RETIREMENT BOARD MEETING 1. Opening ofMeeting. 30, 2022 3. Public Comment. 4. Treasurer's Report:  February 16, 2023  2. Approval ofMinutes No. 288 dated. August 18, 2022 and No. 289 dated November  Bank Reconciliations- -November: 2022- - December 2022  5. Requisitions:  Requisitions- - December 2022 - January 2023  6.Old) Business. 7.New Business:  A. Addendum from Marquette Associates.  B. Approval ofai request from Rachel Roney toj purchase prior service time dated April 23, 20161 thru November 14, 2016in the amount of$15, 479.79. C. Portfolio Presentation: Lee Martin, Ph.D. -1 Marquette Associates.  8.Adjoumment.    Minute No. 288  August 18,2022  The quarterly meeting of the Washington County Retirement Board was held at approximately 2:54 p.m. on' Thursday, August 18, 2022, in the publici meeting room with the following members being present: Commissioners Dianal Irey Vaughan, Larry Maggi andl Nick Sherman; Treasurer Tom Flickinger; and Controller April Sloane. Also present: Chief Clerk Cindy Griffin; Secretary Paula. Jansante; Executive Assistant Marie Trossman; Chief of Staff Michael Namie; Solicitor Jana Grimm; Finance Director. Joshua Hatfield; Dave Reichert representing Korn Ferry; Leel Martin, Ph.D. and Sara Wilson representing Marquette Associates. Deputy Sheriffs Jack Camerson and Tyler Pape; and Payroll Supervisor Brittany Mosco.  Approval of Minutes  Mrs. Vaughan entertained: ai motion to approve Meeting Minute No. 286 dated] February 17, 2022. The motion was moved by Mr. Sherman and seconded byMr.,Maggi that the above-mentioned  minutes be approved as written. No discussion followed. Roll call vote taken: Motion passed unanimously.  Ms. Sloane -yes; Mr. Flickinger yes; Mr. Maggi-yes; Mr. Sherman yesMrs. Vaughan -yes. Mrs. Vaughan entertained: ai motion tol holdt the meetingminutes ofl May 19,2022, in abeyance pending corrections. The motion wasmovedby MSherman and seconded by Mr. Maggi  -  thatt the above-mentionedi minutes be! Roll call vote taken: Ms. Sloane -1 no; Motion passed. Public Comment None. Treasurer'sReport  Sherpan- -yes; Mrs. Vaughan yes.  a  Mr. Flickinger made ai motion to accept the presented reconciliations of January 2022, February 2022, March2022, April2022, May 2022, and. June 2022. Mr. Sherman seconded the Ms. Sloane yes; Mr. Flickinger- yes; Mr. Maggi - yes; Mr. Sherman yes; Mrs. Vaughan- -yes.  motions to accept the reconciliations oft the mentioned above.  Roll call vote taken: Motion passed unanimously. Retirement Allowance Report  Bank Balance as ofJ January 1,2022 Depositst to Checking Account Transfers In Add: ACH Credit Other Credits Less: Cancelled Checks Less: Other Debits Less: ACHI Debits Funds Transfers Out  $867,695.12 -0- 285,216,68 262,618,16 -0- (96,775.49) -0- (935,113.65) -0-    Bank Balance as ofJ January 31, 2022 Transfers toN Mutual Fund Less: Outstanding Checks Less: Retirement Check Run Reconciled Balance as of. January 31, 2022 Bank Balance as ofFebruary 1,2022 Deposits to Checking Account Transfers In Add: ACH Credit Other Credits Less: Cancelled Checks Less: Other Debits Less: ACHI Debits Funds Transfers Out Bank Balance as of February 28, 2022 Transfers toN Mutual Fund Less: Outstanding Checks Less: Retirement Check Run Reconciled] Balance as ofFebruary 28, 2022 Bank Balance as ofMarch 1,2022 Deposits to Checking Account Transfers In Add: ACH Credit Other Credits Less: Cancelled Checks Less: Other Debits Less: ACHI Debits Funds Transfers Out Bank Balance as ofl Mach31,2022 Transfersto.Mutual. Fund Less: Outstanding Checks Less: Retirement Check Run Reconciled Balance as ofMarch: 31,2022 Bank Balance as of April 1, 2022 Deposits to Checking Account Transfers In Add: ACH Credit Other Credits Less: Cancelled Checks Less: Other Debits Less: ACHI Debits Funds Transfers Out Bank Balance as ofA April 30, 2022 Transfers tol Mutual Fund Less: Outstanding Checks  $383,640.82 -0- (338,339.80) (45,301.02) $-0- $383,640.82 -0- -0- 257,460.82 848,170.05 (388,848.82) -0- (897,628.40) -0- $202,794.47 -0- (338,33980) (29,663.79) $-0- $202,794.47 2,065.96 272,155.53 858,345.75 (224,336.75) -0- (900,029.95) -0- $210,995.01 -0- (182,832.40) (28,162.61) S-D- $210,995.01 -0- 769,496.02 265,885.41 -0- (190,934.68) -0- (885,672.99) -0- $169,768.77 -0- (142,545.77)    Less: Retirement Check Run Reconciled: Balance as ofFebruary 28, 2022 Bank Balance as of May 1,2022 Deposits to Checking. Account Transfers In Add: ACH Credit Other Credits Less: Cancelled Checks Less: Other Debits Less: ACHI Debits Funds Transfers Out Bank Balance as ofl May: 31, 2022 Transfers tol Mutual Fund Less: Outstanding Checks Less: Retirement Check Run Checks Duplicated (ck #2339-2340) Reconciled Balance as of May 31, 2022 Bank Balance as ofJ June 1,2022 Deposits to Checking. Account Transfers In Add: ACH Credit Other Credits Less: CancelledChecks Less: Other Debits Less: ACHI Debits FundsTransfers Out Bank Balance asofJune 30, 2022 Transfers toN Mutual Fund Less:Outstanding Checks ChecksDuplicated (2339, 2340and 2348) Less: Retirement Check Run Reconciled] Balanceas of. June3 30, 2022  (27,223.00) S-0- $169,768.77 -0- 804.594.42 270.995.93 -0-(301,316.22) -0- (888,791.71) -0- $55,251.19 -0- (81,139.07) (29,661.45) 55,549.33  $55,549.33 -0- 805,310.31 406,600.38 754.64 (192,839.76) -0- (915805.47) -0- $159,271.29 -0- (205,358.64) 74,500.31 (28,412.96) $-0-  Requisitions  Ms. Sloane made a motion to approve the requisitions for the months of May 2022, June 2022, and. July 2022. It was seconded by Mr. Sherman that the requisitions be approved.  No discussion followed. Roll call vote taken: Motion passed unanimously.  Ms. Sloane - yes; Mr. Flickinger yes; Mr. Maggi - yes; Mr. Sherman yes; Mrs. Vaughan - yes.    