Retirement Board

MINUTES OF REGULAR RETIREMENT BOARD MEETING--Adopted Thursday, September 10, 2020 Virtual Meeting 6:00 p.m. NOTICE: This virtual meeting of the Retirement Board was held pursuant to and in compliance with the Virginia Freedom of Information Act, Section 2.2-3708.2 and state and local legislation adopted to allow for continued government operation during the COVID-19 declared emergency. All participating members of the Retirement Board were present at this meeting through electronic means. All members of the public may view this video of this meeting on the City’s website at www.fallschurchva.gov. 1. Call to Order The virtual meeting was called to order by Chair Connie Rydberg at 6:18 PM 2. Roll Call Present: Connie Rydberg, Charles Collier, Larry Little, Marshall Jarrett, Ryan Davis, Richard Campbell and Jason Widstrom Absent: Staff Present: Cindy Mester, Meaghan DeCelle, Kiran Bawa and Steve Mason Also Present: Tammy Dixon, Meghan Horn, Julian Regan, and Lisa , Segal Consulting Kristen Michael, FCCPS COO; Mary Nye, AndCo Consulting 3. Introductions and Welcome 4. Receipt of Petitions: No public comments or petitions were received as of the public comment deadline of 6:30 PM on September 10, 2020. 5. Review and approval of draft Minutes from May 14, 2020 meeting: Ryan Davis moved and Rick Campbell seconded to approve the minutes of May 14, 2020 as presented. The motion passed 7-0. 6. Fiduciary Training—Tammy Dixon of Segal Consulting Segal’s presentation refreshed fiduciary responsibilities, briefed on applicable legislative rules and court cases, and advised of best governance practices. This training complies with the annual training requirement for Board trustees and staff. 7. Review of the Investment Performance for the Second Quarter of 2020 for the Basic and Police Pension Plans and OPEB –Mary Nye of AndCo Consulting Market Performance: Broad asset classes rebounded sharply in the 2nd quarter following their harsh downturn in the 1st quarter. Fixed Income performed well due to declining interest rates. US equities outperformed international stocks, and small-cap equities showed higher gains than large-cap. Basic and Police Plan and OPEB Market Values, Net Flows and Returns on Investment were presented in a consolidated chart. The Police Plan at the start of the first quarter was $32.02 Million, net flows totaled $232 thousand out of the plan, market gain of $4.5 Million and the ending market value for Q2 was $36.35 Million. Thus the gross return for the quarter was a 14.25%. Market Value for the Basic Plan at the start of the fourth quarter was $98.7 Million with net flows of $1.19 Million out of the plan,  market gains of $14.25 Million and an ending market value of $111.7 Million. Thus the gross return for the Basic Plan in Q1 was 14.44%. Gross returns for the 12-month period were 3.63% for the Police Plan and 3.61% for the Basic Plan. OPEB funds started at $14 Million at the beginning of Q2, showed investment gain of $2.29 Million and an ending market value of $16.3 Million, a gross return of 16.38%. All OPEB asset allocations are within policy range, with total domestic equities being slightly overweight. Vanguard Large-Cap is overweight out of policy. Mary Nye stated she is comfortable deferring a rebalance to a future quarter if it does not self-correct. Returns are tracking their underlying indices. Asset Allocations in the Basic Plan: All broad asset classes are within policy and close to target. Clarion Lion Investments is at the low end of policy in the Police Plan due to negative real estate returns. Mary Nye recommended taking no action and waiting to see if balances will improve in the next quarter. Securian Cash is overweight outside of policy in the Police Plan, but expected to correct following benefit payments in next quarter. Mary Nye suggested to also keep the status quo in cash for this quarter. There were no objections from the Board on Mary’s recommendation. Comparative performance for the Basic and Police Plan showed the Total Funds ranked 21st in the All Master universe of plans. In the three-, five-, seven- and ten-year comparative performances, the plans showed rankings in the top decile. Connie Rydberg commented that the cash flow shown in the City reserve money market account from the Water Sale Proceeds is consistent with the calculated amounts provided by the Plans’ actuaries. Mary Nye reviewed the administrative fees by investments, showing a total of 0.6% of plan assets paid in fees from the Basic and Police Plans. For OPEB, the administrative fees total 0.06% of plan assets. This is reported to be on the lower end of average for similar plans. 8. 2019/2020 Training Plan—Cindy Mester The Plan Administrator updated the Board on trainings completed in the past quarter. The City plans to enroll in the VIP access for all Board members to participate in the virtual IFEBP Annual Conference. The Board concurred to delay discussion of setting a travel expense limit and to change the topic of the planned October training from Bonds and Equities to Real Estate Basics. The training will be presented by AndCo. 9. Retiree Rehire Clarification/Plan Amendment—Cindy Mester Ms. Mester summarized review by staff and legal counsel regarding hiring retirees back to City employ. An administrative policy was enacted to set limitations on the circumstances that would allow the rehiring of a retired individual, including a required bona fide break in service and material change in job functions. The Board will review and direct staff on plan amendment action at the next quarterly meeting. 10. Codifying Demographic and Economic Valuation Assumptions/ Plan Amendment—Cindy Mester Staff reviewed the pension plan appendixes that included outdated valuation and demographic assumptions and is drafting a plan amendment to remove the old information. The process for assumptions would be included in the Investment Policy Statements and details would be in the valuation reports. 11. Administrative Fee Methodology Follow up/ Plan Amendment—Cindy Mester Analysis of the administrative fee paid to the City of Falls Church will be presented and discussed at the next quarterly meeting. 12. Legal General Pension Plan Clarifications/ Plan Amendment—Cindy Mester Inconsistencies in the Plan documents were discovered during recent review. They will be summarized and presented to the Board for potential plan amendment at the next quarterly meeting. 13. Plan Administrator’s Report—Cindy Mester Cindy Mester presented the Administrative Quarterly Report, summarizing special projects, pension participant changes, training and administrative expenses. The Retirement Board Work Plan status was also shared and amended to capture Board-directed activities. Connie Rydberg drew attention to the substantial consulting fees paid to Williams Mullen, outside ERISA Counsel, in the current quarter. This was due to in-depth review for the retiree rehire analysis. Ms. Rydberg objected to the cost incurred and suggested the City go back to counsel to discuss the charge. Staff will review with the City Attorney and Williams Mullen and report back to the Board at the next quarterly meeting. 14. Staff and Public Participation protocol—Connie Rydberg Discussion of the participation protocols was deferred to a future meeting. 15. Other business not on the agenda—None. 16. Closed Session Connie Rydberg moved and Rick Campbell seconded at 8:38 PM that the Falls Church Retirement Board convene in closed meeting, pursuant to Virginia code Section 2.2-3711.A.16, for the discussion of medical and mental health records subject to the exclusion in subdivision 1 of section 2.2-3705.5, specifically the determination of a disability under the City’s pension plan. The motion passed 7-0. Connie Rydberg moved and Rick Campbell seconded at 9:24 PM to return from closed session. The motion passed 7-0. Connie Rydberg moved and Rick Campbell seconded to certify that (i) only public business matters lawfully exempted from open meeting requirements and (ii) only such public business matters as were identified in the motion by which the closed meeting was convened were heard, discussed or considered in the closed session or meeting by the Retirement Board. The motion passed 7-0. Ryan Davis moved and Rick Campbell seconded to approve the application for Disability Retirement discussed during closed session. The motion passed 7-0. 17. Adjournment: Ryan Davis moved and Rick Campbell seconded to adjourn the meeting at 9:28 PM. The motion passed 7-0. 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.