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Home My WebLink About2024-11-07_Retirement Board Agenda_Meeting No 296 RETIREMENT BOARD MEETING November 7, 2024 1. Opening of Meeting. 2. Approval of Minutes No. 295 dated August 15, 2024 3. Public Comment. 4. Treasurer's Report: Bank Reconciliations—August 2024 5. Requisitions: Requisitions—August 2024-September 2024 6. Old Business. 7. New Business: a. Cost of Living increase - required to be reviewed once every 3 years b. Fee increase of 89/per month in 2025 —Korn Ferry c. 2024 Charitable Contribution distribution from Marquette Associates d. Lee Martin presentation from Marquette Associates 8. Adjournment. Minute No. 295 August 15, 2024 The quarterly meeting of the Washington County Retirement Board was held at approximately 11:17 a.m. on Thursday,August 15,2024,in the public meeting room with the following members being present: Commissioners Nick Sherman;Larry Maggi and Electra Janis;Treasurer Tom Flickinger and Controller April Sloane.Also present;Solicitor Gary Sweat;Human Resources Assistant Director Andrea Johnston;Chief of Staff Daryl Price;Chief Clerk Cynthia Griffin and Administrative Assistant Debbie Corson;Executive Secretaries Casey Grealish and Randi Marodi;Lee Martin,Ph.D. and Brad Hampton representing Marquette Associates and Michael Spadaro from Korn Ferry. APPROVAL OF MINUTES Mr. Sherman entered a motion to approve meeting Minutes 294, dated May 16, 2024. The motion was moved by Ms.Janis and seconded by Mr. Maggi that the above-mentioned minutes be approved as written. No discussion followed. Roll call vote taken: Ms. Sloane—yes;Mr. Flickinger—yes;Ms.Janis—yes;Mr. Maggi—yes;Mr. Sherman—yes. Motion passed unanimously. PUBLIC COMMENT None. TREASURER'S REPORT Mr. Flickinger made a motion to accept the presented reconciliations of April 2024 to July 2024. Motion was seconded by Ms.Janis. Roll call vote taken: Ms. Sloane—yes;Mr. Flickinger—yes;Ms.Janis—yes;Mr. Maggi—yes;Mr. Sherman—yes. Motion passed unanimously. RETIREMENT ALLOWANCE REPORT Bank Balance as of April 30, 2024 $204,916.89 Transfers to Mutual Funds -0- Less: Outstanding Checks (172,778.50) Less: Retirement Check Run (32,138.39) Reconciled Balance as of April 30, 2024 Less:ACH Debits (994,673.47) Funds Transfers Out -0- Bank Balance as of May 31, 2024 $ 310,571.08 Transfers to Mutual Funds 1526.49 Less: Outstanding Checks (274,668.95) Less: Retirement Check Run (37,428.62) Reconciled Balance as of May 31, 2024 Bank Balance as of April 1, 2024 $ 238,403.72 Deposits to Checking Account -0- Transfers In $791,424.99 ACH Credit $287,542.15 Other Credits -0- Less: Cancelled Checks (136,629.26) Less: Other Debits -0- Less:ACH Debits (975,824.71) Funds Transfers Out -0- Less:ACH Debits (992,940.37) Funds Transfers Out -0- Bank Balance as of June 30, 2024 $362,651.91 Transfers to Mutual Funds -0- Less: Outstanding Checks (344,426.47) Less: Retirement Check Run (18,225.44) Reconciled Balance as of June 30, 2024 Bank Balance as of July 1, 2024 $204,916.89 Deposits to Checking Account -0- Transfers In 707,961.78 ACH Credit 287,065.47 Other Credits -0- Less: Cancelled Checks (172,085.49) Less: Other Debits -0- Less:ACH Debits (989,832.82) Funds Transfers Out -0- Bank Balance as of July 31, 2024 $ 195,760.85 Transfers to Mutual Funds 7563.66 Less: Outstanding Checks (160,634.84) Less: Retirement Check Run (42,689.67) Reconciled Balance as of July 31, 2024 REQUISITIONS Ms. Sloane made a motion to approve the requisitions for the months of May 2024 through July 2024. Motion was seconded by Ms.Janis No discussion followed. Roll call vote taken: Ms. Sloane—yes;Mr. Flickinger—yes;Ms.Janis—yes;Mr. Maggi—yes;Mr. Sherman—yes. Motion passed unanimously. DISTRIBUTIONS May 2024 Check Payee Amount 3432 Cynthia A Landrum 169.77 3433 MSSB as Trustee of IRA of Brenda Davis 72,566.51 - Brenda Davis-VOID (65,620.51) 3451 Charles Schwab as trustee of IRA of Pierce Wissler 12,715.29 3435 David Findley 18,932.09 3436 Stacy Stroup 5,672.25 3437 Brian Guyton 904.25 3438 Francisco Berumen 1,850.49 3439 Whitney Rogers 1,435.84 3440 Skylar McCormick 4,035.81 3441 Patrick Bonner 39,452.20 3442 Samantha Coffield 3,334.12 3443 Ryan Messmer 2,519.74 3444 Karen Havener 842.02 3445 Laura Ramsey 29,773.48 3446 Northwestern Mutual as Trustee of IRA of Brittani Berkeley 22,772.06 3447 