the Section on pensioner information andsupport services.

    14 FY 2016-17 Proposed Budget - March 17, 2016

    375436Typewritten TextAttachment III, Page 22

  • Members

    DEPARTMENT OF FIRE AND POLICE PENSIONS Fiscal Year 2016-2017 Proposed BudgetOrganization Chart

    Board of Fire and Police Pension

    Commissioners

    Robert von Voigt PresidentPedram Salimpour Vice President

    George V. AlianoSam Diannitto

    Adam NathansonRuben NavarroBrian PendletonCorinne E. TapiaBelinda M. Vega 1 Departmental Audit Manager

    Erin Kenney1 Internal Auditor IV James Yeung1 Senior Management Analyst II Caroline Dinu

    Internal Audit

    Raymond P. CirannaGeneral Manager - #041

    1 Executive Administrative Assistant III Martha Martinez1 Secretary Joni Chavez

    Assistant General Manager - Joseph Salazar

    Chief Investment Officer - Thomas Lopez

    Executive Officer -William S. Raggio

    Effective July 1, 2016 as of 3/17/2016

    Adminstrative Operations Division

    Authorized122

    LAFPP TOTAL POSITIONS

    Filled110

    *Sub-Authorities Filled

    Filled 7

    5

    **As Needed (Part-time)9

    Investments Division Pensions Division

    4

    1 (Managing) Assistant City Attorney Alan M. Manning2 Deputy City Attorney IV John C. Blair James H. Napier2 Deputy City Attorney III Anya J. Freedman Joshua M. Geller1 Legal Secretary II Julie Cruz

    City Attorney

    *Resolution-Authorities2

    Filled2

    #075

    #119

    #104

    #009

    #086

    #077 #083 #042

    Attachment

    Schedule 9

    FY 2016-17 Proposed Budget March 17, 2016 15

    375436Typewritten TextAttachment III, Page 23

  • Ally Tang

    DEPARTMENT OF FIRE AND POLICE PENSIONS Fiscal Year 2016-2017 Proposed BudgetOrganization Chart Executive Officer

    William S. Raggio

    ADMINISTRATIVE OPERATIONS DIVISION

    1 Commission Executive Assistant II Rhonda Ketay 1 Chief Management Analyst

    Stephanie Clements1 Director of Systems

    Accounting

    1 Department Chief Accountant III

    1 Principal Accountant II Danny Coloso

    1 Principal Accountant I Cecilia De Los Angeles1 Senior Accountant II

    4 Accountant II

    1 Payroll Supervisor I Annett Anderson

    1 Administrative Clerk Laura Navarro

    Relief Retirement Worker** Niela Chavez

    Effective July 1, 2016 as of 3/17/2016

    1

    1 Senior Personnel Analyst I Lindi Willhite1 Management Analyst II Jennifer Barnych (Mgmt. Asst. in-lieu)

    Narciso Magno Jr. (Sr. Acct. I in-lieu)

    Payroll/Investment Accounting

    3 Accountant II Felicitas De La Cruz Maria Nina De Leon-Tabangin John Strand

    General Accounting/Pension Roll

    Systems

    1 Sr. Administrative Clerk Rita Harper

    ConSEPP

    1 Senior Systems Analyst II Alfredo Domagat 1 Senior Systems Analyst I

    1 Fiscal Systems Specialist I Pat Kho 1 Systems Analyst II

    Server and Help Desk

    1 Senior Systems Analyst II David Liu

    1 Senior Systems Analyst I

    1 Systems Programmer II Tarralyn Rose

    3 Systems Analyst II

    Application Development

    1

    1 Programmer Analyst V Vacant (Hold for SSA Sub-Authority)

    1 Programmer Analyst III

    Systems Analyst II*

    Senior Systems Analyst II* Jennifer Huang-Leifeste (Prog. Anal. V in-lieu)*

    Network and Security

    1 Systems Programmer III Jimmy LIndsey 1 Systems Analyst II Apollo Victoria

    Human Resources

    1 Systems Analyst II Robin Woo

    Vacant

    Elaine Good Ramirez

    Teresa Guerrero

    Amorfina Stubblefield

    Jack Huang

    Alvaro Marin

    Kien Trieu

    James Kawashima Jazmin Erenas

    Management Assistant New FY16-171

    1 Department Chief Accountant IV* Yolanda Huang

    Vacant Held for Sub-Authority

    Jennifer Shimatsu

    Sylvia Whelan

    Rimski Chua Cynthia Gomez

    1 Senior Management Analyst II

    1 Senior Management Analyst I

    2 Management Analyst II Wendy Kamayatsu

    1 Principal Clerk Erick Kurimoto (Sr. Admin Clerk in-lieu)2 Sr. Administrative Clerk Christine Schmidt

    1 Administrative Clerk Vacant

    Relief Retirement Worker**

    Administrative Services

    Administrative Unit

    Administrative Support Unit

    Sr. Admin. Clerk New FY16-17 James Pineda

    2 Administrative Clerk Julie Guan Timothy Morita Relief Retirement Worker**4

    Vacant

    Vacant

    Mark Granado

    Carissa Takahashi (Mgmt. Asst. in-lieu)

    Grace Shin

    Diana Pointer

    Moira Gomez 2

    Document Imaging Unit

    1

    Vacant

    Vacant

    1 Executive Administrative Assistant II Evange Masud (Secretary in-lieu)

    Bob Yan (Info Systems Manager II in-lieu)

    #069

    #011

    #128

    #077

    #064

    #109

    #073

    #074

    #079

    #092

    SA49

    #114

    #044

    #094

    #116

    #110

    #046#103

    SA41

    #102

    #095

    #115

    #049

    #037

    #091

    SA52

    #036

    #018

    #034

    RRW6

    #062#033

    #093

    #035

    #032#100

    #014

    #117

    #057

    #118

    #051

    #061

    #105

    #085#056

    #012

    #088

    #015

    RRW10

    #106

    RRW5

    1

    RRW8

    RRW7

    #101#017

    RRW1

    RRW13

    #016

    Principal Accountant II Vacant 1 SA60

    Attachment

    Schedule 9

    FY 2016-17 Proposed Budget March 17, 2016 16

    375436Typewritten TextAttachment III, Page 24

  • Chief Investment Officer Thomas Lopez

    INVESTMENTS DIVISION

    Support1 Secretary Marie Prieto1 Sr. Administrative Clerk

    Asset Class Management

    1 Investment Officer III Richard Rogers

    Public Equity & Real Estate

    1 Investment Officer II Paul Palmer2 Investment Officer I Annie Chao Daren Perlstein

    Private Equity & Performance Mgmt.

    1 Investment Officer II 1 Investment Officer I

    Commodities, Cash & Fixed Income

    1 Investment Officer II Derek Niu

    Effective July 1, 2016 as of 3/17/2016

    Relief Retirement Worker** Angelica De Vera1

    Vacant

    Catherine Taylor-Gomez (Admin Clerk in-lieu)

    Miki Shaler

    DEPARTMENT OF FIRE AND POLICE PENSIONS Fiscal Year 2016-2017 Proposed BudgetOrganization Chart

    #083

    RRW 11

    #008

    #019

    #039

    #108

    #120#084

    #040

    #038

    #107

    #0521 Management Analyst II Susan Liem

    Attachment

    Schedule 9

    FY 2016-17 Proposed Budget March 17, 2016 17

    375436Typewritten TextAttachment III, Page 25

  • Paul Guevara (Admin. Clerk in-lieu)

    Assistant General Manager - #042Joseph Salazar

    PENSIONS DIVISION

    1 Executive Administrative Assistant II Lee Tsubaki

    Disability Pension1 Senior Management Analyst II Chris Annala2 Senior Management Analyst I Loanne Truong Tina Zipper 4 Management Analyst II Carmen Steward Lady Smith

    1 Benefits Specialist Carleen Guzman1 Sr. Administrative Clerk Anthony Samaniego (Admin. Clerk in-lieu)

    Medical and Dental Benefits

    1 Senior Management Analyst II

    2 Management Analyst II Joe McGlinchey

    2 Benefits Specialist Jorge Saenz

    1 Sr. Administrative Clerk

    1 Senior Management Analyst II Diana Anderson

    1 Senior Management Analyst I

    1 Management Analyst II Kimberly McCullough (Mgmt. Analyst I in-lieu)

    1 Management Analyst I

    3 Benefits Specialist Kimberly Boyd Leneva Cobb Angela Espino

    1 Administrative Clerk

    Retirement Services

    1 Senior Management Analyst II Myo Thedar

    1 Management Analyst II Naomi Sukimoto 3 Benefits Specialist Deborah Campos Laura Gonzalez Ellis Lea Villero

    4 Sr. Administrative Clerk

    Active Member Services

    1 Senior Management Analyst II Gregory Mack

    Communications & Education

    1 Senior Management Analyst I Carol Tavares (Mgmt. Analyst II in-lieu) 2 Management Analyst II

    1 Sr. Administrative Clerk

    2 Management Analyst II Jackie Pallas May Simmons

    1 Benefits Specialist

    1 Sr. Administrative Clerk Elizabeth Lopez

    Effective July 1, 2016 as of 3/17/2016

    DROP/Service Pensions

    Relief Retirement Worker**1

    Counseling and Application Processing

    1 Management Analyst I

    3 Benefits Specialist Lourdes (Lis) Burog Jesse Hernandez Roel Villanueva

    1 Benefits Specialist Diane Barragan

    3 Benefits Specialist Carin Batista Sandy Davis

    Service Purchase

    Refund of Contributions

    Pensioner Benefits Administration

    Pensioner Information & Support Services

    Sue Wells

    Stephen Bayutas

    Rhodora Silverman

    Nicole Horn

    Management Analyst II* RA1

    Management Assistant*RA2

    Benefits Specialist Bernice Ortiz

    Erika Robinson

    Alma Rosas

    1

    1

    2

    Usha Papa (Mgmt. Analyst I in-lieu)

    Barbara NobregasConroy Gibson (Mgmt. Analyst I in-lieu)

    Jennifer Chan

    Laura Morales (Mgmt. Analyst I in-lieu)

    PAS Coordination

    Anthony Torres

    Edwina Valencia

    Travis King

    Kyle Susswain

    Lorraine Chan (Mgmt. Asst. in-lieu)

    Adam Perez (Mgmt. Asst. in-lieu)

    Samantha Jew (Mgmt. Asst. in-lieu) New FY16-17

    Pam Dacoff

    Ramiro Lopez Luis Pelayo

    Vacant 1 Management Analyst II New FY16-17

    Vacant

    1 Sr. Administrative Clerk

    Vacant Accounting Clerk 1

    DEPARTMENT OF FIRE AND POLICE PENSIONS Fiscal Year 2016-2017 Proposed BudgetOrganization Chart

    Vacant New FY16-17

    #010

    #059

    #078#124#112

    #082

    #029#063#031

    #025

    #050

    #111

    #127

    #054#125

    #053

    #023

    RRW9

    #099

    #022

    #098#071

    #126

    #121

    #097

    #113#089

    #070#060

    #065#058

    #047

    #028

    #027

    #048#055

    #129

    #096

    #081

    #030

    #076

    #090

    #087SA56

    #080

    #045

    #021#026#122#066

    #020#024#072#123

    #013

    1 Chief Benefits Analyst - New FY16-17 Vacant

    1 Chief Benefits Analyst - #043Robyn WIlder

    #130

    #131

    Attachment

    Schedule 9

    FY 2016-17 Proposed Budget March 17, 2016 18

    375436Typewritten TextAttachment III, Page 26

  • DEPARTMENT OF FIRE AND POLICE PENSIONSFiscal Year 2016-17 Proposed BudgetTravel Resolution

    AttachmentSchedule 10

    A. Business Trips

    1. To meetings with investment advisors, a master custodian bank and various consultants under contract in connection with the management of fund assets.2. To the offices of investment advisors and consultants who are under consideration to be hired.3. To the site of proposed real estate property investments.

    B. Pension related conferences, business meetings and educational programs held or sponsored by the following organizations:

    Association of Asian American Investment Managers (AAAIM)Association of Local Government Auditors (ALGA)Association of Public Pension Fund AuditorsCalifornia Association of Public Retirement Systems (CALAPRS)California Public Employees' Retirement System (CalPERS)California Society of Municipal Finance Officers (CSMFO)California State Teachers' Retirement System (CalSTRS)Callan Investment InstituteChartered Financial Analyst Institute (CFA Institute)Client conferences of current contractorsEMC CorporationGovernment Finance Officers Association (GFOA)Institute for Fiduciary EducationInstitute of Internal AuditorsInstitutional Investor InstituteInstitutional Limited Partners AssociationInternational Foundation of Employee Benefit Plans (IFEBP)National Association of Investment Companies (NAIC)National Association of Public Pension AttorneysNational Association of Securities Professionals (NASP)National Conference on Public Employee Retirement Systems (NCPERS)New America Alliance (NAA)Opal Financial Group ConferencesPension Real Estate AssociationPublic Safety Employees Pension and Benefits ConferenceStanford Law School - Fiduciary CollegeState Association of County Retirement Systems (SACRS)Sworn active employee or retired member associationsXerox State and Local Solutions, Inc. (Pension Administration System)Wharton School (Partnership w/ IFEBP)

    C. Pension industry organization meetings of officers and directors, when a Commissioner or staff member is an officer in that organization and expenses are not reimbursable by the organization.

    D. Other educational or continuing education training and seminars (not listed in B above), approved by the General Manager up to $4,500 per staff member per trip.

    AUTHORIZATIONS FOR TRAVEL

    BE IT RESOLVED, that the Board of Fire and Police Pension Commissioners and staff are authorized to travel and incurrequired expenses to the functions and for the reasons listed below, adopted effective July 1, 2016. Travel under thefollowing categories (A, B and C) is automatically approved to a maximum of four Commissioners (Board OperatingPolicies and Procedures, Section 2.6).

    Travel expenses incurred by any Commissioner or General Manager shall require the approval of the Board President.

    19 FY 2016-17 Proposed Budget - March 17, 2016

    375436Typewritten TextAttachment III, Page 27

  • DEPARTMENT OF FIRE AND POLICE PENSIONS

    701 E. 3rd Street, Suite 200 Los Angeles, CA 90013

    (213) 279-3000

    REPORT TO THE BOARD OF FIRE AND POLICE PENSION COMMISSIONERS DATE: JUNE 16, 2016 ITEM: A.6 FROM: RAYMOND P. CIRANNA, GENERAL MANAGER SUBJECT: CITY ADMINISTRATIVE OFFICERS REQUEST FOR AIRPORT POLICE

    TRANSFER STUDY AND POSSIBLE BOARD ACTION

    RECOMMENDATION That the Board:

    1) Retroactively approve The Segal Company (Segal) to conduct an actuarial study of the impact of allowing sworn members of the Airport Department to participate in LAFPPs Tier 6, as requested by the City Administrative Officer (CAO); and,

    2) Direct staff to seek reimbursement from the City for the cost of the Airport Police transfer study.

