Retirement Board

MINUTES OF REGULAR RETIREMENT BOARD MEETING-ADOPTED 5/13/2021 Thursday, February 11, 2021 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 6:07 PM 2. Roll Call Present: Connie Rydberg, Charles Collier, Marshall Jarrett, Richard Campbell, Ryan Davis and Jason Widstrom Absent: Larry Little Staff Present: Cindy Mester, Meaghan DeCelle, Kiran Bawa and Steve Mason Also Present: 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 February 11, 2021. 5. Review and approval of draft Minutes from November 19, 2020 meeting: Ryan Davis moved and Rick Campbell seconded to approve the minutes of November 19, 2020 as presented. The motion passed 6-0-1 (Larry Little absent). 6. Review of the Investment Performance for the Fourth Quarter of 2020 for the Basic and Police Pension Plans and OPEB –Mary Nye of AndCo Consulting Market Performance: Broad asset class returns were strongly positive in the 4th quarter. Both US and International stocks showed double-digit returns. Fixed income returns were muted due to an uptick it interest rates. Basic and Police Plan and OPEB Market Values, Net Flows and Returns on Investment were presented in a consolidated chart. Market Value for the Basic Plan at the start of the fourth quarter was $116.78 Million with net flows of $1.29 Million out of the plan, market gains of $12.35 Million and an ending market value of $127.83 Million. Thus the gross return for the Basic Plan in Q4 was 10.58%. The Police Plan at the start of the fourth quarter was $38.04 Million, net flows totaled $385 thousand out of the plan, market gain of $4.01 Million and the ending market value for Q4 was $41.67 Million. Thus the gross return for the quarter was a 10.56%. Gross returns for the 12-month period were 14.37% for the Police Plan and 14.22% for the Basic Plan.  Asset Allocations: MFS Growth is very overweight due to exceptional market performance. Domestic and International Equities, Real Estate and Cash are within policy ranges for the Basic and Police Plans. Fixed Income is on the low end of policy range for the Basic Plan and outside of policy in the Police Plan. Clarion Lion Investments is below policy in the Basic and Police Plans. Cash flows in the coming weeks may balance the Fixed Income classes. Mary Nye recommended to wait for cash movement before adjusting Fixed Income. Mary Nye recommended liquidate assets from MFS Growth in order to move $750K for the Basic Plan and $350K for the Police Plan into Clarion Lion to bring total Real Estate back into range. Ryan Davis moved and Rick Campbell seconded a recommendation move $750K from MFS Growth to Clarion Lion in the Basic Plan and $350K from MFS Growth into Clarion Lion for the Police Plan. The motion passed 6-0-1 (Larry Little absent). Comparative performance for the Basic and Police Plans showed the Total Funds in the top third in overall universe, defending well in down markets. In the five-, seven- and ten-year comparative performances, the plans showed rankings in the top decile. OPEB funds started at $17.4 Million at the beginning of Q4, showed investment gain of $2.14 Million and an ending market value of $19.5 Million. OPEB broad asset allocations show total domestic equities being overweight and out of policy range and Total Domestic Fixed Income below policy range. Specifically, Vanguard Large-Cap is overweight out of policy. Mary Nye recommended moving $750K from Vanguard Large-Cap Index to Vanguard Short-Term Bond Index. Returns are tracking their underlying indices Ryan Davis moved and Rick Campbell seconded to move $750K out of Vanguard Large Cap to Vanguard Short-Term Fixed Income. The motion passed 6-0-1 (Larry Little absent). 7. Annual Ethics Policy Review—Meaghan DeCelle Each Board and staff member present affirmed that they have read and will abide by the Ethics policy for the Retirement Board. Ryan Davis moved and Rick Campbell seconded to readopt the Retirement Board Ethics policy as presented. The motion passed 6-0-1 (Larry Little absent). 