Brittani Berkeley 9,600.00 3448 Courtney Bonner 33,435.20 3449 Washington County Regular Payroll Escrow Account 21,535.12 3450 Washington County Cash Disbursement Account 44,931.01 Transfer: PNC Bank 93,915.30 Transfer: Washington Co. Retirement Acct. 922,092.25 1,276,864.29 June 2024 Check Payee Amount 3452 Ryan Anderson 49,406.10 3453 Pershing LLC as trustee of IRA of Flence Selph 22,419.52 3454 Nathaniel Menzer Jr 1,951.90 3455 Ethean Abbott 161.93 3456 (void- error in spelling) 3457 Renee R King 4,513.05 3458 David James Kozak 6,415.74 3459 Alexandra Meyer 2,870.82 3460 Kiera Goolsby 1,204.10 3461 Jessica Pantalo 138.92 3462 Ashlyn Waychoff 2,368.18 3463 Chelsea Fine 13,472.60 3464 Lisa Henry 2,591.54 3465 Brian Dupain 26,270.58 3466 Venessa Olivier 2,848.86 3467 Donald Foster 6,287.36 3468 (void- error in spelling) 3470 Washington County Regular Payroll Escrow Account 21,526.92 3471 Washington County Cash Disbursement Account 3,283.58 Transfer: PNC Bank 89,901.29 Transfer: Washington Co. Retirement Acct. 924,373.16 Total June 2024 Distributions 1,192,00LE July 2024 Check Payee Amount 3472 Donna Giambianco 49,271.01 3473 Ethon Clark 391.92 3474 PNC Investments,LLC as trustee of IRA of Anne R Schlegel 31,231.36 3475 Ashley Kovalski 6,821.80 3476 Charles Schwab as trustee of IRA of John Kalenish 8,118.79 3477 Jennifer Bioni 2,061.76 VOID Madeline McClay (7,079.29) 3478 Trustee of Raymond James FBO Madeline McClay 7,079.29 3479 Washington County Regular Payroll Escrow Account 21,487.42 3480 Washington Co. Cash Disbursement Acct 7,028.25 Transfer: PNC Bank 77,218.65 Transfer: Washington Co. Retirement Acct. 934,770.04 Total July 2024 Distributions 1,138,401.00 OLD BUSINESS None. NEW BUSINESS A motion was made by Controller Sloane to approve Timothy Kreger's request to purchase part time service to vest for retirement. Motion was seconded my Ms.Janis. Roll call vote taken: Ms. Sloane—yes;Mr. Flickinger—yes;Ms.Janis—yes;Mr. Maggi—yes;Mr. Sherman—yes. Motion passed unanimously. PORTFOLIO PRESENTATION Michael Spadaro—Korn Ferry Mr. Spadaro began with the 2024 funding valuation, stating the purpose of this valuation is to review the demographic experience and investments during CY2023. It also provides information on the funded status by comparing the assets and liabilities. Mr. Spadaro states that all these things determine the Actuarially Determined Contribution (ADC) for the year 2024.The ADC is comprised of two components,Normal Cost,which is the contribution for the current year of service accrued and Amortization Payment,which is the contribution to pay down unfunded liability. Mr. Spadaro points out that the smoothing method is used over a 5-year period to dampen the effect of investment market volatility on the funding status and employer contribution rates. Basically, the gains and losses that happen every year,gets smoothed out evenly over a 5-year period causing a more consistent ADC rather than it being very volatile. Moving on to results,Mr. Spadaro shares a year-to-year measure of how many employees the county has, their age and years of service, all things that are looked at to prepare the valuation. In comparing the valuation of 2023 to 2024, the contribution was about 6.5 million in 2023, and about 4.6 million in 2024, due to the amortization payment going down. Mr. Spadaro adds that there will be another drop of 1.3 million likely in 2025. Moving on,Mr. Spadaro goes over the Funded Ratio of the plan. In 2024, the Funded Ratio is 94.2%,up from 2023 which was 92.4%. The Funded Ratio has steadily been going up,which is great to see as the goal is to get to being 100% funded. Mr. Spadaro wraps things up by stating Korn Ferry will be providing a 2025 ADC estimate in the future. Lee Martin & Brad Hampton—Marquette Associates Brad Hampton begins by presenting an update on the U.S economy. Mr. Hampton states that economic growth picked up in Q2,with real GDP increasing at an annual rate of 2.8%,which was better than expected.The consumer has continued to be healthy and continued to spend, despite a slight increase in the unemployment rate in July 2024. The unemployment rate and the interest rate cycle are very closely tied together, meaning that if the FED keeps rates where they are at, the US could see unemployment rates continue to rise. Companies carrying a higher