ORANGE COUNTY EMPLOYEES RETIREMENT SYSTEM

Transcription

1 ORANGE COUNTY EMPLOYEES RETIREMENT SYSTEM MEMORANDUM DATE: July 8, 2015 TO: Members, Board of Retirement FROM: Steve Delaney, Chief Executive Officer SUBJECT: MID-YEAR 2015 BUSINESS PLAN REVIEW Recommendation: Receive and file. Background: The OCERS Board s Planning Policy requires the following: Review of Business Plan Initiatives On a semi-annual basis, the Chief Executive Officer will review for the Board the status of each initiative in the Business Plan, regardless of whether any progress was made. Attached you will find a copy of the 2015 Business Plan package. The manager of each department addressed within the plan will be speaking to the current status of the initiatives in his or her department. This is a special opportunity for the Board to hear directly from the broad range of talented managers working so hard on behalf of our members and other stakeholders. Submitted by: Steve Delaney Chief Executive Officer I-5 Mid-Year 2015 Business Plan Review Page 1 of 1 Regular Board Meeting, July 20, 2015

2 2015 Business Plan

3 Table of Contents Business Plan Process... 3 Introduction... 4 Department Goals and Initiatives for Executive... 7 Information Technology... 7 Finance Administrative Services Member Services Disability Communications Internal Audit Legal Investments Business Plan Review and Status Update Executive Investments Information Technology Member Services Disability Legal Communications Finance Administrative Services Internal Audit Additional Departmental Accomplishments in Executive Investments Information Technology Member Services Disability Legal Communications Finance Administrative Services 36 Internal Audit Appendix Appendix A OCERS Current Organization Chart Appendix B OCERS Department Descriptions Appendix C Budget Authority Appendix D Budget Approval Policy Appendix E 2014 Budget Summary Appendix F 2014 Budget - 21 Basis Point Test (Liabilities) Appendix G 2014 Budget 18 Basis Point Test (Assets) Appendix H Historical Actuarial Asset and Liability Data OCERS 2015 Business Plan Page 2

4 Business Plan Process On an annual basis OCERS staff prepares a one year Business Plan for the Board of Retirement s (Board) consideration and adoption. The purpose of the annual Business Plan is to set department and agency-wide goals and initiatives for the upcoming year that will support and advance the longer term strategic goals of the agency and complete short term projects. The goals and initiatives included in the Business Plan are assumed to be in support of and in addition to the ongoing business activities of the agency. The Business Plan then becomes part of the foundation for developing OCERS annual budget. The OCERS Strategic Plan was the starting point for developing the 2015 Business Plan. Staff reviewed the goals and objectives within the rolling three-year Strategic Plan and considered tactics to be used in implementing those long term goals in the upcoming year. The Board initially reviewed staff s proposed goals and initiatives for the upcoming year in September at the annual strategic planning session. Although an official action of the Board is not taken at that meeting, staff received verbal direction from the Board to proceed with including the goals and initiatives presented at the Strategic Planning Meeting into the 2015 Business Plan After receiving Board approval of the 2015 Business Plan, executive management will perform a detailed final review of all budget requests that have been submitted by department managers during the initial stages of developing both the Business Plan and the annual budget. Executive management ensures that the funds requested are both necessary and adequate to deliver, in an effective and efficient manner, the services OCERS is committed and obligated to provide to its plan sponsors and participants as well as to achieve the Board approved goals for the upcoming year and move longer term strategic goals forward. The budget is also reviewed for compliance with expenditure limitations set by the California Government Code. The budget includes detailed expenses by category and functional area along with comparative data from previous years. A budget workshop is held prior to the regularly scheduled Board of Retirement meeting in November. The budget workshop will give staff an opportunity to review the detailed budget proposal with Board members. Board members will have an opportunity to ask questions and provide feedback to staff on the budget before it is before them for approval. The annual budget is then presented to the Board or Retirement in November for review and approval. Business Plan goals must be funded in the approved budget. Should the Board decide not to fund a goal or initiative in the budget that item will either be deferred or deleted from the Business Plan. Should the Board have additional questions, comments, or are in need of further information, the schedule allows for staff to return to the board in December if necessary. OCERS 2015 Business Plan Page 3

5 Introduction OCERS 2015 Business Plan (the Business Plan) is organized as a list of goals and initiatives for each department at OCERS. The plan is not organized or intended to be a comprehensive financial and strategic road map for operations for Instead, the intention of the Business Plan is to set and document goals and initiatives for each department that are in addition to the everyday operations. The goals and initiatives are then incorporated into the budget process for the next year. The 2015 budget impact (not including existing staff time) for each goal/initiative has been noted when applicable. The Business Plan also contains a review of the goals approved in the 2014 Business Plan and provides a status update on how staff has progressed in achieving those goals. In addition to the stated goals from 2014, the Business Plan also includes other accomplishments in each department that resulted from either unplanned or unknown events or activities at the time of developing the 2014 Business Plan or as a result of changing priorities during the year. Each year, as staff develops the goals and initiatives through the Business Plan Process it is important to remind ourselves what the organization s core purpose and focus is to ensure our goals are aligned with our mission. OCERS Mission Statement The role of the Orange County Employees Retirement System is to provide secure retirement and disability benefits, quality information concerning those benefits, and prompt, professional and courteous service that meets the highest standards of excellence. In carrying out that role, the Board of Retirement and staff are committed to act for the exclusive benefit of the plan and its participants, manage assets of the plan prudently, and administer benefits with impartiality. Supporting Goals 1) Excellent Customer 2) Timely & Accurate Benefits 3) Secure and Reliable Data 4) Prudently Managed Investments 5) Professional Plan Administration The 2015 Business Plan is organized as a list of goals and initiatives for each department at OCERS. The plan is not organized or intended to be a comprehensive financial and strategic road map for operations for Instead, the intention of the Business Plan is to set and document goals and initiatives for each department that are OCERS 2015 Business Plan Page 4

