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HomeMy WebLinkAbout2017-08-08 NEERB MINUTES• • • NONEMERGENCY EMPLOYEES RETIREMENT BOARD MEETING August 8, 2017 Chairperson Woodward called the regular meeting of the Englewood NonEmergency Employees Retirement Plan Board to order at 3:30 p.m. in the Public Works Conference Room of the Civic Center, I 000 Englewood Parkway, Englewood, Colorado. Members Present: Members Absent: Others Present: David Henderson, Employee Representative Mahendra Patel, Employee Representative James Phelps, Council Appointee Kathleen Rinkel, Director of Finance and Administrative Services (arrived 4:00 p.m .) Jim Woodward, Chairperson , Council Appointee Carol Wescoat, Recording Secretary John Moore, Council Appointee (Notice) Steven Yates, Council Member (No Notice) Wendy Dominguez, Innovest Portfolio Solutions Jerry Huggins , Innovest Portfolio Solutions Leslie Thompson, Gabriel Roeder Smith and Company Joan Weber, Benefit/Risk Manager A quorum was present. * * * * * Approval of Minutes MR. PHELPS MOVED TO APPROVE THE MINUTES OF THE MAY 9, 2017 REGULAR MEETING AND THE JUNE 9, 2017 TELEPHONE POLL MEETING. MR. PATEL SECONDED. Ayes: Nays: Absent: The motion carried. Phelps, Henderson, Patel, Woodward None Moore, Rinkel, Yates Gabriel Roeder Smith and Company (GRS) a. Discussion of 2017 GASB Report Fees The Board reviewed the opinion memo from the Deputy City Attorney regarding the payment obligation for the GRS fee to prepare the required GASB report as requested by Kevin Engels, City of Englewood Accounting Manager. MR. PHELPS MOVED TO APPROVE PAYMENT FOR GRS OF $2,000 FOR THE GASB REPORT PREPARATION. MR. WOODWARD SECONDED. Ayes: Nays: Absent: The motion carried. Phelps, Henderson, Patel, Woodward None Moore, Rinkel, Yates • • • Ms. Thompson indicated at the prior meeting she would provide the Board the 30 Year Projection Results with the 30 year funded status of plan based on the January 1, 2017 Actuarial Valuation data . She explained the reduction after 2030 in expected employer contribution rate is because of the Board 's decision to use a 15 year amortization of the outstanding unfunded liability for the 2016 report . A new base will be established each year for any additional gains or losses and each base will be amortized over a closed 10 year period. These changes were effective with the January 1, 2016 valuation. She said this 30 year projected contribution report will be included with the annual report in the future. Retirement Approvals and Notifications : a. Con s ideration of DROP Application for Michael Renner b. Consideration of DROP Application for Debra Moomaw c . Consideration of DROP Application for Terry Tadlock d. Notification of DROP Application for Jack Standlee e. Consideration of DROP Application for Gregory Croaston f. Consideration of Retirement Benefit Application for Dale Southworth g. Consideration of Early Retirement Benefit for Lee Gallegos h . Consideration of Early Retirement Benefit for John Lujan 1. Notification of DROP Application for Nicholas Johnson J . Notification of DROP Application for Kevin Hill k. Notification of Death of Christopher Albers, employee, and approval of benefit for the Beneficiaries I. Notification of Death of Richard Apodaca, retiree, and approval of benefit for the Beneficiary MR. PHELPS MOVED TO APPROVE THE BENEFIT APPROVALS AND NOTIFICATIONS. MR. HENDERSON SECONDED. Ayes: Nays: Absent: The motion carried . Phelps, Henderson , Patel, Woodward None Moore, Rinkel, Yates Notification of Death of David Gomes, Deferred Vested Member (May 12, 2017) and approval of Benefit for Surviving Spouse Beginning July l, 2018 Ms . Wescoat explained that Mr. Gomes had not attained age 55 at the time of his death . His spouse will begin to receive 50% of his accrued benefit at the time he would have attained age 55, July 1, 2018, unless the Board makes the decision that would permit the lump sum distribution as provided by the Plan. Ms. Wescoat explained the Plan provides that the Board could choose to provide the beneficiary, at the time of death, a onetime payment rather than monthly payments. The Board agreed to approve the monthly benefits to the beneficiary prior to July 2018. Innovest Portfolio Solutions, LLC a. Performance Evaluation No nEmerge nc y Employees Retirement Boa rd Meeting 2 of 4 • Ms. Dominguez reviewed the highlights of the second quarter Portfolio Review. She said the total fund's return for the quarter was 2 .56 percent, which was .56 percent more than the Custom Benchmark. Over the past 12 months, the total fund was 13.24 percent outpacing the Custom Benchmark by about 2.58 percent. The year to date return is 7.02 percent