MINUTES OF THE EMPLOYEE RETIREMENT ACCOUNT COMMITTEE REGULAR QUARTERLY MEETING OF NOVEMBER 12, 2020. Present: Chair Jeffrey Vredenburg, Vice Chair Aaron Olson, Secretary Shayla Griggs, and Treasurer Kelly Strickland Others: Pension Plans Administrator Debra Martin, Senior Pension Analyst Anthony Ferrer, and Pension Specialist Peter Gottlieb. Absent: None. 1. CALL THE MEETING TO ORDER: Chair Vredenburg called the meeting to order at 10:03 a.m. 2. PLEDGE OF CIVILITY: Chair Vredenburg stated for the record, "We may disagree, but we will be respectful of one another. We will direct all comments to issues. We will not engage in personal attacks." 3. ROLL CALL: Presenter(s): Pension Plans Administrator Martin. Pension Plans Administrator Martin called roll. All Committee members were present. 4. PUBLIC INPUT: None. 5. APPROVAL OF MINUTES: 5.1. Approval Re: Minutes of the Employee Retirement Account Committee Regular Quarterly Meeting of September 17, 2020 Presenter: Secretary Griggs. Treasurer Strickland made a motion to approve the Minutes of the September 17, 2020 Meeting; Vice Chair Olson seconded the motion. Motion carried unanimously (4-0). 6. QUARTERLY INVESTMENT REPORTS: 6.1. Presentation and Discussion Re: AIG Retirement Services, ERAC Report for Quarter Ending, September 30, 2020. Presenter(s): Gregg Hudak, Financial Advisor, Trent Harris, Financial Advisor, and Lilia Pivetta, Relationship Manager, VALIC Financial Advisors, AIG Retirement Services. Mr. Hudak and Mr. Harris appeared before the Committee telephonically and introduced themselves. Book 1 Page 59 11-12-2020 10:00 a.m. Mr. Harris stated the conversion has been completed for approximately two months. He has enrolled seven new employees, as well as conducted reviews for existing participants, and put together one retirement plan. Mr. Harris stated the City is begun to include him in New Hire Orientation Zoom meeting which has worked well, although he looks forward to in-person meetings. Mr. Hudak stated that VALIC had previously anticipated allowing employees to meet clients in person starting January 1, 2021, but it has extended its virtual meeting policy until April 1, 2021 and will continue its virtual policy until at least that date. Mr. Hudak confirmed he would advise Pension Administration of any changes to work the most effectively with City employees. Chair Vredenburg thanked Mr. Harris and Mr. Hudak for their presentations. 6.2. Presentation and Discussion Re: Quarterly Investment Analysis Review Ending September 30, 2020 Presenter: Howard Daher, Principal, Daher Capital Group. Mr. Daher appeared before the Committee telephonically and introduced himself. Mr. Daher reviewed the third quarter economic and financial market activity, noting the more robust investment platform with lower costs, and stated that he looks forward to in-person employee education in the future. He discussed the market's overall trend as reflected by the S&P 500 over the first three quarters of 2020, noting that from January 1, 2020 through close of business November 11, 2020, thei index was up 10.55%, which, on a 12-month return basis, is up almost 16% as it has been driven by technology, communication, and health care sectors, although those have pulled back in September. He noted a slight rotation, where some portfolio managers are divesting somewhat from technology and communications sectors and moving towards value stocks which are trading below where they are expected to be. He discussed the COVID-19 pandemic and how the market has been responding and expected to respond despite being an unprecedented event. Mr. Daher discussed the two funds being monitored on the watch list and discussed the analysis performed. He explained how a fund needs to out-perform its benchmark to equal that benchmark's performance because the fund must account for administrative fees and expenses, which appears to be the case with the DFA Enhanced US Large Cap fund which uses the S&P 500 as a benchmark. From January 1, 2020 to September 30, 2020, the fund was up approximately 5.41%, and from January 1, 2020 through close of business November 11, 2020, it was up over 12%, both of which are in the top third of its class. Mr. Daher did not express concern as the Plan also has a passively managed S&P 500 index fund. He explained the Ariel Fund is tightly concentrated, and it tends to outperform a rising market and devalues more in declining markets; it has approximately $17,000 in it as of third quarter end. He discussed fund utilization, noting the Wellington Fund and four other funds hold approximately $10 million, or 62% of the entire Plan balance, and that he expects to see more money movement throughout the available plans as volatility continues. Should that not happen, he suggested outreach and participation education on available options. Vice Chair Olson asked if Mr. Daher had seen, either in the Plan, or across his other portfolios, greater participation levels or rates during the pandemic considering workers are generally spending less on travel and entertainment. Mr. Hudak and Mr. Harris stated they have received some contact from participants requesting increased participation rates, but that employees could also go through Pension Administration. Chair Vredenburg asked if VALIC was planning on any additional participant outreach or seminars; Mr. Harris stated he is working with Pension Administration to determine the most appropriate topics for seminars, as well as developing e-mail correspondence for employees. A discussion ensued regarding how to provide employee education on increasing savings through the 457 Plan and various fund options within it and the 401(a) Plan for both new employees at orientation and existing employees. Pension Plan Administrator Martin stated, informally, that she has noticed some additional requests from participants to increase their contributions to the elective 457(b) Plan, but also noted more requests for distributions and loans under the CARES Act. Book 1 Page 60 11-12-2020 10:00 a.m. Book 1 Page 61 11-12-2020 10:00 a.m. The Committee thanked Mr. Daher for his presentation and Mr. Harris, and Mr. Hudak for their participation. 7. UNFINISHED BUSINESS: None. 8. NEW BUSINESS: 8.1. Presentation and Discussion Re: Proposed 2021 Meeting Schedule. Presenter: Debra Martin, Pension Plans Administrator. Pension Plans Administrator Martin stated that the City expects to hold a State of the Pension Workshop in August 2021 on a date yet to be determined. Treasurer Strickland made a motion to approve the calendar. Vice Chair Olson seconded the motion. Chair Vredenburg stated he has a conflict for the September meeting date and was unsure if he should request an excused absence or request the meeting date be changed. Secretary Griggs stated that the meeting only required a quorum to proceed. They also expressed hope for a fifth committee member by that time. The motion carried unanimously (4-0). 9. OTHER MATTERS: 10. ADJOURN. Chair Vredenburg adjourned the Employee Retirement Account Committee (ERAC) Regular Quarterly Meeting at 10:47 a.m. - / 1 2D elli Stucblg Secretary Shayla Griggs Treasurer Kelly-Striekland