6 in addition to the everyday operations. The goals and initiatives are then incorporated into the budget process for the next year. The 2015 budget impact (not including existing staff time) for each goal/initiative has been noted when applicable. A status report on the 2014 Business Plan follows the 2015 goals. Included in the appendix of the 2015 Business Plan are documents that are helpful in understanding OCERS budget development process. They are intended to provide the reader additional information about OCERS as an organization and how the 2015 Business Plan goals and initiatives fit into the annual budget process. The items included are: A. Existing Organization Chart B. OCERS Department Descriptions C. Budget Authority D. Budget Policy E Budget Summary F. 21 Basis Point Test of 2014 Adopted Budget compared to Accrued Liabilities G. 18 Basis Point Test of 2014 Adopted Budget compared to Total Assets (informational only no longer a required statutory test). H. Historical Actuarial Asset and Liability Data OCERS 2015 Business Plan Page 5

7 Department Goals and Initiatives for 2015 OCERS 2015 Business Plan Page 6

8 Executive 1. Begin Administrative Rule creation process (5 year anticipated timeline) 2. Continue investigating Incentive Pay Program for Investment Team 3. Rewrite the OCERS Strategic Plan; consider expanding the plan to a five year future outlook 4. Visit 2 California retirement systems for on-site overview Budget Impact: $3, Plan for all OCERS Managers to visit another California pension system as an educational process improvement opportunity Budget Impact: $2, Continue investigating Baldrige Performance Excellence Program a. On-site visit of Illinois Municipal Retirement i. #1 system in CEM, ii. Presently undertaking multi-year program to implement Baldrige Budget Impact: $1, Accompany Investment staff on local due diligence trips. Completed 8. Investigate converting the existing annual Strategic Planning meeting and the Board Educational Forum into a single event that spans two days Budget Impact: $5,000- Completed Information Technology 9. V3 Implementation Budget Impact: $4,500,000 (for year 5 of 5+ year project-total project budget is $27.6 million) a. Project Management b. Member document conversion from LibertyNet to V3 (deferred from 2014) c. Coordinate with Plan Sponsors on transmittal and healthcare deduction submissions and training of Employer Self Service and Partner Self Service Portals i. New file formats OCERS 2015 Business Plan Page 7

9 ii. Development of Plan Sponsor Processing Guides iii. Engagement in UAT activities d. Testing (by IT) i. Interface files (Bank Files, IRS, EDD, etc.) ii. Transmittal files iii. Configuration setup iv. Security and access e. Data Conversion f. Data Reconciliation i. Reconciliation to audit data conversion ii. Reconciliation to audit V3 processing (payroll, COLA, etc.) g. Development of new and translation of existing business reports from Pension Gold to V3 for adjunct processes i. Actuarial Extract, CAFR, State Controller Office ii. OCERS by the Numbers iii. Member Service, Disabilities, and Finance operations h. Development of additional Workflows in V3 i. Development of V3 queries j. Performance testing of V3 application and portals k. Penetration testing of V3 portals l. Development of new business processing documents for IT activities related to V3 (deferred from 2014) m. IT support for V3 Data Conversion activities n. IT support for V3 Data Cleansing activities o. IT support for V3 Testing activities p. IT support for V3 Training activities 10. Equipment Upgrades & Replacement a. Upgrade dual monitor setups - Completed Budget Impact: $30,000 b. Internet gateway and guest Wi-Fi services Budget Impact: $10,000 OCERS 2015 Business Plan Page 8

10 c. Digital microfiche reader Budget Impact: $20, OCERS Web site Assist Communications as technical support (multi-year project) Deferred to 2016 a. Outsource Web site re-design with a hosted content management solution Budget Impact: $250, OCERS Intranet (multi-year project) a. SharePoint Developer Budget Impact: $115,000 b. Migrate non-member documents from LibertyNet to SharePoint c. Develop a document library structure for: i. OCERS Policy Documents ii. OCERS Business Process Documents iii. OCERS Personnel Documents iv. OCERS Training Documents v. OCERS Contracts vi. OCERS Public Records Request d. Create standard forms, templates, widgets and pages for departments (i.e., Meetings, calendars, Action Items, etc.) Budget Impact: $20, Implementation of Business Continuity (BC) and Disaster Recovery (DR) Solution Budget Impact ranges from $1.68M - $2.35M a. Define and establish overall IT DR solution based on defined business requirements, acceptable risk assessment and min/max downtime and recovery time. b. Replication, co-location, backup and recovery, remote access and support Budget Impact: $145,000 - $250,000 c. Acquire and install new hardware Budget Impact: $500,000 d. Implement emergency mass notification system OCERS 2015 Business Plan Page 9

