Thank you.

Thank you.

Good morning and welcome to the March 19, 2025 meeting of the Define Contributions

Plan Committee.

My name is Brad Hookstra, the Chair of the Committee.

The meeting is now called to order.

Will the clerk please call the roll to establish a quorum?

Thank you, Chair.

Commissioners, please unmute for roll.

Member Bader?

Oh, I'm sorry, that's the alternate members.

Member Covell?

Absence?

I've been hearing this place.

Alternative?

Member Gardella?

Member Harland?

Member King?

Member Levison?

Member Ragoni?

Member Tonson?

Chair Hockstra?

You didn't call Ash?

Yes, she said Member Rue.

Okay, I'm sorry.

And we'll go ahead and do roll for the alternate members.

Alternate Bader?

Absent?

Member Contreras?

Absent?

Member Hutchins?

Absent?

Member Trun?

Absent?

And members Zalansky is sitting in for Member Covell today, correct?

Okay, thank you.

We have quorum.

Thank you.

Can we now will you please read the land acknowledgement?

Thank you, Chair.

Please rise for the open-eating knowledgements in honor of the Sacramento's Indigenous

People and Tribal Lands.

To the original people of this land, the Nisanan people, the southern Maidu, the valley

plains, Miwa, Patwin, Wintun, peoples, and the people of the Wilton Rancharia, Sacramento's

only federally recognized tribe.

May we acknowledge and honor the native people who come 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's history, contributions

and lives.

Thank you.

And now we will say the pledge of allegiance.

I pledge allegiance to the flag of the United States of America and to the Republic for

which it stands one nation under God, individual with liberty and justice for all.

Thank you for everyone attending.

I would like to ask that everyone please keep their comments concise and to the point we

got a lot to cover.

And hopefully we can get through it all.

And first thing I would like to welcome our newest member, Jeremy Cardella.

He comes from public safety, specifically fire.

So welcome aboard from me and everyone.

And moving on, let's go to the consent calendar.

Item number one, approval of the Divine Contribution Plan Committee meeting minutes.

Is there anybody that has any input on that item?

I think we can take the consent calendar all as one motion unless, of course, if any members

of the committee or the public have comments about the consent calendar in general.

But we can do it all as one item.

Correct.

I was just seeing if anybody had any comments on item number one.

Thank you.

Is there any comments?

Yes.

Vice Chair Levinson.

Yes, I've got some changes to the minutes.

I handed them to the clerk already.

It's correcting the wording of the motion that we made on an item at the last meeting related

to item number.

I don't have the item number here.

I gave it to Heather.

But it's correcting the wording of the motion as it was made by listening to the video.

So she's got a written copy of that.

That's the only change I have.

Is there anyone else?

We could read the change.

If the plan is to vote on the amended minutes.

Sure.

Okay.

So the language, this was on item number three as our September 25th meeting.

The motion I made was as follows.

I moved to keep Vanguard U.S. growth admiral fund on watch status for quantitative reasons,

place American century mid cap value, our six fund on watch for quantitative reasons,

and make no other changes to the investment lineup.

So I think what happened is in the minutes, the motion as it was in the staff report got

copied over as if it was read that way, but I made purposely made some changes.

Nothing substantive, but the wording needs to be corrected.

Anyone else on item one?

Okay.

Moving to item two, depending on the Constitutional Plan Committee follow-up log.

Does anybody have any comments on that?

Any committee members?

Okay.

Item number three, fiduciary review.

I just have one question on item number three.

Okay.

On the staff report talks about the catch up limit for age 60 to 63 was made available.

It appears in reading the information from NAGDA that was an optional provision.

And so one of the responsibilities City Council gave this committee is to review potential

amendments to the plan and make recommendations to council.

Did we have a chance to review that plan amendment and make a recommendation to City Council?

I don't recall that.

The city did not bring forward a request for the committee to make a recommendation on

that specific provision.

Okay.

I don't think that's the first time that's happened, and I hope it's the last.

Oh, yeah.

Thank you.

Item number four, money market product review.

Yes.

I have a question, I guess, on this item I understand it's coming back for a future meeting.

I just wanted to request that we could consider money market funds that have both international

and corporate exposure.

I'm just to inform that discussion.

Is that possible?

I'm sorry, can you repeat that one more time?

Is your microphone on?

Yes.

I can speak a little closer to it.

So item four is regarding money market products that would come back to a future meeting

for consideration.

There's a list of three money market funds that are listed in this item.

Presumably, those three are the funds that we would discuss at that future meeting, and

all three of them are basically treasuries.

And so, domestic, US government treasuries, and so my request would be as part of that conversation,

just to broaden the scope of the dialogue that we would consider fund options that have

both international and corporate bond exposure as money market products.

So that's just the request.

I know this is coming back for a future meeting.

I just thought that the three funds are going to be...

Right, so you want to see if nationwide offers that as a product that we could take a look

at.

Yes.

Okay.

Thank you.

Thank you.

Anyone else on item number four?

Okay.

I have a question or two.

Just real quickly.

In the highest report, it says that typically, generally, it's going to be considered a

competing option, and typically, it has to go into a non-competing option for 90 days.

Is that...

I'd like to hear at the next meeting whether that's going to be specific to our plan,

how that works.

And I just want to make sure that based on any commitments we've made to nationwide,

are we allowed to add this money market option?

Obviously, it changes their revenue.

And if we later recommend the introduction of one of these funds into our lineup, will

we need to amend our investment policy statement?

Marie, all of those questions are noted, and we'll be followed up with highest.

Thank you.

Okay.

Item number five, 25 NAGDA, Art, Capital Presidents Award.

Any comments on that?

From any committee members.

Okay.

We went over everyone.

I need a motion to accept the...

Do we need to hear from the public on this one?

Thank you, Chair.

There are no speakers for this item.

Okay.

Thank you.

I need a motion to accept the consent calendar.

I make the motion to accept the consent calendar.

And I'll second it.

As amended on the minutes.

What's that?

As amended on the minutes piece of it.

Yes.

I'm sorry.

Who made the...

Who moved the item?

I did.

On the street.

Oh, I did, and he did.

Sorry, I left.

King moved it.

Mr. Committee member, Tonson moved and I seconded.

We wanted to...

He was...

Murray was saying it's the amended note inversion.

Thank you for clarifying, Chair.

So I have a motion to approve the consent calendar as amended, moved by member Tonson,

seconded by member Hoxtra.

If members could please unmute for vote.

Member Kovil is absent.

Member Zalasky.

Yes.

Member Gardella.

Yes.

Member Harland.

It's absent.

Member King.

Yes.

Member Levison.

Yes.

Member Rogani.

Yes.

Member Tonson.

Yes.

And Chair Hoxtra.

Yes.

Thank you, motion passes.

I just wanted to be clear.

She's sitting in the audience, but she has an alternate appeal.

Yes.

We've had a switch for that seats representation.

So he's now the primary.

Asheroni is the primary and Crystal has moved to alternate.

So when it comes to taking a vote on the motion, we should be able to just do the prime...

Everyone who is sitting up here at the days.

Right.

So Crystal's not the primary.

Yes.

Okay.

Moving right along.

Yes.

Samantha.

Yeah.

I can take this up.

First for the record.

I want to make sure that we recognize that Audrey White from highest group is sitting in today

for Roch.

Roch had a scheduling conflict.

So I wanted to make sure her name is recorded for the record.

Our first presentation today is Vanguard.

We have with us today from Vanguard is Brian Scott and Stacy Morrison.

They are here to provide a presentation, talk about target date funds.

And your packet is also a document from highest about collective investment trusts.

And we're going to figure out how to get the presentation and the packet up on the screen.

So it's in the agenda item.

Thank you.

Could we also acknowledge we have a new attorney representing?

Oh, yes.

For the record, we also have a new attorney assigned to our committee.

Ryan, can you please tell me the correct way to pronounce your last name so I don't get it wrong?

Ryan Meyerhoff.

Meyerhoff, thank you.

I have a lot of questions.

And I know Ryan has watched several years of meetings to get up to speed for today's meeting.

So thank you for your time and commitment of doing that.

So with that, I'm going to go ahead and turn it over to Brian, Brian.

The speaking into the microphones is important.

So it's all recorded and the public is able to hear.

So I just wanted to give you that tip.

And I will turn it over to you.

I want to thank you for coming.

I really appreciate this.

Hopefully you're going to have a lot of great information and hopefully you can learn a lot.

Thank you.

What is all yours?

Thank you.

So as I was introduced, my name is Brian Scott.

I've been at Vanguard for 27 years, mostly working on the analysis and design of our mutual funds.

And I'm pleased and thankful to be here with you this morning.

So thank you for that opportunity.

Does my clicker advance things or no, it doesn't?

I think it's a new computer.

Oh, okay.

So.

Yeah, so what?

Sorry, why don't we start at page 11 if we can?

I know time is short.

And so therefore I'm going to skip around a little bit during the deck.

So if I had five minutes to share my thoughts on our target retirement funds, I would start on page 11.

And really, this page is designed to help define and differentiate our funds relative to our competitors.

And I'd say there's three principles that I would really lean into that define and differentiate our funds.

One is our aligned interest with your participants.

If you're probably aware and if you're not, I want to let you know that Vanguard is a mutually owned mutual fund company,

that means we don't have any private family that owns us or corporate stockholders that we are beholden to to increase profits and increase profit margins often at the expense of the mutual fund shareholders.

So our sole focus is improving outcomes for our mutual fund shareholders.

And in the context of our target retirement funds, I'd say that means two very important things.

Number one, we were very early and a leader in lowering costs over time.

When we started our mutual funds, our target retirement funds back in 2003, the lowest cost version was 23 basis points or 0.23%.

Today, the lowest cost version is seven basis points. So that's a 70% reduction.

And through collective trust vehicles, pricing gets even lower than that.

And that's important because lower costs mean your participants and employees of the city get to keep more of their harder and money and allow that to compound over time for them.

So it creates a better experience. That aligned interest piece is really important.

But it also leads to if your page numbers are a little bit different than mine, I apologize. So I think if you advance two more slides, please.

There we are. Okay. The second thing it leads to is the purposeful design of our funds.

And what I mean by that specifically is that there are two primary objectives of our target retirement funds.

There are other secondary objectives, which are also important.

The two things that we're constantly thinking about when we're designing our funds and thinking about whether or not we could improve upon them is that we want to ensure that with proper savings behavior, that participants accumulate enough wealth during their working years, that they're able to accomplish objective number two, which is to be able to sustain their income through their retirement years.

And that's really the sole focus of our funds. Some of our competitors will put in smaller mutual funds to maybe boost cash low into them and to grow those products.

That's not on our agenda whatsoever. It's entirely about does this improve wealth accumulation and income sustainability through retirement.

And that's really the focus of the design of our funds. And I'll share more about that in just a moment.

And finally, I think that when you do those things and you design our funds with some of our core investment principles, a focus on strategic asset allocation and global diversification, you get better long term results.

And I'll share that with you as well.

So if we could skip ahead several pages that thank you keep scrolling down, I'll probably find it in just a minute. Let's stop on slide number 21, please.

There. So I wanted to briefly discuss how we design our glide path. And every year we go through this exercise, asking ourselves does our glide path and the glide path being the mix of stocks and bonds that participants have in their portfolios at every point of their lives.

Right. And that's represented by the line you see here. We're constantly thinking about can we improve upon that should we change it does it incorporate our best thinking.

And again, the focus is on those outputs you see on the bottom right hand side of the page. I led with the retirement income sufficiency and wealth accumulation.

But we also keep an eye on some secondary objectives as well. Portfolio reasonable level of volatility over time. You have to take some risk in the markets to get some return.

But we want that level of risk to be appropriate for each point of a person's life. And we also want to try to protect it in bear markets a little bit.

Of course, acknowledging that there will always be losses if the markets are down 20, 30, 40% or more. But can we keep that to a reasonable level given a participants age and their state of the life cycle.

