RETIREMENT BOARD MEETING 1.C Opening of Meeting.  February 17.2022  2. Approval ofl Minute No. 285 dated December 1, 2021.  3. Public Comment. 4. Treasurer's Report:  Bank Reconciliations - November 2021.  5. Requisitions:  Requisitions - December 2021 and January 2022.  6.Old Business. 7. New Business:  A. Approval of the 2022 Washington County Retirement Fund budget. B. Approval of the purchase of Employee Benefit Statements from Korn Ferry at a cost of$1.85 per statement for a total approximate cost of 1337.55. The cost per C.A Approval ofa a request from Natalie Mazza to purchase prior service time dated August 5, 2002 to. July 24, 2004 in the amount of$2,065.96. D. Portfolio Presentation: Lee Martin, Ph.D. - Marquette Associates.  statement remains unchanged from 2021.  8. Adjournment.    Minutel No. 285  December: 1,2021  The quarterly meeting oft the Washington County Retirement Board was held at approximately 2:51 p.m. on' Wednesday, December 1,2021, in thej public meeting room with the following members being present: Commissioners Dianal Irey Vaughan, Marry Maggi and Nick Sherman;" Treasurer' Tom Flickinger and Çontroller Michael Namie. Also present: Finance Director Joshua J.1 Hatfield; County Solicitor Jana Phillis Grimm via teleconference; Chief Clerk Cindy Griffin; Secretary Paula. Jansante; Controller-Elect. April Sloane; Leel Martin, Ph.D. representing Marquette Associates; and Joseph Jasek  representing WJPA. Approval of] Minutes approved as written. No discussion followed. Roll call vote taken; Public Comment None. Treasurer's Report  Mrs. Vaughan entertained a motion to approve Minute! No. 284 dated! September 16, 2021. The motion was moved by! Mr. Sherman ands seconded' by! Mr. Maggit that the above-mentionedi minutes be  Mr. Namie- - yes; Mr. Flickinger- yes; Maggi - yes; Mr. Sherman- yes; Mrs. Vaughan - yes.  Motion passed unanimously.  Mr. Flickinger presented the September and October 2021 statements stating that all months are in order. It was moved by Mr. Flickinger ands seconded by Mr. Sherman to accept the reconciliations ofthe  above-mentioned. statements. No discussion followed. Roll call vote taken:.  Mr. Namie- yes; Mr. Flickinger yes; Mr. Maggi . yes; Mr. Sherman- yes; Mrs. Vaughan yes.  Motion passed unanimously. Retirement. Allowance Report Bank Balance as of September 1,2021 Deposits to Checking Account Transfers In Add: ACH Credit Less: Cancelled Checks Less: ACHI Debits Bank Balance as of September. 30, 2021 Less: Outstanding Checks Less: Retirement Check Run Reconciled Balance as of September 30,2021  $112,627.39 1,425.47 799,789.04 288,536.14 (147,189.00) (860.677.48) $194,511.56 (153,976.93) (40.534.63) $-0-    Bank Balance as of October 1,2021 Transfers In Add: ACH Credit Less: Cancelled Checks Less: ACHI Debits Bank Balance as ofOctober 31,2021 Less: Outstanding Checks Less: Retirement Check Run Reconciled Balance as ofOctober 31, 2021  $194,511.56 875,038.67 408,651.42 (305,686.41) (879.023.39) $293,491.85 (251,998.89) (41.492.96) $-D-  Requisitions 2021 totaled $3,331,831.30. No discussion followed. Roll call vote taken: Vaughan -yes. Distributions Check 2241 2242 2243 2244 2246 2247 2249 2250 2251 2252 2253 Transfer Transfer  Mr. Namie stated thati requisitions for the months of September, October andl November It was moved by Mr. Namie and seconded by Mr. Sherman that the requisitions be approved. Mr. Namie- yes; Mr. Flickinger - yes; Mr. Maggi yes; Mr. Sherman - yes; Mrs.  Motion passed unanimously.  September 2021 Payee Monica Adams Deanna. Bevan Christoper Bioni TD Ameritrade. as Trustee ofI IRA ofI Diane Bova Shana Bradbury First Federal Savings & Loan as' Trustee of IRA of Glenn Al Furbee Glenn Al Furbee Denise! Stepney PNCI Bank  Amount $435.44 12,626.96 6,652.65 18,087.10 7,637.12 60,409.10 4,175.57 25,000.00 33,783.05 1,539.80 3,122.64 21,857.22 71,559.48 820.340.40 $1.087,226.53  Charles Schwab & Co-Trustee-Cheryl Amodei-Mascara  2245 Goldstar Trust Co as Trustee ofl IRA ofE Brooke. Blackman  Washington County Cash Disbursement. Account Washington County Regular Payroll Escrow Account Washington County Retirement Account Total September 2021 Distributions    October2 2021 Payee Janet MJ Johnson Robert Orsatti Sr Jules Bioni Earl CI Dean] III Ada Ezechl Hill Kimberly. A. Jackson Tiffiny