11 Finance Budget Impact: $60,000 to $100,000 e. Upgrade existing Data Center facilities equipment: (deferred from 2014) f. Replace UPS unit, water-based fire suppression, central A/C unit for the server room and install power generator for Data Center, additional work space and supporting facilities Budget Impact: $975,000 - $1,500,000 g. Create OCERS Business Continuity Plan h. Create OCERS Business Resumption Approach for IT (Disaster Recovery Run Book) i. Create BC/DR annual testing and review schedule 14. Continue active participation in the implementation of V3, including the dedication of 3-4 full time UAT testers from Finance with the following areas of focus: a. UAT Deployment Prep/Testing b. UAT Training c. UAT d. Parallel (all Finance V3 users) e. Budget Impact: Included in V3 Total Project Budget in IT Department 15. Working together with external auditors and actuary, implement GASB 67 in OCERS 2014 financial statements and assist Plan Sponsors with the implementation of GASB 68 in their FY14/15 financial statements which will include - Completed a. Creation of new RSI schedules in CAFR required by GASB 67 that will be built into 10 years of required information b. Schedule of Change in Net Pension Liability c. Schedule of Contractually Required Contributions d. Schedule of Annual Money Weighted Returns e. Expand or create new footnotes required by GASB 67 in the following areas: i. Plan membership ii. Investments OCERS 2015 Business Plan Page 10

12 iii. Components of Net Pension Liability (NPL) iv. Sensitivity of NPL to changes in discount rate v. Significant Actuarial Assumptions used to measure Total Pension Liability f. Provide Plan Sponsors with their proportionate share data and supporting schedules to assist them with their required GASB 68 disclosures Budget Impact: $100, Explore the benefits and process of changing OCERS s financial reporting year from a calendar year to a fiscal year that would end on June Prepare and solicit an RFP for the engagement of an independent auditing firm to perform audit related services effective as of the December 31, 2015 (per OCERS policy) 18. Participate in the Disaster Recovery/Business Continuity Solution Project 19. Work with Investments to issue an RFP for investment custodial services in 4 th quarter subject to completion of key V3 milestones which are competing for department staff resources required to undertake the custodian procurement process. Deferred to 2016 Administrative Services 20. Migrate contracts and forms from LibertyNet to SharePoint (collaboration with IT as part of Intranet project continued from 2014) 21. Partner with Legal to complete the revision of the Personnel, Policies & Regulations and Employee Handbook (Include working with Fiduciary Counsel continued from 2014) Budget Impact: $60,000 (to be included in fiduciary counsel line item in Board department) 22. Conduct an Employee Opinion Survey. Deferred to Implement Electronic Employee Exit Survey (coordination with IT and the Intranet project) OCERS 2015 Business Plan Page 11

13 25. Provide OCERS direct employees an on-site training session (by HR staff) 26. Create internal career ladders in departments where workloads and job responsibilities have indicated a need 27. For the 2016 budget process, work with the CEO and Investments to develop an investment analyst retention strategy to enhance OCERS market competitiveness for non-managerial investment professionals when they have acquired highly marketable and transferable experience 28. Implement security enhancements to OCERS headquarters building Budget Impact: $55, Participate in the Disaster Recovery/Business Continuity Solution Project Member Services 30. Provide technical support to the Pension Administration Software team through the next phase of the V3 implementation project a. Pre-UAT testing Builds 4.1 and 4.2 b. Data Cleansing c. Training Staff and Plan Sponsors d. Forms, Documents and Letters e. User Acceptance Testing f. Parallel (all Member Services V3 Users) 31. Cross train staff; with a focus on developing desk manuals that integrate business processes to revised functions developed in conjunction with the V3 project 32. Assist Legal with the Administrative Rule creation process (5 year anticipated timeline) 33. Participate in the Business Continuity and Disaster Recovery Solution Project Disability 34. Provide technical support to the Pension Administration Software team through the next phase of the V3 implementation project a. UAT Training OCERS 2015 Business Plan Page 12

14 b. Forms, Documents and Letters c. User Acceptance Testing d. Parallel (all Disability V3 Users) - Completed 35. Create a policy on reexaminations for disability retired members 36. Work with the Legal Department as well as a consultant to develop options for improving efficiencies to the disability retirement adjudication process a. Budget Impact: $40, Assist Legal with the Administrative Rule creation process (5 year anticipated timeline) Communications 38. Lead the redesign of the OCERS Web site utilizing the IT department for technical support a. Budget Impact: included in IT budget Deferred to Utilize video production and editing resources to create training videos related to the V3 project Completed 40. Train Communications staff on V3; with specific focus on content management of the Member Self Service (MSS) and Employer Self Service (ESS) portals 41. Participate in the Business Continuity and Disaster Recovery Solution Project Internal Audit 42. Perform audit of data conversion from PensionGold to V3. Audit would include use of consultant to assist with testing Budget Impact: TBD (RFP is in process) 43. Use audit software to analyze pension administration data for risk assessment; audit would involve use of data analysis consultant Budget Impact: $20,000 OCERS 2015 Business Plan Page 13

