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HomeMy WebLinkAbout2023-08-17_Retirement Board_Min. No 291 187 MINUTE BOOK RETIREMENT BOARD WASHINGTON COUNTY, PENNSYLANIA PAB- lMaEI-F1 DZ92aL Minute No. 291 August 16,2023 The quarterly meeting of the Washington County Retirement Board was held on Wednesday August 16, 2023 at approximately 2:56 p.m., in the public meeting room with the following members being present: Commissioners Diana Irey Vaughan,Larry Maggi and Nick Sherman;Treasurer Tom Flickinger; and Controller April Sloane.Also present: Executive Assistant Marie Trossman; Executive Assistant Randi Marodi; Chief of Staff James McCune; Solicitor Jana Grimm; Financial Analyst Adam Petris, and Brad Hampton representing Marquette Associates. Approval of Minutes Mrs. Vaughan entered a motion to amend the posted retirement agenda, dated August 16, 2023. The revised agenda packet was provided to all members to revise the agenda to include: Approval of minutes, remove approval of Minutes 288, dated August 20,2022 and Minute 289, dated November 20,2022. Both were previously approved at the February 16,2023 meeting. The motion was moved by Mr. Sherman and seconded by Mr. Maggi. Roll call vote taken: Ms. Sloane—yes; Mr. Flickinger—yes; Mr. Maggi—yes; Mr. Sherman—yes; Mrs. Vaughan—yes. Motion passed. Mrs.Vaughan entered a motion to replace with correct Minutes 290 dated February 16,2023, which is being held in abeyance. Several corrections need to be made, including an amendment to: The Treasurer's report to revise the bank reconciliation dates to January 2023 to June 2023 instead of November 2022 to June 2023 due to November's and December's being approved at the February 2023 meeting. Requisitions-Revised requisition dates to February 2023 to July 2023 instead of December 2022 to July 2023. December and January were approved in the February meeting. The motion was moved by Mr. Sherman and seconded by Mr. Maggi. Roll call vote taken: Ms. Sloane—yes;Mr. Flickinger—yes; Mr. Maggi—yes; Mr. Sherman—yes; Mrs. Vaughan—yes. Motion passed. Public Comment None. Treasurer's Report Mr. Flickinger made a motion to accept January through June 2023 bank reconciliations with$0 balances. Seconded my Mr. Sherman. Roll call vote taken: Ms. Sloane—yes; Mr. Flickinger—yes; Mr. Maggi—yes; Mr. Sherman—yes; Mrs. Vaughan—yes. Motion passed. 188 MINUTE BOOK RETIREMENT BOARD WASHINGTON COUNTY, PENNSYLANIA IMR LIMITM E18n792R11) Retirement Allowance Report Bank Balap4e as of January 1,2023 S 125,961.91 Deposits to,::hecking Account -0- Transfers In .0. ACH Credit.; $275,750.79 Other Credh a $840,376.34 Less:Cancelled Checks (111,566.85) Less: Other Debits -0. Less:ACH LIebits (948.980,14) Funds Trans-ers Out -0- Bank Balance as of January 31,2023 $181,542.05 Transfers to V4utual Funds 5795.16 Less; OutstsndingChecks (150,243.23) Less:Retire.tent Check Run (37,093.98) Reconciled 3alance as of January 31,2023 -0- Bank Balance as of February Is',2023 S 181,542.05 Deposits to,Checking Account -0- Transfers I9 r $264,175.89 ACH Credit., $272,946.96 Other Credit3 $1,000,000.00 Less:Cancelled Checks (298,023.09) Less: Other.Debits .0- Less:ACH Debits (1,009,843.56) Funds Transfers Out -0- Bank Balance as of February 28,2023 $410,798.25 Transfers to Mutual Funds $29,921.38 Less: Outstanding Checks (401,938.37) Less:Retirement Check Run (37,207.90) ACH Return (226.54) ACH Return; (346.82) Reconciled Balance as of February 28,2023 -0- 189 MINUTE BOOK RETIREMENT BOARD WASHINGTON COUNTY, PENNSYLANIA IMR I IMIT ❑ F16QZP29LQ I Bank Bala"e as of March 1,2023 S 410,798.25 Deposits toj7hecking Account .0- Transfers In, ,0- AC14 Credit, S 281,370.52 Other Credits $1,052,257.58 Less:Cancelled Checks (442,552.66) Less: Other Debits -0- Less:ACH Debits (944,305.04) Funds Transfers Out -0- Bank Balance as of March 31,2023 $357,568.65 