And ultimately, we want to test these portfolios to ensure that they maintain their ability to provide income sufficiency through age 85, 95. That's a quantitative test that we're able to model even out to 115 years of age.

And we're sure that a participant has positive wealth as we call it or income sustainability. And we take all of our data on participants, how they save, how they invest when they start withdrawing money.

We incorporate our capital markets forecast because you have to have some kind of forecast about what stocks and bonds are going to do over time, how they correlate with each other. And that's how we design our glide path.

And we're making all those inputs and focusing on those outputs. We do that every year and we're gearing up with for this exercise to ensure that it incorporates our best thinking.

I got a question. Do you have, since we're all government employees and have a pension, most of us, do you have alternate guide paths that maybe are a little more risky because we so speak have somewhat of a safety net in our pension?

We do have an alternative product called the target retirement income and growth trust that has a higher landing point or higher equity allocation for investors, older investors, past age 65.

We would encourage people to not use it as a default although it can be. And what I mean by that is that allow participants to follow our current glide path and only use that if their risk tolerance allows them to do so.

Right. And I'd say that risk tolerance is more less of a financial function and more of an emotional one. And that's why I think the default is probably better to use the 30% but if an individual is more risk tolerant, they feel confident and maybe they have other assets or less spending needs than maybe a higher equity allocation might be appropriate for that.

Thank you. But also recognizing that that's why we made a secondary option to that there are some participants where a more aggressive glide path might be warranted.

And that's not in our the suite right now. Right now it is not.

And some of our clients both government entities and corporates and nonprofits have added it. I would say uptake to this point has been modest.

The design of these funds and the way they've been used is mostly by participants that are a little bit less engaged. And it's also relatively new. So I would say we haven't seen a huge uptake yet but I think over time we'll see that grow.

But in general it would be accurate to say that your target date suite of funds is the same suite for 401k and the public sector with pensions and those without pensions.

Okay. And I think it's important to emphasize that we retain a high degree of confidence that the existing glide path the one with the more conservative landing point produces those outcomes that I described adequate wealth accumulation and income sustainability.

Right. If we did felt otherwise we would change it.

So why don't we advance a few more slides. Let's go to slide 24.

So we talked about how we arrive at the glide path the mix of stocks and bonds. I briefly want to touch on what the underlying building blocks to that glide path is into our target retirement funds.

They're all index based products underneath the glide path. You can see a mix of US and non-US stocks US and non-US bonds as well. Right. The mix of stocks is 60% US 40% non US within bonds it's 70% US and 30% US.

You'll also note that we add an allocation to tips or treasury inflation protected securities of shorter duration because we believe that's a necessary and important inflation hedge for participants that are over age 60.

Roll it all up. You get a globally diversified portfolio that provides coverage of approximately 90% of the publicly traded capital markets.

We think that's really important because our own research and really decades of research and investment management shows that global diversification and strategic asset allocation tends to result not always but historically has tended to result in better risk adjusted returns greater tax efficiency and lower costs.

We believe strongly will help produce better outcomes for participants. Any questions there? Why don't we scroll down and if we do I'll find the slightest moment that I'd like you to pause at.

I talked about slide 32 please. I talked about the design of our glide path, the construction of it. Now I wanted to get to performance. What you're looking at are three different scatter plots of risk adjusted returns.

But you also would like to see your provider be as far up into the left as possible indicating better risk adjusted performance. You can see that in the three-year chart or roughly in the top quintile or the top 20% of risk adjusted performance.

But as you zoom out over time you widen the aperture over five and ten years we begin to move even higher into the top quintile and into the top desile over ten years numbers.

And I think that's really because of the deliberate design of our funds, the purposeful design of our funds, right, focusing on strategic asset allocation, driving down costs for investors and making sure our portfolios are globally diversified.

To put some harder numbers, if we advance a few more slides.

Slide 36, I believe. Yes, so I gave you conceptually how our funds have performed but here are the actual numbers through the end of the year December 31st, 2024.

Starting with the most conservative portfolio, the target retirement income fund, it has 70% bonds in it.

Bonds had a pretty disappointing year as rates rose and non-US stocks were lagged, US stocks considerably still positive returns.

But as you move down the page, you begin to see the influence and the contribution from very strong equity market returns over the last 12 months.

I'd say it's important to also mention a secondary objective of these funds is that they don't precisely track their benchmarks but they come pretty close.

That is an important objective but I would say a reasonable expectation is tracking is going to be a little bit less strong than you might see in a traditional index fund.

We've made some changes to our rebalancing policy to make sure that continues over time and so that you'll see tracking within usually I would say 40 to 50 basis points of the benchmark and usually better than that.

And certainly when you compare the return of the funds versus the benchmark, it was definitely closer to say 20 basis points in all the ventages.

If you scroll down to the next page, 37, you're beginning to see even higher equity allocations, better absolute returns but relative returns are also quite good within 10, 20 basis points for all the ventages of these funds.

It's also worth pointing out long term returns also just reflect the strong capital market environment we've been in five of the last six years, US stocks have returned at least 20%.

So very strong returns on an absolute basis over the long term as well.

Any questions on the design or performance of our target date funds?

I thought we'd probably skip ahead at least 15 slides or so because I wanted to have a brief discussion about transitioning from mutual funds to collective trust and what that means.

Slide 54 in mind, so it's probably in the low 50 low to mid 50s and years.

Sorry.

Oh, I think it's 56.

Thank you.

This page just highlights some of the differences between mutual funds and collective trusts.

I'd say the most no worthy difference is that collective trust trusts have lower cost structures because some of the reporting requirements are less stringent.

There's still a regulatory oversight, right?

When I say less stringent reporting requirements, I think some people might be concerned that there's less regulation of the funds and maybe it touched so, but still the Department of Labor and state-banking agencies regulate these funds.

The regulatory structure is still very much in place, but if you're inclined to read mutual fund perspectives or statements of additional information, there's still a handful of people out there that do that.

They won't find them for collective trust.

But I'd say the more important difference is that because of that slightly lighter reporting requirements, the costs are lower.

And that can make an important difference. You can see costs that are two, three, four basis points lower than mutual funds.

Doesn't sound like much, but when you compound that over time, you're likely going to get better returns and greater wealth accumulation in a collective trust vehicle.

I'd say that two other things I would note is that if you do have participants that like looking up ticker symbols, they might be a little bit disappointed because collective trust do not have them.

So we still find some people that rely on ticker symbols to look up daily prices. Your record keeper will have them.

They can log on or call in and find what their prices are and their returns are. They just won't be able to type in a ticker into any kind of financial software application like Google Finance, Yahoo Finance, whatever they might be using.

So there are no tickers. One final point I wanted to emphasize is that there's favorable tax treatment in collective trust that mutual funds do not enjoy.

To the extent that a mutual fund owns foreign equities, they have to pay taxes on dividend payments to those foreign governments.

Collective trust can reclaim those taxes, which enhances the returns. And sometimes meaningfully so.

So we have 10 to 20 basis points we expect over time. Again, you compound that with the lower costs. You're very likely going to get better returns, greater wealth accumulation, better income sufficiency.

So we encourage clients that are eligible for to collective trust to give serious consideration to use them.

I mean, people do you see shifting their portfolio over to collective trust?

It's been generally. It's been sizable to the point that now a majority of our target retirement assets are in trust vehicles. A small majority, I would say around 55 ish percent.

But there has been a significant shift over the last five to 10 years into collective trust vehicles. Partly because we reduced the eligibility requirements.

But also because people have understood the benefits of doing so.

I have a question about eligible investors for the collective trust. I see 401A listed for 57B. We will be moving our health reimbursement arrangement plans to nationwide in August are HRA plans.

Eligible plans for collective trust investments. Do you know?

No. Okay. Thank you.

Can you talk a little bit more about the the roll over considerations section on that chart?

So to the extent that an individual wants to roll over to an IRA, they will not be able to use a collective trust vehicle in an IRA.

So I think some employers, depending on your attitude and how you see your defined contribution plan, actually see this as a benefit.

We've seen a mine shift among plan sponsors of all types that they prefer to keep participants in the plan to help provide better pricing for everyone.

And this is potentially another tool to do that. I would encourage somebody thinking about this rolling over to an IRA to just understand that if they do that, they will lose out on the option of using a collective trust vehicle.

I'm trying to understand the practical implications. If I'm still working and I have my money in a target date suite, that's a collective investment trust.

And then I stop working and I want to move my money to some outside vehicle. In some cases, I won't be able to.

You will not, if you choose to move your money out of the plan into an IRA, you will not be able to use a collective trust.

So I would first move it to some other investment within my account and then I could move it. I could move it to outside the suite of funds to one of the other mutual funds in our menu.

And then I can move it. You shouldn't have to move it before you. When you move to the IRA, you would have to designate where you want the money invested. And then you, an option would not be to use a trust in those circumstances.

So I can move it out. I just can't put it into a new collective investment trust. That's correct. Okay. So as a, I'm just trying to understand what this could mean for our participants if we decide to go this route.

Can I ask a clarifying question just because I think Marie, I appreciate that question. So I separate from the city. I decide to move my money out to my to fidelity.

There's no, in an IRA, fidelity as well. It's not just a Vanguard thing, right? Like when I move my money to my fidelity, IRA, collective investment trust or not available to me there. They're just not available as an investment. Right. They're not available as an investment.

So I think I can add one thing. Sorry. I think to and incorrect me if I'm wrong, one of the benefits of a collective investment trust is a result of the growth of the plan.

So not every plan can invest in a collective investment trust, just like an IRA. Right. So one of the benefits for participants at the city could be that participants have access to CITs through the retirement plans because of the type of plan that it is and because of the size.

That's right.

Follow up. Thank you. Follow up question on that. So if we have we have multiple 401A plans, they're all individual plans with their own plan documents. And then we have our large 457 plan. If any of those 401A plans, the assets held in them are below a certain amount. Does that mean the CITs would not be available to participants in those specific plans as a funding option?

Is it are we looking at the city's total assets of all plans combined or oh, this would just be available in the 457 plan to participants because that specific plan has a certain asset balance. But our 401A some of them are newer and not a lot of assets in there are very few participants in them at this point.

So if one of those plans is only has $100,000 in it. It's not the CITs if we made the choice is not going to be available to all participants in city 401A and 457 plan. It's going to be planned specific.

I'm deferring to my colleague Stacy. We actually will look at it collectively and will aggregate for the more eligibility and we would allow it in all of the plans that the government allows us to.

Thank you. So the answer your question is yes for the records and Stacy's not on my phone. Yes.

And so Audrey what you're saying is we should if we go this route we should talk about it as an advantage as opposed to when someone moves out that then they're facing a disadvantage.

So the fact is they can they can be in a collective and trust investment trust now because of the nature of our plan the size of our plan it gives them this opportunity.

And sorry when you leave our plan the advantage goes away. Right and that could be an item to focus on you know participants are thinking about leaving the plan.

Right it could encourage them to remain in the plan so it's an enhanced benefit is having access to the CITs.

I'm sorry I'm just trying to figure out kind of the scope of this discussion are we considering moving into allowing access to in a collective investment trust or do we I know we currently have access to target date funds.

We do not have access to collective investment trust so the decision we might be considering in the future is to move into that and then if we do allow for that is that mutually exclusive with the target date funds meaning we those who are already invested in target date funds would no longer have access to continue making investments in those funds.

Right let me just for historical purposes the committee has been presented information or it's been talked about to the committee from the highest group about the opportunity for collective investment trust now that our total assets have reached a certain dollar amount that qualifies the city to have these funds available to us.

What was rec requested prior was just more information about what our collective investment trust how do they work presentation from Vanguard have them come talk about their target date funds and the CITs take all the information from today and get questions answered if there are additional questions.

That need further follow up I can take care of that through highest with the Vanguard and then bring back the discussion at a future meeting for actual potential recommendation on action for the city to make the CITs available and make the switch from our current target date fund line up to the CIT options.