15 44. Work with other retirement systems to explore joint audits; would likely involve audit of investment manager fees (cost will include travel to site) Budget Impact: $5,000 Legal 45. Begin Administrative Rule creation process working in collaboration with Member Services and Disability (5 year anticipated timeline) 46. Partner with Administrative Services to complete the revision of the Personnel, Policies & Regulations and Employee Handbook (includes working with outside fiduciary counsel continuation from 2014) 47. Review and update the existing OCERS template for domestic relations orders, and work with IT toward including a fillable electronic form on OCERS website 48. Issue a request for information for an international securities fraud monitoring firm 49. Issue a request for proposal for additional hearing officers 50. Assist the Board in the external fiduciary counsel selection process pursuant to a request for proposal 51. Work with the Governance Committee and Board toward: a. Finalizing rules of parliamentary procedure for Board/Committee meetings b. Implementing Hewitt Ennis Knupp (HEK) recommendations from HEK s governance review 52. Provide technical support to the Pension Administration Solution implementation team Investments 53. Further strengthen portfolio risk management functions and evaluate the concept of conducting asset allocation based on risk factors 54. Evaluate asset class benchmarks to ensure appropriate fit 55. Formally evaluate smart beta strategies as an alternative to capitalizationweighted equity indices (if interest is shown at October 2014 education session) Completed OCERS 2015 Business Plan Page 14

16 56. Conduct pacing studies for direct lending, private equity, real estate and real return to ensure appropriate level of allocation 57. In the midyear 2015 Fee Report, continue to evaluate investments related costs to improve net of fee returns Completed 58. Continue trustee education in relevant aspects of asset allocation, risk and the various asset classes 59. Establish ongoing annual on-site staff due diligence reviews of 75% of all investment managers, with a program to review all managers on site every 18 months 60. Begin development of a 10-year vision of OCERS portfolio size, structure, governance, staffing and advisory configuration. Include research on characteristics of 5-8 $25 billion pension plans 61. Initiate development of a 10-year plan for private equity that replaces or reduces reliance on fund of funds managers by building or recruiting highly experienced and specialized internal staff expertise. Explore alternative feasibility of a jointlyoutsourced deputy CIO for private equity 62. Complete by the end of 1Q15 all research necessary to formalize and implement an equity tail risk management strategy, at least as a contingency or future strategy Completed 63. Complete by the end of 1Q15 all research necessary to implement a macro strategy to manage foreign currency risk exposure in our international portfolio allocations Completed 64. Present to the Investment Committee in 2H2015 a strategy for opportunistic investment, including possible co-investment with other public funds, after discussion in 1H2015 with other California pension professionals and the NEPC comparable-client network Deferred to 2016 OCERS 2015 Business Plan Page 15

17 65. For the 2016 budget process, work with the CEO and Human Resources; develop an investment analyst retention strategy to enhance OCERS market competitiveness for non-managerial investment professionals when they have acquired highly marketable and transferable experience 66. Formally review late-cycle market and recession risks and strategies twice in Include this topic in board education sessions or afternoon Committee strategy sessions Completed 67. Conduct a study session or educational session on inflation, inflation risks and alternative portfolio strategies, in 1H2015 Completed 68. Prior to the 2016 budget process, explore and formally articulate alternative strategies for fee and cost reduction and collaborative due diligence through multi-plan cooperatives and/or collectively outsourced senior professional employees 69. By 4Q15 develop and present to Committee a macro portfolio re-risking strategy that would reduce fees paid for alternative investments Completed 70. Work with Finance to issue an RFP for investment custodial services in 4Q15, subject to completion of key V3 milestones competing for Finance department staff resources required to undertake the custodian procurement process. Identify investment-related performance incentive metrics (with symmetrical penalties) to include in the RFP by 3Q14 Deferred to Review the charter of the Manager Monitoring Subcommittee with the board in 1H15 to make formal recommendations to the Committee and Board regarding manager watch and /or replacement Completed 72. Collaborate with other plans during 1H15 to explore providing advanced-level investment education for trustees Deferred to 2016 OCERS 2015 Business Plan Page 16