Distributions Check 2341 2342 2343 2344 2345 2346 2347 Transfer Transfer  May 2022 Payee National Financial Services as Trustee of IRA ofCasey Bamberger Principal Trust Company FBOI Danielle MI Deklewa RosemariJ Fassette Zackary Fike TD Ameritrade as Trustee ofI IRA ofLauren Wadsworth Washington County Regular Payroll Escrow. Account Washington Co. Cash Disbursement Acct PNC Bank Washington Co. Retirement Acct Total May 2022 Distributions  Amount 23,385.85 15,986.27 1,926.36 10,345.70 1,998.13 22,839.30 86.270.94 61,418.14 851,419.66 1,075,590.35  June 2022 Payee -  Check 2349 2350 2351 2352 2353 2354 2355 2356 2357 2358 2359 2360 2361 2362 2363 2364 2365 2366 2367 Transfer: Transfer:  Amount 2.437.32 58,757.05 10,700.00 8.740.81 10.750.79 2,085.78 59.071.31 2,559.96 3,827.42 776.52 48,853.89 6.520.46 9,593.88 1.357.20 3.845.03 187.24 187.24 21.971.82 18.950.98 86.154.81 854,581.18 1,211,910.69  Matrix Trust Company FBOI Ryan Wilityer Trustee of GBUI Financiallife FBOI Heather Smith Capital Bank & Trust ast trustee OfIRA ofJ JeffreyA Franks Fidelity Management' Trust Col FBOJoln Edward Burnett Fidelity ManagementTrust CoF FBO. John Edward Burnett  Chelsey_Cook Billie. Jo? Mance David Oglive  JoshuaT Peake ZoeyPorter Benjamin Cagnon William Al FranksJr RoniSprowis Jeremy Emph Kaylal DMartin Linda L Snyder Francis E. Jeffers Washington County Regular Payroll Escrow. Account Washington Co. Cash Disbursement. Acct PNC Bank Washington Co.) Retirement. Acct. Total. June 2022 Distributions  July 2022 Payee Benjamin Cagnon VOID Benjamin Cagnon- REISSUE Waynel Kress Beth] Phillips Lisal Leach Najah McBryde Megan Lindley  Check 2368 2369 2370 2371 2372 2373 2374  Amount (48,853.89) 48,853.89 1.114.31 12.625.37 989.46 902.35 9.895.67    2375 2376 2377 2378 2379 2380 2381 2382 2383 Transfer: Transfer:  Mina Thompson Garland Fuqual II Maureen Springmeyer Jordan! McCrae Anna Tutwiler-Emler for Brookel Emler Alton) Eckert George Eckert Washington County Regular Payroll) Escrow Account Washington Co. Cash Disbursement. Acct PNCI Bank Washington Co. Retirement. Acct. Total. July 2022 Distributions  2,430.06 3.429.17 8.373.07 9.030.50 18.940.04 18.940.04 32.68 32.68 22,313.54 3.304.34 71.369.83 857,733.68 1,0041,456.79  Anna Tutwiler-Emler: for Zachary Emler  Old Business None. New Business  Mrs. Vaughan entertained a motion to approveal request fromRaffaele Casale to purchased prior service time, dated December 27, 2004, tol March17, 2006, in thes amount of $1975.75. The motion was moved by Mr. Sherman and secondedby Mr. Maggi thatt the above-mentioned: request be  approved. No discussion followed. Roll call vote taken: Motion passed Presentation- - Dave  Ms. Sloane- - yes; Mr. Flickinger-yes; MMaggi-yes: Mr. Sherman- - yes; Mrs. Vaughan -yes.  Mr. Reichertbegan  the valuation report, noting that the purpose oft the  valuation reporti is to givea budgetary number eachyear toj put funds into thej plan so that whent the participantsretire therei is enough money, However, the true cost tot the retirement plan are what benefits are actually paid out. Thelestimateisithe valuation report and sincei iti is an estimate, the goal ist tol keep the contributioni int the! ADC each year as level as possible. Washington County's contribution has been somewhere int the $4 million to $5 million range. Therei is an effort tol keepi it consistent bys smoothing the assets. Mr. Reichert pointed to a chart that shows the effects oft the asset smoothing overa af five-year period. There isar recognition ofa gain or loss ofe each year of 20% overa five-year period until all the gain or loss for that year is recognized. He went on to note that the market value as of. January 1st, was $214 million but for the valuation purpose, $199 million was used. Mr. Reichert moved ont tot the summary of demographics. He stated that the numbers are consistent for 2021 to 2022. That leads one to believe that the numbers will stay consistent from year to year. He then went ont to reviewing thatt the ADCI numbers went downt to $100,000 due to the assets having a good year. The normal costs remained the same as well as the expected member contribution, however, amortization charges went down, and thisi is what was affected by the assets. Funded ratio did go up, fromj just below 90%1 toj just below 94%. Most counties are between 80-100%. The funded ratioi is always calculated based ont the assumptions. Washington County's assumptions are    However, numbers now are above $1991 million, whichi is a positive.    much lower and is conservative. The statistical report that is presented in December will put in perspective how Washington County is doing comparative to other counties. Mr. Reichert went ont toj present a 10-year history of the funded ratio. He noted the positive aspect of the increase. While Washington County may not always be at 95%, buti iti is always trending in the right direction, reflecting the positive contributions in the last 10 years, noting aj job well done in He moved on to review the history of the investment return assumptions over the last 20 years. The median 20 years ago was 8% and Washington County was at 7.5%. This reflects how the county has been ahead of the curve as far as Pennsylvania counties are concerned. He notes the downward trend of thei investment rate return assumption goes from 8%, 20 years ago, to median being 7%. He points out that Washington County has always been below that median and currently sits at 6.5%. This puts Finally, Mr. Reichert noted to keep track oft the investment réturn assumption and consistently monitor it. He also goes on to touch on the COLA letter issent outevery October, noting that there only a requirement to look ati it every three years, andi itmay need to bevoted on. He also brings forth a reminder that and estimate letter for nextyear is also sent at that timeas well.  managing the retirement fund.  the county in a good position as far as the assumption chart.  