PASADENA

FIRE &

POLICE RETIREMENT SYSTEM

1. Call to Order 2. Public Comment

PASADENA FIRE & POLICE RETIREMENT SYSTEM

RETIREMENT BOARD - REGULAR MEETING

Wednesday, March 16, 2016

City Council Chambers, 100 N. Garfield Ave., #S249

10:15 a.m.

AGENDA

3. Minutes: February 17, 2016 (Regular Meeting)

CONSENT CALENDAR 4. Approve the monthly retirement allowance roll of $1,120,576.82 for February

2016. 5. Schedule the hearing on the CaiPERS Service Pending Industrial Disability

Retirement application for Lawrence Contreras, Fire Captain, for the April 20, 2016 regularly scheduled meeting of the FPRS Board.

6. Schedule the hearing on the CaiPERS Service Pending Industrial Disability Retirement application for Alfredo Magallon, Jr., Police Officer, for the April 20, 2016 regularly scheduled meeting of the FPRS Board.

ACTION ITEMS- The Board may discuss and take action on the following items: 7. Review, discuss and take action on the contract for auditing financial services

with System Auditor Macias Gini & O'Connell. 8. Review, discuss and take action on the revised policies for Disability Retirement

Hearing Procedures and Disability Retirement Document Procedures, as prepared by System Counsel Best Best & Krieger LLP.

9. Discuss and possibly take action on the following investment reports submitted by Verus Investments: a. Receive and file, February 2016 Performance Update b. Review, discuss and possibly take action on the System's 10-Year Asset

Allocation Review and Return Forecast

INFORMATION ITEMS 10. Staff Report

a. February 2016 Budget Report 11 . Counsel Report 12. Articles/Newsletters/Conferences

Page 1 of 2

COMMENTS FROM BOARD MEMBERS

ADJOURN

POSTING STATEMENT: I HEREBY CERTIFY that this Agenda was posted in its enti rety at the City Kiosk and on the City Council Chamber bulletin board, Room S249, on March 9, 2016 at 5:00p.m., and a copy was sent to the Central Library for posting.

Jill Fosselman

Administrator/Secretary to the Board

In compliance with the Americans with Disabilities Act of 1990, listening assistive devices are available from the City Clerk 's Office with a 24-hour advance notice. Please call (626) 7 44-4320 to request use of a listening device.

Any documents distributed to a majority of the Pasadena Fire & Police Retirement Board regarding any item on this agenda will be made available at the office of the Fire & Police Retirement System, located at 100 N. Garfield Avenue, #N204, Pasadena, CA 91101 . To make arrangements to view items, during normal business hours, please contact the Retirement office at (626)744-4320.

DISTRIBUTION Board Members Bartel Associates A. Taylor, Wurts I. Safie, City A tty

Police Dept (Admin Srv) Fire Chief Director of Finance City Treasurer

Workers' Compensation S. Lebovitz A. Snitzer

Page 2 of 2

T. Phillips, CPA J. Acosta, Keenan F. Aridegbe, Keenan

W. Boyer, PIO Library, NIS City Controller

PASADENA FIRE & POLICE RETIREMENT SYSTEM RETIREMENT BOARD - REGULAR MEETING

Wednesday, February 17, 2016 City Council Chambers S249

Pasadena City Hall, 100 N. Garfield Avenue 10:15 a.m.

MINUTES

1. Call to Order

The regular meeting of the Pasadena Fire & Police Retirement Board was called to order by the Chair, Mr. Keith Jones, on Wednesday, February 17, 2016 at 10:17 a.m. in the City Council Chambers at Pasadena City Hall.

Members - Present K. Jones, Chair P. Boyle, Vice Chair J. Milligan J. Brinsley T. Tomek (departed 11:45 a.m.)

Staff - Present J. Fosselman, Administrator/Secretary E. Wong, Tech. Assistant I. Safie, City Attorney Representative

Others Present A. Taylor (Verus Investments), J. Curtis, A. Joseph, S. Lebovitz T. Riley, A. Snitzer, N. Bazzo, M. Maas

2. Public Comment

None.

Not Present

Not Present

3. Minutes: Approve the minutes for the regular meeting of January 20, 2016.

MOTION by Mr. Boyle, seconded by Mr. Brinsley, to approve the Minutes for the regular meeting of January 20, 2016. (Motion unanimously carried)

Page 1 of 8

CONSENT CALENDAR

4. Approve the monthly retirement allowance roll of $1, 120,576.82 for January, 2016. 5. Receive and file the 4th Quarter 2015 Asset Manager Performance Reports from the

following asset managers: a. Atlanta Capital Investment Managers, including Proxy Voting Summary b. Capital Group, American Funds EuroPacific Growth Fund c. Dodge & Cox Investment Managers, International Stock Fund d. Dodge & Cox Investment Managers, Stock Fund e. Invesco Core Real Estate, USA- LP, 2015 Q4 Flash Report f. PIMCO All Asset Fund g. TCW MetWest Fixed Income Review h. Vanguard Growth Index Fund, 4th Quarter Investment Commentary i. Vanguard TIPS Fund, 4th Quarter Investment Commentary j. Voya Senior Loan Collective Trust Funds

MOTION by Mr. Boyle, seconded by Mr. Milligan, to approve items 4-5 on the Consent Calendar. (Motion unanimously carried)

CalPERS HEARINGS

6. CalPERS scheduled hearing on the Service Pending Industrial Disability Retirement application for Tory Riley, Police Sergeant (Continued from the regular meeting of January 20, 2016.)

The hearing was opened on the CalPERS Service Pending Industrial Disability Retirement application filed by Tory Riley, Police Sergeant. The Board received the Disability Hearing Option form signed by the Applicant requesting the Retirement Board close the hearing to the general public, including the discussion of the medical reports submitted in consideration of the Retirement Board's determination. Therefore, the hearing was closed to the public.

The following were present at the hearing: Antoinette Joseph, Jennifer Curtis and Sam Lebovitz (City and counsel), and Tory Riley (Applicant). The Applicant was administered the oath of witness.

By order of the Chair, the following exhibits were marked and entered into record: a. CalPERS Service Pending Industrial Disability Retirement application, filed by Tory

Riley, Police Sergeant, dated June 15, 2015. b. Verification of employment with the City of Pasadena. c. Certification Forms signed by the City and Applicant. d. Information report and recommendation from the Human Resources Department

dated February 1, 2016, and the accompanying medical file, including: 1) Essential Functions Job Analysis, Police Sergeant; 2) Dr. Babak Baravarian, D.P.M., operative report (dated 9-9-14); 3) Dr. Babak Baravarian, D.P.M., PTP, progress report (dated 2-25-15); 4) Dr. Babak Baravarian, D.P.M., PTP, progress report (dated 3-25-15);

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5) Dr. Babak Baravarian, D.P.M., PTP, progress report (dated 5-13-15); 6) Dr. Babak Baravarian, D.P.M., PTP, suture removal and report (dated 6-1-15); 7) Dr. Franklin Kase, D.P.M., AME, evaluation and report (dated 11-24-14); and 8) Dr. Franklin Kase, D.P.M., AME, comprehensive agreed medical re-evaluation

and report (dated 8-26-15).

Mr. Lebovitz reviewed the medical evidence provided.

Following discussion, a MOTION to close the hearing was made by Mr. Tomek, seconded by Mr. Brinsley. (Motion carried 4-0, Boyle abstaining)

Chair Jones thanked Ms. Riley for her 32 years of service in public safety, and specifically 27 years in Pasadena. Mr. Tomek thanked Ms. Riley on the behalf of the Council and community for her service.

MOTION by Mr. Tomek, seconded by Mr. Brinsley, to approve the CalPERS Service Pending Industrial Disability Retirement Application filed by Tory Riley, Police Sergeant, with a retirement date of September 12, 2015, and instruct the System's Attorney and the Secretary to prepare the necessary documentation of this Board's determination and forward same to the California Public Employees' Retirement System. (Motion carried 4-0, Boyle abstaining)

7. CalPERS scheduled hearing on the Industrial Disability Retirement application for Nicole Bazzo, Police Officer.

The hearing was opened on the CalPERS Industrial Disability Retirement application filed by Nicole Bazzo, Police Officer. The Board received the Disability Hearing Option form signed by the Applicant requesting the Retirement Board close the hearing to the general public, including the discussion of the medical reports submitted in consideration of the Retirement Board's determination. Therefore, the hearing was closed to the public.

The following were present at the hearing: Antoinette Joseph, Jennifer Curtis and Sam Lebovitz (City and counsel), Nicole Bazzo and Alan Snitzer (Applicant and counsel). The Applicant was administered the oath of witness.

By order of the Chair, the following exhibits were marked and entered into record: a. CalPERS Industrial Disability Retirement application, filed by Nicole Bazzo, Police

Officer, dated July 14, 2015. b. Verification of employment with the City of Pasadena. c. Certification Forms signed by the City and Applicant. d. Information report and recommendation from the Human Resources Department

dated February 3, 2016, including: 1) Essential Functions Job Analysis, Police Officer.

e. Cover Letter and medical reports submitted by the Applicant's counsel dated February 8, 2016, including: 1) Application for Adjudication, Case No. ADJ9825037 (dated 2-2-15);

Page 3 of 8

2) Dr. Lawrence Feiwell, M.D., AME, orthopaedic examination and report (dated 7 -7 -15);

3) Dr. Lawrence Feiwell, M.D., AME, review of records and response to interrogatory (dated 10-2-15);

4) Dr. Lawrence Feiwell, M.D., AME, orthopaedic examination and report (dated 12-9-15);

5) Dr. Lawrence Feiwell, M.D., AME, response to interrogatory and report (dated 1-15-16);

6) Dr. Ralph Steiger, M.D., PTP progress reports (dated 10-14-15, 9-9-15, 8-12-15, 7-8-15, 6-9-15, 5-6-15, 3-31-15, 2-11-15, 2-3-15, and 1-3-15);

7) San Gabriel Valley Diagnostic Center, MRI left sternoclavicular joint, radiology report (dated 3-24-15);

8) San Gabriel Valley Diagnostic Center, MRI of the left shoulder, radiology report (dated 3-23-15);

9) San Gabriel Valley Diagnostic Center, MRI of the cervical spine, radiology report (dated 3-23-15);

1 O)Deposition transcript of Nicole Bazzo, Applicant, Case No. ADJ9825037 (dated 4-22-15); and

11) Essential Functions Job Analysis, Police Officer.

Mr. Snitzer provided a review of the cover letter and medical evidence. Next, Mr. Lebovitz noted the change in the retirement date given the City's change in the policy regarding the Applicant's utilization of earned sick time. Both attorneys confirmed agreement of the revised eligible retirement date of October 23, 2015.

Following discussion, a MOTION to close the hearing was made by Mr. Boyle, seconded by Mr. Milligan. (Motion unanimously carried)

On the behalf of the community, Chair Jones thanked Ms. Bazzo for her 13 years of service in public safety.

MOTION by Mr. Brinsley, seconded by Mr. Boyle, to approve the CalPERS Industrial Disability Retirement Application filed by Nicole Bazzo, Police Officer, with a retirement date of October 23, 2015, and instruct the System's Attorney and the Secretary to prepare the necessary documentation of this Board's determination and forward same to the California Public Employees' Retirement System. (Motion unanimously carried)

8. CalPERS scheduled hearing on the Service Pending Industrial Disability Retirement application for Michael Maas, Battalion Chief.

The hearing was opened on the CalPERS Service Pending Industrial Disability Retirement application filed by Michael Maas, Battalion Chief. The Board received the Disability Hearing Option form signed by the Applicant requesting the Retirement Board close the hearing to the general public, including the discussion of the medical reports submitted in consideration of the Retirement Board's determination. Therefore, the hearing was closed to the public.

Page 4 of 8

The following were present at the hearing: Antoinette Joseph, Jennifer Curtis and Sam Lebovitz (City and counsel), Michael Maas and Alan Snitzer (Applicant and counsel). The Applicant was administered the oath of witness.

By order of the Chair, the following exhibits were marked and entered into record: a. CalPERS Service Pending Industrial Disability Retirement application, filed by

Michael Maas, Battalion Chief, dated August 6, 2014. b. Verification of employment with the City of Pasadena. c. Certification Forms signed by the City and Applicant. d. Information report and recommendation from the Human Resources Department

dated February 4, 2016. e. Cover Letter and medical reports submitted by the Applicant's counsel dated

February 8, 2016, including: 1) Essential Functions Job Analysis, Fire Battalion Chief; 2) Application for Adjudication, Case No. ADJ9542231 (dated 7-16-14); 3) Workers' Compensation Claim Form, CT 7-30-84 to 5-28-14 for back, neck,

shoulders, hands, right hip, ears, skin, heart (dated 6-10-14); 4) Dr. Gary Brazina, M.D., AME orthopaedics, supplemental report and response

to interrogatory (dated 12-12-15); 5) Dr. Gary Brazina, M.D., AME orthopaedics, supplemental report (dated 8-7-15); 6) Dr. Gary Brazina, M.D., AME orthopaedics, supplemental report and record

review (dated 6-18-15); 7) Dr. Gary Brazina, M.D., AME orthopaedics, examination and report (dated

12-30-14); 8) Dr. Jonathan Green, M.D., AME internal medicine, supplemental report (dated

6-22-15); 9) Dr. Jonathan Green, M.D., AME internal medicine, supplemental report (dated

4-8-15); 1 O)Dr. Jonathan Green, M.D., AME internal medicine, examination and report

(dated 1-3-15); 11 )Dr. Alfred Roven, M.D., AME otolaryn, examination and report (dated 1-28-15); 12)Dr. David Freeman, M.D., AME psychology, medical reevaluation and report

(dated 12-12-14); 13)Deposition transcript of Michael Maas, Applicant, on Case No. ADJ9542231

(dated 11-4-14); 14)Stipulations with Request for Award, including Award, Case No. ADJ6441035

(dated 10-25-11); 15)Dr. Jonathan Green, M.D., AME internal medicine, examinations and reports

(dated 12-28-08, 9-22-09, 11-30-09, 11-7-10, and 3-11-11); 16)Dr. Jay Jurkowitz, M.D., AME neurology, examination and reports (dated

8-24-09 and 8-25-09); and 17)Dr. David Freeman, M.D., AME psychology, examination and report (dated

3-25-10).

Mr. Snitzer provided a review of the cover letter and medical evidence, noting the continuous trauma sustained in the neck and back. Next, Mr. Lebovitz further discussed the required duties of a fire fighter.