18 2014 Business Plan Review and Status Update OCERS 2015 Business Plan Page 17

19 2014 Business Plan Review and Status Update OCERS 2015 Business Plan Page 18

20 Executive 1. Update the Agency s Mission Statement. In September 2013 we began discussing the background for an updated Mission Statement. The process will require Board involvement through much of Ongoing: Considered at the September 2014 Strategic Planning Workshop. This item will return to the Board for additional discussion in November Implement a new benchmarking standard for the multi-year Strategic Plan. Replacing the national CEM benchmarking program will entail two approaches self-benchmarking, and possible work with other SACRS systems for peer benchmarking. Ongoing: In meetings with CEM executive representantive in Spring 2014, it was made clear that OCERS is still interested in benchmarking services if they can be made relevant to OCERS tasks, and capacity. CEM is hoping to be on a future SACRS conference agenda in order to engage the entire association and determine what would work best for all parties. Additionally worked with the SACRS CEO work group to discuss interest at that level. Smaller systems facing tight budgets are not interested, so this may be a tough projet to get through the SACRS process. Presently the Strategic Plan has three internal benchmarks created to measure effective and efficient use of resources, while the OCERS management team continues to consider what additional internal benchmarks may be of value. 3. Analyze, develop and initiate implementation of a comprehensive disaster recovery and business continuity plan: Estimated cost $500K. Initiate discussions with other pension systems, SACRS and the County of Orange on potential partnering opportunities to create cost efficiencies. Ongoing: The team got underway this summer with initial overview shared with the Board at the September 2014 Strategic Planning Workshop. 4. Implement customer service integration across OCERS departments (the Washington state model). Launch a program of outreach to all new retirees, for lessons learned, while engaging the ENTIRE OCERS management team in that outreach. Ongoing: The materials used by the State of Washington Employees Retirement System have been received. Telephone conference call held with a Washington State manager to determine how best to institute. Presently under consideration by the OCERS management team. OCERS 2015 Business Plan Page 19

21 5. Investigate Baldrige Performance Excellence Program. Overseen by the US Department of Commerce s National Institute of Standards and Technology, this multi-year process will help OCERS engage itself in organizational improvement and excellence. The Baldrige Program oversees the nation s only Presidential award for performance excellence while offering criteria, assessments, tools, training and a community for those dedicated to helping organizations improve. Ongoing: Completed the initial review of the Baldrige program materials. Commenting on this to the Board at the September 2014 Strategic Planning Workshop, it was indicated that Mr. Delaney would like to continue the investigation of this program in to 2015 with a visit to Illinois Municipal, one of the first public pension funds in the country to undertake the effort. At the same time the team also wants to investigate a general agency approach to Enterprise Risk Management, which shares similarities to the Baldrige program, to determine which might be the better route for OCERS moving forward. 6. Plan for all OCERS Managers to visit another California pension system as an educational and process improvement opportunity: estimated cost $2,800. Completed. 7. Investigate Investment Department incentive pay program. Delayed in 2013 due to the ongoing need to first complete and approve a foundational agency Compensation Philosophy, this initiative will continue in Three steps are envisioned: Review pros and cons of other programs across the country Craft a model that fits OCERS goals, mission and culture Test a pilot program Ongoing. This topic will be discussed in further detail as part of the 2015 budget discussions with the Board. OCERS 2015 Business Plan Page 20

22 Investments 8. Develop a late-business-cycle and/or equity tail risk portfolio strategy for subsequent or timely implementation. Ongoing: Further discussions scheduled for fourth quarter of Complete the build-out of the direct hedge fund investment program. Completed. 10. Complete all searches to conclude 2013 revisions in the asset allocation plan by end of 1st quarter All searches are complete, with the exception of the real return program manager (metals and mining) 11. Provide new trustee training on investments at OCERS and investment related ethics. New trustee training has been completed in the areas of asset allocation, real estate and risk. Trustee training on investment related ethics is pending. 12. Complete review of real estate strategic plan and implement changes to the program in 1st quarter Lowered core target, completed the hiring of real estate debt managers. Continued review of real estate strategic plan including pacing analysis is scheduled for fourth quarter of Review commitment levels and pacing for private equity. Reviewed the private equity program and pacing analysis in the first quarter, subsequently committed $100 million to Pantheon for commitments will be reviewed in the fourth quarter Review existing managers due diligence and monitoring policies. To be discussed with the I/C in the fourth quarter 15. Continue research and development of collaborative or cooperative investment procurement strategies; implement if feasible. Ongoing: continue discussions at SACRS & CALAPRS OCERS 2015 Business Plan Page 21

23 16. Continue to build out a more comprehensive risk monitoring and management platform. Ongoing: Enhancements are ongoing, basic program structure in place 17. Explore the feasibility of customizing a family of appropriate age/risk-based fundsof-funds that efficiently employs OCERS portfolio or strategies. Deferred: County officials have indicated that there is no further interest in this area at the present time. 18. Streamline capital call process through State Street Private Edge. Deferred: State Street is still in the process of development, the template has not been rolled out to clients. 19. Develop reporting tools for proxy voting surveillance. Ongoing: ISS has presented a reporting template to the Investment Committee. Information Technology 20. V3 Implementation Ongoing: A key component completed this year is the Data Reconciliation database schema where data is pulled from V3 and Pension Gold and laid side by side to generate reports and perform the reconciliation. The same schema design also lays the foundation for OCERs reporting and data inquires after we go live and helps in building our knowledge and understanding of how our data lies in V Complete long-term OCERS IT staffing plan Ongoing: Began the development of an IT Strategic Plan to lay out the desired vision that defines ITs future within OCERS, specific IT strategic goals and strategies and objectives for meeting the needs of staff, our membership and the overall business. All of these factors will play a part in determining the long term staffing requirements, skills and effort needed to support the plan. Through utilizing Gartner, have received expert advice regarding best practices. With regards to V3, more time is needed to understand and map out the long term level of effort and skills needed to support V3 post go-live. 22. Update OCERS internal reporting services OCERS 2015 Business Plan Page 22

24 Completed: Over the past year, our IT Programming staff have re-engineered OCERS network to create the Data Aggregation Center (DAC) which centralizes OCERS data from various applications to facilitate reporting and allows reporting from data from multiple sources. Several reporting portals have been created to allow staff the ability to access the information and reports they need on demand. The Management Information System (MIS) was created as the one-stop-shop for centralized aggregation of critical business data. The MIS provides executives and staff enterprise level reports and dashboards, business process reports (Actuarial, OCERS by the Numbers), budget reports (w/automatic quarterly reminders to review these reports), and business metrics (phone counts, etc.) Other portals developed this year: OCERS Membership Data Systems (MDS) allows Member Services staff to search and view overall information or with one click drill downs into specific member s current and historical data. The site also contains quick and easy access to all Member Service operational reports including exception reports and data cleansing reports for our V3 project. OCERS Financial Data Systems (FDS) allows Finance staff access to budget, payroll and transmittal reports OCERS Personnel Data Systems (PDS) serves as the platform for all employee information, including training and Personal Action Notices (PAN) forms to request time off. OCERS IT Central manages IT projects and tasks, including asset tracking, and simplified user account management. IT Central will be the basis for the soon to be released IT Helpdesk ticket tracking system. IT continues to work with the department leads to determine the reporting and data needs for each department and is reviewing the 12,000+ inventory of reports (current and historical) that exist. 23. Redesign OCERS Intranet Completed: The official roll-out of OCERS new Intranet homepage is scheduled for October Included with the rollout will be the first introduction to OCERS Personnel Data System where staff will be able to create and submit their electronic PAN forms to request time off (complete with management workflow for approvals). Functionality to streamline the way HR staff reconciles PAN requests with the County s VTI Time Keeping system where staff reports their time, saving them several hours of work each pay period was added. In addition to the electronic PAN forms, IT Central will be rolled out which is a tool for staff to submit helpdesk requests, and setup a contract management system to track and manage OCERS vendor and other contract types. OCERS 2015 Business Plan Page 23

25 24. Redesign OCERS Web site Ongoing: Project team has held meetings to define the particular functionality and design aspects desired as part of OCERS new public web site. In addition, recommendation made to outsource the design of the web site and implement a content management solution on a hosted server which would allow designated staff the ability to update content from multiple devices without having to have any web programming knowledge or skills. 25. Implement online streaming and archiving of Board meetings Deferred: This project is moved to 2016 post V3 go-live where we will resume our investigation into our options and costs for streaming and archiving video copies of our board meetings to the general public. Member Services 26. Provide technical support to the Pension Administration Software Solution team through the next phase of the V3 implementation project. Goal includes work in the following areas: Pre-UAT testing Builds 2&3 Data Cleansing Training staff and plan sponsors Forms, documents and letters Final Detail Design Specifications Imaging Ongoing 27. Facilitate staff roundtable discussions addressing end to end processes that cross multiple divisions (Legal, IT, Finance). Ongoing 28. Continue to review and revise policies and procedures related to critical business areas (with Legal) in conjunction with V3 implementation. Ongoing 29. Scan terminated paid records currently being stored offsite, into Liberty. Deferred OCERS 2015 Business Plan Page 24

26 30. Adjust the current staffing plan for Member Services by: Disability Legal Adding a Member Services Supervisor (Total annual comp cost: $110K). Consolidating two long term temporary positions into a full time Office Technician ($60K total comp less $70K in temp costs = $10K net savings). Completed 31. Provide technical support to the Pension Administration System Solution team throughout the next phase of the V3 implementation project. Goal includes work in the following areas: Pre-UAT testing Forms, documents and letters Ongoing: The disability team has participated with testing of the application, as well as working on developing the letters and forms related to disability retirement that will be managed in V3. In addition, once the workflow module is fully developed and deployed on-sight the disability team to assist in its testing. 32. In conjunction with Legal, continue to review and revise policies and procedures related to critical business areas as well as disability retirement process for the V3 implementation. Ongoing: Several policies are being reviewed to streamline the process in V3. The disability team is also working with the legal department to formalizing reexamination processes and will be developing procedures required to fully support and document that policy. 33. In conjunction with Legal, examine the Administrative Record compilation process and formalize a procedure to standardize it for use in each phase of a member s retirement benefit application processing and appeal. Completed. 34. Explore the creation of a Public Records request form to be posted on the OCERS website and a work flow triggered upon submission. Deferred: We have had some preliminary discussions with IT programming staff regarding this project. They are very willing to assist, but the project has been on hold due to the V3 project. OCERS 2015 Business Plan Page 25