Transfers to Mutual Funds $31,865.18 Less: Outstanding Checks (351.815.36) Less:Retirement Check Run (37,618.47) Reconciled Balance as of March 31,2023 .0. Bank Balance as of April 1,2023 S 357,568.65 Deposits to phecking Account -0- Transfers In .0- ACH Credit. . S 280,337.84 Other Credit:; S 866,860.10 Less:Canceled Checks (430,969.19) Less: Other Debits -0- Less:ACH Debits (938,355.12) Funds Transfers Out (I7,554.95) Bank Balance as of April 30,2023 $117,887.33 Transfers to Mutual Funds $31,865.18 Less: Outstanding Checks (111,721.05) Less:Retirement Check Run (38,031.46) Reconciled 3alance as of April 30.2023 -0- 190 MINUTE BOOK RETIREMENT BOARD WASHINGTON COUNTY, PENNSYLANIA Bank Balance as of May 1,2023 S 117,887.33 Deposits to Checking Account -0- Transfers In S 60,000.00 ACH Credit $415,691.33 Other Credits $802,615.20 Less:Cancelled Checks (157,671.26) Less: Other Debits .0- Less:ACH Debits (957,279.68) Funds Transfers Out .0- Bank Balance as of May 31,2023 $281,242.92 Transfers to Mutual Funds $31,706.92 Less: Outstanding Checks (272,619.17) Less:Retirement Check Run (40,330.67) Reconciled Balance as of May 31,2023 -0- Bank Balance as of June 1 ,2023 $281,242.92 Deposits to Checking Account -0- Transfers In $866,431.88 ACH Credit $284,538.96 Other Credits -0- Less:Cancelled Checks (291,763.80) Less: Other Debits -0- Less:ACH Debits (%1,825.98) Funds Transfers Out -0- Bank Balance as of June 30,2023 $178,623.98 Transfers to Mutual Funds $39,315.22 Less: Outstanding Checks (39,926,15) Less:Retirement Check Run (39,259.29) Transfer (138,753,76) Reconciled Balance as of June 30,2023 -0- Requisitions Ms. Sloane made a motion to approve the requisitions for the months of February through July 2023. Motion was seconded by Mr. Sherman. Roll call vote taken: Ms. Sloane—yes; Mr. Flickinger—yes; Mr. Maggi—yes; Mr. Sherman—yes; Mrs. Vaughan—yes. Motion passed. 191 MINUTE BOOK RETIREMENT BOARD WASHINGTON COUNTY, PENNSYLANIA IMR I IMI LLU-E-IJ'/2 Distributions WashiWon County Retirement Board DirtrAmdons .Iannry 2023 rimArmouat 2430 ?NC as Trnatee of IRA of Ans da McGsirlt laSC44 2431 Morsas Stan ley as Trustee of ntA of SheRi Arneld 28,A65,S9 2432 vanguard as Trustee of IRA of 3anaatha Robb 1,979AS 2433 Francis C Seliga Jr 5,983.94 2434 DomuwkACarrols 14,611.64 2435 Jake Pubes 1,347.97 2436 Bradley M Boni 47,36834 2437 Abigail Lunger 2 897.13 2438 Shawn Myers 422.75 2439 Breaaan Watts 1,749.02 2440 Kiera Goolsby 13,043.78 2441 Waahingtaa County ItegularFayroll Faerorr Aseount 2210.08 2442 Wash n&n Co.Cash Dirburnment Acec 9,260.44 Transfer. PNC Bank 92,240,72 Transfer: Washington Co.Retiretntat Aett 879,3U.76 '• Total Monthly 1,122A20.38 Washington County Retirement Board DIstributiona February 2023 Payee Amount 22" Pershing LLC as trustee of IRA of Jonah Green 32,710.41 2245 Kayla Straheekec 1,859.27 22" Kevin Scheibel 19,631.12 2247 Dheaven Jhames Kelley 4,24542 2243 JeaniferMengle 16.122.67 2249 Anthony Cox 14,993.09 2250 Janney Montgomery Scott trustee of NA of Richard R Gaydw 89,574.89 2251 Frank Kublaw 112,28445 2252 Patrick Puskarkh IM44&60 2253 WwAln"County Regular Payroll F.acrow Attoasnt 22AM.82 22S4 Washiagwo Ca Cash Disbe sementAcet 33,219.14 Transfer: PNC Bask ]",60 A6 Transfer. Was>hMwn Co.Retirement Acct. 879,324.76 Total Monthly 1,36.549A9 192 MINUTE BOOK RETIREMENT BOARD WASHINGTON COUNTY, PENNSYLANIA I LIMITED F_1.607g4i D__ Wau)tingto-a County Retirement Board Dietribut ont March 2M3 Pavee Amount 24" Thoansa Namilton 1,321.94 2445 Denise Dupoin-Nicholson 7,Ma9 2446 Micbelle Vutcano 26697 2447 ANCeia F1latel 3A36.24 2448 Ny'zjriona Alka 674.69 2449 Zaackary Fike 203.81 2450 Asliyah Branch 77111A3 2451 Ltigh Mawhinaty 7,43891 2452 Audres0rum 2,64.80 2453 Franklin Morris 12,571A6 2454 Ashiey Lutska 13T60 SI 2455 "Hainan 20,249.29 2456 Community Bank FBO Austin