Portfolio Presentation Lee Martin, PhD. Marquette Associates  Mr. Martin begins by stating thatGDPcontracted by 1%in Q2 and so growth has declined for the second quarter in a row. This contraction wasnot.as significant as the first quarter. This is on the back of both Phvagindreallavesment being reduced. Private investment due to inflation impacting future earnings and whatthe federal government is doing thru tightening to cull the economy. Residential investments slow down on theback of rates going up so that it costs more to borrow money. TheNational Bureau of Economic Research defines a recession as a significant declineofeconomic activity, Thisisderived by several economic indicators. The strong job market isl holding them from declaringa recession. And while unemployment indicators tend tol be lagging, job claims are abetter indicator beçause ofatimelier reflection. Unemployment claims are starting to gou up. He notesthat every timeclaims start to rise, a recession occurs eminently. A future lookback att this currenttime may indicate a recession, but expectations are that by the end of the year ori in 2023, we should expectarecession. There ist not a lot to be done to stopi it. The government has culled the market al bit but toi impact inflation, there needs to be impact on the supply side, but tightening does nothing to impact the supply side. The expectation is that inflation will stay higher. Though inflation has come down about 501 basis points from the previous month, and producer prices have come down about 501 basis points, thati is expected due to the Fed tightening starting to work its way through the economy. Inflation will remain elevated for longer than expected though, as some areas ofi inflation will be sticky, like wages and rent/shelter inflation. This is not simply going to go away. Some inflation ist transitory: commodity prices and energy prices go up and down. However, there are some that are more permanent and sticky, like in the service industries. The resulting Moving on to the Global Economy, Mr. Martin points out the similar dynamics across the world. He notes that Europe isi in a worse state due to the ties tol Russia for energy. Using Sweden asa  expectation is fori inflation to be higher for longer.    predictor, Europe will goi into a recession. Though it may be rougher than in the US, again, due to the ties to Russian energy markets. Mr. Maggi pauses toi inquire about grain andi its effect, to which Mr. Martin explains that is why food prices are up sO much. Stating it ties backi into the supply side. Moving on to China, Mr. Martin touches on their real estate issue and their zero Covid policy taking them back years. China is trying tol kickstart the economy and put just over a trillion dollars into their economy to try and build infrastructure. They were positive in Q2 and equity markets were down double figures. However, in July more issues arose, and China has dropped al lot again. Equities were down 16.7% in the US. This is nos surprise because inflation is high, profit margins are down, and future earnings expectations arel lower. The international market did slightly better, down 14.5%. In local terms, it was only down about 8%. The US Doller appreciated on the back of thei rate increase, by about 6.5% making al big impact oni international returns. Touching on bonds, in the first half of the year bonds are down 10.3%1 making it the worse start toayear since the bond index commenced in 1970. The risingr rates are impacting the bonds-TIPS came in below bonds in the first quarter, down 6.1%, due to oft the slowing inflationary environment. TIPS has been a great investment for the past 18 months, but iti is starting to be worse than core bonds. Commodities and infrastructure are down 7.5%, whichi is negative,however still 9% bettert than the broad equity  market.  Focusing on' Washington County Employees' Retirement Systems, Mr. Martin starts by noting that as of. June 30th the fund finished atj just over $188 million. There has alteady been a gain of about $12million so far in quarter3 making up a portion of the $16.6million-bst in quarter 2. It was down 8.1%1 net including allthe fees for thequarter whichis 100 basis) points above the policy index. This ranks the county int the 1percentile among the peerranking, outperforming about 89% ofall the public fundsint the US for the quarter. Because of the diyersity and conservative nature of the portfolio.there is no surprise that the county is outperforming in this type of risk off market. Thisi is aided by thehigher quality positions within the portfolio as well as the low volatility type managers. The emerging markets was accretive for Washington County but that was really on the back of Russia in Q2. Alltheprivate realassets are positive: the infrastructure, the real estate, and the timber-farmland. Whatdidn'ts work as well for the quarter, with a small allocation youl have international small cap and highyield, because spreads blew out a little bit during the quarter. Though, in July they were the two areas that lead the market, whichi is why the county has diversified across a lot of asset types. When one is more conservative, from an assumed rate of return position, one can tilt the portfolio a little more to the higher quality type assets. However, when there isa higher target, one must be more aggressively invested, resulting in more ins small caps because one Int the past ten years, Washington County has averaged about 7.6% per year, gaining $1121 million and ranking in the 37th percentile of the public fund universe. That has beeni in a very strong return environment post GFC. The county did finally get the last calls for private equity and credit. Leaving nothing really on the horizon before becoming fully diversified. In. June, there were some redemptions put in on real estate. Real estate was up over 30% this year. Valuations have gone through the roof, particularly ini industrial sectors. The key with private real estate is one wants tol be  needs to chase return more.    on the front end oft trimming, taking the gains out. Just as itis gated on the way ini it can be gated on the way out ifeveryone tries to get the money out at the same time. The county goti in early previously, resulting