DIVISION 2. ADMINISTRATION OF THE SYSTEM

Sec. 22-44. Board of trustees.

   Sec. 22-44(a). Administration. The board of trustees shall be responsible for, and shall have the power and authority necessary to effectuate the administration, management and operation of the system. The board shall construe, interpret and implement the provisions of this article, in its discretion and pursuant to uniform and non-discriminatory rules, policies and procedures.

   Sec. 22-44(b). Membership. The membership of the board shall be exempt from all provisions of section 10A-134 of the Tucson Code. The board shall consist of the following seven (7) members:

   (1)   A chairman, to be appointed by the mayor, subject to the approval of the city council;

   (2)   The city's human resources director or his/her designee;

   (3)   The city's finance director or his/her designee;

   (4)   Two (2) contributing members nominated and elected by the contributing members of the system in a manner that the board shall prescribe by regulation;

   (5)   One (1) retired member nominated and elected by the retired members of the system in a manner that the board shall prescribe by regulation;

   (6)   One (1) member appointed by the city manager.

   Sec. 22-44(c). Qualifications. The individuals appointed to the board by the mayor, as chairman of the board, and by the city manager shall be appointed based on the individual's business experience with emphasis on a discipline such as law, retirement administration, accounting or investments.

   Sec. 22-44(d). Compensation. The members of the board shall serve without compensation but shall be reimbursed for expenses incurred by them in the performance of their board duties.

   Sec. 22-44(e). Term of office. The term of office of board members nominated and elected by members in accordance with section 22-44(b)(4) and (5) above shall be four (4) years. The chairman of the board shall serve a term of four (4) years. The city manager's appointee shall serve at the discretion of the city manager or until the appointee resigns by providing advance notice to the board and the city manager. The directors of human resources and finance shall be standing members of the board and not subject to annual terms. Any employee or retiree representative board member who is elected to two (2) consecutive terms shall not be eligible to succeed themselves.

   Sec. 22-44(f). System budget. The board shall annually prepare and maintain a budget setting forth the administrative costs of the system. The system budget shall include separate line items for the primary administrative expenses of the system, including, but not limited to, recordkeeping, accounting fees, actuarial expenses, investment fees and expenses, audit expenses, staffing costs, other independent professional expenses, and professional development fees and expenses for board members and the system administrator. The system budget shall be presented to mayor and council in connection with the board's annual report on the system.

   Sec. 22-44(g). Employment of professionals. The board may employ managers, consultants, actuaries, technical advisors and professionals, including legal counsel and medical practitioners, and staff personnel as may be necessary for the proper administration of the system. Professionals employed by the board shall discharge their duties in accordance with and be subject to the highest prevailing industry standard of care for their respective disciplines.

   Sec. 22-44(h). Establishing interest rates and actuarial assumptions; actuarial studies. The board shall establish, from time to time, the interest rate(s) applicable to member accumulated contributions accounts and the assumed earnings rate applicable to end of service program benefits, as well as the applicable crediting methodologies. The board also shall adopt from time to time such mortality, service and other tables, as well as the assumed interest rate, as are necessary and proper for the administration and funding of the system. Additionally, the board shall cause an actuarial study to be completed with regard to all of the experience of the system no less frequently than every five (5) years. Upon receipt and review of the results of the actuarial study(ies), the board shall if necessary revise the actuarial assumptions used in the calculation of contributions and/or the preparation of the annual valuations.

   Sec. 22-44(i). Retirement incentives. The board may, pursuant to duly adopted board policies, recommend retirement incentive programs and/or an extension of the scheduled termination date of incentive programs such as the end of service program; provided that the recommended action shall have no significant detrimental effect on the annual required contribution or the funded status of the system and is consistent with the employment and retention goals and objectives of the city, as determined by the board in consultation with the system's actuary and the city manager's office.

   Sec. 22-44(j). Prohibited interest and fiduciary responsibility. No member of the board shall have any interest, direct or indirect, in the gains or profits of an investment made by the board, except as a member or beneficiary of the system. No member of the board shall, directly or indirectly, for himself or as an agent, in any manner use the moneys or other assets of the system, except to make such payments from the system as are authorized by the board; nor shall any member of the board become an endorser or surety or in any manner an obligor for moneys loaned by or borrowed from the board. The board shall discharge its duties with respect to the system solely in the interest of, and for the exclusive purpose of providing benefits to, members and beneficiaries.

   Sec. 22-44(k). Additional powers and duties. In addition to all other powers and duties, the board shall:

   (1)   Keep a record of all of its proceedings, and such record shall be open to inspection by members and the public;

   (2)   Determine the credited service, the compensation, the average final monthly compensation, and the age of all members; and when the same cannot be determined from the records, it may make the best available estimates thereof;

   (3)   Make annually a report to the mayor and city council covering the operations of the system for the preceding fiscal year, including its financial conditions as of fiscal closing;

   (4)   Review and provide written recommendations to the mayor and city council on all proposed ordinances and resolutions not originating from the board that amend, modify or delete provisions of the system. The board shall be given forty-five (45) days advance notice prior to any such mayor and council action regarding the system;

   (5)   Invest the assets of the system;

   (6)   Adopt necessary rules and regulations governing the administration of the system;

   (7)   Hear and resolve employee, member and beneficiary claims relating to the system; and

   (8)   Do all other things necessary for the proper administration of the provisions of the system.

