Fresno County Employees’ Retirement Association Strategic Planning Presented by Tom Iannucci Cortex Applied Research February 20, 2008

2 Agenda 1.Background 2.Draft strategic plan: – Mission and values – Strategic positions – Projects 3.Reporting and next steps

3 Background Process:  Strategic planning off-site in October 2007  Board input/discussion on key strategic positions  FCERA Administration and Cortex worked together to prepare:  Draft mission and values statement  Refine strategic positioning  Five draft project descriptions  Today is an opportunity for further input by the Board

4 Components of the Strategic Plan Mission & Values Strategic Positioning Projects Concise description of our business & valued (long-term view/ seldom changes) More detailed description of what kind of organization we will be and how we will approach our business (5-6 pages) (medium-long view/ changes slowly) Detailed description of specific projects we will undertake to achieve our Mission and Strategic direction over the coming 18 months:  Projects  Timelines  Responsibilities  Resources (short-medium term view/ changes often)

5 FCERA Mission (draft) The Mission of FCERA …to administer the retirement benefits provided for by law to the members and beneficiaries of the Fresno County Employees’ Retirement Association in a prudent, accurate, and timely manner; and …to administer the investment funds of the Association in a manner that achieves FCERA’s investment objectives within prudent levels of risk.

6 Core Values  Fiduciary duties:  Exclusive benefit rule  Primary duty rule  Prudent person rule

7 Other Core Values  Honesty and Integrity  Professionalism  Reliability and stability  Team orientation  Responsiveness and security  Education

8 Strategic Positioning  Member service quality  Governance and Board decision-making  Investment management  Operational risk management  Corporate governance  Stakeholder relations  Pension benefit policy

9 Strategic Direction For coming month period:  Stakeholder relations. FCERA will focus on building and maintaining effective relations with stakeholders, with the Board of Supervisors being a strategic priority  Member service quality. Specifically, FCERA will focus on resolving pre-existing issues and problems; and building a service quality measurement capability.  Risk management. Specifically, FCERA will explore risk management opportunities relating to the investment function and internal controls

10 Projects  Strategic plan identifies special, one-off projects that are generally beyond the normal operations.  Strategic plan does not address ongoing routine activities and projects that may considered part of FCERA’s normal operations.  Most resources are consumed by the normal operations. The Strategic Plan focuses on a small number of proactive projects that are critical to longer term success.

11 Proposed Projects  Member Service Quality Measurement Project  Internal Investment Position Feasibility Project  Accounting software project  IT Roadmap/Assessment Project  Stakeholder Relations Program

12 Member Service Quality Measurement Project  Strategic Direction: Member service quality – Client satisfaction measurement plan – Satisfaction measurement tools – Pilot survey  Investigating CEM services  Budget: Unknown at this time

13 Internal Investment Position Feasibility Project  Strategic Direction: Operational risk management  Many implications to be considered:  Governance and organizational structure: – Roles of Board, Retirement Administrator, Investment Consultant  Attraction and retention  Career path  Reporting  Cost benefit analysis and peer practices  Budget: existing internal resources

14 Accounting Software Project  Strategic Direction: Service quality and risk management  Replacement of current outdated accounting software:  Due diligence  Data conversion and testing  Integration with custodian bank  Budget: Unknown at this time

15 IT Roadmap/Assessment Project  Strategic Direction: Service quality and risk management  New IT systems are a major investment of millions of dollars and countless hours  All technology systems are interrelated:  FCERA Administration suggesting a holistic approach  Consider all of FCERA’s future technology needs and plan accordingly  IT consultant to be retained for assessment  Budget: $200,000-$250,000

16 Stakeholder Relations Program  Strategic Direction: Stakeholder relations  Again, FCERA Administration suggesting a holistic approach:  Documented stakeholder relations program/plan  Consider all stakeholders and define reasonable efforts to be undertaken  Board and staff input  Budget: Likely existing internal resources only

17 Potential Future Projects  Operations Reorganization Assessment Project:  Review of operations and organizational structure to ensure optimal support of service quality goals.  Facility Assessment Project  Review of office space needs to support service quality goals.

18 Reporting & Next Steps  FCERA Administration will report on status of projects at least semi-annually  Strategic Plan will be reviewed annually with emphasis on projects (Mission, values, and strategic positioning are not expected to change significantly from year to year, but may simply be refined over time)

19 Conclusion  Planning process is simple and efficient  Test of a good plan:  Clarifies the mission and approach  Establishes general direction  Identifies concrete steps to move forward  Plan can be refined and expanded over time (if necessary)  Key is steady and continual improvement

Board Comments and Discussion