Got it and so they would be mutually exclusive we moving to okay perfect thank you.

At the same time like a 2065 in the target date fund would have a 2065 in the collective investment trust so the same number of options would exist they would be a different with the benefits that we've talked about.

And I think at one prior meeting rush talked about well would you want to have both and I think the general answer is and other you can speak to this is sometimes when you get too many options you get a paralysis on your participants and then they're not sure what to do and they make some bad decisions or no decisions which could be a bad decision so I think they would recommend it's one or the other target date funds.

Target date funds either the regular mutual fund or target date funds with the collective investment trust correct yeah we were the discussions have been essentially swapping out the current target date fund line up to the CITs.

Yeah and I would point out that the funds in the trust use identical methodologies but one's cheaper right so I mean tell me any other product we say I give you the one that's more expensive but identical to the cheaper version right you would.

And in fact we expect the performance to be better in the collective trust so same methodology very likely better results at a lower price I have a question why is it cheaper.

Mo sorry.

I would say that's that's part of it but I'd say it has more to do with the fact that mutual funds have more stringent reporting requirements like writing those

perspectives as mailing them to everyone all the statements of additional information it doesn't sound like much but when you're talking of tens of millions of people and potentially tens of millions of

people or what kind of speakers for that what kind ofside data and then what kind of Thanksgiving expenses to mail those costs add up and can and that that's a big driver of why the costs are lower.

But I'd say over time we expect that ability to reclaim taxes with held on dividends paid by foreign holdings is probably going to be a greater return enhancer than just the low cost but combine we expect them to produce better results for the trust at a lower price.

The two active managed funds that are in the slide deck, the US Growth Fund and the International

Growth Fund, would those then convert over to the collective investment trust, or I was

just trying to figure out the context for including those funds?

At this time, we only have mutual funds for those funds.

And when I say at this time, that's not foreshadowing anything.

There are no plans to make collective trust vehicles of those.

The pricing is already extremely competitive and we just don't have the ability to lower

it any further at the time being.

Was that your way of segwaying into the active funds?

Or happy to take any additional questions on this subject?

But I also know our time is limited and we haven't covered that topic yet.

All right, maybe we'll spend a couple minutes very briefly on the active funds.

Next page, I think it's 58.

Performance has improved.

I know there's been concerns ongoing.

They've already been mentioned on the US Growth Fund.

As you can see over the last 12 months, the fund is actually ahead of its benchmark.

I'd say a general statement about the way the fund has been positioned.

It has been underweight, handful of those Mag 7 stocks that are obviously household names,

particularly Microsoft, Nvidia and Apple that have weighed on results over the last three

to five years.

Some of that trend is reversed and those stocks haven't performed as well over the last

12 months.

And some other holdings have done better.

And that's the 32nd version of how performance hasn't proved.

We're certainly pleased at that while also acknowledging that the longer term results

are not as impressive and something that we're certainly seeking to improve upon.

The International Growth Fund has also improved, as you can see, done very well over the last

12 months.

Not in absolute terms and not as great as US Growth Fund, but obviously that's just a function

of the fact that this fund invests outside of the US primarily and stock returns outside

of the US have not been as strong as inside.

But relative results have been much better over the last 12 months and remain extremely

strong over the last five and ten years.

I'll pause there again, knowing time is short and see if there's any questions.

Great.

Well, again, thank you for the opportunity to speak with you today.

It's my pleasure being here and appreciate your time.

Well, thank you very much.

You were very brief.

We have a lot to go.

Thank you.

Are there any comments from the public?

Thank you, Chair.

There are no speakers for this item.

Okay.

Well, thank you very much.

I appreciate all your time.

Both of you.

You and Stacy.

I need my notes.

Anyway, thank you for coming.

We were looking forward to you last time, but it just didn't work out.

So anyway, thank you.

And have a good afternoon.

Yes, of course.

In the staff report, after Vanguard's presentation, is a document from Hias Group about CIT,

and background, some comparisons, performance reviews.

So that document is there.

I just want to make sure that if you haven't already, when you have time to scroll to that,

Audrey, I don't know if you had any additional comments or...

Just generally, when you're looking at the Vanguard Mutual Fund, compared to the collective

investment trust, and Brian showed it in his presentation, but the performance numbers

over time in the CITs are a little bit higher than the Mutual Fund options.

So if you're looking at, say, the Vanguard 2040 fund as a Mutual Fund versus the Vanguard

CIT, the CIT is going to be a little bit higher in terms of performance in that five-year

column, typically across the board in terms of comparisons.

So that's what the document shows.

It goes through each of the different target date fund options.

It compares the Mutual Funds to the CIT.

So it's relevant information, just good to take a look at and good to have.

I have a question.

Historically, how long have CITs been around?

Gosh, they've been around for decades.

I don't know the exact date, but they're coming to the forefront, I believe, for the city,

because of that growth over time in your plans.

So as retirement plans become larger and certain thresholds are met, then CITs can become

an option.

And because they've had more of a track record and there are more plans participating

in them now, folks seem to be more interested.

So I have plan sponsors that I've worked with that have grown over time.

And once they get the opportunity to potentially move away from target date mutual funds into

CITs, they're very interested in that.

And usually, after doing the due diligence, like you all are doing, they will make a decision

to move forward because it is a benefit.

Thank you.

Are there any more questions on this item?

I was particularly satisfied with the explanation about how their glide paths are adequate for

public sector employees with pensions.

I remember Harlan that I had an opportunity to talk with a different company that had

done some work for the county of Alameda that was very interested in making sure that

their specific employee group based on their characteristics and their typical age of

retirement for their sheriffs and for their workers were enough, a type of fund that

was more customized to their plan.

And they're very data driven, their elected treasure.

And so there are opportunities to do some things differently.

And I felt the answer was a little too pat and not really acknowledging the differences

that I think you were suggesting, Brad, by asking the question.

And then the other thing is the Vanguard U.S. Growth Admiral Fund has just performed terribly.

It's failed our criteria quarter after quarter.

They were on watch and they're off watch and we didn't really get a chance to talk about

that.

I know he asked if we had questions about that, but I would have hoped that they would have

addressed it proactively rather than waiting for us to ask questions about it.

Is there anyone else?

Okay, moving along to item number seven.

Review of the 24th quarter by the highest group.

You're up.

Okay, excellent.

Thank you, Mr. Chair.

Good morning to everybody here.

Thank you very much for having me.

I know I have big shoes to fill with Roch being unable to attend this meeting today, but

hopefully I can answer additional questions.

And if you want to talk about a certain topic throughout the performance report, please

let me know.

Otherwise I'm going to pull up our plan overview page.

So I'm assuming everybody can see this.

Is that right?

Do you have it on your screens too?

Okay, perfect.

So this is a snapshot of where the cities 457 and 401A plans combined all together were

at the, oh gosh, you know what?

This says third quarter.

Huh, wonder what says that up there.

This is fourth quarter information.

So my-

This is around 160 or so.

Yeah, my book has the same numbers and it says fourth quarter that I'm looking at.

We have both.

Yeah, it's in there.

I think it's around page 160 something on that document.

Oh, on this document.

Okay.

I think it's because the December meeting was canceled.

Correct.

Yeah, you got it.

It's there.

I don't have way down obviously.

Okay, let me see here.

Yeah, it's a big, yeah.

It's like 334 pages.

So I think it's somewhere around 160 thing.

It's 557.

Well, these are all, okay, this, okay, good.

This is fourth quarter.

So let me go back up here.

Thank you for that.

Oh, 30.

Okay.

Here we are.

Oh wait, actually this is not the combined page.

So we include as you know information on the combined plans here, the 457 and 401A

plans.

And then we also separate them out individually.

So if there's interest in looking at those plans individually, that information is here

as well.

So this is the overview for the combined 457 and all the 401A plans together at the end

of the year, fourth quarter, 2024.

So during the fourth quarter of 2024, we saw continued resiliency in the financial markets

overall.

So it's great to see the total plan assets at 818 million.

So I don't know that we all have met together when the assets have been over that $800 million

mark, but really excellent to see that growth and to see those numbers there.

So in terms of fixed income, which is in the top left hand corner here, you can see the

conservative options that participants have.

So the nationwide fixed fund is part of the fixed income offerings at about $119 million

at the end of the year, representing 14 and a half percent of the assets in the plans.

So overall 23 and a half percent, it's a pretty high amount in terms of what's invested

in those conservative options.

I would say typically we see 15 to 20% invested in fixed income funds in government public

plans.

So this is a little on the higher side, but you do have a great allocation to large cap

funds as well.

So here at the end of the year, you can see the allocation of 34.8% in terms of the

large cap utilization by participants.

And that's pretty similar to previous quarters as we'll see here in a moment.

And then we also have, of course, the mid cap, small cap, international allocations, and

then the target date funds, the Vanguard Mutual funds that were just referenced are shown

here and represent just over 15% of the assets in the 457 and 401A plans at the end of

the year.

Wanted to point out the self-directed brokerage account assets.

So of course, that's the window that participants can open if they take that initiative and they

want to invest in funds that are not part of the core line up.

So it looks like there's a little over $11 million in the self-directed brokerage account,

which is pretty common actually at tiny bit higher.

Usually we see that around 1%, so it looks like there's some interest there from your

participants to use that self-directed brokerage account option through Schwab.

And then, of course, participant loans are offered to participants under $13 million

in loans, about 1.6% of the plans.

So moving on to the next page here, which is the historical plan allocation.

So this is interesting because you can see participant movement over time.

So whether that is participant activity making withdrawals or redemptions or roll-ins,

this shows what those allocations have been over time.

And the fixed income portion looks like it is lower at the end of 2024 versus the end

of 2023.

So it went from 26.2% down to 23.5%.

On the flip side of that, you saw a change in the large cat fund.

So this is actually a trend that the highest group is seeing across most of our public plans

in that we're seeing participants move just slightly away from fixed income and into

those large cat funds that have been providing some of the performance returns that are attractive.

So you went from 32.4% in large cat funds to almost 35% at the end of the year.

But overall, just historically, since 2017, you can see here it's around that 30% mark

or higher.

So it does show that your participants are really interested in that type of a retirement

account where a third of the investments are in those large cat funds.

Okay, moving on to the last page in this section that we'll cover, which are the cash flows.

So what I'm looking at here is on the top right hand side, the historical plan cash flows.

The first line here is the quarterly activity and then right underneath that is the annual or year-to-day activity.

So at the beginning of the quarter, the plan balance was $796,870,000.

It's different from that 818 number because of the self-directed brokerage account assets in the loan amount.

So that's why it's showing the $796,870, a negative cash flow of 1.5 million over the quarter,

a slight market loss of 815,000, and then an ending value of $794,560.

So if you look at the yearly numbers as well, of course, there's a much larger market gain

in the previous quarters of the year.

But there's also that negative cash flow.

So $5.6, almost $5.7 million in negative cash flow over the year.

Now I will say that across the board and John may want to chime in here,

but we have been seeing a trend of participants making withdrawals and rollouts.

And whether that's because, hey, COVID is finally really over.

So people think, and now they're going to go spend their money and do something fun.

They go on a vacation and things are more expensive.

Whatever the case may be, there are people that are taking an increased number of withdrawals.

So across the board, at least in my plans that I'm working with,

I have seen the same trend where there is that negative cash flow.

And that is not to explain maybe the previous year,

but I am seeing that, John, do you have anything to add on that?

No, just an agreement we've seen it across the board, not every plan but most.

And it's for many reasons of relationships with advisory firms.

Some people want to purchase other products.

A lot of people want advice through their financial planners.

And so there's a lot of pressure in the market to roll over these assets

when you've saved your whole career and you have this giant nest egg.

There's a lot of pressure to roll it out.

And that's just human nature.

And so we're seeing a lot of increases with respect to rollouts to going,

again, to various service providers for whatever reason.