interest expense may offset higher costs with a decrease in hiring and an increase in layoffs. As a result, markets have shifted their focus from inflation to the health of the U.S. labor market. Mr. Hampton touches on Global Asset class Performance, stating we are seeing a lot of the same themes from earlier in the year,with a few stocks driving returns.The S&P index has generated most of the return this year. There is a healthy rotation in system value stocks, so investments like TWIN Capital will begin to pay off as well as bonds. Markets sold off 6-7% during the first week of August,but bonds performed well,indicating that correlations between stocks and bonds may be normalizing. Rates are coming down in response to volatility,which is good for the county's bond portfolio. Mr. Hampton concludes with shifting the focus to U.S. Equity Markets. Mr. Hampton points out that superior earnings growth for these mega-cap names is expected to continue in the coming years, though the spread compared to the median S&P 500 stock is estimated to narrow considerably in 2025 and 2026. Mr. Martin moved on to present the Retirement Fund's Portfolio overview as of the 2"d Quarter 2024. As of June 30, 2024, the Fund was valued at approximately$217.3 million with a second quarter net gain of 1.1% ($2.5M gain). He also stated that the positive attribution for the quarter were from Emerging Market Equities,Defensive Equity (VRP),Private Credit and Short- Term Credit. The negative attribution for the quarter were from Small Cap &Value Equities,Low Volatility Equities,Timber/Farmland and Private Equity (traditional benchmark). Mr. Martin added that the fund gained$22.6 million over the last 3 years with a gross return of 7.7%. He states we are in the top 16% of the InvestMetrics US DB plan universe. He noted lower volatility and downside capture relative to the policy index over that period. Mr. Martin also points out that we have low investment management fees of 0.42%. Mr. Martin states the Timber Farmland dividend reinvestment has been turned off along with Real Estate over the past couple of years. Real Estate redemptions are continuing to come in. Mr. Martin concludes that there were lower negotiated fees for Partners Group,which continue to be well below market average for private markets exposure. Mr. Martin moved on to review the Asset Allocation Report,highlighting that Real Estate is currently at 4.3% of the portfolio, significantly lower than the average percentage of other funds which will minimize any negative issues in the future with Real Estate. Mr. Martin notes that in the last few years Private Equity and Private Credit have done very well compared to their traditional public equivalents and therefore, are above target allocations. Mr. Martin touches on Peer Ranking. Mr. Martin explains the portfolio is positioned more defensively now than it was previously. He notes that because of the portfolio structure, Fixed Income allocation at 28%is now close to the median defined benefit plan in the U.S. Mr. Martin concludes this portion by looking at IPS targets. Mr. Martin states that with the better outlook for Fixed Income going forward, the estimated return of the current IPS targets was 7.10%,with assumed risk of 8.76%. Mr. Martin compared that to the implantation,which includes the diversifying strategies within each asset class to note that return levels remained at 7.1%,while the assumed risk is expected to be less at 8.16%,resulting in a higher risk-adjusted return expectation. Mr. Martin wraps up the presentation with a look at the Pension Asset Allocation Implementation attachment. Mr. Martin advises that Marquette is not recommending any new strategies as the county is well diversified at this point. Mr. Martin then suggested that the county switch from Fixed Income benchmark mandate to Aggregate (Core) Bonds,which would make the duration longer and offer a bit more protection if markets go down. Ms. Sloane made a motion to allow Marquette to change the duration of the Asset Allocation Implementation. Seconded my Ms.Janis. Roll call vote taken: Ms. Sloane—yes;Mr. Flickinger—yes;Ms.Janis—yes;Mr. Maggi—yes;Mr. Sherman—yes. Motion passed unanimously. No Discussion followed. The meeting was adjourned at 11:52 p.m. THE FOREGOING MINUTES SUBMITTED FOR APPROVAL: 52024 ATTEST: