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Home My WebLink About2016-05-10 NEERB MINUTES.. I • • • NONEMERGENCY EMPLOYEES RETIREM ENT BOARD MEETING May 10 , 2016 Chairperson Woodward called the regular meeting of the Englewood NonEmergency Employees Retirem ent Plan Board to order at 3:03 p.m. in the Public Works Conference Room of the Civic Center, 1000 Englewood Parkway, Englewood, Co lorado. Members Present: Member s Absent: Others Present: A quorum was present. Approval of Minutes Kathleen Rinkel , Director of Finance and Administrative Services David Henderson, Employee Representative John Moore, Co uncil Appointee (Arrived 3:07 p.m .) Mahendra Patel , Employee Representative James Phelps, Cou ncil Appointee Jim Woodward, Chairperson, Council Appointee Steven Yates, Co uncil Member (Arrived at 3:08 p.m . and left at 3 :55 p.m.) None Wendy Dominguez, Innovest Portfolio Solutions Paul Wood , Gabriel Roeder Smith and Com pany (GRS) Joe Herm , GRS Leslie Thompson , GRS * * * * * MR. PHELPS MOVED TO APPROVE THE MINUT ES OF THE FEBRUARY 9, 2016 REGULAR MEET ING . MR . PATEL SECONDED. Ayes: Nays: Absent: Abstention: The motion carried. Henderson , Patel, Phelp s, Woodward None Moore , Yates Rinkel Innove st Portfolio Solutions, LLC Upda te on Change of Custodia/ Services Ms. Dominguez sa id the transfer of custodial services from Wells Far go to Schwab should be completed in about a week. Performance Evaluation Ms. Domingue z presented the first quarter portfolio performance. She reviewed fund performance and some of the variables that impacted the performance. Mr. Moore arrived at 3 :07 p.m. Mr. Yates arrived at 3:08 p.m. Ms . Dominguez explained that the Virtus Fund, an Emerging Market s Equity, has a major personnel change that prompted a new fund search. The Lead Portfolio Manage r and Chief Inve st ment Officer, Raj iv Jain , announced that he was leavin g May 31, 2016. Ms . Dominguez highlighted some of the other funds' performance during the quarter and reviewed the manager 's score card page noting that the Virtus is a major concern . Ms. Dominguez reviewed the Emerging Markets Equity Mutual Funds brochure that has the alternative fund information for the Virtus replacement that lnnovest is presenting to the Board. She outlined the proce ss th at Innovest follows to evaluate the univer se of possible funds. • • • The funds for consideration are the Dimensional Fund Advisors Emerging Markets Core Equity and Harding Loevner Emerging Markets Equity Fund. Ms. Dominguez presented funds ' information and the differences between the funds . The Board discussed the choice of funds and the advantages of each fund attributes as well as the portion of the portfolio that would be invested in the asset category . MR. MOORE MOVED TO APPROVE SELLING THE VIRTUS FUND AND USING ONE HALF OF THE PROCEEDS TO PURCHASE DIMENSIONAL FUND ADVISORS MERGING MARKETS CORE EQUITY AND REMAINING BALANCE TO PURCHASE HARDING LOEVNER EMERGING MARKETS EQUITY FUND. MR. PHELPS SECONDED. Ayes: Nays: Henderson, Moore, Patel, Phelps, Rinkel, Woodward, Yates None Absent: None The motion carried. lnnovest will proceed with the transaction as soon as the as sets are transferred from Wells Fargo to Schwab . Asset Allocation Study Ms. Dominguez suggested the Asset Allocation Study and the long term outlook be postponed until the August meeting. She said there was not a recommendation ofa change of the asset allocations. lnnovest will be introducing the Reinsurance asset category for the Board 's information at the next meeting. The Board agreed. Gabriel Roeder Smith and Company - Presentation of the January 1, 2016 Actuarial Report The GRS summary of the actuarial report was distributed to the Board and Ms . Thompson reviewed the draft January I , 2016 Actuarial Report and the various assumptions used for the report. The study indicates a total required contribution of 25% of pay beginning 2016 . The employer contributions would be 22% and the employee is 3%. This is up 1.2% from the total required 2016 contribution of23 .8%. Mr. Wood reviewed the liability experience of the plan and the factors that influence the variance of the actuarial liability amount. Mr. Yates left at 3:55 p.m. Mr. Wood reviewed the studies for changing the mortality assumption used from RP-2000 with Improvement Scale BB to RP- 2014 with 2-dimensional Improvement Scale MP-2015; decreasing the Discount Rate from 7.0% to 6.5% and a combination of the two studies. The results of the changing the mortality table would increase the contribution from 25.0% to 26.5%. To decrease the Discount Rate increases the contribution from 25.0% to 30.3%. To change both the mortality table assumption and decrease the Discount Rate increases the contribution to 31.9%. The contribution rates include the 3 .0% employee contribution . Mr. Wood commented that changing to a more recent mortality table does not mean that the assumptions currently being used are not appropriate . Since this is a very small group, even two or three deaths in a year could have impact the results. Mr. Wood explained the results of decreasing the Discount Rate means that there is less income generated from investment and increases the contributions necessary to fund benefits. The Board discussed the studies presented. Ms . Rinkel asked about the impact if the amortization period was changed from I 0 years to 15 years. Ms. Thompson said it would decrease the actuarially required contribution, but she did not know the amount. Mr. Moore briefly reviewed some of the historical assumption changes that were agreed upon by the Board in an effort to reduced unfunded liability. He agreed that ifGRS is supporting the use of the current mortality table that it would be acceptable to monitor assumption for a while . He inquired about lnnovest's expected return and Ms. Dominguez said that it is basically 6.5% for a five to ten year period, but the actuarial time frame is a much longer period of time. Ms. Thompson ask how it split for real return and inflation. Ms. Dominguez said their expectation for inflation is 2.25%. Discussion followed about the possible expectation of return in the portfolio and the risk changes that may be necessary as well as if it prudent with decreasing the discount rate in addition to lengthening the amortization periods. Mr. Wood commented that because the plan 's average age and NonEmergency Employees Retirement Board Meetin g 2 of 4 • • • it has twice as many inactive members as active, GRS would find it difficult for to support too long of an amortization period . Discussion ensued regarding various factors and the impact on the funding of the plan. The Board reviewed the options available . Ms. Thompson estimated the cost of providing the studies at $500-$875 . MR. MOORE MOVED TO APPROVE A $500 TO $875 EXPENSE FOR THE STUDIES OF A CHANGE OF EXTENDING THE TIERED AMORTIZATION TO FIFTEEN YEARS FROM TEN , CHANGING THE ENTIRE UNFUNDED LIABILITY TO A FIFTEEN YEAR AMORITIZATIONS AND THE NECESSARY NUMBER OF YEARS TO KEEP THE CONTRIBUTION LEVEL OF TWENTY-FIVE PERCENT. MR. PHELPS SECONDED. Ayes: Nays: Absent: Henderson, Moore, Patel, Phelps , Rinkel, Woodward None Yates The motion carried. The Board agreed to a special meeting to review the GRS studies when completed. Retirement Approvals and Notifications: a. Consideration of Special Early Retirement Benefit for Jeffrey Hlad b. Notification of DROP Application for Mitchell Offutt c . d. e. f. g. h. i. Notification of Special Early Retirement Benefit for Michael Cassidy Consideration of Retirement Benefit for Cathy Miller Consideration of Retirement Benefit for Robert Herberg Notification of Retirement Benefit for Richard Apodaca Notification of DROP Application for Michael Boyett Notification of Death of Barbara Smith , Surviving Beneficiary Retiree Notification of Death of Patricia Stephens, Retiree j. k. Notification of Death of Burton Vance and Consideration of Benefit for Elizabeth Vance , Surviving Beneficiary Consideration of Refund of Accumulated Contributions for Matthew Polk I. Consideration of Refund of Accumulated Contributions for Mario Fragoso MR . PHELPS MOVED TO APPROVE THE ITEMS LISTED ON THE BENEFIT APPROVALS AND NOTIFICATIONS . MR . PATEL SECONDED. Ayes: Nays: Absent: The motion carried. Henderson , Moore, Patel , Phelps , Rinkel , Woodward None Yates Colorado Public Plan Coalition Annual Conference August 30 -September 2 The Board was reminded of the Colorado Public Plan Coalition Annual Conference and the discussed the benefit of attending , possible attendees and estimated costs . The next regular Board meeting will be August 9, 2016, with a start time to be at 3 :00 or 3 :30 because of the lnnovest Asset Allocation Study that will be presented . Members' Choice No items were discussed. MR . PHELPS MOVED TO ADJOURN. MR. PATEL SECONDED . Ayes: Nays : Absent: Henderson, Moore, Patel, Phelps , Rinkel, Woodward None Yates 3 of 4 NonEmergency Employees Retirement Board Meetin g J • • • The motion carried. The Board adjourned at 4:45 p.m. {Ju u uJ (!;j~a-4- Carol Wescoat Recording Secretary NonEmergency Emp loyees Retirement Board Meetin g 4 of 4