So we can't stop them obviously, but we can track it.

So the numbers, when you look at negative five, that's a big number.

When you look at your whole plan, it's not a big number for the city.

So not a huge concern, but we work really hard to conserve.

We take it personally.

We want to keep every dollar we can in the plan for many reasons.

There's a lot of buyer beware.

So when Rick meets with participants, he usually suggests that they leave some money

behind in case they want to come back.

Once you've closed out your account, you can't come back.

But if you leave money behind, you can.

And so we recommend that.

Some people like to move some money and use that approach.

But again, it's something we are heavily focused on.

Conservation is extremely important to us.

Excellent.

Thank you.

OK, I am going to move on now to the investment policy statement compliance report

unless there are other questions from the members.

OK.

Could we start with the third quarter compliance report?

Because I have a couple of questions and a comment on that one as well.

Get back there.

Forgive me for the scrolling.

While you're looking for that, I'm curious.

Where would I find a copy of our investment policy statement?

I can send it to you.

They're posted online on our deferred compensation page,

but I will get that over to you, OK?

And you should be aware I asked that in 2022, I believe it was.

The committee recommended changes to the document,

which have yet to be on the City Council agenda.

Continue to wonder why that is, but that's the way it is.

So yeah.

We are at the third quarter investment policy statement compliance report here.

And what I am looking at, Emory, I don't know if you had a specific question.

Or if you just want me to review this before we get to the fourth quarter.

Yeah, maybe I could just quickly ask my questions now.

At the very top on the nationwide fixed fund.

This, there was a recommendation at that time.

Had we met in December to place that fund on watch?

Nothing's changed in the fourth quarter.

And yet there is no recommendation in the fourth quarter compliance report

to put the fund on watch curious why the recommendation changed

when the results didn't change.

For the nationwide fixed fund, I do see here it looks like this might be the first quarter

or no two-seq consecutive quarters of noncompliance, OK?

So this fund is part of the structure of your 457 and 401A plans.

I don't see an issue with placing this fund formally on watch status.

Just with that understanding that it works a little bit differently

than some of the other funds in the lineup.

But yes, if the fund is violating those investment policy statement standards,

then I do think it is prudent as fiduciaries to place the fixed fund on watch status.

And it is still in violation for fourth quarter 24.

I know that Russia's had conversations with nationwide

and that this has been a focus.

So that will just continue.

I think we take the same approach whether the fund was formally on watch status or not

because it is something that I know Russia has been focused on

and has talked with the committee about.

But yeah, happy to formally place that fund on watch status with approval.

I have a question for John real quick.

John, are they going to be ramping up that rate of return on the nationwide fixed fund?

And your investments.

Hopefully yes, is the easy answer.

I'm not able to take a look in the future.

But I would for sure like to see our rate improve.

And over time it will.

It's a large, it's a giant bond fund and it has about a 10 year turnover on all of the investments.

It's a very slow moving fund.

It also has to be benefits sensitive to participants.

So a lot of, so we do have to leave some money in short term securities to pay out retirees

and so forth.

So it's about a $40 billion bond fund and it's very, it's sensitive interest rates.

But it doesn't move like a money market fund because of the nature of it with the duration

of about seven years.

It's not like a money market which has a duration of really really 30 days.

And so the money market, I know there was some discussion to add one.

Money markets for many years were zero and then they spike and then they go down quick.

So they have these spikes and these peaks and valleys.

Our fund is more consistent but it's designed for preservation of principle.

But to raise the rate, we need to have rates high for a long period of time.

That's, I can work with our finance team to see if there's any improvements that we can

make.

I've already reached out and I'll continue to reach out to see if we can get that rate

higher for you.

But I agree that we need to do a better job there.

Thank you.

And then there's two funds I wanted to, on that page, just one comment on and one ask

a question.

The Fidelity Total International Index Fund.

Technically, it fails both criteria but my understanding is because it's an index fund,

it's treated differently than an actively managed fund.

And so it doesn't really fail the criteria.

It's given, Rosh has talked about wiggle room and tracking error and is that's correct?

That's why that one doesn't have a red.

Yeah, let's look at the.

It was .05 below the index and it was in the 57th percentile.

Yeah.

Yeah, so the percentile numbers don't apply to the passively managed funds.

So it works a little bit differently there.

However, it is underperforming the benchmark, right?

The tracking error that we look at typically with passively managed funds is 15 basis

points.

So this is just at five.

Yeah.

Okay.

Yep.

And then the last one, the 2040, the Vanguard target 2040.

That was .44 below the index and it was at the 50th percentile.

The language in our investment policy statement says it has to rank above the 50th percentile,

not at or above, but at above the 50th percent.

The median rate.

It needs to be 49 or lower and this one is at 50.

So to me, that means it technically failed that part of the criteria.

Yeah.

I mean, in the concept behind the target date funds being flagged or put on watch status

really comes to the forefront when there's half or more of those funds that are violating

it.

We have some specific language in our policy statement about half the number of funds

or half the dollar amount and I know it doesn't meet that for the entire suite.

But from time to time, an individual fund in the target date will fail and we do, for

instance, the 2065 does have a red circle and I believe it was an error not to have the

24 with the red circle as a third quarter.

So I'd ask highest to update the chart for the third quarter and then there's the cumulative

chart as well that would need to be updated.

Okay, yes.

That was for the 24.

Are you 40?

Yeah.

Yeah, I agree with that.

Okay.

And that's all I have on the third quarter.

So if you want to go to the fourth quarter, back to the fourth quarter compliance report.

Okay.

Yeah, thank you for those comments.

Anything else on third quarter before we move to third quarter?

Okay.

Let's see where we are.

Well, I can't believe I found it.

Okay, here we are.

Fourth quarter, investment policy statement compliance report.

So the first fund we already talked about to an extent, the nationwide fixed fund,

in 2.3%.

It is in violation of the performance standards for the investment policy statement.

So our recommendation would be to put this fund on watch, even though it says no recommendation

there.

Typically, it's kind of a plan sponsor to plan sponsor in terms of making that independent

decision.

A lot of times with these fixed fund options, we don't formally put them on watch, but we

are always having conversations about the funds.

They're a big part of every plan, but it does no harm in informally putting this fund

on watch if that's the desire of the committee.

Okay.

The next fund here is the MFS value fund.

So this fund is not currently on watch status, so this is a newer violation, if you will,

it's a second consecutive quarter of noncompliance.

And this is a result of, let me go to the performance numbers here, so we can see.

The numbers exactly.

Okay, so the MFS value are six fund.

Of course, we're looking at the five-year column because we feel that that represents a full

market cycle, and that is in correspondence with the investment policy statement.

The fund was paying 8.34% on that five-year basis versus the benchmark at 8.68%.

So underperformance of 0.34%, and then has a ranking of 69.

So those two items combined, the underperformance with the ranking of 51 or higher, at 69 indicates

that this is violating the investment policy statement, so that's why that red dot is

on the investment policy statement compliance report.

So we recommend that this fund be placed on watch status.

There's about $48 million in this fund across the plans, about 5.9% of the assets.

And the underperformance really has to do with an underweight to three out of the top

performing sectors for 2024.

So this fund is underweight consumer discretionary, communication services, and technology.

So as a result of that, and it's a value fund, so value has been out of favor for the

last few years. So it's no surprise that this fund has seen its challenges, but it has

crossed that threshold of violating performance standards over the last couple of quarters.

So the highest groups recommendation is to place the MFS value fund on watch.

The other two items on this page on the investment policy statement for fourth quarter, include

of course the Vanguard U.S. Growth Fund.

So we've talked about this fund during this meeting already.

The fund is still formally on watch status, although it is not technically violating

compliance at the end of the year, nor was it violating at the end of the last quarter.

So this is the second consecutive quarter of being in compliance.

However, we want to keep the fund where it is on watch status, so we want that fund to

remain on watch.

And then similar story with the American Century Mid-Cat Value Fund.

So this fund was placed on watch at the second quarter 24 meeting.

It is still violating compliance standards at the end of the year, and our recommendation

is to continue to hold that fund on watch status.

Let's take a closer look at the Mid-Cat Value Fund.

So here you can see on a five year basis that the fund had a return of 7.64%, versus the

benchmark at 8.59, so underperforming by 0.95% and has a ranking of 67.

So there was, of course, if you look at historically the year by year performance in 2022, this

fund had a great year, but other than that, has had its challenges do mostly in part to

some international exposure that this fund has, about 11% in international.

It's also a value fund.

So in 2022, when all the growth funds were suffering, this fund was doing really well.

So it's good to have these types of funds as options for participants in the lineup,

but at this point we do want to continue to hold the American Century Mid-Cat Value

Fund on watch status.

So any additional questions on the investment policy statement compliance report?

I really enjoyed seeing the historical pages that showed us back to the second quarter

of 2022.

So please thank Ross for doing that.

I've asked quite often for something to, for us to look back on, as committee members

change, some of the history gets lost.

I know we're moving away from Mission Square and their health reimbursement arrangement

plans, but it's been a very long time since we've seen a compliance report on their funds.

We did see it one time and it reflected what I think we knew, which was they are not

doing well at all, which is why we're, well, it's not the only reason, but we did an RFP

and Nationwide came out ahead on that.

On that historical sheet, so you'll update the Vanguard 2040 to show the third quarter

of last year is failing.

And then the 2050 fund, Vanguard's 2050, it failed both measures back in the fourth quarter

of 2023 and that's not reflected on this historical chart.

At one point, at our June meeting, Ross said that an error had been made in a previous

compliance report.

It should have been read one of the quarters.

And so if someone was just looking back at the quarterly reports to pick up for the historical,

they might have missed it.

That was the 2050 fund.

It was the fourth quarter of 2023, the 2050 fund.

Okay, yeah, we'll look closer into that and then update that compliance report.

Thank you.

But I love the chart.

Thank you for doing that.

Okay, so let's move on to the fees here.

So you've seen this page before, the Plan Fe Analysis for the Plans.

And wow, I am really impressed with how low the fees are across the board for the cities

457 and 401A plans.

Just really incredibly low fees compared to other peers or similar plans that have the

same assets and participants.

So kudos to you all for all the work you've done.

I don't know exactly what all of those items are, but I know it must have been a lot to

get where you are today with the fees.

So I'm going to look at the total annualized cost summary here, the bottom right hand chart.

So what I'm looking at in the blue part of each bar graph is the average investment cost

per participant.

So that's at 25.7 basis points at the end of the year.

And that changes quarter over quarter based on where participants are invested at the

end of each quarter.

So what I'm seeing here is fourth quarter of 2020, perhaps that was pre-RFP.

You all were at 40.8 basis points in terms of the average investment cost per participant.

Now you're at 25.

So that's incredible just in terms of price reduction for investments, really good to

see.

And then of course the average administration cost per participant at just 2.4 basis points.

So that is incredibly low.

So just really competitive and low fees for your participants across the board.

And I can see in the past that the fees were higher for admin costs.

So at some point there had been a slight reduction there as well for one reason or another.

So again, good to see the price reduction there.

This page shows a list of all of the funds in the plan line up for the 457 and 401A plans.

This is also a good representation of what those, the new retirement health savings transition

to the nationwide PEP will also mirror the same investment line up.

So what you can see here of course is a list of all of the funds, the dollar amount in

each of the funds, the net expense ratio.

So this is the amount that each investment manager charges participants to utilize these

funds.

And then you can see the admin fee is the same regardless of whatever fund you're invested

in as a participant.

You're paying the same amount in admin fee, which is a best practice as fiduciary.

So it's excellent to see that there's that consistency across the board with the admin

fees at just 2.4 basis points there.

And then you can see the dollar amounts here at the bottom in terms of what the contracted

revenue is that goes to nationwide for record keeping and then looks like there's a 457

admin fee of $18 per participant per year.

So that's included here below as well.

And that really concludes my performance report, the prepared comments that I had for

fourth quarter, but happy to answer any questions.

If there are any from the committee or staff.

And to follow up from the prior item on the discussion on collective investment trust,

the committee didn't really provide statements about bringing information having highest

bring information back.

So as part of their quarter report for this, certainly if the committee wants to provide

information and say, yeah, let's bring back to the June meeting information in a way

that a decision could be made or you need further information.

We can make that part of this item for the highest information.

Maybe before we start on that, I've got a couple questions for the nationwide piece

of the agenda item.

John, I can't, I tried to do a search for words in the PDF document that was part of your

report.

I couldn't do it.

I don't know whether they're all photos.

And that's why I'm not being able to search for text.

If you've done something or the company has done something in producing the report differently,

if you could go back to the way where I can actually search for text in the PDF document

that would be very helpful.

We can provide it in PowerPoint form.

What I do is I receive it in PowerPoint and I just convert to PDF.

Something must have in the translation then made it so that it's not searchable.

I'll just say it's searchable on my computer.

I've downloaded a copy in Adobe Acrobat and I searched for nationwide and I'm getting

results.

Okay.

Specific to your system.

All right.

Thank you for that.

And then John, at our June meeting last year, I asked you about the nationwide annual survey

and you said you would bring the results to our September meeting of last year.

And then at our September meeting, there weren't any results.

So I asked you again about it and you said you would bring the results to our December

meeting, which was canceled.

And even today, there's no information that I've seen about the 2024 survey results.

And there's nothing even on the follow-up log that would remind everyone that there

was a request and a promise to bring that forward and it didn't happen.

So what's going on?

We will include it.

My apologies.

I think John and I did have a discussion about it.

I know that I believe our discussion was to get it on the June agenda in light of how

long this agenda is and the meeting cannot go past three hours and we've got to discuss

the participant communication plan for the pet plan and the action on the investment line

up.

So looking at everything for this agenda and trying to manage it, John, our discussion

was that it would be on the June meeting.

And I think there was one more thing related to some additional data that we wanted as

well for the June meeting.

I'll go back to my notes.

Our plan was for the June meeting.

That was a prior year, I think, survey.

And then when you answered the question, I think at both meetings, you said not only that,

but we're going to be doing this other survey.

And I don't have the committee ever has an opportunity to weigh in on what's going to be surveyed,

how it would be worded, what would be beneficial in terms of responses for us to receive.

That would be, I think, a useful exercise.

If, even if you get it to us as part of the packet and we give you some feedback to help

the survey, give us the information that would be helpful for us to review.

Yes, I believe we can include plant sponsor feedback on the types of questions that are asked

in the survey.

So the next survey that we produce will make sure that you have the ability to do that in

advance.

We typically don't get a lot of notice when it goes out, so we're notified usually a

few weeks that the survey is going to be launched.

So sometimes it doesn't fit with the committee schedule, but I'll work with Samantha to make

sure that the city does have some input.

Thank you.

And then on the document that shows the balance in the administrative allowance account, I saw

that there wasn't a December 31st, 2024, evaluation.

It goes from November 19th to March 3rd of this year.

Is there a way, I'd like to see every quarter and number, and is there a way to go back and

see what the value was on December?

That's a, so it doesn't, usually it doesn't come forward until a certain time after the

end and close out of that quarter, so the next one should have it.

Oh, you're saying that.

Are you talking about valuation of, oh, I, so you're talking about the last line total

account value as of three, three, that was the date I requested.

Sure.

And I thought.

So you can get line item specific for what it was on December 31st.

First of 2024.

Every other quarter has a number.

And this fourth quarter of 2024 doesn't have a value.

So if we were to look at, you know, yearly, yearly participant fees collectively, it's

hard to know what the amount earned during 2024 was because we don't have that.

Yeah, so there's individual line item for the fourth quarter invoice unit credit is

there up above.

But then the total account value was provided as a snapshot on the day I requested this to

be able to upload to this meeting date and also work on the other agenda items with a total.

So, but I can follow up with, it's someone else at Nationwide I work with on this.

And so I can ask her what the parameters are available for.

And if it's possible to do a 1231, 24 number and every quarter going forward, that would

be helpful.

And then my last question has nothing to do with Nationwide.

It's on the mission square sheet.

I don't know we won't be seeing this too often, but well, that's not true.

No, I guess everything's transferring over.

In time, this situation will continue for local 522 and SPOA are no longer contributing to

the city's plans.

Could you just add a column just has a note that says the last contribution was on a certain

date so that it's always clear why the valuation in those plans, the two for SPOA and the

two for 522 are increasing.

They're not contributing anymore.

They went to a separate outside firm.

If you could just add a note that says stop contributing as of, that would be helpful

reminder on that one sheet or whatever we see going forward.

Yeah, I can put a note as to when regular contribution stop we do sometimes have instances

where contributions do have to be made when employees are returned to work and then certain

contributions have to be taken out and posted from that salary period.

So you're not, the numbers may change as time goes on, but I can certainly just make

a note that they stopped contributing in general to that plan on a certain date.

Thank you.

That's all I have.

Thank you.

Is there anything else on this agenda item for many committee, committee minors?

And I, again, if can the committee just quickly have a discussion about your desire for

follow up information on the CITs and what you might like to see at the next meeting from

from highest so we can either continue that discussion for the committee to continue to

evaluate or not interested in continuing at this time.

Also please remember that the CITs are not going to be available as investment options

in the nationwide pet plan.

So, but I think we, committee needs to have a little bit of a conversation about that.

So we know what to plan for.

I'm sorry.

What is the nationwide pet plan?

Yes.

So right now we have a retiree health savings account plans.

Those are health reimbursement arrangement plans.

They are held with Mission Square.

Those are mandatory participation based upon labor agreements.

Those plans are going to be picked up and moved to nationwide.

Nationwide's product name for the retiree health reimbursement arrangement plan is a

post employment health plan.

So the retiree health savings account is like a trademark name held by Mission Square.

That's their product name.

But they're all retiree health reimbursement arrangement plans.

We went through an RFP process and the first week of August is the schedule for everything

to be picked up and moved in those plans into nationwide.

So the CITs would be primarily for the 457 and 401.

Yeah.

So the CITs, the HRA plans, CITs, cannot be investment options for those plans.

Only for the 401A and 457 plans.

I mean, I would just speaking for myself definitely support whatever.

I don't know what the next step in the process is, but I guess I would defer to highest in terms of like the logical next step for how we might consider moving that forward.

I think today was a good kind of general overview of the product, but maybe some comparison.

For the analysis.

We'll get some comparables between the funds.

Is that what you're saying essentially?

I mean, I'll just kind of being new here.

That's OK.

It's your input to excellent.

Definitely just like, I guess number one would be the comparison in the fee costs.

It sounds like their fan guard had suggested that the CITs do have a lower expense ratio, but maybe if we can get a more independent perspective on that, that would be helpful.

And then I guess as well as any other kind of fan guard presented their own pros and cons of the CIT approach, but if we could get some further independent analysis on what the pros and cons are of these plans.

So I'll just give one example of a con.

I was a little concerned that they don't have ticker symbols, meaning I can't just go into Google Finance or somewhere else to kind of do my own research.

It scares me a little bit when I have to rely on the firm to provide that data to me directly and there's no sort of independent verification of that, but if that's just industry practice and that's a trade off of getting lower expense ratios, I think that's that's just helpful to know from kind of an independent perspective.

So could high I'm asking can highest prepare a report for us and not a large report talking 15, 20 pages tops.

I mean, yeah, oh yeah, of course some kind of analysis, some kind of chart that shows here what the fees are on current target date fun lineup in here's based on assets and investments.

Yeah, I think maybe fees and performance, you know, in some of the differences.

So an extension of what we've already created, which includes some of those differences and the performance, but then also including fees.

Yeah, we can we can do that easily.

So can I request that that being agenda item then do I do that now or would that be later?

Oh, yeah, we yeah, so I think our plan would be to have a specific agenda item on the CIT matter and.

Requests that committee make a recommendation at the next meeting on what it wants to do with the CITs.

So it would be its own item for further discussion.

Okay, so we to be clear those so we couldn't get a report prepared by the next meeting as well or we'd have to get the agenda item first and then.

It would all be it's the standard processes for it to all be included in the.

Okay, I was guessing at 15 pages it could be five I don't know you know all these things are written you know.

Highest did include some materials in this in the staff report for this meeting that that compared the.

The standard mutual fund each of the.

Vintage is against the CIT and the same vignages and you can see their performance and I think the Van Van Garter included the fee cost as well.

So I mean the information's there.

Are we able I would I'd like to move forward with this I'd like to see a recommendation and then see where the committee is at the next meeting.

Do we want to go forward enough but I.

I've had.

Move forward bringing the this CIT specific agenda item back with the information.

The chart that makes it you know sometimes these charts we want to make sure that they're easy to understand to the everyday participant and not just the committee who's been

entrenched in this for a while so I can work with highest on on a specific chart that's going to compare and maybe again easy for the everyday

participant to look at to have an understanding of why.

It might benefit them and with at that meeting with that in for additional information discussion ask the committee to make a recommendation.

Is this is that what you're thinking?

Yeah.

And John how long would it take let's say when's our meeting in June the 20.

I don't remember but.

Yeah, Marie I was I was going to comment on that so.

We're doing a we're doing a ton of CIT movement right now I have in process three plans right now current day that are moving to CIT's just got we were just out of plan last week to

move in the CIT's it's a great opportunity for a city of your size with the balances you have to take advantage on an ash I know exactly talking about on the participant side.

We run into it all the time your local rep Rick was in the pro at explaining the differences between the CIT version and the mutual fund version and not having a ticker we get those questions a lot we have a fun data sheet that is on the website that they can click on.

Our record keeping system can you know we will update those.

Prices every day.

So they cannot get it externally but they can through us as a record keeper that's an issue but.

It's it's one that can be explained very simply.

And timing wise so there there needs to be paperwork done between Vanguard in the city and that paperwork and take anywhere from 30 to 60 days typically to iron out the CIT paperwork once the paperwork is done and usually your city needs to review it and there's some you know there's some back and forth between the two entities when we get final sign paperwork CIT then we start the fund change process.

So it's it's typically 60 days prior to the execution of the agreements between the city and Vanguard for the CIT funds that you're going to be switching.

So I've seen it done as soon as 30 days I've seen it done with it six months later so it's a bit of a drag on on the front end by completing the paperwork but it's no reason not to do it.

So if let's say 30 days to get signed paperwork plus 60 days for a fund change notification and our friends change notification will go out to all participants that have money and the funds that are being converted to CIT's we won't have a long length the explanation as to why the changes made because of compliance reasons but we will send out our

functions notification 30 days prior to the fund change date so let's say it's we meet in June 30 days July plus 60 is August September we're looking at September October for the timing to get the funds changed and mapped into CIT's.

So it depends on really it depends on how how fast paperwork can be executed plus 60 days is the short version.

So there's no opportunity to fold it into the health reimbursement arrangement changes and have one mailer that covers all issues that's that's not it's going to be October November December I'm thinking.

Okay thank you.

Yeah and those pepper HRAs cannot have CIT's by nature but no but we're going to be doing a mailing to mail yeah so I think could we have two subjects in the same city mailing that's not possible.

I like the way you think and I wish but other issue with that is not everyone yeah is in the pet will be in it sure that's going to be a target in mailing specific to those participants and that's it's going to I think to us it certainly.

It doesn't seem like that significant of a change you know we see the benefit and the enhancement of this change but again the everyday participant I think we really want to target community we'll talk about it but it needs to be specific to that or it's going to create so much confusion yeah.

So that also informs our budget discussion that we need to plan for if we go forward we need to plan for the cost for some.

So for this particular I'm definitely hearing will bring back something more.

An additional document with maybe an easy to understand chart comparing now and fees costs and the CIT and then also for this particular item there is a motion that's being recommended.

I just want to make sure we don't forget that for this item before we move on to anything else.

