Leesburg OPEB Trust Finance Board Meeting – March 5, 2026
Leesburg OPEB Trust Finance Board Meeting – March 5, 2026
The Town of Leesburg OPEB Trust Finance Board met on March 5, 2026, to review fourth-quarter 2025 portfolio performance, discuss asset allocation and fixed income strategies, approve prior meeting minutes, and plan future discussions. The meeting included reports from PFM Asset Management on financial markets, portfolio returns, and proposed asset allocation models.
Opening and Roll Call
The meeting began with a roll call. Two new appointments were announced: Sandra Gresson as a citizen member (former small library director, appointment effective February 24, 2026) and Octavia Andrew as the chief procurement officer. Vice Mayor Seminal Johnson and management/budget officer Tamara Keesecker were present. Remote participation for Josh was approved by motion and seconded, with a unanimous vote in favor.
Approval of Minutes
A motion was made and seconded to approve the minutes from the December 3, 2025 meeting. The motion passed unanimously.
Market and Economic Overview (PFM Presentation)
Jack Schnorbus (PFM) provided an economic update. Key points:
- Fourth quarter 2025 featured a 43-day government shutdown, leading to data distortions.
- The Federal Reserve cut rates twice in Q4 due to softer labor markets; full-year job growth was 181,000 jobs (down from 1.4 million the prior year), averaging about 15,000 per month.
- January 2026 labor report showed 130,000 jobs added, with healthcare and construction (33,000 jobs) as bright spots.
- Inflation moderated: January headline CPI 2.4%, core 2.5% (lowest since 2021), but shelter and healthcare services remain elevated.
- Q4 GDP came in at 1.4% (well below the 2.5% expected), and full-year 2025 GDP was 2.2% (down from 2.8%). Federal spending fell 16% in Q4, the largest decline since 1972.
- The Fed's dot plot projects two additional 25-basis-point cuts in 2026, possibly in June/July.
- Fixed income returns were strong (Barclays US Aggregate up 7.3% for the year); credit spreads remain tight.
Portfolio Performance Review (Alison Corbeli, PFM)
Alison Corbeli presented the OPEB trust performance for Q4 2025 and the calendar year:
- For 2025, the portfolio returned 15.8%, trailing the benchmark (16.25%) due to an earlier underweight to equities following Liberation Day (April 2025 tariff concerns).
- For Q4, the portfolio returned 2.18% (benchmark 2.4%), driven by slight underperformance in fixed income (1.07% vs. 1.1%) and minor index tracking differences.
- The portfolio's asset allocation remains approximately 60% equities / 40% fixed income (target 60/40). It is allowed to drift; rebalancing is considered when equity exposure exceeds 2% above target.
- Fees: Active fixed income managers (Baird Core Plus) cost 30 basis points; passive equity ETFs cost 3 basis points. The portfolio's returns are net of manager fees. The total investment management fee (advisory) is separate and shown as a cash flow line.
- A committee member asked about downside risk in a potential equity bubble. PFM acknowledged high valuations (US equity PE ratios well above five-year averages) and noted the portfolio is managed conservatively with a neutral stance.
Asset Allocation Modeling Discussion
PFM presented several asset allocation scenarios using Monte Carlo simulations:
- Current 60/40 (equities/fixed income).
- 65/35 (more equity).
- 50/50 (more fixed income).
- 60/40 with listed real assets (e.g., REITs) and a small high-yield bond allocation.
- The model including real assets and high yield showed a slight reduction in standard deviation (approx. 1% lower) while maintaining similar expected returns.
- A board member noted the plan is closed (no new participants as of April 2016), raising the question of whether a liability-driven investment (LDI) approach is appropriate. PFM recommended obtaining the most recent actuary report to run a more tailored analysis.
- The committee agreed to bring the actuary report to a future meeting to inform asset allocation decisions.
Fixed Income Manager Review
PFM reviewed the active fixed income managers in the portfolio (Baird Core Plus, PGIM, and Boya):
- Baird Core Plus has outperformed its benchmark (Bloomberg Aggregate) by approximately 5 basis points per year over the holding period. A growth-of-dollar analysis showed an additional $109,000 earned versus a passive ETF since inception (2016).
- PGIM and Boya have small sleeves (less than 1% of holdings) rated below B, but both funds overall maintain A or AA ratings. Mortgage exposure is slightly above benchmark but default rates are low (4% currently vs. 11-12% in 2010).
- The committee expressed satisfaction with the active fixed income managers given their net-of-fee outperformance.
