Agenda Item 8

September 18,2012

Public Hearing

MEMORANDUM

September 14, 2012

TO:

FROM:

County Council

Robert H. Drummer, Senior Legislative Attorney

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{':( Michael Faden, Senior Legislative Attorney

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SUBJECT:

Public Hearing:

Bill 24-12, Board of Investment Trustees - Consolidated Retiree

Health Trust Board of Trustees - Delegation - Attendance

Bill 24-12, Board of Investment Trustees - Consolidated Retiree Health Trust Board of

Trustees - Delegation - Attendance, sponsored by the Council President at the request of the

County Executive, was introduced on July 31, 2012. A Government Operations and Fiscal

Policy Committee worksession is tentatively scheduled for October 8 at 2:00 p.m.

Bill 24-12 would amend the County's retirement law to allow the Board of Investment

Trustees, which oversees the investment programs for the County's Employee Retirement Plans,

including the Employees' Retirement System, Retirement Savings Plan and the Deferred

Compensation Plan, to delegate certain duties as it deems appropriate and consistent with its

fiduciary duties and its written policies and procedures.

The Bill would also amend the current law governing automatic removal of a member of

either the Board of Investment Trustees or the Consolidated Retiree Health Trust Board of

Trustees for missing meetings. Bill 24-12 would make the automatic removal laws for these

Boards consistent with the law governing all other County boards and commissions.

This packet contains:

Bi1l24-12

Legislative Request Report

Transmittal Memo from County Executive

Fiscal and Economic Impact Statement

F:\LAW\BILLS\1224 Delegation Legislation-BlT • CHRBT\Public Hearing Memo.Doc

Circle #

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Bill No.

24-12

Concerning:

Board of Investment

Trustees - Consolidated Retiree

Health Trust Board of Trustees ­

Delegation - Attendance

Revised: July 16,2012 Draft No. _1_

Introduced:

July 31,2012

Expires:

January 31, 2014

Enacted: _ _ _ _ _ _ _ _ _ __

Executive: _ _ _ _ _ _ __

Effective: _ _ _ _ _ _ _ _ __

Sunset Date:

-'N-'-'o~n:.=e'__

_ _ _ _ __

Ch. _ _ Laws of Mont. Co. _ __

I

COUNTY COUNCIL

FOR MONTGOMERY COUNTY, MARYLAND

By: Council President at the Request of the County Executive

AN

ACT to:

(1)

(2)

(3)

(4)

(5)

authorize the Board of Investment Trustees to adopt written policies and

procedures to delegate certain duties;

modify the laws concerning excused absences for a member of the Board of

Investment Trustees;

modify the laws concerning excused absences for a member of the Consolidated

Retiree Health Trust Board of Trustees;

generally amend the law regarding the Employees' Retirement System,

Retirement Savings Plan and Deferred Compensation Plan; and

generally amend the law regarding the Consolidated Retiree Health Benefits Trust

Fund.

By amending

Montgomery County Code

Chapter 33, Personnel and Human Resources

Sections 33-59, 33-60, 33-125, 33-145, and 33-160

Boldface

Underlining

[Single boldface brackets]

.QQJJble.JJ.ruieIilnlng

[[Double boldface brackets]]

* * *

Heading or defined term.

Added to existing law by original bill.

Deletedfrom existing law by original bill.

Added by amendment.

Deleted from existing law or the bill by amendment.

Existing law unaffected by bill.

The County Council for Montgomery County, Maryland approves the following Act:



Bill No. 24-12

Sec. 1. Sections 33-59, 33-60, 33-125, 33-145, and 33-160 are amended

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3

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as follows:

33-59.

(c)

Board of investment trustees.

*

Vacancies.

(1)

*

*

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6

7

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A trustee [who is absent from more than 25 percent of the

scheduled meetings of the Board during any 12-month period

has resigned from the Board. Scheduled meetings mean

meetings held at least 7 days after notice of the meeting.] may

be automatically removed for missing meetings as described in

Section 2-148(b ).

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to

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*

(t)

*

*

l3

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Written policies.

(1)

The Board must establish written policies to administer and

invest the funds created by this Article and to transact the

business of the trust and the retirement system.

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(2)

The Board must apply the policies to all members and

beneficiaries of the retirement system and must not discriminate

in favor of or against any member or beneficiary of the

retirement system.