Page 5 of 8

Following discussion, a MOTION to close the hearing was made by Mr. Tomek, seconded by Mr. Brinsley. (Motion unanimously carried)

Chair Jones offered gratitude and appreciation to Chief Maas for his three decades of service to the community.

MOTION by Mr. Boyle, seconded by Mr. Milligan, to approve the CalPERS Service Pending Industrial Disability Retirement Application filed by Michael Maas, Battalion Chief, with a retirement date of October 11, 2014, and instruct the System's Attorney and the Secretary to prepare the necessary documentation of this Board's determination and forward same to the California Public Employees' Retirement System. (Motion unanimously carried)

ACTION ITEMS - The Board may discuss and take action on the following items:

9. Adopt Resolution No. 322 setting the cost of living adjustment at an increase of 1 % for all eligible retires and beneficiaries per Charter Section 1509.8 to become effective July 1, 2016, as determined by Bartel Associates, FPRS actuary.

MOTION by Mr. Tomek, seconded by Mr. Boyle, to adopt Resolution No. 322 setting the cost of living adjustment at an increase of 1 % effective July 1, 2016, as determined by System Actuary Bartel Associates. (Motion unanimously carried)

10. Discuss and take action on the System's contract with Bartel Associates for preparation of the June 30, 2016 actuarial valuation and actuarial services.

Ms. Fosselman briefly reviewed the report and highlighted the total proposed budget amount for the year of $19,000, which will be included in the Fiscal Year 2017 Budget Request.

MOTION by Mr. Milligan, seconded by Mr. Brinsley, to approve the proposal from System Actuary, Bartel Associates, to prepare the June 30, 2016 actuarial valuation and provide actuarial services. (Motion unanimously carried)

11. Discuss and possibly take action on the following investment reports submitted by Verus Investments:

a. Receive and file, 4th Quarter 2015 Quarterly Investment Report

Ms. Annie Taylor of Verus Investments briefly reviewed the research report. For the quarter, net cash flow was -$3.56 million, and net investment change was $1.9 million, bringing the value of the portfolio to $128.48 million on December 31, 2015 (not including pooled cash with the City). Overall, the Fund returned 1.4% net of fees for the quarter (v. the policy index of 2.3%), bringing the fiscal year-to-date earnings to -2.4% (v. the policy index of -1.0%). The bounce in investment returns was largely felt in equities over the quarter, although the portfolio's holdings fell short of the benchmarks. Holdings in

Page 6 of 8

Domestic Equities returned 5.4% net of fees (v. the benchmark of 7.0%), and holdings in International Equities returned 1.9% net of fees (v. the MSCI EAFE of 4.7% and MSCI ACWI ex USA of 3.2%), with growth assets outperforming value in both asset classes. Overall in the U.S., GDP declined and weaker growth is expected going forward. In the international markets, growth continues but at a much milder pace as it is still constrained by generally high unemployment. The Fund's cumulative performance for the quarter ranked in the 99th percentile relative to its peer universe (lnvestorForce Public DB $50mm-$250mm Gross), which was largely attributed to the Fund's asset allocation and holdings in Domestic Equity and US Fixed income relative to its peers.

MOTION by Mr. Boyle, seconded by Mr. Milligan, to receive and file the 4th Quarter 2015 Quarterly Investment Report, as recommended by Verus Investments. (Motion unanimously carried)

b. Receive and file, January 2016 Flash Report

The flash report was reviewed reflecting performance without pooled cash. The total fund returned -2.5% net of fees (v. the policy index of -2.3%) for January, bringing the fiscal year-to-date return to -4.9% net of fees (vs. the policy index of -3.3%). Ms. Taylor noted the majority of the negative earnings came from Domestic and International Equities, which returned -5.9% and -7.7%, respectively, for the month. Total market value for the end of January was $125.8 million, including pooled cash with the City.

MOTION by Mr. Boyle, seconded by Mr. Milligan, to receive and file the January 2016 Flash Report, as recommended by Verus Investments. (Motion unanimously carried)

c. Receive and file, Transaction Report

Ms. Taylor briefly reviewed the transaction report for the previous month's withdrawal for quarterly pension benefits and administration.

MOTION by Mr. Boyle, seconded by Mr. Brinsley, to receive and file the Transaction Report, as recommended by Verus Investments. (Motion unanimously carried)

CLOSED SESSION - 11 :30 a.m.

A. CONFERENCE WITH REAL PROPERTY NEGOTIATORS (Government Code Section 54956.8) Property Location: 275 E. Cordova Street Agency Negotiator: William Huang, Isabel Safie (Board Counsel) Negotiating Party: Residential Housing Foundation Under Negotiation: Price and terms of payment

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No public comment was provided on this item. At 11: 16 a.m., the Board recessed to the City Council Conference Room for this item. Mr. Tomek departed the meeting at 11 :45 a.m.

The public meeting was reconvened at 12:46 p.m. It was reported that the item was discussed, with nothing reportable at this time.

INFORMATION ITEMS

15. Staff Report - Ms. Fosselman provided a brief update on the upcoming Board calendar for March, and pending disability hearings. a. January 2016 Budget/Expense Report- noted.

16. Counsel Report - Ms. Safie reminded the Board of Mr. Wahlin's attendance at the March meeting. a. Memorandum on the Board's Disability Hearings Procedures Policy - noted.

17. Articles/Newsletters/Conferences - Upcoming NCPERS conference and trustee training in San Diego, May 14-19, 2016.

COMMENTS FROM BOARD MEMBERS

ADJOURNMENT

MOTION by Mr. Brinsley, seconded by Mr. Boyle, to adjourn the meeting at 12:53 p.m. (Motion unanimously carried, 4-0)

Respectfully submitted,

J~~a~· Keith Jones Secretary to the Board/Administrator Chair, Retirement Board

Details of this meeting are contained on a DVD recording of the meeting and will be kept in the archives for two years, per Board policy.

DISTRIBUTION: Board Members City Attorney Director of Finance

Fire & Police Retirees Assn. Police Chief Fire Chief

Workers Compensation A. Snitzer S. Lebovitz L. Tomlison

Page 8 of 8

DATE 3/ /C,// b

MONTHLY ALLOWANCE ROLL-TOTALS ITEM #_-4....._ __ _

Approved 2015- Actual 2015-MONTH 2013-2014 2014-2015 2016 2016

JULY 1, 192,972.10 1, 156,360.39 1, 133,056.86 1, 133,056.86 AUGUST 1, 192,010.00 1, 139, 148.67 1,132,739.08 1,132,739.08 SEPTEMBER 1, 191,857.42 1, 140,585.54 1, 127, 165.89 1,127,165.89 OCTOBER 1, 183,343.98 1, 141 ,527.41 1,122,125.71 1,122,125.71 NOVEMBER 1, 185, 193.00 1, 139,378.41 1,121,651.68 1,121,651.68 DECEMBER 1, 173,208.24 1,137,229.40 1, 120,576.82 1, 120,576.82 JANUARY 1,175,416.55 1, 137,229.40 1, 120,576.82 1, 120,576.82 FEBRUARY 1, 186,095.58 1, 137,229.40 1, 120,576.82 MARCH 1,169,199.58 1, 130,773.44 0.00 APRIL 1,164,877.82 1, 131,857.62 0.00 MAY 1,169,287.95 1,126,038.77 0.00 JUNE 1, 159,580.64 1, 122,917.19 0.00 FY TOTALS 14, 143,042.86 13,640,275.64 7,877,892.86 8,998,469.68

COL BENEFITS INCLUDED ABOVE 7,451,093.87 7, 177,264.72 4, 149,614.62 4,738,709.84

COL - % Of Total 53% 53% 53% 53%

Y:\Office Docs\Retiree Payroll\Payroll\[Total Payroll FY 2016.xlsx]FY 2016 Pension Gold Recon. 3n12016

California Public Employees' Retirement System Beneflt Services Division 'P.O. Box 2796 I Sacramento, CA 95812-279ti ITV: (877) 249-7442 (888) CalPERS (225-7377) phone • (916) 795.j12sq fax www.calpers.ca.gov

February 10, 2014

Lawrence Contreras

Dear Mr. Contreras:

DATE 3/fWf~ ITEM # __ 5 __ _

This letter acknowledges receipt of an application for your disability retirement. Your employer has been notified to provide a determination of your disability. Your employer is required to make a determination within six months of this notice unless you waive the requirements of this provision (Government Code section 21157).

If your employer finds you substantially incapacitated from the performance of your usual duties, your application will be approved and cannot be canceled. However, if you are eligible, and wish to change to a service retirement in lieu of disability retirement, you must apply for the change prior to the effective date of your disability retirement or within 30 days after notification of approval (Government Code section 21156).

Under the law, if a person (other than your employer) caused an injury that results in certain CalPERS benefits being paid, then Cal PERS has the right to recover from the responsible person up to one-half of the total retirement benefit costs payable due to this injury. This right is known as a "right of subrogation" (Government Code section 20251 et seq.).

If you pursue a claim against any person for the same injuries that also entitle you to disability retirement from CalPERS (other than a workers' compensation claim or an uninsured motorist claim) YOU MUST INFORM CALPERS OF THE EXISTENCE OF THIS CLAIM. This is true even if the claim has not yet resulted in a court action. CalPERS has the right to participate in any such claim either through filing its own action against the responsible party, intervening in your claim, or filing a lien against any judgment which you may recover. IF YOU SETTLE SUCH A CLAIM WITHOUT NOTIFYING CALPERS, CALPERS MAY ALSO BE ENTITLED TO FILE A LAWSUIT AGAINST YOU FOR RECOVERY OF CALPERS' SUBROGATION RIGHTS.

From 9167951522 I 11 ' ' ..1..lt_O L-~.J,.. I ..L._," I..&. I I "-1111° '-'• 11.-1 L-1,.._,

Lawrence Contreras February 10, 2014 Page 2

If at any time prior to the mailing of your first warrant you wish to receive a refund of your accumulated contributions in a lump sum in lieu of a retirement allowance, you may do so by sending written notification to the return address shown above. You should be advised that membership in CalPERS terminates upon the mailing of a warrant refunding contributions, making you ineligible for future benefits unless you return to employment covered by CalPERS Government Code section 20340).

If you have any questions, please contact us.

Sincerely,

STACEY OLSEN Retirement Program Specialist Disability Retirement Section

Enclosure: LS ER 1st Letter

cc: City of Pasadena

October 20, 2015

City of Pasadena

P. 0. Box 7115

Pasadena, CA 91109-7215

Re: Alfredo Magallon, Jr. Occupation: Police Officer

Dear Personnel Officer,

P.O. Box 2796 Sacramento, CA 95812-2796 888 Ca!PERS (or 888-225·7377)

TTY: (877) 249-7442 I Fax: (916) 795-1280 www.calpers.ca.gov

DATE 3/(Cz//b ITEM# 6

California Public Emplov~l'.l~l' ,R~feri~nt sv~tepit.; i. f. .. :u J tJ .. , (t) Yh ,) tt)

CalPERS ID: 5405281773

Alfredo Magallon, Jr., has filed an application for industrial disability retirement. Your agency needs to

make a determination of the member's disability in accordance with Government Code sections 21154

and 21156. You must make your determination within six months of this request unless the local safety member waives the requirements of this provision (Government Code section 21157).

Under the California Public Employees' Retirement law, disability means the incapacity of a member from the performance of duty in public services for permanent or extended and uncertain duration, as

determined on the basis of competent medical opinion. Disability is not necessarily an inability to

perform every function of a given position. Rather, the courts have concluded that the test in any case

is whether the employee can substantially perform his or her usual duties.

Disputed questions regarding the industrial relationship of the disabling injury to the member's work will be resolved by the Workers' Compen$ation Appeals Board (WCAB). In the event there is no

dispute, such a finding can be made by the employer. A Workers' Compensation Award is not

sufficient evidence that a local safety member is disabled for retirement purposes. There must be a specific finding under Government Code section 21166, by the employer, with respect to the disability

for which the member will be retired.

If it is determined that the member is not disabled from the performance of his or her duties, a Resolution to that effect must be filed with CalPERS. Please refer to sample Resolution No. 1 in the

Public Agency and School Reference Guide - Benefits Procedures (see link below).

If the member is found to be disabled, CalPERS will require the following documentation:

1. A finding that the member has been found to be substantially incapacitated from the performance

of the usual duties of his or her position.

Page 1 of 3

2. A finding by your agency as to whether or not the disability is industrial.

a) In case of a dispute, a Findings and Award by the WCAB resolving the industrial relationship.

3. A certified statement (Resolution) by the local agency of the member's last day on payroll. In case of a dispute regarding the member's effective date of retirement, a request must be filed with the

WCAB for Finding of Fact to determine on what date the member's condition became permanent

and stationary. That date then becomes the effective date of retirement (Government Code section

21164).

4. A statement identifying the type of disability retirement determined, i.e., non-industrial disability

retirement or industrial disability retirement. A member must have minimum of five years of

credited service to qualify for non-industrial disability retirement. If a member does not meet the minimum service requirements for disability retirement, they may still qualify by re-depositing

previously withdrawn contributions or contributing an amount for service rendered prior to membership with CalPERS. Time during which the member is absent from State service by reason of injury or illness, which is determined within one year after the end of such absence to be job­related, shall be considered as time spent in State service for the purpose of qualification for

retirement and death benefits.

5. A statement by the agency to the effect that there is, or is not, a possibility of third-party liability

present, if the member's disability was caused by negligence or an intentional act of a party other

than the employer.

If a person (other than the employer) caused an injury that. results in certain Cal PERS benefits being

paid, then we have the right to recover from the responsible person up to one-half of the total retirement benefit costs payable due to this injury (Right of Subrogation - Government Code

section 20250)

Please advise us if you are aware our member is pursuing a claim (other than a Workers'

Compensation claim) against any person or entity for the same injuries that also entitle the

member to a disability retirement from Cal PERS.

6. A statement identifying the disabling condition(s} and body part(s), i.e., orthopedic (right knee),

psychological, cardiovascular, internal (kidney), neurological (leg) or other.

7. If Advance Disability Pension Payments (ADPP) will be paid to the member, include the monthly amount and the beginning date. Also, please include where the reimbursement check should be

mailed.

It is the employer's responsibility to report to Cal PERS the amount of ADPP paid to a member. If the employer fails to notify Cal PERS that ADPP is paid or if the member service retires, the local agency and the employee shall arrange for repayment. CalPERS will not reimburse the employer in these situations.

