Retirement Board

MINUTES OF REGULAR RETIREMENT BOARD MEETING Thursday, August 2, 2018 Cherry Hill Farmhouse Parlor 312 Park Avenue 6:00 p.m. 1. Call to Order The meeting was called to order by Chair Connie Rydberg at 6:06 PM 2. Roll Call Present: Connie Rydberg, Richard Campbell, Larry Little, Marshall Jarrett, and Jason Widstrom Absent: Ryan Davis and Charles Collier Staff Present: Kiran Bawa, Cindy Mester and Meaghan DeCelle Also Present: Elinor Clendenin and Marc Purintun, Williams Mullen Mary Nye, AndCo Consulting 3. Introductions and Welcome 4. Receipt of Petitions: None 5. Review and approval of draft Minutes from May 17, 2018 meeting: Richard Campbell moved and Marshall Jarrett seconded to approve the minutes of May 17, 2018 as presented. The motion passed 5-0 (Ryan Davis and Charles Collier absent) 6. Public Pension Plan Fiduciary Training: Williams Mullen presenters, Marc Purintun and Elinor Clendenin Mr. Purintun and Ms. Clendenin reviewed fiduciary responsibility and roles of trustees, including applicable legal standards and significant recent litigation. Board members received credit for 1.5 hours of training, per the adopted Board training policy. 7. Review of the Investment Performance for the Second Quarter of 2018 for the Basic and Police Pension Plans and OPEB - Mary Nye of AndCo Consulting Market Performance: Mixed returns were reported in equities this quarter. Emerging markets took the biggest hit with a negative 8% return. Move of currency impacted returns in international markets due to appreciating US dollar. For the year, equity had broadly positive returns, US domestic stocks having double digit growth. Rising interest rates impacted fixed income, returns being close to neutral with less than half a percent loss. Fixed income returns are likely to continue to fall as rates rise. Falls Church plans’ investments are being held at the low end of policy to protect the funds from this anticipated poor performance. Domestic equities performed well thanks to strong US corporate earnings, but were tempered by global trade uncertainty. Market value for the Basic Plan at the start of the 2nd quarter was $108.2 million, net flows totaled $940K out of the plan, and return on investment was $3.2 million. Thus the ending market value for Q2 and for Fiscal Year 2018 was over $110.4 Million. The 12-month performance of the Basic Plan shows over $13.6 million growth, over $1 Million per month, averaged over the year. Asset Allocations in the Basic Plan: total domestic and international equities are on the high end of the range, and fixed income is being held at the low end of the range, as planned with current market  standing. The Board may discuss at a future date the policy ranges and potential adjustments to equities and fixed income. The liquidation of Real Estate investments at the end of June reflected a surge of cash into the plan on the Q2 quarterly reports, printed as of June 30. As of July 2, the cash was allocated in compliance with the Board’s direction back into Real Estate. Fund performance for the quarter ranked the Basic Plan 1st in the universe. Each fund manager for the plan added value when performance is compared to the policy index. MFS, especially, showed positive 2.5% return when the benchmark index had negative returns. Market Value for the Police Plan at the start of the second quarter was $33.88 Million with net flows of $155K out of the plan, $949K return on investment. Over the last 12 months, the Police Plan has grown over 10%, starting with a MV of $30.8 Million in July 2017 and finishing the Fiscal Year at $34.7 Million. Asset Allocation in the Police Plan is very similar to the Basic Plan with total Real Estate and Cash showing out of policy due to the timing of asset liquidation. Looking at the individual fund managers, Northern Fixed Income funds are below policy at less than 6% share of total funds. Fixed income policy targets and range could be addressed next quarter after the purchase of Real Estate has been completed. Rankings for the Police Plan are similar to the Basic Plan’s positive performance. OPEB funds showed return on investment of $222K for Q2 with an ending market value of over $14.8 Million. Return on investment over the last 12 months was over $1.27 Million. All OPEB asset allocations are within policy range. Differences between indexes of the OPEB plan and Police and Basic plan actively-managed investments are apparent. As assets in OPEB grow, the Board can discuss shifting policy from investing with the index to active managers. 8. Finalization of Retirement Board Training Policy and 2018/2019 Plan- Cindy Mester Ms. Mester highlighted recent edits and clarified the training budget as a percentage of fund balance. Richard Campbell moved and Marshall Jarrett seconded to approve the Retirement Board Training Policy as presented. The motion passed 5-0 (Ryan Davis and Charles Collier absent) The 2018/2019 Retirement Board Training Plan, detailing the conference assignment and training schedule for Board members over the next year, was reviewed. Ryan Davis will not attend IFEBP annual conference and mention of his contingent attendance was removed. Richard Campbell moved and Larry Little seconded to approve the Retirement Board Training Policy as amended. The motion passed 5-0 (Ryan Davis and Charles Collier absent) Ms. Mester briefed the Board on the current staff review of Plan manager fees and upcoming training by AndCo, scheduled for the November quarterly meeting. 9. Proposed plan administration amendments a. Modeling for clarification of the water sale proceeds smoothing is progressing, with internal review. Staff will report back to the board at a future meeting for discussion and guidance on potential plan amendments. b. Purchase of non-credited service for time employed by the City as a temporary or term employee: Ms. DeCelle presented to the Board the current plan document’s provisions for increasing credited service and asked if the Board would like staff to pursue research into adding a provision that would allow participants to purchase time worked that did not qualify as credited service. The discussion was tabled for the November quarterly meeting. 10. Plan Administrator’s Report- Cindy Mester  New real estate investment subscription agreement has been executed with Clarion; Principle purchase is progressing. 11. Other business not on the agenda: None 12. Adjournment Richard Campbell moved and Marshall Jarrett seconded to adjourn the meeting at 9:06 PM. The motion passed 5-0 (Ryan Davis and Charles Collier absent). THE CITY OF FALLS CHURCH IS COMMITTED TO THE LETTER AND SPIRIT OF THE AMERICANS WITH DISABILITIES ACT. TO REQUEST A REASONABLE ACCOMMODATION FOR ANY TYPE OF DISABILITY, CALL 703-248-5129, TTY711.