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ill

Any delegation of duties

Qy

the Board under Sections 33-60,

33-125 or 33-145 must be specified in written Qolicies and

procedures.

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(g)

Officers.

The Board must select a chair, vice chair, and secretary

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from the Board's members.

(1)

The chair must preside at meetings of the Board and may take

administrative action [, including executing an instrument,] on

~LAW\BILLS\1224

Delegation Legislation-BIT - CHRBTl.Billl.Doc

26

27

if)



Bill No. 24-12

28

behalf of the Board. [A person may rely in good faith on an act

of the chair as legally valid.]

(2)

The vice chair must perform the duties and exercise the powers

of the chair when the chair is [absent from the County or

disabled] unavailable, or the Board determines is otherwise

unable to perform the duties of the chair.

(3)

The secretary must record the proceedings and actions of the

Board and may certify a document or action of the Board. A

person may rely in good faith on the secretary's certification as

proof of the document or action.

(h)

Meetings and actions.

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*

[(5)

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*

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The Board may authorize a trustee to execute instruments on

behalf of the Board. The authority must be in writing and

specifically describe the instrument and how the trustee must

execute the instrument.]

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*

33-60.

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*

*

The board of investment trustees-Powers and duties.

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ill

Delegation gf duties.

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The Board may delegate its duties to the

similarly situated County employee as

i!

Executive Director or

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deems appropriate and consistent with its fiduciary duties in

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written

policy and procedure. If the Board has prudently delegated its duties

and monitored the delegation, the trustees must not be liable for an act

or omission made

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its delegate.

33-125.

Powers and duties of the Board.

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*

:/<

*

0..\LAW\BILLS\ 1224 Delegation Legislation-BIT - CHRBnBiJI I ,Doc



Bill No. 24-12

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ill

Delegation

Q[

duties.

The Board may delegate its duties to the

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Executive Director or

similarly situated County employee as it

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deems appropriate and consistent with its fiduciary duties in

written

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59

policy and procedure. If the Board has prudently delegated its duties

and monitored the delegation, the trustees must not be liable for an act

or omission made

by

its delegate.

33-145.

Powers and duties of the board.

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*

ill

Delegation

Q[

duties.

*

~

*

The Board may delegate its duties to the

similarly situated County employee as it

fiduci~

Executive Director or

deems appropriate and consistent with its

duties in

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written

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policy and QLocedure. If the Board has prudently delegated its duties

and monitored the delegation, the trustees must not be liable for an act

or omission made

by

its delegate.

33-160.

Board of Trustees

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*

(c)

*

*

Vacancies.

(1)

A trustee [who is absent from more than 25 percent of the

scheduled meetings of the Board during any 12-month period

has resigned from the Board.

Scheduled meetings mean

meetings held at least 7 days after notice of the meeting.] may

be automatically removed for missing meetings as described in

Section 2-148(b).

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*

*

*

Q

41LAWIBILLSI1224 Delegation Legislation-BIT - CHRBTlBiII l.Doc



LEGISLATIVE REQUEST REPORT

Expedited Bill 24 -12

Board ofInvestment Trustees

-

Consolidated Retiree Health Trust Board o/Trustees

Delegation

-

Attendance

DESCRIPTION:

The Bill amends the County's retirement law to allow the Board of

Investment Trustees, which oversees the investment programs for

the County's Employee Retirement Plans, including the

Employees' Retirement System, Retirement Savings Plan and the

Deferred Compensation Plan, to delegate certain duties as it deems

appropriate and consistent with its fiduciary duties and its written

policies and procedures.

The Bill also amends the attendance provisions of the Board of

Investment Trustees, and the Board of Trustees overseeing the

Consolidated Retiree Health Benefits Trust, to make them

consistent with those that currently apply under County Code

Section 2-148 to all other Boards, Commissions and Committees

and bases attendance on the number of missed meetings.

PROBLEM:

The Bill would pennit the Board of Investment Trustees to delegate

certain duties, such as the execution of contracts, if it deems it

appropriate and consistent with its fiduciary duties, resulting in a

better alignment of the roles and responsibilities of the Board and its

Staff in the oversight of the investment programs and to further

enhance the efficiency of the operation of the programs.

Section 33-59 (which governs the Board of Investment Trustees)

and Section 33-160 (which governs the Board of Trustees for the

Consolidated Retiree Health Trust provides that a trustee has

resigned for missing more than 25% of scheduled meetings in a 12

month period. While the County Code only requires that the

Boards meet four times a year, both Boards currently meet six

times a year. The Boards would like to amend the attendance

requirements to the provision in County Code Section 2-148 which

bases removal on the number of missed meetings.

GOALS AND

OBJECTIVES:

The goal of the Bill is to provide the Boards with the necessary

authority to meet its fiduciary duties in overseeing the investment

programs for the County's retirement plans, and the Consolidated

Retiree Health Benefits Trust, in the appropriate manner.



COORDINATION:

The Board of Investment Trustees, the Board of Trustees, and the

County Attorney's Office have reviewed this Bill.

FISCAL IMPACT:

Office of Management and Budget

ECONOMIC

IMPACT:

EVALUATION:

EXPERIENCE

ELSEWHERE:

Office of Management and Budget

N/A

Numerous other retirement plans, including the Maryland State

Retirement and Pension System,

currently provide for the Boards,

overseeing the investment of retirement trust fund assets, to delegate

certain functions to the Executive Director, or other staff, if such

delegation is established in policies and procedures. The County's

Chief Administrative Officer, in his role as Plan Administrator,

currently has the authority within the Code to delegate his duties.

SOURCE OF

INFORMATION:

Linda Herman, Board ofInvestment Trustees, Board of Trustees

Amy Moskowitz, Office of the County Attorney

Morgan Lewis, outside legal counsel for the Board of Investment

Trustees

APPLICATION

WITHIN

MUNICIPALITIES:NIA

PENALTIES:

NI

A

F:\LA W\BILLS\1224 Delegation Legislation-BIT - CHRBTlLRRDoc



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OFFICE OF THE COUNTY EXECUTIVE

ROCKVILLE, MARYLAND

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Isiah Leggett

County Executive

July 5, 2012

069243

TO:

Roger Berliner, President

County Council

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IsiahLeggett

County Executive

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FROM:

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SUBJECT:

Expedited Legislation - Board of Investment Trustees and Board of

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for

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the Consolidated Retiree Health Trust

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I am attaching for the Council's consideration a bill that would amend the County't::!

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retirement law to allow the Board of Investment Trustees, which oversees the investment programs for the

County's Employee Retirement Plans, including the Employees' Retirement System, Retirement Savings

Plan and the Deferred Compensation Plan, to delegate certain duties as it deems appropriate and

consistent

with

its fiduciary duties and its written policies and procedures.

The County Code establishes the Board of Investment Trustees in Section 33-59 and

provides the Board the power to invest the assets of the retirement system, authority to direct the payment

of benefits, and describes other actions to be taken in Sections 33-60 and 33-61. The Board has been

advised by its legal counsel that the delegation of its duties is permitted under common law. However,

the Board's legal counsel has advised it that the delegation authority should be provided in its governing

document, the County Code. Numerous retirement plans, including the Maryland State Retirement and

Pension System, currently provide for the Boards overseeing the investment of retirement trust fund

assets to delegate certain functions to staff. This bill would allow for a similar delegation of duties as the

Board deems appropriate and consistent with its fiduciary duties and its written policies and procedures.

The bill also changes the attendance requirements for both the Board of Investment

Trustees and the Board of Trustees which oversees the assets of the Consolidated Retiree Health Benefits

Trust to make them consistent with those that currently apply under County Code Section 2-148 to all

other County Boards, Commissions and Committees.

Section 33-59 (which governs the Board of Investment Trustees) and Section 33-160

(which governs the Board of Trustees) provide that a trustee has automatically resigned when the trustee

misses more than 25% of the scheduled meetings. While the County Code only requires that the Boards

meet four times a year, each Board currently meets six times a year. The Boards would like to amend the

attendance requirements to mirror the provision in County Code Section 2-148 which applies to all other

County Boards, Commissions and Committees and bases attendance on the number of missed meetings.

Thank you for your prompt consideration of this bill.

Attachments



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ROCKVILLE,

MAR~~D

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IL

069869

MEMORANDUM

August 20,2012

TO:

FROM:

Roger Berliner, President, County Council

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Jennifer A. Hughes, Director, Office of Management and Buaget

Joseph F. Beach, Director, Department of Finance

Council Bill 24-12 - Board of Investment Trustees - Consolidateq Retiree Health Trust

Board of Trustees - Delegation

SUBJECT:

Attached please find the fiscal and economic impact statements for the above-referenced

legislation.

