RETIREMENT BOARD MEETING 1. Opening ofMeeting,  December 1, 2021  2. Approval of Minute No. 284 dated September 16, 2021.  3. Public Comment. 4. Treasurer's Report:  Bank Reconciliations - September 2021 and October 2021,  5.1 Requisitions:  Requisitions - September 2021, October 2021 and November 2021.  6.Old) Business. 7.1 New Business:  A. Approval of a request from Patricia Ashcom to purchase prior service time dated from. June 9, 19861 to. July 31, 1991 in the amount of $6,351.33.  B. Costo ofLiving Discussion. C. Investment. Policy Update. D. OPEB Custodian Search.  E. Portfolio Presentation: Lee Martin, Ph.D. - Marquette Associates.  8.Adjournment.    Minutel No. 284  September 16, 2021  The quarterly meeting oft the Washington County Retirement. Board was held: at approximately 3:58 p.m. on' Thursday, September 16, 2021, int the public meeting room with the following members being present: Commissioners Dianal Irey Vaughan, Nick Sherman andl Larryl Maggi; Treasurer Tom Flickinger and Controlier Michael Namie. Also present: Chiefof Staff) Johnl Haynes; Financel Director Joshua Hatfield; County Solicitor. Jana Grimm; ChiefClerk Cindy Griffin; Secretary Paula. Jansante; Lee Martin, Ph.D. representing Marquette Associates andl David! Reichert representing! Kom) Ferry.  Approval ofMinntes as written. No discussion followed. Roll call vote taken: Motion passed unanimously. Public Comment None. Treasurer'sReport  Mrs. Vaughan entertained ar motion to approve Minute No. 283 dated] June 3, 2021. Ther motion was moved by Mr. Sherman ands seconded by! Mr. Maggi that the above-mentioned minutes be approved  Mr. Namie- yes; Mr. Flickinger-y yes; Maggi- ) yes; Mr. Sherman- - yes; Mrs. Vaughan-yes.  Mr. Flickinger presented the April, May, June, July and August 2021 statements stating that all months are inc order. It was moved! by Mr. Flickinger ands seconded by! Mr. Sherman to accept the  reconciliations oft the above-mentioned: statements. No discussion followed. Roll call votet taken: Motionj passed unanimously. Retirement, Allowance Report Bankl Balance as of April 1,2021 Deposits to Checking Açcount Transfers In Add: Other Credits Less: Cancelled Checks Less: ACHI Debits Bank Balance as of April 30, 2021 Transfer tol Mutual Funds Less: Outstanding Checks Less: Retirement Check Run Reconciled Balance. as of April3 30,2021  Mr. Namie- - yes; Mr. Flickinger- -yes; Mr. Maggi yes; Mr. Sherman- - yes; Mrs. Vaughan-yes.  $96,771.19 2,439.94 312,228.66 617,022.04 (105,316.35) (833.359.41) $89,786.07 (15,353.49) (46,806.18) (27,626.40) $:D:    Bank Balance: as ofMay 1,2021 Add: ACHCredit Add: Other Credits Less: Cancelled Checks Less: ACHI Debits Bank Balance as ofMay 31,2021 Transfers to! Mutuall Funds Less: Outstanding Checks Less: Retirement Check Run Reconciled: Balance as ofMay 31,2021 Bank Balance as of. June 1,2021 Deposits to Checking Account Transfers In Add: ACH Credit Add: Other Credits Less: Cancelled Checks Less: ACHI Debits Bank Balance as of. June: 30, 2021 Transfers to! Mutual Funds Less: Outstanding Checks Less: Retirement Check Run Reconciled Balance: as ofJune 30, 2021 Bank) Balance as ofJuly 1,2 2021 Deposits to Checking Account Add: ACHCredit Add: Other Credits Less: Cançelled Checks Less: ACHI Debits Bank) Balance as ofJuly31,2021 Transfers tol Mutual Funds Less: Outstanding Checks Less: Retirement Check Run Reconciled Balance as ofJuly 31,2021 Bank Balance as of August 1,2021 Add: ACHO Credit Add: Other Credits Less: Cancelled Checks  $89,786.07 261,175.80 766,525.48 (162,967.39) (854.051.68) $100,468.28 (14,649.49) (52,263.80) (33.554.99) $-0: $100,468.28 5,435.00 22,963,82 323,745.75 678,250.59 (90,110,78) (839,905.68) $200,846.98 (47.10) (166,668.04) (34.131.84) $0: $200,846.98 7,546.55 288,852.28 1,011,263.99 (444,081.94) (912.314.14) $152,113.72 (94.20) (121,744.38) (30.275.14) $-0: $152,113.72 282,772.90 696,342.60 (162,511.29)    Less: ACHI Debits Bankl Balance as of August 31,2021 Less: Outstanding Checks Less: Retirement Check Run Rèconciled Balance as ofA August: 31,2021  (856.090.54) $112,627.39 (88,413.32) (24,214.07) $-0:  Requisitions $3,331,540.14. No discussion followed. Roll call vote taken: Vaughan-yes. Distributions Check 2194 2195 2196 2197 2198 2199 2200 2201 Transfer Transfer  Mr. Namie statedt thatr requisitions for the months of] June, July and August 2021 totaled Itv was moved by Mr. Namie ands seconded by Mr. Sherman thatt the requisitions be approved. Mr. Namie- yes; Mr. Flickinger- yes; Mr, Maggi -yes; Mr. Sherman- - yes; Mrs.  Motion passed unanimously.  June 2021 Payee Marela Benitez Mark Gramm Dawn Simko Dakota Snyder UMB: Bank) FBOK Kathy Ross Jacquir Baston Washington County Regular Payroll Escrow. Account PNCI Bank Washington County Retirement. Account Total June 2021 Distributions Julv2021 Payee Jeanniel M. Ayd Beth A. Lindey Ronald C. Revi Roxanne Rizak Richard Black Catherine Buchanan  Amount $3,143.51 3,232.26 36.93 825.01 4,519.88 142,064.34 38.36 21,984.52 57,225.83 812,570.66 $1.045.641.30 Amount $8,017.30 242,21 422.04 242.21 13,907.15 22,691.01 10,285.55  Washington County Cashl Disbursement Account  Check 2202 2203 2204 2205 2206 2207 2208  Storehouse Investments-Truste: Abby L. Cook IRA    2209 Fidelityl Management Trust Co-Trustee Carlos Correa IRA  2,040.37 2,640.77 6,691.69 5,280.45 288.72 26,439.78 38,931.66 1,513.21 78.21 2,465.89 35,557.18 49,356.65 19,525.96 40,160.61 6,189.76 24,696.80 21,659.48 29,471.21 123,818.07 815,001.78 $1.307.615.72 Amount $242.21 242.21 252.70 840.21 351.12 474.42 7,856.40 3,114.35 4,222.18 2,649.74 31,474.80 27,372.21 21,831.08 62,456.25 814.903.24 $978.283.12  2210 2211 2212 2213 2214 2215 2217 2218 2219 2220 2222 2223 2224 2225 2226 Transfer Transfer  Olivia Cypher Jacobl Fritch Deborahl Furbee Philip Milostan Onilee Moore Amy! Mruk Stephen Sobocinski Cheryl L. Valvo Michael Costello Deborah S.) Hammond Darlal R. Mayton Eileen Retamal Carriel M, Sprowls Washington County Payroll Account Washington County Cashl Disbursement, Account PNCI Bank Washington County Retirement. Account Total. July 2021 Distributions August 2021 Payee Justine A. Cleveland Audrey Dorsey Mariela Benitez Lizal Blanco Saquan Clark Dylan Culbertson Steffan Kceton Monical Piontek Denise Sexton' Fidelity Net Benefits as Trustee ofI IRA ofKarly Steele Jon' Tustin Washington County Cash) Disbursement, Account Washington County Payroll Account PNCI Bank Washington County Retirement. Account Total. August 2021 Distributions  2216 TD. Ameritrade Clearing-Trustee Kelly LI Mummert IRA  2221 Washington Financial as Trustee ofI IRA ofLois A. Pettit  Check 2228 2229 2230 2231 2232 2233 2234 2235 2236 2237 2238 2239 2240 Transfer Transfer    Oldl Business None. New Business $1,425.47. approved. No discussion followed. Roll call vote taken: Vaughan- - yes.  Mrs. Vaughan entertained a motion to approves a request from Nancy Wyland to purchase part-time service credit dated from November4 4, 2019 to September 16, 2020, in the amount of Itwasi moved by Mr. Sherman and seconded by Mr.1 Namiet that the service credit request be  Mr. Namie-> yes; Mr. Flickinger yes; Mr. Maggi- -yes; Mr, Sherman - yes; Mrs.  Motion passed unanimously  Mrs. Vaughan entertained: a motion to approve adding Robbins Gellar Rudman &1 Dowd, LLP as ana additional securities litigation firm as discussed at the previous meeting held on. June: 3, Itv was moved by! Mr. Sherman and: seconded by Mr. Maggi thatt the request to addt the  2021.  securities litigation firm be approved. 