    BACKGROUND Currently, sworn personnel of the Airport Department (Airport Police) are members of the Los Angeles City Employees Retirement System (LACERS). During labor negotiations with the Airport Police bargaining units, the City agreed to place on the November 8, 2016 State General Election ballot a Charter amendment that proposes certain retirement benefit enhancements for this group. On June 9, 2016, the CAO sent a letter to the General Manager requesting that LAFPP direct Segal to conduct a study of the impact of the proposed Charter amendment which would: 1) Enroll new Airport Police into Tier 6; 2) Allow current Airport Police to transfer into Tier 6 from LACERS at their own expense; and 3) Permit new Airport Police Chiefs to transfer into LACERS. It is noted that due to the timing of the City Councils consideration of the proposed ballot measure, Segal was asked to begin work on this report in order to complete it within the necessary time constraints.1 It is noted that previously the Board and representatives of the Police and F ire unions have also expressed their desire to have the actuary prepare a report on the probable impact of allowing the Airport Police to participate in Tier 6 and determine if this change will have any adverse consequences for existing Plan participants and beneficiaries.

    1 City Election Code Section 601, subsection (b) requires that resolutions placing proposed measures on the ballot be adopted no fewer than 110 days before the election. With regard to the November 8, 2016 State General Election, the last date upon which these resolutions may be adopted is July 21, 2016. However, this legal deadline falls on an anticipated Council Recess date. Therefore, the practical deadline for Council to adopt these resolutions is Friday, July 1, 2016, preceding the anticipated Council Recess.

  • Board Report Page 2 June 16, 2016

    DISCUSSION Since the transfer of Airport Police from LACERS to LAFPP modifies retirement benefits, Government Code Section 7507 requires that a r eport from an actuary, who is an as sociate or fellow of the Society of Actuaries, must be obtained and made public at a public meeting at least two weeks prior to the adoption of any benefit changes. If the future costs of the changes exceed one-half of one percent of the future annual costs, an actuary must be pr esent to provide information as needed at the public meeting at which the adoption of a benefit change proposal shall be considered. Government Code Section 7507 also requires that the Mayor acknowledge, in writing, that he understands the current and future cost of these benefit changes as determined by the actuary. Section 7.6 (B) of the LAFPP Board Operating Policies and Procedures allows the Board to consider written requests that may be received from time to time from the Plan Sponsor for actuarial studies to be conducted by the Plan actuary on beh alf of the Plan Sponsor, provided the Plan Sponsor pays for said studies. Staff recommends that the Board retroactively approve the requested Airport Police transfer study at this time in order to allow the City to complete this Government Code-mandated review in a timely manner.

    BUDGET No budget impact as recommended.

    POLICY No policy changes as recommended. This report was prepared by: Joseph Salazar, Assistant General Manager Pensions Division RPC:JS Attachment: Request from CAO for Actuarial Cost Study

  • CITY OF LOS ANGELES MIGUEL A SANTANA

    CITY ADMINISTRATIVE OFFICER

    June 9, 2016

    Raymond Ciranna, General Manager Department of Fire and Police Pensions 701 East 3rd Street Los Angeles, CA 90013

    CALIFORNIA

    ERIC GARCETTI MAYOR

    ASSISTANT CITY ADMINISTRATIVE OFFICERS

    PATRICIA J. HUBER BEN CEJA

    YOLANDA CHAVEZ

    RE: ACTUARIAL STUDY REQUEST- CHARTER AMENDMENT

    Dear~nna: The City of Los Angeles has agreed to place a proposed Charter

    amendment on the November 6, 2016, State General Election ballot that would allow Los Angeles Airport peace officers to enroll in Tier 6 of the Fire and Police Pension Plan (LAFPP). Specifically, Airport peace officers hired on or after January 7, 2018, would be enrolled in Tier 6 and those hired before that date would have a one-time irrevocable option to transfer service credit from the Los Angeles City Employees Retirement System to LAFPP Tier 6 if they pay the full actuarial cost of such transfer.

    It is hereby requested that the Board of Fire and Police Pension Commissioners authorize the Segal Company to complete an analysis of the potential impact of adding Airport peace officers to Tier 6 of the LAFPP. The City will fully reimburse LAFPP for the cost of the study.

    Please contact Maritta Aspen at (213) 978-7641 if additional information is required.

    Sincerely,

    ~ 4.J.J_ Miguel A. Santana City Administrative Officer

    MHA:MAS: 0715187

    AN EQUAL EMPLOYMENT OPPORTUNITY- AFFIRMATIVE ACTION .EMPLOYER

    1!500 CITY HALL EAST, LOS ANGELES, CA1.1F. 90012-4190 TEL. (213)473-7500

  • DEPARTMENT OF FIRE AND POLICE PENSIONS

    701 E. 3rd Street, Suite 200 Los Angeles, CA 90013

    (213) 279-3000

    REPORT TO THE BOARD OF FIRE AND POLICE PENSION COMMISSIONERS DATE: JUNE 16, 2016 ITEM: A.7 FROM: RAYMOND P. CIRANNA, GENERAL MANAGER SUBJECT: CHIEF INVESTMENT OFFICERS QUARTERLY REPORT OF ASSET

    ALLOCATION STATUS AND POSSIBLE BOARD ACTION RECOMMENDATION That the Board approve the actual asset allocation of the Fund and Staffs plans for bringing asset classes currently outside of their target allocation ranges back within their allocation ranges. BACKGROUND The Rebalancing Policy (Board Policies Sec 1.7) specifies that the Board will review and affirmatively approve any allocations of Fund assets outside of their target ranges. It states:

    Staff will monitor the portfolios asset allocation relative to the target allocations. If the actual allocations fall within the defined ranges, no rebalancing will be required. If actual allocations fall outside the predetermined range, Staff will implement a rebalancing back to within the range of the target allocation. Staff will report all rebalancing activities to the Board on a quarterly basis at a minimum. In circumstances where it is impractical to rebalance the portfolio for any market or portfolio-specific reason, Staff shall assess the rebalancing options, notify the Board of the out of balance situation, and report its recommendations to the Board. Staff shall seek approval from the Board to implement rebalancing according to Staffs recommended rebalancing plan in situations that involve leaving the portfolio, or some portion of the portfolio out of balance for an extended period of time.

    On October 17, 2013, the Board approved the current asset allocation:

    Target Upper Lower

    Asset Class Allocation Range Range Dom. Large Cap Equity 23.0% 25.8% 20.2% Small Cap Equity 6.0% 7.3% 4.7% Int'l Equity 16.0% 18.4% 13.6% Int'l Emerging Markets 5.0% 6.4% 3.6% Core Bonds 14.0% 14.8% 13.2%

  • Board Report Page 2 June 16, 2016

    (contd from previous page)

    Target Upper Lower

    Asset Class Allocation Range Range TIPS 5.0% 5.3% 4.7% High Yield Bonds 3.0% 3.4% 2.6% Unconstrained Fixed Income 2.0% 2.2% 1.8% Real Estate 7.0% 8.0% 6.0% REITS 3.0% 3.5% 2.5% Commodities-Energy 5.0% 6.2% 3.8% Private Equity 10.0% 12.5% 7.5% Cash Equivalents 1.0% 4.0% 1.0%

    Together with the General Consultant RVK and Staff, rebalancing range limits were established. DISCUSSION Portfolio Status As of May 31, 2016, all asset classes were within their target ranges except Core Bonds (Attachment I). The improvement in energy prices and t he stabilization of emerging markets during the 3-month period ended May 31, 2016 led to higher valuations in most asset classes. In particular, the Commodities allocation which was previously below its lower target range was back in range. Core Bonds which was previously hovering at the lower end of its target range became under-allocated largely due to the denominator effect as the increase in this asset class was small when compared to equities. Attachment II illustrates the portfolio and allocation status of each asset class as of May 31, 2016. Rebalancing With the exception of a real estate fund redemption of about $73 million, there was no rebalancing that was implemented for the 3-month period ending May 31, 2016. Liquidity of the Fund remained adequate despite large cash outflow associated with larger DROP payments, regular pension rolls, and capital calls from private equity and real estate funds. Although market volatilities had subsided, Staff remained vigilant in monitoring the asset allocation of the Fund as well as the liquidity to provide payments for all its liabilities. CASH FLOW The actual cash flows (in millions) for 2Q2016 and the projected cash flow for 3Q2016 are summarized as below.

  • Board Report Page 3 June 16, 2016

    Apr 1 - Jun 30, 2016

    Jul 1 - Sep 30, 2016

    Actual/Projected

    Projected

    City Contributions (Net)1

    $ -

    $ 600.4 Member Contributions

    $ 35.2

    $ 32.1

    Securities Lending

    $ 2.3

    $ 2.0 Investment Income

    $ 87.9

    $ 81.4

    Earnings on Cash/Misc

    $ 0.4

    $ 0.2 Real Estate

    $ 96.7

    $ 44.8

    Private Equity

    $ 15.5

    $ (7.5) DROP

    $ (81.0)

    $ (38.8)

    Benefits & Administrative Expense

    $ (299.8)

    $ (277.5) Net Cash Flow (est.)

    $ (142.8)

    $ 437.1

    1The Net City Contribution = (the Total General Fund Contribution the retirement contribution payment from LAFPP to LACERS for LAFPP staff) + the Special Fund (Harbor) contribution. T he Excess Benefit Plan contribution is not included in the calculation.

    CURRENT EVENTS Asset Allocation/Asset Structural Review Currently, a series of asset allocation discussions which include the asset allocation targets, portfolio risk, active vs. passive, structure of each asset class are being conducted by RVK. Decisions will be made by the Board on each of these topics to balance between, returns, costs, and risk. Private Equity Emerging Manager Search The Board has instructed Staff to conduct a search for a private equity manager. Staff will present to the Board in July the responses to the specialized private equity manager search. This report was prepared by: Tom Lopez Chief Investment Officer RPC:TL:DN:MS Attachments: I. Portfolio Allocation Chart as of May 31, 2016 II. Total Portfolio as of May 31, 2016

  • Attachment I

    770722 1637069 936538 3344329

    3344329

    Portfolio Allocation

    25.7

    8%

    6.40

    %

    15.9

    1%

    3.81

    %

    17.8

    3%

    2.69

    %

    2.03

    %

    2.28

    %

    10.4

    8%

    8.97

    %

    3.81

    %

    0.00%

    5.00%

    10.00%

    15.00%

    20.00%

    25.00%

    30.00%

    35.00%

    Core Equity (23%) Small Cap. Equity (6%)

    Int'l Equity (16%) Int'l Emerg. Mkts (5.0%)

    Core Bonds Iincluding TIPS)

    (19.0%)

    High Yield Bonds (3%)

    Unconstrained Fixed Income (2.0%)

    Cash (1.0%) Total RE (Including REITS) (10.0%)

    Private Equity (10.0%)

    Commodities Energy (5.0%)

    Actual Allocation, Target Allocation in parenthesis

    Over-allocated (Blue), Under-allocated (Red)

    6.2

    3.8

    *Board approved ranges on 10/17/13

    1.8

    7.3

    4.7 3.6

    6.4

    20.2

    17.9

    2.6

    1.0

    4.0

    8.5

    11.5

    7.5

    12.5

    25.8

    3.4

    20.2

    18.4

    13.6

    2.2

  • A

    EQUITIES STOCKS BONDS CASH TOTAL ALLOC. PRIVATE EQUITY BONDS CASH TOTAL ALLOC.Alliance Capital (S&P 500 Index) 1,999.8 - 9.2 2,009.0 Abbott Capital 56.2 - - 56.2

    Alliance Capital (Russell 1000 Value Index) 128.2 - 0.7 128.9 Hamilton Lane 11.5 - - 11.5

    Alliance Capital (Russell 1000 Growth Index) 964.8 - 2.7 967.5 PCA 52.0 - - 52.0

    Chicago Equity (Enh. Index-Core) 310.0 - 4.3 314.3 Portfolio Advisors 1,134.4 - - 1,134.4

    LA Capital (Enh. Index-Growth) 248.6 - 1.6 250.2 Aldus Equity 257.2 - - 257.2

    Research Affiliates (Enh. Index-Value) 498.7 - 1.9 500.6 Stepstone Group 148.2 - - 148.2

    Robeco (Value) 534.5 - 9.8 544.3 TOTAL PRIVATE EQUITY MGRS (10%) 1,659.5 - - 1,659.5 8.97%

    OakBrook Investments (Large Cap-Core) 27.6 - 0.2 27.8 Target Differential (1.03)% (189.9)

    Redwood Investments (Large Cap-Core) 24.8 - 0.8 25.6

    Terminated Domestic Equity Managers - - 0.0 0.0 REAL ESTATECore Equity Managers (23%) 4,736.8 - 31.3 4,768.2 25.78% Alliance Capital Global REIT 110.7 - 0.4 111.1

    Target Differential 2.78% 514.6 Principal Global REIT 170.0 - 0.7 170.7

    Principal U.S. REIT 332.6 - 1.8 334.4

    Frontier Capital Mgt (Growth) 535.5 - 14.5 550.0 Terminated REIT Managers 0.0 - (0.0) 0.0

    Daruma (Value) 464.4 - 38.9 503.3 REIT Managers (3.0%) 613.4 - 2.9 616.3 3.33%

    Channing Capital Mgt. (Small Cap.) 52.2 - 1.3 53.5 Target Differential 0.33% 61.5

    Phocas Financial (Small Cap.) 50.9 - 1.6 52.5 REAL ESTATE COMMINGLED FUNDS SUMMARY

    Granite Investment Partners (Micro Cap) 24.8 - 0.4 25.2 Total Pooled Funds 836.0 - - 836.0 4.52%

    Attucks (Mgr of Emerging Mgrs) / New Accts. - - 0.0 0.0 REAL ESTATE SEPARATE ACCT. SUMMARY BY MANAGER

    Small Cap. Equity Mgrs (6%) 1,127.8 - 56.7 1,184.4 6.40% Heitman 209.1 - - 209.1

    Target Differential 0.40% 74.8 Sentinel 276.3 - - 276.3

    Real Estate Equity Mgrs 485.3 - - 485.3 2.62%

    Brandes (Value) 825.2 - 68.5 893.8 TOTAL REAL ESTATE (10%) 1,934.8 - 2.9 1,937.6 10.48%Fisher (Core) 404.1 - 8.0 412.1 Target Differential 0.48% 88.3

    Blackrock (Core Passive) 652.7 - 6.4 659.0 COMMODITIESBaille Gifford (Growth) 507.5 - 9.7 517.2 Alliance (Commodities, Public Equity) 282.3 - 0.7 283.0

    Boston Common (ESG) 26.6 - 0.5 27.1 Gresham Invest. Mgmt. (Commodities, Active) 93.4 - - 93.4

    Northern Trust (Int'l Small Cap Index) 334.6 - 5.8 340.4 Goldman Sachs (Commodities, Enhanced Index) 97.1 - - 97.1

    FIS (Mgr of Emerging Mgrs) International 89.6 - 2.7 92.3 Kleinwort Benson (Commodities, Public Equity) 87.9 - 1.9 89.8

    Terminated Int'l Equity Managers 0.0 - 0.0 0.0 Mellon Capital (Commodities, Public Equity) 77.4 - 0.9 78.3

    Int'l Equity Mgrs (16%) 2,840.4 - 101.5 2,941.9 15.91% PA (Commodities, Private Equity) 62.3 - - 62.3

    Target Differential (0.09)% (17.1) TOTAL COMMODITIES (5.0%) 700.3 - 3.5 703.9 3.81%

    Harding Loevner 310.2 - 6.0 316.2 Target Differential (1.19)% (224.4)

    Dimensional Fund Advisors 384.9 - 3.9 388.8

    Terminated Int'l Emerg. Mkts. Mgrs. 0.0 - 0.0 0.0 CASHInt'l Emerg. Mkts Mgrs (5.0%) 695.1 - 9.9 705.1 3.81% HOUSE ACCOUNTS

    Target Differential (1.19)% (219.6) Tier 1 (Article 17) - - 3.5 3.5

    TOTAL EQUITIES MGRS (50.0%) 9,400.1 - 199.4 9,599.5 51.91% Tier 2 (Article 18) - - 249.1 249.1

    Int'l Tax Reclaims - - 0.3 0.3 Tier 3 (Article 35) - - 9.1 9.1

    FIXED INCOME Tier 4 (New) - - 5.4 5.4 Northern Trust (Fixed Income Index) - 678.6 4.3 682.9 Tier 5 (New) - - 147.2 147.2

    Reams Asset Mgmt. (Opportunistic) - 641.9 52.5 694.4 Tier 6 (New) - - 7.7 7.7

    LM Capital (Opportunistic) - 335.1 3.6 338.7 CASH SUMMARY

    GIA Partners (Opportunistic) - 25.7 0.2 25.9 Unallocated Cash Reserve (1%) - - 421.9 421.9 2.28%

    SemperCapital Mgt. - 25.2 0.9 26.1 Target Differential 1.28% 237.0

    Loomis Sayles (Long Duration) - 652.6 2.4 655.0 Transition - - -

    CA Comm. Mort. Fund - 1.6 - 1.6

    Bridgewater (TIPS) - 342.7 - 342.7 PRIVATE REAL

    Reams Asset Mgmt. (Passive TIPS) - 467.8 0.1 467.9 EQUITY STOCKS BONDS ESTATE CASH TOTAL

    Bridgewater Pure Alpha - 62.7 - 62.7 ACTUAL ASSET MIX

    Core Bond Mgrs (19.0%) - 3,233.8 64.0 3,297.9 17.83% Current Month 700.3 1,659.5 9,401.1 4,027.3 1,934.8 770.7 18,493.7

    Target Differential (1.17)% (215.9) 3.79% 8.97% 50.83% 21.78% 10.46% 4.17% 100.00%

    MacKay Shields 1.0 481.9 15.2 498.1 Last Month 702.9 1,668.4 9,390.6 4,000.3 1,995.2 774.8 18,532.3

    High Yield Bond Mgrs (3.0%) 1.0 481.9 15.2 498.1 2.69% % Change -0.37% -0.53% 0.11% 0.67% -3.03% -0.53% -0.21%

    Target Differential (0.31)% (56.7)

    Reams Asset Mgmt. (Unconstrained) - 129.8 58.2 188.1

    Payden & Rygel (Unconstrained) 181.8 5.1 186.9

    Unconstrained Fixed Income (2.0%) 311.6 63.4 375.0 2.03%

    Target Differential 0.03% 5.1

    TOTAL FIXED INCOME MGRS (24.0%) 1.0 4,027.3 142.7 4,171.0 22.55%

    Subtotals & totals may not sum up exactly due to rounding.Data is unaudited.Note: Data is unaudited Note: City Pension Contribution received on 7/15/15Dollars expressed in Millions.

    COMMODITIES

    Portfolio as of May 31, 2016

    TOTAL FUND

    STOCKS / EQUITY / RE

    Attachment II

  • Active vs. Passive DiscussionLos Angeles Fire and Police Pension System

    June 16, 2016

    14935Typewritten TextITEM: A.8

  • Introduction

    1

  • Manager StructureIntroduction We are here today to discuss RVKs Active/Passive Analysis

    Schedule:

    Broad Asset Allocation Target (May 5th)

    Risk Follow Up (May 19th)

    Active/Passive Discussion (Today)

    Equity/Fixed Income Structure Discussion

    Todays objectives:

    Understand the Plans current Active/Passive structure

    Discuss RVKs research on the Active/Passive debate

    Use todays discussion in future meetings when examining LAFPPsequity and fixed income structures

    2

  • Investment Decision Process

    Large Cap (X%) Manager X ($)

    Small Cap (X%) Manager Y ($)

    100%

    Developed (X%) Manager X ($)

    Emerging (X%) Manager Y ($)

    100%

    Investment Grade (X%) Manager X ($)

    High Yield (X%) Manager Y ($)

    Funding Ratio

    100% 100% 100%

    Total Plan Assets (100%)

    US Equity(X%)

    InternationalEquity(X%)

    Fixed Income

    (X%)

    Total Plan Assets vs.

    Plan Liabilities

    AA Study Structure Study

    Structure Study

    Structure Study

    Manager Decisions

    Manager Decisions

    Manager Decisions

    A/L Study

    May 5th &May 19th

    Following MeetingsToday Part I Active/Passive

    3

  • Structure AnalysisLooking Forward Some of the items that we will review in the structure analysis

    include:

    Active vs. passive structure

    Passive implementation market weighted vs. enhanced indexing, vs. smart beta

    Active implementation Manager weights, manager guidelines

    Style structure value/core/growth

    Size structure micro/small/mid/large/mega

    Region structure US/developed/emerging

    Sector structure Treasury/Corporate/MBS/High Yield/Bank Loans

    Benchmark selection

    Fees4

  • Structure AnalysisActive/Passive Analysis The active vs. passive decision is an active investment decision It is not helpful to simply ask the question: Is it better to be active or

    passive?1) Instead, when approaching the active/passive decision it is more productive to specify:2) Where specifically in the portfolio the decision would apply? (i.e., what asset class/sub

    asset class/strategy)3) What is the outlook for the active/passive performance cycle in that part of the portfolio?4) Are they any structural reasons for constructing a mandate that differs from the passive

    alternative?5) What type of passive exposure is most appropriate (i.e., cap weighted, low volatility,

    fundamental, equal weighted, etc.)?

    Hence our strong recommendation that the active/passive analysis and decision be made at the asset class and even sub asset class levels

    5

  • LAFPP Active/Passive

    6

  • LAFPP PortfolioTotal LAFPP Portfolio Active/Passive 69% Active 31% Passive

    Deeper Dive Active/Passive Some asset classes cannot be invested in on a passive basis

    Unconstrained Fixed Income, Private Real Estate, Private Equity, Private Equity Commodities

    Excluding these asset classes, LAFPPs Active/Passive mix is: 62% Active 38% Passive

    Data as of 12/31/2015. Active allocations includes exposure to Enhanced Index mandates.Active/Passive split varies slightly from the Public Fund Report due to all Real Estate being classified as Active in the Public Fund Study.

    Active Passive

    Active Passive

    7

  • LAFPP Equity

    Data as of 12/31/2015.Active allocations includes exposure to Enhanced Index mandates.

    US Equity Active PassiveTotal US Equity 47% 53%Large Cap 34% 66%Small/Micro Cap 100% 0%

    Non-US Equity Active PassiveTotal Non-US Equity 72% 28%Developed 66% 34%Emerging 100% 0%

    Total Equity Active PassiveTotal Global Equity 57% 43%

    8

  • Fixed Income Active PassiveTotal Fixed Income* 68% 32%Core 72% 28%High Yield 100% 0%TIPS 40% 60%Unconstrained 100% 0%

    REITs Active PassiveTotal REITs 72% 28%US 100% 0%Global 61% 39%

    LAFPP Fixed Income and REITs

    Data as of 12/31/2015.*Excludes Unconstrained Fixed Income, in which a passive investment cannot be made.

    9

  • RVK Public Fund StudyDecember 31, 2015 Report Twice a year, RVK publishes a Public Fund Study based on a Survey of public

    retirement funds across the country Study represents 75 public funds throughout the U.S. LAFPP is below the average for its fund size category in terms of active allocation

    Asset Range Average Active Average PassiveOver $20 B 76% 24%

    $10 20 B 75% 25%

    $5 10 B 73% 27%

    $1 5 B 77% 23%

    $500 M 1 B 79% 21%

    Under $500 M 89% 11%

    All Funds 77% 23%

    LAFPP 70% 30%

    Data from the 2015 Q4 RVK Public Fund Study.

    Portfolio Active (%) # of Funds90 to 100 12

    50 to 89 60

    10 to 49 2

    Less than 10 1

    $10 20 B Active Passive25th percentile 68% 32%

    Median 73% 27%

    75th percentile 83% 17%

    10

  • RVK Public Fund StudyDecember 31, 2015 Report

    LAFPP ranks close to the bottom quartile of all funds in terms of active management percentage

    Data from the 2015 Q4 RVK Public Fund Study.

    11

  • 2016 RVK Active/Passive Study

    12

  • Definitions

    Passive Investing True passive investing is the replication of the basket of

    investments comprising a market with perfect rebalancing and representation of each underlying asset

    Passive investment strategies as implemented with real-world constraints such as transaction costs and liquidity attempt to match market performance with as little tracking error (volatility of manager positive and negative excess return) as possible

    There are a spectrum of choices in executing a passive or near passive approach (see table on following page)

    Active Investing Active strategies begin with the premise that an active

    selection of investment assets based on manager investment skill and/or the exploitation of certain market inefficiencies will result in a higher return than holding the entire basket of market assets

    13

  • Indexing Approaches

    IndexingApproach

    % of IndexHoldings

    ExpectedPerformance

    DifferenceDescription

    FullReplication All None

    Holds each security in a benchmark to its index weight. The classic example of full replication is the Vanguard S&P 500.

    Sampling MostMinor

    Difference+/-

    Using a factor model to optimally determine the necessary set of securities to replicate the benchmark risk profile. Used when full replication isn't possible, or for tax-efficiency, etc.

    Synthetic NoneMinor

    Difference+/-

    Using derivatives to replicate benchmark exposure, e.g., portable alpha strategies.

    EnhancedIndexing Most Outperform

    All or some of the above, enhanced indexers try to replicate the risk profile of the index while outperforming it through marginal variations.

    StructuredPortfolios Depends Outperform

    A strict set of rules designed to exploit inefficiencies in a particular market segment, e.g., Dimensional Fund Advisors (DFA).

    14

  • The Active vs. Passive Debate

    The benefits of active management versus a comparable passively managed investment is an ongoing debate

    While the debate is academically interesting, the only responsible answer must be a highly unsatisfying it depends

    Results differ depending on the asset class or market segment in question

    Other factors directly impacting the debate include: Market cycles and time period of observance Availability and ease of indexing

    15

  • The Active vs. Passive DebateThe Case for Passive Investing

    Lower fees - guaranteed head start relative to active management

    Lower maintenance - no benchmark risk due to active bets, so it is less resource intensive to select, monitor, and terminate managers

    No timing (managers) risk - cannot make ill-timed move from one underperforming active manager to another

    Little manager selection skill required - gaining market exposure is relatively straightforward

    Efficient markets theory - if markets are efficient, then active management is expensive and potentially detrimental to performance

    16

  • The Active vs. Passive DebateThe Case for Active Investing

    Markets are efficient, but investors are not - if no market is entirely efficient, then there is the potential for active outperformance

    Fundamentals can be accounted for - valuation and other fundamentals can be incorporated to ensure that investments are not merely following prices (i.e. no rear-view mirror investing, or need to follow P/E expansion unless commensurate growth is expected)

    Avoid concentration risk - if a sector or stock becomes a large position relative to others in the index, an active manager can react accordingly

    Markets need active investors - markets will not function properly without active management, as someone has to do the dirty work

    17

  • Market CyclesOverview

    A case can be made for active or passive management, depending on the time period analyzed During bear stock markets active equity managers tend to

    outperform (fear breeds opportunity), and vice versa for bull markets

    Please see examples of general trends on the following pages

    Investors must take caution not to embrace active or passive management based on recent trends

    18

  • Market CyclesEquity Example

    A case can be made for active or passive management, depending on the time period, or regime, analyzed

    Active management tends to perform better during periods of weak absolute returns

    Excess Return vs S&P 500 Return (Correlation = -0.85)

    -30.0%

    -20.0%

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    Large Cap Active Excess Rolling 3Yr Median S&P 500 Return Rolling 3Yr

    19

  • Market CyclesEquity Market Cycles: Alpha or Beta?

    Attribution analysis of manager excess returns is useful, as structural (beta) biases can drive outperformance, instead of skill (alpha) based decisions tactical, selection, etc. for which managers are paid

    Cycle Comparison: Excess Return vs R3000 IndexAll Cap Active Excess vs. All Cap Value Passive Excess (Correlation = 0.62 )

    -5.0%

    -4.0%

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    All Cap Active Excess Rolling 3Yr Russell 3000 Value Excess Rolling 3Yr20

  • Market CyclesFixed Income Market Cycles: Alpha or Beta?

    Attribution analysis of manager excess returns is useful, as structural (beta) biases can drive outperformance, instead of skill (alpha) based decisions tactical, selection, etc. for which managers are paid

    Cycle Comparison: Excess Return vs Barclays Agg IndexCore Plus Fixed Income Active Excess vs. HY Passive Excess (Correlation = 0.94 )

    -20.0%

    -16.0%

    -12.0%

    -8.0%

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    Core Plus Fixed Income Active Excess Rolling 3Yr Barclays HY Excess Return Rolling 3Yr

    21

  • Active vs. Passive SummaryAvailability & Ease of Indexing

    For some asset classes, investable indices do not exist or are imperfect Some asset classes can be implicitly and explicitly expensive

    to index Example: Barclays Aggregate Bond Index has approximately 9,000 holdings

    making it very difficult to replicate Some smaller markets lack liquidity and therefore carry a higher price tag for

    investors making indexing less advantageous

    Investors should consider: Index manager fees Trading costs Opportunity costs Potential index replication errors Flexibility with tax management, gain/loss harvesting and

    social screens

    22

  • Active vs. Passive Summary

    Passive management has many compelling attributes

    Active management can add value across various markets or risk regimes

    Benefits of active management tend to hinge on the investors ability to select better than average managers

    We frequently recommend active management styles, but recognize that there are situations in which passive investing can bring with it economic benefits, investment simplicity, and competitive relative returns

    For example, large cap US equity is often regarded as a particularly efficient market, providing less opportunity for active managers to add value above the index. Many plan sponsors decide to index large cap US equity in order to focus their efforts on selecting top managers in less efficient markets, such as small cap and international, where the potential for active manager alpha is possibly higher.

