SACRS, an acronym for State Association of County Retirement Systems, is an association of 20 California county retirement systems, enacted under the County Employees Retirement Law of 1937. This law chapter, beginning with Section 31450 of the California Government Code, sets forth the policies and regulations governing the actions of these county retirement systems.
In the late 1930's and the 1940's, individual counties established their retirement systems by the adoption of an ordinance, accepting the provisions of the County Employees Retirement Law of 1937. Over time, 20 California counties opted to adopt such an ordinance. As time went on, these counties banded into the SACRS organization.
The counties range from heavily populated Los Angeles County to the northernmost SACRS County of Mendocino, with a population of 83,400. Collectively, the Retirement Systems' assets are in excess of $90 billion, with the median county having $1.5 billion in assets.
Except for the Board of Investment in Los Angeles County and the statutory duties of the County Treasurer, the management of each county retirement system is vested in the Board of Retirement, consisting of nine members. Four are employees (2 general, 1 safety, 1 retired, all elected by their peers for three year terms); four are appointed to 3-year terms by the Board of Supervisors; and one is the County Treasurer.
The Boards of Retirement, or Board of Investment for Los Angeles County, has fiduciary responsibility for and control of the investment of the employees' retirement fund. During the formation days of these county retirement systems, the funds were invested in short-term cash instruments, bonds and mortgages.
The voters of California passed Proposition 21 at the June 5, 1984 Primary Election, which allowed the Board of any 1937 Act county to invest in any form or type of investment deemed prudent by the Board. The Legislature then enacted CA G.C. Section 31595b which requires the board to carry out their duties with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with these matters would use in the conduct of an enterprise of a like character and with like aims. This enactment canceled an earlier restriction of a maximum ownership of 25% of any fund's assets in stocks.
Since 1984, most boards of the various counties have begun to diversify the type of assets held, while minimizing the risk of loss and maximizing the rate of return. Some funds are now investing in or considering investing in real estate, venture capital, international equities, fixed income and mortgages, and short term cash instruments.
With the significant sums in the various funds, most boards of trustees, in carrying out their fiduciary responsibilities in light of the prudent person rule, have hired outside firms to manage some or all of their investments. The management fees of such funds are paid from the investment earnings of the fund.
Regarding the fiduciary responsibility of the Boards of Trustees of the retirement systems, CA G.C. Section 31595(a) requires the board and its officers and employees to discharge their duties solely in the interest of, and for the exclusive purpose of:
- Providing benefits to participants and their beneficiaries
- Minimizing employer contributions thereto
- Defraying reasonable expenses of administering the system
Where does SACRS fit in? During the early years, the 20 individual retirement systems were isolated. The County Treasurers, through their association, worked together on legislation affecting the systems. In the early 1970's, a wider confederation was formed which evolved into SACRS. The Constitution of SACRS states that the purpose of the Association is to provide forums for disseminating knowledge of, and developing expertise in, the 1937 Act retirement systems; and further, that the Association foster and take an active role in the legislative process as it affects SACRS retirement systems.
SACRS now meets as an organization twice a year with all 20 counties participating through attendance by Trustees, Administrators, Treasurers and staff. Education and legislation are the principle focus of these meetings, particularly education in the investment and fiduciary responsibility area.