Mahland Marikol Marshman Zachary Nimal Jacqueline Schmalz Amber N Shipley Alana Staniszewski Kelly Stutzman Carolyn Shaw Arent  Check 2254 2255 2256 2257 2258 2260 2261 2262 2263 2264 2265 2266 2267 2268 2269 2270 2271 Transfer Transfer Check 2272 2273 2274 2275 2276 2277 2278 2279 2280 2281 2282 Transfer Transfer  Amount $724.37 47.42 1,217.53 4,632.15 407.83 6,363.64 163,048.20 17,117.36 6,483.78 884.33 722.39 3,973.55 4,113.62 1,701.66 4,543.92 48,844.10 21,789.58 92,662.16 79,725.33 824.687.17 $1.283.690.09 Amount $6.33 2,346.50 17,498.24 4,653.98 9,775.75 1,412.38 6,306.36 5,665.97 2,161.77 21,610.00 2,859.00 62,386.28 824.232.12 $960.914.68  Fidelity Investment as Trustee ofIRA of] Jodil NI Dunkle  2259 First Clearing as Trustee ofI IRA of Mariel Maza Higgins  Washington Countyl Regular Payroll Escrow. Account Washington County Cash Disbursement Account Washington County Retirement Account Total October 2021 Distributions November, 2021 Payee William S Vilcheck Ronald Behanna II Schwab 4A ACI FBOI Kaitlin Engle 6834 David Finder Savanna. Jimenez Paige King Kristinal Roup Nicole Skidmore PNCI Bank  PNCI Bank  Gaitens, Tucceri &1 Nicolas, PC: FBO Charlee Rosini Washington County Regular Payroll Escrow. Account Washington County Cashl Disbursement Account Washington County Retirement Account Total November 2021 Distributions    Old Business None. New Business  Mrs. Vaughan entertained ai motion to removel Item 7A request toj purchase prior service time from the agenda as the employeei resigned effectivel November 29, 2021. Ity was moved by Mr. Sherman and: seconded byl Mr. Namie to remove the: item from the  agenda item. No discussion followed. Roll call vote taken: Vaughan yes.  Mr. Namie- - yes; Mr. Flickinger yes; Mr. Maggi - yes; Mr. Sherman yes; Mrs.  Motion passed unanimously  Mrs. Vaughan explained that the Board is obligated by law to considerac cost-of-living increase for retirees once every three years. No discussion followed and no action was taken. Mrs. Vaughan moved on to the Investment! Policy Updatei introducing Leel Martin of Marquette Associates tol briefly explain theu update to thel Investment Policy Statement (IPS). Mr. Martin stated that IPS update bringsi in all of the addendums for the past ten yearsi into one document andi includes the updates to Act 96, delegation of responsibiities, standard of care, objectives, guidelines, etc. into one comprehensive document. Mrs. Vaughan stated that the updated document included no changes to the investment policy, ands she entertained ar motiont to Itv was moved by Mr. Sherman and seconded by Mr. Maggi that the Investment Policy  approve the IPS update. Statement update be approved. No discussion followed. Roll call vote taken: Vaughan- -yes.  Mr. Namie-s yes; Mr. Flickinger- - yes; Mr. Maggi - yes; Mr. Sherman yes; Mrs.  Motion] passed unanimously  After some discussion with regard to changing the OPEB Custodian from BNYI Mellon to another custodian and reviewingt the options whichi included thei incumbent custodian, U.S. Bank, andl PNCI Bank and the possibility of engaging al local bank, etc., Mrs. Vaughan entertaineda Itwas moved by! Mr. Sherman to change the custodian from BNYI Mellon tol PNCI Bank.  motion to change the custodian. Mr. Maggi seconded the motion. No discussion followed. Roll call vote taken:  Mr. Sherman - yes; Mr. Maggi - yes; Mrs. Vaughan-yes    Motion passed unanimously.  Portfolio Presentation - Leel Martin, Ph.D. - Marquette Associates  Mr. Martin began the discussion reminding the Board that on the last meeting ofeachy year, Marquette prepares thel Pennsylvania County Pension Plan Report whichi isi nowi ini its fourteenth year. Marquette compiled, free of charge, the data from 52j participating! Pennsylvania counties out of65asaw way for counties to compare, determine and follow best practices. Mr. Martin] pointed out that Washington County is really well ahead oft ther rest oft the counties ini its conservative assumptions which willl help to ensure thatt thei retirement fund willl be well funded int the future. Ther report shows that' Washington County ist the only county with the actuarial assumed rate of retum at 6.5% with most still at 7.0to 7.5%. He explained that the lower ARR generates al higher liability, but it resultsi in earlier funding which, int