St. Mary's County, MD Length of Service Awards Program, 4 Jun 2021

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From YouTube: 6/4/21 Length of Service Awards Program for St. Mary's County

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A

Okay, uh good morning, david weiskoff I'll call the uh meeting of lowsap to order.

A

And first on the agenda will certainly be the roll call and we'll start to my far left, which.

A

Would be commissioner hewitt here, catherine bratson here, david weiskopf, marianne murray.

B

Jeannette cudmore and in the audience helping us, we have miss jody quasney and michelle rantz.

A

And the first thing to do is to approve today's june 4th agenda a move to approve today's agenda.

C

For june 4th 2021 do I have a second, oh second, all in favor, aye, aye, aye.

A

Eyes have it and the approval of the march 25th meeting minutes.

A

So I have a motion.

B

I'll make a motion to approve the um march 25th meeting minutes all in favor. Oh, I need a second.

A

I apologize second, all in favor, aye, aye, aye, nice have it thank you, and today we're going to start.

A

With presentation, which is mr pat winger from marquette, associates, doing a quarterly quarter.

A

Ending march 31st, 2021 uh performance report or portfolio update all right great. Thank you.

D

And good morning, everyone, it's nice to see you all again, uh so we have a couple of books within the.

D

Packet, if you open up the silver clip there, the first deck on top is the quarterly performance.

D

Report and we'll probably spend a little bit more time walking through the report today than we will.

D

Moving forward, given at our last quarterly meeting, we ran through the previous advisors report today,.

D

It's our first report to share with the committee, so we'll talk about some of the pages that we.

D

Necessarily won't walk through every time out, but just show you, the high level information and the.

D

Hit on the important characteristics within the fun, but if you could hop behind that back cover.

D

And then behind the cover page and just look at the table of contents quickly, just to talk a.

D

Little bit about how this book is structured, so you can see the exhibits there listed normally.

D

We provide a marquette update, so this is just behind the first cover we're on low sap now or.

D

Yes, so I I think it's the other book there, commissioner, we had two. Yes, sir, sorry about that.

C

Oh hey, thank you, you're welcome! So in the table of contents. There you see the first section. It's just.

D

An update on marquette, we will rarely, if ever get into that unless there's something relevant for.

D

For you all to consider we'll really start the our discussions with the market environment when we.

D

Let met last at um in february, we did provide our market environment for context. It's an overview.

D

What's going on in the economy, what's going on in markets just to provide context for how the.

D

Trust did and how some of the investment managers performed during the quarter.

D

And then, as you work your way down there, we have a portfolio overview and then information.

D

On the investment manager, so our report is basically a high level information of cash.

D

Flows, market values returns asset allocation and then we break it down more granularly.

D

So we look at the asset class level, the individual manager level and then provide characteristics for.

D

Asset classes and individual managers, the latter two mainly for context in case there's a question.

D

That comes up about a manager or how the pieces are fitting together. Then we can use that as.

D

An illustration to help answer that question. So with all that said, if you hop behind, exhibit two.

D

Again, we'll skip over the marquette update and get into the market environment.

D

We'll spend a little bit less time here than we will at the opeb meeting. Just given the.

D

Straightforward nature of the trust you know the asset allocation being relatively straightforward,.

D

And then the implementation using all passive investments. You start at page six there, where you.

D

See u.s economy and look at the top left bullet there. It's been a very strong start to the year.

D

You'd see in that first sentence we saw economic growth come in at about six and a half percent in.

D

Q1, really on the back of the themes, we've talked about previously very strong consumer spending.

D

Certainly aided by policy support, namely the fiscal support coming out of washington.

D

Where we've seen a number of packages come through over the past 12 months,.

D

Now, if you shift gears and look at that top right chart specifically those last three columns that.

D

Are striped there? Those are economist estimates for the remainder of 2021 and they're very strong.

D

To round out the year, and if they come to fruition, we're looking at the best year.

D

For economic growth in the u.s calendar year since 1984., so a very strong economy continues.

D

To really fire on all cylinders again on the back of that policy, support that we've seen.

D

Now, since we have such a strong economic environment again, this historic policy support if.

D

You look at that second bullet point on the left towards the bottom. We have seen some inflation.

D

Concerns begin to bubble up to the surface here, most notably again, the economy is running red, hot.

D

The policy support, but we've also seen a big jump in commodity prices and then most notably.

D

Input costs for firms, so I'm sure you've all heard of the semiconductor chip shortage going.

D

On throughout the world and, interestingly ford when they came out with their earnings, release,.

D

About a month ago now they had to slash production estimates, even though the demand for autos is so.

D

High right now, because they can't get the chips necessary to produce these new cars and for.

D

For consumers- and it's just not that industry, it's a lot of industries, not just in the u.s across the.

D

Globe so, given it's a very tight supply chain and the demand is very high, those input costs.

D

Are rising so when we think about moving forward? If you look at that bottom chart to the right.

D

One of the interesting surveys that comes out by the nfib, the national federation of independent.

D

Businesses is they ask companies a series of questions each month and one of those questions.

D

You can see there is, you know, are you planning to raise prices or lower prices in the near term?.

D

So that black line is showing the difference between the two and more recently, it's ended at.

D

Its highest level in a decade, meaning that those companies planning to raise prices.

D

Outweigh those planning to lower them at the highest level in almost a decade.

D

So we have seen inflation come in a little hotter more recently and it's very likely as.

D

We head into q2 and q3. Now we could continue to see these inflation inflationary pressures build.

D

So when we circle back to asset allocation in just a few short minutes, keep in mind the discussions.

D

We had over really the course of the year from a portfolio construction perspective right.

D

Trying to have that growth engine in the portfolio to drive the return, at least to the assumed rate.

D

Of return or potentially higher, but having that insurance as well when equity markets aren't.

D

Doing poorly or are doing poorly, you know on the fixed income side, but also having some exposure to.

D

Assets that are expected to do well if inflation picks up and and comes in higher than expectations.

D

So with that said, if you skip ahead to page nine and again we'll run a little bit through this.

D

A little bit more detailed when we get to the opeb, given it's a little bit more of a complex.

D

Portfolio, this is showing asset class performance in q1 and over the past year, there's a chart to.

D

The right, the green bars are the quarterly numbers you can see. U.S equities at the top there up, 6.3.

D

So a very strong quarter. You know investors continuing to price in an economic recovery.

D

And continuing to price in a strong rebound in corporate fundamentals or corporate earnings.

D

And sympathy with that recovery, so u.s equities up six percent. They did outperform international.

D

Developed and emerging market equities, which were up four and two percent respectively,.

D

A couple reasons behind that. Excuse me number one: the coveted concerns are still more paramount.

D

Outside the u.s and international developed companies places like the uk.

D

And europe still under some quarantine orders and then in emerging market economies,.

D

Places like brazil and india, most notably have seen a spike in coveted cases more recently, so.

D

That's certainly weighed on sentiment for those markets relative to the u.s. Now the real action.

D

During the quarter, if you look below emerging market equities was in the u.s bond market.

D

So that's a proxy for the barclays aggregate index, which is the benchmark in the investment policy.

D

Statement it's an index of investment-grade bonds. I think treasuries mortgage-backed securities.

D

uh Treasury bonds and with inflation, sort of bubbling up to the surface, we saw a big jump in.

D

Interest rates during the quarter, so we have rates going up, which means bond prices went down so that.

D

Negative three and a half percent was one of the worst quarterly returns for core fixed income in.

D

Quite some time so again, keep that in mind when we think about asset allocation, as we talked.

D

About previously, the trust is very conservatively invested from a policy perspective being about.

D

Sixty percent equities and forty percent fixed income like those core bonds right there and.

D

As we think about moving forward trying to grow the trust in a better funded ratio and the lack.

D

Of any liquidity needs, just by definition, then we can afford to take a little bit more risk because.

D

There's not a risk of having to sell something at the wrong time to meet those liquidity needs.

D

So with that said, if you look to page 12, just one other quick comment as it relates to fixed income.