in getting the money back, bringing it halfway back to target. By banking half of the gains, they will come back into the plan and backi into equities and fixed. Under net cash flow, in the second quarter no money needed taken out, only $1.7m was taken out early in the first quarter. Unlike a lot of counties that are having tot take money out every month, the first half of the year the ADC: supported any payments for Washington. Therefore, all the negative returns are on paper. The negative return is only banked when iti is sold. However, there will start to be ar needt to sell assets to support benefit payments for the rest oft this year. This is the case for all counties this] point. The market has recovered a bit over the summer, so the assets will not be sold at lows. Because the county has de-risked the plan over time, is not down as much as others, helping to Washington County has held up a lot better on the downside, Ever for aj plan of Washington County'ss size, whichi isas small or mid institutional sized fund, ifeffort and work are put in, there will bear nicely diversified fund that looks more like al large-institutional fund. The county is not only diversified across asset classes, equities, and bonds,therei is also volatility.risk premium, real estate, timber farmland, and infrastructure. Also, there isthis hybrid of private equityand private credit. So, there's not only diversity by asset class, but there are alsotwoorthree managers ineach oft these areas too, giving diversity within the assetclass. This has allhelped to smooth and lower volatility. Ideally, the best thing is toi invest for achievings your assumed rateofi return with the lowest volatility  limit losses.  possible each year.  The past year produced good relativèperformance. aswell as  the  -  goodprotection against policy  index. The county came in-down 6.9%for the yearand the policy index was down 8.1%. However, the ranking ofthe policy indexwas int thel 18th percentile. That means great work from an asset allocation point of view, and the implementationofiher managers have added another 120 basis points ofreturn above that. Now, compare that to aj plans or smaller counties that can't diversify, and they. just indexed 65/35. The bottom line isthe county would be down 13% for the year ify you only invested in stocksand bonds. Now,you will see the opposite when you get a recovery in stocks and bonds. Those funds willjump upalittle more, and the county won't be up as high. But when that occurs, others making 20%,and Washington it might be making 17%. The assumed rate of returni is 6.5%. The funded ratio will still be going up at that point. The focus for unfunded pension fundsi is US equities were without 2% ahead for the quarter and 2.5%1 for the year. This is due tot the two defensive active managers TWIN and GWK. They are more ofa higher quality approach. TWINis more ofa dividend payer, it tends to be more ofa larger cap dividend payer, and they tend to hold up better in down markets. TWIN was lagging about ay year ago in the low-quality rallies and they should be ahead when wel have a stressed market. When the county went more conservative and de- On the global side, Washington County is about 250bps ahead for the quarter, really driven by the value manager, Dodge and Cox. As rates go up, that favors value over more highly levered growth stocks. They were down only 9.7% whereas ACWI was down 15.7%. The other accretive strategy  toi focus on the downside.  risked, they changed TWIN's strategy to the higher quality Dividend Select.    was thel MFSI low volatility fund, down only 8.9% for the quarter. Additionally, for the year, Low Volatility only being down 11.4% whereas. ACWI has been down 20%. What didn'ty work well for the quarter was the growth strategies. This did great two years ago but is about on benchmark for the quarter. Though, Artisan is doing well this quarter to date asi it has pivoted back to growth outperforming value and Artisan has more tech in their portfolio. Witht the different pieces of each, the goal ist tot try top pick up returne every quarter from different areas oft the market. On the international side, Washington County is about 2% ahead for the quarter, since Schroders was down only about 12%, ACWI was down 14.3%, and the emerging markets was down only 10%. Defensive equities are where one would expect to outperform when therei is volatility in the markets. Down about 5% over one year and stocks were down about 20% overt the one year. That has been Moving ont toj private real estate. A couple of years ago, the countymoved out of. JPI Morgan, which had al lot oft retail and office. This was positive because the ones chosen more overweighti int the areas that are doing great, industrial and apartment, and very much underweight in retail and office. The performance from that, over the one year, is up nearly 32%. Which again,goesi into why the choice was made tos start redeeming. The county is about2.5% percent above target.The only way tol have gains ist to bank them. Both Clarion and' TAI have done well. Hancock isj just getting fully funded out. They may have one more call. Then, they can be measured against the 50/50. It willnota add as much as real estatei int thisi inflationary environment, but it'sp positiveI'sa good hedge fori inflation int the Infrastructure has been positive-sofart this yearat 3.596.1FMisup 3.8% and. JPI Morgan is up 3.5% for the quarter as well,just over 1%above, year-to-date. Cohen and Steers isal listed infrastructure equity. It's negative buti itsnot downanywhere nearas much as the broad equity markets. About  true toi its name of defensive equity.  real asset! bucket.  $300,000 iskeptt theretor  and  as tol leave the private investments  alone. Private  /  equityand private credityear-to-date, private equity is only down 501 basis] points whereas stocks are down! 17% and 18% year-to-date.The) private credit, over the past years, have been down The little things added havebeepdifferent, from a return pattern point-of-view, ultimately leading to a drop in volatility and better protection ont the downside. Ift there isaf fast aggressive growing equity market, it will lag the market int that that environment, but from an absolute return point-of-view, returns should be well above the assumed rate of return in that environment. Washington County is nicely diversified so there should never be al big shock because there are so many different The traditional assetsi in OPEB are very similar but this fund is smaller so there are no privates ini it. Therei is listedi infrastructure instead of private infrastructure. The only private ini iti is private real estate. Outside that, looking at performance, it finished at $22.5 million, down 9.3%, so the absolute is down a little more thant the pension fund due tot the more aggressive investment and there not being as much private. Relatively, iti is about 180 basis points above policy index because the structure withini iti is more like our OCIO model. Thisi is due toi it being built from the ground up, where the pension fund has investments that have beent there many years. Other things were fit around it, sot that  only 1% whereas the.other fixed income is down around 7%.  investments doing different things.    is why absolute little worse. Itist more aggressively invested but relatively better because the OCIO portfolio is modeled to be optimal and top quartile performers in risk off markets. Similarly, things worked well and didn'twork as welli from an attribution point of view. Over the past seven, there has been a gain of over $7 million. Compared to other counties, many others that have this liability do not have ai fund. Washington County funded that over seven years ago. By putting money into a fund, ahigher discount rate is used, duet toi investment, bringing liability down. More importantly, with over $7 million of gains, money doesn't have to be taken from the general fund. Longer term performance was predominantly indexing, but more importantly, more recently it has been diversified, at least across the traditional asset classes. For the year, iti is over 2% ahead.  The meeting was adjourned at3:41-p.m.  THE FOREGOINGMINUTESSUBMITTED: FOR APPROVAL:  2022  ATTEST:    Minute No. 289  November 30, 2022  The quarterly meeting of the Washington County Retirement Board was held at approximately 2:36 p.m. on Wednesday, November 30, 2022, in the public meeting room with the following members being present: Commissioners Dianal Irey Vaughan, Larry Maggi and) Nick Sherman; Treasurer Tom) Flickinger; and Controller April Sloane. Also present: Chief Clerk Cindy Griffin; Secretary Paula. Jansante; Executive Assistant Marie Trossman; Chief of Staff Michael Namie; Leel Martin, Ph.D. representing Marquette Associates; and] Frank Byrd.  Approval ofl Minutes  Mrs. Vaughan entertained: ai motion to approve Meeting Minute No. 287 dated May 19, 2022. The motion was moved by Mr. Sherman and seconded by Mr. Maggi that the above-mentioned  minutes be approved as written. No discussion followed. Roll call vote taken: Motion passed unanimously.  Ms. Sloane - yes; Mr. Flickinger yes; Mr. Maggi - yesMr Sherman - yes; Mrs. Vaughan -yes. Mrs. Vaughan entertained: ai motion tol holdthe meeting minutes ofAugust 18, 2022, in abeyance stating they did not receive said minutes until the previous afternoonMs. Sloane countered that the minutes were supplied to ChiefClerk Cindy Griffin weeks prior. Mrs. Gritin,countered that the retirement information was received theprevious afternoon, to whichl Ms. Sloane replied that just the minutes were supplied weeks ago. MEs Vaughan then statedthatt the Commissioners hadi not received them and thus, the metion was thenmoved! by Mr Sherman and seconded by Mr. Maggi Ms. Sloane - no; Mr. Flickinger- yes:Mr.Maggi yes; Mr. Sherman - yes; Mrs. Vaughan-yes.  that the abovementigedminutest be heldi for review.  Roll call vote taken: Motion passed. Public Comment None. Treasurer's! Report  Mr. Flickinger made amotioni to accept the reconciled. statement for of. July, August, September, and October 2022.as presented. Mr. Sherman seconded the motion to accept the  reconciliations oft the mentioned above. Roll call vote taken: Motion passed unanimously. Retirement Allowance Report  Ms. Sloane  yes; Mr. Flickinger - yes; Mr. Maggi - yes; Mr. Sherman yes; Mrs. Vaughan -yes.  Bank Balance as ofJuly 1,2022 Deposits to Checking Account Transfers In ACH Credit  $159,271.20 -0- 837,504.93 279,011.34    Other Credits Less: Cancelled Checks Less: Other Debits Less: ACH Debits Funds Transfers Out Bank Balance as of. July 31, 2022 Transfers tol Mutual Fund Less: Outstanding Checks Less: Retirement Check Run Funding Error Adjustment from January Reconciled Balance as ofJuly 31, 2022 Bank Balance as of August 1,2 2022 Deposits to Checking Account Transfers In Add: ACH Credit Other Credits Less: Cancelled Checks Less: Other Debits Less: ACH Debits Funds Transfers Out Bank Balance as of August 31,2022. Transfers tol Mutual Fund Less: Outstanding Checks Less: Retirement CheckRun Reconciled Balanceas of August 31,2022  48,853.89 (264,348.13) -0- (904,762.61) -0- $155,530.71 -0- (127,747.93) (27,537.63) (245.15) $-0-  $155,530.71 -0- 809,713.73 359,677.55 5000.00 (124,536.93) -0- (919.714.81) $285,670.25 (75,500.13) (176,496.29) (33,673.83) $.