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  Actuary Presentation- - David) Reichert- - Korn! Ferry  Mr. Reichert started offt the actuary presentation: stating thatb before going over the numbers for the 2021 valuation report, he wanted to mention that the County fundi isi in really good shape explaining that the County continues tor makei its contributions, keeps the benefits to employees affordable, and has managed its liabilities very well. He went ont tos state that duringt the valuation process, Korn) Ferry reviews the demographics andi investments for thej prior year, calculates the funded: ratio by comparing the assets tot thel liabilities and determines the Actuarially! Determined Mr. Reichert explained that Korn Ferry tries tol keep the valuation process as consistent as possible from one, year tot the next witht the understanding that the ADCisat tool used int the budget process in determining the desired fundingi neededt to meet thel benefit obligations. He specified that the asset smoothing method is the approach usedt to dampen the effect ofi investment market volatility. Mr. Reichert stated that Kornl Ferry uses a 5-year smoothingy which recognizes twenty percent ofthes gains/losses for each year over a: 5-year period to determine the Actuarial Value of Assets which smooths the: fluctuations oft the markets. Currently, ing good times, the Market Value  Contribution (ADC) for the current year 2021.    of Assets shown ont the presentation graphi is showing higher than the Actuarial Value of Assets which demonstrates that monies can be puti ini reserve durings good timest tol hedge the County's Moving to the demographics,' Mr. Reichert pointed out the consistency between the 2021 and the 2020 valuation periods with the activep participant count at 747 and' 751, respectively, He also commented that the ayerage age and average servicei remained consistent with the average annualized compensation up slightly at around 1.6% due tot the assumption ofthe 3.5% annual increase. The number ofs annuitants and! beneficiaries was 848f for 2021 and 841 for 2020, andt the number ofinactive and vested participates was 1581 for 2021 and 147 for 2020 which also illustrates the consistent: nature oft the demographics. These demographics are used in determining the ADC which was calculated at $4,648,159 (Funded! Ratio 89.8%) for 2021 and $4,962,184 (Funded] Ratio 86.0%) for 2020. Mr. Reichert explained that a desirable funded ratio! is anywhere Mr. Reichert directed attention tot the national investment. return graphi int thej presentation that shows the national median average assumed rate ofreturn for public funds about 20: years ago at 8% which! has steadily decreased tot the current median of7%. Washington County is currently well below the average at 6.5%. He emphasized thatt the County has shown ac conservative approach with funding as well as with the ARR assumptions. He madet the point that when looking atj justt thel Funded Ratiol by Pennsylvania Counties, its appears that Washington County is approximately int the middle ofi its peers at 89.8% but that! Marquette Associates adjusts the numbers by also considering the ARR. In other words, Marquette's calculation will compare apples to apples bringing Washington County's funded ratio up to approximately 99%1 relatively To wrap up the presentation, Mr. Reichert communicated tot thel Board that the estimated ADCI letter for 2022 would be distributed to thel Board in October: 2021 andt thatt the data request and financial information memos fort the. January 1,2022, valuation would bes sent inl December 2021. After some discussion, it was determined that thel Board woulds submit the September 2021 financials ast the basis for the 2022 Cost-of-Living: adjustment (COLA) letter whichi is required to ber reviewede every three year. Mr. Reichert stated thatt the COLA letter for 2022 would be distributedi in October 2021. In closing, Mr, Reichert reiterated that the' Washington County Fund isi in good shape. He went ont tos state that Koml Ferry services 47 counties and that Washington County comes up ast the envy ofal lot ofc counties because of] how well iti is run. Portfolio Presentation- - Lee Martin, Ph.D. - Marquette Associates  funding risks against badt times as experiencedi in 2019.  