compared to custom benchmark of 5.75 percent. She reminded the Board when reviewing the performance, the funds' earnings are reported net of fees and Custom Benchmark has no fees included. On an after fee basis, the fund has done exceptionally well. She continued reviewing the markets and the 2017 second quarter market conditions highlighting the incidents that had an impact during the quarter. Ms. Dominguez said that page 14 demonstrates why diversification is important and why trying to time the market is so difficult. There are times when one asset class outperforms and times when another may outperform . The best mechanism is to protect yourself from risk and create a smoother investment performance is diversification . Mr. Huggins reviewed the current Investment Policy Statement Strategic Allocation. He explained when reviewing page 16 the target allocations are a bit off because of the reinsurance allocation . The Plan has chosen to do an incremental purchase of reinsurance and began by purchasing two percent of the targeted five percent that it will increase to with the final purchase. Ms. Dominguez said the next purchase will begin during October with the purchase transacted during December. Mr. Huggins reviewed the Manager Score Card on page 17, noting the reasons where there are areas of minor concern or changes . Mr. Huggins reviewed the funds' performances for the quarter and summarized some of the changes , highlighted impacts to the funds during the quarter. • Ms. Rinkel arrived 4 :00 p .m . • M s. Thompson asked about Ms . Dominguez' comment regarding the high price to earnings ratio and if there are concerns about a market correction. Ms. Dominguez said there are concerns and if you look at the expectation of the total portfolio earnings over the next five to ten years, Innovest is not predicting 13 percent returns, more of a 6 -6.5 percent returns . Part of that expectation is because it has been so long without a correction . There is a lot of political noise, but at the end of the day, stocks generally move based on consumers' confidence. If consumers feel good about their job and are certain they are not going to lose their jobs, they will continue to spend and that should continue to propel stock prices. It is the uncertainties that you never know about, the 9-11 or the events that you could never plan for or expect. That is when the shoe could drop and you need to keep diversified for those times . Mr. Huggins reminded the Board of the funds that were chosen for correlation during the down periods . Mr. Phelps said that over a long period of time, where there are corrections, the next upslope goes even higher than where it dropped off. Ms . Dominguez said that for a fund like this, you can look forward thirty years and still see need to maintain that long term horizon. Notification of Board Vacancy -Mahendra Patel Mahendra Patel is retiring from the City on August 31, 2017. This meeting is his final meeting as a Board Member. Ms . Wes coat will request nominations for an election to fill the remainder of Mr. Patel's term that ends, February 1, 2020 . The Board congratulated Mr. Patel on his retirement and thanked him for his many years of service on the NERP Board . NonEmerge ncy Employee s Retirement Bo a rd Meetin g 3 of 4 • • • Members ' Choice Ms. Rinkel presented a summary from John Jordan, Expen se Reduction Analy sts, Inc . (ERA), of where they are in the project. The memo is regarding the City of Englewood NonEmergency Employees Retirement Plan Proposal, Project: Investment fees. She summarized the memo indicating that if any portion of the ERA plan was implemented that next steps outlined on the memo are to be addressed. Ms . Dominguez commented as a point of clarification on the first bullet point of the memo under ERA Proposal, that Innovest did not agree on any of the ERA recommendations. The ERA had recommended ETFs. The Board discussed the issues of using ETFs. Innove st provided an analysis of index funds and the Board 's decision was not to move forward with index funds. Ms. Rinkel ask how it could be documented and give it back to ERA to bring it to a close. Discussion followed regarding what information was shared with ERA. Ms . Rinkel s uggested putting a cover letter on the pieces of analysis and send that to ERA. Ms . Dominguez said she would help prepare a letter. Ms. Rinkel suggested sending the draft to Ms . Wescoat to share with the Board . Ms. Rinkel wants the Board to be comfortable with the letter to be sent. The next Board meeting will be November 14, 2017. The Board adjourned at 4:27 p.m . Carol Wescoat Recording Secretary NonEmergency Employees Retirement Board Meeting 4 of 4