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OPENPUBLICA · PUBLIC MEETING RECORD

Record of Proceedings

Montgomery County Retirement Board Meeting - July 16, 2026

Board of Commissioners — Thursday, July 16, 2026

BodyMontgomery County, Pennsylvania

SessionBoard of Commissioners

DateThursday, July 16, 2026

StatusFILED

Video Record

0:00 / 39:19

Transcript — VerbatimClick a timed line to jump · ⧉ to share it

0:02

Yeah.

0:04

I don't know when that happened.

0:07

All right.

0:07

So I'm going to call to order the what day is it?

0:10

Uh July 16th, 2026.

0:16

Yeah.

0:18

I don't know what was going on.

0:19

That was a fun day.

0:22

Note the presence of all retirement board meeting participants.

0:27

See everybody here, right?

0:29

All right.

0:30

I'm going to have our treasurer lead us in the public.

0:51

All right.

0:52

Do you have anyone public comment?

0:54

No public comment.

0:56

All right.

0:57

Um, I'd like to make a motion to approve the April 23rd, 2026 uh meeting minutes.

1:02

Do I have a uh so moved?

1:06

Um second by Commissioner De Bello, all in favor.

1:10

Aye, motion carries.

1:12

All right, Kathy.

1:18

Afternoon.

1:18

How's everyone today?

1:20

So I was told to be short and sweet, which is very you know different than the other meetings, and then you like to hear more.

1:26

Um, and I the actuaries are following me.

1:28

So I believe they have great news.

1:30

Yeah, um, I will keep it short.

1:32

They go on.

1:34

I'm the fast walking Northeast girl.

1:37

So um I'll I'll start right off on the executive summary, and we can um just give you the the the important points for the quarter.

1:45

So you can see on this page, I have the beginning market value and the end of market value 2025.

1:51

I kept the first quarter information in here because I think it's very noteworthy.

1:55

We were down for the quarter less than just about less than one percent.

1:59

But the good news is we're back up to 801 million dollars with a quarterly return of over 8%, which puts the year to date numbers at 715.

2:09

So and I looked at the market value as of yesterday, we're pretty much flat.

2:12

So the good news we're continuing that momentum, which has really been beneficial in some of the numbers that you're healed from a funding standing perspective.

2:20

But the the shift this quarter was really a powerful recovery.

2:24

Again, we saw March with the outbreak of the um the iron conflict, what really happened, but we had a strong quarter and it was really led by spending and artificial intelligence.

2:34

And what's unique, what we saw this quarter is it's really shifted from those mega cap names into infrastructure and semiconductors, and it's all about memory and hardware, and we're really starting to see that shift.

2:46

What is also notable is that we saw areas again, we see this broadening of the equity market.

2:51

We saw areas like small cap and emerging markets, so exceedingly well, both areas were up over 20%.

2:57

Merging markets were up 24%.

2:58

So again, but if you dig deep into the into the data, what I think is really shocking is it's heavily focused and concentrated.

3:07

So for example, the emerging markets are up 24%.

3:10

There were three stocks that were up um 170%.

3:14

Um, the SK hinex, um, Samsung, and um drawing blank of the last one.

3:21

It'll come to me.

3:22

Three semiconductors.

3:23

If you take them out of the index, the cricket's pretty much flat.

3:26

So very highly concentrated, 30% of the index, Korea and South Um South Taiwan.

3:31

So really, really heavily focused there.

3:33

If you looked at the fixed income market, uh, we didn't have as strong as a rally, and a lot of that was due to shifts in expectations on Fed.

3:40

We started the year with expecting the Federal Reserve will cut rates twice.

3:44

Um, it really blew out during the quarter that we might get a rate increase.

3:48

We saw inflation really kick up, and a lot of that was due to oil and energy.

3:52

So a pretty mild fixed income quarter, and it continues to remain that way.

3:56

Other areas within fixed income did better, high yield emerging market debt did add some positive value.

4:02

And then finally, your alternatives had a strong quarter.

4:05

I have more recent numbers that continue to benefit the portfolio and provide the role of being uncorrelated and um differentiated sources of return.

4:13

So um, do you want to just do you want to skip all the market and outlook and go right to performance and then have these guys come up on getting nuts?

Discussion Breakdown — Share of Meeting

Pension System█████████████████████████████████████████████45%

Fiscal Sustainability█████████████████████████████████████████41%

Procedural██████████████14%

Summary of Proceedings

Montgomery County Retirement Board Meeting - July 16, 2026

The Montgomery County Retirement Board met on July 16, 2026, at 7:14 PM. The meeting included presentations on second-quarter 2026 investment performance and the annual actuarial valuation as of January 1, 2026. Key updates included a strong market recovery, a funded ratio increase to 80.2%, and a discussion on the potential for a cost-of-living adjustment (COLA) for retirees. The board approved the previous meeting minutes and adjourned.

Consent Calendar

Approved the April 23, 2026 meeting minutes unanimously.

Public Comments & Testimony

No public comments were made.

Discussion Items

Investment Performance Report (Kathy): The portfolio ended the quarter with a market value of $801 million, achieving a quarterly return of over 8%. Year-to-date return was 7.15%. The quarter was characterized by a strong recovery led by spending on artificial intelligence, with a shift from mega-cap names to infrastructure and semiconductors. Small-cap and emerging markets both gained over 20%. Fixed income returns were modest due to expectations of a potential rate hike. Alternative investments, including a hedge fund, had its best quarter ever (up 9%). The fund has gained over $110 million over the past year. Kathy noted that the market outlook is for a reflationary environment with strong U.S. growth and sticky inflation, and that the strategic asset allocation is designed to provide diversification through bumpy periods.
Actuarial Valuation (Michael Savarrow, GRS): The annual actuarial valuation as of January 1, 2026, showed a funded ratio of 80.2%, up from 76.9% the prior year. The actuarially determined contribution (ADC) for 2026 is $31 million, lower than the previous year's $32.5 million. The improvement was attributed to strong asset performance and demographic gains (lower-than-expected pay raises and retirements). The plan uses a five-year asset smoothing method, which helps stabilize contributions. The board discussed the trajectory of the funded ratio and noted that the negative 2022 base will roll off next year, potentially improving the ratio further.
COLA Discussion: Board members and the actuary discussed the potential for a cost-of-living adjustment (COLA) for retirees. Act 96 requires the plan to be at least 80% funded to grant a COLA, and the adjustment must match the full percentage increase in the CPI (currently estimated at around 5% for August-to-August measurement). Providing a 5% COLA would increase liabilities by about $20 million, raising the annual contribution to roughly $36 million (if amortized over five years). The board noted that while the plan is now at 80.2%, a COLA would likely bring it below 80% unless additional funding is provided. The actuary will provide updated budget estimates and COLA fiscal impact information in the fall.

Key Outcomes

Approved the April 23, 2026 meeting minutes.
Received the investment performance report and actuarial valuation as presented.
The board will await the September 2026 CPI release and the actuarial analysis to further consider a potential COLA for 2027.
The meeting was adjourned by unanimous vote.

Meeting Transcript

Yeah. I don't know when that happened. All right. So I'm going to call to order the what day is it? Uh July 16th, 2026. Yeah. I don't know what was going on. That was a fun day. Note the presence of all retirement board meeting participants. See everybody here, right? All right. I'm going to have our treasurer lead us in the public. All right. Do you have anyone public comment? No public comment. All right. Um, I'd like to make a motion to approve the April 23rd, 2026 uh meeting minutes. Do I have a uh so moved? Um second by Commissioner De Bello, all in favor. Aye, motion carries. All right, Kathy. Afternoon. How's everyone today? So I was told to be short and sweet, which is very you know different than the other meetings, and then you like to hear more. Um, and I the actuaries are following me. So I believe they have great news. Yeah, um, I will keep it short. They go on. I'm the fast walking Northeast girl. So um I'll I'll start right off on the executive summary, and we can um just give you the the the important points for the quarter. So you can see on this page, I have the beginning market value and the end of market value 2025. I kept the first quarter information in here because I think it's very noteworthy. We were down for the quarter less than just about less than one percent. But the good news is we're back up to 801 million dollars with a quarterly return of over 8%, which puts the year to date numbers at 715. So and I looked at the market value as of yesterday, we're pretty much flat. So the good news we're continuing that momentum, which has really been beneficial in some of the numbers that you're healed from a funding standing perspective. But the the shift this quarter was really a powerful recovery. Again, we saw March with the outbreak of the um the iron conflict, what really happened, but we had a strong quarter and it was really led by spending and artificial intelligence. And what's unique, what we saw this quarter is it's really shifted from those mega cap names into infrastructure and semiconductors, and it's all about memory and hardware, and we're really starting to see that shift. What is also notable is that we saw areas again, we see this broadening of the equity market. We saw areas like small cap and emerging markets, so exceedingly well, both areas were up over 20%. Merging markets were up 24%. So again, but if you dig deep into the into the data, what I think is really shocking is it's heavily focused and concentrated. So for example, the emerging markets are up 24%. There were three stocks that were up um 170%. Um, the SK hinex, um, Samsung, and um drawing blank of the last one. It'll come to me. Three semiconductors. If you take them out of the index, the cricket's pretty much flat. So very highly concentrated, 30% of the index, Korea and South Um South Taiwan.

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