Audrey had a great point of you might if you're going to go the CIT route Mary you might want to start your paperwork review in advance so it doesn't take quite as long because it can be like I don't want to say painful but it's time consuming to get the paperwork reviewed and signed prior to the 60 day no or you know to our six day requirement so that's something if you're going to leave in that direction it might be something you'd want to do in advance.

I don't want to presuppose where the committee is going to go I just like to see a recommendation and then the committee can can turn it down if they choose but this way if we're ready to move forward at least the recommendations there we've met the Brown Act requirement Ryan I don't see the attorney's office wanting to review legal documents until you know the committee's ready to go forward.

I mean do you want extra work.

Are there any more comments on item number seven clerk are there any.

Thank you chair we do not have any speakers for the site.

Thank you.

I don't need to make a motion I do need to make a motion.

So I'd like to would someone like to make a motion to pass or US Vanguard US Growth Admiral fund be held on watch for quantitative reasons quantitative reasons the American Century Mid cap value R6 fund to be held on watch for quantitative reasons and the MFS value R6 fund be placed on watch for quantitative reasons.

And I think we were going to add placing the nationwide fixed fund on watch for quantitative reasons and add that as well the fixed fund account as well and make no other changes to the investment line up.

Can I get a motion.

And I didn't I didn't hear the beginning of your motion.

Are the bank or US growth Admiral fund.

No, no, even before that the way the motion is the way the recommendation is written in the staff report is that we would pass a motion to recommend these things.

Sorry if I sound like a broken record but city council has given the committee in our several documents that they've approved the decision making on what's what funds are in the lineup and who's on watch and how we replace them.

So we're not recommending to anyone so we're this is this motion should be to do something not to recommend to do something.

Okay.

I mean I can I can I can reread it if you'd like I'll be.

So the one word that's holding you all up is recommending.

So so I just need a motion then to hold all those previously said funds.

How about I read on watch for quantitative reasons.

Okay.

Can someone give me a motion to do that.

Will anybody motion make a motion.

Let me essentially you want to approve the action not simply recommend the action.

Let me read it the way I think we ought to be doing it.

I moved to keep Vanguard US growth Admiral fund on watch status for quantitative reasons.

Keep Americans century mid cap value R6 fund on watch for quantitative reasons place MFS value fund on watch for quantitative reasons.

Place nationwide fixed fund on watch for quantitative reasons and make no other changes to the investment line.

Okay.

Third second.

All second.

Thank you.

I just can't confirm mean that was a motion by member levis and a second by member Zalasky.

Thank you members please unmute for vote.

Member Rogani.

Yes.

Member Zalasky.

Yes.

Member King.

Yes.

Member Thompson.

Yes.

Member Gardella.

Yes.

Member Hockstra.

Yes.

Thank you motion passes.

Thank you.

Item agenda item number eight investment fund mapping for the transfer of health reimbursement arrangement plans from mission square to nationwide.

Samantha please.

Yes I'll introduce this and then turn it over to Audrey for any questions throughout the process.

The RFP process for the health reimbursement arrangement plans.

Wow that's a mouthful.

You know there was a lot of conversation discussion and also included in our RFP the ability for the fund line up for those plans to match the existing.

The funds for the city's four one eight and four fifty seven plans.

So highest was able to get data on all the current investments across the plans and the dollars in dollars invested across those funds at mission square and then has provided the document in the report that's the mapping of the intent on how we are going to map the assets into the funds when the plans move to nationwide.

So really this item if the committee has any questions about the information or that highest is provided or how the proposed mapping.

This is the thing for us to get that settled as a nationwide is we need to get the information over to nationwide here pretty soon after the contract is done.

Are there any questions for Audrey.

On each of the pages on the bottom right corner there's a total savings number like a plan by plan on the mapping sheets.

Over what period of time is that savings calculated?

Is that an annual savings?

Oh this right here the total savings the 519 is that what you're referencing?

I can't see the top of the.

There's a different page.

Yeah I mean I just print out one of the sheets and it lists the current line up on the left and in the green column.

These are all going to be annual savings.

So a lot of this document I mean there's a lot of small font here within the pages of this report but essentially it's going through each of the existing mission square health retirement accounts today and then listing the assets in those plans and then where they will map the assets.

They will map to under the the nationwide structure so it sounds like in August when they move to the pet.

It just shows how those funds will be mapped and then there are amounts at the bottom in terms of the savings for each plan.

I really like the last page of this report here which is the mapping document because what it does is it lists out all of the the HRA plans.

So it looks like there are eight or nine of them eight okay and it shows the plan assets so totaling about 26.7 million dollars.

So it shows what the current expense ratio is at .96% and then the revenue sharing so that's another additional expense.

And then it shows where those plans are moving to so under the nationwide umbrella on the right hand side with the green header it lists the same plans but then it shows much lower expense ratios here.

So the expense ratio is prior or current I suppose are in the 90s and then that is being lowered to 9 or 10 basis points per plan and eliminating revenue share so that's the big you know piece that is going away which is which is great.

So I really like to see that as a best practice just throughout the industry to not have revenue share associated with funds in plans but what this says shows the total savings of $110,000 per year.

So participants in addition to the money that they're already saving in the record keeping administration for the 457 and 401A plans now that is also being experienced or will be experienced in the pet plans once the HRA plans moved to nationwide.

And the plans will have better performance because they're in the plans that we've watched in monitor and very carefully.

Same funds, so best in class funds so not only is there that instant savings by participants just in terms of the overall admin fees but there's also better funds in the lineup so over time participants are going to experience that in terms of performance.

And that's all that I really have to share on this piece unless there are additional questions.

And by listing each of the eight plans on a separate sheet there's no intent to map any of the plans differently than the others.

We're not doing that.

No, just like to like.

Okay, look good.

I just had a quick question about how it's going to work in practice.

So let's say the transfer of the rollover was going to happen today so the market closes and then we sell the funds that are in mission square and then is it the next day after the next market close that we purchase the new ones.

And that kind of address the risk of loss between the time that the mission square funds are sold and the purchases are made under the new plans.

Is that just an inherent risk of.

They are out are that they are potentially out of the mark so when the market closes yes everything will move and I think it might be about 48 hours or so.

We should do a one day blackout at the most it could be done overnight but it'll be very short so everything is sold and then repurchased so you're out of the market for a short period of time where the money's not invested and you can't take a distribution until it's reinvested back when nationwide so it's industry standard to have a blackout has to be done that way.

So as soon as we so we go to blackout we have all the records in mission square we do all the purchasing overnight and then it's either the next morning or a one day later I believe it's probably the next morning but will confirm the blackout very short and then once the assets are repurchased then full functionality on those participants so they're going to be getting a welcome letter notification etc.

That's the next section so I won't jump ahead there but very very streamlined we work in mission square a lot to transfer their product to ours so we've we've done over 20 here in the last couple of years so we're we're very familiar with their process policy procedures and very confident that will be very very short.

Yeah and I'll just add in too that I just went through this exact exercise with a client of minus city of Napa California they had mission square under the same arrangement and they moved to nationwide and the communication that nationwide sends out is excellent.

There was a lot of contact with those participants they understood what was coming very clear in the communication pieces that went out they can always talk to somebody at nationwide as well and there were no issues whatsoever and everything went smoothly so and that was just gosh in January so.

Plus you'll have Rick who's an expert on these Rick's been with us forever he's probably on the top rep in the company he's he's very well versed in these transitions and also this product itself so once the participants have access to this it'll also show up on the same website same app so very very streamlined but Rick will be our point person to handle questions if they arise so sometimes we see the transition and then six months later some of them are going to be in the same way as we do.

So it says oh I didn't realize my money changed right they didn't read the letter so then the little skull Rick and Rick will explain it send them the letter email to them and then have this conversation so we expect to have some delay and you know these conversations but our notifications going to be very very thorough like Audrey said and we shouldn't expect that many questions especially when you see cost savings and the benefits of moving from one to the next it'll be pretty self explanatory to participants.

You're looking for a motion now okay. Yeah the staff report identifies the the motion that we're asking for.

Happy to make a motion recommending the plan administrator direct nationwide to map all assets received upon transfer of the mission square retiree health savings plans to the nationwide post deployment health plans is outlined by highest group in their March 20th.

25th plan investment menu mapping document. I'll second the motion.

Thank you so that was a motion by member Leviston and we didn't ask if there was any public comment. Oh there are no public comments.

Okay got it. That was a motion by member Leviston and a second by chair Hoxtra members please unmute for vote. Member Rogani. Yes.

Zalasky. Yes.

Chang. King. Sorry. Yes. Hanson. Yes.

Gordella. Yes. Leviston. Yes. Enter Hoxtra. Yes. Thank you motion passes.

Okay thank you moving along to. We are coming upon the two hour mark so we will do a motion to extend the meeting past two hours.

Correct. I would like to make a motion to extend the meeting for another half hour.

Okay. Are we doing a half hour? Did you want to do the hour? I think we can do it in a half hour. Can we do that?

Per council rules a procedure it's extending and it only states one hour doesn't give. Can't break it up in the box. Yeah 15.

I was hoping I could get more by off if it was just I mean that's a big commitment so I was kind of hoping we could get you know okay.

All right how about I make a motion to extend the meeting for one hour.

I'm sorry who second.

Okay. Five second.

That was a motion by chair Hoxtra with a second by member Leviston. Members please unmute.

Member Raghani. Yes. Zalasky. Yes. Member Chaun. Chang. Yes. Member Tonson. Yes. Member Gardella. Yes. Member Levison. Yes. And Chair Hoxtra. Yes. Thank you motion passes. Thank you for that.

All right item number nine participant communication plan for transfer of mission square RHS plans to nationwide.

All right. So this item is the opportunity to have the community discuss committee discuss and provide feedback or other recommendations for the city's current proposed communication plan to participants on the transfer of these plans for mission square to nationwide.

In the staff report we have you know our outline and things that we are proposing. One is to develop a dedicated transition page on the city's website that houses all information related to this transition all copies of all email communication that goes out flyers.

Everything that we need with a will work with IT on a specific URL name for this this page but to set that up and that's going to house you know just all the information publicly available to that we can make to our participants.

So they have one stop shop on where to go to get information on this. We want to set up a specific city email address for this transition for the pet plan for participants to use that email address to communicate with us about any questions that they have when the city sends out emails to participants about it will use that email address but just one housed email space.

So this is a specific for this we think is important for this transition and the communication.

We'll utilize the city's email system it's I think it's called Adobe campaign we're going to pull we're already working on this data pulling all the email addresses that are currently in mission square for participants plus all of those participants if we have email addresses in our own payroll system that are different.

So we're going to pull that and be able to put them into Adobe sign to do targeted emails to the masses that are impacted by this and be able to do you know this is what's coming just routine communication out via email we would use the Adobe campaign software that IT provides.

We want to do direct hard mailed copy notices by the city with a first notice going mayor June outlining the transfer what's happening important dates to know we'd like to do a second hard copy notice as a reminder notice nationwide will provide one directly mailed hard copy notice to participants they provided a sample from another plan some the information is redacted for privacy purposes.

Of course the dates and such on their document will be updated to reflect ours but wanted to provide a sample of that notice that goes out from nationwide.

And then also we will be working with nationwide to schedule informational sessions for participants to join to get more information.

So I think that is our current plan and this item is specifically for the committee to recommend our proposed plan and certainly you can make additional recommendations as part of your motion but we feel I think having that dedicated web page where everyone can go to.

I you know my office is constantly pushing it out it's something that Rick can refer participants to I think is a really important key of all this most of the time now I know this from doing retiree open enrollment like the packets are not read what's mailed is not read I don't hear from someone to like June why is my premium now this amount well did you open read your packet I think I have it in the kitchen I never opened it because I just want everything to stay the same.

So the website and email tends to be what we see the most return on investment when participating I'm sorry when communicating with participants for any information related to our different compensation plans.

