Sacramento Administration, Investment, and Fiscal Management Board Meeting - May 21, 2026
Sacramento Administration, Investment, and Fiscal Management Board Meeting - May 21, 2026
The Administration, Investment, and Fiscal Management Board met on May 21, 2026, at 1:03 PM in the Sacramento City Hall Council Chamber. Chair Peter Coletto presided. Members present: Dave O'Toole (arrived at 1:10 PM), Michael Tamayo, Yousaf Zamanudin, and Chair Coletto. Member absent: John Colville. The meeting opened with a land acknowledgement and pledge of allegiance. The board adopted the consent calendar unanimously (3-0, with O'Toole absent for that vote) and then considered three discussion items, all passing unanimously (4-0). No public comments were received.
Consent Calendar
- Approval of Minutes (Feb 19, 2026): Passed a motion approving the minutes.
- SCERS Investment Policy: Adopted a resolution approving the investment policy governing SCERS funds.
- SCERS Pensioners' Cost of Living Increase: Reviewed and filed.
- SCERS Monthly Investment Reports (Jan, Feb, Mar 2026): Passed a motion accepting the reports.
- Interest Rate to Credit Member Accounts for FY 2026/2027: Adopted a resolution establishing the interest rate at 7.50%.
Public Comments & Testimony
- None.
Discussion Items
- Item 6: SCERS Fiscal Year 2026/27 Asset Allocation Policy – Stacy Hussey, Chief Investment Officer, recommended increasing the fixed income allocation to 47.5% (from a previous level) and equities to 52.5%, citing a desire to de-risk the portfolio as the fund is over 100% funded. She noted that the 10-year Treasury yield had risen from 4.17% in January to 4.6% as of the meeting date, making fixed income more attractive. Board members expressed support for reducing risk. The 5% buffer per asset class allows flexibility (e.g., fixed income can go up to 52.5% without further approval). Motion passed unanimously (4-0).
- Item 7: SCERS Quarterly Investment Report for March 2026 – Stacy Hussey reported that as of March 31, 2026, the fund had a 7.96% return for the fiscal year (9 months). She noted that on March 11, 2026, the board had directed selling 50% of large cap equity positions, moving proceeds to cash (earning ~3.8%). As of April 30 (unaudited), the return had increased to 10.66%, well above the 6% actuarial assumption. The plan is to reallocate to the new 52.5/47.5 split by July 1, 2026, and to prefund operating needs from the cash position rather than selling assets. Board members discussed the possibility of further de-risking and the impact of the seven largest stocks dominating the S&P 500. Motion passed unanimously (4-0).
- Item 8: Segal Marco Advisors Quarterly Investment Performance Report for March 2026 – Jeff Nipp, Senior Vice President at Segal Marco Advisors, presented an overview of market conditions. He noted that the first quarter was weak for stocks, especially in March due to the start of the Iran war, but April was one of the best months ever. The S&P 500 was down over 4% for Q1 but up over 8% through late May. The portfolio slightly outperformed benchmarks in Q1, with a 0.0% return on bonds and slight positive overall. Long-term performance exceeded the actuarial assumption. Jeff Nipp announced his retirement in October 2026 and introduced David Roll as his successor. Board members thanked Nipp for his service. Motion passed unanimously (4-0).
Key Outcomes
- Consent Calendar adopted (3-0): All five items approved without discussion.
- Asset Allocation Policy approved (4-0): 47.5% fixed income, 52.5% equities for FY 2026/27.
- SCERS Quarterly Investment Report accepted (4-0).
- Segal Marco Advisors Quarterly Report accepted (4-0).
- Board comments: Members expressed satisfaction with the conservative approach and noted that the actuarial report due in fall may prompt a discussion on lowering the 6% actuarial return assumption. The 30-year Treasury yield at 5.1% was noted as favorable for locking in returns.
- Next meeting: Scheduled for November 2026 (no specific date given).
Meeting Transcript
All right. Good afternoon, everybody, and welcome to the May 21st meeting of the Administration Investment and Fiscal Management Board. Clerk, can you please call the roll? Thank you, Chair. Member Tamayo here. Member Colville is absent. Member O'Toole is absent. Member Zemanudin here. And Chair Coletto. I am here. If everyone will please rise for the land acknowledgement and pledge of allegiance. So please rise for the opening acknowledgments in honor of Sacramento's indigenous people and tribal lands to the original people of this land, the Nissanan people, the Southern Maidu, Valley and Plains Miwok, Patwin Winton peoples, and the people 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 peoples' history, contributions, and lives. Thank you. Salute and 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, indivisible with liberty and justice for all. Okay, so first let's move to the consent calendar. Are there any public comments on consent? Thank you, Chair. I have none. Entertain a motion. I'll move it. I'll second. Are there any board member comments or questions? All right. Uh seeing none, I will do roll call vote. All those in favor, please say aye. Aye. Opposed. Abstentions. The motion passes. So we'll move to the discussion calendar and we will start with item number six. So for our annual asset allocation, which you do have in the we can I can scroll through it if we need to. Um we are going to recommend for the upcoming fiscal year that we move more funds into the fixed account as we try and maintain the funded status being over 100%, and we're not in the scenario now where we need to be reaching for outsized returns. Um I will talk about some of the de-risking measures we've made on the portfolio this fiscal year, and I'll talk about that in the quarterly report just because I have some pages that show that. So for going forward, we are looking for July 1st to change the allocation on the fixed account to 47.5%. But when we looked at the long-term returns on a 10-10 and 20-year basis, we were just under hitting the actuarial return. So we thought it was more prudent to back it down a little bit and make it 47.5 fixed and 52.5 equities. The outlook for the bond market was we were in a an environment where they were going to be reducing interest rates over the next six to eight months, two, three cuts. Things have changed. Interest rates have gone up dramatically since then. So the odds are that the short-term returns for the fixed funds is probably going to be greater than when they did the analysis back in January. Um in January when we started looking at the report, the 10-year treasury was of 4.17. Um as of yesterday's close, it's at 4.6. So we've seen a quite dramatic increase across all the maturities with a steepening yield curve. Um so we're very comfortable that we can achieve our actuarial um return by having the 47.5, 52.5% split. Um and also of note is as we're able to secure these higher interest rates, um, these increased payments at these higher interest rates are going to offset any operating needs we have, which is always great to not have to be a consistent seller to meet the operating needs of the fund. At um the next meeting in November, I anticipate that if the market just kind of treads water for the next six weeks, we should we could probably see another three to five percent increase over our funded status when the actuary produces their report this fall. So we think at this point it's prudent to move more into the fixed fund and try to insulate somewhat the gains that we've had in the portfolio.
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