T>Beatiie 214.973.23 2457 Washington County Regular Payroll Lrscrow Account 23A2&5D 2458 Washington Co.Cash Disburscroeat Aoct 52,011.23 Transfer. PlrC Bank 76,270.12 Transfer: Washington Ca Rvirement Acct. gg0,( 3,93 Total Mon ddy .i nor 1 4.92 —- 141,279.92 132,M.90 61107.80 346.82 Total PW Deposits 281,717.34 S 1,333,974.92 Whatweaeed (njq 717.34) PNCDepodlx S 1,052,257.58 TmoferAmauat 193 MINUTE BOOK RETIREMENT BOARD WASHINGTON COUNTY, PENNSYLANIA —��1F31JAdlIED�tf.Q7.924LR. Washington County Retirement Beard Dia dbutlont April 2W bum Amaant un Tammy S Haborick 64.11 2459 LeigbAon Fohner 439M 2460 Sharon J Vesmith 92.41 2461 Estate of James S Mithaloeei 207A4 Z"2 Estate of Ruth Beraett 194.79 2463 Lucinda Bailey 185.53 2464 Estate of L,awrtace C Kintltcy 31316 2465 Theresa Frisco 3,73039 2466 Fidelity as Trustee of IRA of Christopker Kaschok 483U,20 2467 trfatthew Masrars 2,162.60 2468 Andrew Campbell 740.04 240 Clara Sagsatirado U82A1 2470 balls Abosays 2,46247 2471 Lace Keeney 6,975.29 2472 Heather Lacy 5,163.96 2473 John Sopiak 2,7U.85 2474 Washington County Regular Payroll Escrow Account A42350 2475 Washington Co.Cash Diaburecmeat Aect 76,125.73 Transfer. P1NC Beak 69,071.95 Transfer. Washington Co.Retirement Acet. 892,902.28 Total Monthly 1,145,SS9.13 194 MINUTE BOOK RETIREMENT BOARD WASHINGTON COUNTY, PENNSYLANIA IMR I IMITFQ F160792ql Q W=kbgft'Ci7 110tiret Bored DbugmHen blst{y f 24" Trwoee of mom Vailey cumamidty Fm Fw Panda Jaaaasee 6474&14 2478 Trmea aE Nawport 7 o FW Aedev Asti of Way Co in,$Sdwy 7,393.75 P@dtK =PS Man&laaae:Troy Be9arf8a f7$6DTXN 2479 Mddiq inwrtetmmb of f w*9 of ERA odAlex Jena 437.03 2480 BMW*moor. 1.98,m 2m Luke Pexkwt 2,269.20 un B8e8rda Ko 3,W.77 2483 mad"A I cneciaa l0,Ol0.ty 24" Vve"a Gawdbertty 2,WU4 2489 Carty smshu 110139 2486 Cam NAm"lall 14,00191 24P uric wain 7.9"M 2488 W"n*-C-mfy ftyroR EKrar Awn= ZZ, 0106i 240 W*A1v tm Ca.CAA 9bbwswma Aar 18,02M 75nmter. ANC Book 73,218.42 Tlrasder: Wasbbgbm Ca Raffr went Ac& 9"725.43 TOW montuy 1341,149JS 14061377A7' 139,336�1! TaWPNC d 279:534.15 $ 1,142,149.25 Whm wo med :179,534.03, PWDe *Aft :� MU15.20 Tromow AnImm 195 MINUTE BOOK RETIREMENT BOARD WASHINGTON COUNTY, PENNSYLANIA [MR LIMITER E1607929LD _ WyaWROM QAW('Redraammt Board Dk bgxdim Jw 2w AmooW 2490 Amber(;@Wbhr 4,bi.S.i6 2491 Atgpmdrlajht 2,010.74 2492 WQmoE4rrh 94A9AI 2493 Kelharb*Gook 2,171.i1 2494 Ansel[C*dWb i,867,$7 24" Waahbom C06nq Ramer PWA MWuw Aesomt 22,$9LU Z06 Wu C&Cx&DLbareeueotAcd 3,24E.13 2497 Addalooal WmhlW-Ca:Cmb DlabmvmmW Aoel K"1.26 Trmdarl FNC Bank 76ACL24 Transfer. Wubbefto Ca Retl►eateA!Aut, on.;513.24 TOW Mal* 1,14SJ74,% 13A,677,4� 196,197.28 Tom pm i 1,148,374.36 what we aaed rg8j,942A8l MCDop""s $ $661$31.8$ TY urw Amwmd 196 MINUTE BOOK RETIREMENT BOARD WASHINGTON COUNTY, PENNSYLANIA 1MR I NISEI] E16n7Q9QI F) W"Mmgtm Cwoty ksitrssltaat Baard DbWbuti m Jaly IM Amuot 2408 Mary Bob Morris 397.54 2499 Ed+r*WJ0nesas Trustee*1111A of BEP,sly 33420.31 2505 Capital Bazk&n ust Co W b ntss of MA of Deunit Sams 2501 Natiaual I'4xncLl Services ws testes of IRA of7ustise Crow 4t2A2.45 2502 Bet"as trustee orIRA orourk At" 2 9am Z"3 Mikcwyavtllo 12,10357 2504 Coal Dsiley 863.811 2505 Brenda Foel"er 546.67 25" mixissel Bea+tley 9"46 207 Andrew Yamer 1,i63.26 25M Keiyls Krwr 2509 CbristopharDille 2,275.70 2510 Leak Cox 4,62L% 2511 wabl an C—trRegtdsr ftnilFserow 4e ouot 23J 2S12 Wm0ftsta QL CaA blibursemeatAeet Ics".70 Trawsfor. PIYCLBant 75A41425 Transfer. 