Retirement Board

MINUTES OF REGULAR RETIREMENT BOARD MEETING-ADOPTED 9/9/2021 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, Kevin Knudsen, Larry Little Vacant: City Manager Appointee Staff Present: Cindy Mester, Meaghan DeCelle, Kiran Bawa and Steve Mason Also Present: Kristen Michael, FCCPS COO Jim Ritchie, Bolton Consulting Mary Nye, AndCo Consulting Lauren Albanese, Financial Investment News 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 May 13, 2021. 5. Review and approval of draft Minutes from February 11, 2021 meeting: Marshall Jarrett moved and Rick Campbell seconded to approve the minutes of February 11, 2020 as presented. The motion passed 4-0-2 (one vacancy). 6. Basic and Police Service Calculation Compliance Review—Jim Ritchie, Bolton Consulting Bolton Consulting was engaged by the City to complete an independent review of Basic and Police pension plan benefits calculations as a matter of due diligence. Ten recent calculations were chosen from each plan for the review. Bolton found that the calculations reviewed were all completed consistently with each other and that the methods used were reasonable. Bolton identified minor inconsistencies between plan language and the actual calculations which can be rectified by plan amendments and changes to administrative practice. Bolton’s findings will not result in the recalculation of any current or past benefits for retirees. Marshall Jarrett moved and Rick Campbell seconded to accept Bolton’s benefit calculation review report as presented and to direct staff to present a plan for implementing recommended changes at the September Board meeting. The motion passed 6-0 (one vacancy). 7. Review of the Investment Performance for the First Quarter of 2021 for the Basic and Police Pension Plans and OPEB –Mary Nye of AndCo Consulting  Market Performance: Broad asset class returns were positive in the 1st quarter. Gains in US equities were largely driven by the effects of the American Rescue Plan. International equities posted positive as well. Fixed income returns were negative due to a rise in long-term interest rates. For the 12-month period, international equities showed returns ranging from 49% to 58% and US equities posted returns upward of 56%. Most notably, Russell 2000 small cap equities showed a 94.8% return for the April 2020-March 2021 period. 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 $127.83 Million with net flows of $1.15 Million out of the plan, market gains of $4.25 Million and an ending market value of $130.94 Million. Thus the gross return for the Basic Plan in Q1 was 3.33%. The Police Plan at the start of the fourth quarter was $41.67 Million, net flows totaled $285 thousand out of the plan, market gain of $1.35 Million and the ending market value for Q1 was $42.74 Million. Thus the gross return for the quarter was 3.27%. Gross returns for the 12-month period were 37.71% for the Police Plan and 38.06% for the Basic Plan. Asset Allocations: Fixed income is below policy range in the Police and Basic Plans due to negative returns. Clarion Lion is showing out of policy on the report as of March 31 however monies were moved into the fund effective April 1 which brought the fund back into policy range. For the Police Fund, AndCo recommends moving $500K from Summit Creek and $300K out of Schroder to deposit $400K into Northern Intermediate Fixed Income and $400K into Northern Core Fixed Income. In the Basic Plan, AndCo’s recommendation is to liquidate $1 Million from Summit Creek and deposit $500K into Northern Intermediate Fixed Income and $500K into Northern Core. Marshall Jarrett moved and Rick Campbell seconded to follow the recommendation by AndCo to move $500K from Summit Creek and $300K out of Schroder to deposit $400K into Northern Intermediate Fixed Income and $400K into Northern Core Fixed Income in the Police Plan and to liquidate $1 Million from Summit Creek and deposit $500K into Northern Intermediate Fixed Income and $500K into Northern Core in the Basic Plan. The motion passed 6-0 (one vacancy). Comparative performance for the Basic and Police Plans showed the Total Funds in the top third in overall universe for the quarter. In the five-, seven- and ten-year comparative performances, the plans showed rankings in the top decile. OPEB funds started at $19.54 Million at the beginning of Q1, showed investment gain of $884 Thousand, net cash flow of $1.8 Million out of the plan and an ending market value of $18.59 Million. Growth in the OPEB plan for the last 12 months showed a gross return of 45.89%. OPEB broad asset allocations show all funds within policy and close to target. Individual funds are also within policy and close to target. Returns are tracking their underlying indices. The Q1 returns show 4.68%, ranking 9th in the universe and 25.35% for the fiscal year to date, ranking 7th. 8. Rebalancing/City Liability True-up Process and Reporting—Cindy Mester The Plan Administrator reported on the City’s action to rebalance funds from the OPEB trust and reimburse the City’s general fund for benefits payments made over the last five years. City staff have established a regular process going forward to true-up the accounts on a semi-annual basis. 