27 35. Review OCERS contracting process and develop a standardized vendor contract procedure with associated forms. Ongoing: Contract cover sheet has been completed. 36. Review and update the existing Domestic Relations Order (DRO) templates. Study feasibility of adding a DRO fillable form to OCERS website. Deferred: Currently on hold while IT is working on V Issue a Request For Information for an international securities monitoring firm. Ongoing: internal discussion, research and planning commenced. 38. In conjunction with the Disability unit, examine the Administrative Record Compilation process and formalize a procedure to standardize it for use in each phase of a member s retirement application process and appeal. Completed. 39. Partner with Administrative Services to complete the revision of the Personnel Policies & Regulations and Employee Handbook. Ongoing. 40. Provide technical legal support to the Pension Administration System Solution team throughout the next phase of the V3 implementation project. Ongoing. 41. Address IRS technical issues that arise during the IRS determination letter and VCP application review. Ongoing: At its August 27, 2014, the OCERS Board approved the proposed IRS regulations. The final step is to obtain the approval of County Board of Supervisors. That procedure is underway. Communications 42. Redesign the At Your Service member newsletter. Completed: A major redesign was completed beginning with the Winter 2014 issue. We continue to refine and enhance the redesigned publication with each issue. 43. Participate in the redesign of the new OCERS Web site (project will be a multi-year implementation). OCERS 2015 Business Plan Page 26

28 Ongoing: This project is in the early stages, and will be ongoing through 2015 and likely into early Develop a focus group pool, that includes OCERS retirees, and utilize the group at least annually to maintain contact and obtain feedback on current initiatives and/or projects. Completed: The Communications division has completed a number of interviews with members related to the At Your Service redesign, and is compiling a list of members willing to be interviewed on other new initiatives in the future. 45. Utilize video production, and editing resources to create training videos related to the V3 project. This would likely include videos for staff, members and plan sponsors. Deferred. 46. Continue to assist I.T. with the development of OCERS new Intranet. Finance Ongoing. 47. Assess current processes for all facets of the contribution and payroll disbursement functions. Determine through testing and implementation of V3 what impact the new software will have on these processes including the cross-departmental functions (Finance, Member Services, IT) Identify and plan for potential realignment of job responsibilities. Ongoing: Tentatively identified a list of processes related to transmittals, retiree payroll, 1099 extract, import/export of files, and cash receipts as potential areas for realigning job duties. As V3 moves forward, we will continue to assess impact on processes and the need to realign duties or make changes to procedures. 48. Actively participate in and support the Pension Administration System Solution team in the next phase of the implementation of V3. Goal includes work in the following areas: Final Detailed Design Specifications Pre-UAT testing Training Ongoing: Finance has been actively involved in assisting with the implementation of V3, including reviewing and approving design specifications, attending regular GL Export meetings, and dedicating 3-4 staff members for hands-on participation OCERS 2015 Business Plan Page 27

29 in pre-uat testing for Builds 2, 3.1 and 3.2 and assigning a Finance SME to assist with development of training plan for V Continue making progress towards the implementation of GASB 67 & 68 Continue ongoing communication with plan sponsors, external auditors, actuaries and other pension systems. Ongoing: Staff has been in regular contact with our actuaries and independent auditors as we move forward with a plan to implement OCERS s GASB 67 reporting requirements in FY14, as well as the information that we will need to provide to our Plan Sponsors as they implement GASB 68 in their FY15 financials. Multiple meetings were held with all Plan Sponsors, Segal and MGO to discuss the technical apsects of implementation. In addition, Brenda Shott is developing a Q&A/Fact Sheet that will serve as an executive level communication plan for our Plan Sponsors and stakeholders. 50. Work with State Street (custodian) to implement and test automated download of investment statements. Estimated cost: $12K-$15K. o Eliminate manual entry of investment journal entries. Complete: Completed this goal using an alternative method of directly downloading information from State Street s website into an Excel spreadsheet at no additional cost to OCERS, eliminating the need to use the $15K budgeted for a customized program that would accomplish essentially the same task. Human Resources/Administrative Services 51. Partner with IT to implement electronic Personnel Action Notice (PAN) forms as part of the revised OCERS intranet Completed: PAN form designed and created by IT, implementation date coordinated with revised Intranet site rollout in 4 th Quarter. 52. Migrate contracts and forms off the Liberty system into SharePoint Deferred: In connection with the V3 implementation this project completion date has been moved to Partner with Legal to complete the revision of the Personnel, Policies & Regulations and Employee Handbook Ongoing: Developed the scope of the revisions need to the PP&R and Employee Handbook. The project requires revising not only the typical handbook policies but also some of the complex policies that include updates to Federal leave laws and the employee discipline process. While we understand that OCERS has the right to revise policies, staff is consulting with outside Counsel, ReedSmith, to assist with reviewing the legal implications of the proposed revisions. Project completion date will be in OCERS 2015 Business Plan Page 28