1V►ashlogm Co.RsfirraoestAut. _ -91twi9323 Tatttlmanaly 9148 1 I F 331 $3,51 LX733.76 Taw PNC Demons 270 00728 S 1,149APL97 Wbatwe used j27Q01i7r8? PNCDepasltp S 874kx184� Ti'#otdrAmralpt Old Business None. New Business Mrs. Vaughan entertained a motion to remove addendum for investment policy statement for Marquette Associates-Controller Sloane advised vote still needs to be done for 2023. Mrs.Vaughan requested copies of the addendum voted on prior for 2022. Ms. Sloane acknowledged the request. Mrs. Vaughan also entertained a motion to remove the approval of the request from Rachel Roney which was voted on and approved at the February 16,2023 meeting, the portfolio presentation will now be done by Brad Hampton.The motion was moved by Mr. Sherman and seconded by Mr. Maggi. 197 MINUTE BOOK RETIREMENT BOARD WASHINGTON COUNTY, PENNSYLANIA imn LIMITED E1607929LD No discussion followed. Roll call vote taken: Ms. Sloane—yes; Mr. Flickinger—yes; Mr. Maggi—yes; Mr. Sherman—yes; Mrs. Vaughan—yes. Motion passed. Portfolio Presentation—Mr. Brad Hampton--Marquette Associates Mr. Hampton began with an overview of the economic landscape found in exhibit two of the Marquette portfolio. He highlighted that GDP was at 1% during quarter one indicating we may be headed towards mild recession by the end of 2023,but later that number revised upwards to 2%. Second quarter followed up at 2.4%. He states that the economy is being driven continually by a healthy consumer. Recent consumer reports show spending has been positive, money is being spent on leisure activities such as restaurants, sporting events and entertainment,which continues to help our economy. He notes that student loan re-payment will resume in October, which may cause a hit to household budgets. Fiscal government will start to be under some spending pressures in the later half of this year. He states governments are continually making up a large portion of our economic growth with infostructure and CHIPS act spending, all areas that would spur economic growth are now feeling the pressure to bring spending back down due to the debt ceiling. Focus is being kept on the above two areas to see when recession might happen, currently looking at Spring 2024. Mr. Hampton adds that household percentage of debt servicing is currently at a historical low and has been for some time due to consumers being able to put off student loan payments and having a low mortgage payment as most of the mortgages are fixed rate. Further, looking at global economy,he states that Europe and Japan are some of the stronger foreign economies while there is concern for countries such as Germany as they export largely to China which does not currently have a healthy consumer spending cycle due to the lack of stimulus from the Chinese government. It is questioned as to how the US will interact with China moving forward from a geopolitical front as the relationship between the US and China has been very contentious for a long period of time. Moving on, Mr. Hampton turned the attention to the markets and how they have responded noting that the US equities posted their third consecutive quarter 7+%return in the S&P 500. He states it has all been driven mainly by seven stocks. They have grown very large with returns of upwards of 30% across all seven of the stocks. The other 493 stocks in the S&P 500 have not done anything significant. There is roughly 23%performance gap between value stocks vs. growth stocks within the first year. He also notes that year to date numbers for developed broad markets are up about 11%, with emerging markets posting below single digit returns, largely due to China. Touching on fixed income areas such as bonds,bank loans,high yield have moderately taken a jump as interest rates have gone way up. Rates have soared to 5.5%which is higher than usual, and 198 MINUTE BOOK RETIREMENT BOARD WASHINGTON COUNTY, PENNSYLANIA IMB I IMITED E16079NI r) it is expected that we will see some rate cuts by Spring 2024 along with a slow- down in the economy. Finally,he notes that real estate, mainly for this portfolio is more invested in private real estate has been the one thing that has had some price pull backs and has not done great this