9. Retirement Board Membership—Meaghan DeCelle  Basic Plan representative, Kevin Knudsen began his 3-year term on May 1, 2021. Rick Campbell nominated Connie Rydberg to be re-elected as Board Chair. Connie Rydberg nominated Rick Campbell to be the vice-chair for the coming 12-months. Marshall Jarrett moved and Larry Little seconded to elect Connie Rydberg as Retirement Board Chair and Rick Campbell as Retirement Board Vice-Chair. The motion passed 6-0 (one vacancy). 10. Actuarial Economic Assumption Review—Connie Rydberg Ms. Rydberg shared Segal Consulting’s summary of their economic valuation assumptions review. Segal did not recommend any changes to the current assumptions and Mary Nye of AndCo concurred that the current assumptions are reasonable. Marshall Jarrett moved and Rick Campbell seconded to continue to follow the actuarial economic assumptions as presented. The motion passed 6-0 (one vacancy). 11. Investment Policy Statement (IPS) Annual Review—Cindy Mester The Plan Administrator recommended the Board adopt the Investment Policy Statements for the Basic and Police Plans as they stand. Marshall Jarrett moved and Rick Campbell seconded to accept the IPS for Basic and Police Plans as they currently stand. The motion passed 6-0 (one vacancy). Ms. Mester requested that the Board defer review of the OPEB IPS to the September Board meeting. The Board concurred to postpone the review. 12. OPEB Funding Policy Update—Cindy Mester The Plan Administrator updated the board on the ongoing research into the legal framework of the OPEB trust, with a goal of determining whether the trust is made up of three separate plans—one for each segment of the plans: City government, City schools and Northern Virginia Criminal Justice Academy—or one plan with three employer groups. City staff received a cost proposal for a legal review from Segal consulting with an option to rephrase the OPEB trust agreement. Ms. Mester requested authorization to execute the special project with a cost not to exceed $3000 and the trust agreement option at an additional cost, not to exceed $3500. Marshall Jarrett moved and Rick Campbell seconded to authorize staff to employ Segal consulting for a full legal compliance review of the OPEB trust for a cost not to exceed $3000 directed staff to work with the Board chair and vice-chair for approval of the additional project to restate the OPEB Trust agreement. The motion passed 5-1 (one vacancy). 13. Plan Amendments Discussion of proposed plan amendments was deferred to a future meeting to ensure adequate time for legal review. 14. City Council Equity Work Plan Review—Connie Rydberg Ms. Rydberg summarized City Council’s entreaty to City Boards and Commissions to consider policy changes that would fit the City of Falls Church’s goal for equity and inclusion in the community. The Board discussed administration and policy practices that have a direct impact on participants and community members and how changes may affect the health of the Plans. Board members shared reactions and agreed to continue the discussion and awareness going forward. The Chair indicated that she would draft a response to the City Council by the May 31, 2021 deadline based upon the discussion. 15. Employee Retirement Savings Plans—City staff The City’s Human Resources department is reviewing the vendor selection for the investment manager of the Defined Contribution 457(b) plan and Cash Match 401(a) plan and will be going through a procurement process to ensure plan participants receive competitive investment returns with minimal fees. Staff introduced the idea to the Retirement Board of acting as fiduciaries of the 457b and 401a plans to review fund performances and investment options. Staff work with the Board Chair to clarify the fiduciary role and pursue a training for the Board. 16. Meeting Frequency Review—Connie Rydberg The Retirement Board currently meets quarterly and meeting length has increased as plan administration as become more robust. Ms. Rydberg raised for discussion the option of meeting more frequently in order to ease fatigue from lengthy meetings. Action was deferred to the next meeting. 17. 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. Staff presented the updated Retirement Board 2021 Work Plan status, summarizing regular duties and upcoming Board-directed activities. Ms. Mester presented the proposed May 2021-June 2022 Retirement Board Training Plan for Board review and approval. Requested training budget for the year began $12,000. After discussion, the budget recommendation was increased to $16,000 in order to cover the cost of the future City Manager Appointee’s new trustee training. Marshall Jarrett moved and Rick Campbell seconded to accept the May 2021-June 2022 Retirement Board Training Plan with a budget of $16,000. The motion passed 6-0 (one vacancy). Ms. Mester briefed the Board on the status of consultant contracts and procurement goals. Staff sought guidance on contracting an outside expert to assist with the recordkeeper RFP project. Board Chair concurred with pursuing quotes for expert assistance. 18. Staff and Public Participation protocol—Connie Rydberg Discussion of the participation protocols was deferred to a future meeting 19. Other business not on the agenda None. 20. Adjournment: Marshall Jarrett moved and Rick Campbell seconded to adjourn the meeting at 9:00 PM. The motion passed 6-0 (one vacancy). 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.