D

So, on page 12, up at the top right we're showing the yield curve for treasury bonds and as I've.

D

Mentioned we did see some movement in rates so in that darker blue line. Those are the most recent.

D

Interest rates the dotted line is at the end of the year. You can see not much movement on the.

D

Short end of the curve, since the fed's still keeping rates at zero, but a big jump in more.

D

Intermediate and long-term bonds so that drove the weakness in u.s bonds during the quarter.

D

Again, rates up bond prices down, however, that yield curve that blue line the more recent one.

D

Even though it's increased, those yields are still exceptionally low relative to historical averages.

D

So not only in the short term is the risk reward, still sort of tilted to the downside, given rates.

D

Are so low, but in the intermediate term those rates are going to be the key driver of fixed.

D

Income returns so since they're still below average, fixed income outlook still remains.

D

Very very much subdued relative to history. So you see that rate.

C

Continuing pressure to move it up, I think it's certainly skewed to have them go higher.

D

Just considering the policy support considering the economy continues to to do quite well now, I'm.

D

Hoping that it's more gradual rise, as opposed to a rapid rise, because we saw sort of a gradual rise.

D

In q1 and equity still did okay, but if we see a more rapid rise, then that could potentially.

D

Develop into some dislocations in the market, but for right now the market's expecting more.

D

Gradual rise- and we do think that's sort of the base case scenario. So with all that said,.

D

Are there any other questions about the market environment before we jump into the trust itself,.

A

When you had mentioned the 60-40 that you know, our portfolio is 60 equities, 40, fixed income.

A

Are you suggesting that we change that to be more and and where would you see it changing too.

D

That is exactly what I'm suggesting and when we circle into the asset allocation report,.

D

All that information in there, okay, so um pat, what about the cyber attacks? How is that.

E

Impacting um the markets at this point right now it the market seems to be just sort of not.

D

Reacting all that much to them, obviously, we've seen a number of them more recently between.

D

The colonial pipeline, and just the other day with I think, was jbs, was the name of the car.

D

They came back online right now. The market is looking through that, because those things came.

D

On or came back on relatively quickly, but if we see an uptick in these sorts of things which.

D

Seems like the direction that we're heading in theory, there could be an increase in say.

D

Concern about those sorts of things so that could eventually impact markets.

D

Investors being more concerned about the frequency at which that happens, but as we stand here today,.

D

They sort of look through those issues. I think, if anything bothers me, if that's that's, not a good.

C

Term anything concerns me uh is the amount of borrowing the federal government's doing.

C

And at some point in time, this six trillion whatever these, this astronomical sums is going to.

C

Have to start being paid back now, of course they did talk about how the rates are so low. Now's, the.

C

Time to bar, but these are heavy heavy numbers and you know I wonder if at some point in time.

C

The real economy reappears, I.e, the stimulus money is, you know, goes away, the unemployment benefits.

C

Go away those types of things go away and what's the economy look like and my point gets to be is.

C

I think it's going to be slower. I think it's going to be subdued so well, that's my crystal ball and.

D

Who knows? Oh, I think, you're spot on. I mean just just about how things work right, that the stimulus.

D

Is so front loaded right that when we looked at those estimates for the rest of this year, they're.

D

Well well above average, but then the marginal contribution or effect from the remaining stimulus.

D

Weakens over time, so I talked about how strong economic growth is going to be.

D

This year, it's not going to look anything like that next year, unless we get even more.

D

Huge packages coming out in washington: well, you know you talk about commodities and equities.

C

Because we were locked down for so long we've seen people say: hey, look! I'm going to do some.

C

Improvements to my home or I'm going to do something. You know: they're, not traveling. The hotel.

C

Industries, you know taking the travel, people are taking a real hit and I guess my point gets to be.

C

Is that that's going to go away too? Is that you know people we're going to hopefully return back.

C

To normal, whatever, that term is, and I wonder, if we're going to have the consumer spending that.

C

We're having now that's growing those equities and commodities that so again, I'm a little cautious on.

C

This portfolio going forward, I'd still like to remain conservative yeah. I think, commissioner,.

D

You raised a good point that what the what the feds are trying to do right now is like bridge.

D

The gap right provide bridge financing right from where we fell off the precipice about a year ago.

D

And provide the support to the consumers and businesses to help bridge that gap to when the.

D

Private sector can stand on its own two feet: we're not there. Yet. The employment report for may came.

D

Out this morning, and it showed about seven hundred thousand jobs added, which certainly sounds like a.

D

Lot, but that was below just be over a million right. It was below well below the estimate, so.

D

We're still seeing an improving labor market, but not nearly as much as I think. Some of us.

D

Had hoped for so the length of time for or the length of this bridge to bridge that gap seems.

D

To be getting extended a little further and a little further, so if that's the case, then we could.

D

See some more support coming out of washington to help you know get us to the other side, but if we.

D

Don't to your point, then, I think economic growth is going to decelerate, rather notably next year,.

D

And that could have implication for markets, but the markets these days are really driven by policy.

D

You know what's coming out of washington and the headlines around that, so it remains difficult, not.

D

Knowing how that's going to unfold in six nine to 12 months, to really make a you know fully informed.

D

Estimate of what the economic outlook could look like until we see that.

C

I guess my point is we're dealing with money that we cannot afford to lose or we.

C

Don't want to lose, and so we keep some kind of a conservative or some kind of a cautious approach.

C

But again we'll hear you out. I read your stuff, so I'm sorry prepping you up for the end. I appreciate.

D

That so, if we can hop behind, exhibit three we'll talk about the trust results themselves.

D

So, on page 18 there we always just provide a high level observation of the things that we're going.

D

To discuss really the high level takeaways, so in that first bullet point, you see the observations.

D

There, the trust at the end of march was about 5.9 million dollars. We have an updated asset value to.

D

Share with you all shortly in the next book you can see the investment gain was about 162 000.

D

And the portfolio as a whole returned 2.8 net of fees versus the policy index.

D

Per the investment policy statement of 2-3 so outperformed by about a half a percentage point.

D

So when we think about what drove that difference or what helped the portfolio.

D

Outperform that's when we get into attribution, so that's what's explaining the difference so.

D

On the positive side, that's what was helpful number one inequity, overweight.

D

So if you recall, when we met in february, we talked about how conservative the trust was.

D

And didn't recommend any rebalancing at that point. Thought equities were still sort of the place to.

D

Be in the short term, so that was helpful. Being overweight, equities relative to policy having more.

D

Money in equities relative to your target and the second big thing was the u.s equity structure. So.

D

If you remember back in february, we took a deep dive and basically how the pieces fit together.

D

Right on the equity side and the fixed income side for all the portfolios, so what we saw in q1 was.

D

Those more cyclical or economically sensitive areas like small caps and mid caps, outperform.

D

So, within the u.s equity structure for the portfolio having a little bit more.

D

In those two areas within u.s equities relative to large caps that helped out performance because.

D

Small and mid caps did better than the broader market on the negative side, really nothing to.

D

Report, given the straightforward structure, asset allocation implementation, only a couple things are.

D

Going to impact relative performance, namely those two that were helpful during the current quarter,.

D

And then looking ahead, we'll do the asset allocation study shortly and then talk about.

D

The investment policy statement at a subsequent meeting, so if you focus on page 19, this is the.

D

Executive summary page, so if we had 30 seconds at a meeting, he said you know pat 30 seconds, give.

D

Us the high level overview here this is the page we'd focus on. So if we focus on the top, it tells.

D

Us the summary of cash flow is essentially where we were and how did we get to where we are now.

D

So at the first quarter you can see we began the year at about 5.725 million dollars. There were no.

D

Flows in and out of the trust, and then you could see that investment gain of 161 thousand dollars.

D

If you compare that to the fiscal year to date, we began with about 4.133 million dollars.

D

There was the contribution last year, some withdrawals for fees and expenses.

D

And then the investment gain at the bottom, so all told the trusted. Stealth grew by about.

D

1.6 there should be 1.55 million dollars in the current fiscal year.

D

If you look at the returns in the middle we'll skip over this, we'll spend more time talking about.

D

These when we look at the peer rankings page in just a minute, but if you focus on the bottom chart.

D

The asset allocation versus the targets, the key takeaway again here, if you focus on those first.

D

Three rows: we're sharing the current allocation, the u.s non-us and emerging markets respectively,.

D

They are each slightly above their target, so we went into the quarter with about a two percentage.

D

Point overweight to equities, which similar to q1 has so far proven helpful as equities are up.

D

About five to six percent here, as we stand through the end of really yesterday so having more money.

D

In equities, just like in q1 has been helpful so far here in q2. So if you skip ahead to the next.

D

Couple pages I'll walk through these quickly. What about this fixed income? We took a hit on that baby.

C

The 161 negative, so the commissioner, that is showing not the investment game, but the difference.

D

Relative to the policy, so, okay, so that's the 41 versus 38.3 yeah! Oh good! Thank you! Yes, yes, sir.

D

Go ahead so essentially that would be the rebalancing required to move everything in.

D

Line back to the target: yes, so if you look at page 20 up at the top here quickly, it just shows.

D

The market value history, how that changed over time. So obviously, if you look at the top right.

D

There you can see, the trust has ended the quarter at its highest level, since it was.

D

First funded a few years ago, but if you look at the bottom of the page, you just want to spend a.

D

Quick minute on this so again breaking things down at a more granular level, so we showed the.

D

Cash flows at the total portfolio, but here we're breaking it down by individual manager.

D

And if you look at that second column, you see net cash flows and it might be counter-intuitive at.

D

First glance, because there was nothing, was approved, cash didn't move in and out of the.

D

Portfolio but what happens here for etf vehicles? They don't automatically invest their dividends.

D

Like mutual funds, there's really no option to do that so once they pay a dividend.

D

It just moved directly into cash. So that's why there's negative cash coming out of all the etfs.

D

And then, in that second, to last line, you could see about 15 000 in aggregate moving into cash.

D

So when we get to the recommendations, a couple short minutes, we'll talk about putting some of.

D

That cash back to work as it's been built up over the past quarter on page 21 again just.

D

Getting a little bit more granular, you can see at the top it's showing the asset allocation.

D

Over time, with the legend to the right, showing the respective asset classes- and you can see a.

D

Couple of those big, lighter blue bumps over the past two years. That's really the contribution.

D

Right so the annual contribution going in it's sitting in cash for a little bit before it gets.

D

Fully invested, that's why you see those big bumps in a couple of years there as far as the bottom of.

D

The page, this is again just the same information that we talked about a little bit earlier.

D

But it's showing the allocations to the respective managers themselves in the first two columns, so.

D

Again, a more granular breakdown of the asset allocation across each individual asset class.

D

So if we move ahead to page 22, this is the peer rankings page. So I think we talked about this.

D

Before we used the same third party platform as the previous advisor called investment, metrics.

D

So it's a third party platform. We use it, maybe about 50. Other consultants use it. So there's.

D

Trillions and trillions of dollars on this platform, it gives us an opportunity to really.

D

Slice and dice this data on an anonymized basis. So what we're doing here is comparing the trust.

D

Results relative to public defined benefit funds across the u.s and there's a ton.

D

Of charts and data on this page, so if you just focus on the bottom two rows, this is where the.

D

Big takeaways are where you see the circle on the triangle. So, as you work your way from.

D

Left to right there, you could see again that 2.8 return. I mentioned a few minutes ago. Neta fees was.

D

Good for 66 percentile, so lower numbers here are better. So that's indicative of below the median.

D

When you look at the policy index at 2 3, that was almost in the bottom quartile and just to echo.

D

Some of the comments I made earlier meetings and, more recently, being a little bit more conservative.

D

If you just focus on that policy index right, that's your strategic asset allocation and work.

D

Your way from left to right, you can see generally in the bottom quartile or below the median. So what.

D

That's telling us is that the trust itself is much more conservatively invested than many similar.

D

Funds at a time when the total portfolios, you can see all the way to the right there returned about.

D

Eight or nine percent respectively, so it's been a very good environment for for markets.

D

But having that little bit more of a conservative allocation really explains the difference.

D

Between how the trust is doing relative to other public defined benefit, funds so again want to keep.

D

That, in the back of our minds, when we shift gears to asset allocation in just a few short minutes,.

D

Questions about that data before we continue on or anything else now, we would have had a more.

C

Conservative approach early on in the in the funding into this thing, because we didn't have.

C

A lot in it to kind of self-fund um I'll. Let you continue on, I I I'm still thinking I'm not ready.

C

To speak yet, okay, and I think a lot of a lot of this discussion will help be fleshed out when we.

D

Shift gears in the asset allocation as well page 23, just quickly, it's the same data, but we just.

D

Show it for fiscal years, so obviously we only have two fiscal years so far, we'll have a third for the.

D

Next report, but it's the same universe and the same data just for those different time periods.

D

We skip page 24. This is a high, it's just a higher level. Look at the risk of the.

D

Portfolio relative to the benchmark, but since it's so new we only have three years of data.

D

We put it in here because it's a stable, but it's not all that meaningful right now, given.

D

The trust has only been around for three years, so talk more about it. When we.

D

Switch gears to the opeb report. We look on page 25 here so now we're breaking down not just the.

D

Returns of the total fund you see at the top, but then each respective asset class in those darker.

D

Gray bars and then the individual managers within those asset classes in the lighter gray bars so.

D

We talked about the total fund returns, but if you look at the us equity composite and work, your way.

D

To that first column there was up eight percent during the quarter relative to the benchmark of.

D

About seven percent, so, as I spoke about earlier on what really drove that is, if you work your way.

D

Down the page, you can see the s p or the vanguard s p. Mid cap etf was up about 13 and a half percent.

D

The small cap etf up about 18 and a half percent, so just as an accounting identity, we can know that.

D

Having more allocation to those areas drove the out performance because we're just using.

D

Passive funds, so that's the only explanation so as we think about that. Having more allocated to.

D

Those areas which was helpful really at the early stages of an economic recovery, and we talk about.

D

The recommendations later on, with the expectation that the economy may decelerate moving forward.

D

I think a more balanced approach between small, mid and large caps makes a lot of sense for the.

D

Rest of this page and the next page not really too much to cover here. These managers are all passive.

D

Managers, the returns will be largely in line with the benchmark at very low cost, which we'll look at.

D

In just a second here, but any questions about the returns themselves before we move forward.

D

Okay, so we want to shift gears to page 28, please, as we round out.

D

So one of the things that we always include in our reports- and I I don't know that it's something.

D

That committee has seen before is fees for all the managers, so in the interest of transparency.

D

And disclosure, and for the committee's own comfort and knowledge, what we're showing here is all of.

D

The investments their fee schedule in the second column, how much of the portfolio they have. What.

D

It's estimated from a dollar perspective and then the estimated annual fee all the way to the right.

D

But if you look at that blue line below that's the aggregate number for the total portfolio, so all.

D

The way to the right in the blue line, the expense ratio for the portfolio is just six basis points.

D

To a very, very low cost very, very cheap, and we talked about the importance of that. Given the.

D

Small asset base of the trust we think maintaining this passive approach, as the trust grows, continues.

D

To make a heck of a lot of sense for the fact that keeping fees lows just means dollars stay.

D

In the trust they compound over time- and secondly, we really can't access institutional type quality.

D

Managers at a good fee until we're maybe double this level or closer to 15 million dollars. So when.

D

We do get there we'll revisit implementation, but for right now, low-cost passive approach.

D

Definitely agrees the way to go, but you get what you pay for we'll see that with the opeb shortly.

D

uh Any other comments that wraps up everything I had for the book, the rest of the sections.

D

Again are just a more of a breakdown of the asset classes and the managers themselves, as.

D

Far as characteristics and exposures and again it's relatively straightforward for the low sap.

D

Given everything is a passive investment so happy to get into any of that information.

D

But for right now that was going to wrap up my comments as it relates to the report.

D

A

Anybody, no thank you. Okay, so do you need a motion to accept the report.

B

Looks like there is so I'll make a motion to accept the marquette associates, portfolio update.

B

Quarter ending march 31st 2021 second, first and the second all in favor, aye aye aye motion carries.

A

Next, we're going to get into your recommendations. Yes, the.

A

Second book, yes yeah, that was the one that was on the second book. Indeed,.

D

All right, terrific, well, thank you again and if you hop behind the cover page in that book, there and.

D

You see the table of contents again as outlined in the agenda, we'll start with the recommendations.

D

That'll be in relative short order and then we'll shift gears to the asset allocation study.

D

So if you flip behind exhibit one there for the recommendations.

D

See on page four, uh this should be relatively familiar for most of you all how we show the.

D

Fund allocations broken down not just at the total level but at each individual manager. So a.

D

Few takeaways on this page before we get into the recommendations themselves, so you can see in the.

D

Call it second column from the left there, the total assets of the trust at point, one.

D

One million dollars through pretty much the end of may so at the end of march it was five eight.

D

Nine, so so far in q2, the return has been just a shade under four percent. Again, as I mentioned.

D

Equities have continued to do well, so a strong start to the quarter and if we think about the.

D

Fiscal year to date, so far through um really the end of last month, we showed uh about 16.

D

Or 16.2 percent through march, so with three eight. On top of that now we're looking at about 20 and.

D

A half percent so well north of that six percent bogey and you should see the positive impacts of.

D

That you know we have a few weeks left here, but we're comfortably ahead of that and hopefully.

D

We'll stay that way in the next actuarial evaluation report. um Actually, I'm not terribly.

D

Sure is that done annually or semi-annually? Okay, so is. Are we looking at the next one for this.

D

Year will be the year after that we just had one did we. I think we just had one. I think yeah yeah.

D

The year after that, okay, so we think about it, you know for two years for it, if we finish call it 20.

D

Then that means in the next fiscal year we're 14 ahead of the actuarial, assume raider return. This.

D

Year in theory, for the next fiscal year, if we had a negative 10 percent, we'd still be in line with.

D

That actuarial assume rate of return over the two year period. So we have a lot of cushion build up.

D

In this year, and hopefully again, we have another decent solid year the following year and then at.

D

That point we'll see the positive implications for the actuarial evaluation report when it's.

D

Done at that time, okay, we're actually doing a rfp for a another. What's the term actual actuary, but.

C

We're just trying to find out about the rates, but I would be interested to know what other actuarial.

C

Opinions are, we've had the same guy for a long time and I like him nice guy, but I would like.

C

To get another opinion go ahead so a couple key takeaways when we look at the recommendations.

D

Here, if I could bring your attention to the bottom left chart the smaller chart on the page.

D

So similar to the report, what we're showing here in black is the current allocations across the.

D

Respective asset classes in blue are the targets per the ips and then the difference. If it's in.

D

Green, it's overweight and in red and underweight so you can see between the three equity segments.

D

We're about a two and a half percentage point overweight in equities, as we stand here today,.

D

About a half a percentage point overweight in reits and that is largely being sourced from fixed.

D

Income, most notably investment grade, which is a proxy for that negative three. Four percent return.

D

We saw earlier and the high yield, and you can see cash has been further built up over time, so we're.

D

About a percentage point overweight and about fifty one thousand dollars in cash in total, as.

D

Those etf dividends get thrown off and put into cash, so two recommendations for the committee.

D

Consider one is structure related and the other one is related to putting cash to work. So if you.

D

Look at that middle column in rebalancing. The first recommendation is to move fifty thousand.

D

Dollars out of the vanguard, small cap, sn, p, uh 600 etf into that schwab, u.s large cap etf, so.

D

Again, a little bit more balance, so those small mid cap companies did exceptionally well in q1.

D

Given economic activity, continued to, you know, run pretty hot, but as things sort of even out.

D

Over time, the performance based on history should level out. So basically it's you know, selling high.

D

And buying low, you know with rebalancing just within equities, so not taking any.

D

Equities off the table, but sort of taking more balanced approach to the structure itself.

D

The second recommendation, if you work your way all the way down to that middle column, would be simply.

D

Using twenty five thousand dollars in cash and moving that into the I shares broad usd.

D

High-Yield corporate bond etf, so these are obviously high-yield bonds, as I showed on the.

D

Chart a few minutes ago, even though core bonds were down three and a half.

D

These bonds were up about one percent, so they're not nearly as impact as as interest rates and.

D

The yield on these bonds are somewhere in the neighborhood of about four and a quarter percent.

D

Whereas the core fixed income is about one and a half, so not only is the yield lower, but those core.

D

Bonds, much more sensitive to interest rate changes so putting some of that cash to work. I think not.

D

Necessarily in equities because we have a decent overweight, but maybe in the u.s high-yield market.

D

Makes make some sense yeah, so, on page five there you can see the recommended actions for the.

D

Committee has summarized on the previous page and is listed below there, the again moving 50 grand.

D

Into schwab, u.s large cap coming from the vanguard, small cap and then 25 000 to that usd high yield.

D

Etf from cash, so let me pause there for a second for any questions or comments. I guess my question.

A

Is I understand that the equity is supposed to be 30 of our portfolio right? That's the target and.

A

It so within that you have the three the large mid and small within those three is there's.

A

Is there a specific target for what each one of those three makes up for each one of the three.

D

Right so it is towards the 30. Is that yes, so it's 24 to large caps and six percent to the other two.

D

So if you look at the allocations to my point earlier on moving those.

D

Funds out of small caps will bring that into more balance, so it doesn't look.

D

Exactly like 24 and six, because we have an overweight right of 32 gotcha, but proportionally.

D

Having more money in the smaller and mid areas would be a greater overweight than having more.

D

Money in large, given those targets, okay, I was just curious what that was thanks. You're welcome you.

C

Know I think all these will grow given the current economic outlook. uh But I do like the small cap.

C

Over the large cap and we'll still have that tilt, if you will it'll just be mitigated slightly.

C

Well, it seems like vanguard's doing a little bit better in uh stuff. I was reading last night.

D

Oh commissioner, certainly more more recently in q1, small caps have outperformed now in q2.

D

That's leveled off to some degree. There's there hasn't been too much differentiation.

D

Between the returns, what do you think in three and four? What's the outlook.

C

For three and four years yeah: well, hopefully, I'm sorry quarter. Oh the third and fourth quarter. You.

D

Know the rest of this year, the rest of this year. I think that again, at least, you know we use history.

D

As a guide and when the economy continues to decelerate or move more into say, like a mid-cycle.

D

Type of outlook instead of early cycle, then this performance tends to level.

D

Out and there's not much differentiation, so I think moving money into large cats is kind of.

D

Splitting the baby, if you will, you know, bringing the structure a little closer, but we still have.

D

A little bit tilt to those other areas in small and mid caps, so you might want to make a motion.

C

I'm going to make a motion that the committee approved the proposed rebalancing of 50 000.

C

To swab u.s large cap ef etfs to vanguard small cap, I'm sorry am I doing that the wrong way. No.

C

I'm doing it right, it's coming from vanguard, it's coming from vanguard and going to schwab and then.

C

Moving 25 000 in cash to 25 000, I sure, as broad usd high yield corporate bond is there a second.

B

Second, is there any discussion? Excuse me: okay, if not um all in favor, aye, aye aye eyes have it.

A

Thank you, okay. So we're gonna move to the next item on the agenda. Do we need to.

D

Do an approval of that, like we just did for the quarterly report before I think we just did it.

A

Didn't we no, I didn't emotionally. Oh, I apologize, oh, no, worse or worse, we're moving it around.

D

So I know at one of our first meetings I just got in the zone and I powered through everything and.

D

Necessarily was cognizant of the agenda so we'll round out here with our final.

D

Part of the presentation in the next tab the asset allocation study, so I think this will help.

D

Answer some of the questions that came up during the report but think about this as a tool to aid.

D

The committee to developing that long-term roadmap from an asset allocation perspective.

D

So, even though it's strategic think long term, it's something that we'll review on an annual.

D

Basis because the capital markets environment can change pretty rapidly, as we saw q1 of last year,.

D

And really over the past year with a strong equity return. So this is a good exercise to make sure.

D

That the asset allocation is in line not just with the assumed rate of return, but also takes into.

D

Account the unique characteristics of the trust right, namely that there are no liquidity, needs.

D

Right so we can afford to take a little bit more risk, perhaps than what we are now again just don't.

D

Have to sell things at the wrong time to meet benefit payments or expenses. But when we walk.

D

Through these numbers, I'd like to think about this more as not just a trade-off between the.

D

Two, the various portfolios, but also directionally for the numbers themselves, because we put numbers.

D

Here, they're out to two basis points in some instances and I guarantee, when we're sitting.

D

Here in 10 years, it's not going to unfold the two basis points. We don't have that level of precision.

D

But directionally is the most important again the trade-offs. You know the upside versus the downside.

D

Things of that nature are the most important takeaways. When we look at these portfolios.

D

So with that said, we look at page seven here, one of the things that we like to do before jumping in.

D

Is you know in the interest of transparency again, what are we assuming for these asset classes over.

D

The next 10 years you can see in that second column, but then also for more context. What are.

D

Other consultants, other parties looking at as well, okay, just for more context for the the committee.

D

So that third-party 10-year is an aggregate and average of about 40 consulting firms that an.

D

Actuaro puts out an actuarial firm puts out about once a year, so there's a couple takeaways on this.

D

Page number, one: if you simply look at the equities in u.s, non-us and emerging. The first thing is.

D

You know us, and our peers are certainly expecting below average returns from equity markets over the.

D

Next 10 years, and that's mainly the result of valuations so like we talked about previously.

D

Valuations are a little bit more expensive now than history, and what history tells us.

D

If you buy something, that's a little bit more expensive, then your return from that point is.

D

Likely to be below average and vice versa, but right now things are a little bit expensive.

D

The other key takeaways, if you look at infrastructure and reach, this really gets.

D

Back to our discussions over having that inflation insurance in the portfolio so reits play that role.

D

Tips play that role. Infrastructure plays that role and importantly, even though we're looking at.

D

Infrastructure as an asset class, you can implement that using a passive etf. They are out there so.

D

Adding that diversification won't compromise the implementation side of what we're trying.

D

To do and keep things at a low cost. So if the committee ultimately would like to include it.

D

We can still do it and keep us on the the path that we're that we're using right now.

D

So if you look at page eight, the rest of these pages are going to show you the.

D

Output for these three portfolio options here, so the first one, the current these are the.

D

Respective allocations for the current asset classes in the ips.

D

And then number two in the middle there it says: lower fi, that's lower, fixed income and number.

D

Three lower fi v2 lowering fixed income a little bit more, the other key takeaway. Obviously, if fixed.

D

Income goes lower, the money has to go somewhere, so that would be in equities. When you look at.

D

U.S equities in non-us in aggregate right now you only have about 51 in equities in the second and.

D

Third options respectively: it's 55 and 60., so still pretty conservative type portfolio. There.

D

You know a large portion still in fixed income, but increasing that equities, trying to increase the.

D

Return expectations and then finally, below you'll, see in the current reits have about.

D

Eight percent, you know we would expect them to continue to do well. If the economy continues to.

D

Improve but the outlook like we talked about is still a little murky still a little cloudy.

D

So the recommendation would be to complement that with listed infrastructure to play a similar role.

D

In the portfolio, but the latter doesn't necessarily suffer from the same sort of.

D

Structural headwinds, you know, like the office market in real estate, like the retail market,.

D

In real estate from the work from excuse me from the amazon effect for the latter.

D

So with that in mind, if you hop to page nine again we'll look at a base case outlook here.

D

And then talk about all the trade-offs between these two options. So, on page nine, you know the key.

D

Takeaway there summarize, with the the brief blurb you know, higher allocation equities will increase.

D

The likelihood of meeting the assumed rate of return, you know very intuitive and straightforward.

D

You're going to move money out of fixed income and increase the equity exposure, you could expect.

D

Higher returns and that's illustrated in the table in the middle, that's showing the base case 10-year.

D

Outlook you can see for the current pretty much at the assumed rate of return of about six percent.

D

The second one, lowering fixed income by about five percentage points, increases that, by about.

D

20 basis points annualized to 6-2 and then finally overweight to the right there about six and a half.

D

Percent so still well, above the assume rate of turn, all the way to the right there. Now that's.

D

The base case scenario and if before we switch gears, if you look at the volatility below those.

D

Returns in that top table moving money out of core fixed income, even though the return outlook is.

D

Not great, by any stretch of the imagination, it's still a very conservative asset class.

D

So when you move money out of something, that's very conservative into an area like equities, where.

D

You expect a much higher return, but there's more volatility. So at the total portfolio level you can.

D

See compared to the current, the volatility or the risk would step up in lockstep with that as well.

D

Questions about any of the any of that, because then we're going to shift gears and start looking.

D

At the trade-offs from a returns, market value and funded ratio perspective. I guess this is what got.

C

My attention, when I saw this higher volatility, you know again higher return, higher higher risk higher.

C

Volatility of risk- and I just want to maintain a conservative, but I want to be smart about it-.

C

I think I told you earlier we're getting ready to put some money into this thing and we want to look at it. Well, that's that's an important, I'm sorry to mentor rob. I think we're going to.

D

Please, oh, I was just going to say, commissioner, in that.

D

Not that this is the same as as as the opeb but think about the opeb as well, whereas you know.

D

Very low funded early on when you begin it and you it was much more aggressively implemented.

D

Over time- and that's paid off yes right, but it was timing too you're. Well, you are 100 right on.

D

That absolutely, but when we think about the opeb 2, the proposal here relative to what the opeb was.

D

It's still much more conservative relative. I I totally agree, but I just think the the.

C

The core amount in it is low, it's so low. So that's why I think that we want to a hit on. This is worse.

C

Than a hit in right open, I would say I I don't know about that, so think about it. Think about! I.

D

Always think about risk, I mean it means so many different things to so many different people, but.

D

And please correct me if I'm wrong, but from the county's perspective right, the unfunded liability.

D

For the low sap is so great that the returns are not going to impact that contribution very much.

D

Just think about the contributions the county has to make it's essentially a mortgage.

D

Right get it, we get it, we get it, we get it, but I'm also about I'm sorry. I'm.

C

You guys, you guys get it right. I do I do understand and I I guess my I always you.

A

Know I'm the newcomer here I I try to wrap my head around this discussion. Thinking of you know.

A

A person investing for their retirement right, which is essentially what we're doing in a way.

A

um And I guess what what you're saying now is we're this: this funds, we're sort.

A

Of a young person that can bear more risk because we're not paying out that is that.

A

Right is that a correct way to look at it? I mean that's yes and related to that right, a.

D

Young person doesn't have any, can take spending and right because they don't have spending needs.

D

And they have to get longer to recover right, yeah, no old guy here and and my sense of it.

C

No comment well, look, it is what it is. I got 30 years on you, my point gets to be. Is that we still.

C

We're still dealing with other people's money, it's fiduciary responsibility that I need to make sure.

C

That you know I'm true to myself and I continue my conservative what I can call conservative ways.

C

So going forward, I see your point, I believe. If we get a bigger fund, it can have better.

C

Returns and like opeb, and so it can kind of start self-generating I mean the returns, have.

C

Been self-generating, which has been great, but uh I also say this is you know I sit around and claim.

C

My you know, while I've been on this board, you know these things have gone up, but look at the economy.

C

But the other thing could be is if you know we had a big downturn in things, and I don't know I'm just.

C

I just can I'm just sure we get too aggressive. It's interesting to me, though. The third line.

F

Because you're averaging the return with the volatility, so it's even low it's lower.

D

Right and that's the nature of taking money out of fixed and adding it to equities, so you get a.

D

Higher return, but your your risk increases a little higher proportionally, but in average.

F

It's decreasing right because of the higher return because of the higher volatility relative.

D

To the return, so your denominator is going up proportionally higher than the numerator there.

D

If I'm making sense so when you look at just the current versus the lower fixed, you have a 20 basis.

D

Point increase, which I'm trying to think about it from a percentage point perspective might be about.

D

3 or so, but from a risk perspective, the 9 7 to the ten five that might be eight percent or so.

D

So when your numerator goes up by three and your denominator on.

D

Up by more than that, then your average return, divided by the volatility, will come down.

D

Those are still very high numbers and, at the end of the day, it's really.

D

You know trade-off it's all about trade-offs like comfort level, exactly exactly so. If the.

D

If the committee is more comfortable with a more conservative portfolio, then you know that makes.

D

A a lot of sense, but at the same time just have to realize the um the implications of that right.

D

If we just meet the assumed rate of return, then the contributions are going to be what they are.

D

If we can come in a little bit higher than that, then the contributions will come down a little bit.

D

On a relative basis to what they are, but it's all you know, you've got to take it into account of the.

D

Entire budget itself right, but my comments just quickly. Circling back to the opeb commissioner.

D

A poor return in this fund from the county's perspective will have a much lower impact than the.

D

Opeb, because the unfunded liability is so big in this one, whereas on the opeb, the mortgage, you're.

D

Paying off is so small right, you're, really that contribution is coming from the normal cost in.

D

Other words the benefits being accrued each year, so the returns would have a much bigger impact.

D

For opeb from the contribution than the low staff yeah, sometimes I do that. I get things just flipped.

C

Around in my mind, and I get on the wrong track all right, I see what you say and then from from.

D

A dollar perspective too right. The contributions here are what a million ish dollars this year.

F

It's gonna be two: it's gonna be well this year, it's three two right, three, two three starting in.

B

July right, but that's that's in addition to what the actuary is requiring. I think right.

B

That's uh the amount that's going to the actual trust right and that doesn't include the pay go.

B

Amount for the current retirees right, but the um maybe I'm misspeaking, but what boldin is.

D

Saying that you should be putting in is less than what you're going to put in yes right. So what my.

D

Perspective is just what bolton is saying you have to put in right is only a million or a million to.

D

Whatever that number is so, the returns won't impact that number so much, because the funded.

D

Ratio are so low right right again. The key is to get that up right. The funded ratio right, which.

C

But also make sure it's it's not real high risk yeah. So you do that through two levers.

D

Right the increase in contributions, which sounds like it's going to happen or higher investment.

D

Returns but if you're doing the former, then maybe you don't have a need to do the latter.

C

Well, that's another discussion about turf fields, but.

D

So with that in mind, let me walk through some of these other pages quickly and maybe it'll help.

D

Us um frame up the path forward. So if you look at page 10 again just to reiterate my comments about.

D

Trade-Offs, this is showing the distribution of the returns themselves, so we showed that base case on.

D

The previous page, you see that at the top line there, where you see the average and the median.

D

But then the distributions below that so the 5th and 25th percentiles, that's sort of worst.

D

Case type scenarios, the fifth being, you know a very, very worst case scenario and then the 50 is.

D

75Th and 95th that's sort of your base or upside scenario, so think about this as similar base case.

D

Similar upside but admittedly a lower floor.

D

If you will, you can look at the current in that fifth percentile just at about point six percent.

D

The first version of 0.3 and the latter version 0.1, so adding more inequities relative to fixed.

D

Income will, you know, be more volatile and give you more volatility on the downside, but again.

D

The trade-off of a better base case and higher upside type of scenario. If you look on page 11, the.

D

Story as we continue through these are going to be pretty much the same when you have higher return.

D

Expectations, this is the market value distribution of potential outcomes over the next 10 years.

D

We did work with bolton to incorporate their projected cash flows here, and you can see those.

D

Triangle or excuse me, diamonds in the middle of those distributions, are reflective of the base.

D

Case so again, higher market values over the next 10 years, assuming the investment returns and the.

D

Cash goes into the funds, but wider distributions right again, taking more money out of fixed income.

D

Adding it to equities would lead to a wider or more uncertain outlook over the next 10 years.

D

If you look on page 12 again for the funding ratio summary at the end of 10 years again, we.

D

Work with bolton to get the cash flows and the liabilities, but it's a similar story when we.

D

Think about returns and market values in the middle of that page. The base case scenario.

D

At the end of the next 10 years, the trust could be, you know very, very well funded. You know if markets.

D

Continue to deliver and the contributions go in again. You have that higher upside.

D

Potential, but from a funded ratio perspective a little bit lower on the downside. When you look.

D

At that 5th and 10th percentile, so again all about the trade-offs. The comfort level of the committee.

D

And really thinking about certain budgetary implications, if appropriate, to consider as well.

D

So the last few pages on page 13 14 and when we think about a worst case scenario over a 10-year.

D

Period, typically, market, poor environments aren't 10 years they're a few months a year. Two years.

D

At most, so what we do here, I think, is pretty interesting. Is we look at these current mixes.

D

And then we say well, what would things have looked like at the 2008 financial crisis? In other words,.

D

If the portfolios were allocated like these potential mixes, how would the market values.

D

Have changed at the beginning and then subsequent to that crisis, so the takeaway, if you look at 2024.

D

In that top right table, obviously moving money out of fixed income and into equities right before a.

D

Downturn is going to leave you with less money, just intuitively. At the same time, if you look.

D

On page 14, we not only look at it from an equity perspective, but an interest rate perspective too.

D

So what happens if rates spiked similar to what happened in 1981 well, now you'd be a little bit.

D

Better off because having less fixed income in the portfolio would leave you less sensitive.

D

To interest rate changes over time and kind of pulling those ideas together on page 15.

D

One of the things that we can look at is hey well. What, if equities, do poorly end interest.

D

Rates go up, it's not an environment that we've seen in quite a long time, but it's not out of.

D

The realm of possibilities, but at the end of the period you're basically left at the same position.

D

Right because lowering fixed income is going to hurt you if equities, do poorly.

D

But lowering fixed income is going to help you. If rates go up.

D

So you can see that seven, eight seven, eight seven, seven pretty much the same outcome if equities.

D

Do poorly over a three year period and rates increase over that three year period as well.

D

So to wrap up this discussion on page 16 here, what I'm again just showing are these potential.

D

Options and then the base case outlook there on the bottom. So I think it's my hope here today.

D

For one of two things, either to you know, maybe come to a consensus about the path forward with.

D

These allocations, if not we'd, be happy to run. You know another set of iterations for the next.

D

Meeting and walk through those, but then in conjunction with that also develop an investment.

D

Policy statement draft, so we can continue to get the ball rolling and moving forward, but with all.

D

That said, let me pause for any further comments or questions from the committee.

C

That means I I'm happy or I'm satisfied. I don't know about happy satisfied with the way.

C

It's growing, I think it's a little slow, but it's also the nature of the so the policy statement. I.

C

Think is a great idea. I just worry that we're ripe for a correction- and you know I've had.

C

My share of buying high and selling low. So I'm sorry, I'm rambling here go ahead. Anybody else.

F

I think it's reasonable to think we're going to face inflation. I do too higher.

C

Interest rates when's the turnaround or is it three to four percent when the market.

C

Goes down because rates go up for rates, it's about three percent. Historically, if you look.

D

At that data, that's exactly the level at least three or four percent, but also very important.

D

Not just the level but the rate of change of how we get there, so we have a huge spike in rates that.

D

Would be much more detrimental to say this sort of gradual increase that the economy- and you know the.

D

Markets can sort of digest over time, but you're spot on that three and a half 40 percent level.

D

Is where sort of the script flips there I mean? You know we hear the feds, you know starting to they're.

C

Going to relax that policy of bond buying and or whatever they do when they buy all those bonds and.

C

That just again leads to me to think increase in inflation increase in interest rates right so that.

F

Lower fi might position us to yeah to buffer inflation, better right right, because that lowers.

D

The fixed income and then incorporates some of those other inflation, sensitive yeah, possibly.

F

That the first one is just a little bit more conservative than the second, which is absolutely.

C

But but not it's not as risky right right, so this might be more comfortable. The middle ground.

A

I, like the lower- I guess, fi, fixed income and.

A

In terms of you know, because when we look at the equities that that we invest in, it seems like.

A

They're, mostly, you know, index funds that that my limited experience don't seem to take the.

A

Huge swings, but I haven't you know been around for so you know. Obviously I wasn't around for.

A

87- and you know things like that, but um so I I'm comfortable with the middle road again for the the.

A

Hedge against uh what they were discussing, I think I am too yes, I'm very comfortable with the middle.

E

I would have been even comfortable going the other um because of the fact that this we have such a.

E

Long period to grow this fund young fund. Yes, it's such a young fund, but um I'm I'm comfortable with.

E

The lower also you know when and and I think we're in agreement on that- I think the thing.

C

To at least I want to keep in mind is that it looks like this uh federal tax cut of 2017 is. Is.

C

Giving us more revenues coming in now, we had the best of both worlds. In my opinion, of course, it's.

C

People have different opinions this year, where we were able to raise salaries but also lower taxes.

C

Right, you know, that's that's a that's a interesting dynamic to do and going forth if these.

C

Income taxes continue to where they are we're going to be in a new.

C

In my opinion, in a new position into this year, like when we do our.

C

Audits in december that we may be able to do a mid-year correction with this, with with.

C

Mm-Hmm and see, and the key gets to be, is pumping in while we can but don't pump it in high yeah.

C

So I I guess, I'm fine with the lower one and you're thinking the lower of the l2.

F

I think everybody thought that I'm comfortable with the middle.

F

Middle, but this this is put in gradually. I mean this is a strategic placement going from these.

E

Allocations right, so we wouldn't necessarily look for any approval or motion here today. What.

D

We'll do is incorporate this into the investment policy statement. Draft put an effective date and.

D

Then stage it in right. Well, my thought is so if we give you three two to put into it.

C

You know we want to see how it's allocated and hopefully I'm sure, you're going in this way.

C

But you know there's potential coming around the end of the year first part of next year to be a.

C

You know another another pot of money. If I can talk to other people and go in with me and to.

C

You know again reinforcing this fund and getting it up to a point where it's more attractive and.

D

When a perfect world, you know all the money goes in, we have a great fiscal 22 and, like I said, we.

D

Revisit this on an annual basis and if we're at a much higher funded level ratio, you know not just.

D

The markets but the characteristics of the fund itself, so we're at that point maybe we'll take a.

D

Step back and say, wow we're a heck of a lot better funded than we thought we would be just a year ago.

D

Let's revisit this and we can have the discussion and change it as appropriate.

A

So what needs to happen to do this? Do we have to change the plan itself? Do we have to? I would still.

B

Investigate this policy statement, yep yeah now you're gonna, but we you're working on that right.

C

Yep, and that would be the next meeting and that'll be in the august meeting you'll bring that back.

C

Now do we want to have an earlier meeting? I know we've been having these things monthly, but we've.

C

Been breaking in the new guy here and right, I think we're having. We have the quarterly meeting.

E

August, it's not 12 27 right, we're good for that. You think, I think so well, I think pat suggested.

F

Earlier that we might want to meet sooner because of the new investment right, no new investment.

C

Policy, but right right: if the contribution would what would be the timing of that it would be.

C

The thing is, we got a lot of. We had a lot of time off over the next couple months. We I know.

C

Right, but we would actually send that money um from finance. We could probably send that as soon.

B

As july first comes, we can plan to send that um at the beginning of the fiscal year, okay, so.

F

We have a sort meeting july 22nd, I don't know if anybody would want to try to incorporate a special.

F

Low sap or opip meeting because we'll likely be in the same position with opeb right right, correct.

E

I'm on vacation that week, but okay, just to let you know we can dial you in. Thank you don't do that.

F

Not on your facebook page no, I mean I'm I'm good with that, just because I kind of want to monitor.

C

This slowly and probably a little bit more closely as we go along but sure I think so yeah it's up to.

B

The board yeah you're not doing it. I mean I don't, have a problem, but I mean I'm thinking. You know.

B

Keeping to the regular quarterly schedule, I think, is fine too, but I think just because we've brought.

C

Them on and we're starting to fund this a little bit differently right in the past, at least for.

C

This board member I'd like to keep a little bit better eye on it. Okay, what do you think, mr winger.

A

You think I I think if they buy, would be good for us. If the committee is okay with another meeting.

D

July would work to keep us on the same track as the opeb and the sorp, and I think eventually.

D

You know once we get these things in place as far as the new investment policy, um some of the.

D

Upcoming changes with the contributions, then we can scale that back a bit we're not doing an open.

C

In july, are we well? I I don't know I mean we might want to think about it, that, after that president.

C

Did the whole thing at one time again? Currently we have sorb in july. Well, I'm good we're going.

C

With losa, but all right, maybe open too, I mean, if we're going to show up. Let me do it. Yeah.

F

Well and then, uh marianne, that the investments following the policy statement would be in august.

F

You know when you would be here yeah exactly that would yeah that would make sense, yeah, okay, so do.

A

We need a motion for the july 20 to change the calendar july 24th uh july 22nd 22nd. I'm sorry.

C

I'll make a motion: we hold a meeting july, 22nd 2021 at what 10 30 or something like that.

A

Well, this today was 9 30.. Do we want to yeah at 9 30 a.m? Okay, do I have a second.

B

A second thank you and all in favor vote. I.

A

Okay motion passes july 22nd and do we need to have a motion or vote on going.

A

To the lower I or I think it's just probably in july yeah, I think you know he's just going to.

A

Bring it back and then we would make the form okay, based on our indications. Okay,.

A

So that would wrap you up, mr wenger, yes, sir great great, and then we would.

A

uh Turn to committee reports, which I believe is miss bratson- is that um actually it's the.

F

Planned administrator report, this would be jody jody. Thank you. My report is much more brief than.

G

What we just discussed so for the plan administrator report, we have had no transfer.

G

Of funds or paid expenses since the last meeting of march 25th, we had the future calendar meetings.

G

We had confirmed dates, uh upcoming dates of august 27th and december 3rd and we'll add the july 22nd.

G

To the plan report based on what we just approved, thank you thank you and we need the bush. Do we.

A

Need a motion to approve the plan administrator report so moved. Second, thank you all in favor say.

A

Aye aye aye motion carries now. I'm sorry, I jumped new business would be miss bratson. Regarding the.

A

Emergency service board request for expanded low sap benefits. Yes, thank you. Thank you, david.

F

So you may recall um last year the commissioners approached the emergency services board and.

F

Requested that they consider alternative methods for earning points because of the pandemic.

F

The emergency services board responded in october and their response included.

F

Recommendations for 2020 recommendations for 2021 and then even broader recommendations for 2022.

F

So I'd like what I'd like to ask the board to consider is the point award process for 2021.

F

And if we would approve bringing that before the commissioners considering changing how.

F

Points are awarded in 2021, following what the emergency services board asked.

F

What would occur is that we would have a public hearing and then we would change the code.

F

When we did this for 2020, it was just the code was changed just in that one specific instance.

A

And if I recall it was to to earn benefits, you need 50 points and what we did because.

A

Of the pandemic was give everyone 25 points that had earned 50 the previous year. Yes yep so are.

A

Are is what they're asking sort of the same, or are um it's right here in the memo? So it's not quite.

F

As generous 21 add four points per month right um for any volunteers who um are restricted to.

F

From participation, well, we see what I guess I don't understand. It seems.

C

Like we're coming out and I'm not against it, so don't sound like that. I'm just talking to john.

C

We're coming out of the pandemic right, I mean what I really worry about is going to the paid ems.

C

Which is, do we need the volunteers anymore and if the number of participants in low sap goes.

C

Down, obviously, it seems like the uh the payouts go down right, so the trust would stay up, but what.

C

I'm confused about, and I still haven't been able to get a clear picture on is what happens to the.

C

Volunteers after we hire all the ems right paid right, this may eventually go away, or we just have.

C

To fund it for a smaller and smaller group of people right, because what I've also been hearing.

C

That's again, hearsay is that people who are currently volunteers will be applying for these.

C

Ems, full-time positions right- and you know, there's nothing wrong with that, but again it gets to be.

C

Does the low sap need to grow to the amount if this pool is going to shrink right, because I think.

C

Usually, we see the pools increasing whether it would be opeb or sorp.

C

But in this case the pool could shrink right right. What's your oh, I should, but I mean in 21.

A

With this right right right, because I I think, because in 21 we're still going to have a a mix.

A

Of volunteers and and paid personnel, so there's still going to be room and again I guess we're.

A

Also, we have to also think that we're dealing with the fire department as well right, not not just.

A

You know the rescue squad right, so we're only adding um the 22 positions, which was.

B

The 16 emts and the four paramedics right do. We know how many rescue um volunteers there are.

B

Do we have that number? I don't know how big the pool is.

F

Not um I would have to look, um but I think the total was about 900 combined.

C

For the next meeting, if we had a trend on what's been going on, so we can see how much more the.

B

Volunteers are compared to the paid that we're adding. I mean it's still going to be significantly.

B

Well see where I think this really kicks in. For me an example would be. Is these people who worked on.

C

Base right and were doing, you know uh lexington park volunteering, whatever they were doing and.

G

Then their employers said look, you got to stop right all right. That's that's total. You know.

C

Like those people should be uh given the points, if you know, and that's one of the categories.

F

And then, similarly, if you had a health condition and your physician said yeah, you shouldn't respond.

C

Right but dude, but what we're going to do when someone says I just don't feel comfortable right.

C

uh You know- or you know I was at ridge- volunteer, rich american legion and a woman next to me was a.

C

I mean a 40-year vet of the rescue squad and she hasn't gotten a vaccine and she's my age.

C

We graduate high school together, and I said why didn't you get one? Oh, I just don't trust.

C

It yet- and I said you're running these calls she did something like 2500 calls.

C

You know back when, and I said why would you do that she said I got my own immune system.

C

So sometimes you got to wonder about right, let's give it to him, but make sure it's.

A

Well, what we're doing at this stage is just pushing it forward to the public hearing where.

A

We'll have okay right right, yes, esb members come in and discuss it as well. At the commissioner.

A

Public hearing and um steve walker and his group from emergency services discuss it and.

A

And I'm sure sean david- oh, oh absolutely it was hell too so be able to do- is to bring it forward.

F

To the commissioners and say this is what the esp submitted the board considered it and support you.

F

Know a public hearing, oh absolutely! What about 2022? Is that part of this or is this that's the.

E

Next discussion: okay, I didn't know if it was all wonderful, so you're just suggesting that.

B

On here on your memo, katherine that we're just adding the four low set points, we're just going.

F

To so I'm going to ask two things, so the first thing is that for the 2021 request, can I bring it.

F

Forward to the commissioners, would you approve that I bring it forward to the commissioners.

F

For a public hearing to potentially change the code right for 2021 so moved. Second, all in favor.

A

Say aye hi motion carries. Thank you. What was your other thing? Well? The second request is that what.

F

They asked for for 2022., so that is much trickier so for 2022. And if you go to the attachment.

F

That is from um chair. uh I guess that mock mattingly, I think, is his name, which it's dated.

F

October, 2nd, okay got it yeah. No, this one's october, 2nd davidson, it's right here! If you wanted to.

F

This welcomes this one here, so it's from um when I flip it to the next page yep, it says sean, oh.

B

Sean davidson also right: okay, yeah, it's from sean yeah, no you're right, but anyway, this is what we're.

C

Talking about right, this is the second item I wanted to bring to everyone's attention so for.

F

2022 um they have proposed. The emergency services board has proposed increasing the um allocated.

F

Increasing the dollar amounts that are associated with the points increasing.

F

The benefits that are provided to volunteers to potentially include access to the county's.

F

Health insurance plan, property tax incentives, landfill access and gift cards.

F

um And a tiered point scheme is the ultimate goal, but again we're talking people with 30 years and I.

C

Mean long time in right I mean that's a no-brainer for me, I'm I'm good with that because they put.

C

Time in I just uh so the short term, if that costs could be additionals, but the long term is again, we.

C

Need to see what happens to the pool goes down. So what I'd like to do what I wanted to ask the.

F

Board, if you would support, is that we get a fiscal analysis of what that would mean. We wouldn't yes.

F

To the trust, if we were to change those benefits wearing my hr hat, I'm nervous about providing.

F

Employee benefits to volunteers right. So at what point are they no longer volunteers and are they.

F

Employees so I'd like some kind of legal analysis, right kapinsky or something right right, because.

F

It's a slippery slope right because a volunteer can then say: well, I'm really an employee yeah.

A

Well, it reminds me of you know I teach university of maryland as an adjunct and I have access to.

A

Their health healthcare, it's just that I pay a hundred percent if I so so desired it right. So.

A

Right so it might be, it might be something like that that they can have access to it, but it would.

A

Be a much you know deterrent in it right right. It wouldn't be an 85 15, obviously right it would.

A

Be something and I'm not saying it would be 100 like the state, but you know it's something that.

A

You would look at and you would run numbers and and make a decision on right. Well, and so that's.

F

What I'd like to do- and I think we have some time because it's calendar year 2022- is what.

F

They're thinking so you're not looking for a motion then well, um if I were to, if I were to.

F

Do that it would be a cost to the trust right. So here's what I'd suggest I wouldn't want to vote.

C

On that today, but maybe at the 22nd, you can come up with some kind of idea what the costs are. Okay,.

F

Yeah, I can do that. I can reach out to bolton and karpinsky I'd, also like to do a survey of other.

F

Jurisdictions to understand what kind of benefits are, what do they provide.

F

Now tell me what what what kind of number do you have in mind for this study? I don't know, I don't.

F

Have any idea what it looks like just to see what they come back with? I could certainly do that and.

F

Then ask the board to vote on that next time. That sounds perfect to me to more information yeah. We.

B

Need to know what the cost is. Okay, what everybody else is doing: okay, okay! Well, we can do that. We can.

F

Try to do that survey in hr, okay, um so I'll see if we can get that done before the next meeting and.

F

Then um do we want to move forward with the fiscal and the legal analysis yeah? So, okay, the the.

E

The fiscal analysis is pretty straightforward, but then the side note, we think other benefits like.

E

Access to county health, like you talked about, I mean those are other questions I mean once.

E

You allow some volunteers in. Are you going to have to let all volunteers do exactly what about other.

B

Volunteers, I mean that's like a whole nother other non-profit slope right. My question, then, is what.

E

Part are we trying to get solved for the 22nd, just the fiscal of this points and the.

E

Amounts, or are you going to also look at the county, health insurance and things like that.

A

I think at least see see what the cost would be for an extended study.

F

Right or an opinion anyway, um because, as you say that and I hadn't even considered it, but.

F

The impact to open sure bro the open, even thought of that so um yeah, okay, yeah. Well. The other thing.

C

Though is if you can get us a trend on the low set member, you know the pool, you know I I would.

C

Assume just because I don't know that it's been steadily growing. But if we're gonna again go to.

C

A paid system right, what does that mean when we lexington park, wants 72 coverage right.

F

Right, okay, so um thank you, and so I will bring back estimated costs estimated scopes of work.

F

And then also element analysis of what other communities are doing so appreciate that. Thank you.

A

Okay, well, that would wrap up new business. I believe, unless anybody has any other new business.

A

That you don't know about okay, um there's nothing else to be said. I would take a motion to adjourn.

E

I'll make the motion to adjourn the meeting. Second, all in favor voda ocean carries meeting adjourned.

A