    23

  • Analysis

    24

  • Methodology

    Rolling 3-Year Excess Returns Uses data starting in January 2001

    Net of Fees Fee assumptions based on eVestment Alliance

    peer group median Given the following mandate sizes:

    Core/Core Plus Fixed Income

    US All Cap US Large Cap Non-US Large Cap

    $500M

    High Yield Fixed Income

    US Small Cap US Mid Cap Non-US Small Cap Emerging Markets

    $200M

    25

  • Considerations

    Potential survivorship biasConstrained analysis to start in January 2001, mitigating survivorship bias from periods prior to good data

    Head count vs. invested assetsThe study examines the average performance of the peer group, but does not account for actual assets invested in the various products

    Index dependencyIndex providers differ in methodology, holdings, and reconstitution all of which can have an impact on relative performance of active managers vs. the passive index

    Source: Blanchett, David and Israelsen, Craig. Active Vs. Passive. January/February 2009, Vol. 12 No.1, Journal of Indexes26

  • Manager Excess Returns SummaryLong-Term 3-Year Rolling Average (Net of Fees)January 2001 December 2015

    Excess return is calculated versus universe-specific benchmark.January 2001 represents the start of the first 3-year period.

    25th Percentile Median 75th Percentile

    Core Fixed Income 0.76% 0.26% -0.31%

    Core Plus Fixed Income 1.79% 0.91% 0.08%

    High Yield Fixed Income 0.65% -0.38% -1.41%

    Fixed Income

    27

  • Manager Excess Returns SummaryLong-Term 3-Year Rolling Average (Net of Fees)January 2001 December 2015

    Excess return is calculated versus universe-specific benchmark.January 2001 represents the start of the first 3-year period.

    25th Percentile Median 75th Percentile

    US All Cap Core Equity 2.79% 0.88% -1.10%

    US Large Cap Growth Equity 1.89% -0.04% -1.82%

    US Large Cap Core Equity 1.51% -0.02% -1.57%

    US Large Cap Value Equity 2.01% 0.19% -1.50%

    US Large Cap Enhanced Equity 0.99% 0.35% -0.22%

    US Mid Cap Growth Equity 1.81% -0.35% -2.42%

    US Mid Cap Core Equity 1.23% -0.63% -2.49%

    US Mid Cap Value Equity 1.35% -0.54% -2.35%

    US Small Cap Growth Equity 2.72% 0.13% -2.66%

    US Small Cap Core Equity 2.85% 0.73% -1.24%

    US Small Cap Value Equity 3.68% 1.32% -1.09%

    US Equity

    28

  • Manager Excess Returns SummaryLong-Term 3-Year Rolling Average (Net of Fees)January 2001 December 2015

    Excess return is calculated versus universe-specific benchmark.January 2001 represents the start of the first 3-year period.

    25th Percentile Median 75th Percentile

    Non-US Large Cap Core Equity 1.47% -0.05% -1.44%

    Non-US Large Cap Equity 2.19% 0.15% -1.68%

    Non-US Small Cap Equity* 4.00% 1.59% -1.04%

    Emerging Markets Equity 3.12% 0.74% -1.45%

    Global All Cap Equity 2.83% 0.11% -2.27%

    International Equity

    *Jan 2001 Small Cap Equity Peer Group Population was 21

    29

  • FIXED INCOMECore Fixed IncomeManager Excess Returns Rolling 3-Year Periods (beginning January 2001)

    eVestment Alliance Manager Database Comparison

    Excess Returns are performed relative to theBC Aggregate Bond IndexAssumed Annual Management Fee 21.5 bpsPeak Population:291

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    2015

    /03

    2015

    /06

    2015

    /09

    2015

    /12

    25th Percentile Median 75th Percentile

    25% of all managers at this point in time had trailing 3-year performance that put them above this green line.

    50% of all managers at this point in time had trailing 3-year performance that put them above this blue line.

    30

  • FIXED INCOMECore Plus Fixed IncomeManager Excess Returns Rolling 3-Year Periods (beginning January 2001)

    eVestment Alliance Manager Database Comparison

    Excess Returns are performed relative to theBC Aggregate Bond IndexAssumed Annual Management Fee 25.5 bpsPeak Population:135

    -8.0%

    -6.0%

    -4.0%

    -2.0%

    0.0%

    2.0%

    4.0%

    6.0%

    8.0%

    2003

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    /09

    2015

    /12

    25th Percentile Median 75th Percentile

    31

  • FIXED INCOMEHigh Yield Fixed IncomeManager Excess Returns Rolling 3-Year Periods (beginning January 2001)

    eVestment Alliance Manager Database Comparison

    Excess Returns are performed relative to theML U.S. High Yield Master II IndexAssumed Annual Management Fee 47.5 bpsPeak Population:152

    -8.0%

    -6.0%

    -4.0%

    -2.0%

    0.0%

    2.0%

    4.0%

    6.0%

    2003

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    /06

    2015

    /09

    2015

    /12

    25th Percentile Median 75th Percentile

    32

  • DOMESTIC EQUITYUS All Cap Core EquityManager Excess Returns Rolling 3-Year Periods (beginning January 2001)

    eVestment Alliance Manager Database Comparison

    Excess Returns are performed relative to theRussell 3000 IndexAssumed Annual Management Fee 52.5 bpsPeak Population:94

    -6.0%

    -4.0%

    -2.0%

    0.0%

    2.0%

    4.0%

    6.0%

    8.0%

    2003

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    /09

    2015

    /12

    25th Percentile Median 75th Percentile

    33

  • DOMESTIC EQUITYUS Large Cap Enhanced EquityManager Excess Returns Rolling 3-Year Periods (beginning January 2001)

    eVestment Alliance Manager Database Comparison

    Excess Returns are performed relative to theS&P 500 IndexAssumed Annual Management Fee 24.5 bpsPeak Population:46

    -1.5%

    -1.0%

    -0.5%

    0.0%

    0.5%

    1.0%

    1.5%

    2.0%

    2003

    /12

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    2015

    /12

    25th Percentile Median 75th Percentile

    34

  • DOMESTIC EQUITYUS Large Cap Value EquityManager Excess Returns Rolling 3-Year Periods (beginning January 2001)

    eVestment Alliance Manager Database Comparison

    Excess Returns are performed relative to theRussell 1000 Value IndexAssumed Annual Management Fee 43 bpsPeak Population:397

    -4.0%

    -3.0%

    -2.0%

    -1.0%

    0.0%

    1.0%

    2.0%

    3.0%

    4.0%

    5.0%

    6.0%

    2003

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    2015

    /12

    25th Percentile Median 75th Percentile

    35

  • DOMESTIC EQUITYUS Large Cap Core EquityManager Excess Returns Rolling 3-Year Periods (beginning January 2001)

    eVestment Alliance Manager Database Comparison

    Excess Returns are performed relative to theRussell 1000 IndexAssumed Annual Management Fee 41.5 bpsPeak Population:391

    -5.0%

    -4.0%

    -3.0%

    -2.0%

    -1.0%

    0.0%

    1.0%

    2.0%

    3.0%

    4.0%

    5.0%

    2003

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    2015

    /12

    25th Percentile Median 75th Percentile

    36

  • DOMESTIC EQUITYUS Large Cap Growth EquityManager Excess Returns Rolling 3-Year Periods (beginning January 2001)

    eVestment Alliance Manager Database Comparison

    Excess Returns are performed relative to theRussell 1000 Growth IndexAssumed Annual Management Fee 47.5 bpsPeak Population:388

    -6.0%

    -4.0%

    -2.0%

    0.0%

    2.0%

    4.0%

    6.0%

    8.0%

    2003

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    2015

    /12

    25th Percentile Median 75th Percentile

    37

  • DOMESTIC EQUITYUS Mid Cap Value EquityManager Excess Returns Rolling 3-Year Periods (beginning January 2001)

    eVestment Alliance Manager Database Comparison

    Excess Returns are performed relative to theRussell Mid-Cap Value IndexAssumed Annual Management Fee 67.5 bpsPeak Population:106

    -6.0%

    -4.0%

    -2.0%

    0.0%

    2.0%

    4.0%

    6.0%

    2003

    /12

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    2015

    /12

    25th Percentile Median 75th Percentile

    38

  • DOMESTIC EQUITYUS Mid Cap Core EquityManager Excess Returns Rolling 3-Year Periods (beginning January 2001)

    eVestment Alliance Manager Database Comparison

    Excess Returns are performed relative to theRussell Mid-Cap IndexAssumed Annual Management Fee 59 bpsPeak Population:78

    -8.0%

    -6.0%

    -4.0%

    -2.0%

    0.0%

    2.0%

    4.0%

    6.0%

    2003

    /12

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    2015

    /12

    25th Percentile Median 75th Percentile

    39

  • DOMESTIC EQUITYUS Mid Cap Growth EquityManager Excess Returns Rolling 3-Year Periods (beginning January 2001)

    eVestment Alliance Manager Database Comparison

    Excess Returns are performed relative to theRussell Mid-Cap Growth IndexAssumed Annual Management Fee 63.5 bpsPeak Population:149

    -8.0%

    -6.0%

    -4.0%

    -2.0%

    0.0%

    2.0%

    4.0%

    6.0%

    8.0%

    2003

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    2015

    /12

    25th Percentile Median 75th Percentile

    40

  • DOMESTIC EQUITYUS Small Cap Value EquityManager Excess Returns Rolling 3-Year Periods (beginning January 2001)

    eVestment Alliance Manager Database Comparison

    Excess Returns are performed relative to theRussell 2000 Value IndexAssumed Annual Management Fee 83 bpsPeak Population:233

    -6.0%

    -4.0%

    -2.0%

    0.0%

    2.0%

    4.0%

    6.0%

    8.0%

    10.0%

    2003

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    25th Percentile Median 75th Percentile

    41

  • DOMESTIC EQUITYUS Small Cap Core EquityManager Excess Returns Rolling 3-Year Periods (beginning January 2001)

    eVestment Alliance Manager Database Comparison

    Excess Returns are performed relative to theRussell 2000 IndexAssumed Annual Management Fee 74 bpsPeak Population:154

    -6.0%

    -4.0%

    -2.0%

    0.0%

    2.0%

    4.0%

    6.0%

    8.0%

    2003

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    /12

    25th Percentile Median 75th Percentile

    42

  • DOMESTIC EQUITYUS Small Cap Growth EquityManager Excess Returns Rolling 3-Year Periods (beginning January 2001)

    eVestment Alliance Manager Database Comparison

    Excess Returns are performed relative to theRussell 2000 Growth IndexAssumed Annual Management Fee 77.5 bpsPeak Population:202

    -6.0%

    -4.0%

    -2.0%

    0.0%

    2.0%

    4.0%

    6.0%

    8.0%

    2003

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    25th Percentile Median 75th Percentile

    43

  • INTERNATIONAL EQUITYNon-US Large Cap EquityManager Excess Returns Rolling 3-Year Periods (beginning January 2001)

    eVestment Alliance Manager Database Comparison

    Excess Returns are performed relative to theMSCI All Country World ex US IndexAssumed Annual Management Fee 55.5 bpsPeak Population:85

    -5.0%

    -4.0%

    -3.0%

    -2.0%

    -1.0%

    0.0%

    1.0%

    2.0%

    3.0%

    4.0%

    5.0%

    6.0%

    2003

    /12

    2004

    /03

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    /06

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    /09

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    /09

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    /03

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    /06

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    /06

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    /06

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    /09

    2014

    /12

    2015

    /03

    2015

    /06

    2015

    /09

    2015

    /12

    25th Percentile Median 75th Percentile

    44

  • INTERNATIONAL EQUITYNon-US Large Cap Core EquityManager Excess Returns Rolling 3-Year Periods (beginning January 2001)

    eVestment Alliance Manager Database Comparison

    Excess Returns are performed relative to theMSCI EAFE IndexAssumed Annual Management Fee 50 bpsPeak Population:67

    -4.0%

    -3.0%

    -2.0%

    -1.0%

    0.0%

    1.0%

    2.0%

    3.0%

    4.0%

    2003

    /12

    2004

    /03

    2004

    /06

    2004

    /09

    2004

    /12

    2005

    /03

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    /06

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    2014

    /12

    2015

    /03

    2015

    /06

    2015

    /09

    2015

    /12

    25th Percentile Median 75th Percentile

    45

  • INTERNATIONAL EQUITYNon-US Small Cap EquityManager Excess Returns Rolling 3-Year Periods (beginning January 2001)

    eVestment Alliance Manager Database Comparison

    Excess Returns are performed relative to theMSCI EAFE Small Cap IndexAssumed Annual Management Fee 85 bpsPeak Population:52

    10.0%

    -8.0%

    -6.0%

    -4.0%

    -2.0%

    0.0%

    2.0%

    4.0%

    6.0%

    8.0%

    10.0%

    12.0%

    2004

    /01

    2004

    /04

    2004

    /07

    2004

    /10

    2005

    /01

    2005

    /04

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    /07

    2005

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    /01

    2015

    /04

    2015

    /07

    2015

    /10

    25th Percentile Median 75th Percentile

    46

  • INTERNATIONAL EQUITYEmerging Markets EquityManager Excess Returns Rolling 3-Year Periods (beginning January 2001)

    eVestment Alliance Manager Database Comparison

    Excess Returns are performed relative to theMSCI Emerging Markets IndexAssumed Annual Management Fee 84 bpsPeak Population:224

    -4.0%

    -3.0%

    -2.0%

    -1.0%

    0.0%

    1.0%

    2.0%

    3.0%

    4.0%

    5.0%

    6.0%

    2003

    /12

    2004

    /03

    2004

    /06

    2004

    /09

    2004

    /12

    2005

    /03

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    /06

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    /03

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    /06

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    /09

    2015

    /12

    25th Percentile Median 75th Percentile

    47

  • Manager Excess Returns SummaryLong-Term 3-Year Rolling Average (Net of Fees)January 2001 December 2015

    Excess return is calculated versus universe-specific benchmark.January 2001 represents the start of the first 3-year period.

    Percentage of time all managers in given percentiles outperformed benchmark

    Fixed Income25th Percentile Median 75th Percentile

    Core Fixed Income 100.00% 73.10% 28.28%

    Core Plus Fixed Income 91.72% 82.76% 68.97%

    High Yield Fixed Income 86.21% 24.83% 4.83%

    US Low Duration Fixed Income 88.28% 69.66% 42.07%

    48

  • Manager Excess Returns SummaryLong-Term 3-Year Rolling Average (Net of Fees)January 2001 December 2015

    Excess return is calculated versus universe-specific benchmark.January 2001 represents the start of the first 3-year period.

