• SCERA Background
• Governance
• Meet Your Retirement Board
• Funding
• Investments
• Summary of Investment Policies
• Industry Concentrations of Portfolio Assets
• List of Professional Consultants

SCERA Background

The Sonoma County Employees’ Retirement Association (SCERA) is a public employee retirement system that was established by the County of Sonoma on January 1, 1946. SCERA is administered by the Board of Retirement ("Board") to provide retirement, disability, death, and survivor benefits for its employees’ under the California State Government Code, Section 31450 et.seq. (County Employees’ Retirement Law of 1937).

SCERA was established on January 1, 1946, to provide retirement allowances and other benefits to the safety and general members employed by Sonoma County and four other participating agencies as listed below:

Sonoma County Water Agency
Valley of the Moon Fire District
Community Development Commission
Sonoma County Transportation Authority

SCERA is governed by the California Constitution, the County Employees’ Retirement Law of 1937, and the bylaws, procedures and policies adopted by the SCERA Board. The Sonoma County Board of Supervisors may also adopt resolutions, as permitted by the County Employees Retirement Law of 1937, which may affect benefits of SCERA members.

Governance

The Sonoma County Employees’ Retirement Association Board of Retirement is responsible for establishing policies governing the administration of the retirement plan, making benefit determinations and managing the investment of the system’s assets. The day-to-day management of SCERA is delegated to an Administrator appointed by the Board.

The SCERA Board of Retirement is a nine member Board, four of whom are appointed by the Sonoma County Board of Supervisors, four of whom are elected by SCERA’s membership, and the County Treasurer (Meet Your Retirement Board). Board members, with the exception of the County Treasurer, serve three-year terms in office with no term limits.

The system is managed by a nine member Board of Retirement and an Alternate Retiree member. Representation on the Board is as follows:

Members	Representing	Elected or Appointed by:
First (ex-officio)	Member and Public Representatives	California Law
Second and Third	General Members	General Members
Fourth, Fifth, Sixth and Ninth	Public Representatives	Board of Supervisors
Seventh	Law Enforcement and Fire Suppression Members	Safety Members
Eighth and Eighth Alternate	Retired Members	Retired Members

Regular Board of Retirement meetings are held on the third Thursday of each month at 8:30 am at the Board Conference Room, 433 Aviation Boulevard, Suite 100, Santa Rosa, California. Meetings are open to the public. Requests of the Board should be submitted in writing to the Board Secretary, Retirement Administrator Gary Bei, at the Retirement Office. View the current board agendas and minutes from the most recent meetings.

There are two standing committees that meet on a monthly basis the Investment Committee and the Disability Committee. Additionally, there is an Administrative/Benefits Committee, which meets on an adhoc basis as necessary. A fourth committee was added as a result of Governance Review in 2004 - Audit Committee. It meets 2-3 times per year. The meeting dates and times may vary, so please consult the (Calendar of Events).

Meet your SCERA Board of Retirement

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Funding

SCERA’s funding objective is to meet long-term benefit promises by retaining a well-funded plan status as well as to obtain optimum returns consistent with the assumption of prudent risk. As a result, employer contributions remain approximately level as a percent of member payroll. The greater the level of overall plan funding, the larger the ratio of assets accumulated to the actuarial accrued liability and the greater the level of investment potential.

Pursuant to provisions in the County Employees Retirement Law of 1937, SCERA engages an independent actuarial firm to perform actuarial valuations of the system annually. Additionally, every three years, a triennial experience study of the members of SCERA is completed. The economic and non-economic assumptions are updated at the time each triennial valuation is performed. Triennial valuations serve as the basis for changes in member and employer contribution rates necessary to properly fund the system. The most recent triennial valuation, which was completed by Gabriel Roeder Smith & Company (GRS), was performed as of December 31, 2005. The recommendations from the 2005 study were incorporated into the 2006 valuation.  As of the most recent valuation of December 31, 2006, the funded ratio (the ratio of system assets to system liabilities) was 90.8%.

Investments

The Board of Retirement has exclusive control of all investments of the retirement system and is responsible for the establishment of investment objectives, strategies and policies. The Board is authorized to invest in any form or type of investment deemed prudent in the informed opinion of the Board. Members of the Board serve in a fiduciary capacity and must discharge their duties with respect to SCERA and the investment portfolio. The assets of SCERA are exclusively managed by external professional investment management firms (a listing of all investment professionals who provide services to SCERA can be found clicking here: (List of Professional Consultants). The investment staff closely monitors the activity of these managers and assists the Board with implementation of investment policies and long-term investment strategies. establish the investment program goals, asset allocation policies, performance objectives, investment management policies and risk controls. A summary of the most recent asset allocation can be found in the News & Reference Page - Investment Portfolio Asset Allocation section.
(See Investment Plan Policy and Guidelines.)

For the year ended December 31, 2006, SCERA investments provided annualized rate of returns over the last year of 14.6%, last three-year and five-year periods of 11.8% and 9.0% respectively.  The rate for the 10 year period is 8.6%.  Current Investment Performance can be viewed in the News & Reference Page - Investment Performance Updates section.

Summary of Investment Policies

The County Employees Retirement Law of 1937 (Law) authorizes the Board of Retirement with exclusive control over the investment of SCERA’s investment portfolio. The Law allows for the Board to invest, or delegate the authority to invest the investment portfolio through the purchase, holding, or sale of any form or type of investment, financial instrument or financial transaction when prudent in the informed opinion of the Board.

Additionally, the Law requires that the Board and its officers and employees shall discharge their duties with respect to SCERA and the investment portfolio as follows:

• Solely in the interest of, and for the exclusive purposes for providing benefits to, participants and their beneficiaries and defraying reasonable expenses of administering SCERA.
• With the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with these matters would use in the conduct of an enterprise of a like character and with like aims.
• Shall diversify the investment portfolio to minimize the risk of loss and to maximize the rate of return, unless under the circumstances it is clearly prudent not to do so.

Industry Concentrations of Portfolio Assets

The Board of Trustees’ policies and guidelines enable the portfolio to develop into numerous asset classes and to take advantage of professional investment managers with diverse management’s styles. The result is a well-diversified portfolio.

Summary of Investment Objectives
The Retirement Board has adopted an Investment Policy Statement, which reflects the Board’s policy for the management of SCERA’s investments. The Board is responsible for overseeing the investment activities for SCERA. This includes, but is not limited to, selecting acceptable asset classes; defining allowable ranges of holdings by asset class and by individual investment managers as a percent of assets; defining acceptable securities within each class; and establishing investment performance expectations. The Board will make revisions to this Investment Policy as necessary.

The Board has adopted a long-term investment horizon such that the chances and duration of investment losses are carefully weighed against the long term potential for appreciation of assets. The assets of SCERA will be invested in a manner that provides the safeguards and diversity that a prudent investor would adhere to. All transactions undertaken on behalf of the SCERA will be in the sole interest of the participants.

SCERA’s primary investment objective is to exceed the long-run actuarial assumption for return on assets. The risk to be assumed must be considered appropriate for the return anticipated and consistent with the total diversification of the fund.

An integral part of the overall Investment Policy is the strategic asset allocation policy. This allocation mix is designed to provide an optimal mix of asset categories with return expectations that reflect expected risk. This emphasizes a maximum diversification of the portfolio that protects the fund from declines that a particular asset class may experience in a given period.

Summary of Proxy Voting Guidelines and Procedures
Voting of proxy ballots shall be in accordance with SCERA’s Investment Policy Statement. The investment managers shall review each proxy ballot and vote them in a manner that preserves and enhances shareholder value. Each investment manager shall keep accurate written records of all proxy votes and, at least annually, provide a detailed report to the Investment Committee, documenting all votes.

List of Professional Consultants

Consulting Services

Investment Managers

Actuary The Segal Company Auditors Brown Armstrong, Certified Public Accountants Custodian State Street Bank & Trust Co. Data Processing Sonoma County Information Systems Integrated Pension System Levi, Ray & Shoup, Inc. L.R. Wechsler, Ltd. Investment Consultants Ennis Knupp & Associates Legal Counsel Neil Baker Robert A. Blum of Hanson, Bridget, Marcus, Vlahos, Rudy LLP County Counsel, Sonoma County Michael Merrill of Merrill, Arnone & Jones, LLP Patrick M.K. Richardson, Esq.

Enhanced Core Fixed Income Reams Asset Management Company Western Asset Management U.S. Broad Mandate Equity Jacobs Levy Equity Management Large Cap Value Equity Dodge & Cox Large Cap Growth Equity INTECH Turner Investment Partners Small Cap Value Equity Systematic Financial Management Small Cap Growth Equity State Street Global Advisors International Equity Capital Guardian Trust Company State Street Global Advisors Templeton Investment Counsel Global Equity Grantham, Mayo, Van Otterloo & Co. Real Estate Blackrock Realty RREEF UBS Realty Investors