   Sec. 22-44(l). Advisory committees and subcommittees. The board may establish advisory committees and subcommittees consistent with the needs of administering the system. Advisory committees and subcommittees shall report directly to the board and have no authority to make decisions on behalf of the board.

(Ord. No. 10657, § 4, 4-28-09, eff. 7-1-09; Ord. No. 11327, § 16, 12-8-15, eff. 1-1-16; Ord. No. 11743, § 1, 4-14-20, eff. 7-1-20)

Sec. 22-45. Investments.

   Sec. 22-45(a). Investments. The board shall have full power to invest and reinvest all moneys belonging to the system's trust fund and to hold, purchase, sell, assign, transfer or dispose of the securities or investment in which such moneys have been invested. The board or any agents employed by the board may:

   (1)   Invest and reinvest the principal and income of the trust fund without distinction between principal and income;

   (2)   Sell, exchange, convey, transfer or otherwise dispose of any investments of the trust fund held in the name of the system by private contract or at public auction;

   (3)   And with regard to trust fund investments:

   (A)   Vote upon any stocks, bonds or other securities;

   (B)   Give general or special proxies or powers of attorney with or without power of substitution;

   (C)   Exercise any conversion privileges, subscription rights or other options and make any payments incidental thereto;

   (D)   Consent to, or otherwise participate in, corporate reorganizations or other changes affecting corporate securities and delegate discretionary powers and pay any assessments or charges in connection therewith;

   (E)   Generally exercise any of the powers of any owner with respect to securities or other investments held in the trust fund;

   (4)   Make, execute, acknowledge and deliver any and all other instructions that may be necessary or appropriate to carry out the powers herein granted;

   (5)   Register any investment held in the trust fund in the name of the system or in the name of the nominee;

   (6)   At the expense of the system, enter into agreement with a trustee or manager for the acquisition and safekeeping and handling of securities and other investments coming into the possession of the board; the agreement shall be entered into under such terms and conditions as shall secure the proper safeguarding, inventory, withdrawal and handling of the securities and other investments; no access to, and no deposit or withdrawal of, the securities from any place of deposit selected by the board shall be permitted or made except as the terms of the agreement may provide; and

   (7)   Do all other acts and engage in other transactions whether or not expressly authorized which may be deemed necessary or proper for the growth and protection of the investment held in the trust fund.

   Sec. 22-45(b). Due diligence. In making each and all such investments, the board shall exercise the judgment and care under the circumstances then prevailing which persons of ordinary prudence, discretion and intelligence exercise in management of their own affairs, not in regard to speculation, but in regard to the permanent disposition of their funds, considering the probable income therefrom as well as the probable safety of the capital. The board shall not be held liable for the exercise of more than ordinary care and prudence in the selection of investments and shall not be limited to so-called "legal investments for trustees"; but all assets of the system shall be invested subject to all conditions, limitations and restrictions imposed by law.

(Ord. No. 10657, § 4, 4-28-09, eff. 7-1-09)

Sec. 22-46. Finance director duties.

The finance director or his/her designee shall deposit the system’s assets in the trust fund held by the custodial financial institution selected by the board to maintain the assets in trust for the benefit of the members. The finance director shall be responsible for maintaining a system of accounts for the assets in accordance with generally accepted accounting principles for pension funds. The finance director also shall be responsible for oversight of the payroll procedures connected to the system administration, such as the collection of contributions pursuant to section 22-35(d). The finance director shall serve as the secretary of the board.

(Ord. No. 10657, § 4, 4-28-09, eff. 7-1-09; Ord. No. 11327, § 17, 12-8-15, eff. 1-1-16)

Sec. 22-47. Human resources director duties.

The human resources director or his/her designee shall provide the board with all relevant information available in the city’s human resources department concerning the employment status of members.

(Ord. No. 10657, § 4, 4-28-09, eff. 7-1-09; Ord. No. 11327, § 18, 12-8-15, eff. 1-1-16)

Sec. 22-48. System administrator.

The system administrator is charged with the day to day administration of the system and oversight of the city's retirement office and personnel. The system administrator shall be an individual having a demonstrated familiarity with one or more disciplines such as finance, accounting, actuarial evaluations, investments or tax law. The system administrator shall attend board meetings, consult with other professionals employed by the board and shall report to the board on such matters as may affect the administration of the system. The system administrator shall make all such decisions as are necessary for the daily operation of the system, exercise the discretion necessary to carry out its functions hereunder and supervise such employees who may be assigned to assist in the operation of the system.

(Ord. No. 10657, § 5, 4-28-09, eff. 7-1-09)

Sec. 22-49. Indemnification.

To the extent permitted by law, the board, the individual members of the board and the system administrator shall be indemnified and held harmless against any and all liabilities (including defense costs and expenses) arising by reason of an act or failure to act in their fiduciary and administrative capacities to the system, and for liability and costs resulting from the acts and omissions of their duly appointed agents, except for those acts, omissions, or conduct resulting from their own willful misconduct, willful failure to act, or gross negligence. The system shall maintain fiduciary liability insurance designed to fund the indemnification provided by this section. The city shall be liable for indemnification under this section only to the extent that the liability exceeds the amount available through the system's fiduciary liability insurance.

(Ord. No. 10657, § 5, 4-28-09, eff. 7-1-09)