    Percentage of time all managers in given percentiles outperformed benchmark

    US Equity25th Percentile Median 75th Percentile

    US All Cap Core Equity 100.00% 66.90% 16.55%

    US Large Cap Core Equity 91.72% 51.03% 0.69%

    US Large Cap Enhanced Equity 100.00% 96.55% 21.38%

    US Large Cap Growth Equity 86.90% 46.90% 2.07%

    US Large Cap Value Equity 100.00% 46.21% 17.93%

    US Mid Cap Core Equity 86.90% 30.34% 0.00%

    US Mid Cap Growth Equity 88.97% 35.86% 2.76%

    US Mid Cap Value Equity 70.34% 36.55% 8.97%

    US Small Cap Core Equity 100.00% 82.07% 11.03%

    US Small Cap Growth Equity 100.00% 53.79% 0.00%

    US Small Cap Value Equity 100.00% 88.28% 16.55%

    49

  • Manager Excess Returns SummaryLong-Term 3-Year Rolling Average (Net of Fees)January 2001 December 2015

    Excess return is calculated versus universe-specific benchmark.January 2001 represents the start of the first 3-year period.

    Percentage of time all managers in given percentiles outperformed benchmark

    Non-US Equity25th Percentile Median 75th Percentile

    Non-US Large Cap Core Equity 100.00 % 46.90 % 0.00%

    Non-US Large Cap Equity 100.00 % 53.10 % 8.28%

    Non-US Small Cap Equity 100.00 % 82.64 % 29.86%

    Emerging Markets Equity 100.00 % 80.00 % 1.38%

    Global All Cap Equity 100.00 % 53.10 % 0.69%

    50

  • 51

  • DEPARTMENT OF FIRE AND POLICE PENSIONS

    701 E. 3rd Street, Suite 200 Los Angeles, CA 90013

    (213) 279-3000

    REPORT TO THE BOARD OF FIRE AND POLICE PENSION COMMISSIONERS DATE: JUNE 16, 2016 ITEM: B.4.a FROM: RAYMOND P. CIRANNA, GENERAL MANAGER SUBJECT: MAY 2016 MONTHLY REPORT AND UPDATE

    THIS REPORT IS PROVIDED FOR INFORMATIONAL PURPOSES DISCUSSION The May 2016 Monthly Report includes the following notable items:

    1) Proposed Financial Counseling Program Staff is researching the scope and feasibility of

    offering individual financial counseling sessions to members. A fter attending one o f the Financial Planning Education seminars, members will have the opportunity to schedule a follow-up session with a financial planner for a personalized review of their financial situation. This will allow the members to apply the education provided in the seminar to develop a comprehensive financial plan with their financial planner. Staff is proceeding with a pilot study of the financial counseling program and will be conducting focus group sessions with members to provide feedback for the development of the program.

    2) Airport Police Transfer to Tier 6 Sworn personnel of the Airport Department, the Airport Police, are currently members of the Los Angeles City Employees Retirement System (LACERS). The City agreed to place on the November 8, 2016 State General Election ballot a Charter amendment that proposes certain retirement benefit enhancements for this group. Staff is working with the City Attorneys Office, outside tax counsel, CAO, and LACERS to review a draft Charter amendment. Staff is also working with the Plan actuary to commission a study that demonstrates the impact of allowing Airport Police to transfer to Tier 6.

    3) Pension Administration System Replacement Project The requirements document/FAST (Fit

    Analysis Specification Template) have been approved for development and configuration. The System functionalities will be available to LAFPP for verification and testing by the third week in June. Some of the functionalities included in the FAST are Terminations, Retirement Calculations/Estimates including DROP, and Disability.

    4) Electronic Documents Management System (DocuShare) Staff continue to work on the

    conversion of Documentum files into DocuShare along with correcting the issues that were identified during implementation. The migration of the files into DocuShare is still anticipated to be completed by June 2016. A new project lead in the Administrative Services Section was selected to focus on the overall DocuShare project that includes the migration.

  • 5) Private Equity - The following private equity investments have closed since the last meeting announcement:

    On December 17, 2015, the Board, in closed session pursuant to Government Code Section 54956.81, approved a c ommitment of up to 23 m illion Euros in the following alternative investment: Astorg VI, SLP and the investment closed on March 31, 2016.

    On April 7, 2016, the Board, in closed session pursuant to Government Code Section 54956.81, approved a c ommitment of up to $15 million in the following alternative investment: Vista Foundation Fund III, L.P. The general partner reduced LAFPP's commitment to $11.3 million due to oversubscription and the investment closed on May 19, 2016.

    On February 18, 2016 the Board, in closed session pursuant to Government Code Section 54956.81, approved a c ommitment of up to $25 million in the following alternative investment: Lightyear Fund IV, L.P. and the investment closed on May 18, 2016. On February 4, 2016 the Board, in closed session pursuant to Government Code Section 54956.81, approved a c ommitment of up to $40 million in the following alternative investment: Vista Equity Partners Fund VI, L.P. This report originally stated that the general partner reduced LAFPP's commitment to $25 million due to oversubscription, and that the investment closed on March 11, 2016. That statement was made in error. The Board received its full allocation of $40 million. [Corrected: June 16, 2016] The following searches and firms are within the (new) Marketing Cessation Period Policy*:

    Vendor / Contract Contract Start Date

    Contract Expiration

    Date

    Market Cessation Start

    Date Private Equity Specialized Manger Search TBD 02/04/16 02/04/16 Daruma Asset Management, Inc. (Domestic Equity) 08/01/13 07/31/16 05/01/16

    *Marketing Cessation: In accordance with Section 9.0 of the Investment Policy, from the time the search begins with the Boards approval of the minimum criteria for the search until the search ends with the selection of the firm(s) to receive contract(s), all direct marketing contact with firms that meet the search criteria will be limited to meetings with the Consultant, information sent to the Consultant or Department, questions about the search directed to the Staff or Consultant, one meeting at the Departments office with Staff and any site visits. The Board members, Department Staff or Consultant will accept no entertainment or gifts of any kind from any firm qualifying for the search. This policy does not prohibit contact with potential interview candidates at group social events, educational seminars, conferences, or charitable events so long as there is no direct marketing. During the three months prior to the renewal of a contract with a firm currently under contract, the Board Members, Department Staff and Consultant will accept no entertainment or gifts from that firm until the contract has been renewed or terminated by the Board. Firms who currently have contracts with LAFPP are allowed to continue contact related to the existing contract with Staff and the Consultant. Attachment

  • Item: B.4.a

    MONTHLY REPORT

    MAY 2016

  • STATUS REPORT OF BOARD ASSIGNMENTS TO STAFF

    06/16/16

    I:Executive/Board Assignments/Board Assign to Staff 06/16/16

    MEETING

    DATE

    ASSIGNMENT

    STAFF PERSON

    DATE DUE

    TO THE BOARD

    STATUS

    04/03/14

    FORMALLY AUDIT COMMITTEE

    HEK Audit recommendations: 4 recommendations assigned to the

    Audit Committee.

    Erin Kenney

    (1) July 2016

    The Board approved the status of the four recommendations on June 19, 2014 as follows: No Action 1 Completed 2 In Progress 1 The remaining active recommendation marked In Progress regarding a comprehensive security plan for the new building was considered in the 2016 risk assessment. A Special Project was included in the 2016 Annual Audit Plan and Forecast (AAPF) and will be presented to the Committee and/or the Board with a target date of July 2016 as noted on the AAPF.

    04/03/14

    FORMALLY GOVERMANCE COMMITTEE

    HEK Audit recommendations: 2 recommendations assigned to the

    Governance Committee.

    William

    Raggio (1)

    June 15, 2016

    The Board approved the status of the two recommendations on October 2, 2014, leaving one In Progress. The one remaining active recommendation marked In Progress concerns the process that will be invoked when a potential conflict of interest arises with the City Attorney. This is being discussed by the Ad Hoc Committee City Attorney on Engagement of Outside Counsel.

    1

  • A

    EQUITIES STOCKS BONDS CASH TOTAL ALLOC. PRIVATE EQUITY BONDS CASH TOTAL ALLOC.Alliance Capital (S&P 500 Index) 1,999.8 - 9.2 2,009.0 Abbott Capital 56.2 - - 56.2

    Alliance Capital (Russell 1000 Value Index) 128.2 - 0.7 128.9 Hamilton Lane 11.5 - - 11.5

    Alliance Capital (Russell 1000 Growth Index) 964.8 - 2.7 967.5 PCA 52.0 - - 52.0

    Chicago Equity (Enh. Index-Core) 310.0 - 4.3 314.3 Portfolio Advisors 1,134.4 - - 1,134.4

    LA Capital (Enh. Index-Growth) 248.6 - 1.6 250.2 Aldus Equity 257.2 - - 257.2

    Research Affiliates (Enh. Index-Value) 498.7 - 1.9 500.6 Stepstone Group 148.2 - - 148.2

    Robeco (Value) 534.5 - 9.8 544.3 TOTAL PRIVATE EQUITY MGRS (10%) 1,659.5 - - 1,659.5 8.97%

    OakBrook Investments (Large Cap-Core) 27.6 - 0.2 27.8 Target Differential (1.03)% (189.9)

    Redwood Investments (Large Cap-Core) 24.8 - 0.8 25.6

    Terminated Domestic Equity Managers - - 0.0 0.0 REAL ESTATECore Equity Managers (23%) 4,736.8 - 31.3 4,768.2 25.78% Alliance Capital Global REIT 110.7 - 0.4 111.1

    Target Differential 2.78% 514.6 Principal Global REIT 170.0 - 0.7 170.7

    Principal U.S. REIT 332.6 - 1.8 334.4

    Frontier Capital Mgt (Growth) 535.5 - 14.5 550.0 Terminated REIT Managers 0.0 - (0.0) 0.0

    Daruma (Value) 464.4 - 38.9 503.3 REIT Managers (3.0%) 613.4 - 2.9 616.3 3.33%

    Channing Capital Mgt. (Small Cap.) 52.2 - 1.3 53.5 Target Differential 0.33% 61.5

    Phocas Financial (Small Cap.) 50.9 - 1.6 52.5 REAL ESTATE COMMINGLED FUNDS SUMMARY

    Granite Investment Partners (Micro Cap) 24.8 - 0.4 25.2 Total Pooled Funds 836.0 - - 836.0 4.52%

    Attucks (Mgr of Emerging Mgrs) / New Accts. - - 0.0 0.0 REAL ESTATE SEPARATE ACCT. SUMMARY BY MANAGER

    Small Cap. Equity Mgrs (6%) 1,127.8 - 56.7 1,184.4 6.40% Heitman 209.1 - - 209.1

    Target Differential 0.40% 74.8 Sentinel 276.3 - - 276.3

    Real Estate Equity Mgrs 485.3 - - 485.3 2.62%

    Brandes (Value) 825.2 - 68.5 893.8 TOTAL REAL ESTATE (10%) 1,934.8 - 2.9 1,937.6 10.48%Fisher (Core) 404.1 - 8.0 412.1 Target Differential 0.48% 88.3

    Blackrock (Core Passive) 652.7 - 6.4 659.0 COMMODITIESBaille Gifford (Growth) 507.5 - 9.7 517.2 Alliance (Commodities, Public Equity) 282.3 - 0.7 283.0

    Boston Common (ESG) 26.6 - 0.5 27.1 Gresham Invest. Mgmt. (Commodities, Active) 93.4 - - 93.4

    Northern Trust (Int'l Small Cap Index) 334.6 - 5.8 340.4 Goldman Sachs (Commodities, Enhanced Index) 97.1 - - 97.1

    FIS (Mgr of Emerging Mgrs) International 89.6 - 2.7 92.3 Kleinwort Benson (Commodities, Public Equity) 87.9 - 1.9 89.8

    Terminated Int'l Equity Managers 0.0 - 0.0 0.0 Mellon Capital (Commodities, Public Equity) 77.4 - 0.9 78.3

    Int'l Equity Mgrs (16%) 2,840.4 - 101.5 2,941.9 15.91% PA (Commodities, Private Equity) 62.3 - - 62.3

    Target Differential (0.09)% (17.1) TOTAL COMMODITIES (5.0%) 700.3 - 3.5 703.9 3.81%

    Harding Loevner 310.2 - 6.0 316.2 Target Differential (1.19)% (224.4)

    Dimensional Fund Advisors 384.9 - 3.9 388.8

    Terminated Int'l Emerg. Mkts. Mgrs. 0.0 - 0.0 0.0 CASHInt'l Emerg. Mkts Mgrs (5.0%) 695.1 - 9.9 705.1 3.81% HOUSE ACCOUNTS

    Target Differential (1.19)% (219.6) Tier 1 (Article 17) - - 3.5 3.5

    TOTAL EQUITIES MGRS (50.0%) 9,400.1 - 199.4 9,599.5 51.91% Tier 2 (Article 18) - - 249.1 249.1

    Int'l Tax Reclaims - - 0.3 0.3 Tier 3 (Article 35) - - 9.1 9.1

    FIXED INCOME Tier 4 (New) - - 5.4 5.4 Northern Trust (Fixed Income Index) - 678.6 4.3 682.9 Tier 5 (New) - - 147.2 147.2

    Reams Asset Mgmt. (Opportunistic) - 641.9 52.5 694.4 Tier 6 (New) - - 7.7 7.7

    LM Capital (Opportunistic) - 335.1 3.6 338.7 CASH SUMMARY

    GIA Partners (Opportunistic) - 25.7 0.2 25.9 Unallocated Cash Reserve (1%) - - 421.9 421.9 2.28%

    SemperCapital Mgt. - 25.2 0.9 26.1 Target Differential 1.28% 237.0

    Loomis Sayles (Long Duration) - 652.6 2.4 655.0 Transition - - -

    CA Comm. Mort. Fund - 1.6 - 1.6

    Bridgewater (TIPS) - 342.7 - 342.7 PRIVATE REAL

    Reams Asset Mgmt. (Passive TIPS) - 467.8 0.1 467.9 EQUITY STOCKS BONDS ESTATE CASH TOTAL

    Bridgewater Pure Alpha - 62.7 - 62.7 ACTUAL ASSET MIX

    Core Bond Mgrs (19.0%) - 3,233.8 64.0 3,297.9 17.83% Current Month 700.3 1,659.5 9,401.1 4,027.3 1,934.8 770.7 18,493.7

    Target Differential (1.17)% (215.9) 3.79% 8.97% 50.83% 21.78% 10.46% 4.17% 100.00%

    MacKay Shields 1.0 481.9 15.2 498.1 Last Month 702.9 1,668.4 9,390.6 4,000.3 1,995.2 774.8 18,532.3

    High Yield Bond Mgrs (3.0%) 1.0 481.9 15.2 498.1 2.69% % Change -0.37% -0.53% 0.11% 0.67% -3.03% -0.53% -0.21%

    Target Differential (0.31)% (56.7)

    Reams Asset Mgmt. (Unconstrained) - 129.8 58.2 188.1

    Payden & Rygel (Unconstrained) 181.8 5.1 186.9

    Unconstrained Fixed Income (2.0%) 311.6 63.4 375.0 2.03%

    Target Differential 0.03% 5.1

    TOTAL FIXED INCOME MGRS (24.0%) 1.0 4,027.3 142.7 4,171.0 22.55%

    Subtotals & totals may not sum up exactly due to rounding.Data is unaudited.Note: Data is unaudited Note: City Pension Contribution received on 7/15/15Dollars expressed in Millions.

    COMMODITIES

    Portfolio as of May 31, 2016

    TOTAL FUND

    STOCKS / EQUITY / RE

    2

  • Portfolio as of January 29, 2016

    Venture Capital Buy-out Special Situations Percentage

    Total $780,702,000 23% $1,622,352,000 48% $966,521,000 29% 100.00%

    Commitment Total $3,369,575,000

    Total Commitment Contributions Remaining Commitment Percent Funded

    Abbott $303,112,000 $291,261,000 $13,420,000 96.09%Hamilton Lane $172,925,000 $167,407,000 $10,288,000 96.81%Portfolio Advisors Legacy $265,185,000 $254,208,000 $10,977,000 95.86%Portfolio Advisors Current $1,725,614,000 $886,165,000 $839,450,000 51.35%PCA $193,443,000 $180,805,000 $12,638,000 93.47%Stepstone Group $197,451,000 $172,660,000 $24,791,000 87.44%Aldus Equity $511,845,000 $463,263,000 $48,582,000 90.51%Total $3,369,575,000 $2,415,769,000 $960,146,000 78.63%

    Unfunded Commitment $960,146,000

    Source: BOARD OF FIRE AND POLICE PENSION COMMISSIONERSData as of December 31, 2015Data is based only on current/active funds whaich are funds that have remailing commitment or residual value.

    Private Equity Commitment Summary

    Private Equity Funding Summary

    Total Fund Portfolio Allocation

    25.7

    8%

    6.40

    %

    15.9

    1%

    3.81

    %

    17.8

    3%

    2.69

    %

    2.03

    %

    2.28

    %

    10.4

    8%

    8.97

    %

    3.81

    %

    0.00%

    5.00%

    10.00%

    15.00%

    20.00%

    25.00%

    30.00%

    35.00%

    Core Equity (23%) Small Cap. Equity (6%) Int'l Equity (16%) Int'l Emerg. Mkts (5.0%) Core Bonds Iincluding TIPS) (19.0%)

    High Yield Bonds (3%) Unconstrained Fixed Income (2.0%)

    Cash (1.0%) Total RE (Including REITS) (10.0%)

    Private Equity (10.0%) Commodities Energy (5.0%)

    Actual Allocation, Target Allocation in parenthesis Over-allocated (Blue), Under-allocated (Red)

    6.2

    3.8

    *Board approved ranges on 10/17/13

    1.8

    *Board approved ranges on 10/17/13

    7.3

    4.7

    3.6

    6.4

    20.2

    17.9

    2.6

    1.0

    4.0

    8.5

    11.5

    7.5

    12.5

    25.8

    3.4

    20.2

    18.4

    13.6

    2.2

    3

  • Portfolio as of January 29, 2016

    COMMINGLED FUNDS EQUITY POOLED CASH TOTAL ALLOC.ABR Chesapeake Fund III NA 12.7 - 12.7

    AEW Partners V NA 0.6 - 0.6

    AEW Value Investors II NA 2.1 - 2.1

    Almanac Securities Realty VII NA 14.4 - 14.4

    Berkshire Multifamily Income Realty Fund NA 33.9 - 33.9

    Buchanan Fund IV NA 13.6 - 13.6

    Calif Smart Growth IV NA 12.9 - 12.9

    Capri Urban Investors NA 19.3 - 19.3

    CIM Real Estate Fund III NA 32.7 - 32.7

    CIM Urban REIT, LLC NA 36.9 - 36.9

    CityView LA Urban Land Fund NA 6.3 - 6.3

    Clarion Lion NA 82.7 - 82.7

    Colony VIII NA 6.1 - 6.1

    CPI Capital Europe (A NA 3.8 - 3.8

    Forum Asian Realty II NA 1.6 - 1.6

    Gerrity Retail Fund NA 14.1 - 14.1

    Genesis Workforce Fund II NA 1.1 - 1.1

    Guggenheim RE III NA 0.0 - 0.0

    Hampshire Partners VI NA 0.6 - 0.6

    Heitman Value Partners II NA 10.2 - 10.2

    Heitman American Realty Trust (HART) NA 70.6 - 70.6

    Jamestown Premier NA 82.3 - 82.3

    Kennedy Wilson II NA 0.0 - 0.0

    LaSalle Asia Opp. II NA 0.1 - 0.1

    Legg Mason Chesapeake RE NA 0.4 - 0.4

    Legg Mason II NA 9.0 - 9.0

    Metlife Core Property NA 82.8 - 82.8

    Noble Hospitality NA 10.8 - 10.8

    Oaktree Capital RE Opp. III NA 1.6 - 1.6

    Praedium Fund VII NA 0.9 - 0.9

    Principal Green I NA 2.0 - 2.0

    Prudential PRISA NA 78.9 - 78.9

    Prudential PRISA III NA 29.2 - 29.2

    Prudential RE Fund II NA 0.7 - 0.7

    Rothschild Five Arrows Realty V (Almanac) NA 11.3 - 11.3

    Savanna Real Estate Fund III NA 31.6 - 31.6

    Starwood Distressed Opp IX NA 24.8 - 24.8

    Standard Life Investments NA 24.9 - 24.9

    Standard Life Investments Euro RE Club II NA 21.1 - 21.1

    Unico Partners I NA 34.3 - 34.3

    Urdang Value-Added Fund II (CenterSquare) NA 4.8 - 4.8

    Value Enhancement IV (Ares) NA 0.0 - 0.0

    Value Enhancement V (Ares) NA 8.2 - 8.2

    Total 836.0 - 836.0 4.52%

    SEPARATE ACCOUNT PROPERTIES EQUITY POOLED CASH TOTAL ALLOC.Heitman - Galleria Palms Apts. 31.2 NA - 31.2

    Heitman - 121 W. Chestnut 69.0 NA - 69.0

    Heitman - Palm Valley 1.2 NA - 1.2

    Heitman - Woodland Plaza 35.4 NA - 35.4

    Heitman - Twin Creeks Village 32.2 NA - 32.2

    Heitman - Sea Isle, Inc. 40.0 NA - 40.0

    Sentinel - Corridor Park Pointe 6.7 NA - 6.7

    Sentinel - Riverplace 33.6 NA - 33.6

    Sentinel - Windward Place Apts. 27.7 NA - 27.7

    Sentinel - Jefferson Town Center Apts 42.2 NA - 42.2

    Sentinel - Shoppes @ Broad Street 0.1 NA - 0.1

    Sentinel - St. Louis Industrial 44.5 NA - 44.5

    Sentinel - NorthPointe Exec. Park 19.7 NA - 19.7

    Sentinel - Aerial Center Exec. Park 31.7 NA - 31.7

    Sentinel (Urdang) - Shadeland Station 45.3 NA - 45.3

    Sentinel (Urdang) - Exelon Building 24.8 NA - 24.8

    Neptune Building 0.0 NA 0.0

    Real Estate Managers Total Committed

    Heitman 209.1

    Sentinel 206.2

    Sentinel (Urdang) 70.1

    Total 485.3 2.62%

    Real Estate Summary

    4

  • Manager 1-month 3-month 1-year 3-years 5-years FYTD

    Total Fund 0.20 % 6.41 % -0.47 % 6.64 % 7.06 % 0.34 %

    S & P 500 Index 1.80 % 9.12 % 1.72 % 11.06 % 11.67 % 3.72 %

    Total Equity 0.32 % 9.09 % -4.22 % 6.94 % 7.28 % -2.71 %

    S & P 500 Index 1.80 % 9.12 % 1.72 % 11.06 % 11.67 % 3.72 %

    Total Domestic Equity 1.45 % 9.00 % -1.07 % 9.90 % 10.61 % 0.11 %

    Russell 3000 Index 1.79 % 9.63 % 0.22 % 10.57 % 11.15 % 1.93 %

    Total Large Cap Equity 1.61 % 8.76 % 0.89 % 10.94 % 11.66 % 2.83 %

    S & P 500 Index 1.80 % 9.12 % 1.72 % 11.06 % 11.67 % 3.72 %

    Total Small Cap 0.82 % 10.07 % -8.16 % 5.99 % 6.22 % -9.68 %

    Russell 2000 Index 2.25 % 12.15 % -5.97 % 6.93 % 7.86 % -6.67 %

    Total International Equity -1.47 % 9.24 % -9.16 % 2.15 % 1.49 % -7.17 %

    MSCI ACWI ex-US -1.59 % 9.38 % -10.97 % 0.64 % 0.57 % -8.46 %

    Total International Developed Markets -0.85 % 9.16 % -8.07 % 3.58 % 2.76 % -6.06 %

    MSCI ACWI ex-US -1.59 % 9.38 % -10.97 % 0.64 % 0.57 % -8.46 %

    Total International Emerging Markets -3.22 % 10.38 % -13.14 % -3.55 % -3.87 % -11.23 %

    MSCI Emerging Markets Index -3.71 % 9.67 % -17.33 % -4.62 % -4.50 % -15.19 %

    Total Fixed Income -0.05 % 3.41 % 2.70 % 3.12 % 4.76 % 4.16 %

    Barclays Universal 0.08 % 1.99 % 2.83 % 2.98 % 3.58 % 3.99 %

    Total Core Fixed Income 0.00 % 3.09 % 3.64 % 3.82 % 5.18 % 5.54 %

    Barclays Aggregate 0.03 % 1.33 % 2.99 % 2.91 % 3.33 % 4.13 %

    Total High Yield 0.79 % 8.57 % 1.34 % 4.13 % 6.39 % 2.13 %

    LAFPP HY Benchmark1

    0.72 % 9.38 % -0.88 % 2.90 % 5.55 % 0.65 %

    Total REITs 1.19 % 9.53 % 7.50 % 8.79 % 9.27 % 12.00 %

    LAFPP REIT Benchmark2

    1.02 % 9.51 % 7.23 % 7.67 % 8.32 % 11.87 %

    Total Commodities -1.69 % 12.82 % -12.79 % N/A N/A -9.00 %

    Bloomberg Commodities Index TR -0.19 % 12.45 % -15.32 % N/A N/A -16.76 %

    Footnote:1

    LAFPP HY Benchmark: CS HY Index thru 12/31/11 & BofA ML US HY Master II Cnst Index thereafter.

    2 LAFPP REIT Benchmark: Dow Jones US Select RE Securities Index thru 12/31/13, 50% FTSE EPRA/NAREIT Global RE Index & 50% Dow Jones

    US Select RE Securities Index thereafter.

    Preliminary Return Information as of May 31, 2016

    5

  • (Data through May 31, 2016)

    DISABILITY PENSIONS

    *Claims filed include the following: Disability, Active Member Death, Dependent Child.

    50 46 11

    6

  • *Claims include Surviving Spouse/Domestic Partner, Minor Child, Dependent Child/Parent.

    7

  • *Claims include the following: Disability, Active Member Death, Dependent Child.

    *Claims include the following: Disability, Active Member Death, Dependent Child. Months with zero (0) indicate no claims presented to the Board that month.

    16

    35 35

    8

  • DROP ENTRIES/EXITS

    DROP PARTICIPATION

    9

  • SERVICE PENSIONS Current

    Month Fiscal Year

    To Date 12 Month

    Moving Avg. Service Pensions by Effective Date 3 58* 5

    *Total increased by one due to processing of retroactive service pension. SURVIVORSHIP PENSIONS Current

    Month Fiscal Year

    To Date 12 Month

    Moving Avg. Surviving Spouse/Domestic Partner Pension Applications Processed 10 167* 15 Survivor Benefit Purchase Program 0 8* 1 Total Surviving Spouse/DP Applications Processed and Survivor Benefit Purchase Program Granted 10 175

    *One additional application/purchase was processed in the prior month, increasing the YTD total. ACTIVE MEMBER SERVICES Refund of Contributions (Number Leaving Without Vesting)

    Current Month

    Fiscal Year To Date

    12 Month Moving Avg.

    Fire 1 5 0 Police 4 53 5 Harbor 0 0 0 Completed Basic Training Purchases Fire 13 104 10 Police 53 469 43 Harbor 0 0 0 Public Service Purchases (PSP) Completed Purchases

    2

    6

    1

    Avg. Years of Service (YOS) Purchased 2.3 2.3 2.3 Avg. Cost per YOS Purchased $49,585 $50,706 $52,615

    MEDICAL & DENTAL TRANSACTIONS May 2016 (PPE May 31, 2016) Current Month* Fiscal YTD* Last 12 Mos* Total Subsidies Paid $9,054,149 $97,835,393 $107,070,113 Total Medicare Part B Reimbursements Paid $840,869 $8,841,929 $9,614,936

    *Includes Quarterly HIPR Payment(s)

    10

  • OUTREACH ACTIVITIES Date Type of Outreach Number of Participants Tier

    May 9, 2016 New Recruit Talk: LAPD Graduates Westchester ARTC 27 6

    May 11, 2016 Financial Planning Education Seminar DROP Exit Grace Simons Lodge 28 5

    May 24, 2016 Financial Planning Education Seminar Late Career California Endowment 50 5

    May 24-25, 2016 Information Table: LAFRA Reunion Temecula 15 multiple

    Upcoming Events

    June 1, 2016 Information Table: LARFPA General Membership Meeting Grace Simons Lodge TBD multiple

    June 2, 2016 New Recruit Talk: LAFD Graduates Terminal Island TBD 6

    June 6, 2016 New Recruit Talk: LAPD Graduates Westchester ARTC TBD 6

    June 9, 2016 Information Table: LAPPL Outreach Hollenbeck Division TBD multiple

    June 23, 2016 Information Table: LAPPL Outreach Foothill Division TBD multiple

    June 29, 2016 Presentation: LAPD Central Division Training Day Grace Simons Lodge TBD multiple

    Outreach Activity Totals Current Month Fiscal Year to Date

    Members Reached 120 1,841 -# of Recruit Talks 1 14 -# of Financial Planning Education Seminars 2 15 -# of Other Outreach Events 1 20

    Note: The number of participants for Information Table events is an estimate. Staff is available to answer questions, check personal information and collect forms at these events.

    NEW PROJECTS

    AIRPORT POLICE TRANSFER TO TIER 6 Currently, sworn personnel of the Airport Department (Airport Police) are members of the Los Angeles City Employees Retirement System (LACERS). D uring labor negotiations with the Airport Police bargaining units, the City agreed to place on the November 8, 2016 State General Election ballot a Charter amendment that proposes certain retirement benefit enhancements for this group. Staff is working with the City Attorneys Office, outside tax counsel, CAO, and LACERS in reviewing a draft Charter amendment which would: 1) Enroll new Airport Police into Tier 6; 2) Allow current Airport Police to transfer into Tier 6 from LACERS at their own expense; and 3) Permit new Airport Police Chiefs to transfer into LACERS. Additionally, staff will be working with the Plan actuary to commission a study demonstrating the impact of allowing Airport Police to transfer to Tier 6.

    11

  • UPDATED PROJECTS PROPOSED FINANCIAL COUNSELING PROGRAM Staff is conducting research to determine the scope and feasibility of offering individual financial counseling sessions to members. Members who attend one of the Financial Planning Education (FPE) seminars (for education only) would be given the opportunity to schedule a f ollow-up session with a f inancial planner for a per sonalized review of their financial situation. This would allow members to apply the education provided in the FPE seminar to take the next step and develop a comprehensive financial plan. Staff previously met with representatives of United Firefighters of Los Angeles City, Los Angeles Police Protective League, Los Angeles Firemens Relief Association, Los Angeles Police Relief Association, and Los Angeles Retired Fire and Police Association, to request their input on the individual financial counseling services. The representatives were supportive of the proposed services. The individual counseling sessions would be c onducted through our current financial education consultant. The FPE seminar contract was awarded as a r esult of an RFP released in July 2015. At that time, staff requested to make a recommendation to award a financial counseling contract at a l ater date. The financial education and planning consultants would not be allowed to provide, sell or derive any income from the sale of any investment products to members. In addition, any advice to the member for certain investment choices should not affect or provide compensation to the advisor. [UPDATE: Staff met with the City Attorney on May 27, 2016 to discuss the parameters of the proposed financial counseling program. Staff will be proceeding with the financial counseling program (pilot study) and will be conducting focus group sessions with members to gather feedback that will assist staff and the contractor in the development of the program.] IRC OPERATIONAL COMPLIANCE AUDIT Staff began working with The Segal Company, our IRC operational compliance auditor, in late January/early February 2015. Staff provided a large number of documents to Segal in early February 2015, including Summary Plan Descriptions for the various tiers, desk manuals, policies and procedures, and pertinent Charter/Administrative Code sections. Segal conducted onsite interviews with key staff members on March 23 and 24, 2015. Segal presented the final audit report to the Board on October 1, 2015. The Board reviewed, received and f iled the report and directed staff to analyze and/or implement the recommendations as noted in the IRC Operational Compliance Audit Recommendation Log. Staff is continuing to review and analyze the various audit recommendations with the City Attorneys office, as well as outside tax counsel, implementing new internal policies and procedures as necessary.

    [UPDATE: Staff plans to report back to the Board on July 21st with an implementation status update.]

    12

  • UNCHANGED PROJECTS

    PENSION PERSPECTIVES RETIRED MEMBERS Staff is in the initial phase of drafting the next newsletter for retired members. The issue will include articles on the 2016 COLA, plan funding status, new medical and dental subsidy maximums, and identify theft prevention. The newsletter is expected to be mailed and emailed to retired members in June 2016.

    13

  • UPDATED PROJECTS

    PENSION ADMINISTRATION SYSTEM REPLACEMENT

    The monthly requirements gathering sessions with Xerox and staff Subject Matter Experts from impacted business units continue in order to develop the specifications for the configuration and customization of the CPAS system. Weekly meetings with the project management team (LAFPP, Xerox, and L RWL consultant) are also being conducted to review and check on the progress of various deliverables, including planning documents, data mapping and conversion, hosting services, as well as the implementation of the new imaging solution to replace Documentum.

    [UPDATE: The requirements document/FAST (Fit Analysis Specification Template) addressing Core Calculations for the Rules and Calculations as well as Live Events- have been approved for development and configuration. System functionalities included in these FAST (Terminations, Retirement Calculations/Estimates including DROP, and Disability) are scheduled to be delivered to LAFPP for verification and testing on the third week of June.]

    UNCHANGED PROJECTS ELECTRONIC DOCUMENTS MANAGEMENT (DOCUMENTUM & DOCUSHARE) LAFPP still warehouses more than 2000 boxes of historical documents at off-site facilities. Many of these boxes require an assessment of whether or not they can be destroyed per the Departments Record Retention Schedule or scanned into the Departments repository system (DocuShare). Scanning of these historical documents at off-site facilities is not a pr iority for the Department at this time until other major projects are completed. The LAFPP file repository conversion of Documentum to DocuShare is still underway. The complete migration of files is anticipated by June 2016. Staff is currently focused on ex pediting the scanning of day-forward documents to minimize the amount of hardcopy files stored at the new Headquarters. After the hardcopy files are scanned, staff provides a Quality Assurance (QA) assessment to ensure that all documents are digitally captured and retained before destruction. The backfile repository conversion project and QA functionality has created a backlog of day-forward scanning. Concurrently, staff continues to refine policies and pr ocedures associated with the implementation of DocuShare. [UPDATE: Docushare went live on December 15th and staff are working together to address some issues identified during implementation. Staff continue to catch up on the backlog of day-forward documents. As a result implementation delays and resource requirements needed for the Pension Administration System (PAS) Project, the PAS Project Steering Committee elected to postpone the migration of Documentum files to

    14

  • June 2016. In addition, a new project lead in the Administration Section was selected to focus on overall Docushare project including migration.]

    PERFORMANCE METRICS

    As part of the Mayors Back to Basics philosophy, the Mayor has directed departments to submit performance metrics that will measure the effectiveness of the departments in key areas. M onthly, staff submits performance metrics and b usiness plan project updates to Mayoral staff including data in following areas: p ayment of pension payments; disability applications; customer satisfaction; contractor disclosure; and investment benchmarks.

    In addition, the General Manager has expanded the use of performance metrics to better measure and track performance and assist management decision making, taking into consideration resource requirements needed to compile and analyze the data.

    15

  • DEPARTMENT OF FIRE AND POLICE PENSIONSBUDGET TO ACTUAL - ADMINISTRATIVE AND INVESTMENT MANAGEMENT EXPENSESAs of May 31, 2016 (92% of year)

    ADMINISTRATIVE EXPENSE (A) (B) (C) (D) (E) (F) (G) (H)DIFFERENCE

    ADOPTED BUDGET ADJUSTED YEAR TO DATE REMAINING YR END (UNDER)/OVER VARIANCEACCOUNT TITLE BUDGET CHANGES2 BUDGET TOTAL BALANCE PROJECTED PROJECTED %1

    (A + B = C) COMMITTED (C - D = E) EXPENSES (C - F = G) (G / C = H)

    Salaries-General3 10,952,000 (180,000) 10,772,000 9,104,168 1,667,832 10,406,000 (366,000) -3%

    Salaries-As-Needed3 111,000 20,000 131,000 107,505 23,495 123,000 (8,000) -6%

    Overtime3 89,515 89,515 75,853 13,662 87,000 (2,515) -3%

    Printing & Binding 36,154 36,154 36,154 - 36,000 (154) 0%

    Travel 162,635 (10,000) 152,635 75,613 77,022 130,000 (22,635) -15%

    Transportation3 6,000 6,000 5,250 750 6,000 - 0%

    Contractual Services 6,581,312 (7,000) 6,574,312 6,354,406 219,906 6,574,312 - 0%

    Medical Services 200,000 150,000 350,000 350,000 - 350,000 - 0%

    Health Insurance 1,360,000 1,360,000 837,041 522,959 1,256,000 (104,000) -8%

    Dental Insurance 55,000 55,000 36,247 18,754 54,000 (1,000) -2%

    Other Employee Benefits 40,000 40,000 30,624 9,376 39,000 (1,000) -3%

    Retirement Contribution 3,108,000 3,108,000 3,039,718 68,282 3,108,000 - 0%

    Medicare Contribution 160,000 160,000 97,934 62,066 160,000 - 0%

    Office & Administrative 771,919 16,000 787,919 585,705 202,214 600,000 (187,919) -24%

    Tuition Reimbursement 20,000 20,000 5,254 14,746 10,000 (10,000) -50%

    Election - - - - - - 0%

    Furniture, Office & Tech - 1,463,000 1,463,000 1,319,578 143,422 1,463,000 - 0%

    Unappropriated Balance 270,000 (180,000) 90,000 - 90,000 - (90,000) -100%

    TOTAL ADMINISTRATIVE EXPENSES 23,923,535$ 1,272,000$ 25,195,535$ 22,061,051$ 3,134,484$ 24,402,312$ (793,223)$ -3%

    TOTAL INVESTMENT MANAGEMENT EXPENSES 88,221,204$ -$ 88,221,204$ 24,182,295$ $64,038,909 85,179,196$ (3,042,008)$ -3%

    1 Percentage difference between projected expenses and the adjusted budget.

    3 Year-to-Date Committed based on Pay Period 23 ending May 14, 2016.

    2 Budget changes reflect net amounts of the following transfers: Headquarters (HQ) amounts totaling $1,272,000, approved on July 16, 2015: $153,000 IT Cabling (Contractual Services); $16,000 Voice Over Internet Protocol (Office & Administrative); and $1,103,000 for New Furniture ($767,000) New Upgrades ($336,000) (Furniture, Office & Tech). On September 3, 2015, the Board approved a transfer of $10,000 from Contractual Services to Furniture, Office & Tech accounts to fund new Microfiche Machine. On January 7, 2016 the Board approved a transfer of $150,000 from Contractual Services to Medical Services to offset projected expenses. On February 18, 2016 the Board approved a transfer of $20,000 from Salaries-General to Salaries-As-Needed to offset projected expenses. On March 31, 2016, funds totaling $350,000 were transferred to Furniture, Office and Tech to offset HQ related costs. The transfers were processed based on July 16, 2015 Board authority to move funds between line items as needed for the HQ Project ($160,000 Salaries-General; $10,000 Travel; and $180,000 from the Unappropriated Balance).

    16

  • DEPARTMENT OF FIRE AND POLICE PENSIONSBUDGET TO ACTUAL - RECEIPTS AND EXPENSESAs of May 31, 2016 (92% of year)

    VARIANCEACTUAL PROJECTED %

    YEAR YEAR END SURPLUS/ (UNDER)/OVERBUDGET TO DATE PROJECTIONS DEFICIT PROJECTED

    A B C C-ARECEIPTS General Fund 622,851,100$ 622,851,100$ 622,851,100$ -$ 0%Special Fund (Harbor) 4,237,083 4,237,083 4,237,083 - 0%Excess Benefit Plan (1) 1,018,273 1,018,273 1,018,273 - 0%Member Contributions (2) 136,835,823 117,816,730 131,881,479 (4,954,344) -4%Earnings on Investments 355,440,000 343,900,949 375,164,672 19,724,672 6%Miscellaneous (3) 1,000,000 3,040,891 3,317,335 2,317,335 232% Total Receipts 1,121,382,279$ 1,092,865,026$ 1,138,469,941$ 17,087,663$ 2%

    EXPENSESService Pensions 566,000,000$ 524,920,526$ 573,333,927$ 7,333,927$ 1%Service Pensions - DROP payout 176,000,000 125,419,600 175,000,000 (1,000,000) -1%Disability Pensions 120,000,000 102,782,333 111,988,738 (8,011,262) -7%Surviving Spouse Pensions 122,000,000 107,719,026 117,505,459 (4,494,541) -4%Minor/Dependent Pensions 2,000,000 2,090,236 2,259,469 259,469 13%Refund of Contributions 3,500,000 3,265,982 3,562,889 62,889 2%Health Insurance Subsidy 108,000,000 93,565,748 102,047,211 (5,952,789) -6%Dental Insurance Subsidy 4,100,000 3,542,914 3,868,447 (231,553) -6%Medicare Reimbursement 11,750,000 8,830,983 9,671,256 (2,078,744) -18%Health Insurance Reimbursement 1,300,000 1,029,729 1,287,161 (12,839) -1%Investment Management Expenses 88,221,204 24,182,295 85,179,196 (3,042,008) -3%Administrative Expenses (4) 25,195,535 22,061,051 24,402,312 (793,223) -3%

    Total Expenses 1,228,066,739$ 1,019,410,423$ 1,210,106,066$ (17,960,673)$ -1%

    RECEIPTS OVER EXPENSES (106,684,460)$ 73,454,602$ (71,636,125)$

    YTDCURRENT MOVING

    MONTH AVERAGE

    PENSION PAYROLL 100,669,467$ 88,172,827$

    (1) Represents the City of Los Angeles General Fund earmarked to pay excess benefits incldng associated administrative costs in compliance with IRC Section 415.

    In FY 2015-16, funds totaling $454,773 were re-appropriated from prior-years' available funds in addition to the original budget of $563,500 for the Excess Benefit

    Plan. Any year-end surplus of funds (currently project at $202,405) will be re-appropriated to the next fiscal year.

    (2) Includes FY 2014-15 Pay Period 26 and up to FY 2015-16 Pay Period 23.

    (3) Represents receipts from purchase of prior years' lost service time and recovery of prior years' pension overpayment.

    (4) Actual Year-to-Date reflects Year-to-Date commitments (encumbrances) and expenditures.

    17

  • Start Date Expiration Date

    New Search Date

    Vendor/ Candidate

    Finalist Date

    Contract Award / Renewal

    Date

    SEARCH Private Equity - Specialized Manager tbd tbd 02/04/16 02/04/16 New Search approved by the Board.

    Firms involved in search: All Private

    Equity Managers. RFP responses

    received 05/06/16.

    578PEN Brandes Investment Partners, LP (International

    Equity)

    08/01/13 07/31/16 06/02/16 Board approved contract renewal on

    06/02/16 and the Market Cessation

    period has ended.

    576PEN Daruma Asset Management, Inc. (Domestic Equity) 08/01/13 07/31/16 05/01/16 Staff recommendations to Board

    scheduled for 06/16/16.

    577PEN Fisher Asset Management, LLC (International Equity) 08/01/13 07/31/16 06/02/16 Board approved contract renewal on

    06/02/16 and the Market Cessation

    period has ended.

    583PEN Scout Investments, Inc. - Reams Asset

    Management Division (Fixed Income - TIPS)

    09/01/13 08/31/16 06/02/16 Board approved contract renewal on

    06/02/16 and the Market Cessation

    period has ended.

    582PEN AllianceBernstein, LP (Commodities) 10/01/13 09/30/16 06/02/16 Board approved contract renewal on

    06/02/16 and the Market Cessation

    period has ended.

    580PEN Northern Trust Company (Custodian Bank) 10/01/13 09/30/16 New Contract No. 651PEN is effective

    10/01/16.

    586PEN Robeco Investment Management, Inc. (Boston

    Partners) (Domestic Equity)

    11/01/13 10/31/16 Staff recommendations to Board

    scheduled for 09/15/16.

    589PEN Principal Global Investors, LLC (Global REIT

    Manager)

    12/01/13 11/30/16

    587PEN Principal Global Investors, LLC (U.S. REIT Manager) 12/01/13 11/30/16

    590PEN AllianceBernstein, LP (Domestic Equity) 01/01/14 12/31/16

    585PEN Harding Loevner (International Emerging Markets) 02/01/14 01/31/17

    591PEN The Townsend Group (Real Estate Consultant) 02/01/14 01/31/17

    595PEN FIS Group, Inc. (International Manager of Emerging

    Managers)

    07/01/14 06/30/17

    596PEN MacKay Shields, LLC (Fixed Income - High Yield

    Bond)

    07/01/14 06/30/17

    598PEN Chicago Equity Partners LLC (Domestic Equity) 08/01/14 07/31/17

    599PEN Los Angeles Capital Management and Equity

    Research, Inc. (Domestic Equity)

    08/01/14 07/31/17

    602PEN Payden & Rygel (Unconstrained Fixed Income

    Manager)

    08/01/14 07/31/17

    600PEN Research Affiliates LLC (Domestic Equity) 08/01/14 07/31/17

    601PEN Scout Investments, Inc. - Reams Asset Management

    Division (Unconstrained Fixed Income Manager)

    08/01/14 07/31/17

    604PEN Kleinwort Benson Investors (Commodities Active

    Equity Manager)

    10/01/14 09/30/17

    605PEN Mellon Capital (Commodities Active Equity Manager) 10/01/14 09/30/17

    613PEN Dimensional Fund Advisors LP (International

    Emerging Markets)

    01/01/15 12/31/17

    615PEN Baillie Gifford Overseas Limited (International Equity) 03/01/15 02/28/18

    641PEN BlackRock Institutional Trust Company (International

    Equity)

    02/01/16 01/31/18

    618PEN AllianceBernstein, L.P. (Global REIT) 03/02/15 02/28/18

    624PEN Frontier Capital Management Company, LLC

    (Domestic Equity)

    07/01/15 06/30/18

    621PEN Gresham Investment Management (Enhanced Index

    Commodity Manager)

    07/28/15 06/30/18

    622PEN Goldman Sachs Asset Management (Enhanced Index

    Commodity)

    07/16/15 07/15/18

    629PEN LM Capital Group, LLC (Fixed Income) 09/01/15 08/31/18

    638PEN Boston Common Asset Management, LLC

    (International Equity Emerging Manager)

    10/01/15 09/30/18

    639PEN Loomis, Sayles & Co. LP (Fixed Income) 10/01/15 09/30/18

    633PEN Channing Capital Management, LLC (Domestic

    Equity)

    10/01/15 09/30/18

    INVESTMENTS

    Contract Vendor / Services

    Contract Term Market

    Cessation Start Date1

    Board Authorization Date

    Comments

    18

  • Start Date Expiration Date

    New Search Date

    Vendor/ Candidate

    Finalist Date

    Contract Award / Renewal

    Date

    Contract Vendor / Services

    Contract Term Market

    Cessation Start Date1

    Board Authorization Date

    Comments

    636PEN GIA Partners, LLC (Domestic Fixed Income) 10/01/15 09/30/18

    635PEN Granite Investment Partners (Domestic Equity) 10/01/15 09/30/18

    631PEN OakBrook Investments, Inc. (Domestic Equity) 10/01/15 09/30/18

    634PEN PHOCAS Financial Corporation (Domestic Equity) 10/01/15 09/30/18

    632PEN Redwood Investments, LLC (Domestic Equity) 10/01/15 09/30/18

    637PEN Semper Capital Management, L.P. (Fixed Income) 10/01/15 09/30/18

    643PEN Northern Trust Investments, Inc. (Fixed Income) 12/01/15 11/30/18

    642PEN Scout Investments, Inc. - Reams Asset

    Management Division (Fixed Income)

    12/01/15 11/30/18

    647PEN Glass, Lewis, & Co., LLC (Proxy Voting Services) 01/01/16 12/31/18

    646PEN Northern Trust Investments, Inc. (International

    Equity)

    01/01/16 12/31/18

    649PEN R.V. Kuhns & Associates, Inc. (General Consultant) 03/01/16 02/28/19

    650PEN Portfolio Advisors, LLC (Private Equity) 04/01/16 03/31/19

    644PEN Heitman Capital Management, LLC (Real Estate

    Separate Account)

    01/01/16 12/31/18

    645PEN Sentinel Trust Company (Real Estate Separate

    Account)

    01/01/16 12/31/18

    640PEN Blackman & Holberton (HQ Move Consulting

    Services)

    09/01/15 08/31/16

    641PEN Haworth, Inc. (HQ Furniture) 08/01/15 12/31/16

    608PEN Iron Mountain Secure Shredding, Inc. (Secure

    Document Shredding)

    07/01/15 06/30/16

    65515 JPPF 360 E SECOND, L.P. (Brunswig Building Lease) 12/15/86 04/14/17 Final payment is being negotiated.

    652PEN Firedrill (Graphic Design Services) 05/19/16 05/18/19

    630PEN Something Special (Catering) 07/16/15 07/15/16

    607PEN The Cherry Hill (Website Design and Support) 10/01/14 09/30/17

    648PEN Four Square Financial Literacy Partners, Inc.

    (Financial Planning Education)

    12/03/15 12/02/18

    623PEN U.S. Legal Support (Court Reporting) 07/01/15 06/30/16 New Contract No. 654PEN is effective

    07/01/16. GM approved contract

    renewal on 04/19/16.

    627PEN Alpha-One Investigations, Inc. (Investigative

    Services Contractor)

    09/15/15 09/14/18

    628PEN Examination Management Services, Inc. dba ICS

    Merrill (Investigative Services Contractor)

    09/15/15 09/14/18 Contractor name to change to

    CoventBridge Group due to recent

    merger.

    RFP Annual Financial Statements Audits tbd tbd 01/07/16 4/21/2016 05/05/16 New Contract with Simpson & Simpson

    Certified Public Accountants is pending

    negotiation and execution.

    555PEN Brown Armstrong Accountancy Corporation 07/19/12 07/18/16

    C-113244 Berstein Liebhard & Lefshitz (Securities

    Litigation/Monitoring Services)

    03/15/08 03/14/11

    C-113252 Kaplan Fox & Kilsheimer, LLP (Securities

    Litigation/Monitoring Services)

    03/15/08 03/14/11

    - Kessler Topaz Meltzer & Check (Securities

    Litigation/Monitoring Services)

    03/15/08 03/14/11

    - Robbins Geller Rudman & Dowd (Securities

    Litigation/Monitoring Services)

    03/15/08 03/14/11

    DISABILITY PENSION

    INTERNAL AUDIT

    LEGAL SERVICES

    ADMINISTRATIVE SERVICES

    ADMINISTRATIVE OPERATIONS

    COMMUNICATIONS AND SPECIAL PROJECTS

    19

  • Start Date Expiration Date

    New Search Date

    Vendor/ Candidate

    Finalist Date

    Contract Award / Renewal

    Date

    Contract Vendor / Services

    Contract Term Market

    Cessation Start Date1

    Board Authorization Date

    Comments

    C-123047 Nossaman, LLP (Investment Services) 06/16/13 06/15/16 Currently evaluating proposals for

    Investments outside counsel contracts.

    Staff will be recommending a three-

    month extension to the current

    contract.C-123109 Foster Pepper, PLLC (Investment Services) 08/01/13 07/31/16 Currently evaluating proposals for

    Investments outside counsel contracts.

    C-123757 Reed Smith, LLP (Fiduciary Services) 10/01/13 09/30/16

    C-125199 Nossaman, LLP (Fiduciary Services) 11/10/14 11/09/17

    C-126341 Ice Miller, LLP (Tax Services) 06/16/15 06/15/18

    C-126452 Steptoe & Johnson LLP (Tax Services) 09/21/15 09/20/18

    C-123569 Nossaman, LLP (Legal Representation) 09/15/13 until

    completion

    C-121678 Reed Smith, LLP (Legal Representation) 08/02/12 until

    completion

    Los Angeles City Employee Retirement System

    (Health and Dental Plan Subgroups)

    08/22/11 07/31/14 Contract currently under negotiation.

    Los Angeles Firemen's Relief Association

    (Medical Insurance Administration)

    07/01/14 06/30/17

    Los Angeles Police Relief Association

    (Medical and Dental Insurance Administration)

    07/01/14 06/30/17

    Los Angeles Police Protective League

    (Dental Insurance Administration)

    08/01/14 07/31/17

    United Firefighters of Los Angeles City

    (Medical and Dental Insurance Administration)

    09/01/14 08/31/17

    574PEN Keenan & Associates, Inc. (Health Consulting

    Services)

    03/01/13 02/28/17

    625PEN The Segal Company (Western States), Inc. (Actuarial

    Consulting Services)

    07/01/15 06/30/18

    603PEN Center for Internet Security, Inc. (Network Security

    Monitoring)

    03/01/14 02/28/17

    610PEN EMC Corporation (Documentum) 10/01/14 09/30/17

    611PEN Verizon Terremark (Disaster Recovery Services) 12/04/14 12/03/17

    552PEN Buck Consultants, LLC (OnPoint Software) 05/01/15 04/30/18

    616PEN AT&T (CALNET3 Phone) 11/15/13 06/30/18

    617PEN AT&T (CALNET3 Data) 11/15/13 06/30/18

    619PEN Verizon (CALNET3 Phone) 11/15/13 06/30/18

    620PEN Verizon (CALNET3 Data) 03/26/14 06/30/18

    575PEN LRWL, Inc. (Pension Administration System

    Consulting Services)

    06/01/13 12/31/18

    521PEN Northern Trust Company (Benefit Payment System) 05/20/13 05/19/19

    626PEN Xerox State and Local Solutions, Inc. (Pension

    Administration System Replacement Project)

    07/02/15 07/01/23

    Subscription

    Agreements

    Bridgewater Associates, Inc. (TIPS and Pure Alpha) 07/31/08 n/a on-going

    1 Marketing Cessation: The purpose of this policy is to prevent, and avoid the appearance of, undue influence on the Board or any of its members in the award of all contracts. In accordance with Section 9.0 of the Investment Policy, from the time the search begins with the Boards approval of the minimum criteria for the search until the search ends with the selection of the firm(s) to receive the contract(s), all direct marketing contact with firms that meet the search criteria will be limited to meetings with the Consultant, information sent to the Consultant or Department, questions about the search directed to the Staff or Consultant, one meeting at the Departments office with Staff and any site visits. The Board members, Department Staff or Consultant will accept no entertainment or gifts of any kind from any firm qualifying for the search. This policy does not prohibit contact with potential interview candidates at group social events, educational seminars, conferences, or charitable events so long as there is no direct marketing. During the three months prior to the renewal of a contract with a firm currently under contract, the Board Members, Department Staff and Consultant will accept no entertainment or gifts from that firm until the contract has been renewed or terminated by the Board. Firms who currently have contracts with the Los Angeles Fire and Police Pension System are allowed to continue contact related to the existing contract with Staff and Consultant. 2 Hedge Fund of Funds do not have contracts like our other managers. They have limited partnership agreements that do not have a fixed expiration date. They are on this list to include them in our regular three-year manager review process. *Expired contracts are listed in red. Expired investments contracts will remain on the list if the market cessation period is active and until a new contract is awarded.

    N/A

    HEDGE FUND OF FUNDS PARTNERSHIP AGREEMENTS2

    MEDICAL AND DENTAL BENEFITS

    PENSIONS DIVISION (EXECUTIVE)

    SYSTEMS

    20

    06162016 AgendaBOARD OF FIRE AND POLICE PENSIONCOMMISSIONERSJune 16, 2016

    Los Angeles, CA 90013

    board_2016-06-16_a1 consent to assignment of the kleinwort benson investors International ltd's contract06-16-16 A1 - KBI Consent to AssignmentDEPARTMENT OF FIRE AND POLICE PENSIONS

    06-16-16 A1 - Attachment, KBI Acquisition by Amundi

    board_2016-06-16_a2 renewal daruma capital mngt llc small cap domestic equity mngt contract06-16-16 A2 - Proposed renewal of Daruma Capital Management, LLC Small Cap Domestic Equity Management ContractDEPARTMENT OF FIRE AND POLICE PENSIONS

    06-16-16 A2 - Attachment 1, DarumaPerformance

    06-16-16 A2 - Attachment 2, Daruma Small Cap Contract Recommendation2016-06 Daruma Small Cap Contract Recommendation v12016-03-31 Daruma Mgr Profile

    board_2016-06-16_a3 amend contract nossaman llp for investment and real estate legal svcsDEPARTMENT OF FIRE AND POLICE PENSIONS

    board_2016-06-16_a4 approval of final 2016-17 business plan06-16-16 A4 - Final 2016-17 Business PlanDEPARTMENT OF FIRE AND POLICE PENSIONS

    06-16-16 A4 - Attachment 1, Final 2016-17 Business Plan06-16-16 A4 - Attachment 2, 3-17-16 FY 2016-17 Proposed Annual Business Plan

    board_2016-06-16_a5 approval of 2016-17 final budget06-16-16 A5 - Approval of the Fiscal Year 2016-17 Final BudgetDEPARTMENT OF FIRE AND POLICE PENSIONS

    06-16-16 A5 - Attachments 1 & 2, FY 16-17 Adopted Budget Schedules & ChartSch 9 - Org Chart - FY16-17 Adopted Budget_6.9.16 DRAFT.pdfOrg Chart - FY16-17 Adopted Budget_6.9.16 DRAFT.vsdExec Admin INV PEN

    Attachment II - LAFPP Key Budget Indicators PDF.pdfSlide Number 4Slide Number 6Slide Number 7Slide Number 8Slide Number 9

    06-16-16 A5 - Attachment III, FY16-17 Proposed Budget

    board_2016-06-16_a6 cao request for airport police transfer study06-16-16 A6 - CAO Request for Airport Police Transfer StudyDEPARTMENT OF FIRE AND POLICE PENSIONS

    06-16-16 A6 - Attachment, CAO Request for Study

    board_2016-06-16_a7 cio quarterly report of asset allocation status06-16-16 A7 - CIO Quarterly Report of Asset Allocation StatusDEPARTMENT OF FIRE AND POLICE PENSIONS

    06-16-16 A7 - Attachment I - Portfolio Allocation Chart as of May 31, 201606-16-16 A7 - Attachment II, Total Portfolio as of May 31, 2016

    board_2016-06-16_a8 asset allocation analysis - active vs passiveboard_2016-06-16_b4a may 2016 monthly report and updateMR #0 Monthly Report-DEPARTMENT OF FIRE AND POLICE PENSIONS

    MR #1 Monthly Report Cover PageMR #2 Board Assignments to Staff (06-16-16)MR #3 Weekly 53116 for monthly Board ReportMR #4 Preliminary Total Fund Performance 5-31-16MR #5 Monthly Board Report.May2016 (FINAL 060816) (1)MR #6 Admin Op Division (May 2016)MR #7 May 31%252c 2016 Budget Board Report_cet (3)_shcAdmin ExpensesReceipts & Expenses

    MR #8 May 2016 Contract Report_wk2 (3).May 2016