Is Governance Really Such A Big Deal??? Rich Goss Administrator California Association of Public Retirement Systems

The Way We Were… Run by an Agency Official Clerical administration Not much budget impact Boring to the Press Agency Official = Treasurer, CFO, Controller, etc PERS & STRS had common investment officer All in Bonds, minor stock holdings, all buy and hold Staff used worksheets and coding sheets Tab card systems Somewhat informal structure – part of larger organizaton

Then Things Started to Change 1971 Myers, Millias, Brown Act 1978 Proposition 13 1984 Proposition 20 – Prudent Expert 1985 Computer Work Stations 1986 Fiduciary Responsibility 1992 Proposition 162 Somewhere Along the Line - Independence

We Got Lots of Help With Some of those changes Investment Policies Asset Allocation Studies Multiple Asset Classes Multiple Asset Managers Discretionary Relationships All managed by very willing Investment Consultants

We Got Less Help Data Processing Member Communications Staff Operations Financial Oversight Staff Training and Succession Planning Media Relations Board Operations

And Then The Fresno County Employees’ Retirement Association Went Independent!

So, Who Is In Charge? Barriers to Excellence Time Spent on Important & Urgent Effective Decision Making Clear, documented, understood, mapped The Board as Risk Controller The Administrator as Performance Maximizer Handout Panel 5: Barriers to Excellence #1 Poor Process, #3 Lack of focus Handout Panel 9: Traditional Focus Handout Panels 11 + 12 Handout Panel 13 Handout Panel 14

Investment Program/ Strategy Decision Map Level Planning/ Policy Investment Program/ Strategy Management/ Implemen- tation Oversight/ Control Board Approves Monitors Investment Committee Reviews & Recommends to Board Executives & Staff Develop & Recommend to Committee Manages

Policies Board Governance Policy Board Charter Board Elections Policy Board Officers’ Job Descriptions Board Operations Policy Conflict of Interest Policy Liability Management Policy Investment Gain/Loss Treatment Travel Policy Trustee Education Policy Board Terms of Reference Code of Conduct Executive Director Evaluation Policy Policy Development Process Attachment: SUGGESTED MINIMUM ELEMENTS OF A GOVERNANCE STRUCTURE This doesn’t even get in to Communications, Succession, Financial Oversight, etc.

What’s It Worth? Clearer Operating Focus Risk Management Future Directed Affects the Core of the Business

And… You have to revisit it every couple of years