COUNCIL AGENDA: = 5/2/2023
ITEM:
cover Sy SAN JOSE Memorandum
CAPITAL OF SILICON VALLEY
TO: HONORABLE MAYOR FROM: Nora Frimann
AND CITY COUNCIL City Attorney
SUBJECT: PUBLIC MEMBER APPLICANTS DATE: April 19, 2023
FOR FEDERATED CITY
EMPLOYEES’ RETIREMENT
PLAN BOARD
BACKGROUND
This Office routinely reviews applications for appointment to City boards and commissions for conflicts of interest, appearance of bias and incompatible office.
The applications generally do not provide complete information; however, they do occasionally disclose potential conflicts of interest or incompatible offices.
The purpose of this memorandum is to summarize our review of the applications submitted by the individuals who will be considered by the City Council for a public member trustee position on the Federated City Employees’ Retirement Plan’s Board.
BOARD DUTIES
In order to analyze potential conflicts, it is necessary to consider the duties of the particular board or commission for which the applicant is seeking appointment.
The Board of Trustees of the Federated City Employees’ Retirement Plan is established under the Municipal Code to manage and administer the plan. The Board’s scope of authority and duties include determining employee eligibility for benefits, establishing contribution rates for employees and the City based on actuarial valuations, commenting on ordinances that propose modifications to the retirement plan and investing retirement funds. The Board is expressly authorized to secure the following types of contractual services:
Actuarial service
Auditing services
Investment management services
Investment performance evaluation services
Proxy voting services ,
Legal services
Other consulting services as the Board deems necessary to carry out its duties and responsibilities under the retirement plan.
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Honorable Mayor and City Council
Subject: Federated Retirement Board Conflicts Review
April 19, 2023
SUBSTANCE OF CONFLICTS REVIEW
Incompatible Office
The doctrine of incompatible offices is contained in Government Code section 1099. To fall within the Doctrine of Incompatible Offices, two elements must be present.
e Hold two public offices simultaneously, and
e A potential conflict or overlap in the functions or responsibilities of the two offices must exist.
Appearance of Bias
There may be facts which would not amount to a legal conflict of interest, but which could require a Board trustee to recuse him or herself from a Board vote or discussion, because of an appearance of bias on the part of the Board. City Council policy requires Board members to be free from bias in their decision making, and may require a Board member to recuse him or herself if the facts could reasonably lead one to conclude that the Board member would be biased for or against a person or entity.
Legal Conflicts That May Preclude Board Contracts
Because the Board has independent contracting authority, Board member conflicts of interest preclude the Board from contracting with entities in which a trustee has a financial interest. (Government Code Section 1090) For the Federated City Employees’ Retirement Plan Board, it is not adequate for a trustee to recuse him or herself from participating in a Board discussion or from voting on matters coming before the Board. The trustee with the conflict must either resign, or the Board must forgo the contractual opportunity.
While this list is not complete, conflicts generally arise in one or more of the following situations:
e A trustee has “sources of income’ within the 12 months preceding the start of the trustee’s term or during the trustee’s term, as defined under the Political Reform Act.
e A trustee’s spouse or domestic partner has “sources of income” within the 12 months preceding the start of the trustee’s term or during the trustee’s term, as defined under the Political Reform Act. 2011074
Honorable Mayor and City Council
Subject: Federated Retirement Board Conflicts Review
April 19, 2023
e A trustee or trustee’s spouse or domestic partner is an Officer or Board Member of an entity other than the Retirement Board and the entity is involved in a matter coming before the Board.
APPLICANTS
Deborah Abbott
Employer
San Jose State University Lecturer
Spouse’s Employer
N/A
Conflict of Interest
In her application, Ms. Abbott did not confirm that she has read the Fair Political Practices Commission Form 700 reference pamphlet and agrees to file Form 700 Statements of Economic Interest, as required by the current City Council Conflict of Interest Resolution.
Ms. Abbott did not identify any organization, association, or entity in which she is active or which she is involved or associated that might be affected by decisions of the Board. She further indicated that she would have no financial interest to disclose other than her interest in her employment.