-0-  Bank Balance as of September 1,2022 Deposits to Checking Account Transfers In Add: ACH Credit Other Credits Less: Cancelled Checks Less: Other Debits Less: ACH Debits Funds Transfers Out Bank Balance as of September 30, 2022 Transfers tol Mutual Fund Less: Outstanding Checks Less: Retirement Check Run Transfer in gth Period for 10th  $285,670.25 -0- -0- 402,632.55 833,216.89 (163,640.95) -0- (907,950.78) (124,363.10) $325,564.86 (75,500.13) (85,014.63) (32,213.92) (132,836.18)    Reconciled Balance as of September 30, 2022  $-0-  Bank Balance as of October 1,2022 Deposits to Checking Account Transfers In Add: ACH Credit Other Credits Less: Cancelled Checks Less: Other Debits Less: ACH Debits Funds Transfers Out Bank Balance as of October 31, 2022 Transfers tol Mutual Fund Less: Outstanding Checks Less: Retirement Check Run Reconciled Balance as of October 31,2022  $325,564.86 24.38 -0- 325,913.02 600,505.29 (172,660.87) -0- (923,051.37) -0- $156,295.31 (75,521.51) (48,217.84) (32,455.96) $-0-  Requisitions  Ms. Sloane made a motion to approve the requisitions for the months of August, September, October, and November of2022. It was seconded by Mr.Sherman that the requisitions be approved. Ms. Sloane - yes; Mr. Flickinger-yes:Mr. Maggi yes; Mr. Sherman : yes; Mrs. Vaughan -yes.  No discussion followed, Roll call vote taken: Motion passed unanimously. Distributions Check 2370 2385 2386 2387 2388 2389 2390 2391 2384 Transfer Transfer  August 2022 Payee Beth Phillips VOID Heather Petruskie Philip Ziedman Emilee RI McClain Monike Harrison Theresa Cooper Linda Cooper PNC Bank  Amount (12,625.37) 6,656.14 234.98 5,952.23 73.99 98,078.81 330.05 22,313.54 26,510.89 81,565.84 946,193.52 1,175,284.62  Washington County Regular Payroll Escrow Account Washington Co. Cash Disbursement Acct Washington Co. Retirement. Acct. Total August 2022 Distributions    September 2022 Payee Corey Bridge Camellia McGhee Kelsey Stanford Hannah Wapiennik Makayla Henderson Patricia DeClair PNC Bank  Check 2392 2393 2394 2395 2396 2397 2398 2399 Transfer: Transfer:  Amount 3,789.98 2,380.94 107.26 2,611.03 363.90 13,021.49 21,042.82 3,042.88 65,918.32 866,371.54 978,650.16  Washington County Regular Payroll Escrow Account Washington Co. Cash] Disbursementoct Washington Co. Retirement Acct. Total September 2022 Distributions  October 2022 Payee Jessica Sphar HarrisonGraydon Telina Lindsay TashaDeVaughn Aimee Gorden. Jones Madison Kopach Arthur Williams Stephen Chappars Marc Scott Howard) Matten PNCI Bank  Check 2400 2401 2402 2403 2404 2405 2406 2407 2408 2409 2410 2412 2411 Transfer: Transfer:  Amount 1,986.90 4,946.13 2,780.87 1,843.65 2,047.56 931.07 1,741.39 3,903.68 607.58 2,197.90 59,388.40 20,870.04 9,164.18 79,201.98 867,643.16 1,059,254.49  Trustee ofFidelity neimdarBosan.liake.n  Washington County Regular Payroll Escrow. Account Washington Co. Cash Disbursement Acct Washington Co. Retirement Acct. Total October 2022 Distributions    November 2022 Payee Achili Minch Dominic Petrocco Joseph Condoluci Joseph Rusnak PNC Bank  Check. 2414 2415 2416 2417 2418 2419 2413 Transfer: Transfer: Old Business None. New Business  Amount 447.58 477.46 85,743.84 88,419.17 20,601.94 40,010.59 97,537.36 865,403.88 1,059,254.49  Capital Bank & Trust as a Trustee of] IRA of Dean Aaron Petrone Jr 1,838.50  Washington County Regular Payroll Escrow. Account Washington Co. Cashl Disbursement Acct Washington Co. Retirement Acct. Total November 2022 Distributiens  Referring to the meeting'sa agenda, Mrs. Vaughan noted her appreciationof. April's attention to detail, however, she pointed out there is noi need to vote ont theestimated pensioncosts for the 2023 budget. Mrs. Vaughan went on toexplain that a resolution was passed, more than a year ago, that the actuary determined amount uabekgemrihuidno the pension fund. Ms. Sloane stated that Korn Ferry advisedit to be put onthe agenda. Mrs. Vaughan countered that it has never been voted on inj previous meetings and that thesolicitor advisedthat it did not have to be voted on. Mrs. Vaughan went on topoint out that the information was received by the chief clerk the previous day and that Ms. Sloane Mapchdaeiafmmuigen October 27th. Mrs. Vaughan went on to explain that the information isi important tot the.commissioners for budgeting purposes. Mrs. Vaughan then asked that, int the future,Ms. Sloane send the information to the commissioners when Mrs. Vaughn moved on tothe Korn) Ferry fee increase. Ms. Sloane made a motion to accept the increase in fees forthe actuary-charge from $2859.00 to $2944.00 effective January 1,2023. Thisi increase would be a3% change. Mr. Sherman seconded the motion that the above-mentioned request be approved. Mrs. Vaughan paused for questions, stating that while the increase is standard,  itisi received.  the information was just received and there was no information ahead of time.  No questions were posed, and no discussion followed.  Roll call vote taken: Motion passed unanimously.  Ms. Sloane - yes; Mr. Flickinger yes; Mr. Maggi - yes; Mr. Sherman yes; Mrs. Vaughan -yes.  Portfolio Presentation - Lee Martin, Ph.D.- - Marquette Associates  Mr. Martin opened by stating that the last meeting of the year always begins with a review the annual database report for Pennsylvania counties. The data in this report is as of12/31/21 and is taken from each county's2022: annual actuarial report. From an assumed rate of return point of view, about 10 years ago everybody was 7.5 %, although that valuel has trended downwards because    of the expected lower return environment that played out. Washington County is ahead of everybody regarding this trend and has the most conservative return assumption of all counties at 6.5%. Touching ont the salary increase assumption, there may be some pressure from Korn Ferry to start toi increase that at some point. Currently, Washington County is using 3.5%. However, 10to15 years ago, most used 4.5% because 7.5% was being used as the return assumption. The key is to keep about a 3% difference between the two, because that is the long-term inflationary impact. The salary increase assumption looks at the increase int the employee salary over their whole lifetime at the county. It should not be thought of as an annual merit based but as full life of county employment. However, because the return assumption is low for Washington County, ani increase is less of an issue than many others because youl have a conservative assumption for the expected return. Last year, only five counties gave COLAS. This is not a great year to be issuing COLAS during an inflationary environment ast the calculation includes the doçal level for CPI. However, while there is no look-back provision, even without that, the cost of COLAS would be expensive to  funds, long term.  