►
Description
San José Federated City Employees' Retirement Board
View Agenda at https://sjrs.legistar.com/View.ashx?M=A&ID=722612&GUID=90DA82B7-8F01-47D6-80CD-00FF1F5E767B
A
All
the
order,
please,
the
Federated
City
Employees
Retirement
System
and
federated
City
Employees
Health
Care
Trust
meeting
for
October,
seventeenth,
twenty
nineteen
hundred
of
the
day
I
have
to
punt
on
a
couple
things
real
quick,
but
as
listed
here
item
one
point
for
a
that:
the
deferred
vested
retirement
it
was
approved.
Last
month's
agenda
with
the
incorrect
spelling
of
the
last
name
changed
from
BA
ad
to
be
a
a
n,
also
item
one
point:
three
F:
a
service
retirement
for
Mitchell
Doherty,
changing
the
effective
date
from
September
20th
to
September,
21st
2019.
A
B
A
All
those
in
favor
aye
opposed
I
would
like
to
note
some
things
is
not
an
orders
of
day
for
this
meeting
there's
a
meeting
scheduled
for
the
Audit
Committee
that
is
scheduled
to
begin
at
noon.
There
is
a
typo
on
the
agenda
in
that
it
said
that
the
meeting
was
to
be
scheduled
at
the
retirement
services
offices
as
1737.
A
It
will
be
held
here
in
this
facility
after
the
meeting
and
at
the
scheduled
time,
and
so
there
folks
staffing
that
there
and
signs
being
posted
on
the
door
just
to
alert
people
of
the
type
of
it's
happening
here
in
this
facility.
So
it's
not
an
orders
of
the
day
for
this
meeting,
but
for
general
consumption.
A
C
D
A
E
A
Questions
or
comments
I
mean
that
eyelids
update
bring
questions
for
the
CIO.
Okay.
Thank
you
on
to
item
3b.
That's
discussion
on
the
approval
to
renew
a
one-year
agreement
with
al
born
American
LLC
for
20,000
dollars
a
month
on
a
month-to-month
basis
and
for
the
Secretary
to
negotiate
and
execute
an
agreement
for
not
to
exceed
amount
of
$260,000.
F
E
A
B
H
A
So
you're,
looking
at
me,
Tom
questions
from
staff
I
mean
the
delivery
request
for
a
recommendation.
This
was
presented.
I'll
give
the
thorough
presentation.
This
was
presented
to
the
IC
and
thoroughly
discussed
there
about
the
value
and
need
for
this
continued
engagement,
also
that
this
would
be
rivetting
as
the
allocation
gets
reinvented
and
brought
back
through
x'
through
the
board
and
do
we
have
a
timeline
and
when
that
bill,
that
rivetting
of
alternatives
in
all
portents,
here's.
A
A
So
before
the
end
of
the
year,
this
discussion
will
be
brought
back
to
the
board
about
the
allegation,
and
then
you
can
be
considering
whether
L
bar
needs
chickens
needs
to
persist
in
the
current
format
or
in
a
different
format.
And
so
this
is
to
maintain
the
agreement
through
that
period
to
abort
as
a
further
to
sit.
The
discussion
on
on
the
actual
allocation.
D
D
J
J
J
D
A
G
K
H
B
A
A
G
E
E
We
would
like
to
revisit
our
capital
market
assumptions
and
tweak
the
asset
allocation
if
necessary,
and
so
that's
exactly
the
process
that
was
followed
here.
We
did
go
to
the
IC
with
a
few
different
options
and
it
was
recommended
by
the
IC
that
three
or
four
options
we
brought
to
the
full
board
and
that's
what
we
will
be
discussing
today,
and
it
is
my
hope
that
we
can
discuss
and
take
action
on
this
today.
Then
I'll
turn
it
over
to
Laura.
Thank.
L
You
very
much
great
introduction
and
covers
most
of
our
intro
I
know
that
you
have
seen
much
of
this
document
at
your
retreat
recently
and
we
didn't
go
through
slides
in
as
much
detail
as
I
will
today.
But
the
the
purpose
of
this
document
is
to
either
reaffirm
the
current
asset
allocation
or
adopt
one
that
tweaks
some
of
the
asset
class
allocations.
L
I
know
that
we've
discussed
many
times
that
it
is
now
more
difficult
to
get
the
same
level
of
return
and
that
you
either
need
to
take
on
more
risk
to
to
get
the
same
level
of
return,
that
you've
earned
in
the
past
or
accept
a
lower
level
of
return,
and
so
we'll
just
skip
ahead
straight
to
page
six,
which
gets
into
the
options
that
we're
looking
at.
And
then
we
have
variety
of
slides
following
slide:
six
that
analyze
these
allocations
in
various
ways,
and
so
there's
a
lot
of
numbers
on
this
page.
L
But
if
you
look
at
the
two
columns
on
the
left,
the
current
cash
and
the
current
short-term
bonds,
this
is
the
asset
allocation
that
you've
already
adopted.
One
of
the
things.
The
only
difference
between
these
two
allocations
is
whether
or
not
if
you
look
under
low
beta
about
the
middle
of
the
page,
cash
equivalents
has
25
percent
or
cash
equivalents
has
5
percent.
In
short
term
bonds
has
20
percent
there's
not
a
huge
difference
in
yield,
typically
between
cash
equivalents
and
short
term
bonds.
L
If
you
look
down
at
the
bottom,
we'd
expect
about
a
10
basis.
Point
improvement
in
return
by
moving
from
cash
a
little
bit
further
on
the
yield
curve
to
short-term
bonds
over
the
long
term.
You
can
see
that
our
expected
standard
deviation
is
the
same
between
these
two
asset
allocations
at
eleven
point.
Six
and
viruses
standard
deviation
is
also
the
same
at
nine
point
two,
and
so
you
know,
we've
talked
with
staff,
and
we
really
think
that
you
know
this
change
between
cash
or
short
term
bonds.
L
These
asset
classes
are
so
close
and
sometimes
considered
the
same
by
some
groups
wouldn't
really
require
necessarily
a
change
in
asset
allocation,
but
given
the
shift
of
twenty
percent
of
assets
from
one
asset
class
to
another,
we'd
still
want
to
discuss
that
and
have
them
have
consent
by
the
board.
And
so,
if
you
look
along
the
bottom
here,
we're
showing
you
an
expected
20-year
return
an
expected
10-year
return,
and
then
you
see
both
the
makita
and
the
varus
daeviation.
These
are
based
on
capital
market
assumptions
that
we've
developed
and
that
Varys
has
developed.
L
The
absolute
number
I
would
encourage
you
not
to
pay
too
much
attention
to
then.
What
you
want
to
look
at
for
standard
deviation
is
the
relative
differences
in
standard
deviation
between
the
current
and
the
possible
alternatives.
Your
risk
policy-
that's
in
your
investment
policy
statement,
depends
on
the
numbers
from
beerus.
That's
why
we
had
beerus
run
these
as
well,
and
so
I'll
mention
that
all
of
these
asset
allocation
options,
even
the
most
the
most
risky
and
which
is
D
all
fall
within
your
risk
policy,
and
the
difference
is
that
all
highlight
between
some
of
these.
L
These
asset
allocation
policies,
US
equity,
would
increase
as
you
move
to
the
right
towards
policy,
D
and
developed
markets.
Equity
would
also
increase.
Emerging
markets
is
currently
at
10%
of
your
portfolio,
and
so
we've
we've
shown
some
options
which
go
up
to
12%
and
some
which
keep
emerging
markets
at
10%.
And
if
you
look
at
buyouts,
which
is
traditional,
private
equity,
you
see
that
all
of
the
alternatives
bring
that
down
to
8%
from
10.
Venture
capital
is
the
same
under
all
of
these
scenarios.
L
So
is
private
real
estate,
natural
resources,
which
includes
private
energy
infrastructure,
agricultural
agriculture,
things
that
are
private
real
assets,
would
increase
slightly
in
the
in
the
riskier
scenarios.
Moving
to
the
right
and
private
debt
and
emerging
markets
bonds
would
stay
the
same
under
all
of
them.
I've
already
highlighted
the
difference
between
the
two
current
allocations:
cash
and
short-term
bonds.
But
if
you
look
across
the
page
here,
cash
would
always
stay
at
5%
as
the
immunized
cash
flows
allocation.
L
You
have
designed
to
protect
5
years
of
net
cash
flows
so
that
you
can
take
more
risk
in
the
rest
of
the
portfolio.
Hedge
funds
would
go
down
to
5%
under
most
of
these
allocations
and,
as
you
would
increase
equity
as
you
move
to
the
right,
you'd
also
decrease
short-term
investment
grade
bonds.
That's
the
trade-off
here.
If
you
look
under
the
other
asset
class,
you
see
that
under
allocations,
a
through
D
we'd,
add
a
small
allocation
to
investment
grade.
L
Vons
tip
stays
the
same
as
does
core
private
real
estate
commodities
would
be
eliminated
as
an
asset
class
under
allocation,
C
and
D.
Then,
in
the
far
right
allocation
here
you
just
see
a
60/40
portfolio,
so
we're
trying
to
look
at
sort
of
a
pure
strawman
portfolio
that
people
throw
out
a
60/40
allocation.
This
is
60%
global
equity
and
40%
investment
grade
bonds.
So,
in
terms
of
our
expected
return,
you
can
see,
as
you
move
to
the
right,
the
more
equity
risk
you
take
on
the
less
bonds
you
have
in
the
portfolio.
L
You'd
expect
a
higher
average
annual
return
and
the
commensurate
trade-off.
There
is
that
you'd
also
have
a
higher
standard,
deviation
or
risk
with
moving
to
the
right
with
a
higher
expected
return.
The
good
news
with
a
higher
expected
return
is
you
have
a
higher
probability
of
reaching
your
assumed
actuarial
rate
of
return
each
year,
so
I
wanted
to
set
the
stage
by
talking
about
the
differences
between
these
policies
and
then
move
on
to
page
8,
which
looks
at
peer
asset
allocations.
L
So
take
these
exact
numbers
with
a
grain
of
salt,
because
they're,
self-reported
and
some
funds
break
out,
US
equity
and
international
equity
and
emerging
market
equity,
others
just
group
it
all
in
global
equity
and
that's
what
they
report.
But
some
of
the
key
takeaways
here
are
that
the
Federated
pension
plan
currently
has
a
lot
less
US
equity
than
the
peer
group
of
defined
benefit
plans,
but
defined
benefit
plans
over
a
billion
and
currently
has
a
higher
alternatives.
Wait.
L
Another
thing,
that's
notable
is
that
the
median
allocation
to
emerging
markets
for
those
who
report
it
as
a
separate
asset
class
is
about
5%
and
yours
is
currently
10%
and
your
asset
allocation
options
that
we're
considering
here
and
the
way
that
you've
moved
over
the
past
several
years
is
very
similar
to
your
peers.
If
you
look
at
over
a
hundred
pension
plans
that
are
state
pension
plans,
typically
equity
exposure
has
been
coming
down
and
alternatives
has
been
increasing
similar
to
your
plan.
L
We
then
have
a
variety
of
risk
analysis.
If
you
want
to
take
a
look
at
page
10
and
we
have
worst-case
returns-
that
we'd
expect
over
a
one-year
period
based
on
our
modeling,
so
the
probability
of
expected
experiencing
negative
returns
for
a
full
year
or
three
years
or
five
years.
You
can
see
that
the
numbers
are
different
in
terms
of
currently
we'd
expect
your
worst-case
return
for
a
one-year
period
to
be
16
percent
down.
L
If
in
the
riskiest
portfolio
we're
looking
at
here,
D
we'd
expect
seventeen
point
six
percent
down,
so
a
difference
of
about
a
percent
and
a
half
of
your
total
funds.
The
probability
of
experiencing
negative
returns
in
any
one
year
period
would
go
up
by
about
one
percent.
If
you
move
to
the
right,
your
probability
of
achieving
your
actuarial
soon
for
a
return
would
go
from
about
64
or
65
percent
to
closer
to
70.
So
I
think.
L
L
The
next
couple
of
pages
on
pages,
11
and
12
get
into
historical
scenario,
analysis.
So
what's
important
to
us
about
these
slides,
is
they
don't
depend
on
Makita
or
varus's
expectations
for
future
returns?
This
is
actual
historical
scenarios,
and
these
are
indexes
not
your
actual
managers
in
your
portfolio,
since
they
weren't
all
around
and
all
these
historical
time
periods
and
then
the
6040
you
can
sort
of
think
of
is
sort
of
like
an
average
peer.
L
That's
really
what
we've
seen
we're
now
in
the
longest
bull
market
in
history
at
over
10
years,
and
we've
seen
a
60/40
portfolio
do
better
than
all
others,
and
but
one
thing
that
that
stands
out
to
us
is
that,
if
you
do
look
at
these
historical
negative
scenarios
on
page
11,
the
6040
does
not
do
as
well
as
where
you're
positioned.
Currently
the
next
couple
pages
on
pages,
13
and
14
use
a
different
type
of
analysis
again,
just
to
sort
of
put
together
a
mosaic
of
the
different
things
that
we're
look
here.
L
But
again,
this
highlights
to
me
that
the
riskiest
scenario
were
evaluating
today
would
be
about
the
same
as
what
most
folks
consider
to
be
the
average
peer
in
these
negative
market
environments.
I'll
skip
ahead
to
page
16.
So
look
at
just
one
more
type
of
analysis
in
this
mosaic
that
we're
putting
together
we've
developed
a
model
called
economic
regime
management
that
looks
at
surprises
in
growth,
which
are
good
surprises,
an
interest
rates,
inflation
and
systemic
risk.
L
Historically,
however,
you
could
have
a
surprise
and
interest
rates
or
surprise
inflation,
so
you
can
see
on
page
16
here
the
current
portfolio
would
do
about
in
line
with
with
portfolio
a
in
terms
of
a
growth
surprise
and
then
the
riskier
you
get
the
more
equity
exposure.
You
get,
the
better
your
going
to
do
in
a
growth,
surprise,
environment.
L
If
the
economy
does,
if
the
markets
do
better
than
we
would
have
expected,
which
again
is
what
we've
seen
over
the
past
decade
or
so,
and
then
you
can
see
that
how
the
various
bars
react
if
we
were
to
have
an
inflation
surprise
or
an
interest
rate
surprise.
The
current
cash
portfolio
has
a
lot
in
cash,
and
so
you
could
see
that
holding
up
better
if
other
asset
classes
go
down
and
then
systemic
risk
relies
on
correlations
between
asset
classes.
E
So
when
we
did
the
asset
allocation
study
last
year,
we
used
makitas
model
as
well
as
varus
and
we'll
get
to
that
in
a
minute,
and
we
ran
it
at
a
12%
target.
So
if
you
look
at
the
current
portfolio
simply
because
of
how
risk
has
worked
over
the
past
several
months,
you
can
see
that
that
standard
deviation
has
actually
come
down
to
11.6
percent.
So
what
option
a
does?
Is
it
simply
being
brings
us
back
to
that
twelve
percent?
E
So
so,
if
you
want
to
keep
to
that
level
of
risk
that
we
targeted
last
year,
then
option
a
you
know
would
be
sort
of
a
no-brainer.
In
my
mind,
B
C
and
D
slightly
take
up
the
risk
and
I'd
like
to
just
talk
about
that
a
little
bit
one
of
the
things
that
we
have
seen
compared
to
our
peers.
What
are
the
reasons
why
a
peer
relative
comparison
may
or
may
not
be
appropriate,
because
San
Jose
is
unique,
as
is
every
plan,
but
you
like
it
or
not.
E
We
do
you
do
get
compared
to
your
peers,
and
this
comment
is
often
made
that
in
this
last
bull
market,
we've
pretty
much
lacked
the
our
peers,
because
our
equity
beta
has
been
lower
than
that
of
our
peers.
So
if
the
board
would
like
to
take
a
little
bit
more
risk
and
I
think
it's
very
prudent
to
take
a
little
bit
more
risk,
then
options,
B,
C
and
D
can't
be
considered.
Now
in
terms
of
timing,
it's
hard
to
say:
are
we
going
to
increase
equity
beta?
E
Just
when
the
mark,
when
there's
going
to
be
a
meltdown?
It
may
happen
that
way,
but
in
the
long
run,
I
think
the
plan
will
be
better
off
by
taking
on
a
little
bit
more
risk,
and
if
the
board
feels
the
same
way,
then
options
B,
C
or
D
can
be
considered,
and
the
other
are.
The
other
thing
I'd
like
to
point
out
is
that
our
hedge
fund
allocation
for
all
the
scenarios
present
at
B,
C
and
D
actually
drops
down
from
7%
to
5%.
It
used
to
be
nine,
went
to
seven
now.
E
It's
headed
on
its
way
down
to
five
and
that's
a
conscious
decision
that
we
have
made
I
think
the
head.
The
hedge
fund
program
exists
and
did
exist
previously
for
sound
reasons.
If
you
look
at
calendar
year
2018,
actually
our
our
basket
of
hedge
funds
did
better
than
cash
and
the
SNP,
but
it
does
come
at
a
cost.
The
cost
of
capital
is
pretty
high
for
hedge
funds,
and
now
that
we
have
you,
we
are
using
cash
as
a
buffer.
In
this
plan
cash
and
short-term
bonds.
E
A
F
L
I
mean
I
would
say
thematically
they're
all
very
similar
to
what
you
have
now.
The
main
difference
is
increasing
US
and
developed
market
equity.
In
some
of
the
allocations,
you
also
get
a
small
increase
in
emerging
markets
equity
in
terms
of
how
you
increase
risk
in
return,
there's
only
a
few
asset
classes
that
are
expected
to
return
long
term
over,
say
8%,
and
so
you
need
to
use
those
if
you're
going
to
increase
risk.
L
Emerging
markets,
equity
and
private
natural
resources
are
two
of
the
higher
returning
asset
classes,
and
so
you
can
see
in
sadie
where
we're
keeping
emerging
markets
equity
at
10%
we're
increasing
private
natural
resources
to
five.
So
you
know,
there's
only
certain
levers
that
you
can
sort
of
pull
to
try
to
increase
risk
and
return.
So
the
main
difference,
though,
is
just
increasing
equity
exposure
and
decreasing
short
term
investment
grade
bonds,
sort
of
commensurately,
as
you
move
right.
Okay,.
F
L
H
L
So
core
private
real
estate
is
more
liquid,
its
quarterly
liquid.
Typically
in
practice.
You
know
it
does
take,
maybe
six
to
nine
months
to
get
your
money
out,
but
private
real
estate
is
similar
to
private
equity,
in
terms
of
where
you're
committing
to
a
you
know
a
fund
with
a
10
to
12
year
life
that
you're
in
they're
investing
it
over
three
to
five
years
and
then
they
distribute
as
they
sell
the
properties
to
other
folks.
So
core
private,
real
estate
sort
of
has
a
different
risk
return
profile
than
private
real
estate.
L
It's
not
quite
as
illiquid,
and
it
was
a
you
know,
a
collaboration
with
staff
to
category
some
of
these
asset
classes.
We
moved
from
just
equity,
private
markets,
fixed
income
to
this
framework,
where
you
have
growth
and
low
beta
and
other
to
try
to
to
simplify.
You
know,
sort
of
the
drivers
of
return
over
time.
H
L
This
portfolio
and
in
sort
of
this
goes
to
the
other
council
members
or
board
members
comments
about
theme.
So
when
we
did
the
asset
allocation
back
in
2018
and
worked
with
staff,
there
was
a
desire
to
barbell
the
portfolio
so
rather
than
having
a
lot
of
asset
classes.
That
sort
of
return
like
the
market
or
like
peers
to
sort
of
have
a
higher
weight
to
low
beta
than
a
lot
of
folks
do
so.
L
E
Have
a
limited
risk
budget,
and
so
we
take
that
risk
and
I
say
limited,
because
San
Jose
is
an
outlier.
Our
sponsor
is
very
sensitive
to
fluctuations
in
portfolio
value,
because
25
percent
of
the
city's
operating
budget
goes
into
funding
the
pension
plan
and
which
is
I'm
sure
Chiron
can
address
that
later,
which
is
an
outlier
compared
to
all
other
plans
in
California.
So
when
you
have
that
and
you
couple
that
with
an
underfunded
plan,
so
the
task
is
difficult,
one
in
front
of
us
right.
E
The
other
thing
that
illiquid
do
for
us
is
if
we
had
exposure
a
similar
exposure
to
public
equity,
which
we
can
the
plant
will
feel
the
volatility
of
the
markets.
The
advantage
of
being
in
illiquid
assets
is
from
an
accounting
perspective
from
an
economic
perspective,
I'm
sure,
even
private
assets
are
fluctuating
just
as
much
as
public
assets,
but
from
an
accounting
perspective.
Just
because
of
how
evaluations
and
mark-to-market
work,
you
don't
feel
the
volatility
in
the
portfolio
as
much
so.
H
Thank
you.
That's
very
instructive
to
me
so
I
understand
that
the
private
markets
tend
to
obscure
the
volatility,
and
that
is
has
an
important
value
in
and
of
itself,
but
by
obscuring
it
I
mean
there
is
a
real
underlying
volatility.
It's
simply
not
recognized
in
a
mark-to-market
sort
of
way
we
say:
we've
gone,
we've
used
private
markets
to
achieve
a
high
return
or
that's
the
goal,
but
have
we
in
fact
achieved
a
high
return
in
the
past
to
date?
By
going
with
private
markets,
it
seemed
seems
to
be
for
naught.
E
L
L
Course
you
can
slice
and
dice
the
data
and
look
at
different
time
periods,
and
there
ones
were.
You
know
we
have
been
in
this
ten-year
bull
market
for
equities
the
private
markets
over
the
very
long
term
over
decades,
once
you've
built
out
a
program.
Typically,
our
funds
that
we
work
with
that
are
most
successful
over
the
long
term,
have
consistent
well
built
out
private
markets
programs
that
deliver
over
the
long
term.
So.
H
G
H
L
J
E
Yeah,
so
if
you
go
back
and
read
the
investment
policy
statement,
what
it
says
is
that
we
will
have
we
will
do.
We
expect
to
have
a
strategic
asset
allocation
review
done
every
three
years,
but
on
an
annual
basis,
we
will
revisit
our
capital
market
assumptions,
and
that
is
exactly
what
we
are
doing
today
and
we
are
not
asking
the
board
to
change
its
asset
allocation
today.
We
are
merely
giving
the
board
some
options
out
there
in
light
of
how
capital
market
assumptions
have
changed
over
the
last
year,
so.
L
A
D
A
Sure
here's
the
choice
in
front
of
us,
we
could
stay
the
same
or
we
could
choose
one
of
these
ones
in
front
of
us
or
kick
it
back
and
say,
come
back
with
something
completely
wholly
different
and
and
have
do
a
different
exercise.
Those
are
really
the
choice.
That's
maintain
the
current
choose
one
of
the
ones
in
front
of
us
or
kick
it
back
in
with
direction
to
say
we
don't
like
any
of
what
you
presented
to
us
do
something
else.
Those
are
our
choices.
In
my
mind,
I
mean.
D
D
Pull
your
microphone
closer,
so
it's
bugging
me
so
I
might
as
well.
Ask
it
so
the
commodities
exposure
as
we
go
further
right
in
the
matrix
goes
down,
but
our
standard
deviation
goes
up
and
I've
and
I
assume
the
replacement
for
commodities
is
private,
natural
resources
so,
and
that's
increasing
so,
is
that
why
the
overall
standard
deviation
as
well
as
varus's
risk
calculation
is
going
up
because
I
was
viewed
commodities
as
volatile
with
high
alpha
and
beta.
So.
L
We
have
a
higher
expectation
for
standard
deviation
for
private
natural
resources
than
we
do
for
commodities
because
of
the
Allah
quiddity,
and
so
in
part.
So
one
of
the
differences
between
how
we
develop
standard
deviations
and
how
some
of
our
competitors
might
is
that
we
sort
of
artificially
inflate
illiquid
asset
class
standard
deviations
to
percent
more
of
the
actual
economic
experience
rather
than
being
accounting
one.
It's
about
the
main
difference.
Okay,.
D
Thank
you
so
for
what
it's
worth
my
general
point
of
view
and
people
who
know
me
personally
will
find
the
shocking
I'm
a
bit
ambivalent
as
to
any
of
these
options.
I
think
they're,
all
thematically,
roughly
the
same
and
I
like
the
strategic
asset
allocation
that
we
set
last
year,
I
like
that
Makita
and
the
CIO
and
his
staff
are
presenting
us
with
this
kind
of
information
on
an
annual
basis,
because
I
think
adjusting
the
capital
markets
as
they
adjust
and
tweaking
is
important
right.
D
We
can't
set
assumptions
and
expect
them
to
hold
for
three
five
ten
year
periods,
and
so
it
I
think
we
are
I.
Think
all
of
these
options
have
merit
for
me
personally,
given
where
the
plan
is
in
terms
of
funded
status,
given
the
fact
that
the
staff
has
been
very
thoughtful
about
inflows
of
cash
as
well
as
expected
outflows
of
cash
and
they
feel
comfortable
with
greater
exposure
to
private
assets.
D
A
H
H
Evaluate
these
options
such
that
we're
not
relying
so
much
on
private
markets
to
obscure
and
suppress
the
real
economic
volatility,
because
over
the
past
10
years
we
would
have
done
much
better
being
in
public
markets.
And
yet
we've
been
led
to
conclude
that
private
markets
would
give
us
that
extra
return
with
much
less
volatility,
even
though
I
believe
that's
not
really
the
reality,
the
economic
reality.
B
H
E
E
So
the
assertion
that
private
markets
have
not
delivered
is
incorrect
based
on
these
numbers,
and
our
experience
actually
shows
that
one
of
the
reasons
that
our
clients
have
suffered-
and
this
is
not
just
San
Jose-
is
especially
when
you
embark
down
the
road
of
implementing
a
private
assets
program.
It's
very
important
to
stick
to
it.
E
Either
we
make
the
decision
not
to
be
in
private
assets
or
if
we
make
the
decision
to
stick
to
it,
because
this
has
happened
in
the
past
and
our
experience
has
shown
that
when
you
go
in
and
out
of
it,
you
actually
miss
out
on
important
vintage
years.
Now,
that's
not
to
say
that
the
public
equity
exposure
would
not
have
done
well
in
the
last
10
years,
but
I'm
just
cautioning
the
board
that
that's
been
our
experience,
and
that
should
be
careful
about
those
changes.
Another.
L
Thing
I'd
mention
is
the
plan
hasn't
been
at
its
target
for
private
markets,
so
right
now,
there's
only
11%
and
private
markets
relative
to
a
25
percent
allocation,
we're
getting
to
sort
of
a
number
on
the
reporting,
because
we
put
the
rest
in
public
equity
just
to
to
sort
of
top
up
the
asset
class.
So
we
can.
We
can
probably
do
some
sort
of
back
of
the
envelope
analysis
about
you
know
if
you
had
actually
committed
at
the
rate
that
was
intended.
You
know
my
belief
is
that
the
returns
would
be
better
I'm.
H
E
Iii
think
that's
I,
think
that's
a
fair
point
and
I
did
point
out
to
the
City
Council
that
had
we
had
a
70/30
in
the
fourth
quarter
of
2018
between
both
plans
we
have
six
billion
dollars
and
the
plans
sort
of
combined
lost
about
six
hundred
million
dollars.
So
if
you
can
stomach
that
kind
of
volatility
quarter
to
quarter
sure
70/30
would
be
a
great
way
to
go.
But.
H
E
A
The
one
thought
I
would
have,
and
and
mr.
oversight
I-
don't
disagree
with
your
assertion
to
get
more
information
and
to
have
it
the
different
thoughts
on
these.
That
does
seem
more,
like
the
strategic
asset
allocation
approach
of
rethinking
the
entire
thing,
as
opposed
to
how
are
we
doing
in
this
interview?
Meaning
I
mean
trustee.
Sun
brings
up
the
right
points
like.
A
How
often
are
we
doing
this
making
sure
as
Laura
having
kind
of
set
through
some
of
this
stuff
of
we're
gonna
set
this
out
allocation
and
not
actually
implement
it,
because
we
didn't
have
staff
or
people
on
board
to
actually
implement
those
plans.
So
we
could
actually
witness
what
you
know
that
we're
actually
there
and
see
what
that
experience
is
before
we
got
to
pivot
on
something
else,
and
so
that's
been
sort
of
my
push
for
the
last
couple
years
is
about.
A
We
set
a
plan
and
actually
implement
that
plan,
so
we
can
witness
what
happens
to
it
as
opposed
to
seeing
where
the
wind
blows
and
then
move
it.
Every
five
minutes
is
what
it's
been
feeling,
what
felt
like
towards
the
first
eight
years
or
so
being
on
here
and
we've
gotten
a
little
more
steady
Eddy
on
it,
but,
and
especially,
was
mr.
quanti
come
on
board
like
this
is
the
the
growth.
This
is
the
path
I
would
like
to
take.
Here's
our
strategic
asset
allocation
conversation
unfortunately,
was
prior
to
your
your
term.
A
Starting
now
that
doesn't
mean
that
we
can't
ask
mr.
planning
to
come
back
with
some
other
thoughts
or
have
a
more
deeper
discussion
on.
Does
the
board
want
to
make
a
strategic
decision
now?
What
you're
suggesting
seems
to
be
more
of
a
strategic
decision,
as
opposed
to
nuancing,
based
on
what
we're
seeing
and
that's
that's
my
perspective
on
it
and
there's
a
lots
of
folks
who
have
more
investment
experience
than
I
do
and
so
I'm,
not
hiding
that
or
saying
that
I
know
that
one
thing
is
better
than
the
other.
A
Whether
the
board
wants
to
have
a
further
discussion
on
strategic
planning
and
do
nothing
now.
That's
again,
that's
up
for
the
board
to
decide
I'm
telling
the
way
I!
Think
again,
because
this
will
kick
in
past
November's
I.
Don't
want
to
indicate
that
or
push
that
this
is
happening
one
way
or
the
other.
My
perspective
is
that
we
should
at
least
be
at
as
mr.
Ponte
says,
at
a
because
that's
really
what
we
had
said
when
we
were
doing
our
strategic
conversation,
but
that
you
know
if
it
almost
the
way
mr.
A
H
E
And
this
is
again
something
appointed
now
to
the
City
Council
because
they
raise
similar
questions.
Why
not
70/30
and
I
just
wanted
to
make
this
point,
though,
if
we
had
a
fully
funded
plan,
or
at
least
a
plan,
that's
90
percent
funded
and
if
we
did
not
have
a
sponsor
that
was
so
dependent
on.
You
know
the
volatility
of
the
pension
plans
results,
then
I
would
actually
say
a
70/30,
not
a
bad
idea.
So.
D
Yeah,
the
only
thing
I
was
going
to
add
is
you.
You
have
a
plan
that
predates
all
of
us
that
went
into
a
defensive
crouch
after
the
great
financial
crisis
right
and
missed
all
those
equity
returns
in
the
public
markets.
So
do
we
want
to
jump
in
and
buy
high
and
potentially
sell
low
by
over
weighting
to
equities?
D
At
this
point,
the
answer
might
be:
yes,
we
may
get
another
10-year
run,
but
can
the
plan
would
stand
that
kind
of
volatility
right,
so
everything
that
we
do
and
the
reason
we
meet
try
to
meet
with
the
City,
Council
and
councilman
Davis
has
been
incredibly
helpful
as
it
lays
a
hunt
for
this
effort,
because
it's
not
easy
is
to
explain
the
stakeholders
that
returns
don't
exist
in
a
vacuum.
They
exist
alongside
the
needs
of
the
stakeholders,
the
ability
of
the
city
to
raise
taxes.
D
If
we
miss
on
our
targets,
because
we
take
on
too
much
risk
and
we
get
very
little
guidance.
So
we
have
to
try
and
create
a
plan
here
that
seeks
for
as
much
return
as
possible
with
as
little
risk
as
possible.
We
know
the
world
doesn't
work
that
way,
and
so
all
of
the
thinking
is
not
just
in
the
abstract.
Let's
just
add
some
more
and
I'm,
not
suggesting
you're
saying
this
column's
we
have
a
strategic
plan.
E
D
H
Thank
you
just
one
comment
and
what
you
just
said
about
you
know:
jumping
into
the
public
markets
at
the
peak
or
potentially
at
the
peak
I
guess
I'm
less
concerned
about
that,
because
the
genius,
the
sublime
genius
of
asset
allocation,
is
to
reallocate
funds
when
a
particular
market
is
revaluated
downward.
So
there
is
there's
not
the
danger
I
see
in
in
increasing
an
allocation
to
any
particular
acet.
If
it
goes
down,
we
would
further
increase
our
asset
allocation,
maintaining
the
percentages
of
the
total
portfolio.
E
So
mathematically,
where
that
helps
going
back
to
strategic,
is
if
there
are
small
changes.
If
you
go
to
seventy
percent
equity,
30%
bonds
and
there's
a
20%
market
correction,
sure
you
can
rebalance
to
70/30
but
with
a
much
smaller
asset
base
and
so
I
think
what
trustee
Chandra
was
trying
to
say.
I
think
I
agree
with
that
is
you
know
one
of
the
reasons
we
do
this.
The
plan
was
the
2008-2009
experience
and
right,
and
especially
with
the
sponsor,
was
so
sensitive
to
hundred
turns
we're
trying
to
avoid
that
situation
again.
So
mathematically.
H
N
F
We
have
and
what
we
have
agreed
upon,
there's
been
so
much
work
and
discussion
put
into
all
of
this
material
which
I
have
to
underline
again,
because
it's
not
always
apparent-
and
you
know,
I've
lived
through
this
as
well.
So
what
I
would
say
is
that
if
we
given
that
we
have
our
strategic
asset
allocation
and
that
we
are
actually
below
sort
of
our
target
risk
level,
they
seem
to
be
the
most
obvious
and
easy
things
to
grapple
with,
rather
than
trying
to
reformulate.
You
know
yet
another
scenario.
I
I
do
appreciate
the
thoughtful
discussion
taking
place
and,
honestly,
you
know,
being
in
the
public
eye
having
a
public
meeting
I
appreciate
having
questions
that
are
sort
of
a
little
different
than
the
thought
that
we
have
been
moving
forward
on
so
in
allow
us
to
rethink
what
we
add
and
and
provide
some
historical
perspective
and
so
again,
I
appreciate
the
thoughtful
discussion.
I
do
want
to
remind
everyone.
I
Obviously
this
is
a
lot
of
work
by
Makita
and
staff,
and
it's
based
on
a
lot
of
exercise,
just
a
reminder
that
this
is
based
on
assumptions
and
expectations.
So
obviously
nobody
knows
what
the
future
holds.
We
ideally
will
be
sitting
here
in
2030
and
we
can
look
back
for
the
10-year
return
and
say
yeah.
They
were
right
or
not.
I
don't
plan
to
be
here,
but
you
certainly
welcome
to
to
attend.
I
I
You
know
letter
a
since
that
the
possible
approach
so
that
you
and
Liz
maintain
based
on
those
assumptions
the
same
kind
of
of
risk
other
than
that
you
know,
I
don't
have
any
for
the
commons
giome
a
very
good
comment
in
terms
of
distict
asians
and
the
rationale
behind
why
we
start
with
the
strategic
allocation
that
we
have
and
one
more
item.
One
of
the
reasons
we
have
our
returns
don't
show
to
the
average
stakeholder
that
the
decision
to
really
move
into
prime
real
estate
private
markets
is
because
number
one
in
terms
of
the
allocation.
I
We
are
considering
Norway
than
what
the
level
that
we
want
to
be,
but
also
because
we
means
those
six
years
have
we
been
actually
invest
in
those
six
years.
I
would
argue
that
you
will
see
those
returns
a
little
different
than
they
are,
but
that's
not
what
took
place
so
with
that
said,
I
know,
Prabhu
has
some
for
the
comments.
I
guess.
Mr.
E
Chairman
a
couple
of
things
so
for
the
record
I'm
a
big
fan
of
70/30
I
just
wish
we
had
a
90%
funded
plan
and
we
do
have
Danny
from
various
here.
Mr.
chairman,
if
Danny
would
like
to
comment
on
the
options,
there
is
a
handout
which
did
not
make
it
on
time
to
the
iPad,
but
everyone
should
have
it.
Perhaps
Danny
has
something
bad.
G
So
you
guys
have
already
gone
through
a
lot
of
the
discussion
here,
so
so
I'll
just
give
you
a
few
of
our
takeaways.
We
ran
this
analysis
on
our
n
independently
using
the
RISC
system
that
the
board
has
right.
So
that's
MSC
I
borrow
one
race
system,
along
with
some
of
our
own
capital
market
assumptions
that
we
have
so,
if
you're
making
a
decision
on
return,
we'd
recommend
you
use.
You
know
makita's
assumptions
there,
your
general
consultant,
but
we
have
some
additional
observations
from
a
risk
perspective
here
in
the
in
the
handout.
G
G
The
increases
in
volatility
are
consistent
across
both
makita's
capital
market
assumptions
embarrasses
so
that
just
basically
confirms
that
both
of
our
firms
have
expectations
that
are
consistent
across
some
of
these
different
asset
classes,
and
we
see
you
know
consistent
increases
across
these
mixes.
Expected
returns
are
going
to
increase
from
50
to
70
basis
points
from
the
current
allocation
by
moving
to
the
higher
risk
mixes.
G
So
this
is
the
trade-off
you
you're,
considering
making
is,
is
50
to
70
basis
points
of
additional
return
worth
the
additional
risk
that
we
take
on
and
there's
a
few
different
ways
to
think
about
that
and
I'll
go
into
kind
of
our
perspective
on
that
in
a
second,
the
return
per
unit
of
risk
or
the
Sharpe
ratio
are
pretty
consistent
across
the
mixes
they
change
slightly.
But
amongst
friends,
it's
basically
the
same
across
all
these
mixes.
G
So
we
in
one
of
the
back
slides
we
had
a
comparison
of
what
your
average
peer
is
right
and
the
average
peer
has
a
duration
of
I
think
it
was
one
point
three
years,
yeah
one
point
three
years,
whereas
your
ear
mix
today
has
a
duration
of
0.4
years.
So
what
does
that
mean?
That
means,
if
interest
rates
rose
a
hundred
basis
points
tomorrow,
your
plan
would
be
expected
to
lose
40
basis
points,
whereas
your
peers
would
lose
one
point
three
percent.
G
Alternatively,
if
they
fell,
if,
if
interest
rates
fall,
another
hundred
basis
points,
you
would
be
expected
to
gain
40
basis
points
where
your
peers
would
be
expected
to
gain
one
point:
three
percent,
so
not
big
bets.
These
are
small,
like
this
is
small
exposures
to
interest
rate
risk
right.
That's
the
takeaway
they're
jumping
to
slide
three
and
I'll
just
hit
on
this
one
slide,
and
let
the
discussion
continue.
So
the
risk
operating
zones
I
think,
is
as
you're
considering
potentially
moving
again.
G
We
I
said
they
at
the
onset
that
all
of
these
fall
within
the
expected
operating
zone
identified
in
the
investment
policy
statement.
Why
do
we
care
about
volatility?
You
had
a
healthy
discussion
today
that
identified
all
of
that.
If
I
were
to
distill
it
into
a
couple
of
sentences,
it's
really
that
you
care
about
volatility
because
of
the
impacts
it
can
have
on
your
funding
status,
the
unexpected
impact
you
can
have
on
your
funding
status.
G
If
you
take
too
much
risk,
then
you
can
be
exposed
to
a
drawdown
that
the
plan
could
not
handle
right,
and
that
was
the
whole
idea
coming
out
of
the
great
financial
crisis
of
why
the
plan
D
risked
as
they
said.
We
can't
expose
ourselves
to
a
drawdown
at
that
level,
so
we're
gonna
do
risk
the
plan.
If
you
don't
take
enough
risk
risk,
though
then
you're
not
going
to
achieve
the
returns
that
you
need
right.
G
So
your
plan
has
an
assumed
rate
of
return
or
expected
return
in
order
to
get
that,
you
need
to
take
the
risk
that
basically
has
been
identified
here
in
your
asset
allocation
study.
So
all
of
these
mixes
will
hit
around
the
risk
that
you
need
to
take
in
the
plan.
So
what
this
does
the
operating
zones
here?
J
J
I'm
not
seeing
all
those
for
the
current
cash
cut
card
before
we
go
to
option
D,
there
is
more
than
10%
changing
an
income
asset
class,
so
is
that
is
that
something
achievable
if,
if
that's
a
can
be
deemed,
if
pradhan
by
the
staff
shouldn't
stop
being
able
to
make
the
decision
with
the
semester
committee?
Well,
the.
E
Idea
behind
the
plus
or
minus
10%
is
really
simply
to
rebalance
to
target
it's
not
for
us
necessarily
to
make
a
judgment
call.
So
what
that
allows
us
to
do
is
so.
Our
goal
is
to
stick
to
the
strategic
asset
allocation
mix
at
all
times,
but
it
gives
us
some
flexibility,
so
we
don't
need
to
rebalance
on
a
daily
basis,
so
anything
within
that
plus
or
minus
10%.
We
would
actually
go
and
rebalance
on
our
own
go
back
to
strategic
asset
allocation
right.
E
So
that's
not
a
decision
that
we
are
making
based
on
an
analysis
of
asset
class
expectations.
This
analysis
is
actually
made
is
made
based
on
revised
capital
market
assumptions.
So
to
that
extent
I
view
this
as
more
as
tweak
to
the
si
a
than
a
normal
rebalancing,
which
is
why
it's
brought
to
the
world
so
because,
if
you
now
approve,
for
example,
option
D,
then
staff
would
still
have
the
flexibility
around
option,
D,
plus
or
minus
10%,
to
rebalance
back
to
target.
J
G
They
want
to
have
a
very
low
likelihood
of
having
a
drawdown
in
the
range
of
20
to
25
percent,
and
then
we
backed
into
that
twelve
percent
number
as
being
the
limit
for
total
planned
volatility.
The
plan
does
not
want
to
exceed,
and
then
we
put
the
operating
ranges
around
that.
So
the
idea
behind
that
is
12
is
your
limit.
We
don't
want
to
see
that
exceeded
as
you
approach
that
limit.
G
We
want
communication
from
you
know
from
from
the
consultants
from
the
CIO
to
the
investment
committee
and
then
to
the
board,
so
that
as
risk
is
potentially
increasing
through
time,
everybody
is
fully
aware
that
it's
increasing
and
can
have
a
discussion
about
it.
And,
conversely,
if
it's
going
too
low
and.
O
G
I
can
hit
on
that
real
quick.
So
these
are
really
just
differences
in
our
capital
market
assumptions.
Right
so
varis
we
have
our
own
research
team.
They
basically
break
down
expected
returns
for
each
asset
class
across
the
board.
Makena
goes
through
the
exact
same
exercise
that
we
use
a
you
know,
a
fundamental
building,
building
block
approach.
I
think
we'd
have
to
go
line
item
by
line
item,
to
figure
out
exactly
what
the
discrepancy
or
why
there's
a
difference
there,
but
you're
right.
Our
expected
returns
for
the
current
portfolio
or
at
6.2
percent
right
versus
7.7.
G
L
This
is
a
ten-year
yeah.
Sorry,
our
10
years
are
lower
as
well.
So
everybody
also
looks
at
a
different
time
periods
and
we
do
have
an
appendix
to
this
asset
allocation
document.
That
goes
through
our
expectation
setting
process,
and
you
know
just
isn't
it
sort
of
an
aside.
That's
why
you?
You
know
the
board
hires
groups
that
don't
also
manage
assets,
because
our
research
teams
have
no
vested
interest
in
saying
that
a
certain
asset
class
is
gonna
return
more
than
another,
because
it
might
make
us
more
money
like
an
asset
manager
might.
L
But
if
you
take
a
look
at
page
30
I
just
highlight
you
know,
we
go
through
a
very
long
research
process
each
year
to
set
these
expectations,
but
then
we
try
to
do
a
sanity
check
around.
You
know
how
do
they
compare
to
other
firms?
So
there
is
a
group
called
horizon.
That's
an
actuary
that
puts
together
unexpected
returns
for
34
different
respondents,
and
so
we
like
to
look
at
you
know,
does
our
20-year
average
look.
You
know
way
different.
A
O
L
G
G
That
was
me
that
I
made
at
the
onset
is.
We
would
recommend
you
the
board,
using
makita's
capital
market
assumptions
for
expected
returns.
We
included
this
for
informative
purposes
right.
So
if
it
helps
you
make
a
decision
on
whether
or
not
you
should
consider
risking
up,
then
that's
useful
but
use
Makita
Zoe.
A
L
A
E
E
A
In
the
time
period
is
the
thing:
that's
the
challenge
that
very
few
of
them
are
lining
up.
It
would
the
exact
time
period
that-
and
this
has
been
our
constant
battle-
why
don't
we
just
pick
10
or
pick
20
and
the
reality
is
it's.
It's
yes,
n,
because
we're
a
perpetual
fund
that
needs
to
be
planning
and
we
need
to
get
through
the
first
ten
years
and
hopefully
experienced
the
twenty
depending
on
what
direction
they're
going,
and
so
knowing
the
ten
is
important.
A
L
I
Issue
that
this
board
have
to
wrestle
with,
which
has
been
very
well
explained
by
the
cia's
from
the
trustees
and
just
that
point
to
trustee
son
I
just
wanted
to
if
I'm
mistaken,
please
correct
me,
but
the
twelve
percent
standard
deviation
was
actually
based
on
various
numbers.
We
are
using
to
a
percent
Makeda,
but
in
reality,
if
we
were
going
to
be
using
various
numbers,
we'll
have
more
flexibility
to
increase
the
risk
because
their
numbers
are
lower
on
the
standard
deviation
standpoint.
So
I
just
wanted
to
make
that
distinction.
I
A
L
A
G
So
the
one
point
I'd
like
to
make
about
so
it
says
various
standard
deviation.
This
is
the
volatility
that
we're
getting
out
of
MSC
I
borrow
one
wrist
system,
so
this
is
the
wrist
system
that
this
board
is
invested
in
and
that
we're
using
to
monitor
the
risk
in
the
portfolio
right.
So
this
is
all
your
underlying
exposures.
So
when
we
say
in
the
asset
allocation
study,
we're
looking
at
the
strategic
asset
allocation
volatility,
but
what
what
these
numbers
really
matter
for
what
these
limits
and
range
is
really
matter
for
is
your
portfolio.
L
Also,
it's
a
slide
in
our
quarterly
reporting,
but
in
terms
of
actual
volatility,
actual
experience
volatility
has
been
very
low
relative
to
expectations
for
everyone
across
the
board
really
for
the
past
ten
years.
So
the
funds
of
standard
actual
standard
deviation
was
seven
point.
One
percent
relative
to
a
seven
point:
seven
percent
pure
median
so
like
the
95th
percentile
of
the
pure
group,
had
a
standard
bucket
deviation,
so
the
highest
percentile
of
nine
point
two
percent,
so
everyone's
has
been
lower
than
the
actual
projected.
A
That
seems
like
a
good
three
to
six-month
conversation
that
you
all
need
to
have
and
I
like
no-brainers
and
I
I'm
gonna
make
a
motion
that
we
changed
the
asset
allocation
policy
to
a
as
its
presented
here
on
slide
6
of
the
makita
presentation,
and
we
can
have
further
discussion
in
a
minute.
So
my
motion
is
that
we
move
to
as
it
makes
a
deserve
a
second
second
okay.
We
could
certainly
have
discussion
before
a
vote,
and
people
can
influence
that
or
provide
substitute
motions
or
other
things.
A
It's
not
to
end
conversation,
if
other
people
want
to
hear
so
my
so.
The
reason
why
I
put
that
forward
that
we
have
a
motion
on
the
floor
is
one
year
from
staff
that
I
don't
think
we
can.
It
would
be
prudent
for
us
to
move
to
mix
a
now.
If
we
want
to
have
further
discussion,
say:
look,
we
have
all
mix
of
new
trustees
here
in
the
next
few
months.
A
A
D
G
D
D
A
A
E
M
L
I
A
H
C
A
Sorry,
the
standard
deviation
target
most
efficiently,
I
think
if
we
want
to
have
a
broader
strategic
discussion,
we
should
have
that,
but
not
in
this
discussion
in
my
mind,
because
then,
if
we're
gonna,
do
nothing
I
think
it
really
should
be.
We
should
Park
ourselves
a
take.