30 54. Revamp in-house Human Resources training program for OCERS (including onsite contractors) for EEO required trainings- Completed: OCERS Direct Employees training completed. 55. Convert a long term Extra Help Part-Time HR Staff Assistant into a Regular Part- Time position (estimated additional cost: $10K) In progress: new permanent position slated to be filled in Oct Study and implement cost saving opportunities related to postage and courier services Completed: New postage machine procured, staff is fully trained on new equipment. Initiative in place for staff to utilize United States Priority Mail as an alternative to Federal Express. 57. Partner with the property manager to implement a building maintenance schedule Completed: Maintenance schedule created to track the upkeep of the services performed on the building. 58. Perform a full building HVAC evaluation and procure required services needed to address the long standing building temperature issues (estimated cost: $50K)- In progress: Several upgrades to HVAC have been completed to include the installation on new thermostats, splitting of air vents and full physical assessment of the 3 HVAC units. Internal Audit 59. Perform audits to address key risks to OCERS, addressing accuracy of systems and data. In progress: Following the 2014 Audit Plan, Internal Audit is performing or will perform audits of derivatives, actuarial extract data, payroll transmittals from the County, payroll transmittals from Sanitation District, due diligence, data conversion from PensionGold to V3, and a plan sponsor review. 60. Incorporate the use of ACL Audit Exchange software. Perform 100% sample testing during audits when applicable. Automate audit test procedures currently done manually. In progress: Internal Audit is applying data analysis tools to every audit. Internal Audit is using ACL data analysis software to accomplish this. Internal Audit is applying 100% sampling when the data is accessible. Internal Audit is OCERS 2015 Business Plan Page 29

31 investigating how to automate test procedures currently done manually, especially for repetitive audits such as payroll transmittals. Internal Audit is also investigating how to apply data analysis tools to their risk assessment. 61. Work with other retirement systems to explore joint audits of investment managers & custodian. In progress: Internal Audit is in discussions with audit departments of other California public retirement systems about performing joint audits. If we can agree on objectives and scope of work, OCERS Internal Audit will pursue these audits, though it will probably not be completed in OCERS 2015 Business Plan Page 30

32 Additional Departmental Accomplishments in 2014 OCERS 2015 Business Plan Page 31

33 Executive OCERS Year in Review outreach was completed by August. Annually the OCERS Executive team goes out in the field to meet with the executive teams of each plan sponsor, and of the majority of the labor groups working with OCERS members. Additionally, the CEO accompanies the Chair and Vice Chair of the OCERS Board in similar presentations that are provided individually to the five members of the County of Orange Board of Supervisors. Established ongoing relationship with both the general staff and management staff labor groups at City of San Juan Capistrano. Not previously part of our outreach efforts, following a presentation by Mr. Delaney to the San Juan City Council, he was approached by labor representatives of both groups. Subsequently Ms. Jenike and Mr. Delaney went out to give a presentation to their memberships. They are now included in Mr. Delaney s Board meeting mailings. Additionally, the OCERS Executive Team met with both of their executive teams for the first time as part of the OCERS Year in Review Outreach. Established working communications with the Contract Cities as requested by the OCERS Board of Retirement. Working together with OCFA and the Sheriff s Department, a contact process has been put in place that provides both previews and updates on those OCERS-related issues that have greatest impact on Contract Cities budgets. Additionally, Mr. Delaney communicates directly with those contract city representatives who have been attending the OCERS Board meetings. A special meeting was held at OCERS for all contract city representatives in September to address their concerns regarding the OCERS rate setting process. Investments By the end of October 2014, the Manager Monitoring Subcommittee will have met with 24 managers in its work to monitor and oversee OCERS investment managers Completed Best Ideas Emerging markets equity search OCERS 2015 Business Plan Page 32

34 Completed review of real return strategy allocation Prepared and delivered the most extensive, comprehensive annual Fee Report of its kind; considered a model by other public pension professionals Prepared and posted on Board Vantage thumbnail summaries of OCERS investment managers, with fee and performance information, as reference materials for trustees Information Technology Equipment Upgrades Purchased two large scale Printers for printing Retiree Payroll Checks, Advices and 1099-R s. The new printers are faster and more economical and efficient in their consumption of toner and electricity, and by having two we allow for redundancy and Business Continuity should one printer ever go down. The new printers replace equipment that was over 10 years old for which parts and service are no longer easily obtainable. Purchased a new pressure sealer for sealing Retiree Payroll Checks, Advices and 1099-R s. The new sealer replaces equipment that was over 15 years old and allows for faster sealing, which combined with the new printers is estimated to save OCERS 3-4 hours of Staff time per month in the Printing and Sealing of OCERS Retiree Payroll Application Upgrades and New Installations Upgraded from Microsoft Dynamics SL version 7 to Dynamics SL version 2011 Completed migration of all databases to SQL Server 2008 Installed OpenDNS Content Filtering system to enforce network security and protect OCERS equipment and data from malicious software, virus or other webbased security hacks to our systems and mobile devices. SharePoint Finalized structure for new intranet roll-out including several new sites and libraries including: o Policies & Procedures Center o Business Processes Center o Training Center Redesigned Global Search functions and enhance the user interface OCERS 2015 Business Plan Page 33