PFM Contract Renewal
PFM notified the board that the investment management contract expires at the end of March 2026 and will automatically renew for one year unless terminated. No action was taken.
Future Agenda Items
A motion was made to add a discussion of the actuary report to the next board meeting to help guide asset allocation strategy. The motion passed unanimously.
Key Outcomes
- Approved minutes of December 3, 2025 (unanimous).
- Approved remote participation for Josh (unanimous).
- Directed staff to obtain the latest actuary report for review at the next meeting to inform asset allocation modeling.
- Noted the automatic renewal of the PFM contract; no termination action taken.
- Meeting adjourned at 3:01 PM.
Note: The original transcript refers to "Leedsburg" but the correct municipality is Leesburg, VA. The date used is March 5, 2026 as provided, despite the transcript stating February 25, 2026.
Meeting Transcript
The Town of Leedsburg open up Trust Finance Board meeting February 25th, 2026. I had the date around the agenda. So wrong year. So it is 2026. So first we'll uh do a roll call. Um announcement of all the of the new members at the table. So last night at uh town council meeting, there were two new appointments to the uh finance board, which was new citizen member, which is Sandra Gresson. Um as you know, she's the former um small library director and uh the appointment is for two years. So um uh as of basically February 24th. Um so also at the same time was the chief procurement officer position was appointed as even though Octavia's been coming to the meetings um as well with the quorum. So we have seven votes and also be able to get in-person quorum. So um so starting with that. Both of those members are present today. Um we also have Vice Mayor Simino Johnson present today at the meetings, and uh management budget officer Tamara Keesecker, but Snyder, CFO, assistant town manager, and Jack Schnorbus. Perfect. Okay, usually you leave out the N from PFMAM. Uh Alison Corbeli from PFM. Um Diane Starkey, town's uh deputy control, deputy finance director and controller, Cole FaZen Baker, deputy finance director and treasurer and Octavia Andrew, procurement officer, and that talked about earlier. And remote, we have uh Josh did a wick, and um he is participant participating remote. And I know we have to do a uh formal uh um votes, see if you can participate remotely. So there's a motion for him to participate remotely. There's their second Diane. Um all in favor? Aye. That passes you. Um with that, uh we'll move it to our um third items for third item on the agenda items for discussion that that's led by a PFM. Thank you, Cole in committee. Uh Jack handed out several packets uh today. Uh first and foremost, we have the review of the fourth quarter for the town of Leesburg OHEP trust. We also have, in addition to that, a follow-up discussion as it relates to the conversation around the asset allocation of the portfolio, and we go through this exercise in concert with your investment policy to look at how the portfolio is managed versus the respective benchmark, and then look at optional uh benchmarks or asset allocations to review those from a risk return profile again in line with your investment objectives. The third handout that we have is an extension of the conversation that we had last quarter. I apologize I was in an airport, but uh hopefully we can have um we can answer address some of the questions we had with respect to the fixed income issues in the portfolio. And then lastly, we wanted to touch upon the current investment management agreement that Leesburg has with PFM asset management. So we have a several items to address. So I thought we'd start with a review of the that's okay, a review of the quarterly performance. I'll start out with a review of the markets, financial markets, and I'll hand it over to Jack to at least expand upon um some important uh elements as it relates to the economy and the market itself, and then he'll pass it back to me to talk about portfolio performance, including the fourth quarter and the calendar year 2025. Under section 1.1 in the presentation, we usually start off with an overview of the markets and how they performed for the recent quarter. I'll talk about the quarter as well as 2025. You could say that we got off to a murky start, you know, with limit limited statistical data. We had the due to the longest government shutdown, started in October, lasted 43 days. And then we also had intermittent in that some softer employment data, what we could able to garner to get out of that, and then increased scrutiny around um AI-driven investments and valuations around AI, which was a main theme AI, the magnificent seven for 2025. But the fourth quarter in itself proved to be very resilient. A common term we've used most, we did use most of 2025, very resilient. All this murkiness behind going on what's going on. We had you know liberation day in April 1st, uh the government shutdown, and then we had some political issues, which we always will have, but more on a heightened level. We closed out 2025 on a really good note for the for the equity markets, both US and non-US equity, different in this quarter than we had in past quarters. We saw the rotation out of those growth high-tech companies, communication services companies into value-oriented companies. So a bit of a broadening of the market environment. For example, if you look at the Russell on the first top part of that page, the Russell 1,000 growth, Russell 1000 is your large cap arena of stocks, the growth return 1.1. You compare that to the 1,000 value, and that's 3.81.
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