year. Moving on to Employee Retirement, Mr. Hampton explains that as of June 30,2023, the market value was just under$197,000,000 seeing a$6,000,000 gain during the second quarter which coincided with the 3%return. He noted that most of the US equity portfolio is a part of the S&P 500 including owning the"magnificent 7"which is beneficial for the portfolio. There is a 6.5%return target which allows room for owning some low volatility stocks, defensive equity/private credit/fixed income have all been very positive contributors.This will allow for higher income in the future. Mr. Hampton highlighted that some of the negatives are that this portfolio is somewhat more diverse specifically within value with the US together with global components, we own more in the broader markets owning about 20%. The market is currently very narrow, so if you don't own exactly what the index owns, you tend to trail a bit. Looking at funds that pay a dividend such as Twin Dividend Select, that are a traditional material or utility companies, in a market like this where it is very few names marching everyone forward,the smaller company names tend to get left behind. It is hard for a utility company to benefit from artificial intelligence. That is an area where value stocks aren't really participating at this point. Finishing up the performance summary, Mr. Hampton touched on the real estate portion, highlighting Clarion Lion properties fund, stating that this portfolio is starting to have some write downs particularly in the office space over concerns as tenants start to renew and start to express wanting lower rents/lower square footage. Moving on to exhibit 3 in the portfolio, Retirement System,Mr. Hampton states that a lot of counties have been asking how we have done post-Covid. He states there are 3 market environments since Covid;the initial shock, followed by a boom where almost any stock recovered, and then you have last year where you see a severe down market in bonds and stocks, but we are starting to see a bit of recovery now. We like to see what this portfolio is designed to do,just to see if things are working and really weathering those storms. When we think about building a portfolio, it's not building a portfolio that does well when everything is sunny, and 7 stocks are driving the market,but it is really something that can weather the next 10-20 years of market outcomes. Over the past 3 years your fund has gained$43.3 million dollars with a gross return of 8.4%, net return of 8%, right in line with your policy benchmark of 8.1%.As we measure this fund against about 1,500 other pension funds, this fund has ranked in the top 23%.The changes the board has made over the course of the years,you are now starring to see that benefit. Mr. Hampton directs the attendees to view page 23 in exhibit 3 of the portfolio. He refers to the"within range" section, stating that this is a checkpoint for the board. Looking at the current and policy targets within the second and third columns,you see those are all balancing close to the target numbers. This takes advantage of letting equities get too far ahead of themselves and it is a great kind of tool to rebalance and buy some underperforming assets when possible. 199 MINUTE BOOK RETIREMENT BOARD WASHINGTON COUNTY, PENNSYLANIA IMfll.Lpe1TE❑ E'Lf2Q�.91.17_ Moving ahead to page 38 in Exhibit 3,this is just looking at your fixed income portfolio.The yield to maturity is 5.1% that you are currently getting from your bond portfolio. Mr. Hampton 1 compares that number to the numbers from two years ago, which was under 2%. He touches on the 1 average duration column,which shows how much interest rate risk you are taking which illustrates if rates go up how severe our loss is going to be. Mr. Hampton noted that the typical duration for the Aggregate Bond Index was around 6.5 years, which was a poor risk/return risk tradeoff at under 2% yields. Right now, it is completely flipped, your fund is getting more yield in your portfolio while the interest rate remains the same,therefore a better risk/return tradeoff for bonds. This is what has changed most in the last 18 months and this shift is what retirement boards can most take advantage of and de-risk your portfolio. He adds that if you have a 6.5%return target and your fixed income portfolio can get you 5%of that, you won't need to have as much in the equity markets to sustain your fund. Additionally,pages 39-41 in Exhibit 3 are each of the individual managers that make up your portfolio. Page 39 is your US and Global equity composites. US equities has 16% of 26%is passively managed. This controls the investment cost but also helps benefit when markets go stronger. Mr. Hampton points out that diversified funds like Twin Capital have not done as well this year with such a narrow market but have done better in July &August and it is expected that when stocks start to move in different directions that active managers should start to benefit. Mr. Hamptons reminds that the Global manager index, the MSCI ACWI has two thirds of the index in the US market referencing Apple,Amazon and Microsoft are all big influences on the index in Global portfolio as well. For the months of July and August as things broaden out, the active managers should start to outperform their indexes. Moving on to page 40,Mr. Hampton shifts the focus to the real estate portion, stating that this is the only portion of the portfolio that is negative currently. Comparing Clarion and TA,the biggest difference was the office space. Looking at the broad real estate market, office represents roughly 22% of the index. Both funds were chosen because office wasn't as large of a component. For TA, they only own 8% in office space while Clarion on the other hand has about 17%in office space. Clarion has been trying to make some changes with their office space,they currently have I 1 properties, sold one property and hope to get down to 6-8 properties. For both TA and Clarion industrials and multi-family are the largest holdings which continue to do well. It is expected that in the near term the index will start to catch up and that those write downs within the office space will help to close the performance gap. Wrapping up with page 41 in Exhibit 3, Mr. Hampton states this page is just more diversifying strategies,continually meeting expectations as seen by the year-to-date columns for Infrastructure,Private Equity and Private credit. These strategies have steadily provided diversification while providing steady level of return.The Private Credit Fund is currently ahead of the Private Equity fund due to income rising. Mr. Hampton adds that July performance added another 2%of return for the total fund level. At end of July,total portfolio return is approximately 9%. 200 MINUTE BOOK RETIREMENT BOARD WASHINGTON COUNTY, PENNSYLANIA IMR I IMIIFD FF160 49! Shifting to Exhibit 5, the OPEB portion of the portfolio, Mr. Hampton touches on how this fund is set up very closely to the Pension fund.This fund ended the quarter at$24.2 million, resulting in an$837,000 investment gain during quarter 2. Performance was at 3.6%.There is more in public equities in this fund and a higher allocation to US equities.There is not as much in the value sector, Mr. Hampton adds that The Twin dividend fund is not in this fund, so there is more in the passively managed US equity portion. Finally, Mr. Hampton moves on to the final portion of the presentation contained in Exhibit 8-Asset Allocation proposal. Mr. Hampton advises that yields have gone up, bond holders are being paid to invest in fixed income which creates a great opportunity for pension funds to take risk off the table. This portfolio has been dollar cost averaging out of fixed income since 2015 because rates have gone down. Infrastructure,Private credit,Real Estate came into play because there was no income out there in fixed income. Fixed income is now generating some income, Mr. Hampton states the Core Bonds had just under 5%return, which can allow for funds with a return target of 6.5%to de- risk the plan while still meeting the return objective. Highlighting page 4,proposal 1 within the Pension Fund, shows how Marquette is taking 5% out of the equity portfolio and putting 5%into the bond portfolio.The result in doing this is 7.12% return. Mr. Hampton advises that Marquette does their best to tighten the range of outcomes as much as possible. The risk return came up to .78%. He suggests that a 5% reduction maintains the health of the Pension Fund in terms of expected rate of return and takes some risk off the table. Mr. Hampton asks if this is a move the board would be interested in carrying out and advises if so,we would be selling out of equities at this point and buying into a fixed income portfolio. Someone from the board asks, "Doesn't 7%take more risk off the table?"Mr. Hampton advises there is a proposal 2 which is a closed-end fixed income approach. We added a 2%allocation to a potential close-end fixed income fund at this point, to illustrate what that would look like for closed-end fixed income, which brings you out to 29% in fixed income,45% in total equities.You would still be above 7% of return and risk would be below 9% and return trade off would go up to .8%. Mr. Hampton advises that the recommendation would be to go with proposal 1 at this time. He explains that for the closed-end fixed income investment,proposal 1 is step one for that strategy. Mr. Hampton goes on to say that as co-fiduciary on the fund,Marquette's job is to educate us on the closed-end fixed income space, and he would request an education session on closed-end fixed income to educate the board on what this product is and the potential benefits to the fund. If it is something that the board would like to pursue, they would have it implemented in the investment policy statement. That would be a 2%target(roughly) for a separate section called Closed-End Fixed income as it would be a slight difference from what is outlined in the IPS. From there they would go through the education piece on close-end fixed income providers, such as Gridiron Partners,who manages fund for other PA public funds,along with other firms for the specific investment.A board member confirmed with Mr. Hampton that proposal 1 was the best option at this time. Mr. Hampton agreed proposal 1 is the way to go right now. A motion was entered by Mrs. Vaughan to accept proposal 1 for the Pension Fund. The motion was moved by Mr. Sherman and seconded by Mr. Maggi. 201 MINUTE BOOK RETIREMENT BOARD WASHINGTON COUNTY, PENNSYLANIA IMII I IMITED E1607929LD Roll call vote taken: Ms. Sloane—yes;Mr. Flickinger—yes; Mr. Maggi—yes; Mr. Sherman—yes; Mrs. Vaughan—yes. Motion passed. A proposal was reviewed for OPEB Fund,which would have a 5%reduction from the equity side,taking the equity portfolio from 65% down to 60%. Fixed income would go up to 20% from 15%. A motion was entered by Mrs. Vaughan to accept proposal I for the OPEB Fund.The motion was moved by Mr. Sherman and seconded by Mr. Maggi. Roll call vote taken(only commissioners vote on OPEB): Mr. Maggi—yes; Mr. Sherman—yes; Mrs. Vaughan—yes. Motion passed. Mr. Hampton concluded the meeting stating that Marquette will prepare an education section for closed-end fixed income to see if it is something the board wants to add into the policy statement in the future. The meeting was adjourned at approximately 3:36 p.m. THE FOREGOING MINUTES SUBMITTED FOR APPROVAL: 2023 ATTEST: J-Zl LZ CO ROLLER