I have a question about the mail or this is kind of off topic but it seems relevant in my mind.

I have a home loan on my house and it just got bought out by another loan company and the previous loan company sent e-mailers about how the transaction was going to happen is there any way we can have mission square send out a mail on their dime to let them know that this change.

No they will know that's okay. I mean my own company does it so I just that's not a chance okay there's just a thought they're in in my head okay thank you.

Given what you said about maybe the mail is less used than the email is more used could the second mailing notice be maybe only a postcard as opposed to a full full mail or yeah I love that idea.

I mean it's a lot. I didn't realize how little people were going to use it.

So yes I think electronic communication or someone going to a website to get information where everything is on one page is the trend that we see of what works the best.

Initially we pulled all the data for mission square last week and my team was working on it and a quick look of that the number of missing e-mail addresses from participants that don't work for the city anymore and they're not retirees on our benefits either so that is an important reason why we do want to probably do at least one or two mailers because I love the idea of a postcard I think that's a good idea.

Fantastic idea.

Can we add that recommendation to your recommendation?

Yeah of course this is you know we're really looking from this is our outline of our plan and we really want the information and feedback from the committee on other types of communication to either replace something that's listed or to enhance what's already listed.

Audrey you said you recently went through this with the city of Napa did the nationwide letter that the Napa participants received looked very similar to this.

I found this letter from nationwide to be confusing. I mean I have some I know it's a compliance document and John you've told us in the past that you can't make changes but I just need to tell you I want to give you some feedback on it.

Like the second line starts based on the results of the work you know it's why can't we say that the city of Sacramento defined contribution plans committee conducted a request for proposals process and selected who we believe was most qualified.

That's why we're making the change.

Again this is a document specific to this plan that made the change.

I work with a different team at nationwide on this transition there are several individuals specifically the project managers and that is who I would take back any feedback or work with on the document.

I'll direct one by one.

The language is probably fine I don't see any issue with that specifically.

I didn't work with Napa but the letter can have some modifications we just can't go into detail about giving advice and specifics like that but we can modify a little bit on our fund change notifications and so we can do the same on this one.

So I'll work with Samantha and I'm marketing.

That first paragraph is expected to be for myself and Shelley and our legal team to work with our project manager at nationwide who's working on all this to make it happen to make sure that first paragraph reflects the city of Sacramento's plans.

At the end of the meeting I'll give you what I have here.

At the end of the meeting I'll give you the comments I have on that letter.

One of the things I don't think addresses sufficiently is that how the reimbursement process is going to change for the participants.

That's the biggest change I think people are going to go through.

Exactly. I was just going to echo that comment.

I was thinking about I think we're all pre-retirement here so it's really kind of a passive change from our perspective in terms of just the continued investments in building these accounts but if you're someone who's actively seeking reimbursements for your health care expenses that's going to be a huge change.

I'm not sure exactly what it looks like but I would just want to be a little more conscious of that.

Those folks may need a little further instruction and yeah really just the change in the process from how they seek reimbursements I think.

So we're going to be getting data for those who are currently having either routine distributions such as every month they have a distribution that goes out specifically to their health plan to pay their premium.

Some of the communication surrounding that is going to be a city created document that then we would then email out and then also post on the web page.

And then I have a former employee from my team who is actively having distributions made for specific purposes and I'm in contact with her to help me on a direct one-on-one basis to get a really good picture of what she sees on her end and participate with me surrounding this communication that's going to need to go out to make it clear for everyone who has a routine distribution.

So you know nationwide has their template it has to go through their compliance this document is not an end all be all their document for the city's responsibility in communicating effectively and thoroughly with all the participants on what they're going to need to know.

And I'm retired but I don't have I don't have this this plan so I don't have any personal experience.

There amongst our retiree association board our president was retired and I think she's in the plan Rachel I think she's in the plan.

But we had a retiree association lunch we had you know forty thirty people at a lunch there were only two people there who are in the retiree in the admission square plan so we I was explaining what was changing we did in RFP and it really only affected two people.

The bulk of the folks it's going to affect are the folks who haven't left the city I think it was like what is like a third two thirds it was at the split one third.

It's pretty high number that currently have no access to their funds because they're employed.

Right right but for those who are we we have to be aware of the changes that they're going to see and John is there anything that you can tell us about nationwide improving the reimbursement process since we've we had the people here to talk about the debit card is off the table but maybe some other options are available.

Yes we're going live in May with with the new changes so by the time you transition in August it'll it'll be available for for a few minutes.

An online upload of documents correct this is this is far as you're going okay in May all right so we'll be ready for that so we can talk about what our grill updates may fifth corporately so we'll have plenty of time before you transition over.

Really quick question for police and fire who are in the plan moving forward there we're in the mission square plan but we'll be in the new nationwide plan with the funds for them stay in a mission square account.

No everything is leaving mission square and going to nationwide if you are contributing to the IAFF plan or the poor act plan and you're still actively employed by the city.

Okay yeah and so you'll you'll have the opportunity then for lower fees and and funds that have hopefully historically better performance better higher rate of returns.

Are there any more comments on this agenda item.

So I'm looking for a motion recommending the cities are certainly public comment.

Thank you chair there are no speakers for this item.

Thank you.

I'm looking for a motion recommending the cities propose participant communication plan for the transfer of the mission square retiree health savings plan to nationwide in August of 2025.

And I think to add on that the city notices that are directly mailed the second notice be a postcard.

Thank you.

I'll motion.

I'll second it.

Thank you so that was a motion by members of the last key with a second by member chair chair hoax.

Okay member excuse me members please unmute for vote member Rogani.

Yes members last key yes member King yes member Tonson yes member Gardella yes member love us and yes and chair hoax.

Yes thank you motion passes.

Thank you plan agenda item number 10.

Advanced rate of allowance account budget and selection of attendees for the 2025 NAGIC conference.

All right so the committee is due to update a budget for the how to spend the money if needed and the admin allowance account for a multi year budget.

So we're looking at calendar years 20 25 and 2026.

We went through and looked at past expenses and the prior budgets also included the language for how reserves are supposed to be identified.

This what's before you is you know a proposed we're looking for the committee to any changes that you want to see include in the motion.

We view the documents provided as guiding documents for today's discussion with both an option one where the city does not request for the admin allowance account to pay for the notices on the.

Pet plan transition and then option two where we did build in a line item for that if the committee wants to consider that.

So really again view these documents as guiding documents for the committee's discussion today and if the committee wants changes on the allocate how the expenditures are allocated and what to allocate.

And then looking for that feedback and include in your motion.

Secondly to because the admin allowance account does historically pay for committee members attending the NAGIC conference I have included the 2025 NAGIC conference information and an estimate on what it would cost for a committee member to attend that.

And so the city's proposing based upon the cost of for three attendees for the 2025 conference paid for out of the admin allowance account.

Mary can you give a since we have a fair amount of new committee members today can you give us a little historical knowledge about what NAGIC the NAGIC conference is and what goes on there please.

Sure. Magda stands for the National Association of Government Defined Contribution Administrators there's about 250 member agencies across the United States all public plans cities, counties, special districts, state plans.

I think there's some school district school district plans as well. Yeah. And there's a $600 annual membership fee for the for the agency the city of Sacramento that's paid for out of the account and they hold the conference every year that has seven to 900 people.

And so we have five days of programs networking social events lots of education lots of behind the scenes you know in the hallway at lunches talking to people just like us committee members staff to the plans investment people all the all the vendors are there the nationwide has a big presence highest has a big presence they're both high level sponsors of the association in the conference.

And so I think that's the difference planning committee I think John you and and Rasha on the conference planning right now. So we have a lot of input a great education to be to be present to Mary.

And just as a maybe I can just give a little bit about the administrative allowance account to where that where that came from.

Okay. We started collecting money in February or March of 2021 right around the same time that the highest contract began February 1st of 2021.

We did the RFP for highest. I don't know 2019 I think and we couldn't start the contract until we had a source of funds and we didn't have a source of funds until all the labor union signed a letter of understanding agreeing to a dollar 50 per month charge on every participant in the voluntary 457 plan.

And so that money is collected it's explicitly stated on everyone's quarterly statement. You'll see a dollar 50 every month on your statement that goes into the administrative allowance account.

And the city council gave the committee the authority to decide how that spending is going to occur. And we adopted a budget at our June 2021 meeting and we haven't seen a budget back since then.

And so this is our first opportunity to see that and I appreciate that the reserve account piece has been incorporated and and some of the other items that we talked about are listed there.

Are there any other comments on item number 10? Do we need to select who wants to go or do I do I do?

The budget.

You know what budget it's comfortable with to include in the motion and again this is a kind of a guiding document. The committee can discuss any changes it wants to see reduce itemized expenditures one place make increase it somewhere else add a different type of expenditure.

So I would recommend the committee needs to identify the budget first and then decide on the attendance of the conference.

Just want to comment the conference is serious in San Diego. And then it's shifting east right afterwards. So it's going to be in Orlando in 26 and then San Antonio in 27.

So it shifts regionally so we've had a few years here on the west coast and it's going to be moving out so let's be the last year that's going to be fairly close to Sacramento.

But it's an excellent time. So we expect a really great conference with we expect record participation this year so just just want to point that out.

And it's in late September.

I have a question about the two notices mailed that's $12,000 in your option number two.

How many maillars or do you know how many participants were actually mailing to I just I don't know anything about how much the cost of we do a postcard for the second that would reduce I would need to get an update from the service we use for that but it would certainly not be the same amount of money as

first class regular envelope mailer. It's about 4,500 participants or so so we use a third party service to do all of our retiree open enrollment printing, mailing the postage.

Yeah, so you've got 9,000 postage stamps we have to buy basically which adds up to a lot.

Yeah, the postage is a lot is a lot but there is you know we we have to pay a fee to the service to set it all up for their handling and they put a little they have to they're required to put a little code on everything that they can verify that it went to you know this address and they run all the addresses

through the I think it's called the NOC. Something change of address they run there all the addresses through a system to check for validity on those addresses and that costs.

Mr. Chair. I guess I look through the budget document and I saw some things that I think need to be changed.

I just want to I'll just do some overview examples for instance it says that the historical fees amount of fees collected from the participants is about $88,000 and the document in the nationwide report that shows how much has been collected in in 2023 and 2024 was almost $91,000.

So I think 91,000 based on $5,107 participants $18 a year I think that's a more accurate number.

There I didn't see a number for the interest that's earned on the money that sits in the nationwide account.

It looks like in 2023 we earned about $3,500 and although we don't have a December 31 number to determine how much we earned the last calendar year it looks like it's about $6,500 that's my estimate.

So we need to account for that.

There is a line item for miscellaneous expenditures which was in the original budget we approved in 2021 but now we have a reserve for unanticipated expenses those are those miscellaneous so we don't need to budget for both.

So you think there's an overlap there?

Yeah I think we're missing some fee revenue and some interesting come that is available to spend we've got some budget items that we don't need to spend on.

I have some questions about.

So the fee revenue we took all of the invoice unit credit line items and did an average and it came up with what we thought was a comfortable estimate and not wanting to overestimate.

So I guess the last two years so in 2023 the last four payments was $90,932 and the four payments before that $90,321 and like I said we have 5,071 participants so I think I think 91,000 is a reasonable number.

Plus the earning on the interest it's in a I think it's in a money market account so that can and that we can't always count on $6,500 there's a big surplus in there now.

Once we start spending let's say we have to do an RFP the value and the administrative allowance account will go down and the earning on that obviously will go down.

We have we continued over the participant education and event line which was in the original budget but we've never talked about what would we want to do with with that money so I'm not sure we need to suggest a number there.

The point is I think there's some work and then I'm not sure how we got to each of the reserve numbers we don't have a comparison here of how we did from the first four years of budget we just starting forward.

What I'd like to recommend that we do is table this to our June meeting.

The informal working group which could include myself I'd like to ask alternate member Bader to participate meet with Samantha and try to figure out a better document to bring back to you at our June meeting.

