Administration, Investment & Fiscal Management Board Meeting - May 16, 2024
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Administration, Investment & Fiscal Management Board Meeting Summary - May 16, 2024
The Administration, Investment & Fiscal Management Board met on Thursday, May 16, 2024, at 1:00 p.m. The meeting, held at City Hall Complex, 915 I Street, Sacramento, CA, was called to order by Chair Bader with a quorum present (Members Yusuf, Coletto, Vice Chair Colville, O'Toole, and Chair Bader). The board unanimously approved a consent calendar and three discussion items related to the Sacramento City Employees’ Retirement System (SCERS) investment policies and performance.
Consent Calendar
- Approved (unanimous): Approval of the February 15, 2024 meeting minutes.
- Adopted Resolution (unanimous): Resolution approving the SCERS Investment Policy (File ID: 2024-00829).
- Accepted Reports (unanimous): SCERS Monthly Investment Reports for January, February, and March 2024.
- Received and Filed: SCERS Pensioners’ Cost of Living Increase report.
- Adopted Resolution (unanimous): Establishing an 8.50% interest rate to credit member accounts for FY2024/25.
Discussion Items
Item 8 – SCERS FY2024/25 Asset Allocation Policy Stacy Hussey, Chief Investment Officer, presented the annual asset allocation proposal. The policy recommends shifting 2.5% from the international equity fund to the fixed income fund. This reduction in risk is justified by SCERS’ mid-to-high 90s funded status and the current high interest rate environment (the five-year Treasury yield was approximately 4.4%, up from 0.88% three years ago). The proposal is expected to yield a 20-year average return between 6.4% and 7.1% (based on Segal Marco analysis). Members expressed support, noting the plan’s strong funded status and attractive bond yields. Motion passed unanimously.
Item 9 – Segal Marco Advisors Quarterly Investment Performance Report for March 2024 Jeffrey Nipp, Senior Vice President at Segal Marco Advisors, reviewed market activity for Q1 2024. The S&P 500 returned 10.5% for the quarter, while international developed markets also gained but less. The bond market weakened as yields rose due to inflation data. SCERS’ portfolio returned 5.5% for the quarter, slightly ahead of the custom benchmark, and fiscal year-to-date (nine months) was up 12.1%, well above the 6% annual assumption. Domestic equity remains overweighted and less volatile than the benchmark. Motion passed unanimously.
Item 10 – SCERS Quarterly Investment Report for March 2024 Stacy Hussey provided additional commentary. The portfolio’s value returned to approximately $260 million as of March 31, despite annual disbursements of nearly $30 million. The international fund is underperforming due to a cash drag (cash parked pending reallocation) and tracking issues with the underlying ETF related to currency effects. The option program underperformed in the current rising market but performed positively in April when volatility increased. The fixed income portfolio’s duration now matches its benchmark, but significant reinvestment risk exists as shorter-term bonds mature. The board discussed extending duration into the 10-15 year range to mitigate this risk. Motion passed unanimously.
Member Comments & Future Meetings
- Vice Chair Colville noted the portfolio’s strong performance, highlighting that despite $30 million in annual distributions, principal remains intact.
- The board discussed cost-cutting measures and agreed to cancel the September 2024 meeting. The next scheduled meeting will be November 21, 2024.
Public Comments
No members of the public spoke on agenda items or matters not on the agenda.
Key Outcomes
- Consent calendar approved unanimously (Items 1-7).
- Resolution adopting the FY2024/25 Asset Allocation Policy (Item 8) passed unanimously.
- Motion to accept Segal Marco Advisors Quarterly Report (Item 9) passed unanimously.
- Motion to accept SCERS Quarterly Investment Report (Item 10) passed unanimously.
- The September 2024 meeting was cancelled; next meeting set for November 21, 2024.
Meeting Transcript
Sorry, 30 seconds has begun. Chair staff is ready when you are. Okay, thank you. Uh good afternoon and welcome to the May 16th, 2024, 1 p.m. Administrative Investment and Fiscal Management Board Meeting. The meeting is now called to order. Will the clerk please call a roll to establish a quorum? Thank you, Chair. Members, if you can please unmute. Member Yusuf. Present. Member Coletto. Here. Vice Chair Colville. Here. Member O'Toole. Present. And Chair Bader. Here. Thank you. We have quorum. Okay. I'd like to remind members of the public if you would like to speak on agenda items. Please turn in a speaker slip when the item begins. Uh you will have two minutes to speak once you are called on. After the first speaker, we will no longer accept speaker slips. We will now proceed to today's agenda. Please rise for the opening acknowledgement in honor of Sacramento's indigenous people and tribal lands. To the original people of the land, the Nissanon people, the Southern Maidu, Valley and Plains, Meewok, Put Run Wind Toon peoples and peoples of the Wilton Rancheria, Sacramento's only federally recognized tribe. May we acknowledge and honor the native people who came before us and still walk beside us today on these ancestral lands by choosing to gather together today in the active practice of acknowledgement and appreciation for Sacramento's indigenous people, history, contribution, and lives. Thank you. Please remain standing for the pledge. I pledge allegiance to the flag of the United States of America and to the Republic for which it stands one nation under God. Okay. Happy Dow 40,000 point day. Yay. Um tried. Uh first order of business today is approval of the consent calendar. Uh clerk, are there any members of the public who'd like to speak? Thank you, Chair. I have no speakers for this item. Okay. Any members like to speak on the consent calendar? Okay. I'll move consent. Member Tool, or I'll second. Member Coletto moves and seconded by Member O'Toole. Thank you, Chair. Members, if you can please unmute. Member Yusuf.
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