That's
really
what
we
said
we
wanted
to
do
last
year,
and
then
we
wanted
to
kick
off
a
strategic
discussion
about
how
we're
investing.
A
We
should
kick
off
that
strategic
discussion
while
we're
parked
in
a
and
that
we're
at
least
in
line
with
what
we
said
we
wanted
to
do
last
year
and
if
we
want
to
have
a
further
discussion,
that's
all
for
the
board
to
decide
and
if
we
want
to
do
that,
do
that
so
it's
kind
of
Miss
Anne.
So
my
recommendation
on
this
decision
set
is
to
move
to
a
if
you
want
and
then
further
direction
give
me
to
kick
something
off
later
on,
but
that's
sub
that
I
think
subsequent
to
this
decision.
So.
A
First
of
all,
I
really
appreciate
the
discussion
and
I
appreciate
people's
willing
to
challenge
thoughts
and
to
bring
their
own
ideas.
It's
it's
fruitful,
I,
actually,
I
I've
been
on
many
boards
for
many
things
and
I've
always
hated
when
we're
all
thinking
that
that
talking
the
exact
same
way,
I've
always
advocated
for
people
to
speak.
Contrary
ideas
to
help
people
think
through
and
advocate,
and
think
why
we're
doing
what
we're
doing
and
doing
things
intentionally
so
I
think
it's
great
I,
don't
discourage
it
at
all.
A
A
D
A
A
F
O
A
Right
welcoming
back
from
recess
the
one
thing
I
wanted
to
note
on
the
decision
that
was
made
on
under
item
3d.
That
was
on
the
discussion
reaction
on
the
asset
allocation
mix
by
Makita
the
yeah
eyes
on
the
motion
to
approve
mix
a
there
were
four
of
us.
Mr.
Horowitz
abstained
from
voting
on
that
one,
so
it
was
for
four
eyes:
zero
nose,
one
abstaining,
one
time,
stench
it
okay,
just
for
the
record,
so
we
get
the
minute
to
correct.
Please.
I
A
Item
so
we
have
a
time
certain
of
item
5d.
That's
the
interviews
of
the
public
member
trustee
for
the
board
of
administration
for
the
federated
say:
Employees
Retirement
System.
We
have
two
members
in
front
of
us.
We've
done
this
so
many
times.
This
is
exactly
our
third
time
since
2011
doing
this.
So
we
have
a
long
history
of
a
litany
of
how
to
do
this
and
so
general
sense
for
those
what's
going
on
here
we
have
several
seven
members
of
our
board.
Two
members
are
representatives
of
active
employees
just
to
son
and
I
are
those.
A
Mr.
Castellano
is
represented
from
the
retirees
retirees
group,
retired
members.
We
have
three
members
from
external
outside
sources
that
are
appointed
directly
by
City,
Council
or
postal.
All
seven
of
us
are
appointed
by
City
Council,
but
those
are
directly
appointed
by
City
Council
through
our
application
process
and
their
approval.
The
seventh
member
is
also
from
the
outside,
but
is
interviewed
and
recommended
by
us
to
City
Council
and
if
they
accept
that
they
approve
that
and
them
as
the
next
member.
So
this
is
known
as
the
seventh
member
it's
it's
recommended
by
us.
A
As
far
as
what
we
would
like
to
see
the
story
of
two
candidates
in
front
of
us-
and
so
my
understanding
is
there's
only
one
present
today
and
so
then
we
could
have
a
discussion
after
we
talk
with
them
and
make
our
recommendation
to
City
Council.
Do
we
have
an
idea
of
when
that's
going
to
City
Council.
I
A
I
I
A
A
Please
come
on,
so
we
have
this
great
public
interview
process.
We
have
so
in
front
of
us.
We
have
it's
a
your
application
provided
to
us,
along
with
mr.
Globes
clubs,
and
so
we
don't
have
like
a
formal
process
or
a
written
set
of
enough
questions.
So
the
way
I
have
done
it.
The
two
other
times
with
my
vast
experience
doing.
This
is
ask
for
a
brief
statement
introducing
yourself
what
your
interest
and
motivation
is
around
being
with
us.
A
B
B
O
Comment
in
a
question
number
one
I
just
want
to
make
sure
you're
aware
that
if
you're
on
this
board,
there
are
state
law,
comp
and
and
city
law,
conflict
of
interest
laws
that
apply
to
you
and
some
of
those
laws
allow
the
board
to
act
on
something
where
you
may
have
a
conflict.
If
you
recuse
yourself,
some
of
them
actually
prevent
the
board
from
acting
all
together.
So
it's
government
code,
section
1090.
O
Sometimes
if
you
have
a
financial
interest
in
a
con
tract,
then
the
board
be
prevented
from
acting
altogether
so
number
one
to
make
sure
you're
aware
of
that.
Yes,
if
you
come
on
board,
you
would
we
would
work
with
you
on
that
and
and
I
don't
want
to
put
you
on
the
spot
here
today,
but
just
if
I
could
just
very
sort
of
briefly
get
you
to
sort
of
discuss
without
being
in
detail
and
all
your
finances,
but
just
any
kind
of
I
see
with
the
the
Mellen
connection.
O
B
A
My
interest
in
this
is
really
to
find
people
that
are
willing
to
lift
up
some
wood
and
do
some
work
because,
as
the
beginning,
part
of
the
conversation
that
you've
witnessed
today
is
a
lot
of
the
investment
conversation.
There's
many
other
things
that
we
have
to
do
other
than
just
investments,
and
so
one
of
the
things
that
really
attracts
people
who
ought
to
do
in
this
work
is
they
get
to
be
around
the
investment
side
of
what
we
do.
A
I
would
say
over
the
bite
time
for
the
last
little
while
doing
this
is
that
it's
really
not
even
half
of
what
we
do.
A
lot
of
it
is
a
lot
of
tedium
around
policies
and
governance
and
legal
issues
and
actuarial
discussions.
You're
welcome
just
talk,
sit
around
for
some
after
this
well
we'll
have
some
great
discussions
with
our
actuaries
around
assumptions
and
so
forth.
Experience
an
interest
in
motivation
around
being
doing
that
stuff
and
ready
to
lift
wood
on
those
items
as
well,
not
just
influence
some
of
the
investment
discussions.
Sure.
B
When
I
was
Alan,
biller
and
associates,
which
is
consultant
primarily
focused
on
taft-hartley
I,
had
attended
more
board
meetings
and
sat
through
more
trustee
meetings
and
I
will
ever
want
to
unless
I
was
actually
involved.
The
aware
of
all
the
different
things
the
board
does
in
terms
of
managing
plan.
B
D
About
the
scope
of
the
work
I
joined
the
board
three
years
ago
and
I
come
from
an
investment
background
like
you
do
and
quickly
discover
that
that's
a
meaningful
and
important
portion
of
the
work,
but
there
are
a
lot
of
things
around
governance
around
working
with
the
office
of
retirement
services,
to
make
sure
that
the
stakeholders
card
employees
retirees
are
being
treated
fairly,
getting
their
benefits
a
lot
of
it
very
tactical.
So
I
just
wanted.
That's
a
comment,
not
a
question
that
there's
a
significant
amount
of
work.
D
You
know
you
may
be
a
great
candidate
for
our
investment
committee
at
some
point,
but
there's
a
lot
more
work
that
we
do
than
just
that.
So
I
just
wanted
that.
You
know
from
speaking
from
personal
experience,
that
that
was
one
of
the
first
things
I
observed
and
I.
Think
you
have
to
have
some
sort
of
appreciation
and
interest
in
that
for
me
trying
to
solve
some
of
those
problems
can
be
frustrating,
but
it's
also
intellectually
interesting
to
see
how
you
bring
stakeholders
and
different
organizations
together
around
some
of
these
issues.
B
D
Terrific
and
and
my
question
would
be
sort
of
and
I
think
this
gets
asked
in
the
application.
But
what
is
sort
of
your
understanding
of
the
relationship
between
the
city
and
the
board
between
the
board
and
the
stakeholders,
by
whom
I,
when
I
affectionately
refer
to
employees
and
retirees
the
stakeholders
as
one?
And
how
do
you
think
that
it
sort
of
influences
our
work?
Okay,.
B
B
You
also
have
very
much
a
fiduciary
obligation
to
the
city,
because
the
city
is
the
one
who
is
writing
the
checks
and
they
have
the
general
fund
that
they
need
to
be
paying
out
of
for
funding
these
and
it's
a
difficult
situation.
How
do
you
balance
getting
money
from
the
city?
How
do
you
and
the
investments,
and
also
meeting
the
obligations?
You
have
many
many
different
loyalties
that
you
have
to
be
meeting.
B
O
Just
a
very
brief
comment:
I
I'm,
not
judging
the
quality.
The
answer
is
a
perfectly
fine
answer.
I
do
just
want
to
be
very
clear.
This
board
does
not
have
a
fiduciary
duty
to
the
city.
Okay,
the
fiduciary
duty
is
only
owed
to
the
members
of
the
plan.
Now
there
are
many
circumstances
where
the
members
of
the
plans
interests
align
with
the
city's
interests
and
and
therefore
you
take
account
of
the
city
situation
in
making
your
decision,
but
I
mean
I've,
been
through
litigation
on
this.
This
very
issue
and
you
can't
serve
two
masters.
O
O
B
D
D
B
But
I
am
very,
very
encouraged
to
hear
about
going
into
less
liquid
asset
classes
and
alternate
the
classes.
The
I
think
that
discount
rated
6.75%
currently
and
that's
an
aggressive
discount
rate.
You
know
I've
looked
at
a
number
of
different
plans
that
have
much
lower
discount
rates.
Certainly
in
the
taft-hartley
world
we
had
higher
discount
rates
so
and
looking
at
the
various
projections
of
expected
returns.
What.
J
B
J
Really
provide
a
lot
of
great
education
to
me
regarding
the
state
pension
system
and
then
the
fiduciary
duties
for
the
board
members
and
the
how
the
board
should
be
struck.
What
what's
what
the
board
should
think
about?
It's
the
most
important
thing,
but
during
those
trainings
I
found
very
few
external
members,
most
people
attending
those
trainings,
our
employee,
wraps
or
retiree
wraps
very
few
so-called
expert
from
external
work,
actually
attend
those
meetings.
Those
meet
those
training.
J
Those
training
does
not
provide
a
lot
of
improvise
in
gaps
into
educational
investments,
because
you
know
that's
not
what
it
clear
to
be,
but
it
does
provide
a
lot
of
my
administrative
or
governance.
Information
on
the
board
and
I
actually
sincerely
hope
all
external
memory
candles
training
really
helps
you
help.
They
really
help
me
to
understand
what
I'm
supposed
to
do
as
a
board
member,
so
I'd
like
to
see
more
external
member
attending
those
trainings
and
then
really
bring
back
the
knowledge.
B
So
I
do
do
independent
consulting
on
the
side,
but
that's
sort
of
very,
very
flexible
and
I
I
can
work
around
various
schedules.
I
don't
have
a
lot
of
experience,
direct
experience,
working
with
California
retirement
plans.
That
being
said,
I
have
worked
with
plans
all
over
the
world,
whether
superannuation
schemes
in
Australia
or
New
Zealand,
whether
it's
retirement
plans
in
Europe
in
the
Middle
East
sovereign
wealth
funds,
so
I've
been
around
institutional
asset
classes
and
institutional
plans.
B
A
A
B
A
I
I
The
second
is,
if
you
are,
if
you
are
the
selection,
with
this
board
and
you're
appointed
by
the
City
Council-
and
you
have
a
time
today
to
have
a
little
more
fun,
it
may
be
helpful
if
you
can
see
through
the
actual
representation,
because
you're
gonna
be
asked
to
be
making
decisions
next
month.
Based
on
that
information
as
well.
So
I
just
wanted
to
make
that
point
clear.
Okay,.
I
I
A
Was
not
here
so
so
open
up
for
discussion
here
of
mr.
clove,
the
only
other
exposure
I
had
to
mr.
clove
that
would
be
relevant
to
this
discussion
would
be
the
conversation
he
had
when
I
believe
mr.
Horowitz
was
appointed
at
City
Council.
Both
were
interviewed
there
as
well,
and
so
I
did
get
to
witness
some
of
that
conversation
and
his
answers
to
those
questions.
That's
that's
really.
The
only
other
thing
that
I
had
as
far
as
informing
anything
that
I'm
gonna
say
today
is
besides
his
application.
I
did
witness
the
conversation
that
both
mr.
A
D
A
I
I
I
H
A
And
the
one
thing
I
we
were
I
was
looking
for
is
to
again
because
I
think
sometimes
for
this
board
to
have
a
balance
of
opinions
and
persuasion
having
all
investment.
People
are
having
a
super
heavy,
because
it's
one
of
the
challenge
I
have
on
the
employees
I'd
being
attracted
to
these
positions.
They
think
you
have
to
be
this
investment
guru,
otherwise
you
you're
not
even
close
to
qualified
I'm,
probably
evidence
that
you
don't
need
to
know
much
about
investments
to
have
a
meaningful
educated
discussion
on
it.
A
That's
what
we
have
consultants
and
staff
for
that
you
can
get
educated,
as
trustee
son
indicated
by
different
means.
Propably
investment
ones,
you're
talking
about
I,
agree,
aren't
that
Hardy,
but
there's
definitely
opportunities
as
I
was
hoping
that
we
get
candidates
and
potentially
in
future
employee
candidates,
we
have
a
balance
of
employees
and
and
folks
that
have
a
additional
experience.
Besides
a
heavy
investment
perspective,
though
I
don't
see,
I
mean
mr.
Geller's
resume
and
both
his
conversation
here
today
is
but
I
like
it.
A
I,
like
you
seem
like
someone
I'd
like
to
have
around
working
with
it
seems,
have
a
broad
range
of
experience
that
could
influence
us
as
far
as
how
we
have
how
we're
thinking
about
our
problem
set
based
on
experience
that
so
my
only
drawback
is
that
both
candidates
were
very
heavily
focused
on
investment
side
and
that's
and
that's
fine
and
I-
understand
that's
a
what
everybody
thinks.
That's
all
we
do
and
I
really
fight
for
even
stuff
on
the
employees,
I,
don't
making
sure
we
get
a
balance
of
employees
on
here
as
well.
Yeah.
D
It's
clearly
not
what
all
we
do,
but
by
the
same
token,
if
you
look
at
some
of
the
trustees
who
have
come
off
like
trustee
Dirk's
and
Armstrong,
they
had
strong
investment
backgrounds
and,
as
the
conversation
earlier
in
many
conversations
have
shown
us,
there
are
very
complicated
issues
and
having-
and
it
is
one
of
them,
it
may
not
be
time-consuming
wise
50
percent,
but
certainly
I,
think
in
terms
of
magnitude.
It's
the.
D
A
Second,
great,
a
second
from
mr.
Horwitz,
all
those
in
favor
aye
opposed
seeing
none
we'll
take
that
to
City
Council.
Thank
you
thank
you
for
being
here.
Okay,
so
we're
gonna
go
back
into
the
order
where
we
were.
We
were
at
item
3
3e.
This
is
a
presentation
of
calendar,
1,
2019,
private
equity
report
by
Neuberger,
Berman.
N
Turning
to
the
first
page,
this
is
a
highlight
of
federated
complete
private
equity
investment.
The
first
column
in
the
middle
being
labeled
legacy
are
the
investments
that
were
made
prior
to
the
Neuberger
strategic
partnership
and
those
are
continuing
to
develop,
although
very
mature.
At
this
point,
the
Neuberger
investments
and
strategic
partnership
was
established
in
May
of
2017.
N
So
as
of
the
date
of
this
presentation,
which
is
q1
nearly
two
years
into
the
program
as
a
q1,
we
did
have
16
primary
fund
investments,
one
secondary
investment
and
17
co-investments
during
q1.
The
only
change
to
that
was.
We
did
make
two
new
primary
fund
investments
during
q1,
so
at
the
end
of
2018,
you
would
have
seen
14
primary
fund
investments,
as
I
mentioned.
N
It
is
early
in
this
program,
but
just
in
terms
of
investment
pays
as
of
q1,
it
was
a
total
of
a
225
million
dollar
program
and
60%
of
that
had
been
committed
at
that
point
and
if
you
look
a
little
bit
further
down
the
contributed
capital
for
the
Neuberger
account.
Forty
three
point:
seven
million
dollars
is
about
32%
invested
at
that
point
and
if
you
continue
to
page
two,
this
show
a
benchmarking
analysis
for
the
legacy
investments
in
the
federated
program.
N
N
The
performance
for
these
are
very
early,
so
not
a
lot
to
take
away
from
this,
but
as
the
portfolio's
develop
more
the
underlying
investments,
as
each
of
these
funds
continue
to
invest
into
more
companies,
you
will
see
this
become
more
relevant
and,
of
course,
the
investments
we
made
in
2018
and
2019
the
benchmarks
for
those
are
not
yet
available.
It's
a
little
bit
too
early.
So
as
time
goes
on
and
those
are
available,
you
will
see
the
benchmark
statistic
for
that.
Can.
J
A
N
Sure
so
investment
number
29
that
investment
as
a
q1
actually
only
had
one
underlying
portfolio
company
and
it
was
about
ten
percent
committed.
So
what
you're,
seeing
there
is
that
investment
that
one
investment
and
how
that
cost?
However,
there
are
fees
and
expenses
associated
but
and
that
have
been
called
on
behalf
of
that
investment.
N
Moving
on
to
page
four,
this
is
just
so
you
can
visually
see,
they
commit
the
commitment
amount
and
where
they
are
based
on
the
vintage
year.
So
you
can
see
the
legacy
portfolio
and
the
diversification
and
how
much
was
committed
by
vintage
year.
You'll
see
it's
a
little
sporadic
moving
forward
in
the
NB
JTG
partnership
that
will
continue
to
diversify
and
hopefully
evenly
diversify
over
vintage
years,
and
so
you
can
see
how
this
is
developing
over
time
and
the
next
page
page
five
is
the
same
analysis.
N
N
Turning
to
page
six
and
seven,
this
is
an
analysis
that
shows
your
performance
by
the
multiple
of
invested
capital
by
asset
class.
So
you
you
can
see,
and
it
includes
both
the
legacy
investments
as
well
as
new
burger
investments.
So
you
can
see
where
really
your
the
value
was
driven
on
an
asset
class
basis
in
the
legacy
portfolio
and
kind
of
where
it's
coming
from
initially
on
the
new
burger
portfolio
and
then
interesting
enough.
N
You
can
see
the
combined
one
as
well,
and
this
is
a
good,
a
good
indicator
of
kind
of
what
you
would
expect.
Special
situations
tend
to
develop
a
little
a
little
bit
quicker,
and
then
you
can
see
on
page
seven
venture
capital.
It
is
a
slower
to
develop
asset
class.
So
this
is
this
is
what
we
would
expect.
N
Page
eight
is
a
similar
scenario,
but
is
on
investment
type,
so
primary
investment,
secondaries
and
co
investments
and
again
this
is
exactly
what
you
would
expect
early
on
in
a
portfolio
that
contains
secondaries
and
co-investments
secondaries
and
co.
Investments
are
a
great
mitigant
to
the
J
curve,
and
so
you
can
see
that
those
are
helping
early
on
performance.
Those
investments
get
put
into
the
ground
immediately
and
are
faster
to
develop.
N
N
And
then,
if
you
turn
the
last
two
pages
are
a
lot
of
numbers
very
small
print,
but
just
give
you
an
underlying
detail
of
each
investment
within
the
legacy
portfolio
and
the
Neuberger
neuberger
berman
portfolio,
and
you
can
see
the
underlying
growth
IRR
and
the
growth
mo
I
see
how
much
has
been
contributed
and
the
total
fair
value.
So
you
can
see
what
investments
are
where
and
then
page
twelve
at
the
very
bottom.
You
can
see
both
totals
for
legacy
Neuberger
and
then
the
total
fund
and
incorporating
both
of
those
investments.
H
N
Yeah,
that's
on
page
yeah,
that's
about
page
11
and
12.
That
is
because
the
underlying
funds
we're
just
showing
their
performance,
and
so
we
don't
necessarily
take
our
fees
and
try
to
pro-rata
it
out
by
investment.
We
typically
show
our
net
returns
on
a
net
fund
basis,
and
so
you
can
see
obviously
on
on
the
first
page,
the
summary
page,
one
our
net
return
and
if
you
look
at
the
on
page
twelve
Neuberger
investments,
the
total,
the
growth
and
I
see
is
1.15,
and
so
that's
that's
the
growth.
But
the
net
is
on
page
one.
N
So
not
not
not
a
big
difference
at
this
point,
but
that's
that's
why
we
we
show
it
as
growth
on
those
pages
just
because
it's
not
typically
done
that.
We
would
that
we
would
go
through
each
one
and
and,
as
you
know
so,
legacy
investments
were
done
directly
by
San
Jose.
So
those
wouldn't
have
net
returns
like
the
gross
would
be
your
net
return.
N
A
On
to
item
F,
G
and
H,
these
are
presentations
of
sorry.
This
is
items
three
F
G
and
H
presentation
of
quarter,
one
private
markets
report
by
Makita
and
then
quarter
to
2019
performance
for
the
pension
and
quarter
to
report
from
the
Health
Care
Trust.
Those
open
them
all
up
and
you
can
go
through
a
measure.
K
K
Total
private
market
program
consists
of
legacy
private
equity,
the
Neuberger
fund
of
one
private
debt,
real
estate,
real
life
and
real
assets,
spanning
roughly
eight
hundred
and
nine
million
dollars
in
committed
capital,
which
has
achieved
a
net
IRR
of
seven
and
a
half
percent
as
designated
in
that
far
right-hand
column
will
jump
into
specific
asset
classes,
beginning
with
private
debt.
On
page
five.
K
Within
private
debt
there's
nearly
200
million
dollars
in
committed
capital
to
five
private
debt
partnerships
and
to
Co
investments.
This
represents
roughly
3.3
percent
of
the
retirement
system
versus
a
four
percent
policy
target.
In
the
first
quarter
of
2019,
there
were
roughly
7.9
million
dollars
in
contributions
towards
private
debt
receiving
0.1
million
dollars
in
distributions,
and
there
was
also
one
new
commitment
to
a
co-investment
Crestline,
and
this
was
a
1.6
million
dollar
Contribution.
K
Flipping
through
to
page
eight,
we
could
jump
into
some
of
the
performance
summary
for
your
managers.
As
a
reminder
when
looking
at
the
performance
summary
IRR
in
the
net
investment,
multiple
are
the
most
meaningful
measures
of
return.
That
would
be
they
fourth
column
from
the
right
and
third
column
from
the
right
respectively.
K
We
would
get
the
private
debt
program.
We
also
think
it's
prudent
to
take
a
timeline
of
the
vintage
year.
Investments
within
the
program
as
the
bulk
of
investments
are
were
invested
in
2010,
that
being
a
hundred
and
fifty
of
the
hundred
and
ninety
six
point
six
million
dollars
in
committed
capital.
We
also
think
it's
important
to
frame
the
market
environment.
Please
keep
in
mind.
This
is
a
first
quarter.
2019
presentation
coming
off
the
large
sell-off
that
we
saw
in
the
fourth
quarter
of
2018,
most
notably
in
December.
K
K
K
Roughly
a
third
of
this
portfolio
is
driven
by
more
legacy
real
estate
investments
over
ten
years
old,
and
there
is
one
particular
outlier
that
weighs
on
performance
in
vintage
year,
2006,
which
significantly
skews
otherwise
strong
results
that
we
see
throughout
the
real
estate
program.
In
the
first
quarter
of
2019.
K
Here
we
saw
real
estate
returns,
driven
by
commentary
around
lowering
of
interest
rates,
and
we
also
saw
vacancy
rates
decreased
slightly
in
the
first
quarter,
a
quarter
over
quarter
basis,
but
we
also
saw
landlords
command
significant
pricing
power
over
tenants
able
to
increase
rates
within
real
estate.
Given
the
strong
US
economy,.
J
K
Okay,
I
will
continue
through
two
real
assets.
Real
assets
begins
on
page
eighteen.
As
of
30
31.
There
are
roughly
twenty
eight
million
dollars
in
committed
capital
towards
real
at
the
real
assets
program.
Two
two
funds
representing
roughly
one
percent
of
the
system
versus
a
three
percent
target.
In
the
first
quarter
there
are
1.2
million
dollars
in
contributions,
zero
point,
eight
million
dollars
in
distributions
and
no
new
commitments
within
the
real
assets
program.
K
Page
twenty
one
breaks
out
the
performance
summary
of
investments
within
real
assets.
I
will
note
that
the
real
assets
program
is
still
maturing.
The
system
did
have
two
investments
that
were
agreed
subsequent
to
the
first
quarter
of
2019.
These
are
actually
detailed
on
the
page
prior
they're
on
page
20,
that
being
kimbridge
five
within
energy
and
global
infrastructure
partners,
four
with
an
infrastructure
so
we'll
be
seeing
results
from
those
two
investments
in
future
reports.
L
Chris
is
also
gonna
go
through
the
broader
report
that
includes
public
assets
as
well,
and
in
that
report
you
can
also
see
time-weighted
returns
for
private
markets,
which
you
can
point
out.
So
internal
rate
of
return
is
the
best
way
to
evaluate
an
individual
private
markets
partnership
and
can
be
compared
to
benchmarks.
That
will
also
show
you
on
a
time-weighted
basis,
so.
K
K
This
page
designates
the
world
markets
as
of
the
second
quarter
of
2019.
The
second
quarter
continued
strength
that
we
saw
in
the
first
quarter
coming
off
of
the
downturn
that
we
saw
in
the
fourth
quarter
of
2018.
We've
seen
strong
markets
overall,
broad-based
market
strength
with
commodities
being
the
only
negative
performer
in
the
second
quarter,
while
year-to-date
commodities
and
small
cap
have
been
the
only
negative
contributors
index
wise
to
returns.
Page
5,
we
detail
worldwide
indexes
of
across
a
wide
variety
of
asset
classes.
K
While
on
page
12
we
detail,
inflation
continues
to
be
subdued
at
well
under
2%.
It
will
also
conclude
us
market
strength
on
page
13,
noting
the
US
unemployment
rate
is
driving
towards
all-time
lows
there
at
3.7
percent
on
page
13,
there's
no
big
market
questions
we'll
continue
through
to
returns
for
the
system.
Any.
K
Okay,
we
have
performance
for
the
system
as
of
June
30th
2019,
beginning
on
page
22,
as
at
the
end
of
the
second
quarter,
the
system
was
valued
at
two
point,
one
to
seven
billion
dollars.
You'll
note
that,
on
that
right-hand
side,
all
asset
classes
are
within
IPS
range,
with
growth
representing
roughly
58
percent
of
the
current
allocation,
0
beta
32
and
a
half
percent
and
other
representing
nine
point.
One
percent
page
23
jumps
into
asset
class
returns
and
returns
for
the
system.
K
Most
of
these
returns
have
been
driven
by
a
risk
on
market
environment
that
we've
experienced
over
those
time
periods
with
the
growth
asset
class
up
3.3%
in
the
quarter
date
and
up
13
percent
year-to-date
through
we
recognize
that
these
numbers
are
slightly
dated.
Typically,
we
present
the
June
30th
report
roughly
a
month
earlier
to
you
all
here
at
the
board,
but
due
to
some
delays
that
we've
seen
from
the
custody
provider
with
the
system
that
has
forced
us
to
delay,
reporting
and
presentation
here
until
this
month.
K
K
Continuing
through
to
us
equity
we'll
touch
base
on
the
theme
of
large
cap
outperforming
small
cap,
you
see
your
Large
Cap
index.
The
Northern
Trust
Russell
1000
has
outperformed
your
Russell
2000
value
and
the
year-to-date
fiscal
year
today
period
pretty
significantly,
but
also
your
active
manager
within
small
cap
Cove
Street
small
cap
value
has
had
very
strong
returns,
especially
in
the
quarter
date.
Year-To-Date
fiscal
year-to-date
time
periods,
driven
by
stock
selection
and
also
since
inception,
we'd
like
to
note
that
they've
performed
nicely
outperforming
the
benchmark
rank
in
the
30th
percentile
versus
fierce
within
international
equity.
K
The
bulk
of
those
assets
are
invested
in
passive
index,
the
Northern
Trust
MSCI
world
X
US
and
there's
also
an
investment
towards
a
small
cap
growth
manager,
/
wise
international
opportunities,
which
has
performed
nicely
and
is
also
handily,
outperforming
its
benchmarks
since
inception,
ranking
the
30th
percentile
versus
peers
with
an
emerging
markets,
equity.
Half
of
these
investments
are
invested
in
a
passive
index.
The
Northern
Trust
MSC
IEM,
which
is
roughly
mirrored
benchmark,
returns.
We've
also
seen
you.
We've
also
seen
growth
outperform
value
here
in
emerging
markets
as
well.
K
Your
growth
manager,
gqg
global
emerging
markets
with
very
nice
returns,
ranking
in
the
third
percentile
since
inception,
and
your
value
manager
struggling
versus
the
broad-based
emerging
markets
return
but
still
ranking
the
51st
percentile
since
inception.
We'll
also
note
that
calm
jest
is
detailed
in
this
report
and
subsequent
to
the
second
quarter.
This
is
a
watchlist
manager.
They
were
terminated
subsequent
to
the
second
quarter,
continued
through
to
page
30.
Within
marketable
alternatives,
there's
been
a
nice
boost
to
performance
within
the
system.
K
All
three
managers
performing
nicely
since
inception
outperforming
their
respective
benchmarks,
as
you
could
see
in
that
designated
by
the
right-hand
column
there.
What's
your
since
inception,
market
of
alternative
equity
bucket
returning
5.7
percent
versus
the
respective
benchmark
up
3.9%,
this
brings
us
to
the
private
markets
portion
of
your
portfolio
as
Laura
had
alluded
to.
These
are
time-weighted
returns.
Private
markets
have
continued
to
be
a
strong
driver
of
portfolio
returns.
K
Policy-Wise
represent
roughly
25
percent
of
the
system.
You'll
note
that
24.8%
are
allocated
towards
private
markets
as
of
June
30th,
although
the
bulk
of
those
assets
are
index
based,
while
your
private
markets
investments
ramped
up
towards
target
as
designated
by
the
11.1%
allocation
towards
private
markets,
X
Russell,
3000,
I.
L
K
We
did
take
a
bit
of
a
deep
dive
into
private
to
private
markets
during
that
presentation,
so
there's
no
questions
on
private
markets
will
continue
through
to
emerging
markets.
Debt,
emerging
markets,
debt
was
also
a
nice
driver
of
portfolio
returns
in
the
risk
on
market
environment.
Returning
three
point:
seven
percent
in
the
quarter
today
period
and
nine
point:
one
percent,
year-to-date
you'll
note,
Anu
manifested.
K
Within
the
0,
beta
bucket
also
had
positive
investment
performance
for
the
system
up
1.5
percent
the
quarter
day
period
up
three
percent
in
the
year
two
day
period
consists
of
short-term
investment,
investment
grade
bonds,
immunized
cash
flows
and
also
your
absolute
return
vehicles
within
immunized
cash
flows.
You'll
note
a
new
manager
as
well.
That's
insight,
immunized
cash
flows,
which
was
hired
towards
the
end
of
the
quarter.
There.
K
Lastly,
that
brings
us
towards
your
other
bucket.
The
other
bucket
represents
roughly
nine
point
one
percent
of
the
system,
as
performed
nicely
as
well
outperforming
the
other
benchmark,
90
basis
points
in
the
quarter
of
day
period
up
three
point:
six
percent
in
the
year
two
day
period
consisting
of
core
real
estate,
commodities
and
tips.
A
new
manager
within
that
bucket
is
Clary
online
properties
fund,
which
was
also
funded
within
the
second
quarter.
A
H
So
I'm
trying
to
understand
back
on
page
18,
you
have
17
18.
You
have
commentary
about
individual
investment
managers.
You
comment
on
18th
at
both
Cove
Street
and
over
Weiss
have
underperformed
their
indexes
over
time
and
I'm,
trying
to
reconcile
that
with
the
numbers
I
see
on
page
28
from
Cove
Street
and
oh
yeah,.
L
That
has
to
do
with
the
watchlist
criteria
in
the
investment
policy
statement,
which
is
that
if
any
manager
has
out
underperform
for
a
three
or
five-year
period,
they
need
to
be
on
the
watchlist.
So
even
if
the
manager
has
outperformed
since
inception-
and
we
really
don't
have
any
performance
concerns
with
them,
they
end
up
on
that
page.
K
Coasts,
really,
they
have
outperformed
over
all
time
periods,
except
for
the
five
year
time
period.
So,
if
you'll
see
on
page
28
all
times
periods,
they've
shown
nice
performance,
but
that
five-year
time
period
they're
up
5.1
percent
versus
the
benchmark
up
five
point,
four,
so
by
lagging
by
the
30
basis,
points
there
that's
what
triggers
to
watch
this
criteria.
Despite
this,
it's
since
inception
out
performance
and
just.
M
K
F
F
L
Places
you
know
the
health
care
is
invested.
Similarly
with
no
different
managers,
except
for
index
funds
relative
to
the
pension
and
so
in
the
health
care
report.
On
page
21,
you
can
see
the
health
care
allocations
relative
to
targets.
The
fund
is
bumping
up
against
300
million
at
two
hundred.
Ninety
seven
point:
eight
million,
as
of
the
end
of
June
and
all
asset
classes,
birth
in
their
investment
policy
statement
ranges,
and
you
can
see
performance
on
the
next
slide.
L
Next
couple
slides
on
page
22
and
23,
and
the
fund
for
the
second
calendar
quarter
was
up
2.1
percent
year-to-date
period
of
9.2
and
for
the
fiscal
year
of
4.2,
and
then
you
can
see
the
individual
manager
benchmarks
similar
to
the
pension.
The
quarter
and
the
calendar
year
to
date
period
were
quite
strong,
but
then
the
fiscal
year
includes
that
late,
2018
correction,
so
I
won't
go
into
individual
management.
None
of
them
are
unique
from
the
pension.
Unless
there
are
questions.
I
Thank
You
mr.
chair
just
a
couple
of
minutes.
If
you
bear
with
me,
we,
as
you
know,
you
had
an
interview
this
morning
for
one
of
the
open
seats
for
you
bore
from
outside
member.
As
you
also
know,
our
chair
is
actually
running
off.
The
plan
at
the
end
of
November
next
month
will
be
his
last
meeting
and
you
can
see
how
that
affected
him,
and
so
the
city
is
running
an
election
for
that
seat
and
unfortunately,
we
didn't
get
any
applicants
when
the
first
process
closed,
so
we're
each
of.
A
I
City
clerk
and
that
they
will
be
open
the
application
process
again
for
the
members,
C
October
28th
and
it
would
run
through
5
p.m.
Friday,
November
15
and
the
election
will
be
held
on
Monday
January
6
2020.
So
the
goal
is
to
have
that
seed.
That
is
being
back
aided
by
share
Lodge
to
be
here
for
you
first
meeting
of
the
year
2020
and
Jeremy,
also
one
until
you
know
last
week,
I
believe
the
8th
we
myself.
J
I
Share
Palani
and
CIO
Palani,
and
also
the
chair
from
police
on
fire,
attended
the
City
Council
on
the
ANA
presentation
for
the
investment
field
report.
I
thought
it
was
a
very
good
presentation
and
mr.
Palani
also
is
deep,
very
well
and-
and
so
it
was
received
well
obviously,
and
on
the
report
for
the
annual
fees
which
have
actually
over
his
tenure
have
decreased
somewhat.
I
I
just
want
to
let
you
know
that
in
September
I
attended
the
annual
calipers,
which
is
the
California
Association
of
public
retirement
system.
The
annual
calipers
I
mean
straighter
Institute.
It
shows
they
only
have
that
I
meet
with
my
peers,
and
the
reason
I
wanted
to.
Let
you
know,
is
because
even
force
again
to
me
how
different
San
Jose
is
from
our
peers
and
so
again
going
back
to
the
discussion
of
the
asset
allocation
clearly
in
terms
of
funded
status
and
also
in
terms
of
the
the
size
of
the
contributions.
I
I
So
the
goal
is
to
have
the
first
edition
of
the
of
the
new
image
for
January
2020,
so
stay
tuned,
we'll
keep
you
posted
on
that
and
I
just
want
to.
Let
you
know
your
next
meeting
so
that
you
can
plan
ahead
is
going
to
be
a
lengthy
meeting.
So
if
you
can,
we
will
follow
up
with
an
email.
One
staff
have
a
chance
to
have
an
internal
meeting
and
have
a
better
estimate
of
how
long
the
meeting
will
be.
I
Finally,
we
do
have
some
new
staff
that
joined
the
office.
There
was
the
you
know:
September
we
onboard
a
new
IT
manager,
an
accounting
clerk
and
early
in
October
investments,
onboard
the
new
financial
analyst
and
finally,
on
October
21st.
We
expect
a
new
office
specialist
for
our
front
desk
to
start
working
for
our
office.
That
concludes
my
optimistic
share.
I'm
happy
to
address
any
questions.
L
I
will
not
be
here
next
month.
The
other
update
I
have
is
much
more
positive
and
September
24th.
The
City
Council
authorized
the
city
manager
to
execute,
execute
a
revenue
capture
agreement
with
eBay.
They
are
newly
collecting
sales
tax
and
we
will
get
a
minimum
of
five
million
dollars
and
then
70%
of
their
increased
revenues
above
that
amount
annually,
that
five
million
dollar
baseline
will
be
increased
by
3
percent
annually
and
it's
a
15
year
agreement.
L
A
C
C
We
thought
we'd
lay
out
kind
of
our
schedule
for
the
pension
valuation.
This
meeting
we're
going
to
review
the
economic
assumptions
next
meeting.
We
are
bringing
a
demographic
experience
anywhere.
We
look
at
retirement
rates,
termination
rates,
mortality
rates,
all
of
those
things
we
haven't
looked
at
that
for
four
or
five
years
for
this
plan,
so
unfortunately,
we'll
be
contributing
to
your
the
length
of
your
meeting
next
month,
but
that's
partly
why
we
wanted
to
get
the
economic
assumptions
brought
this
month
so
that
we
didn't
have
to
deal
with
them.
C
At
the
same
time,
we
will
also
have
some
preliminary
valuation
results
and
at
that
point
we're
hoping
to
get
final
decisions
on
the
assumptions.
Any
decisions
you
make
today
on
the
economic
assumptions
would
be
great
because
it'd
be
less
that
we'd
have
to
decide
next
month,
but
the
real
deadline
is
next
month
so
that
we
can
come
back
in
December
with
the
final
results
of
the
pension
valuation
and
the
contribution
rates
and.
I
C
C
The
red
line
on
that
chart
on
the
left
it
represents
the
normal
cost.
That's
the
expected
cost
of
the
benefits
attributable
to
the
current
year.
So
any
contributions
above
that
red
line
go
towards
the
UAL
at
the
top.
You
can
see
a
blue
line
that
we
label
tread
water.
All
of
the
contributions
between
the
red
line
and
the
blue
line
are
just
paying
the
interest
on
the
unfunded
liability
and
it's
only
the
contributions
above
the
blue
line
that
are
actually
reducing
the
principle
of
the
unfunded
liability.
C
So
we
are
just
at
that
crossover
point
where
we're
finally
getting
above
tread
water.
This
has
been
about
a
10-year
process
that
was
driven
from
going
with.
Prior
to
that,
you
had
a
30-year
rolling
amortization
period
that
just
never
paid
the
interest,
and
so
we've
gradually
increased
the
contribution
rates
until
we
got
up
to
that
tread
water
and
you'll
see
in
our
projections
that
we
continue
to
increase
above
the
tread
water.
As
the
city
grows.
C
The
right
hand
side
shows
measures
of
funded
status
as
of
2017
in
2018,
the
bars
represent.
The
actuarial
liability
broken
out
between
the
blue
bar
is
people
currently
receiving
benefits.
The
gold
unlabelled
barring
between
babies
for
deferred
vested
those
are
people
who
who
are
no
longer
working
for
the
city
but
are
entitled
to
a
benefit
in
the
future,
and
then
the
red
is
for
the
active
members.
I
C
C
This
is
our
projection
model.
We've
shown
you
before
the
top
graph
shows
the
projection
of
the
liabilities
in
the
gray
bar
and
then
there's
a
green
and
blue
line
that
shows
the
market
value
in
actuarial
value
of
assets
projected
out
and
the
bottom
chart
shows
the
the
contributions.
This
is
again
in
aggregate
combining
tier,
1
and
tier
2.
The
purple
bars
are
the
member
contributions,
the
goals,
the
city,
the
black
line.
There
is
the
normal
cost
and
the
blue
line
is
the
tread
water.
C
So
you
can
see
from
2020
we
had
an
employer
contribution
rate
of
a
city
contribution
rate
of
about
58
percent.
We're
expecting
that
to
go
up
about
1%
as
we
recognize
some
prior
investment
losses
through
our
asset
smoothing.
We
also
will
add
on
this
year
some
additional
investment
losses,
because
we
didn't
achieve
the
6.75%
return.
We
don't
know:
what's
happened
on
the
liability
side
and
we're
here
today
and
next
month
to
discuss
assumption
changes
that
would
also
affect
that.
C
So
that's
to
create
the
setting.
We
are
here
to
review
the
economic
assumptions
we
do
this
every
year.
The
demographic
experience
study
we
don't
do.
Every
year,
it's
been
every
four
to
five
years.
The
assumptions
we
adopt
will
be
used
to
determine
contributions
for
2021
and
we're
gonna,
look
at
the
price,
inflation
and
the
wage
inflation.
Those
both
affect
both
the
pension
in
the
opens,
the
amortization
payment
increased
rate.
It
says
it
affects
the
open
valuation
that
that
was
a
mistake.
C
On
our
part,
we
adopted
a
level
dollar
Yammer's
ation
for
the
open
valuation,
so
that
assumption
only
affects
the
pension
valuation
and
then
the
discount
rate
we're
only
looking
at
the
pension
trust.
The
115
Trust
has
a
slightly
different
investment
allocation,
so
we're
only
focusing
on
the
discount
rate
for
the
pension.
O
Okay,
so
moving
to
slide
6
we're
going
to
discuss
price
inflation
price
inflation
is,
is
the
the
foundation
for
all
of
the
economic
assumptions
so
so
wage
inflation
is
price
inflation,
plus
a
real
wage
growth.
Your
expected
return
is
price
inflation,
plus
real
return,
and
the
the
ultimate
healthcare
trend
is
price
inflation,
plus
real
per
capita
GDP
growth.
So
currently
the
assumption
for
price
inflation
is
2.5
percent
and
there's
a
limited,
direct
impact
on
the
valuation,
but
you
know
it
does
get
in
there
indirectly
and
the
other
assumptions.
O
Yeah
so
so
very
limited
impact
there
and
on
tier
2,
the
the
colas
are
equal
to
inflation
up
to
a
maximum
and
that
maximum
varies
from
one
point:
two:
five
percent
to
two
percent.
So
typically,
you
know
that
there's
not
a
lot
of
impact
there,
given
the
volatility
of
an
inflation
that
tier
two
colas,
probably
averaged
something
slightly
below
the
maximum
right.
So
so,
but
in
terms
of
recommending
an
assumption,
we
would
would
recommend
staying
with
the
maximum
itself
is
a
bit
conservative
and
that
that's
what's
being
assumed
currently.
O
So
if
we
move
to
slide
7,
so
we
look
at
a
variety
of
sources
and
surveys
here
for
price
inflation
there
there's
a
Federal,
Reserve
survey
of
experts,
forecasting.
You
know
ten-year
forecasts,
there's
also
the
horizon
survey
that
was
mentioned
earlier,
so
it's
an
actuarial
firm
that
pulls
together.
Information
from
Nikita,
Varys
and
various
other
I
think
34,
total
investment
consultants.
It's
also
the
public
plan
database
which
we're
maintaining
in
the
California
public
pension
plan
database.
O
It's
actually
around
the
50
50th
percentile
across
across
all
those
surveys,
but
yeah
move
on
to
the
next
slide.
It
slide
8.
So
here
we
take
another
approach
and
we
look
at
regular
Treasury
securities
versus
inflation-protected
securities
and
look
at
me
implied
inflation.
So
so
here
you
can
see
that
on
well
on
all
the
different
horizons:
5
years
7
year,
10
year,
20
years
that
that's
come
down
a
bit
more
recently,
so
you
know.
O
For
example,
if
you
look
at
the
ten
year,
inflation
that's
come
down
from
2.1
previously
to
1.7
now
and
on
the
break-even
inflation.
So
second
ball
here.
If
you
look
at
Makita
they're,
assuming
2.1
percent
over
10
years
and
2.6
over
20
for
inflation
and
verus,
is
pretty
similar
on
10
year
horizon
at
2
percent
and
slightly
lower.
O
O
So
moving
on
to
slide
9,
now
we're
going
to
discuss
wage
inflation
so
so
wage
inflation
can
be
thought
of
as
the
across-the-board
increase
in
wages
and
individual
salary
increases
over
a
career
include.
You
know,
promotions
merit
merit
scale,
that's
something
we.
We
have
separate
a
separate
assumption
for
so
here
we're
just
talking
about
the
the
increase
like
the
across-the-board
increase
in
wages
and
wage
inflation
generally
exceeds
price
inflation
because
there's
an
increase
in
purchasing
power
over
time.
So
you
know
due
to
worker
productivity
increases.
O
N
O
We're
tracking
some
some
more
information,
so
we
look
at
wage
growth,
inflation
and
then
the
difference
between
the
two
being
real
wage
growth
for
local
governments
over
several
horizons
and
then
also
for
San
Jose
federated
in
over
the
same
horizons.
And
what
we're
seeing
is
the
wage
growth
and
inflation
that
those
numbers
have
been
a
bit
higher
for
San,
Jose,
federated
and
in
fact,
on
the
real
wage
growth.
You
can
see
that
haven't
quite
kept
pace
with
inflation,
but
the
main
point
there
is
a
slightly
higher
wage
growth.
O
So
the
median
wage
inflation
across
the
survey
of
California
systems
is
three
point,
two
five
percent,
so
that
is
the
same
as
the
current
assumption,
but
on
the
third
bullet
here,
when
one
thing
we
wanted
to
point
out
is
we've
looked
at
the
memorandums
of
agreement
and
those
are
locking
in
three
percent,
three
percent
annual
increases
through
the
end
of
the
agreement
and
for
most
of
the
bargaining
units-
that's
officially
you're
in
2021.
So,
even
though
this
is
a
long-term
assumption,
you
know
the
near-term
reality
should
should
have
some
wave.
O
However,
if
the
payroll,
if
payroll,
doesn't
total
payroll
doesn't
grow,
it
in
3%
a
year
goes
slower
than
that,
and
then
the
payments
will
increase
as
a
percentage
of
payroll,
and
we
believe
this
assumption
continues
to
be
reasonable.
It's
in
line
with
with
the
other
economic
assumptions.
However,
if
if
you
do
decide
to
lower
the
wage
inflation
assumption,
we
would
want
to
maintain
that
25
basis
point
margin,
so
so
this
would
this
would
drop
to
2.75
percent.
In
that
case,.
C
Ok,
I'm
gonna
talk
about
the
discount
rate.
It
is
the
most
powerful
assumption
in
our
evaluation,
the
higher
the
expected
return,
the
lower
the
contributions,
but
over
time
it
really
is
what
the
actual
returns
are.
So
it
really
affects
the
timing
of
the
contributions,
because,
if
you
don't
achieve
those
returns,
then
we
build
in
a
payment
for
the
the
loss
over
time.
Since
2008
we
had
an
eight
and
a
quarter
percent
assumption.
We've
brought
that
down
to
six
point:
seven
five
and
kind
of
led
a
trend
both
within
the
state
and
and
nationally.
C
We
will
primarily
look
at
expectations
for
the
future,
but
we
also
are
looking
at
sort
of
where
trends
are
they're.
Doing.
If
you
look
historically,
the
blue
bars
here
show
the
return
on
the
market
value
of
assets
for
the
last
ten
years,
and
the
gold
is
the
return
on
the
actuarial
value.
The
actuarial
value
smoothes
out
returns
over
a
five-year
period.
C
C
This
is
the
distribution
of
returns
from
our
survey
of
California
systems.
Looking
back
over
the
last
ten
years,
the
so
the
bars
represent
the
range
of
assumptions
and
the
diamond
represents
your
assumption.
So
you
can
see
they
you've
kind
of
led
the
trend
towards
lower
discount
rates,
but
starting
in
2017
no
longer
had
the
lowest
discount
rate
in
the
state.
Now
there
are
a
couple
systems
down
to
six
and
a
half,
but
we're
at
six
point:
seven:
five,
still
one
of
the
lowest
discount
rates
in
the
state
what's
really
driving.
C
This
is
the
decline
in
interest
rates
in
the
broader
market,
and
so
we
always
like
to
remind
people
and
look
at
this
in
terms
of
the
discount
rate
compared
to
current
market
rates
and
what
that
implies
about
the
level
of
investment
risk
that
you
have
to
take.
So,
for
example,
back
in
1995,
the
plan
was
assuming
eight
and
a
quarter
returns,
but
the
yield
on
the
10-year
Treasury
was
6.2,
so
we
only
had
to
beat
the
yield
on
the
10-year
Treasury
by
a
little
over
two
hundred
basis
points
today,
even
at
6.75.
C
C
A
couple
thoughts
as
we
go
into
to
this
data
historically
plans
have
set
the
discount
rate
equal
to
the
expected
rate
of
return.
We've
talked
about
potentially
keeping
a
margin
so
that
there's
a
greater
than
50%
chance
that
we
meet
the
assumption
because
the
assumption
is
used
in
a
budgeting
context
and
then
the
other
key
point
is
that
traditionally,
we've
said,
pension
plans
are
long
long-term,
and
so
we
only
look
at
the
long
term
assumptions,
but
with
the
maturity
these
plans.
C
C
So
Makita,
as
they
do
every
year,
provided
us
their
capital
market
assumptions,
and
you
saw
these
are
on
the
current
allocation,
not
the
allocation,
a
that
you
adopted
looking
over
a
10
and
20
year
horizon
their
median
the
median
we
calculated
based
on
their
rod.
It
is
so
point
one
and
seven
point
six.
These
are
slightly
different
than
what
they
showed
you
and
I
think
it's
just
due
to
rounding.
We
put
rounded
inputs
in
our
model.
Those.
C
Significantly
higher
than
what
they
provided
last
year
and
so
I
think
that's
an
important
consideration
here
and
we'll
talk
about
that.
Last
year,
the
median
was
6.2
for
10
years
and
7.3
for
for
20
years
we
have
in
the
appendix
of
comparison
to
the
horizon
survey.
I
think
they
provided
you
a
comparison
to
the
I
think
it
was
the
2008
teen
survey.
C
Makita
is
not
alone.
In
doing
this.
Most
of
the
investment
consultants
developed
their
capital
market
assumptions
based
on
the
markets
in
December.
Those
market
conditions
were
quite
different
than
they
were
the
year
before
or
than
they
are
now,
and
so
just
to
give
you
an
example,
we
put
three
items
up
here.
C
Obviously,
the
capital
markets
model
is
a
lot
more
complex
than
this,
but
interest
rates
the
yield
on
the
10-year
Treasury
had
gone
up
from
2.4
to
2.8
in
December,
and
now
it's
down
to
two
point,
one
that
has
a
significant
impact
expected
returns
going
forward.
The
S&P
500
had
dropped
and
then
it
bounced
back
in
the
first
half
of
the
year.
Cape
is
cyclically
adjusted
price
earnings
ratio,
so
a
measure
of
the
valuations.
C
A
C
A
So
to
be
clear,
we
have
decisions
and
direction.
We
need
to
give
them
this
time.
Based
on
the
information
you
have.
If
you
want
more
information,
we
can
ask
for
that
and
they
can
come
back
and
we
can
decide
next
month
as
well,
but
obviously
they
will
have
more
decisions
next
month,
based
on
some
experience,
study.
H
First
of
all,
thanks
thanks
for
indulging
in
this
new
board
member
and
my
many
questions,
so
the
current
price
inflation
estimate
of
two
and
a
half
percent
obviously
is
much
higher
than
we're
currently
experiencing.
What
would
be
the
implication
if
we
were
to
bring
it
down
and
make
it
something
closer
to
what
the
the
tip
break-even
rate
is,
which
is
the
actual
experience
we
seem
to
be
having,
but.
C
C
So
if
we
dropped
in
price
inflation
from
two
and
a
half
to
two
and
a
quarter
or
two
to,
for
example,
the
natural
thing
would
be
to
also
look
at
bringing
the
wage
inflation
assumption
down
and
possibly
the
discount
rate
down,
although
the
analysis
we've
shown
is
on
a
nominal
basis
with
makita's
assumptions
of
2.1
and
2.6
percent,
so
I
think
that's
Stephen
said
their
price.
Inflation
is
viewed
as
it's
kind
of
the
base
building
block
for
all
these
assumptions,
but
in
this
valuation
it
doesn't
have
a
direct
impact
it.
C
If
we
match
wage
inflation,
then
our
amortization
payments
are
a
level
percent
of
pay,
assuming
we
actually
get
payroll
growth
that
matches
that
wage
inflation,
and
so
the
rationale
for
having
it
slightly
lower,
is
to
be
conservative
so
that
we
expect
a
declining
percentage
of
pay
in
the
amortization
payments,
but
that
we
don't
and
we
reduce
the
risk
that
the
amortization
payments
actually
become
an
increasing
percent
of
pay,
because
the
payroll
didn't
grow
as
fast
as
we
expected.
So
it's
just
a
slightly
more
conservative
approach
to
the
amortization.
J
C
Each
year
we
set
up
an
amortization
payment
scheme
and
those
schedules
assume
that
the
dollar
amount
of
the
payment
each
year
increases
by
this
rate,
and
so
it's
do.
You
want
that
dollar
amount
to
increase
3%
a
year
or
2.75
percent
a
year,
and
as
long
as
the
city's
revenue
is
growing
and
payroll
is
growing.
Having
that
increased
rate,
it
works
fine,
where
it
creates
potential
problems,
as
if
city's
revenue
and
payroll
doesn't
grow.
C
J
A
J
To
amortize
in
the
ten
year
range
well
we're
how
much
were
talk
well,
how
much
difference
we're
talking
about
between
two
and
seven
five
percent
for
amortize,
a
payment
rate
and
the
three
percent
so
I'm
trying
to
get
I
think
it's
definitely
clear
to
my
miss
anything,
the
misunderstanding
about
the
relationship
of
amortization
and
payroll.
There's
hardly
any
hardly
any
relationship
cases
the
amortization
dispute,
the
previous,
your
amortization
right,
you're.
Having
here,
look
if
you
put
in
a
three
percent,
so
your
your
choose,
amortization
dollar
mal
should
be,
should
be
three
percent
higher
year.
J
J
The
extent
of
that,
unless
we
can
crease
on
my
magical
investment
vehicle
I,
don't
think
the
investment
is
going
to
be
a
solution
in
the
contribution
is
going
to
be
the
key
factor
to
take
ourselves
out
of
the
hole.
So
my
I
was
kind
of
leaning
towards
keeping
everything
on
a
conservative
side.
Okay,.
O
Just
want
to
say
quickly
from
a
legal
perspective:
the
board
has
you
can
do
whatever
it
wants
in
this
realm,
because
if
you
had
a
zero
percent
assumption,
then
you're,
basically
that
that's
a
level
dollar
and
a
level
dollars
like
you
pay
on
your
house.
You
know
you're
just
all
flat,
but
there's
we
have
case
law
on
this
subject
of
much
more
I
mean
we
have
case
law
that
says
you
can
have
negative
amortization
you're,
not
even
in
that
realm.
So
I
want
to
make
sure
everyone
understands
from
a
legal
perspective.
O
J
C
And
a
quarter
percent
payroll
and
three
percent
growth
rate,
but
just
to
show
you
the
impact
of
this.
If
we
went
to
zero
it
it
front
loads
that
contribution
and
makes
it
much
flatter
as
a
dollar
amount
right,
then,
if
we
switch
to
percent
you
can
see,
it
creates
a
declining,
a
much
steeper
decline
in
the
contra
as
a
percent
of
projected
payroll.
Now
that
assumes
payroll
groves
at
three
and
a
quarter
percent.
O
C
And
so
the
the
difference
between
three
percent
increases
or
2.75.
It
is
not
a
huge,
but
we
had
gone
down
the
route
of
saying
we
wanted
to
create
that
25
basis,
point
margin,
and
so
we
thought
it.
It
made
sense
to
keep
that
margin
if
we
reduce
our
payroll
growth
assumption,
so
we're
not
really
suggesting
something
totally
different.
It's
just
really
being
the
same
margin
that
we
had
before
between
payroll
growth
and
the
amortization.
L
C
L
C
F
L
G
F
C
J
N
C
So
so
we're
up
to
date
on
that.
What
we
will
be
reviewing
is
what
the
underlying
base
table
is
before
those
projections
and
I
don't
know
what
the
impact
will
be,
but
preliminary
there
has
been
a
new
mortality
study
of
public
plans
done
and
so
we're
currently
using
a
table
from
Calpers's
prior
study.
We
will
probably
switch
to
a
base
table
based
on
that
public
plan
study,
but
then
we
modify
it
for
your
experience.
C
C
A
J
C
A
C
H
C
H
C
So
that's
one
place
where,
if
we
dropped
our
inflation
assumption
to
two
percent,
we
could
look
at
adopting
an
assumed
Cola,
that's
below
two,
because
with
the
volatility
the
average
is
going
to
be
something
below-
or
we
could
just
say
well,
twos
the
max
and
we'll
be
conservative
and
continue
with
that
yeah
at
a
two
and
a
half
percent
assumption.
We
don't
think
that
analysis
is
really
worthwhile
so
well.
We
would
keep
the
assumption
at
two
percent.
A
I'm
gonna
make
a
recommendation.
I'm
gonna
make
a
motion
like
a
motion
of
the
recommendations
made
by
Chiron
on
page
19
for
retaining
the
price
inflation
at
2.5,
reducing
the
wage
inflation
to
3
chains.
The
real
wage
growth
will
then
reduce
to
0.5
and
then
reducing
the
amortization.
Payment
increases
a
2.75
and
retain
the
discount
rate
of
6.75.
That's
my
motion.
Is
there
a
second
my.
A
A
Discussion
action
regarding
committee
assignments:
this
is
really
for
the
next
six
weeks
and
the
major
driver
for
this
next
six
weeks
was
really
on
the
joint
Personnel
Committee.
Mr.
Paine
is
trying
to
get
every
pound
of
flesh
out
of
me
that
he
can
so
we
can
retain
having
a
joint
Personnel
Committee.
So
we
have
to
add
a
person
there.
That's
the
main
driver
that
we
have
to
do
and
mr.
Horwitz
I
didn't
want
him
to
be
jealous,
and
so
we
picked
a
committee
to
put
him
on
and
so
picked
one
of
the
vacant
ones.
A
And
then,
since
we're
gonna
have
a
new
trustee
next
month,
it
sounds
like
that's
I
redlined
him
into
that
one,
potentially
adding
a
lien
or
into
investments
and
adding
Jake
Estolano
onto
the
Jaypee
seas,
so
that
we
can
hold
our
jpc
meeting
on
the
date
that
mr.
Pena
wants
and
we
can
get
for
all
the
police
and
fire
members
of
that
joint
personnel
committee.
That's
the
major
driver
that
of
what
any
change
needs
to
happen,
because
if
mr.
I
I
A
I
A
A
A
A
Audit
make
sure
that
we're
in
compliance
with
everything
that
we're
doing
and
everything
and
it
provides
a
very
relevant
function,
both
monitoring
ourselves,
monitoring,
our
staff
and
the
consultants,
and
the
jpc
is
really
has
been
meeting
way
more
frequently
than
it
should
it
not
to
have.
But
we
have
a
few
key
things
we
have
to
get
done,
and
so
that's
one
of
the
reason
why
we
have
to
meet
part
of
it
is
through
the
review
policy
for
the
CIO
and
CEO.
We
need
to
get
accomplished,
and
so
we
set
the
jpc
up.
A
Words
to
an
ex
officios
whoever's
in
rolls
automatically
gets
poured
it
in
there
and
then
someone
else
takes
the
third
seat.
There's
some
rules
around
it,
but
so
these
are
my
recommendations
with
a
substituting,
mr.
Horowitz,
at
least
and
on
the
audit.
Until
we
have
someone
else
to
change
it,
maybe
next
month
or
the
following,
the
thoughts,
questions,
comments,
emotion,.
A
A
L
L
A
J
N
G
O
O
They
have
more
market
share
in
their
investments
for
a
long
time
that
the
issue
is
always
between
your
your
duty
to
make
as
much
as
you
can
for
the
fund
versus
you
know,
and
can
you
do
that
while
also
doing
ESG
and
it's
a
very
philosophical
debate,
there's
no
right
or
wrong
answer
and
depending
upon
who's
in
the
White
House,
the
guidance
from
the
executive
branch
of
our
government
switch
swings
back
and
forth,
so
the
the
bush
administration
was
kind
of
pushing
back
against
it.
The
Obama
administration
was
sort
of
pushing
for
it.
O
O
So
the
really
that's
a
long
way
of
saying
is
that
if
this
is
something
you're
interested
in,
it
is
as
they've
acknowledged
it's
clearly
the
sports
responsibility.
They're,
not
you
don't
have
to
do
the
SG
investing
it's
a
question
of
your
interest
level,
and
certainly
you
can
take
the
city's
resolution
into
account.
If
you
want
to
do
that,
it's
something
you
would
just
direct
staff
can
come
back.
Harvey's
very
familiar
with
this.
He's
done
a
lot
of
work
on
this
for
a
lot
of
pension
funds.
O
A
A
It
sounds
like
we
should
have
a
my.
My
recommendation
is
that
we
do
bring
in
some
education
pieces
into
the
full
board
on
this,
and
so
the
board
can
make
active
decisions
on
it.
Based
on
a
prior
note
that
November
is
gonna,
be
pretty
hellacious
as
far
as
their
schedule,
that
possibly
December
or
January
would
be
good
times
to
queue
up
mr.
Lederman,
to
present
these
from
the
legal
perspective,
our
role
and
deciding
this
and
perhaps
have
the
investment
staff,
bring
in
some
advice
for
a
discussion
and
then
start
charting
a
course.
A
E
F
We
just
add
that
yeah
I
would
echo
very
strong
interest
in
learning
more
hearing
more
about
ESG
and
sustainable,
investing
having
myself
been
involved
and
managed
to
social
impact
poll.
So,
to
the
extent
that
our
agenda
is
very
full
I'd,
also
even
invite
it
did
any
prescribed
readings
or
reference
information
that
the
trustees
could
review
in
advance
just
to
because
it
is
a
very
complex
topic.
Would.
E
A
J
A
F
G
A
Any
other
comments
or
questions,
so
we
we
have
direction
of,
they
will
leave
it
up
to
the
staff
and
come
back
see
whether
it's
December
January.
What
that
right
time
frame
is
probably
not
next
month,
just
because
of
the
volume
if
you've
listened
to
the
whole
it
lightens
up
to
maybe
next
month.
Okay,
thank
you,
alright,
a
few
more
items
and
then
on
to
the
audit
committee.
A
E
N
A
J
I
Can
the
reason
we
have
to
go
through
the
iron
is
vintage
cherries,
because
we
couldn't
have
the
meeting
last
time
good,
because
there
was
any
quota,
so
I
actually
asked
Tom
to
join
us.
So
he
can
lead
us
through
the
hopefully
show
discussion
on
the
governor
silence
that
we
couldn't
discuss
at
the
join
committee
with
police
and
fire
perfect.
A
We
have
a
fee,
we
have
the
approval
of
minutes
of
November
26,
2018
s,
joint
Governance,
Committee
meeting
for
the
federated
City
Employee,
Retirement,
System
and
police
and
fire
retirement
plan.
Though
some
of
us
weren't
present
move
approval
of
those
minutes.
Is
there
a
second
all,
those
in
favor
aye
opposed
item,
C
discussion
and
action
on
the
approval
of
the
forward
calendar
for
the
joint
Governance
Committee?
I
Well,
I
can't
speak
to
it,
Tom
I,
believe
you
did.
You
join
us,
my
phone?
Yes,
yes,
so
we
are
on
item
6.2,
see
the
proper
for
the
forward
calendar.
You
know.
Actually
this
is
pretty
straightforward.
When
we
met
with
Tom,
he
suggested
a
former
calendar
and
these
are
the
the
items
to
be
he
suggesting
to
be
discussed
in
the
future
meetings.
Of
course,
you
can
see
the
first
side
in
there
for
September
5th.
I
We
couldn't
discuss
it
at
the
committee,
so
you
haven't
the
discussion
here
when
you
board
today,
but
everything
else
see
indicating
the
forward
calendar
same
read.
You
have
those
issues
to
be
discussed
jointly
and
then
some
other
meetings,
lady
in
2020,
are
still
to
be
determined.
So
I
would
recommend
approval
of
the
calendar
CD
as
it
sits
right
now.
Any
questions.
J
A
I
M
Terrific
thank
you.
So
the
purpose
of
these
updates
is
simply
to
align
the
charters
with
you
with
those
of
the
tnf
board
and/or,
to
update
the
charters
to
reflect
recent
changes
that
the
board
has
made
to
the
investment
policy
statement,
whereby
the
board
has
delegated
greater
authority
to
the
CIO.
So
I'll
begin
with
the
CEO
charter.
M
There's
really
only
one
minor
change
needs
to
be
addressed
if
I'm
page
six,
paragraph
37
and
we
just
sharpened
up
the
language
there
to
make
it
clear
that
the
CEO
is
authority
to
enter
into
contracts
is
limited
to
50,000
dollars
in
the
value
over
the
term
of
the
contract.
So
if
a
contract
extends
over
a
couple
of
years
or
three
years,
but
it.
A
M
M
C
M
Research
consultants
and
investment
managers,
so
I'll
just
focus
on
those
issues,
because
all
the
really
good
substantive
changes
begin
on
page
2
towards
the
bottom
paragraph
10.
The
CIO
will
continue
to
advise
the
investment
committee
regarding
the
appointment
termination
of
the
general
investment
consultant
to
assist
in
the
asset
allocation
process.
So
that's
the
consultant.
The
general
consultant,
which
is
focused
on
the
asset
allocation
process,
will
continue
to
be
approved
by
the
board.
With
the
advice
of
the
CIO
paragraph
11
is
new,
it's
not
new,
but
again
it's
just
reflecting
changes
to
the
IPS.
M
The
board
has
delegated
to
the
CIO
the
authority
to
select
terminated
investment
consultants,
to
a
system
of
selection,
retention,
evaluation
and
termination
of
investment
managers
in
there's
additional
language
and
then
the
very
last
sentence
in
that
paragraph
reads.
The
CIO,
however,
shall
obtain
board
approval
of
all
contracts
with
investment
consultants.
M
So
the
board
has
has
granted
the
CIO
the
authority
to
select
terminate
investment
consultants
for
managed
research
purposes,
but
the
contract
will
continue
to
go
to
the
board
for
approval
of
the
thinking
being
that
the
board
still
wanted
to
maintain
oversight
on
consulting
fees
and
costs,
and
then
paragraph
12
very
important
work.
Earlier
in
the
year
the
board
has
delegated
to
the
CIO
the
authority
to
selectively
terminate
investment
managers
subject
to
constraints
and
parameters
tained
in
the
investment
policy
statement.
So
these
are
the
material
changes
they're
reflected
in
the
investment
policy
statement.
M
A
J
M
Okay,
so
the
next
policy
again
we're
trying
to
align
the
policies
with
the
PMF
board,
where
possible,
where
appropriate,
is
the
board
communications
policy.
This
is
the
only
policy
that
contains
a
substantive
change
for
your
consideration,
or
at
least
a
substantive
issue.
It
relates
to
the
role
of
a
spokesperson
on
page
one,
paragraph,
three
and
I
have
to
apologize
in
preparing
this.
M
A
M
The
board
chair
will
serve
a
spokesperson
for
the
system
or
made
ezza
gate
another
individual
to
serve
a
spokesperson
on
specified
matters.
That's
your
current
language.
The
PMF
board
has
always
used
a
CEO
and
the
General
Counsel
has
their
spokesperson
and
they've
tweaked
the
language
a
bit.
It
now
reads,
and
you
can
see
it
there
in
paragraph
three
in
front
of
you
and
says
PMF
says
the
following:
the
CEO
or
his
or
her
designee
and/or,
the
board's
general
counsel,
well
service,
spokesperson
for
the
board,
depending
on
what
the
timing,
their
contacts
dictate.
M
This
is
one
of
these
few
significant
differences
between
the
board
governance,
manuals
of
your
board
federated
and
the
PMF
board
and
again
in
an
effort
to
try
to
align
these
boards.
We
wanted
to
just
raise
the
question
we
weren't
able
to
discuss
it
at
the
Governance
Committee
level
we
wanted,
so
we
thought
we'd
bring
it
up
to
the
full
board.
I
think
the
difference
was
that
you
historically
had
a
long-serving
board
chair
and
perhaps
the
board
was
comfortable
for
that
reason.
M
Having
the
board
chair
as
the
spokesperson
TNS
has
alternated
its
chair
just
about
every
year
and
perhaps
that's
why
they
delegated
to
the
CEO
and
the
general
counsel.
We
just
want
to
raise
the
issue
for
the
board
to
consider
whether
or
not
you'd
be
you
would
entertain
moving
to
the
PMF
model
for
consistency
or
whether
you
wish
to
continue
deviating
on
this
issue
and
having
the
board
chair
serve
as
the
spokesperson
for
the
system.
So.
A
The
reason
why
I
like
and
just
the
reason
why
I
pushed
it
the
way
it
was
it
wasn't
because
of
my
position
or
me
being
there
is
because
I
think
the
CEO,
as
we
were
working
at
the
CEO
would
work
for
the
board
and
it's
easier
for
its.
How
does
the
CEO
delegate
to
the
board
chair
when
technically
a
CEO
works
for
the
board?
I
always
thought
it'd
be
logical
to
reverse
that
relationship,
and,
quite
honestly,
you
know
it's
I
didn't
want
to
be.
Sometimes
you
can
hide
behind
it.
A
As
spokesperson,
like
hide
behind
our
decisions
in
conversation,
and
it's
like
look
I've
we're
here,
deciding
these
things
I'm
not
going
to
flip
that
on
somebody
else
to
kind
of
pony
up
and
answer
all
the
questions
just
because
they're
hard
and
so
I've
always
thought
that
the
board
chair
and
it
again
not
mat.
But
the
board
chair
should
be
the
one
and,
if
you
know
routinely
Roberto
hands
those
communications
on
things
as
we
talk
about
it
then
look.
Can
you
handle
that?
A
And
so
it's
it's
delegating
routinely,
but
when
it
gets
to
issues
with
members
relationships
or
things
like
that,
that
I
think
the
board
has
we're
talked
about
as
our
fiduciary
responsibility,
to
who
more
responsible
I
think
at
times
that
you
need
to
be
able
to
stand
there
and
take
it
and
not
just
hide
behind
the
CEO,
which
I
think
sometimes
can
happen.
But
at
times
it's
like
having
the
general
counsel
talk
to.
A
Perhaps
the
city's
counsel
on
things
makes
good
a
sense,
and
so
those
differentiations
were
important
to
me
as
I
push
for
these
things
a
long
time
ago.
That
was
my
opinion
and
that
was
still
retained.
My
opinion,
but
remains
my
opinion,
but
this
will
be
your
policy
going
forward.
What
makes
most
sense
to
you.
F
A
Know
in
that
specific
question,
that's
been
true,
so
they're
asking
specific
investment
like.
Why
do
you
know
if
there's
a
investment
magazine
asking
about
something
it
makes
sense
for
Prabhu
to
be
answering
those
things
directly,
but
there's
been
times
where
things
go
to
Council
all
have
gone
with
Roberto
to
make
statements
on
behalf
of
the
board
and.
A
The
board
in
those
conversations
again
I
also
that
sometimes
it
puts
him
in
a
bad
situation
where
yeah
I
think
like
we're
the
ones
saying
America,
should
go,
send
him
off
to
give
bad
news.
It's
all
it's
kind
of
kind
of
wimpy.
In
my
mind,
it's
like
you
know,
I,
don't
know,
he's
perfectly
willing,
has
done
it
many
times,
but
I
also
don't
like
putting
him
in
that
situation
by
default
and
I
also
just
think
the
way.
I
The
idea
was
that
you
realign
to
this
language,
but
it
sounds
like
the
the
board
is
considering
keeping
the
current
approach,
which
is
perfectly
fine,
I,
think
I,
know
in
the
general
basis,
is
easier
and
better
the
board's
aligning
on
the
policies
and
procedures
to
charters.
So
that
is
more
clear
to.
I
And
the
explanation
by
the
chair-
and
he
is
completely
right
in
the
past-
is
being
there
in
difficult
situations
to
speak
on
behalf
of
the
board
and
I
think
I,
understood
correctly,
I
think
in
most
cases,
when
that's
not
the
case,
he
would
have
just
led
the
CEO
or
the
CEO
address
whatever
he
chose
to
be
addressed
with.
It
is
the
the
media
with
the
city
council,
but
he
wanted
to
have
that
flexibility,
certain
situations
he
thought
the
chair
should
be
the
one
speaking
they
can
do
that
which,
which
I'm
fine
with
that
as
well.
I
But
as
he
indicated
he's
not
gonna,
be
the
it's
going
to
be
the
chair
after
November.
So
the
question
is
the
stripper
want
to
continue
that
approach,
or
do
you
want
to
be
a
live
with
the
police
and
fire
language?
That's
the
question
for
something
different:
oh
there's
something
different,
and
then
we
have
to
go
to
police
on
fire
and
see
the.
J
Board
the
delegation
should
have
coming
from
the
board
to
the
staff
and
things
are
having
the
staff
go
into
the
board.
So
I
think,
and
you
know,
in
many
cases
we
probably
will
ask
the
CIO
and
to
see
you
to
speak
on
behalf
of
the
the
office.
But
that
will
be
the
delegation
provided
by
the
mayor
and
chair.
So
I
would
support
keep
the
language
as
it
was.
H
I
Well,
as
I'm
looking
at
the
chair
for
police
and
fire
committee,
I
believe
police.
Various
approach
is
that
they
in
most
cases
they
rely
on
the
CEO
or
the
CIO
to
communicate,
and
let
me
just
make
a
statement
because
I
think
the
chair
is
completely
right
on
the
federal
side.
I
think
in
most
cases,
in
the
examples
that
he
was
referring
to
in
most
cases
he's
thinking
about
the
City
Council,
you
know
I,
don't
wanna
speak
for
him.
I
I
think
Polly
sapphire
is
thinking
more
on
media
statements
and
from
the
from
the
media
standpoint
of
media
statements.
It
makes
a
lot
more
sense
to
have
the
CEO,
because
you
know
the
board
chair
is
not
always
available,
and
you
know
the
media
may
reach
out
to
staff
and
have
the
time
to
be
reaching
out
to
the
board.
They
might
share
to
find
out
exactly
boys
the
communication
they
want
to
be
making
sure
I.
Think
from
that
standpoint,
which
I
think
that's
what
police
and
fire
is
coming
from.
They
have
this
CEO,
this
book
person.
I
A
Its
been
by
choice,
and
so
mostly
because
I
wanted
to
represent
the
board
rather
than
force
staff
to
do
it,
but
it's
it's
not
like
this
is
like
every
week
every
day
occurrence
this
is
happening,
so
you
know
the
decision
you
make
either
way
will
be
fine,
because,
knowing
this
CEO,
if
it's
delegated
to
him,
he's
gonna
coordinate
where
there
was
chair
and
tell
him
what's
going
on,
tell
him
or
her
what's
going
on.
So
that's
you
know
knowing
the
nature
of
how
it
actually
witnessed
how
it
happens
with
PMF.
A
A
I
You
want
to
leave
it
the
way
it
is
to,
instead
of
having
the
board
chair,
he's
heard
the
Sidney,
maybe
the
boy
chair,
oh
he's,
heard
the
Sidney
or
the
CEO
of
board
general
counsel.
That
way,
you
also
have
the
CEO
there,
so
the
board
chair
and
CEO
kind
of
accordin
a,
but
it's
only
situation
where
the
CEO
is
actually
designating
the
board
chair
because
you're
correct
the
CEO
do
report
to
the
board.
A
A
M
A
A
I
I
think
what
happens
the
board
chair
most
likely
that's
in
there
the
CEO
to
speak
again.
My
only
issue
is
there
situations
where
the
media
wants
quick
attention
and
I.
Think
in
that
situation
the
CEO
is
going
to
have
to
contact
the
board
chair
and
get
some
direction
at
that
point,
although
there
might
be
situations
where
you
know,
the
CEO
may
feel
comfortable
enough
to
go
ahead
and
communicate.
A
On
behalf,
the
way
the
white
board
chairs
can't
actively
deal
with
this,
is
you
know
when
they
take
their
role?
They
say
they
could
say.
Look
when
these
things
come
in,
you
can
deal
with
them
directly,
you
delegate
at
the
beginning
of
their
term
and
made
clear
decision
then,
as
opposed
to
case-by-case,
which
would
be
futile
most
times.
Yes,
that
would
be
the
effect
the
efficient
way
to
deal
with
it,
but
I.
You
know
I've
got
along
fine,
so.
M
F
M
Roberto,
just
let
me
know
that,
in
discussions
with
the
city,
it's
not
going
to
be
possible
to
really
deal
with
the
service
level
solvency,
so
to
suggest
that
we
actually
believe
the
references,
the
service
level
solvency,
so
we'll
go
back
at
some
point,
make
that
change
to
penis
as
well,
but
with
that
language
that
reference
the
service
level
solvency
deleted.
There
are
two
two
references
to
it:
we're
presenting
this
for
your
consideration.
If
you
think
this
is
reasonable
to
add
your
policy
and
match
up
with
the
PMF
policy,
so.
M
M
J
M
M
We
have
added
that
language
from
the
CEO
charter
just
to
match
up
about
the
limits
on
the
CEOs
authority
up
to
$50,000.
So
that's
you've
already
approved
that
in
the
CEO
charter,
we're
just
reflecting
it
here
and
then
we
go
into
the
really
the
10
dix
or
the
really
the
heart
of
the
policy,
which
is
the
table
which
lays
out
the
different
responsibilities
in
vendor
selection
and
I'll.
Just.
M
The
I
think
the
most
important
ones,
which
resulted
from
the
changes
in
the
delegation
authority
to
the
CIO
that
involves.
If
you
look
on
the
first
page
of
the
table,
the
third
row
from
the
bottom
and
general
investment
consultant
you'll
see
we
made
some
changes
there
under
the
recommend
column.
You
see
that
the
CIO
advises
the
investment
committee
in
the
IC
recommends
the
general
investment
consulted
aboard
the
board
continues
to
approve
the
next
row.
Are
we've
added
this
new
concept
or
a
new
type
of
consultant
or
a
greater
distinction?
Investment
consultants
for
manager,
research
purposes?
M
M
The
other
important
change
is
on
the
top
of
the
next
page
of
the
chart.
Investment
managers.
Again
this
is
reflected
in
the
vessel
policy
statement,
the
CIO
Charter
and
now
in
this
policy.
It
simply
says
if
you
look
under
the
far
right
column
that
the
CIO
now
has
the
authority
to
approve
and
terminate
investment
managers
with
the
concurrence
of
the
investment
consultant,
and
we've
got
that
note
in
the
left
column
subject
to
constraints
limitations
in
the
IPS.
M
Again,
that's
consistent
with
the
IPS
and
the
CIO
charter
and
then
lastly,
I
draw
your
attention
to
the
next
row.
Hr
consultant
CEO
related
projects,
the
joint
Personnel
Committee
didn't
exist
when
this
policy
was
first
developed.
So
we've
now
had
at
the
joint
Personnel
Committee,
making
the
recommendations
to
the
board.
If
you
would
ever
hire
an
HR
consultant
in
connection
with
the
CEO.
M
F
M
M
A
A
Out
of
committee,
your
meeting
later
as
soon
as
I
can
get
this
over
with
6.4
jpc
we're
meeting
next
or
two
weeks
from
now
and
Chandra
is
that
chair
for
us,
but
so
those
minutes
for
we
note
in
the
file
they're
receiving
file,
we
have
education
and
training,
the
core-tex,
calipers
and
so
forth.
If
you're
interested
to
future
agenda
items,
none
public
retiree
comments.