I'm motion to table this agenda item. I move we table this to the June meeting and that yes.

I'm just a caveat of making a working group. We can't formally do that. Council has said that committees can't formally create.

It would just have to be you know who wants to meet with Samantha if she's willing to have people meet with her and and is that something in your department is willing to entertain.

If we can get it done in one meeting I can make myself available. If anyone wants to participate they just need to come prepare to get the work done.

I don't have the availability between now and June to have continuous meetings on this.

I've got the 2026 renewals coming up and I need to do.

This work maybe this informal working group could work separately and then bring something to you and then we could.

The city is also looking to make sure that any document that is provided to us is easy to understand and try to use the format of how it's listed on here.

So it's really easy to see those reserve balance carryovers and what is unallocated that's actually able to be so that would be another request that we would make is try to make it.

If you're going to propose something different to send try to put it in the format.

Again we want to make sure things are really easy to understand for a participant looking at this as well and know exactly where this fee that they're paying for is potentially going.

I appreciate your willingness to to meet and give us something valuable time.

I think this should be something that can be done in an hour meeting if people who want to participate come prepared.

Can you remember Ash did you have something to add?

I'll defer to the attorney on this. I just wanted to clarify it's true there was a point in time when city council did not allow ad hoc committees to exist but those that has changed.

And now I will defer to the but I in this case if staff is sort of initiating that meeting I don't know that it's necessary to have an ad hoc committee.

I just wanted to for the committee's pleasure for everyone to know that that rule is no longer in place that restriction on informal working groups.

Thank you.

That's correct. Ad hoc sir back on the menu.

Ad hoc sir back.

We weren't told until that they had gone away and we weren't told that the dodo burgu is back or dodo birds back.

We don't have an agenda item on the you know in the report here to create one so we.

I still think an informal group is all that's necessary in one meeting like like she said so.

Would you so then you made a motion to to table this item and have a I'll take responsibility for.

Yeah I can't create a serial meeting by checking each with one of you and getting back to me with the other one said but if.

If someone wants to be involved in that in the on the committee let me know I have some sort of conflict here though potentially because we were going to.

Try to select members to go to nag this so if we're tabling this we're tabling that as well.

So which we didn't make out until June last year right I had asked that it be on the march calendar so people could make sure that they're.

Right they're combined items so I don't know if we could table half of it you know I don't know how that I don't know how these how that works.

So we can table I mean it's just you know if you if members do go it's just the cost goes up slightly because airplane tickets go up slightly.

You could vote on part of the motion and have the rest table part of the item.

All right.

Okay.

So then yes the dates are in there September 28th I think part of the concern was we won't have a finalized budget so we won't know how to.

So if we're going to allocate the members are going to go unless we're going to agree that we're going to leave it at three and then that will just fold into the budget that you propose.

Historically it's what's been budgeted is up to three to attend so maybe the committee thinks about today sticking with the historical trend of the budget of course more have gone.

Committee's comfortable I mean clearly you can see how much the city in the admin allowance account it's not like if we if the committee says yeah let's pass a motion today for three people to the attend the committee at that dollar amount.

All of us sitting up here know that there's plenty of money in the admin allowance account as approximately what did I say 20 2700 per person I think that's completely within reason and I think I know our you know shelly would be comfortable with the committee doing that as well that there's no concern about.

I guess what I'm saying is we're not going to agree to three today in the next meeting we see that there's a surplus and we're going to agree to add two more is what I'm saying where we just going to stick to the three we add and then that's it we're not going to bring this back up or should we or we better position to talk about the budget and then from there.

How about we see who wants to go right now and then we can maybe we have a better way of answering that question.

You know could we take just an informal like I want to go or I want to go and then we would know what we're looking at versus three or four.

Does that make sense?

Okay so who would like to go to act this year and well I mean we are looking at we're not this is informal we're not saying I'm saying this is going to be a two year budget right we're talking about into next year as well and so no.

We're just talking we just do the conference there's an item individual item each year for the committee to select the attendees for that year's conference.

The dates change in authorize the spending on that on that travel and attendance but this is covering twenty twenty five and twenty twenty six the budget.

Yes but the other part of the item is recommending just for this September's Nagtac Conference attendance.

So who would like informally who would like just please raise your hand or say me who would like to go to the Nagtac Conference this year.

Okay so we have eleven committee member leavenson and Jeremy I'm sorry I can't remember your last name.

Thank you and anyone else I would like to go that would make three.

King I saw you kind of I know you're busy you got a lot of you got a lot of stuff here too I mean we all do but yeah I'll put my name in the hand.

And the dates are September twenty eighth to October first.

Thank you John.

So there's an error in the staff report so October thirty first it should say first.

Oh you know all more.

So we have a motion to table the budget and I guess the first part of the motion.

To table the decision on the budget for calendar years twenty twenty five and twenty twenty six and then to select.

I think we should be comfortable with three and if the June budget decision allows for four then we can add one person at that talk.

So do you want to choose names today.

Yeah I'm unclear so it's just some trying to grab my brain out of this work so we're going to make a motion to.

Table that and then so now are we officially asking we're going to officially ask who wants to go to the poor people that said yes.

And then try to and are they're going to be separate.

Should we separate those right now and then select as a separate motion.

You can pass past motion one table in the discussion on the but admin allowance account budget to the June meeting and two selecting committee member ABC.

Okay to attend the twenty twenty five and act a conference.

Okay so we have a did you want to make that whole motion or I will I just I'm not sure whether you want me to be the one to select three names out of the four that are interested.

I'm not sure what at this point I'm comfortable budget I mean adding a fourth name.

So I'd rather wait till the June meeting to see to see everyone is certain that there's budget for a fourth name.

Okay I just don't want to be the one to decide you know hey I'm going and King's not you know I don't want to say that so.

Why don't we sell the whole thing then tell till June I think that's I think that's what we're going to need to do.

If we can't decide to if three or four is going to be a good number or you could leave me off and and then I'll you know maybe that's the way to do it.

Leave me off and I'll I'll see whether in June it whether it works or not.

I think you know for the four who are interested you know what the dates are hold your calendars now and pass a motion at the June meeting it's probably the same for people but I think the biggest issue is those who want to attend blocking off their calendars and not booking something else at the same time so you know that we're not scrambling to try to fill with someone else or you know if the committee really wants to send three people or four people that is cheap.

And just to be clear last year there's five I believe that went there is money for four participants to go.

The budget is you know they this is you know we're deciding that you know who wants three who wants four so you know or is is three a good way to run the budget you know for the next two years so.

Why don't we so you made the motion I have a comment I'm looking back on one of the prior agenda items and it said that the NAGDA conference funds that were submitted for reimbursement for this past conference was $22,116.93 and I think those I don't know if that's accurate or.

So I'm.

I'm a conglomerate of multiple years of.

So the total hold on I have a.

I have my and that was on discussion item number seven.

There is a.

So the total amount money spent since we started sending people to the conference using the admin allowance account so multiple years is $22,116.

That's not one year of the conference so what I do is I take all the expenses identified on the admin allowance account and right now we really have three categories of expenditures paying for highest.

Paying to send people to the NAGDA conference and then our annual membership so what you're seeing is a collective total from the beginning of those category expenses and so the NAGDA conference is that in total of all the years that has been paid for out of the admin allowance account is that $22,000.

So the total allowance account is that $22,116.

Thank you for the litigation.

What was the amount for for last year's conference spent?

I don't.

Have that summarized right here.

Stand by.

I can probably.

The reimbursements range from roughly $1200 in individual to $1500.

Some folks like didn't need their flight reimburse because they were incorporating it into some other travel or.

So $1500 times four is $6,000, which is under the $9,000 budget.

I only saw three items on the list that looked like they were conference travel.

So we have there are some expenses that are because of the timing don't reflect on the statement provided by nationwide but I know what they are and actually I just got the checks yesterday.

So the numbers I've provided include what we know are the real expenses but it wouldn't be reflected until the next statement.

So you have the numbers for five people is what is that cost for last year again?

I'm sorry I didn't hear that. What was that?

Yeah, there were five people who went last year and what are you saying the total reimbursement will be for those five people?

I don't have at all totaled right now for I just have a range of reimbursements from $840 for one individual up to $5,514 for another.

So there's $12,33, $14,59, $14,10.

And that's just the cost of the air travel.

That is the cost of hotel flights, meals, transportation, parking, incidentals, just depending upon what the individual participated in.

Some of the things for the conference meals are provided so they don't get included.

But that's not including the registration for the actual conference itself.

That's included as part of our annual membership fee.

Correct. Registration is separate and registration is separate. Those were just the individual reimbursements.

Okay.

So when I put in the staff report the $2,700 per person estimate that includes the registration cost.

And then typically the expenses do come in less because there tends to be things provided meals and such.

But the estimate of $2,700 is what we're comfortable with making sure that we don't underestimate.

So it still sounds like it was less than $8,000 for last year?

Yeah. And we're budgeting, well, $9,27 times $3,8,100.

We've sent, so the first conference was in 2021.

So 1, 2, 3, 4. What is that for?

Yeah.

Several were virtual only.

Oh, that's right.

We had some savings.

Yes, we did.

People didn't attend in person which was part of the reason that we justified five last year that we knew that in two years prior.

We spent in the hundreds as opposed to the thousands for virtual registration and no hotel, no travel.

Okay. So what I'm hearing is that the motion should be to table the decision on the administrative allowance account to the June meeting.

And I would like to just make a motion to add to that to send the four people who wanted to go to the NAGDA conference.

And to pass this round.

Okay. And so, yeah.

And select Chair Hoax, Chair of the Vice Chair of the Ellison Member, Bill, Member Thompson to attend the 2025.

So, the NAGDA conference and have their expenses paid for from the administrative allowance account.

I'll second the motion.

Thank you.

So that was a motion by Member Levison with a second by Chair Hoax, Chair.

Members, please unmute for vote.

Member Rogani.

Yes.

Member Zalasky.

Yes.

Member King.

Yes.

Member Thompson.

Yes.

Member Gardella.

Yes.

Member Levison.

Yes.

And Chair Hoax, Chair.

Yes.

Thank you. Motion passes.

Thank you, everyone.

I would like to move the selection of Brad Huxstra as Chair for the next year.

I'll second.

Thank you.

Thank you.

That was a motion by Member Levison with a second by Member King.

Please unmute for vote for Chair Hoax, Chair to be Chair again for the remainder of 25.

Member Rogani.

Yes.

Members Zalasky.

Yes.

Member Chang.

Yes.

Member Thompson.

Yes.

Member Gardella.

Yes.

Member Levison.

Yes.

Thank you.

I'll have that one.

Thank you, motion passes.

Thank you all.

I appreciate that.

I'm your humble servant.

Next, we need a motion to select a vice chair for a calendar year 25.

And I would like to make a motion to select Marie Levison for vice chair.

My second.

Thank you.

That was a motion by Chair Hoax, Chair with a second by Member Thompson.

That was selecting Member Levison as vice chair for the calendar year of 2025.

Members, please unmute for vote.

Member Rogani.

Yes.

Member Zalasky.

Yes.

King.

Yes.

Thompson.

Yes.

Gardella.

Yes.

Thank you, motion passes.

Thank you, everyone.

We got member comments, ideas or questions?

Anybody?

Okay.

Thanks to our new people for being here and volunteering and jumping right in.

I agree.

This is, it's good work that we do, but you know, it's hard to find people to do it.

So, I appreciate it.

I look forward to working with all of you.

It'll be, I think we can get a lot of good stuff accomplished.

Is there anyone else?

Are there any public comments?

Matters not on the agenda?

Thank you, Chair.

I do not have any speakers for matters not on the agenda.

And we also did not have any speakers for item 10.

Oh, thank you.

All right.

Well, this concludes the meeting for the Define Contributions Bank Committee March 19, 2025.

Thank you, everyone, for attending.