Page 2 of 3

All such documentation submitted by your agency must be signed by the governing body or its lawful

delegate (i.e., City Manager, Chief Administrative Officer, County Executive, or other comparable

individual). If the governing body chooses to delegate the responsibility of making a determination, a certified copy of the delegation order of this authority must accompany the finding by such delegate in each instance. For Public Agency and Schools Reference Guide - Benefits Procedures and sample

resolutions, please refer to the following two links for further information:

Public Agency and Schools Reference Guide ·· Benefits Procedures: 1nl

Sample Resolutions:

Thank you for your assistance. Your cooperation is appreciated.

If you have any questions, please visit our website at www.calpers.ca.gov, or you may call us toll free at 888 CalPERS (888-225-7377).

Sincerely, -7 .

}Y\O.A-<~~r('2.U~1 Marylin Keller

Retirement Program Specialist Disability Retirement Section

Enclosure: LS - 1st Letter to Member

cc: Alfredo Magallon, Jr.

Law Offices of Alan Snitzer

Page 3 of 3

TO:

FROM:

DATE:

Pasadena Fire & Police Retirement System

AGENDA REPORT

Chair Jones and Board Members of the Fire & Pol" e Retirement System

Jill Fosse I man, Secretary to the Boar

March 16, 2016

DATE 3 / f.{:,/(£ ITEM# T

ITEM: Contract Amendment with System Auditor Macias Gini & O'Connell, LLP for auditing financial services and the financial audit for June 30, 2016 and 2017

RECOMMENDATION

Following discussion, the Board may:

1. Approve the proposal for the two-year extension of the contract with Macias Gini & O'Connell, LLC for auditing financial services and the June 30, 2016 and 2017 financial audits, or

2. Other direction provided by the Board.

BACKGROUND

Upon the Board's adoption of the June 30, 2016 financial audit this past January, the contract with Macias Gini & O'Connell ("MGO") expired. At the last Board meeting, direction was provided to staff to negotiate a two-year extension to the contract with MGO for preparation of the June 30, 2016 and 2017 financial audits.

Attached is the agreement that modifies the contract's term and specified compensation for services. MGO has agreed to reduce the not-to-exceed fee schedule for auditing financial services and the audit modestly, from $54,180 to $48,000 for the June 30, 2016 financial audit and $49,500 for the June 30, 2017 financial audit. The scope of work for the audit will remain consistent with the work undertaken in the June 30, 2015 audit. At the Board's upcoming meeting in May, the System's Engagement Partner, Jim Godsey, will review the June 30, 2016 engagement letter with the Board and present it for approval.

The amendment has been reviewed and approved by System counsel, Best Best & Krieger. Upon approving this contract extension, the total contract term with MGO will be for three years at the completion of the June 30, 2017 financial audit.

FISCAL IMPACT

No funding is requested at this time, as there are sufficient funds in the current budget and contract for initial audit work that commences prior to July 1. The recommended budget for this contract is $48,000, which will be included in the Fiscal Year 2017 Budget Request.

March 16, 2016 Page 1 of 2

2016-2017 Auditing Financial Services

ATTACHMENTS

1. Amendment to the April 15, 2015 Auditing Financial Services Contract with Macias Gini & O'Connell, LLP

2. Auditing Financial Services Contract with Macias Gini & O'Connell, LLP, dated AprillS, 2015

March 16, 2016 Page 2 of 2

2016-2017 Auditing Financial Services

AMENDMENT TO APRIL 15, 2015

AUDITING FINANCIAL SERVICES CONTRACT

BETWEEN THE PASADENA FIRE & POLICE RETIREMENT SYSTEM (ADMINISTRED BY THE RETIREMENT BOARD ("BOARD")) AND

MACIAS GINI & O'CONNELL, LLP (AUDITOR)

The Board and Auditor agree as follows:

1. That term of the contract will be extended for two (2) years to April 15, 2018 to perform auditing financial services and the June 30, 2016 and 2017 financial audits. (Section 1.2)

2. That the Auditor's total compensation for such services provided under the contract for the first extension year, including the preparation of the June 30, 2016 financial audit, shall not exceed $48,000 without the prior authorization of the Board. (Section 4.2)

3. That the Auditor's total compensation for such services provided under the contract for the second extension year, including the preparation of the June 30, 2017 financial audit, shall not exceed $49,500 without the prior authorization of the Board. (Section 4.2)

PASADENA FIRE & POLICE RETIREMENT SYSTEM

By:~~~~~~~~~~­KeithJones Chair, FPRS Board

Date:

MACIAS GINI & O'CONNELL, LLP

By: ~~~ James V. Godse;,ci>A Partner, Macias Gini & O'Connell

Date:

Rev date: 3/8/2016 10:03 AM

Attachment 1

AUDITING FINANCIAL SERVICES CONTRACT

This CONTRACT is made between the Pasadena Fire & Police Retirement System ("System"), a retirement system established pursuant to Article XV, Section 1501 of the Charter of the City of Pasadena, that is administered by the Retirement Board ("Board") and Macias Gini & O'Connell, LLP, a limited liability partnership for professional auditing services ("-"\uditor") with headquarters in Sacramento, California.

The BOARD and AUDITOR agree as follows:

1.0 EMPLOYMENT OF CONTR.i\CTOR. 1.1 Board agrees to engage Auditor as the Contractor to perform the auditing

financial services as hereinafter set forth as authorized by the Board on ~v\ \ \') 1 "J..-0\S , and as described in the Auditor's written response to the Board's RF:>, dated January 6, 2014, attached hereto as Exhib1t "A", and the audit engagement letter in effect between the Board and the Auditor, attached hereto as "Exhibit "B", for the June 30, 2015 financial audit of the System.

1.2 The term of this Contract shall be for one (1) year from the date of commencement of audit senrices, April15, 2015. Upon mutual agreement, this Contract may be extended, subject to approval by the Board.

1.3 The time for perforwJng the services may only be extended in writing by System, and only upon a showing of good cause, in the System's sole discretion.

2.0 SCOPE OF SERVICES. 2.1 Contractor shall perform all work necessary to complete the services set

forth in the Request for Proposals dated October 24, 2013 ("Exhibit "C'"'), the Auditor's Proposal to the System ("Proposal") dated January 6, 2014 ("Exhibit "A""), and the audit engagement letter between the System and the Contractor ("Exhibit "B""), all of which are attached to and incorporated into this Contract by reference. All services shall be performed to the satisfaction of System.

3.0 PERSONNEl,. 3.1 Contractor represents that it employs, or will employ, at its own expense,

all personnel required to perform the services under this Contract. 3.2 Contractor shall not subcontract any services to be performed by it under

this Contract without prior written approval of System. 3.3 i\ll of the services required hereunder will be performed by Contractor.

Contractor, and all personnel engaged in the work, shall be fully qualified and authorized or perwitted under State and local law to perform such services and shall be subject to approval by the System.

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4.0 COMPENSATION AND FEES. 4.1 For satisfactory and timely performance of the services provided for

hereunder, the System will pay Contractor an amount not to exceed Fifty-four thousand one-hundred and eighty dollars ($54,180), in accordance with the payment schedule presented in Exhibit "A", incorporated herein by reference.

4.2 Contractor's total compensation under this Contract shall not exceed $54,180 without the prior authorization of the Board.

4.3 Contractor shall, at its sole cost and expense, furnish all necessary and incidental labor, material, supplies, facilities, equipment and transportation which may be required for furnishing services pursuant to this Contract. The above Contract fee shall include all professional time and all clerical, administrative, overhead, insurance, reproduction, telephone, air travel, auto rental, subsistence, and all related expenses.

5. 0 P A Y1YIENT. 5.1 As scheduled set-vices are completed, on the final day of each calendar

month during the Contract term, Contractor shall submit to the System an invoice for the services completed according to said schedule.

5.2 Each such invoice shall state the basis for the amount invoiced, including the set-vices completed, the number of hours spent, and any extra work performed.

5.3 System will pay Contractor the amount invoiced within thirty (30) days of presentation.

5.4 Payment of such invoices shall be payment in full for all set-vices, authorized costs and authorized extra work covered by that invoice.

6.0 CONFIDENTIALITY. Except as provided by applicable law, or by order of a court or regulatory authority, Contractor shall maintain the confidentiality of all its records with respect to this Contract, including, but not limited to, all information pertaining to the System.

7.0 SYSTEM'S RESPONSIBILITY. System shall cooperate with Contractor as may be reasonably necessary for Contractor to perform its set-vices; and -vvill give any required decisions as promptly as practicable so as to avoid unreasonable delay in the progress of Contractor's services.

8.0 GENERAL TERMS AND CONDITIONS. 8.1 INDEPENDENT CONTRACTOR.

8.1.1 It is understood that in the performance of the services herein provided for, Contractor shall be, and is, an independent contractor, and is not an agent or employee of System and shall furnish such set-vices in its own manner and method except as required by this Contract. Further, Contractor has and shall retain the right to exercise full control over the employment, ditection, compensation and discharge of all persons employed by Contractor in the performance of the set-vices hereunder. Contractor shall be solely responsible for, and shall indemnify, defend and save System harmless from all matters relating

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to the payment of its employees, including compliance with social security, withholding and all other wages, salaries, benefits, taxes, exactions, and regulations of any nature whatsoever.

8.1.2 Contractor acknowledges that Contractor and any subcontractors, agents or employees employed by Contractor shall not, under any circumstances, be considered employees of the System, and that they shall not be entitled to any of the benefits or rights afforded employees of System, including, but not limited to, sick leave, vacation leave, holiday pay, Public Employees Retirement System benefits, or health, life, dental, long-term disability or workers' compensation insurance benefits.

8.2 CONTRACTOR NOT AGENT. Except as the System may authorize in writing, Contractor and its subcontractors shall have no authority, express or implied, to act on.behalf of or bind the System in any capacity whatsoever as agents or otherwise.

8.3 OWNERSHIP OF WORK All reports, plans, computer tapes, floppy disks and printouts, studies, memoranda, computation sheets and other documents prepared by Contractor in furtherance of the work shall be the sole property of Contractor, but shall be delivered to System whenever requested, in electronic medium. To the extent any documents are to be retained only in electronic form, they should be identified. Contractor shall keep such documents and materials on file and available for audit by the System for at least seven (7) years after completion or earlier termination of this Contract. Contractor may make duplicate copies of such materials and documents for its own files or for such other purposes as may be authorized in writing by the System.

8.4 WAIVER. The System's waiver of any term, condition, breach or default of this Contract shall not be considered to be a waiver of any other term, condition, default or breach, nor of a subsequent breach of the one waived.

8.5 SUCCESSORS. This Contract shall inure to the benefit of, and shall be binding upon, the parties hereto and their respective heirs, successors and/ or assigns.

8.6 NO ASSIGNMENT Contractor shall not assign or transfer this Contract or any rights hereunder. Any assignment or transfer shall be null and void and shall constitute a material breach by the Contractor of its obligations under this Contract. No assignment shall release the original parties or otherwise constitute a novation.

8.7 INTERPRETATION. 8.7.1 Applicable Law. This Contract, and the rights and duties of the

parties hereunder (both procedural and substantive), shall be governed by and construed according to the laws of the State of California.

8.7.2 Entire Agreement. This Contract, including any Exhibits attached hereto, constitutes the entire agreement and understanding between the parties regarding its subject matter and supersedes all prior or contemporaneous negotiations, representations, understandings, correspondence, docu1nentation and agree1nents (written or oral).

8.7.3 Written Amendment. This Contract may only be changed by written amendment signed by Contractor and the Administrator or other authorized representative of the System, subject to any requisite authorization by the Board. Any oral representations or modifications concerning this Contract shall be of no force or effect.

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8.7.4 Severability. If any provision in this Contract is held by any court of competent jurisdiction to be invalid, illegal, void, or unenforceable, such portion shall be deemed severed from this Contract, and the remaining provisions shall nevertheless continue in full force and effect as fully as though such invalid, illegal, or unenforceable portion had never been part of this Contract.

8.7.5 Order of Precedence. In case of conflict between the terms of this Contract and the terms contained in any document attached as an Exhibit or otherwise incorporated by reference, the terms of this Contract shall strictly prevail. The terms of the System's Request for Proposals shall control over the Contractor's Proposal.

8.7.6 Choice of Forum. The parties hereby agree that this Contract is to be enforced in accordance with the laws of the State of California, is entered into in the City of Pasadena and that all claims or controversies arising out of or related to performance under this Contract shall be submitted to and resolved in a forum within the County of Los Angeles at a place to be determined by the rules of the forum.

8.7.7 Duplicate Originals. There shall be two (2) fully signed copies of this Contract, each of which shall be deemed an original.

8.8 ATTORNEY'S FEES. Except as otherwise provided herein, if any action at law or in equity is brought to enforce or interpret the terms of this Contract, each party shall be responsible for their own attorney's fees, costs and necessary disbursements.

8.9 TIME OF ESSENCE. Time is strictly of the essence with respect to provisions under this Contract and each and every covenant, term and provision hereof.

8.10 AUTHORITY OF CONTRr'\.CTOR. The Contractor hereby represents and warrants to the System that the Contractor has the right, power, legal capacity and authotity to enter into and perform its obligations under this Contract, and its execution of this Contract has been duly authorized.

8.11 ARBITRATION OF DISPUTES. Any dispute for under $25,000 arising out of or relating to the performance, non-performance, breach or any other aspect of this Contract, shall be settled by binding arbitration in accordance with the Commercial Rules of the American Arbitration Association at Los Angeles, California and judgment upon the award rendered by the Arbitrators may be entered in any court having jurisdiction thereof. The System does not waive its right to object to the timeliness or sufficiency of any claim filed or required to be filed against the System and reserves the right to conduct full discovery.

8.12 INDEMNITY. 8.12.1 Contractor agrees to indemnify, hold harmless and defend (even

if the allegations are false, fraudulent or groundless), to the maximum extent permitted by law, the System, its Board and each member thereof, and its officers, employees, commission members and representatives, from any and all liability, loss, suits, claims, damages, costs, judgments and expenses (including attorney's fees and costs of litigation) which in whole or in part result from, or arise out of, or are claimed to result from or to arise out of:

A. any activity on or use of System's premises or facilities or any perfotmance under this Contract; or

B. any acts, errors or omissions (including, without limitation, professional negligence) of Contractor, its employees, representatives, subcontractors, or agents in connection with the performance of this Contract.

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8.12.2 This agreement to indemnify includes, but is not limited to, personal injury (including death at any time) and property or other damage (including, but without limitation, contract or tort or patent, copyright, trade secret or trademark infringement) sustained by any person or persons (including, but not limited to, companies, or corporations, Contractor and its employees or agents, and members of the general public). The sole negligence or willful misconduct of System, its employees or agents other than Contractor or Contractor's subcontractors are excluded from this indemnity agreement.

8.13 RELEASE. Contractor agrees to release and covenants not to sue the System, its Board and each member thereof, and its officers, employees, commission members and representatives for any damage or injury (including death) to itself, its officers, employees, agents and independent contractors damaged or claiming to be damaged from any performance under this Contract.

8.14 INSURANCE.Contractor shall, atits own expense, procure and maintain policies of insurance of the types and in the amounts set forth below, for the duration of the Contract, including any extensions thereto. The policies shall state that they afford primary coverage. All policies, except for the Workers' Compensation policy, shall contain additional endorsements naming the System and its Board, trustees, and employees as additional named insureds with respect to liabilities arising out of the performance of services hereunder.

8.14.1 Automobile Liability coverage to include contractual coverage and automobile liability coverage for owned, hired and non-owned vehicles. The policy shall have combined single limits for bodily injury and property damage of not less than one million dollars ($1,000,000.00).

8.14.2 General Liability with minimum limits of at least one trillion dollars ($1,000,000.00) combined single limits written on an Insurance Services Office (ISO) Comprehensive General Liability "occurrence" form or its equivalent for coverage on an occurrence basis. Premises/Operations and Personal Injuty Coverage is required. The System, its trustees, officers, employees, and agents must be endorsed on the policy as additional insureds as respect to liability arising out of the Contractor's performance of this Contract.

8.14.3 Professional Errors and Omissions coverage in a sum of at least one million dollars ($1 ,000,000.00). Applicable aggregates must be identified and claims · history provided to determine amounts remaining under the aggregate. Coverage shall continue for five (5) years after termination of the contract.

8.14.4 Contractor shall comply with the applicable sections of the California Labor Code concerning workers' compensation for injuries on the job, including Employer's Liability with $250,000 limits, covering all persons providing services on behalf of the Contractor and all risks to such persons under this Agreement.

8.14.5 Each insurance policy included in this clause shall be endorsed to

state that coverage shall not be cancelled except after thirty (30) days' prior written notice to System

8.14.6 Prior to commencement of perfonnance, Contractor shall furnish System with a certificate of insurance for each policy. Each certificate is to be signed by a person authorized by that insurer to bind coverage on its behalf

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8.15 NOTICES. Any notice or demand to be given by one party to the other shall be given in writing and by personal delivery or prepaid first-class, registered or certified mail, addressed as follows. Notice simply to the Fire & Police Retirement System is not adequate notice.

If to the System:

If to the Contracror:

Jill Fosselman, Administrator

Pasadena Fire & Police Retirement System 100 N. Garfield Ave., Room N204 Pasadena, CA 91101 (626) 744-4320 (626) 396-7908 FAX

James V. Godsey, Partner Macias Gini & O'Connell 777 South Figueroa Street, Suite 2500 Los Angeles, CA 90017 (213) 408-8666 (213) 995-6970 FAX

Any such notice shall be deemed to have been given upon delivery, if personally delivered, or, if mailed, upon receipt o.r upon expiration of three (3) business days from the date of posting, whichever is earlier. Either party may change the address at which it desires to receive notice upon giving written notice of such request to the other party.

8.16 TERMINATION FOR CONVENIENCE (\Y'ithout Cause). System may terminate this Contract in whole or in part at any time, for any cause or without cause, upon thirty (30) calendar days' written notice to Contractor. If the Contract is thus terminated by System for reasons other than Contractor's failure to perform its obligations, System shall pay Contractor a prorated amount based on the services satisfactorily completed and accepted prior to the effective date of termination. Such payment shall be Contractor's exclusive remedy for termination without cause.

8.17 DEFAULT. In the event there is a breach of contract, either party may declare a default and terminate this Contract by written notice to the defaulting party. The notice shall specify the basis for the default. The Contract shall terminate unless such default is cured before the effective date of termination stated in such notice, which date shall be no sooner than ten (10) days after the date of the notice.

Termination for cause shall relieve the terminating party of further liability or responsibility under this Contract, including the payment of money, except for payment for services satisfactorily and timely performed prior to the service of the notice of termination, and except for reimbursement of (1) any payments made by the System for service not subsequently performed in a timely and satisfactoty manner, and (2) costs incurred by the System in obtaining substitute performance.

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9.0 ADDITIONAL ASSURANCES. 9.1 ASSURANCE OF COMPLIANCE WITH CIVIL RIGHTS LAWS.

AUDITOR hereby agrees and represents that it is an equal opportunity employer and has adopted policies to implement the purpose and provisions of the Civil Rights Act of 1964, 42 USC§ 2000(e) et seq. to assure that no person is denied employment on the basis of race, creed, color, sex or national origin in connection with its performance of this Agreement.

9.1.1 Contractor certifies and represents that, during the performance of this Contract, the Contractor and any other parties with whom it may subcontract shall adhere to equal opportunity employment practices to assure that applicants and employees are treated equally and are not discrirninated against because of their race, religion, color, national origin, ancestry, disability, sex, age, medical condition, marital status.

9.2 MAINTENANCE AND INSPECTION OF RECORDS. The System, or its authorized auditors or representatives, shall have access to and the right to audit and reproduce any of the Contractor's records to the extent the System deems necessary to insure it is receiving all money to which it is entitled under the Contract and/ or is paying only the amounts to which Contractor is properly entitled under the Contract or for other purposes relating to the Contract. The Contractor shall maintain and preserve all such records for a period of at least three (3) years after termination of the Contract.

9.3 CONFLICT. Contractor hereby represents, warrants and certifies that no member, officer or employee of the Contractor is a member or beneficiary of the System, or is a director, officer or employee of the City of Pasadena, except to the extent permitted by law.

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IN WITNESS WHEREOF, the parties hereto have caused this Contract to be executed by their duly authorized representatives as of the date set forth below.

DATED:

A TrEST:

~· DATED:

APPROVED AS TO FORM:

Isabel Safie FPRS Board Counsel Best Best & Krieger LLP

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PASADENA FIRE & POLICE RETIREMENT SYSTEM

By: tl!~ Keith] es Chair, RS Board

MACIAS GIN! & O'CONNELL, LLP

By:---=S2~'-'-~----r-+-James V. Godsey, CPA Partner, Macias Gini & O'Connell

DATE31t~/tb ITEM# PS

Pasadena Fire &t Police Retirement System

AGENDA REPORT

TO:

FROM: Jill Fosselman, Secretary to the Board

DATE: March 16, 2016

ITEM: Revised policies for Disability Retirement Hearing Procedures and Disability Retirement Document Procedures, as prepared by System Counsel Best Best & Krieger LLP

RECOMMENDATION

Following discussion, the Board may:

1. Approve the revised policies for Disability Retirement Hearing Procedures and Disability Retirement Document Procedures, or

2. Other direction provided by the Board.

BACKGROUND

At the last Board meeting, System Counsel Best Best & Krieger ("BBK") provided a memorandum to the Board regarding recommended changes to the Disability Retirement Hearing Procedures policy to address hearing appeals. Further, BBK advised that the changes would be necessary to remain consistent with the California Government Code and the Administrative Procedures Act. Recommended changes include the designated hearing body for appeals, the allowable time limit on filing appeals, and the procedures for appeals hearings. In addition, BBK suggested modest changes to the Document Procedures policy that specify the documents to be provided when requesting reconsideration. The attached revised policies have been prepared by BBK.

FISCAL IMPACT

There is no immediate fiscal impact from this item. However, there may be unforeseen costs incurred by the Board if a hearing decision is appealed to prepare for and hold the hearing on the appeal.

ATTACHMENTS

1. Policy on Hearing Procedures, CaiPERS Safety Members Disability Retirement Hearings (redline copy)

2. Policy on Document Procedures, CaiPERS Safety Members Disability Retirement Hearings (redline copy)

3. Best Best & Krieger Memorandum to the Retirement Board, Revisions to Disability Hearing Procedures Policy (dated February 8, 2016)

March 16, 2016 Page 1 of 1 Disability Retirement Hearing Policies

PASADENA FIRE & POLICE RETIREMENTSYSTEM

HEARING PROCEDURES

FOR CALPERS SAFETY MEMBERSDISABILITY HEARINGS

Approved by the Board: __________, 2016

Attachment 1

GUIDELINES FOR PROCESSINGDISABILITY RETIREMENT APPLICATIONS

INITIAL APPLICATIONS

GENERALI.

The Retirement Board is responsible for hearing and determining all facts pertaining todisability retirement applications for local safety members of the California PublicEmployees’ Retirement System (PERS) (Government Code § 21156(b)(1)). Suchapplications are decided consistent with applicable provisions of the rules containedherein and the California Government Code. Unless otherwise stated, all citations toCode provisions refer to the California Government Code.

INITIATING THE APPLICATIONII.

PERS ApplicantsA.

The applicant, or any person acting on his or her behalf, may file an applicationdirectly with the PERS Board of Administration, which then forwards theapplication to the Retirement Board, with instructions to complete itsdetermination within six (6) months of receipt of the application, unlessotherwise waived by applicant. (Government Code §§ 21152, 21154, and21157).

Action of Office or Department HeadB.

The head of the office or department in which the applicant was last employedmay also initiate the application for disability retirement. (Government Code §21152/PMC § 2.250.130(a)). In that case, the office or department head shallfile directly with the PERS Board of Administration.

Action of CityC.

The City Council or an official designated by the City may also initiate theapplication for disability retirement. (Government Code § 21152(c)). In thatcase, the City Council or designated official shall file directly with the PERSBoard of Administration.

SCHEDULING OF HEARINGIII.

The Secretary of the Retirement Board (the “Secretary”) shall submit theA.application, filed in accordance with II.A. or B. above, to the Retirement Boardat a subsequent regular scheduled meeting for the setting of a hearing date.

Once a hearing date has been set by the Retirement Board, the Secretary shallB.notify the applicant and City of the hearing date within 10 days. They shall also

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If the Secretary is advised by the applicant or his/her attorney in writing at leastD.ten (10) days in advance of the hearing that the scheduled date or time isinconvenient,1 the matter may be calendared for the next succeeding regularmeeting, or for a date mutually agreeable to the parties, at the discretion of theRetirement Board.

The Retirement Board shall make its best faith effort to schedule the hearing andE.make a determination within six months of the date after receipt of theapplication, unless the applicant waives the above requirement. (GovernmentCode § 21157).

HEARING PROCEDURESIV.

The Retirement Board shall follow the procedures outlined below in conductingA.hearings on disability applications:

The title of the matter shall be announced by the Chair of the Retirement1.Board (the “Chair”).

If an applicant is not present in the meeting room, the Retirement Board2.shall make inquiries outside of the meeting room to ascertain whether or

be provided with a copy of the Hearing Procedures and the DocumentProcedures.

Medical reports are required and must be received by the Secretary at least tenC.(10) days prior the date of the hearing. The Secretary requires the submission ofeight (8) copies of medical or other relevant reports from the City’s designatedrepresentative, and from the applicant or his/her attorney. After receipt of thereports, the Secretary distributes copies to members of the Retirement Board.The party submitting reports shall assume service of same upon the opposingparty. In extraordinary circumstances, where non-compliance was not within thecontrol of the applicant or the City, the Retirement Board at its discretion, maycontinue the matter for failure to submit medical reports or legal briefs on timeor may waive the time limit requirements.

1 A date may be inconvenient, for example, due to the illness of a party, court-calendarconflict of participating counsel, or insufficient time to investigate or prepare the case.

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Applicants shall be sworn prior to giving any testimony. Applicants shall3.have the right to testify in person, and shall be subject to cross-examination only by members of the Retirement Board. All otherpersonal testimony is subject to the following: In the event theRetirement Board determines, in its sole discretion, that it needs furtherinformation concerning the matter and that such information may beprovided by the personal testimony of other persons, the RetirementBoard may allow or require the personal testimony of any other person,including, but not limited to medical experts. The Retirement Board shallso announce, and the hearing shall be deferred for a reasonable time toallow the parties to arrange for personal testimony of such witnesses.

3. The applicant may request a closing of the hearing to protect privacy4.of health or other private information. The request must be made prior tocommencement of testimony.

4. The Chair shall call for the moving party, generally the applicant, or5.his/her attorney to present his/her arguments, facts or documentaryevidence. Since the members of the Retirement Board have received andreviewed the file and documentary evidence in advance, the moving partyshall limit his or her remarks to the extent possible, and in no event shalla presentation last more than fifteen (15) minutes without RetirementBoard approval.

5. The Chair shall call for the opposing or responding party to present6.his/her argument, facts or documentary evidence. Since the members ofthe Retirement Board have received and reviewed the file anddocumentary evidence in advance, the moving party shall limit his or herremarks to the extent possible, and in no event shall a presentation lastmore than fifteen (15) minutes without Retirement Board approval.

not the applicant is present for the hearing.

Applicants shall be sworn prior to giving any testimony. Applicants shall1.have the right to testify in person, and shall be subject to cross-examination only by members of the Retirement Board. All otherpersonal testimony is subject to the following: In the event theRetirement Board determines, in its sole discretion, that it needs furtherinformation concerning the matter and that such information may beprovided by the personal testimony of other persons, the RetirementBoard may allow or require the personal testimony of any other person,including, but not limited to medical experts. The Retirement Board shallso announce, and the hearing shall be deferred for a reasonable time toallow the parties to arrange for personal testimony of such witnesses.

6. The Chair may call for statements under oath from other persons with7.relevant information regarding the application.

7. The Chair shall call for questions or comments from the Retirement8.Board directed either to the applicant or the City’s designatedrepresentative.

8. The moving party shall be given an opportunity for rebuttal at the9.conclusion of the questions or statements. Since the members of theRetirement Board have received and reviewed the file and documentaryevidence in advance, the moving party shall limit his or her remarks tothe extent possible, and in no event shall a presentation last more thanfifteen (15) minutes without Retirement Board approval.

9. The Chair shall declare the evidentiary portion of the hearing closed10.and provide an opportunity for discussion in which members of theRetirement Board state their opinions of the facts and evidence beforethem.

10. By motion, the Retirement Board shall take action on the application.11.

11. The Chair shall announce the decision of the Retirement Board,12.briefly summarizing the reasons for that decision on the public record(e.g., medical reports establish that the applicant’s job related disability ispermanent and stationary, and the City does not oppose this application).

12. The Chair shall instruct the Fire & Police Retirement System’s13.Counsel to prepare a Resolution documenting the Retirement Board’sdecision.

13. The Said Resolution shall be submitted to the members of the14.Retirement Board for approval and execution.

The Resolution shall address whether the applicant is substantiallya.incapacitated from performing the usual duties of his or herposition, whether the incapacity will exist for a permanent orextended and uncertain duration of six months or longer, andwhether the disability is considered “industrial.”

The Resolution shall address the last day of compensation.b.

b. The Resolution shall address the primary disabling conditionc.(e.g. orthopedic, cardiac, psychological, etc.).

c. The Resolution shall address the effective date of retirement.d.

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d. The Resolution shall address whether there is a third partye.liability related to the injury that caused the disability.

e. The Resolution shall address whether advanced disabilityf.pension payments will be paid, specifying the monthly amount, ifany.

14. Thereafter, fully executed copies shall be transmitted by the Secretary15.within a reasonable amount of time to PERS, the applicant or his/herattorney, the City Attorney, and the City’s Workers’ CompensationSection, and the original shall be placed on file in the office of theSecretary.

If the Retirement Board denied the applicant’s disability retirement16.application, the Chair shall direct the Fire & Police Retirement System’sCounsel to prepare a denial notice to the application informing theapplicant of the decision and his or her right to appeal the decision to theRetirement Board within 30 days of receipt of the notice by filing awritten request in accordance with XIII.A below.

BURDEN OF PROOFV.

The burden of proof for disability cases under Government Code § 21156 is as follows:

The available information must show to the satisfaction of the Retirement BoardA.that the applicant is substantially incapacitated physically or mentally from theperformance of his or her usual job duties, andsuch that the member is eligiblefor disability retirement.

If the applicant is asserting an industrial disability, the available information mustB.show to the satisfaction of the Retirement Board that the applicant’s disability isa result of injury or disease arising out of and in the course of his or heremployment, andsuch that the member is eligible to retirementretire for industrialdisability.

MEDICAL REPORTS AS EVIDENCEVI.

The Retirement Board prefers that medical opinions be provided in the form ofA.written reports. These reports shall include:

The date of examination;1.

History of the injury or illness;2.

Applicant’s present complaint;3.

Source of all facts set forth in the history and complaints;4.

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Findings on examination;5.

Opinion as to the extent of disability and work limitations, if any;6.

Cause of disability;7.

Medical treatment indicated;8.

Opinion as to whether or not permanent disability has resulted from the9.injury or illness, or whether disability is of an extended and indefiniteduration (if disability is stationary, a description of the disability with acomplete evaluation);

Whether retirement is advised;10.

The reason for the opinion; and11.

A summary of the qualifications of the medical expert, including the12.expert’s familiarity with matters relating to police and fire safety officers.

CONTINUING DUTY TO FILE MEDICAL REPORTSVII.

If an applicant or his or her attorney, or the City’s designated representative, acquiresadditional medical reports after the initial submission of such reports, the applicant orhis or her attorney shall forward the additional copies of reports to the Secretary. TheSecretary will then distribute the copies to the Retirement Board. However, theRetirement Board reserves the right to refuse to consider materials determined not to betimely. The Secretary will then distribute the copies to the Retirement Board.

NON-MEDICAL EVIDENCEVIII.

Where non-medical written evidence is filed by either party in lieu of oral evidence,copies thereof shall be prepared by the party and delivered to the Secretary at least ten(10) business days before the hearing, unless a satisfactory showing is made that suchreports and records were not available for service within said time.

RECORD OF PROCEEDINGSIX.

The Secretary shall have an audio recording made of the hearing. At the discretion ofthe Secretary, the services of a court reporter may be procured to record theproceeding. The Secretary shall also be responsible for receiving and distributingdocuments from the applicant, or the City’s designated representative, to the RetirementBoard; giving notice required under these guidelines; identifying and maintainingdocumentary evidence offered at the hearing, and retaining the records after theRetirement Board makes its determination.

CLOSING OF THE HEARINGX.

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Upon the closing of the hearing, the matter will stand submitted by all parties.Accordingly, any arguments or points not made at the hearing shall be deemed waived,and any evidence not presented at the hearing shall not be admissible at a later date.The Retirement Board may, at its discretion, adjourn to deliberate in private beforeannouncing its decision.

XI. REQUEST FOR RECONSIDERATION

The Retirement Board may not reconsider decisions regarding PERS applicants.Appeals from such determinations must be in accordance with Government Code §21156 and filed with PERS.

XII. POST HEARING JURISDICTIONXI.

The Retirement Board may require one who has received a disability retirementA.and who is under the age of voluntary retirement to undergo a medicalexamination to determine whether the applicant is no longer incapacitated forservice in the position held by him/her when retired for disability (GovernmentCode §§ 21172, 21175).

If the applicant refuses to submit to a medical examination, the applicant’sB.pension may be discontinued forthwith until his or her withdrawal of suchrefusal, and if the applicant continues such refusal for one (1) year, his or herdisability retirement allowance may be canceled.

REQUESTS FOR RECONSIDERATION/APPEALS

GENERALXII.

The Retirement Board has the authority to reconsider decisions regarding PERSapplicants who are local safety members. Appeals from such determinations must befiled with the Retirement Board and may not be filed with or considered by PERS.Appeals shall be conducted in accordance with the Administrative Procedures Act,codified at Government Code § 11500 et. seq. (Government Code § 21156(b)(2)).

INITIATING THE APPEALXIII.

Upon receipt of a denial notice described in IV.A.16 above, applicant mayA.initiate an appeal by filing a written statement of issues with the Secretarysetting forth the legal and factual basis for appealing the Retirement Board’sdecision. The applicant must file said statement of issues within 30 days ofreceipt of the denial notice.

If the applicant’s statement of issues is insufficient, the Retirement Board mayB.request additional information from the applicant, to be provided by theapplicant within 10 days of the Retirement Board’s request.

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At any time before the appeal is set for hearing, the Retirement Board mayC.permit the applicant to file an amended or supplemental statement of issues.

PRESIDING AUTHORITYXIV.

The Retirement Board may either request an Administrative Law Judge to hearA.the case alone, or hear the case itself with the assistance of an AdministrativeLaw Judge. (Government Code §11512(a)).

If the Retirement Board hears the case itself, the Administrative Law JudgeB.shall, upon request, advise the Retirement Board on matters of law. TheRetirement Board shall exercise all other powers relating to the conduct of thehearing but may delegate any or all of them to the Administrative Law Judge.

When an Administrative Law Judge alone hears a case, he or she shall exerciseC.all powers relating to the conduct of the hearing.

SCHEDULING THE HEARINGXV.

As soon as administratively feasible after receipt of the applicant’s request forA.appeal and statement of issues, the Retirement Board, Secretary, or legal counselshall contact the Office of Administrative Law Judges to request a hearing.

The Retirement Board shall deliver or mail a notice of hearing to all parties atB.least 10 days prior to the hearing that shall be substantially in the form describedin Government Code §11509.

The time and place of the hearing shall be subject to the availability of anC.Administrative Law Judge.

The hearing shall be held at a hearing facility maintained by the Office ofD.Administrative Law Judges closest to the City, a place selected by theRetirement Board that is closer to the City, or a place selected by agreement ofthe parties. The applicant may file a motion for a change in the place of hearingwith the Administrative Law Judge within 10 days after service of a notice ofhearing.

PLEADINGS AND FILINGSXVI.

Pleadings, motions, and any other filings made in the course of the hearing mustA.include the names of the parties. Otherwise, such documents are not required tobe in any particular form.

Filings must be served on all parties and the presiding authority by mail or inB.person.

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The Retirement Board shall file a response to the applicant’s statement of issuesC.along with the notice of hearing described in XIV.B above.

At any time before the appeal is set for hearing, the Retirement Board mayD.permit the applicant to file an amended or supplemental statement of issues.

The parties may file the following motions with the presiding authority duringE.the course of the appeal:

Motion to compel discovery made within the time limits of Government1.Code §11507.7.

Motion for a change in the place of hearing made within the time limits2.of Government Code § 11508(c).

Motion to hold a prehearing conference.3.

Motion for separate hearing of any issue for convenience or to avoid4.prejudice.

Motion for intervention.5.

Motion to correct clerical error in decision.6.

Motion for reconsideration of all or part of the case made within the7.time limits of Government Code §11521.

Motion to vacate decision made within the time limits of Government8.Code §11520(c).

Any other motions permitted by a presiding Administrative Law Judge.9.

ORDERS BY ADMINISTRATIVE LAW JUDGEXVII.

The Administrative Law Judge may order a prehearing conference and/or aA.settlement conference, and may issue such other orders as needed.

CONDUCT OF HEARINGXVIII.

If the Retirement Board is the presiding authority, the hearing shall beA.conducted using procedures similar to those outlined in IV above. TheRetirement Board may request assistance from the Administrative Law Judgewhile conducting the hearing.

If an Administrative Law Judge is the presiding authority, he or she shallB.exercise all powers relating to the conduct of the hearing.

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CONTINUANCESXIX.

The Administrative Law Judge that has been assigned to the hearing may grantA.continuances for good cause shown in accordance with Government Code§11524.

EVIDENCEXX.

GenerallyA.

The hearing need not be conducted according to technical rules relating toevidence and witnesses, except as provided in this section XVIII. Any relevantevidence shall be admitted if it is the sort of evidence on which responsiblepersons are accustomed to rely in the conduct of serious affairs, regardless ofthe existence of any common law or statutory rule which might make improperthe admission of the evidence over objection in civil actions.

Hearsay evidence may be used for the purpose of supplementing or1.explaining other evidence but over timely objection shall not be sufficientin itself to support a finding unless it would be admissible over objectionin civil actions. An objection is timely if made before submission of thecase or on reconsideration.

The rules of privilege shall be effective to the extent that they are2.otherwise required by statute to be recognized at the hearing.

The presiding authority has discretion to exclude evidence if its probative3.value is substantially outweighed by the probability that its admission willnecessitate undue consumption of time.

Official notice may be requested for any fact which may be judicially4.noticed by the courts of California.

Discovery RequestsB.

Prior to the hearing and within 30 days after service of the initial1.statement of issues, or within 15 days after service of any additionalpleading, either party is entitled, upon written request to the other party,to:

Obtain the names and addresses of witnesses to the extent knowna.to the other party, including, but not limited to, those intended tobe called to testify at the hearing; and

Inspect and make a copy of any of the following in possession orb.custody or under the control of the other party (except for those

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privileged from disclosure by law or protected as attorney workproduct):

A statement pertaining to the subject matter of the(i)proceeding made by any party to another party or person;

Statements of witnesses then proposed to be called by the(ii)party and of other persons having personal knowledge ofthe acts, omissions or events which are the basis for theproceeding, not included in (i) above;

All writings, including, but not limited to, reports of(iii)mental, physical and blood examinations and things whichthe party then proposes to offer in evidence;

Any other writing or thing which is relevant and which(iv)would be admissible in evidence;

Investigative reports made by or on behalf of the(v)Retirement Board or other party pertaining to the subjectmatter of the proceeding, to the extent that these reports(1) contain the names and addresses of witnesses or ofpersons having personal knowledge of the acts, omissionsor events which are the basis for the proceeding, or (2)reflect matters perceived by the investigator in the courseof his or her investigation, or (3) contain or include byattachment any statement or writing described in (a) to(e), inclusive, or summary thereof.

Oral EvidenceC.

Oral evidence shall be taken only on oath or affirmation.1.

Each party shall have the following rights:2.

to call and examine witnesses;a.

to introduce exhibits;b.

to cross-examine opposing witnesses on any matter relevant toc.the issues even though that matter was not covered in the directexamination;

to impeach any witness regardless of which party first called himd.or her to testify; and

to rebut the evidence against him or her.e.

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If the applicant does not testify on his or her own behalf he or she may3.be called and examined as if under cross-examination.

AffidavitsD.

At any time 10 or more days prior to a hearing or a continued hearing,1.any party may mail or deliver to the opposing party a copy of anyaffidavit which it proposes to introduce in evidence, together with thenotice required by Government Code §11514(b).

Unless the opposing party, within seven days after such mailing or2.delivery, mails or delivers to the proponent a request to cross-examine anaffiant, the right to cross-examine such affiant is waived and the affidavit,if introduced in evidence, shall be given the same effect as if the affianthad testified orally. If an opportunity to cross-examine an affiant is notafforded after request therefor is made as herein provided, the affidavitmay be introduced in evidence, but shall be given only the same effect asother hearsay evidence.

A ruling of the Administrative Law Judge admitting or excluding evidence isE.subject to review in the same manner and to the same extent as theAdministrative Law Judge’s proposed decision in the proceeding, as set forth inXXII below.

RECORD OF PROCEEDINGSXXI.

The hearing shall be recorded by a stenographic reporter or, upon the consent ofA.all parties, electronically.

The complete record includes the pleadings, all notices and orders issued by theB.agency, any proposed decision by an Administrative Law Judge, the finaldecision, a transcript of all proceedings, the exhibits admitted or rejected, thewritten evidence, and any other papers in the case.

DECISIONXXII.

If the Retirement Board is the presiding authority:A.

No member of the Retirement Board who did not hear the evidence shall1.vote on the decision.

The Retirement Board shall issue its decision within 100 days of the2.hearing.

If an Administrative Law Judge is the presiding authority:B.

Within 30 days after the hearing, the Administrative Law Judge shall1.prepare a proposed decision in a form that may be adopted by the

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Retirement Board as the final decision in the case. Thirty days after thereceipt by the Retirement Board of the proposed decision, a copy of theproposed decision shall be filed by the Retirement Board as a publicrecord and a copy shall be served by the Retirement Board on each partyand his or her attorney. Such filing does not mean the Retirement Boardadopts the proposed decision.

Within 100 days of receipt of the Administrative Law Judge’s proposed2.decision, the Retirement Board may take one of the following actions. Ifit fails to act within 100 days of receipt of the proposed decision, theproposed decision shall be deemed adopted.

Adopt the proposed decision in its entirety.a.

Reduce or otherwise mitigate the proposed penalty and adopt theb.balance of the proposed decision.

Make technical or other minor changes in the proposed decisionc.and adopt it as the decision. Such action is limited to a clarifyingchange or a change of a similar nature that does not affect thefactual or legal basis of the proposed decision.

Reject the proposed decision and refer the case to the samed.Administrative Law Judge if reasonably available, or otherwise toanother Administrative Law Judge, to take additional evidence.The Administrative Law Judge shall prepare a revised proposeddecision based upon the additional evidence and the transcript andother papers that are part of the record of the prior hearing. Acopy of the revised proposed decision shall be furnished to eachparty and his or her attorney.

Reject the proposed decision, and decide the case upon thee.record, including the transcript, or upon an agreed statement ofthe parties, with or without taking additional evidence. Bystipulation of the parties, the Retirement Board may decide thecase upon the record without including the transcript. If theRetirement Board takes this action, all of the following provisionsapply:

A copy of the record shall be made available to the(i)parties. The Retirement Board may require payment offees covering direct costs of making the copy.

The Retirement Board shall not decide any case provided(ii)for in this subdivision without affording the parties theopportunity to present either oral or written argumentbefore the Retirement Board. If additional oral evidence is

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introduced before the Retirement Board, no member mayvote unless the member heard the additional oral evidence.

The authority of the Retirement Board to decide the case(iii)includes authority to decide some but not all issues in thecase.

The Retirement Board shall issue its final decision not(iv)later than 100 days after rejection of the proposeddecision. If the Retirement Board has ordered a transcriptof the proceedings, the Retirement Board shall issue itsfinal decision not later than 100 days after receipt of thetranscript. If the Retirement Board finds that a furtherdelay is required by special circumstance, it shall issue anorder delaying the decision for no more than 30 days andspecifying the reasons therefor. The order shall be subjectto judicial review pursuant to Government Code § 11523.

Copies of the decision shall be delivered to the parties personally or sent toC.them by registered mail.

The decision shall become effective 30 days after it is delivered or mailed to theD.applicant unless a reconsideration is ordered within that time, the RetirementBoard orders that the decision shall become effective sooner, or a stay ofexecution is granted.

JUDICIAL REVIEWXXIII.

Either party may seek judicial review of the presiding authority’s decision inA.accordance with the guidelines set forth in Government Code §11523.

Revision adopted by the Fire & Police Retirement Board: _______________, 2016

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PASADENA FIRE & POLICE RETIREMENTSYSTEM

DOCUMENT PROCEDURES

FOR CALPERS SAFETY MEMBERSDISABILITY HEARINGS

Approved by the Board: ________, 2016

24924.00002\24425772.2

Attachment 2

PROCEDURES FOR PRESENTINGDOCUMENTS IN CONNECTION WITH

DISABILITY RETIREMENT APPLICATIONSGENERALI.

The Retirement Board is responsible for hearing and determining all factsA.pertaining to disability retirement applications for local safety members of theCalifornia Public Employees’ Retirement System (PERS) (Government Code §21156(b)(1)). To assist the Retirement Board in its consideration of applicationsfor retirement, and to increase efficiency in processing applications, the followingprocedures shall apply.

The document procedures are in addition to the Retirement Board’s HearingB.Procedures, and are intended to provide guidance in connection with submissionof documents. In the event of any inconsistency between the DocumentProcedures and the Hearing Procedures, the Hearing Procedures shall apply.

EARLY FILING OF THE APPLICATIONII.

Applicants are strongly encouraged to file their application for retirement at leastA.one hundred twenty days prior to the desired hearing date.

An application may be withdrawn by the applicant or by the filing party (if anB.application was filed on the behalf of the applicant by the Office or DepartmentHead), at any time prior to the hearing date without penalty.

UNOPPOSED APPLICATIONSIII.

In unopposed matters, representatives of the City and of the applicant shallA.jointly present to the Retirement Board for its consideration the followingdocuments:

A written statement that the matter is unopposed.1.

All Permanent and Stationary reports.2.

The report of the Agreed Medical Examiner.3.

Representatives of the City and the applicant shall eliminate duplication ofB.reports and other materials submitted to the Retirement Board to the greatestextent possible.

124924.00002\24425772.2

OPPOSED CASESIV.

COORDINATION WITH WORKERS COMPENSATION CASEA.

Any Workers Compensation case in which an Answer (as defined by1.Government Code § 21166) has been filed by the City shall be deemedan Opposed Case, subject to these Document Procedures.

In the event the City withdraws its opposition in the Workers2.Compensation case, or that matter is settled, the City shall so notify theapplicant and the Retirement Board. The matter will then proceed as anUnopposed Case.

DOCUMENTS TO BE SUPPLIED BY THE PARTIES:B.

The applicant shall supply the Retirement Board with each of the1.following documents:

A brief statement of any known factual issues, and a citation toa.the report and page on which the facts relied upon by theapplicant appear.

Treating Physician Report (if applicable).b.

Applicant’s Qualified Medical Examiner Report (if applicable).c.

FPRS Disability Hearing Summary Form, with all “Applicant”d.sections completed.

The City shall supply the Retirement Board with each of the following2.documents:

A brief statement of any known factual issues, and a citation toa.the report and page on which the facts relied upon by the Cityappear.

Treating Physician Report (if applicable).b.

City’s Qualified Medical Examiner Report (if applicable).c.

Agreed Medical Examiner Report.d.

FPRS Disability Hearing Summary Form, with all “City” sectionse.completed.

224924.00002\24425772.2

NUMBER OF COPIES AND RESPONSIBILITIES:C.

Each party shall supply the Retirement Board with eight (8) copies of1.their documents. The copies shall be supplied to the Retirement Boardnot later than ten (10) days prior to the scheduled hearing date.

The parties shall coordinate prior to submission of their documents to2.eliminate duplication of copies of documents to the greatest extentconsistent with clear presentation of their respective positions.

FAILURE TO COMPLY WITH TIME LIMITS.D.

In the event the Retirement Board does not receive documents in accordancewith the Document Procedures, the Retirement Board, in its discretion mayeither:

Reschedule the hearing; or1.

Proceed with the hearing as an Unopposed Case.2.

REQUESTS FOR RECONSIDERATION/APPEALSV.

DOCUMENTS TO BE SUPPLIED BY THE PARTIES:A.

The applicant shall supply the Retirement Board with each of the1.following documents:

Written request for appeal including a statement of issues settinga.forth the legal and factual basis for appealing the RetirementBoard’s decision.

All other documents shall be submitted as exhibits to pleadings, petitions,2.motions, etc. in the course of the appeals hearing, in accordance with theHearing Procedures.

Revision adopted by the Fire & Police Retirement Board: _____________, 2016

324924.00002\24425772.2

To:

From:

Date:

Re:

l~lk BEST BEST & KRIEGER::!

ATTORNEYS AT LAW

Memorandum

Retirement Board Pasadena Fire and Police Retirement System Isabel C. Safie

February 8, 2016

Revisions to Disability Hearing Procedures Policy

BACKGROUND

The California Public Employees' Retirement Law ("PERL") requires that a contracting agency of the California Public Employees' Retirement System ("CalPERS") determine whether an employee classified as a local safety member is disabled for purposes of PERL and whether such disability is "industrial" within the meaning of PERL. By action dated March 21, 1978, the City Council of the City of Pasadena ("City") delegated its authority to make such determinations to the Retirement Board ("Board") of the Pasadena Fire and Police Retirement System ("FPRS"), pursuant to California Government Code ("Gov't. Code") Section 21173.

The Board previously adopted two policies governing CalPERS disability determinations: Hearing Procedures for CalPERS Safety Members Disability Hearings ("Hearing Procedures") and Document Procedures for CalPERS Safety Members Disability Hearings ("Document Procedures"). In light of the Board's recent determination that a local safety member was not substantially incapacitated, within the meaning of PERL, for the performance of his usual job duties, we were asked to prepare the required notification to the member advising him of his appeal rights.

In the course of reviewing applicable law and guidance, we discovered that the existing Hearing Procedures do not include certain required elements. Most importantly, the current Hearing Procedures state that requests for reconsideration (referred to in this memorandum as "appeals") must be heard by CalPERS, but applicable law requires that the Board, rather than CalPERS, hear such appeals. This memorandum explains necessary corrections to the Hearing Procedures and the legal analysis behind the recommended revisions. Consistent with the recommendations in this memorandum, we will prepare revised policies for Board approval at its March 2016 meeting.

RECOMMENDED REVISIONS

The following items in the current Hearing Procedures either require revision or are not addressed.

1. Body that Hears Appeals

As stated above, the current Hearing Procedures require that appeals be filed with CalPERS. However, applicable law and CalPERS guidance all confirm that the local agency or its delegate (in this case, the Board) is responsible for hearing appeals, not CalPERS.

24924.00002\24447747.2

DATE: 3/16/2016ITEM#: 8. Attachment 3

DATE: 2/17/2016ITEM#: 13a

lllk BEST BEST & KRIEGER :3

ATTORNEYS AT LAW

PERL does not indicate by what body the appeal must be heard. Rather, Gov't. Code Section 21156(b)(2) simply states, "the local safety member may appeal the determination of the governing body. Appeal hearings shall be conducted by an administrative law judge of the Office of Administrative Hearings pursuant to [the Administrative Procedures Act at] Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of this title." However, other CalPERS guidance explains that for local safety members, "If it is determined that you are not disabled, you may appeal the decision to the local authority that made the determination-not CalPERS."1

(Emphasis added.)

According to the Administrative Procedures Act ("APA"), "Every hearing in a contested case shall be presided over by an administrative law judge. The agency itself shall determine whether the administrative law judge is to hear the case alone or whether the agency itself is to hear the case with the administrative law judge."2 (Emphasis added.) Note that when the APA uses the term "agency itself," the powers listed may not be delegated "unless the statutes relating to the particular agency authorize the delegation of the agency's power to hear and decide."3 In this case, the statutes relating to the City (specifically, Gov't. Code Section 21173) authorize the delegation of the City's power to hear and decide. As discussed above, the City has delegated its authority to make determinations regarding disability to the Board. Therefore, under PERL and the AP A, the Board has the authority to hear appeals in the presence of an administrative law judge, or to have an administrative law judge hear appeals alone. However, even if the Board chooses to have the administrative law judge hear appeals alone, the Board (through its Administrator) must receive the appeal and arrange for the hearing.

We recommend that the Hearing Procedures be revised to require appeals to be filed with the Board, and heard by or in the presence of an administrative law judge in accordance with the APA.

For the Board's reference, to set a hearing date with an administrative law judge, the Board will need to make a request to the Office of Administrative Hearings in accordance with APA regulations.4 An appeal hearing will be scheduled based on the availability of an administrative law judge, but based on AP A regulations will presumably take place within 6 months of a request. Hearings may either be at a hearing facility maintained by the Office of Administrative Hearings or a place selected by the Board that is closer to the location where the local safety member resides.5

1 "A Guide to Completing Your CalPERS Disability Retirement Election Application" (available at https://www.calpers.ca.gov/docs/forms-publications/disability-retirement-pub.pdf). 2 Gov't. Code Section l 1512(a). 3 Gov't. Code Section 11 SOO(a). 4 1 C.C.R. Section 1018 et. seq. 5 Gov't. Code Section 11508.

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IMlk BEST BEST & KRIEGER :i

ATTORNEYS AT LAW

Therefore, we further recommend that the Hearing Procedures be revised to include procedures for requesting an administrative law judge that comply with the APA's regulatory requirements.

2. Time Limit on Filing Appeals

The existing Hearing Policies do not prescribe a time within which a local safety member may file an appeal to a determination of the Board that he or she is not substantially incapacitated, within the meaning of PERL, for the performance of his or her usual job duties.

Neither the APA nor PERL provide any specific timing guidelines regarding when an individual must file his or her appeal. Nor does the CalPERS Public Agency & Schools Reference Guide provide a time limit for filing appeals; it simply states, "Notification to the member of their right to appeal the agency's decision and request a hearing within a designated number of days from the date of the notice shall be by certified mail, return receipt requested, or by personal service." (Emphasis added.) Because applicable law does not prescribe a specific time for filing appeals, we look to analogous guidance from CalPERS. On its disability application form, CalPERS requires that appeals (by miscellaneous members) be submitted within 30 days of the date of the determination letter.

We recommend that the Hearing Procedures be revised to require individuals to file appeals within 30 day of receiving the Board's determination regarding disability. We also recommend revising the Document Procedures to include a section regarding the documents to be supplied by parties in the event of an appeal.

3. Procedures for Appeals Hearings

The AP A prescribes additional procedures for conducting hearings and for issuing decisions after a hearing. For example, if the Board chooses to hear the case itself, the administrative law judge may assist and advise the Board during the hearing. Decisions must be issued within 100 days after the hearing. 6 On the other hand, if the Board chooses to have the administrative law judge hear the proceeding alone, the judge must submit a proposed decision to the Board for review and approval within 30 days after the hearing, at which time the Board may take one of various permitted actions on the proposed decision. 7

We recommend revising the Hearing Procedures to include the procedural and timing requirements prescribed by the AP A.

6 Gov't. Code Section l 1517(c). 7 Gov't. Code Section l 1517(c).

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Policy Index as of 3/1/2015: 9% Russell 1000 Value, 9% Spliced Vanguard Large Growth, 4% Russell 2000, 20% MSCI EAFE, 33% BC Agg, 5% BC US TIPS, 5% S&P/LSTA Leveraged Loan, 10% NCREIF-ODCE, 5% CPI + 5%. Pooled Cash not included in Total Fund calculation. CPI LOCAL (LA) includes Los Angeles-Riverside-Orange County. FY: 6/30. Voya Senior Loan funded 6/27/2014. All manager returns shown net of fees. Effective 3/1/2015 Atlanta SMID Cap strategy changed to Atlanta Small Cap Core strategy. First American Treasury funded 12/2/15. First American Treasury Obligation underwent share class change on 2/18/2016. All data is preliminary.