turn, allows fort the fund to bei invested more conservatively; providing ai morei realistic projection of future returns.. Mr. Martin directed attention tot thes salary increase assumption stating that thel keyi ist tos stay as close to 3001 basis points between the ARR and the salary increase assumption: as possible pointing out that Washington Countyisa at that point with its salary increase assumption at 3.5%. Furthermore, Washington County's mortality assumption1 uses the Society of Actuaries Pub-20101 Public Retirement Plans Mortality Tables which considers public retirement plan mortality separately from thej private sector whichi is also the most conservative of thet three tables] presented. Moving to the cost-of-living adjustment (COLA), Mr. Martin stated that only 66 of 52 counties awardedac COLA adjustment in 2021 and that the COLA would cost even much more today duet to thei increasei ini inflation and the link to CPI. He reminded the Board that the COLA only needs tol bei revisited once every three years Mr. Martin continued with the County Pension Report stating that all but two counties are using the 5-year smoothing for the asset valuationi method. Marquette Associates named the method the' "W" method after Washington County, which was one ofthet first, andi is now the standardi in the actuarial field for 5-year smoothing which recognizes! 20% of gains or losses and applies over a: 5-year window. With regard to returns, Mr. Martin noted that the County is yielding 5a and 10-year returns above median while maintaining its relatively conservative approach. Wrapping upt the County Pension Report portion oft the presentation, Mr. Martin stated thatt the County's funded ratio was approximately 90-95%. However, because the County'sa assumptions are conservative, the comparison to counties withl less conservative assumptions cannot bei made without normalizing the assumptions. To normalize, Marquette Associates assumes that all counties use the same actuarial assumptions, specifically 4.5% salary increase and' 7.5%i investment return which adjusts the County's funded ration to 100-105% well abovet the average of95.5%. Lastly, Mr. Martin wanted to mention that thej percentage of active! participants isj just above 40% andt that there arer now more retirees than active participants meaning that therei is less money coming in from an employer's contribution point of view, yet the benefits continue to grow. Mr. Martin begant the review oft the performance: report with ai review oft the U.S. economy. He stated that the GDP slowed quite ab bith by thee end ofQ3 coming ins at around! 2%. He explained thatt the drop was mainly duet to the slowdowni in consumer spending which makes up  which was revisited today.    approximately 70% ofthel U.S. GDP. Mr. Martin statedt thatt this slowdown coincides with the expiration of unemployment benefits as well as thei issues witht the global supply chain which brought himt to the topic ofi inflation. He explained that with the supply constraints, at tight labor market, home price appreciation and thel high commodity prices thati inflation has reallys spikedi in 2021. Mr. Martin emphasized the amount ofmoneyt that companies are needing to spend to attract good employees. Mr. Martin stated that, unlike commodity prices, wagei inflation andl home appreciation arel lesst transitory. He conveyed that the expectation may be thati inflation will come down! Iater in 2022. The expectation ist thati inflation levels will come backi inl line with whati it! has been historically at 2-2.5%1 rather than revert back to wherei itl has been fort the past 10y years asa Moving to the global economy, Mr. Martin stated that the global growth has comei in below expectations. He explained that thej pandemic is global and developed market economies are experiencing issues such as supply chain disruptions and inflation, similar to the U.S., whereas developing markets ares struggling to a greater extent witht the pandemic and low vaccinationi rates. Mr. Martin directed attention tot the global asset index performance stating that equities were slightly negative for Q3 andt that emerging markets were down 8.1% mainly duet to the new tech regulations issued by the Chinese govemment and China's Evergrande real estate crisis as China represents 35% oft thati index. Fixed income was flat again for the quarter slightly negative YTD at -0.9%. Finally, Mr. Martin stated thati iti is nos surprise that TIPS were up 1.8%1 for the quarter, well above core bonds, asi inflation-sensitive: assets continued to outperform in Q3. He also noted that commodities were up 6.6%1 for the quarter and 42.3% YTD: andt that] REITS hada great year returning 31.5% fort the year. He explained that thej private core real estate markets lag public markets by about a year, and one might expect a strong performancei int the private real estater markets over the next couple of quarters as properties arel being marked upi in valuei inj part Moving to the County's pension fund, Mr. Martin presented the pension fund's observations with the pension fund finishing the 3r quarter at $204 million. The fundi returned 0.1% for Q3, outperforming the policyi index of0.0%. Hei noted that as oft the end ofOctober the fund was at approximately $2101 million for the year. Positive attribution came from domestic equities, defensive equity (VRP), real estate and private credit. Negative attribution came: from equity structure (overweight value and small cap). Over the pasty year, the fund gained $33.5 million returning 19.5%, outperforming the policy index of18.5%. Longer term, the fund gained $1381 million over the past 10 years with ar return of 10.2%, slightly under thej policy index of 10.3%. Looking ahead, Mr. Martin noted a change int the global strategy managers replacing Acadian Global Low' Volatility withl MFS Global Low Volatility. On the real estates side, TA Realty replaced. J.P. Morgan. He alsor mentioned that IFMI Infrastructure, after sittingi in the queue fort two years, finally got called and putt to worki increasing the diversification within the infrastructure portfolio. Mr. Martin explained that the fund nowl has 20% ofthet total investment: in real estate, timberlandfarmland, infrastructure, private equity and private credit that will not move witht the day-to-day volatility reducing the equity betar risk overall. Mr. Martin noted that the  result of Fed policy.  duet toi inflationary; pressures.    County's! high funded ratio allows for al higher quality ofinvestments with! higher yields. He also noted thate even though some of thei fundst topl holdings including Microsoft, Meta Platforms, Alphabet and Apple aret tech stocks, the County is underweight, therefore, lowering risk exposure tot thats sector versus the broad market. To summarize, Mr. Martin explained thatt the County's portfolio is more defensive in equities int this environment andi more aggressivei ini fixedi income. Moving ont to thei managers, Mr. Martin stated that U.S. equities is 501 basis points ahead for the quarter driven by GW&K Small-Mid Cap Core up 2.2% overperforming the bench at -2.7%. Also, in U.S. equities, Twin Capital Dividend Select, the local large cap defensive manager returned 0.1% for Q3 underperforming thel bench at 0.6% as expected int this environment. On the global side, Mr. Martin notedt the addition of Artisan, and Acadian switched out with) MFS Global Low Volatility. Dodge & Cox Global Stock, the value manager, brought in 45.1%1 for the l-year relative to 31.3%. Turning to the Non-U.S. Equity Composite, Schroder Int'1Multi-Cap Equity Trust yielded 12.8 YTD outperforming the bench ats 9.1% with GQGI Emerging Markets' return at negative 6.0% for the quarter but outpertorming the bench at negative 8.1%. Moving to the Defensive Equity Composite, Parametric continues to do well yielding 19.4% for the 1-year relative tot the 14.4% bench. Thel Real Estate Composite brought in 7.0%1 for the quarter and 15.2% for the l-year noting thatt the' TAI Realty Corel Fund returned 11.2%1 for Q3. Mr. Martin alsor noted that TimberlandParmland returned 3.7%1 for the 1-year, and] Infrastructure had a great year bringing in 8.2% for the 1-year relative to 7.6%. He noted that the newly funded Private Credit Composite delivered 1.2%1 for the quarter. Hei reminded the Board that the funding came from  Fixed Income whichi is atz zero right in line with bench. Ther meeting was adjoumed at 3:36 p.m.  THEI FOREGOING MINUTES SUBMITTED FOR APPROVAL:  2022  ATTEST:    8  0  8888832888  8  388888888888 8 8 8  0  388N88488  888888888888 8 d8