Douglas Andrey
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Employer
Omnilndex Head of Operations
Spouse’s Employer
N/A
Conflict of Interest
Mr. Andrey did not identify any organization, association, or entity in which he is active or which he is involved or associated that might be affected by decisions of the Board. He further indicated that he would have no financial interest to disclose other than his interest in his employment.
Honorable Mayor and City Council
Subject: Federated Retirement Board Conflicts Review
April 19, 2023
John Cleveland
Employer
Retired
Spouse’s Employer
Retired
Conflict of Interest
Mr. Cleveland did not identify any organization, association, or entity in which he is active or which he is involved or associated that might be affected by decisions of the Board. He further indicated that neither he nor his spouse would have any financial interest to disclose.
Matthew Faulkner
Employer
San Jose State University Assistant Professor of Finance Spouse’s Employer
N/A
Conflict of Interest
Mr. Faulkner did not identify any organization, association, or entity in which he is active or which he is involved or associated that might be affected by decisions of the Board. He further indicated that he would have no financial interest to disclose other than his interest in his employment.
Julian Vogel
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Employer
San Jose State University Assistant Professor of Finance Spouse’s Employer
California State University, Sacramento Assistant Professor Conflict of Interest
Mr. Vogel did not identify any organization, association, or entity in which he is active or which he is involved or associated that might be affected by decisions of the Board. He further indicated that neither he nor his spouse would have any financial interest to disclose other than their interest in their employment.
Honorable Mayor and City Council
Subject: Federated Retirement Board Conflicts Review
April 19, 2023
LEGAL REVIEW OF RETIREMENT BOARD APPLICANTS
Our office reviewed the applications submitted by the applicants to be considered for the public member position on the Federated Employees’ Retirement Plan Board by the City Council. Our review was limited to the information provided by the applicants and was not intended to be a comprehensive investigation of potential conflicts involving the applicants. The results of our review are as follows:
e The applicants did not disclose any incompatible offices. e The applicants did not disclose an appearance of bias. e The applicants did not disclose an existing conflict of interest, e.g. no disclosure of an existing financial interest in any organization, association, or entity that has an existing contractual relationship with the Federated Retirement Board.
e One applicant indicated that he does not have any financial interests. e Three applicants indicated that they would not have any financial interests other than their own employment.
e One applicant indicated that he would not have any financial interests other than his own employment and his spouse’s employment.
Attachment A is a list of the entities with which the Federated City Employees’ Retirement Board has a contractual relationship as of April 5, 2023. We note that some of these are forms of entities (partnerships or private companies) in which it is unlikely that any applicants would have a financial interest if they are not employed by the firm. However, even if an applicant does not currently have a contractual relationship with any firm in which the Board currently has a financial interest, the list of entities with which the Board contracts with changes from time to time and we would expect a Board member's financial interests to change over time as well. Thus, both staff and any individual appointed to this Board will need to exercise vigilance to avoid conflicts from arising in the future.
NORA FRIMANN
City Attorney
By ur Naps
suai Hutchins
Sr. Deputy City Attorney
cc: Jennifer Maguire, City Manager
Toni Taber, City Clerk
Roberto Pena, Director Retirement Services
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ATTACHMENT A
Retirement Board Contractors
FEDERATED RETIREMENT PLAN
List of Administrative and Investment Vendors as of April 5, 2023 Vendor .
CHEIRON, INC
SEGAL COMPANY, THE
VERIZON WIRELESS
MARTHA E BOYER
BNY MELLON
THE BERWYN GROUP
GRANT THORNTON LLP
CALAPRS CALIF ASSOC OF PUBLIC RETIREMENT SYSTEM
CORTEX APPLIED RESEARCH INC.
LIBERTY MUTUAL INSURANCE
RISK STRATEGIES COMPANY
ALBOURNE AMERICA, LLC
KOFF & ASSOCIATES, INC
MEKETA INVESTMENT GROUP
MCLAGEN PARTNERS, INC.
MORGAN STANLEY INVESTMENT MANAGEMENT
ABEL/NOSER CORP
BARRA, LLC
BCA RESEARCH INC.
BLOOMBERG FINANCE L.P.
BLOOMBERG INDEX SERVICES LIMITED
DYNAMO SOFTWARE, INC.
EVESTMENT ALLIANCE, LCC
FRANK RUSSELL COMPANY
INSTITUTIONAL LIMITED PARTNERSASSOCIATION
JP MORGAN BANK
KLARITY FX INC
MSCI, INC
PITCHBOOK
VERUS ADVISORY, INC
PENSION REAL ESTATE ASSOCIATION
PACIFIC PENSION & INVESTMENT INSTITUTE
HANSON, BRIDGETT, LLP
AMERIPRISE FINANCIAL INC
ARTISAN PARTNERS LIMITED PARTNERSHIP
BLACKROCK INSTITUTIONAL TRUST COMPANY, NATIONAL ASSOCIATION COVE STREET CAPITAL LLC :
INSIGHT NORTH AMERICA LLC
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Category
Actuary
Actuary Auditor
Cellular Service
Communication Consultant
Custodian Bank
Death Audit
External Auditor
General Dues & Subs
Governance Consultant
Insurance
Insurance
Investment Consultant
Investment Consultant
Investment Consultant
Investment Consultant
Investment Consultant
Investment Data Processing
Investment Data Processing
Investment Data Processing
Investment Data Processing
Investment Data Processing
Investment Data Processing
Investment Data Processing
Investment Data Processing
Investment Data Processing
Investment Data Processing
Investment Data Processing
Investment Data Processing
Investment Data Processing
Investment Data Processing
Investment Dues & Subs
Investment Dues & Sub
Investment Legal
Investment Manager
Investment Manager
Investment Manager
Investment Manager
Investment Manager
Honorable Mayor and City Council
Subject: Federated Retirement Board Conflicts Review
April 19, 2023
INVESCO ADVISERS, INC
MELLON INVESTMENTS CORPORATION
NORTHERN TRUST INVESTMENTS
OBERWEIS ASSET MANAGEMENT INC
RUSSELL INVESTMENTS IMPLEMENTATION SERVICES, LLC
VOYA INVESTMENT MANAGEMENT
WHITE OAK GLOBAL ADVISORS, LLC
DELOITTE & TOUCHE LLP
SEI INVESTMENTS GLOBAL FUND SERVICES
CASEWARE INTERNATIONAL INC.
COMPUTERLAND OF SILICON VALLEY
FLEXENTIAL COLORADO CORP. (F/K/A VIAWEST, INC)
GRANICUS, LLC
IRON MOUNTAIN INC.
J &J AIR CONDITIONING, INC
OFF-SITE RECORDS MANAGEMENT
SHI INTERNATIONAL CORP
SMARTWAVE TECHNOLOGIES, LLC
SRP/SOCIALSELLINATOR
TOSHIBA BUSINESS SOLUTIONS
ZOOM VIDEO COMMUNICATIONS, INC
ICE MILLER LLP
REED SMITH LLP
SALTZMAN & JOHNSON LAW CORP
CALIFORNIA MEDLINK INC
EXAMWORKS, INC
WORK HEALTH SOLUTIONS
ANTHEM BLUE CROSS LIFE & HEALTH INSURANCE COMPANY
KAISER FOUNDATION
KAISER PERMANENTE HEALTH PLAN
PRUDENTIAL INSURANCE COMPANY
VISION SVC PLAN
LIFE INSURANCE COMPANY OF NORTH AMERICA-L.I.N.A.
LEVI, RAY, AND SHOUP INC
PITNEY BOWES INC
SENDNLINK
UNITED PARCEL SERVICE
UNITED STATES POSTAL SVC
U S BANK CORPORATE PAYMENT SYSTEMS
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Investment Manager
Investment Manager
Investment Manager
Investment Manager
Investment Manager
Investment Manager
Investment Manager
Investment Misc
Investment Misc
Legal
Legal
Legal
Medical Consultant
Medical Consultant
Medical Consultant
Payroll Medical Insurance
Payroll Medical Insurance
Payroll Medical Insurance
Payroll Medical Insurance
Payroll Medical Insurance
Payroll Medical Insurance
Pension Administration System
Postage
Postage
Postage
Postage
Procurement Card
Honorable Mayor and City Council
Subject: Federated Retirement Board Conflicts Review
April 19, 2023
PACIFIC RESOURCES FIRST AMERICAN, LLC Rent
Temp Agency TRENDTEC INC
VINCE’S OFFICE SUPPLY Office Supplies
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