Pasadena Fire & Police Retirement System 1

Current % Policy %_

Domestic Equity LargeCap Growth $10,360,486 8.5% $10,950,078 9.0%

Domestic Equity LargeCap Value $9,770,700 8.0% $10,950,078 9.0%

Domestic Equity SmallCap Core $4,607,895 3.8% $4,866,701 4.0%

International Equity $20,309,700 16.7% $24,333,507 20.0%Domestic Fixed IncomeCore $41,931,366 34.5% $40,150,287 33.0%

Domestic Fixed IncomeBank Loans $7,322,108 6.0% $6,083,377 5.0%

Domestic Fixed IncomeReal Return $4,384,886 3.6% $6,083,377 5.0%

Real Estate $17,206,103 14.1% $12,166,754 10.0%Alternative Investment $5,752,352 4.7% $6,083,377 5.0%Cash and Equivalents $21,942 0.0% $0 0.0%Total $121,667,537 100.0% $121,667,537 100.0%

Pasadena Fire & Police Retirement SystemExecutive Summary - Preliminary (Net of Fees) Period Ending: February 29, 2016

Market Value % ofPortfolio 1 Mo Fiscal

YTD YTD 1 Yr_

Total Fund 121,667,537 100.0 -0.4 -5.3 -3.0 -4.6Policy Index -0.1 -3.4 -2.4 -3.2Total Domestic Equity 24,739,082 20.3 -0.4 -9.0 -6.3 -8.6

S&P 500 -0.1 -4.9 -5.1 -6.2Vanguard Growth Index Ins 10,360,486 8.5 -0.4 -6.2 -6.3 -7.6

Spliced Vanguard Large Cap Growth Index -0.4 -6.2 -6.3 -7.5MSCI US Prime Market Growth -0.3 -7.1 -6.9 -7.7

Dodge & Cox Stock 9,770,700 8.0 -0.7 -12.8 -7.5 -12.1Russell 1000 Value 0.0 -8.3 -5.2 -9.4

Atlanta Capital Management Company 4,607,895 3.8 0.3 -6.7 -3.5 -3.1Russell 2000 0.0 -16.8 -8.8 -15.0Russell 2500 0.7 -14.1 -7.3 -13.3

Total International Equity 20,309,700 16.7 -2.9 -20.1 -10.3 -20.0MSCI EAFE -1.8 -14.4 -8.9 -15.2MSCI ACWI ex USA -1.1 -16.5 -7.9 -17.4Dodge & Cox Intl Stock 9,591,201 7.9 -2.9 -24.9 -12.0 -25.6

MSCI ACWI ex USA -1.1 -16.5 -7.9 -17.4American Funds Europacific Growth R6 10,718,499 8.8 -2.9 -15.3 -8.8 -14.2

MSCI ACWI ex USA -1.1 -16.5 -7.9 -17.4Total Domestic Fixed 53,638,359 44.1 0.3 1.2 1.3 0.6

Barclays Aggregate 0.7 2.8 2.1 1.5Metropolitan West Core Plus Fixed Income 41,931,366 34.5 0.4 2.0 1.6 1.1

Barclays Aggregate 0.7 2.8 2.1 1.5Voya Senior Loan Fund 7,322,108 6.0 -0.4 -2.6 -0.8 -1.5

S&P/LSTA Leveraged Loan Index -0.5 -4.6 -1.2 -3.5Vanguard Inflation-Protected Securities Ins 4,384,886 3.6 1.1 1.0 2.6 -0.7

Barclays US TIPS 1.1 0.8 2.6 -0.8

Policy Index as of 3/1/2015: 9% Russell 1000 Value, 9% Spliced Vanguard Large Growth, 4% Russell 2000, 20% MSCI EAFE, 33% BC Agg, 5% BC US TIPS, 5% S&P/LSTA Leveraged Loan, 10% NCREIF-ODCE, 5% CPI + 5%. Pooled Cash not included in Total Fund calculation. CPI LOCAL (LA) includes Los Angeles-Riverside-Orange County. FY: 6/30. Voya Senior Loan funded 6/27/2014. All manager returns shown net of fees. Effective 3/1/2015 Atlanta SMID Cap strategy changed to Atlanta Small Cap Core strategy. First American Treasury funded 12/2/15. First American Treasury Obligation underwent share class change on 2/18/2016. All data is preliminary.

Pasadena Fire & Police Retirement System 2

Market Value % ofPortfolio 1 Mo Fiscal

YTD YTD 1 Yr_

Total Real Estate 17,206,103 14.1 13.7NCREIF-ODCE N/A N/A N/A 15.0NCREIF Property Index N/A N/A N/A 13.3Invesco Core Real Estate 17,206,103 14.1 N/A N/A N/A 13.7

NCREIF-ODCE N/A N/A N/A 15.0Total Alternatives 5,752,352 4.7 -0.1 -10.0 -1.5 -11.8

CPI + 5% N/A N/A N/A 5.5CPI (UNADJUSTED) N/A N/A N/A 0.9CPI LOCAL (LA) N/A N/A N/A 2.2PIMCO All Asset Ins 5,752,352 4.7 -0.1 -10.0 -1.5 -11.8

CPI + 5% N/A N/A N/A 5.5HFRI Fund of Funds Composite Index -1.2 -6.6 -3.8 -5.7

Cash 21,942 0.0 0.0 0.1 0.0 0.1Citi 3mth Treasury Bill 0.0 0.0 0.0 0.1First American Treasury Obligation Z 21,942 0.0 0.0 0.0 0.0 0.0

Citi 3mth Treasury Bill 0.0 0.0 0.0 0.1XXXXX

Pasadena Fire & Police Retirement SystemExecutive Summary - Preliminary (Net of Fees) Period Ending: February 29, 2016

N/A N/A N/A

Pasadena Fire & Police Retirement System 3

Pasadena Fire & Police Retirement SystemExecutive Summary with Pooled Cash - Preliminary Period Ending: February 29, 2016

Total MarketValue

% ofPortfolio

DomesticEquity LargeCap Growth

DomesticEquity Large

Cap Value

DomesticEquity Small

Cap Core

InternationalEquity

DomesticFixed Income

Core

DomesticFixed Income

Bank Loans

DomesticFixed Income

Real ReturnReal Estate Alternative

InvestmentCash and

Equivalents_

Total Fund Total Domestic Equity

Vanguard Growth Index Ins $10,360,486 8.3% $10,360,486Dodge & Cox Stock $9,770,700 7.9% $9,770,700Atlanta Capital Management Company $4,607,895 3.7% $4,607,895

Total International Equity Dodge & Cox Intl Stock $9,591,201 7.7% $9,591,201American Funds Europacific Growth R6 $10,718,499 8.6% $10,718,499

Total Domestic Fixed Metropolitan West Core Plus Fixed Income $41,931,366 33.8% $41,931,366Voya Senior Loan Fund $7,322,108 5.9% $7,322,108Vanguard Inflation-Protected Securities Ins $4,384,886 3.5% $4,384,886

Total Real Estate Invesco Core Real Estate $17,206,103 13.9% $17,206,103

Total Alternatives PIMCO All Asset Ins $5,752,352 4.6% $5,752,352

Cash First American Treasury Obligation Z $21,942 0.0% $21,942

Pooled Cash $2,536,000 2.0% $2,536,000Total $124,203,537 100.0% $10,360,486 $9,770,700 $4,607,895 $20,309,700 $41,931,366 $7,322,108 $4,384,886 $17,206,103 $5,752,352 $2,557,942

XXXXX

MARCH  16,  2016

Asset Allocation Review Presentation To

Pasadena Fire & Police Retirement System

10 year return & risk assumptions

Investors wishing to produce expected geometric return forecasts for their portfolios should use the arithmetic return forecasts provided here as inputs into that calculation, rather than the single‐asset‐class geometric return forecasts.  This is the industry standard approach, but requires a complex explanation only a heavy quant could love, so we have chosen not to provide further details in this document – we will happily provide those details to any readers of this who are interested. 

*Historical volatility of inflation. This is not a forecast.

2March 16, 2016PFPRS

Asset Class Index ProxyTen Year Return Forecast Standard Deviation 

ForecastSharpe Ratio (g)

ForecastSharpe Ratio (a)

ForecastTen Year Historical Sharpe Ratio (g)

Ten Year Historical Sharpe Ratio (a)Geometric  Arithmetic 

EquitiesUS Large S&P 500 5.9% 7.0% 15.1% 0.26 0.33 0.40 0.46US Small Russell 2000 5.2% 7.0% 19.8% 0.16 0.25 0.28 0.37International Developed MSCI EAFE 9.2% 10.8% 18.5% 0.39 0.47 0.10 0.19International Small MSCI EAFE Small Cap 8.6% 10.4% 19.7% 0.33 0.43 0.17 0.26Emerging Markets MSCI EM 11.3% 13.6% 23.6% 0.39 0.49 0.10 0.22Global Equity MSCI ACWI 7.7% 9.1% 16.9% 0.34 0.42 0.21 0.29Private Equity Cambridge Private Equity 8.2% 11.0% 23.7% 0.26 0.37 1.01 1.08Fixed IncomeCash 30 Day T‐Bills 2.0% 2.0% 0.6% ‐ ‐ ‐US TIPS Barclays US TIPS 5 ‐ 10 2.7% 2.9% 6.3% 0.11 0.14 0.43 0.45US Treasury Barclays Treasury 7 ‐ 10 year 2.3% 2.5% 6.5% 0.04 0.07 0.67 0.68Global Sovereign ex US Barclays Global Treasury ex US 2.6% 2.9% 7.8% 0.07 0.11 0.24 0.28Core Fixed Income Barclays US Aggregate Bond 3.2% 3.3% 3.2% 0.37 0.40 1.02 1.00Core Plus Fixed Income Barclays US Corporate IG 4.2% 4.4% 6.0% 0.33 0.40 0.68 0.68Short‐Term Gov’t/Credit Barclays US Gov’t/Credit 1 ‐ 3 year 2.5% 2.5% 1.3% 0.37 0.37 1.20 1.30Short‐Term Credit Barclays Credit 1 ‐ 3 year 2.9% 3.0% 2.2% 0.40 0.45 1.01 0.98Long‐Term Credit Barclays Long US Corporate 4.2% 4.7% 10.5% 0.20 0.26 0.47 0.50High Yield Corp. Credit Barclays High Yield 7.1% 7.6% 10.6% 0.48 0.53 0.54 0.57Bank Loans S&P/LSTA 4.1% 4.5% 8.1% 0.24 0.31 0.38 0.40Global Credit Barclays Global Credit 2.4% 2.7% 6.9% 0.06 0.10 0.50 0.52Emerging Markets Debt (Hard) JPM EMBI Global Diversified 6.4% 6.8% 8.8% 0.50 0.54 0.64 0.65Emerging Markets Debt (Local) JPM GBI EM Global Diversified 6.8% 7.6% 12.9% 0.37 0.43 0.24 0.30Private Credit High Yield + 200 bps 9.1% 9.7% 10.9% 0.65 0.71 ‐ ‐OtherCommodities Bloomberg Commodity 4.0% 5.6% 18.2% 0.11 0.20 ‐0.42 ‐0.34Hedge Funds HFRI Fund of Funds 6.0% 6.4% 9.0% 0.44 0.49 0.19 0.21Hedge Funds (Fund of Funds) HFRI Fund of Funds 5.0% 5.4% 9.0% 0.33 0.38 ‐ ‐Core Real Estate NCREIF Property 4.7% 5.8% 13.2% 0.20 0.27 0.92 0.98Value‐Add Real Estate NCREIF Property + 200bps 6.7% 9.1% 23.3% 0.20 0.30 ‐ ‐Opportunistic Real Estate NCREIF Property + 400bps 8.7% 13.3% 33.2% 0.20 0.34 ‐ ‐REITs Wilshire REIT 4.7% 7.8% 26.4% 0.10 0.22 0.23 0.36Risk Parity 7.0% 7.5% 10.0% 0.50 0.54 ‐ ‐Inflation 2.0% ‐ 1.5%* ‐ ‐ ‐ ‐

‐1.5%

‐1.0%

‐0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

Expe

cted

 Return

2016 vs 2015 return forecast

3March 16, 2016PFPRS

2016  VS  2015  RETURN  FORECAST

‐15%

‐10%

‐5%

0%

5%

10%

15%

20%

25%

30%

Return

5th to 25th 25th to 50th 50th to 75th 75th to 95th 10 Year Forecast (Geometric)High Volatility  Low Volatility

Range of likely 10 year outcomes

4March 16, 2016PFPRS

10  YEAR  RETURN  90%  CONFIDENCE   INTERVAL

Correlation assumptions

Note: Correlation assumptions are based on the last ten years. Private Equity and Real Estate correlations are especially difficult to model – we have therefore used BarraOne correlation data to strengthen these correlation estimates.

5March 16, 2016PFPRS

Cash US Large US Small Developed 

LargeDeveloped 

Small EM Global Equity PE US TIPS US 

Treasury

Global Sovereign exUS

US Core US Core Plus

Short –Term Govt/Credit

Short‐Term Credit

Long‐Term Credit US HY Bank 

LoansGlobal Credit EMD USD EMD 

LocalCommodi

tiesHedge Funds

Real Estate REITs Risk Parity Inflation

Cash 1US Large ‐0.1 1US Small ‐0.1 0.9 1Developed 

Large ‐0.1 0.9 0.8 1

Developed Small ‐0.1 0.8 0.8 1.0 1

EM 0.0 0.8 0.7 0.9 0.9 1Global Equity ‐0.1 0.9 0.8 0.9 0.9 0.9 1

PE ‐0.2 0.7 0.7 0.8 0.8 0.7 0.7 1US TIPS 0.0 0.2 0.1 0.3 0.3 0.3 0.3 0.1 1

US Treasury 0.1 ‐0.3 ‐0.3 ‐0.2 ‐0.2 ‐0.2 ‐0.2 ‐0.2 0.6 1Global 

Sovereign exUS 0.1 0.2 0.2 0.4 0.4 0.4 0.3 0.1 0.6 0.5 1

US Core 0.1 0.0 0.0 0.1 0.1 0.2 0.1 0.0 0.8 0.9 0.6 1US Core Plus ‐0.2 0.3 0.3 0.5 0.5 0.5 0.4 0.4 0.7 0.5 0.5 0.7 1Short –Term Govt/Credit 0.4 ‐0.1 ‐0.1 0.1 0.1 0.1 0.0 ‐0.2 0.6 0.6 0.6 0.7 0.4 1

Short‐Term Credit 0.1 0.3 0.2 0.4 0.4 0.4 0.3 ‐0.1 0.4 0.1 0.4 0.5 0.4 0.7 1

Long‐Term Credit ‐0.1 0.3 0.2 0.4 0.4 0.4 0.3 0.1 0.6 0.5 0.5 0.8 0.8 0.5 0.6 1

US HY ‐0.1 0.7 0.7 0.8 0.8 0.8 0.8 0.6 0.4 ‐0.2 0.3 0.2 0.6 0.1 0.5 0.5 1Bank Loans ‐0.1 0.6 0.5 0.5 0.6 0.5 0.5 0.2 0.2 ‐0.4 0.0 0.0 0.2 ‐0.1 0.6 0.3 0.8 1Global Credit 0.0 0.6 0.5 0.8 0.8 0.7 0.7 0.5 0.6 0.2 0.7 0.6 0.8 0.5 0.6 0.7 0.8 0.5 1EMD USD ‐0.1 0.6 0.5 0.7 0.7 0.7 0.7 0.6 0.7 0.2 0.5 0.6 0.8 0.3 0.5 0.7 0.8 0.5 0.9 1EMD Local 0.1 0.7 0.6 0.8 0.8 0.8 0.8 0.6 0.5 0.1 0.6 0.4 0.5 0.3 0.4 0.5 0.7 0.4 0.8 0.8 1

Commodities 0.1 0.5 0.4 0.6 0.6 0.6 0.6 0.2 0.3 ‐0.2 0.4 0.1 0.2 0.2 0.4 0.2 0.5 0.4 0.6 0.5 0.6 1Hedge Funds ‐0.1 0.7 0.6 0.8 0.8 0.8 0.8 0.6 0.2 ‐0.3 0.1 0.0 0.4 ‐0.1 0.3 0.2 0.6 0.5 0.6 0.5 0.5 0.6 1Real Estate ‐0.1 0.3 0.3 0.3 0.3 0.3 0.6 0.3 0.0 ‐0.1 0.1 0.0 0.1 ‐0.1 0.0 0.1 0.2 0.0 0.2 0.2 0.2 0.0 0.2 1

REITs ‐0.1 0.7 0.8 0.7 0.6 0.6 0.7 0.6 0.3 ‐0.1 0.3 0.3 0.4 0.0 0.2 0.4 0.7 0.5 0.6 0.6 0.6 0.3 0.4 0.4 1Risk Parity 0.1 0.5 0.4 0.5 0.5 0.5 0.5 0.0 0.6 0.3 0.6 0.6 0.4 0.5 0.7 0.6 0.5 0.4 0.7 0.6 0.6 0.6 0.4 ‐0.1 0.4 1Inflation 0.1 0.1 0.1 0.1 0.2 0.2 0.2 0.1 0.1 ‐0.3 0.0 ‐0.3 0.0 ‐0.2 ‐0.1 ‐0.3 0.2 0.3 0.1 0.1 0.1 0.3 0.3 0.0 0.1 0.0 1

Asset Allocation

March 16, 2016PFPRS 6

ReturnStandard Deviation

SharpeRatio

Large Cap US Equity 18 17 16 5.9 15.1 0.26

Small/Mid Cap US Equity 4 4 4 5.2 19.8 0.16

Total Domestic Equity 22 21 20

International  Developed Equity 20 21 20 9.2 18.5 0.39

Total Int'l Equity 20 21 20

Total Equity 42 42 40

Core Fixed Income 33 33 35 3.2 3.2 0.37

Bank Loans 5 5 5 4.1 8.1 0.24

US TIPS 5 5 5 2.7 6.3 0.11

Total Fixed Income 43 43 45

Core Real  Estate 10 10 10 4.7 13.2 0.20

Total Real Assets 10 10 10

Hedge Funds  (Fund of Funds) 5 5 5 5.0 9.0 0.33

Total Non‐Public Investments 5 5 5

Total Allocation 100 100 100

CMA's (10 Yr)

Current Policy Mix 1 Mix 2

Scenario Analysis

March 16, 2016PFPRS

Note: It is difficult to fully incorporate macro factors for opaque illiquid investments such as private equity and hedge funds

7

The forecasted 10 year return for the Current Policy in 2015 was 5.7%.

Current Policy Mix 1 Mix 2

Forecast 10 Year Return 5.6 5.7 5.6

Standard Deviation 7.9 7.9 7.6

Return/Std. Deviation 0.7 0.7 0.7

1st percentile ret. 1 year ‐17.0 ‐17.0 ‐16.4

Sharpe Ratio 0.50 0.50 0.50

10 Year Return Forecast

Stagflation 5.5 5.5 5.5

Weak 2.6 2.6 2.6

Base CMA 5.7 5.8 5.7

Strong 8.9 8.9 8.7

Range of Scenario Forecast 6.3 6.4 6.1

Shock (1 year) ‐17.3 ‐17.4 ‐16.6

Stagflation ‐0.6 ‐0.6 ‐0.6

Weak 1.5 1.5 1.5

Base CMA 3.6 3.7 3.6

Strong 6.3 6.3 6.1

Range of Scenario Forecast 6.9 6.9 6.7

10 Year Real Return Forecast

Mean Variance Optimizer Analysis

Verus Scenario Analysis

PIMCO All Asset Current Allocations

March 16, 2016PFPRS 8

*Current asset allocation of the PIMCO All Asset fund as of January 31, 2016.

ReturnStandard Deviation

SharpeRatio

Large Cap US Equity 2 5.9 15.1 0.26

Total Domestic Equity 2

International  Developed Equity 8 9.2 18.5 0.39Emerging Markets  Equity 14 11.3 23.6 0.39

Total Int'l Equity 22

Total Equity 24

Core Fixed Income 1 3.2 3.2 0.37Short‐Term Gov't/Credit 2 2.5 1.3 0.37Long‐Term Credit 1 4.2 10.5 0.20Global  Sovereign ex‐US 1 2.6 7.8 0.07Global  Credit 17 2.4 6.9 0.06Emerging Market Debt (Hard) 22 6.4 8.8 0.50US TIPS 8 2.7 6.3 0.11

Total Fixed Income 52

Commodities 4 4.0 18.2 0.11REITs 5 4.7 26.4 0.10

Total Real Assets 9

Hedge Funds  (Fund of Funds) 15 5.0 9.0 0.33

Total Non‐Public Investments 15

Total Allocation 100

CMA's (10 Yr)

PIMCO All Asset Current AllocationsPIMCO All Asset Current Allocations

Forecast 10 Year Return 6.2

Standard Deviation 9.6

Return/Std. Deviation 0.6

1st percentile ret. 1 year ‐23.9

Sharpe Ratio 0.48

10 Year Return Forecast

Stagflation 6.0

Weak 2.9

Base CMA 6.3

Strong 8.6

Range of Scenario Forecast 5.7

Shock (1 year) ‐15.5

Stagflation ‐0.1

Weak 1.8

Base CMA 4.2

Strong 6.0

Range of Scenario Forecast 6.2

10 Year Real Return Forecast

Mean Variance Optimizer Analysis

Verus Scenario Analysis

Risk Decomposition

March 16, 2016PFPRS 9

86% 85% 85%

‐2%

‐1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

‐20%

0%

20%

40%

60%

80%

100%

120%

Current Policy Mix 1 Mix 2

Rates Credit Equity Inflation Currency Other Total Risk

Tail Risk Scenario Analysis

March 16, 2016PFPRS 10

‐30% ‐20% ‐10% 0% 10% 20% 30%

1972 ‐ 1974 Oil Crisis (Dec. to Sep.)

1987 Market Crash (Oct. 14 to Oct. 19)

1989 ‐ 1990 Nikkei Stock Price Correction

1992 ‐ 1993 European Currency Crisis

1994 US Rate Hike

1997 ‐ 1999 Oil Price Decline

2007‐2008 Oil Price Rise

2001 Dot‐com Slowdown

2007‐2009 Subprime Mortgage Meltdown (Oct. to Feb.)

2009 July ‐ January

Current Policy Mix 1 Mix 2

Notices & disclosuresPast performance is no guarantee of future results. This report or presentation is provided for informational purposes only and is directed to institutional clients and eligible institutional counterparties only and should not be relied upon by retail investors. Nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security or pursue a particular investment vehicle or any trading strategy. The opinions and information expressed are current as of the date provided or cited only and are subject to change without notice. This information is obtained from sources deemed reliable, but there is no representation or warranty as to its accuracy, completeness or reliability. Verus Advisory Inc. and Verus Investors, LLC expressly disclaim any and all implied warranties or originality, accuracy, completeness, non‐infringement, merchantability and fitness for a particular purpose.  This report or presentation cannot be used by the recipient for advertising or sales promotion purposes. 

The material may include estimates, outlooks, projections and other “forward‐looking statements.” Such statements can be identified by the use of terminology such as “believes,” “expects,” “may,” “will,” “should,” “anticipates,” or the negative of any of the foregoing  or comparable terminology, or by discussion of strategy, or assumptions such as economic conditions underlying other statements. No assurance can be given that future results described or implied by any forward looking information will be achieved. Actual events may differ significantly from those presented. Investing entails risks, including possible loss of principal. Risk controls and models do not promise any level of performance or guarantee against loss of principal.  

“VERUS ADVISORY™ and VERUS INVESTORS™ and any associated designs are the respective trademarks of Verus Advisory, Inc. and Verus Investors, LLC.  Additional information is available upon request. 

March 16, 2016PFPRS 11

Fire and Police Retirement Board Administration and Operating Expenses

FY 2016 Comparison of Actual to Budget

For the Month and Year Ended February 28, 2016

A B c D E Actual Budget Variance

For For For Acct# Descriptions Month Month Month

1 System Revenue:

2 751000 Concord Asset Income 0 0 0

3 668900 Miscellaneous Cash/Income 0 0 0 4 703200 City Cash Contributions 0 0 0 5 Total System Revenues 0 0 0 6 7 Expenses: 8 800500/5800 Personnel Costs 14,500 15,833 1,333 9 802200 Retiree Payroll 1,120,577 1,133,333 12,757 10 Subtotal Pers.fRetiree Payroll 1,135,077 1,149,167 14,090 11 12 Services & Supplies: 13 810100 Materials and Supplies 190 208 18 14 810900 Small Equipment Purchases - - -15 811000 Outside Printing & Duplication - 400 400 16 811300 Equip. Lease Payments 156 185 29 17 810800 Computer Related Supplies - Software - - -18 813500 Reference Materials - Subscriptions - - -19 813900 Water 33 29 (4) 20 812400 Dues and Memberships - - -21 812700/2900 Conferences/Meetings - Board/Staff - 500 500 22 815600 Insurance - - -23 811400 Contract SeNices - - -24 811400 Mise SeNices - - -25 811400 Actuarial SeNices 180 - (180) 26 811400 Asset Managers - - -27 811400 Auditing SeNices - - -28 811400 PensionGold Svs - 7,830 7,830 29 811400 Custodial Bank Svs - - -30 811400 Investment Consultant Svs - - -31 811400 Outside Legal Counsel - 833 833 32 860700 Berwyn Group - - -33 Subtotal Contract SeNices 180 8,663 8,483 34 814800 Investment Expenses 35 814800 Mise/Other Fees - - -36 814800 Custodial Bank Svs 1,882 - (1 ,882) 37 814800 Investment Consultant Svs 8,750 8,750 -38 814800 Subtotal Investment Expenses 10,632 8,750 (1 ,882) 39 Subtotal Services & Supplies 11,191 18,736 7,545 40 41 Internal Service Charges: 42 860700 Printing - - -43 814400 Postage 150 225 75 44 862600 Mail SeNices - 8 8 45 861100 IS-Applic. Devel. & Support - 17 17 46 861200 IS-PC Network Support - 21 21 47 Subtotal Int. Service Charges 150 271 121

48 49 Equipment: 50 850400 EquipmenVFurniture - - -51 850600 Computer Equipment - - -52 Subtotal Equipment - - -53

Page 1 of2

DATE 3/ Jb / (.~ ITI=I\A # lOa.. -·

F G H Actual Variance

Year To Budget Year To Date Year To Date Date

0 0 23 0

0 0 23 0

121,844 126,667 8,998,470 9,066,667 9,120,314 9,193,333

722 1,667

- -451 800

1,290 1,480 - -- -245 233 750 750

74 4,000 18,462 18,462

- -- -

17,240 18,000 - -

35,355 50,580 - 7,830 - -- -- 6,667 300 300

52,895 83,377

- -16,467 22,500 75,000 70,000 91,467 92,500

166,356 203,269

- 67 1,663 1,800

- 67 - 133 - 167

1,663 2,233

- -- -- -

3/8/2016 10:44 AM FPRS Adopted Budget FY 2016 linked

February

0

23 0

23

4,822 68,197 73,019

945 -349 190 --(12 -

3,926 ---760 -

15,225 7,830

--

6,667

-30,482

-6,033

(5,000 1,033

36,912

67 137 67

133 167 571

---

A

Acct# 54 55 8601 00/2000/3400

56 860400

57 860500

58 862200

59 863600

60 864300

61 62

63 64

65

66

67 68

Fire and Police Retirement Board Administration and Operating Expenses

FY 2016 Comparison of Actual to Budget

For the Month and Year Ended February 28, 2016

B c D E F G H Actual Budget Variance Actual Variance

For For For Year To Budget Year To Descriptions Month Month Month Date Year To Date Date

City Service Charges: Struct Maint/Prev Maint/Sec 408 407 (1) 3,257 3,259 2 Utilities and Insurance 163 163 (0) 1,302 1,303 1 Housekeeping 136 136 0 1,089 1,089 (0) Telephones 13 13 (1) 64 100 36 DolT Desktop Replacement Prog 24 24 (0) 188 189 1 FY 2014 Cost Allocation Prog - - 0 - - -Subtotal City Serv Charges 744 743 (2) 5,900 5,940 40

Subtotal FPRS Admin Expenses $ 26,585 $ 35,583 $ 8,998 $ 295,763 $ 338,109 $ 42,345

Total FPRS Operating Expenses $ 1,147,162 $1,168,916 $ 21,754 $ 9,294,233 $ 9,404,775 $ 110,542

City Legal Expenses (1. Safie) $ - $ 34,558

Balance of FPRS Funds Actual for Actual for

Northern Funds-Beg. Of Month 122,011,847 Investment Expenses Month YTD

Receipts 0 Atlanta Cap Qtly (NT) 0 18,701

Investment Income 97,841 MetWest Qtly (NT) 0 68,803

Disbursements -105 lnvesco (NT) 0 97,521

Fees & Expenses -2,812 Voya (NT) 2,807 24,027

Net Chg in Unrealized Gain/Loss -552,140 Class Action Fees (NT) 5 211

Realized Gain/Loss -19,621 Northern Trust (NT) 0 15,050

Northern Funds-End. Of Month 121,535,009 Northern Trust 0 12,663

Equity in Pooled Cash (1 001 00) 2,542,173 US Bank 1,882 3,804

Concord Investment 0 Verus Investments 8,750 75,000 Total FPRS Funds on Deposit 124,077,182 Total Investment Exp $ 13,444 $ 315,780

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3/8/2016 10:44 AM FPRS Adopted Budget FY 2016 linked

February