8. Member Terms—Meaghan DeCelle Four trustee terms are ending April 30, 2021: Jason Widstrom as the Basic Plan elected representative, Connie Rydberg and Marshall Jarrett as City Council appointees, and Ryan Davis as the City Manager appointee. The election for a new Basic Plan representative will be underway in the Spring. Appointed members may submit interest for reappointment to the City Council and City Manager. Jason Widstrom indicated that he would not be running for re-election; the Board thanked him for his distinguished service to the Board on behalf of Plan participants. 9. Annual Disability Retirement Re-evaluation—Meaghan DeCelle There are no disability retirement cases in need of review at this time. 10. Plan Amendments—Cindy Mester Discussion of proposed plan amendments was deferred to a future meeting to ensure adequate time for legal review. 11. December 14 Annual Report to Council—Cindy Mester  The Retirement Board Chair provided a report to City Council to summarize the actions of the Board for the year 2020 at the December 14, 2020 regular meeting. The Plans’ valuations, ADC and Water Sale Proceeds fund were highlighted. Chair Rydberg addressed the Schools presentation from December 7th to City Council which claimed a $60,000 need for funding the OPEB contributions. On December 14th, Chair Rydberg clarified that the OPEB minimum contribution override had been discussed over several meetings and is a prudent practice. 12. ADC Budgeting mix of implicit subsidy and cash—Connie Rydberg Connie Rydberg expanded upon the Actuarially Determined Contribution Funding Policy and how the ADC is comprised of cash and implicit contributions, which is an amount based on how many retirees have pre-65 medical coverage. More on this topic will be explored at future meetings. 13. OPEB Funding Policy Follow up—Connie Rydberg City Staff are researching the legal framework of the OPEB plan and will report further at a future meeting. 14. Investment Policy Briefing—Connie Rydberg Retiree medical benefits had been paid from the City budget rather than OPEB assets. The City will need to transfer owed plan liability from the OPEB assets to reimburse the City’s budget. This is an overdue adjustment and semi-annual transfers will be occurring going forward. 15. Procurement Policy—Cindy Mester Ms. Mester presented a draft of a Contract and Purchasing Policy for procuring ad hoc consulting and administrative services that benefit the Plans. The draft lays out procedures for contract approval thresholds and review schedules. Ryan Davis moved and Rick Campbell seconded to adopt the Basic/Police Pension Plans and OPEB Trust Contract and Purchasing Policy as presented. The motion passed 6-0-1 (Larry Little absent). 16. Plan Administrator’s Report—Cindy Mester and Meaghan DeCelle Cindy Mester presented the Administrative Quarterly Report, summarizing special projects, pension participant changes, training and administrative expenses. The Retirement Board 2021 Work Plan status was introduced to project regular duties and upcoming Board-directed activities. Ryan Davis moved and Rick Campbell seconded to adopt the Retirement Board Work Plan as presented. The motion passed 6-0-1 (Larry Little absent). Ms. DeCelle briefed the Board on the status of the record keeper RFP. Staff requested quotes for an independent review of benefit calculations from two firms: Bolton Partners Consulting and Segal Consulting. Bolton’s quote for the project was $5300 and Segal’s was $12,000. Per the newly adopted Purchasing Policy, guidance from the Board was requested. Connie Rydberg moved and Rick Campbell seconded to authorize expenditure of up to $12000 for an independent compliance review of benefit calculations with the vendor selected to be reviewed and agreed upon by the Chair, Vice Chair and Larry Little. The motion passed 6-0-1 (Larry Little absent). 17. Staff and Public Participation protocol—Connie Rydberg Discussion of the participation protocols was deferred to a future meeting 18. Other business not on the agenda  Charles Collier suggests any newly elected Retirement Board member be presented with the Ethics Policy and orientation materials. 19. Adjournment: Jason Widstrom moved and Rick Campbell seconded to adjourn the meeting at 8:21 PM. The motion passed 6-0-1 (Larry Little 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.