from 80t to 100 percent.  speaking.  Mr. Martin began by updating the Board ont the tasks assigned tol Marquette Associates from the last meeting. The first beingt thel RFI for an additional securities firm which was voted' on earlier int today'sn meeting. Thes second is the new. Investment Policy Standard (IPS) whichi isi in progress and will consolidate all oft the addendums to the current IPSt to create a more comprehensive and comprehensible IPS. Lastly is the searchi for a new director trustec oft the OPEB fund to replacel BNYI Mellon, Mr. Martin statedt that ai few banks have sent Marquette    statements which are currently being evaluated.  Moving tot the economy, Mr.] Martin stated that the economy continues tog gaini momentum ast the world reopens with GDP slightly below. expectations at 6.5%. Growth, however, is expected tor moderate over the next few quarters coming backi inl line with pre-pandemic levels as thel Fed moves to a more contractionary fiscal policy. Mr. Martin emphasized that thel bigs story oft the year ist the rebound ini inflation, Hei indicated that itisr nos surprise for inflation toi increase after a recession but, to make matters worse, the pandemic has also disrupted the global supply chain, Mr, Martin explained that the expectations indicate that the risei ini inflation will be transitory. As the economy adjusts, inflation is expected tos settlei ins att the 2.0%-2.5%1 range int the next few years With regard tot thei indices, Mr. Martin: stated that U.S. stocks led the way: fort the quarter up 8.2% with growth equities finally leading the way again over volatile. low-quality and values stocks as rates came down during the quarter. Mr. Martin explained that as rates came downi it became bullish for bonds this quarter notingt that core bonds were up 1.8%, notingt that over the past) year core bonds were: still- -0.3% while high-yield! bonds were up 15.4%1 for the same time period. He also explained thati inflation-sensitive: assets posteds solid results notingt that TIPS were up 3.2%, outperforming the broad core bond market and that commodities andl REITS well outperformed the Moving tot the County's pension fund, Mr. Martin presented the pension fund's observations with the pension fund finishing the 2nd quarter at $205.6 million. Thei fund gained $10.1 million fort the 3-month period returning 5.2%i in Q2, outperforming the policyi index of 5.0%. Positive attribution came from global equities, defensive equity (VRP), real assets and fixed income. Negative attribution camei from underweight large cap equities and defensivel low' volatility equities. Longer term, the fund gained $126.4 million over the past 10; years with ai return of8.9%, slightly under the policy index of9.2% but well above the benchmark of7.6% and assumed rate of return of6.5%. Looking ahead, real estate changes are ongoing phasing out J.P. Morgan completely as of August adding both Clarion and' TA Realty as well and directing recent Directing attention tot the Asset Allocation Summary, Mr. Martins showed that even with a $200M size fund, the portfolio is well diversified ins asset classes with U.S. stocks and global and international stocks as well ast the liquid Volatility Risk Premium (VRP) with expenses around 32 basis points, compared to the expenses ofhedge funds whichi is approximately 220 basis points. Continuing, he stated that the funds alsoi includes real estate, timber, farmland, infrastructure, along with both private credit and equitya as well as fixedi income. This highly diversified fund helps smooth out thel highs and lows through reducing volatility which int turn, leads tos ar more consistent ADCt to the County. Mr. Martini mentioned that the equities in the' Totall Equity Composite are higher quality. Hee explained that as the assumed rate ofreturn was dialed down, the fund was. rebalanced toi include underweight volatile investments and overweight less volatilei investments such as staples and healthcare, With respect tot the Fixed Income Composite, the County fundi is currently; yielding 1,3%, 44% more than the benchmark of0.9% due tos some exposure tol high-  whichi is more inl line withl historic norms.  broad equity markets.  allocations to open ended private equity and credit strategies.    yield bonds.  Moving ont tot the managers, Mr. Martin explained that U.S. equities (7.3%) lagged the bench (8.2%) duet to' TWIN Capital whichi isl higher quality, but he pointed out thatt thes year-to-date U.S. Equity Composite return exceeded the benchmark, 16.0% to 15.1%, respectively. The Global Equity Composite continues to do well outperforming the bench by about 150 basis points for the year, Mr, Martin noted that there would be changes to the managers bringing the pension fund more inl line witht the OPEB by moving from the American Funds and Acadiai to Artisan andi MFS which are currently outperforming some oft the legacy managers. Forl International, the YTD composite returni is at 11,5%, exceeding the benchmark by 1.9% mainly due to the performançe of the Schroder International Multi-Capl Equity Trust ahead 4.3% for the year, Defensive. Equityi is doing welli for the County ahead 2.7% YTDE at 10.1%. Thel Real Estate Composite returned 4.0%. for the quarter with Clarion outperforming! J.P. Morgan by 2.7%. Mr. Martin reminded thel Board that because ofJ.P. Morgan's overweight to retail real estate! holdings, the decision was madet to phase out. J.P. Morgan completely moving fundsi into Clarion and TA Realty. He pointed out that Clarion outperformed. J.P.] Morgan by 2.7%1 fort the Q2. Timber came out 3001 basis points ahead for the quarter at 4.6%. Continuing, Mr. Martins stated that Infrastructure returned 11.3% for the 1- year period highlighting. J.P. Morgan's 10.2% return for the same period coming out 600 basis points ahead oft the benchmark. Mr. Martin commented that Infrastructure isag great indirect inflation! hedge andt thati it was fortunate thatt the County goti iny wheni it did as Infrastructure is currently seeing an 18-month to 2-year waiting period for new investments. Finally, the Fixed Income Composite returned 1.2%f for the quarter justs slightly abovet the bench as expected ast these assets are predominantly high quality and willl be used to payout the benefits. The OPEB fund finished the quarter at $24.1 million, gaining $1.3 million witha a5 5.7% return for Q2 above thep policyi index of5.4%. Positive attribution came from global equities, defensive cquity (VRP) andf fixedi income. Negative attribution came: from underweight large cap equities and defensive low volatility equities. Longer term, Mr. Martin stated that the OPEB: fund gained $9.01 million over the past 7 years, returning 8.5% well over the benchmark of7.8% with lowi investment management: fees at 0.40%. In closing, Mr. Martine explained that the County's decision to fund the OPEBI has allowedt the fund to realize actual gains that will be used to pay out futurel benefits which will eventually resulti ins savings to thet taxpayers. He also emphasized that even with the smaller OPEB fund, Washington County has taken advantage oft thel benefits of  diversification.  Ther meeting was adjourned at 4:43 p.m.    THEI FORECOINGMINUTES: SUBMITTED FOR. APPROVAL:  2021  ATTEST: