1. National Society of Institutional Investment Professionals Public Plans – Plan Design and Funding Issues
Good Morning
My name is Cheryl Clemons and I am the Administrator for the Employees' Retirement Fund. ERF was established by ordinance in November 1943 and became effective in January 1944 after ratification by the voters of the City of Dallas. ERF is a single-employer defined benefit pension plan sponsored by the City of Dallas and it provides retirement, disability and death benefits to its members. All employees of the City are members except police officers, firefighters, etc. As of December 31, 2005, we have over 7800 active member and 5,000 retirees. The fund has $2.8 billion in assets under management.
You are here because you are interested in becoming a trustee for ERF.
The objective of the trustee training session is to provide prospective trustees with an overview of the fund and the responsibilities of the board of trustees. Overall, we feel that if the prospective trustees have more information about the fund, they can make a decision to run based on facts, run a more effective campaign and ultimately, we will have more knowledgeable trustees. It is a very important position because the decisions the Board makes affects both active employees and retirees. The Board consists of 7 people – 3 council appointed, 3 employee elected and the City Auditor.
Today, we plan to cover the following topics
Trustee Fiduciary Responsibility Donna Lowe ERF Chief Compliance Officer
Trustee Time Commitment / Education Carla Brewer ERF Board Chair
Benefits Administration Gail Smith ERF Assistant Administer – Benefits
Investments & Accounting Cheryl Clemons ERF Administrator
Please feel free to ask questions throughout the presentation
Cheryl Alston, Executive Director
Employees’ Retirement Fund City of Dallas

2. $2.5 billion in Assets Under Management as of 09/30/09
Overview of Dallas ERF
Started in 1944 as a single employer defined benefit plan that provides retirement, disability and death benefits for the civilian employees of the City of Dallas
Governed by Chapter 40A and a seven member Board of Trustees consisting of three members appointed by the City Council who may be Council members; three employee members of the Plan elected by the membership, and the City Auditor
$2.5 billion in Assets Under Management as of 09/30/09
Key member statistics active members, 5,500+ retirees
City of Dallas does not participate in Social Security
Both the employer and employee make contributions to the Fund
COLAs – Based on change in CPI, applied to base pension
Funding Ratio – 96.17% as of December 31, 2008

3. No changes to plan design since 2004
City Council formed Employees’ Retirement Fund Study Committee in December 2003
Study Group Conclusions
Current contribution rates will not support future benefit payments – contributions need to be increased
The current defined benefit plan and pension benefit levels are appropriate based on market data
The current contribution ratio (63% City and 37% employee) should be maintained
The investment program is sound
Actuarial assumptions are conservative
Study Group Plan put in place
Pension Obligation Bonds should be issued to lessen the cost of reestablishing sound actuarial status
Future City and employee contribution adjustments should be automatic
Change select Actuarial Assumptions
November 2004 – Plan approved by ERF Board, City Council and City of Dallas Voters. Citizen vote on Plan amendments passed (71%)

4. Asset Allocation Process focus on 30 year horizon
Board reviews Asset Allocation annually and rebalances quarterly
Process now includes liquidity component in the asset allocation process as well as return and risk
As of Nov 30, 2009, the market has rebounded hopefully in line with other recessions
Wilshire %
MSCI ACWI (US dollars) %, MSCI EM %,
Barclays US Aggregate %, Barclays Corp High Yield %
Recession
Market Bottom
Gain in Next 12 to 21 months
Nov.’73 to March ’75
Oct 3, 1974
76% in 21 months
Jan.’80 to July “80
March 27, 1980
35% in 12 months
July ’81 to Nov. ’82
August 12, 1982
66% in 15 months
July ’90 to March ’91
Oct 11, 1990
45% in 19 months
March ’01 to Nov.’02
Oct 9, 2002
50% in 17 months
Dec.’07 to ?
March 9, 2009 ?
Source: Navallier & Associates

5. Investment Manager Selection and Monitoring
ERF Investment Manager Selection and Monitoring Policy requires:
RFP process
Due Diligence Visits to be made prior to recommending a list of finalists to the Board
In addition to standard topics (Inv Philosophy, portfolio construction, trading, etc.); compliance is separate topic and often compliance officer is interviewed alone
Complete contract negotiations before finals
Board interviews finalists and selects firm
Monitoring
Staff has quarterly conference calls with all investment managers individually
Staff visits investment manager every months
Investment Managers present to Board every months

6. DB Through the eyes of our Oldest Retiree
Born in 1899 and retired in (70 years old)
Worked part time until he was 95 years old
His first car was a Model T and his last car was a Buick
He just turned 110 years old
Total years in retirement – 40 years and still going…
His retirement spans the last six recessions
Median annual income in 1969 was $8,389 according to US Department of Commerce Bureau of Census. A Ford Car cost $2,200 vs. $33,000 and a movie ticket cost $1.00 vs. $9.00 today
If he receives $500 a month, $6,000 a year, how much would he have to save in when he retired in a Defined Contribution Plan?

7. Questions and Answers