JAH:nm

c: Kathleen Boucher, Assistant Chief Administrative Officer

Lisa Austin, Offices of the County Executive

Joy Nurmi, Special Assistant to the County Executive

Patrick Lacefield, Director, Public Information Office

Alex Espinosa, Office of Management and Budget

Linda Herman, Board of Investment Trustees

Blaise DeFazio, Office of Management and Budget

Naeem Mia, Office of Management and Budget

David Platt, Department of Finance

\..n ,



Fiscal Impact Statement

Council Bill 24-12 - Board of Investment Trustees ­

Consolidated Retiree Health Trust Board of Trustees - Delegation

1. Legislative Summary

The proposed bill amends the County's retirement law to allow the Board of Investment

Trustees, which oversees the investment programs for the County's Employee Retirement

Plans, including the Employees' Retirement System, Retirement Savings Plan and the

Deferred Compensation Plan, to delegate certain duties as it deems appropriate and

consistent with its fiduciary duties and its written policies and procedures.

The bill also amends the attendance provisions of the Board of Investment Trustees, and

the Board of Trustees overseeing the Consolidated Retiree Health Benefits Trust, to make

them consistent with those that currently apply under County Code Section 2-148 to all

other Boards, Commissions and Committees and bases attendance on the number of

missed meetings.

2.

A~

estimate of changes in County revenues and expenditures regardless of whether

the revenues or expenditures are assumed in the recommended or approved budget.

Includes source of information, assumptions, and methodologies used.

There is no impact on revenues and expenditures.

3. Revenue and expenditure estimates covering at least the next 6 fiscal years.

There is no impact on revenues and expenditures.

4. An actuarial analysis through the entire amortization period for each bill that would

affect retiree pension or group insurance costs.

Not applicable. This bill does not affect retiree pension or group insurance costs.

5. Later actions that may affect future revenue and expenditures if the bill authorizes

future spending.

The bill does not authorize future spending.

6. An estimate of the staff time needed to implement the bill.

No additional staff time is needed to implement the bill.

7. An explanation of how the addition of new staff responsibilities would affect other

duties.

No new staff responsibilities are created as a result of this bill.

8. An estimate of costs when an additional appropriation is needed.

Not applicable.

9. A description of any variable that could affect revenue and cost estimates.

Not applicable.

10. Ranges of revenue or expenditures that are uncertain or difficult to project.

Not applicable.



11.

If

a bill is likely to have no fiscal impact, why that is the case.

The delegation and attendance provisions have no impact on revenues and do not

generate any additional expenses.

12. Other fiscal impacts or comments.

None.

13. The following contributed to and concurred with this analysis:

Linda Herman, Board ofInvestment Trustees

Akiko Kawashima, Board ofInvestment Trustees

Blaise DeFazio, Office of Management and Budget

Naeem Mia, Office of Management and Budget

~~~~Fo.~

Jennifer

A.

Hughes, Director

Office of Management and Budget

Date {

t



Economic Impact Statement

Council Bill 24-12

Board of Investment Trustees - Consolidated Retiree Health Trust

Board of Trustees Delegation

Background:

This proposed legislation (Bill) would:

1. authorize the Board of Investment Trustees to adopt written policies and

procedures to delegate certain duties;

2. modify the laws concerning excused absences for a member of the Boatd of

Investment Trustees;

3. modify the laws concerning excused absences for a member of the Consolidated

Retiree Health Trust Board of Trustees;

4. generally amend the law regarding the Employees' Retirement System,

Retirement Savings Plan and Deferred Compensation Plan; and

5. generally amend the law regarding the Consolidated retiree Health Benefits Trust

Fund.

1. The sources of information, assumptions, and methodologies used.

Not applicable.

2. A description of any variable that could affect the economic impact estimates.

Not applicable. Bill 24-12 would have no economic impact.

3. The Bill's positive or negative effect, if any on employment, spending, saving,

investment, incomes, and property values in the County.

Not applicable. Bill 24-12 would have no economic impact.

@



4. If a Bill is likely to have no economic impact, why is that the case?

The Bill modifies current law so that procedures of the Board are consistent with the

policies and procedures of other County Boards.

5. The following contributed to and concurred with this analysis: David Platt and Mike

Coveyou, Finance

@