Regarding the asset valuation method, Act 44was what many counties adopted post the great financial crisis. At the time, Act 44 allowed the çounty to artificially inflateits assets and therefore, reduce the ADC. Washington County never adoptedAct 44 andas a result are ina far better funded position today as they fully paid the ADC in the years following the great financial crisis. The county has always employed the actuarial standard for assetvaluation by adopting a five-year smoothing method taking 1/5 of the gain and loss each year overafive-year period.  The most recenifive-yearretum, Washington Countyisa little-below median, as you would expect being more conseryatively invèsted. Thisisthrough the end' of last year and included a very aggressive environment where the average is over 10:5%. The assumed rate of return is 6.5%, soi it will be lower. Conversely, afterthis.year, those that have more in the equities due tol higher assumed rate ofreturn of7.5%, aredown approximately 17%this year through September 31St.  The adjusted funding ratio is the measure of how strong a fund is. The adjusted funded ratio standardizes everything by givingeyeryone 4% salary increase and 7%i investment return. By doing this, you can comparehow well funded your plans are. You can now see that Washington County Mr. Martin pointed out that active participants now are under 50%: There are more: retirees than active participants. This is not unusual to see with mature defined benefit plans. However, because the fund is doing sO well, the ADC is coming down and that means the employee contribution is lower. This means due to fewer active participants relative to retirees there will need to be more flows out of the fund each year toj pay the ever-growing benefit payments. These metrics Moving on tot the third quarter pertormance report, Mr. Martin pointed out that the first two quarters of the year GDP negatively contracted. However, in the third quarter GDP came in above expectation, growing 2.6%, which was revised even further up this week to 2.9%. This growth came down primarily to the SPR oil release and itsi impact from a net export pov. The leading indicators going forward have declined over 2.5% over the previous six months. When a leading indicator  was fully funded at overl 1059through the end ofl last year.  are something to be mindful of going forward.  index begins to decline at such an extent, a recession normally follows.    Mr. Martin transitions to the rate-hiking cycle, pointing out that itis the steepest it's been in decades. Thel Fed has tightened its monetary policy to tacklei inflation. As stated inj previous meetings, itt takes a few quarters to make an impact. Thisi is the reason why we are starting to see spending slow al lot. There should be at least 501 basis points Fed hike in December. And, depending on holiday sales and the like, we should have a slower GDP and a slower economy in the fourth quarter. This could also lead to GDP potentially turning negative in the first and second quarters Shifting to global economy, Mr. Martin stated that inflation is occurring across the world, and its seems tol be far more of an issue else ware than in the US. The US has a strong dollar right now and that is helping from any goods that are imported. The rest of the world is doing as the US has done and attacked inflation through monetary policy. Germany and UK government bond yields are now at the highest they have been in decades. Europe has links to) Russian energy, and this could Mr. Martin states that ify you have an expected slowdownin the future, equities will sell off now because equity investments are essentially buying future earnings. In fact, when expectinga future recession, it can sometimes a good chance to. rotate backi into equities later into the recessionary cycle. Thisi is because one would be expecting improvementafter said recession. US stocks were down 4.5%, outperforming international: Lwhich were down 9.5%. Emerging markets were down 11.5%. However, some of the relative outperformance by the US,is driven by the strong dollar as well. Ifyoul look atl local terms, international markets were only down about 3.6%. This highlights the impact currency çan have on overseas investments. Within equities, growth equities outperformed: value for the first time inthree quarters. This essentially happened in the month of. July as itappeared inflation had peaked. Tech stock rose and growth stocks rose as well because they are more highly levèred stocksHowever, that was relatively short lived. By April, Core fixed income aggregate bonds, yearto date, are down 14.6%. Due to Washington County-investing in shorterduration fixed income, that has only been down 9.6% year to date, outperforing.core bonds by 5%on al biga allocation within the portfolio. Bank loans, like private credit, are slightlypositive for thequarter. They don't geti impacted by rate movement because they, like floating rate bondsreadjust; theyields every quarter. High yield also had a strong quarter due to Finally, ini inflation sensitive assets, you are starting to see markdowns within the real estate market. This is because we appear to be over the worse from rising inflation. You will soon start to see the private real estate valuations soften as managers more realistically price those assets. The fund finished the quarter at just under 1801 million, losing around 7 million. This loss equates to about 3.9%. However, this still leaves Washington County in the top 28% oft the peer group. in quarter four the has already made close to 13 million, as equities have gained back about 7%. This leaves the county only down about 7%1 for the year. Since the growth over the past five years have been between 10% and 18%, this year'si impact will not be too dramatic ont the overall Reviewing what has been done, one of the global funds has been removed, helping to reduce fees. Some fixed income was also removed in the third quarter, and equites were dialed back into. This helped to rebalance because equities were down and have risen since. Diversification is the  again next year. It was negative in the first two quarters of the current year.  be detrimental tol European markets this year, especially if we haveacold winter.  