AIFM Special Meeting: Investment Reports, Actuarial Valuation, and 2022 Schedule – November 18, 2021
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Administration, Investment & Fiscal Management Board (AIFM) Special Meeting – November 18, 2021
The AIFM Board met in a special teleconference meeting on November 18, 2021, at 1:30 p.m. to review and approve investment performance reports, an actuarial valuation, a GASB accounting report, and the board’s 2022 meeting schedule. All votes were unanimous.
Consent Calendar
- Item 1: Approval of minutes from September 17, 2021 – approved.
- Item 2-4: SCERS Monthly Investment Reports for July, August, and September 30, 2021 – accepted.
- Item 5: Segal Marco Advisors Quarterly Investment Performance Report for September 30, 2021 – accepted. The consent calendar was approved by a single motion without discussion or public comment.
Discussion Items
Item 6 – SCERS Quarterly Investment Report for September 30, 2021 Chief Investment Officer Stacy Hussey presented the report. The overall fund posted a -0.5% return for the first quarter of the fiscal year, influenced by inflation and supply‑chain concerns. The negative return was in line with the custom benchmark. On a positive note, through the end of October 2021 the fund had recovered to an unofficial +3.3%. Hussey highlighted that fixed‑income duration and maturity are longer than the benchmark, but most holdings are in the 7–10 year bucket. Five million dollars of bonds are being called December 1, and she expressed hope reinvestment can occur at higher rates. The motion to accept the report passed unanimously.
Item 8 – Bartel Associates SCERS Actuarial Valuation Report (FY 2021) Presented by Deanna and Mary Beth Redding of Bartel Associates. The board agreed to consider this item before Item 7. Key findings:
- Funded status: Market value of assets ($275.7 million) exceeds accrued liability ($282.4 million) by $28.8 million, yielding a 110% funded ratio. On a smoothed actuarial value the ratio is just under 100%.
- The discount rate was lowered from 6.5% to 6%, reflecting reduced inflation and expected return assumptions.
- Recommended city contribution is $0 for the next three years due to overfunded status (normal cost fully covered by active employee contributions).
- The plan is mature: only three active members remain, 868 retirees/beneficiaries. Benefit payments peaked around 2016–2017 and are on a downward slope, though a small number of long‑lived beneficiaries may require monitoring in 10–15 years.
- Board members discussed the possibility of using the previously budgeted $3.5 million contribution (from the prior year’s estimate) to further de‑risk the fund or to shift assets to a more conservative allocation. However, Stacy Hussey noted that current fixed‑income yields (20‑year Treasury at ~2%) make it difficult to achieve a significantly more conservative posture. The board took no formal action on this discussion beyond accepting the report.
- A motion to accept the report passed unanimously.
Item 7 – Bartel Associates SCERS GASB 67/68 Report (FY 2021) Presented immediately after Item 8. For accounting purposes, using full market value of assets ($311 million), the plan is overfunded by $28.8 million, resulting in a net pension asset rather than liability. The city will report net pension income for the year. No changes to cash contributions are implied. The motion to accept passed unanimously.
Item 9 – AIFM Board Regular Meeting Schedule (Calendar Year 2022) Presented by Dawn Holm. The schedule of regular meetings for 2022 was approved unanimously without discussion.
Key Outcomes
- Votes: All five items (1 consent calendar, 4 discussion items) were approved by unanimous votes (4–0).
- Contribution recommendation: Zero city contribution for the next three fiscal years (2022–2024), as per the actuarial valuation.
- Discount rate: Reduced from 6.5% to 6.0% for future valuations.
- Monitor plan cash flows: Board noted the need to track declining benefit payments and consider annuity buy‑outs in the distant future.
- Board membership: Member Colville noted this was his last meeting, though he may continue to serve until a replacement is appointed (the seat is currently vacant).
- Public comments: None were made on any agenda item.
Meeting Transcript
John, how are you doing? Jason, how are you doing? Hey Jason. Can't see everybody yet, but okay. Oh, we're getting a few raindrops here in our group. Okay. Oh, are you? It's a little cloudy over here, too. Thank you, Chair. We think we call them meeting to order if I'm correct. Are we are we good to go? Yes, Chair. Thank you. We are online. Okay. All right. I can see everybody now. All right. We're gonna call the meeting to order on this day on November 18th. Um, may we have a roll call, please. Yes, thank you, Chair. Members, if you have not yet, please unmute and turn on your cameras. Board member Colville. Here. Board member Holm. Here. Vice Chair Bader. Try to get Jason. I do see it. Looks like you're muted, but I do see Vice Chair in the Zoom. And Chair Leon. Uh present. Thank you. We have quorum. Perfect. Jason, you might have audio issues because yeah, it shows that you're not uh uh muted, but we can't we can hear you now. Uh okay there we go. Sorry. That's quite all right. All right. Um, so the next item on the agenda is the uh consent calendar, items one through five, if I'm correct. We'll need a motion and a second on that. I'll motion approval. Second, all right. Um correct me, madam clerk, is do we ask for comments now of public cost or do we do it do a vote? I forgot the procedure. Um we'll do that before the vote. And for the record, there are no members of the public with their hands raised, and we can proceed. We can proceed with the vote. I have a motion by uh board member home and a second by vice chair Bader.
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