value stocks came back again.  its shorter duration.  funding ratio in 2023.    reason so much growth has occurred, investing in not only stocks and bonds, but also real estate, From a performance pov, Washington County sits in and around the benchmark due to being alittle more conservative, particularly over the past five years. The impact oft that is noticeable more recently. The one year is down 10.8% andt the policy is down 12.4%. However, the policy is still ranked int the 23rd percentile. There is a good strategy from a policy point of view. The managers have also been accretive for the fund, leading to aj peer group raking in the 14th percentile, adding about 2.5% of outperformance last year. Ifthe portfolio had been made up of just stocks and bonds, it would have been down 17.2% over that same period. This highlights the benefit of diversification. From a risk point of view, the assists have been brought more in line with the liabilities, bringing the risk factor (Beta) to. .98. Over the past two years, Washington County has outperformed its policy Within the US equities, Washington County is defensively/postured with TWIN and GW&K. Int the one-year number, Twini is down 11.3% relative to 15,5%and GW&K is down 19.5% relative to21%. Last quarter, they did lag a little because they dolean moreto the high quality and value side. However, it was the tech and growth that came back the past quarter. Yet, this has reversed On the global side, there are three different.managers doing completely/different things, but the combination oft the last year is down. 19.7%1 relativeto21.29 Dodge & Cox hasbeen the better performing one because value has been thebetter place to havé been up until the last quarter. They are down only 14% whereas the growth manager isdown around30% over that period. However, overt this last quarter, the growth manager isdown only49whereas the value manager was down nearly 10%. This has reversed again this quarter. stréssing astowhy there are allocations to both. The intemationatportiolio leans more toward value because they tend to get great yields. Schroder is getting over 4%yield on your investments. This is an all-cap value strategy, so the benchmark should bet the IMI. Itlagged the ACWLex Us Value a little but is in line with the IMI year to date. More recently,there wasa Jittle small eap overseas allocation. It was a good quarter for thes strategy,down 6.5% relativeto 8%. Emerging markets were down 14.3% relative to 11.6%. There will be a lotmore disparity-and variation relative to the benchmark in emerging markets. For example, Wellington.was at 7% already in the fourth quarter. Therefore, Washington County only has a 1.5% allocation to Emerging Markets. The largest allocations are int the core ofthe portfolio. Defensive equity is one area that has been a little disappointing as an asset class over the past two years. This is due to the heightened volatility, and low yield environment for the base portfolio. Looking forward for this asset class, is the fact that yields are higher now, so just sitting there gainsa a 4%1 for the Treasury Bills. The outlook for the asset class is better looking forward. Conversely, what has worked well, but is not as likely to work as well moving forward, is the private real-estate. The one-year number is over 24% when stocks and bonds have been crushed over that time. This is driven by overweight to the southern region of the US and multifamily, and industrial. Industrial expansion valuations which have gone up over 50-60%. Multifamily have the advantage of shorter contracts, shorter rent/lease agreements. When they are rewritten, they are at higher rates due to the Fed tightening cycle. Last quarter, there were barely positive numbers for some of these companies. TA posted 1.4%., But these numbers may be slightly negative going forward. The good news is that the income is going up as well in line with rates. Some cap  timber and farmland, private equity, and private credit.  over the last seven quarters.  again in the fourth quarter this year.    appreciation will be given back from the past few years, yett thei income should go up because the yields havel been sol low. The redemptions that were put into place in. June to rebalance some oft the real estate overweight as it was the only asset classt that held upi in 2022. Therei isa al huge growth area down south, withr newi multifamily and offices, are the areas where the markets are migrating to. The reason therei is only a 5% allocation to real-estate is due tol having other réal assets, such as infrastructure and timber andf farmland. Therefore, therei ist no need tol have as muchi real estate since the real assets are diversified: across the board. Timber and farmland is positive for the year again whens stocks and bonds are down about 4%. From a real asset point of view, Washington County is Mr. Martin: finished with the private equity and private credit that were added last year. Over the past year, private equity is positive. ACWI benchmark is down 20% and Spliced benchmark is down 15%. Private credit, such as Leveraged loans are down 2.5%t this past year leaving private credit positive. Whent the market does recover, Washington County'willl hold al higher asset value as  up 4.2%. Infrastructure, liket thej past year, is up 5.6%.  the fund has protected more ont the downside.  €  The meeting was adjourned at 3:29p.m  THEI FOREGOING MINUTES SUPMITEDFPAAPROVA  2023  /  ATTEST: