Board Oversight > Minutes Archive > December 17, 2021, CRA Minutes

December 17, 2021, CRA Minutes

Board Meeting: December 17

A meeting of the Governing Board of the Colorado Retirement Association was held on December 17, 2021, at 9:00 a.m.

The following were present at the meeting:

  • Chris Felton, Board Chairman
  • Paul Danley, Vice Chairman-Participated by Zoom
  • Tobe Allumbaugh, Board Member-Participated by Zoom
  • Adam Ford, Board Member
  • Terri Schafer, Board Member-Participated by Zoom
  • Tim Mullen, Executive Director
  • Ed Krisor, Legal Counsel-Participated by Zoom
  • Mike Whalen, Retirement Plan Services Director
  • Matt Evans, Retirement Services Coordinator
  • Lois Kruse, Office Administrator
  • Jared Martin, Principal – Innovest
  • Peter Mustian, Principal, COO – Innovest

Darius Allen, Board Member and Jerry DiTullio, Board Member were not in attendance.

Chris Felton, Board Chairman, called the meeting to order at 9:03 a.m.
Mr. Felton asked members of the Board if they reviewed the minutes from the October 22, 2021 meeting and if there were any comments. There being none, a motion was made by Chris Felton to approve the minutes as presented. Tobe Allumbaugh seconded the motion and it passed unanimously.

Innovest Quarterly Update (9/30/21) and Share Class Review:
Peter Mustian and Jared Martin from Innovest Portfolio Solutions, CRA’s investment advisor, started their presentation.

Jared Martin opened his presentation by announcing that Innovest has been named “Best Place to Work in Pension and Investing” for 2021. He then began a brief review of the Board as fiduciaries. The discussion included; who retirement plan fiduciaries are; what are fiduciary functions; the duties of loyalty, prudence, diversification, and to follow plan documents; and the responsibilities to organize, implement, and document. Jared discussed a more in-depth fiduciary education session in 2022.

Mr. Martin discussed CRA’s plan fees. The 401(a) plan fees are slightly higher, but still reasonable, compared to other similarly sized plans. When compared to smaller sized plans (individually managed plans that would match single employer requirements), CRA’s fee were generally lower. It was noted that CRA is a Multi-Employer Plan (MEP). These plans are inherently more expensive to administer, however a significant benefit of a MEP is the economies of scale available when selecting institutional class funds. CRA also provides customized Target Date Portfolios with a blend of actively and passively managed funds. Actively managed funds are somewhat more expensive. This blend of funds has proven beneficial with enhanced returns to participants, well in excess of the costs. The 457(b) plan fees are lower than all other benchmarked plans.

Continuing his presentation, Mr. Martin provided an overview of CRA’s investment lineup structure, noting that the custom design of the Target Date Portfolios has benefitted participants over the past few years when compared to an off-the-shelf product. It was noted that these Portfolios contain more than half of the CRA’s plan assets. Mr. Martin concluded his presentation with a brief market review and outlook.

Peter Mustian reviewed the Manager Scorecard and Fund Watchlist. Strong returns from several of CRA’s funds and only minor concerns with the performance of Fidelity Contrafund and DFA Emerging Markets Core were noted. A separate analysis of the DFA fund was discussed later in the presentation.

Mr. Mustian moved on to CRA’s annual investment share class review. Due to CRA’s economies of scale and the availability of other institutional share classes with lower expenses, certain options were identified. A recommendation was made to change investment options for three funds and the share class for one fund.

After a brief discussion, a motion was made by Adam Ford to accept the recommended share class changes as presented by Innovest. Chris Felton seconded the motion. Tobe Allumbaugh raised a question and after a brief discussion the original motion was withdrawn and Tobe Allumbaugh moved and Chris Felton seconded a motion to accept the recommended share class changes as presented by Innovest as set forth below. The motion passed unanimously.

The fund and share class changes as approved by the CRA Board of Directors are as follows:

Table representing changes to CRA’s investment lineup. Each replacement fund has a similar investment style and objective as the fund it is replacing. Vanguard Institutional Index I (VIIIX) will be replaced by Fidelity 500 Index (FXAIX) with the rationale for the change being that the new fund will lower fees from 0.02% to 0.015%.Vanguard Mid Cap Index I (VMCIX) will be replaced by Fidelity Mid Cap Index (FSMDX) with the rationale for the change being that the new fund will lower fees from 0.04% to 0.025%.Vanguard Small Cap Index I (VSCIX) will be replaced by Fidelity Small Cap Index (FSSNX) with the rationale for the change being that the new fund will lower fees from 0.04% to 0.025%. Fidelity Low Priced Stock (FLPSX) will be replaced by Fidelity Low Priced Stock K6 (FLKSX) with the rationale for the change being that the new fund will lower fees from 0.65% to 0.50%. Note that Fidelity lowered the fees from 0.78% to 0.65% on FLPSX in the fourth quarter of 2021.

Mr. Mustian then reviewed CRA’s funds, discussing short and long-term performance. Innovest took a deeper look into DFA Emerging Markets Core as required by CRA’s Investment Policy Statement. This detailed review is required when a fund has been on the Watchlist for five quarters. Peter explained that the fund’s recent returns and long-term performance are strong, but are below median and benchmark standards. Ultimately, Innovest recommended CRA continue to utilize the DFA Emerging Markets Core fund.

CRA thanked Jared Martin and Peter Mustian for their presentation. The Innovest team exited the meeting. Chris Felton called for a short break at 10:15 a.m. The CRA Board reconvened at 10:25 a.m.

CRA Activity Updates:
Tim Mullen began his report noting that employer and employee meetings are still a mix of in-person and virtual. In-person meetings continue to be monitored and adhere to pandemic protocols.

The Town of Johnstown joined the CRA Association this fall, starting with a 457(b) plan. They will be adding the 401(a) plan the 1st of the year. The Police Department (PD) for Johnstown has been with FPPA for many years. The town is allowing the PD to increase benefits with FPPA or utilize employer and employee contributions into CRA’s 457(b), to add to their overall benefits package. CRA (Tim Mullen, Mike Whalen, and Rick Chase) presented CRA’s 457(b) plan to the PD on November 17th. This presentation followed an earlier presentation from FPPA. The CRA presentation went very well and the PD will be utilizing CRA’s 457(b) plan for those additional benefits.

After meeting with the Board of County Commissioners in Fremont County, the Fremont County Sheriff’s office requested a five-part financial wellness presentation. Those presentations have already started and were well received.

The Colorado Government Financial Officers Association conference was held November 16-19, 2021. CRA had a booth for the conference and gave a 2-minute CRA overview at one of the luncheons as part of being a Gold Sponsor for the event. During the Colorado Counties Inc. conference, CRA had many touches with Finance Officers and other employer personnel.

CRA will be attending the County Sheriffs of Colorado conference in mid-January as an exhibitor with a booth. CRA will also sponsor an Undersheriffs training session, which provides a 10-minute presentation opportunity.

CRA will be ending the conference season as a premium exhibitor at the Colorado Water Congress Conference near the end of January. The next slated conference will be the CCI Summer Conference on May 31, 2022.

The October 2021 fee waiver was well received. Notice of the fee waiver was widely publicized via email, CRA’s website, and on the quarterly participant statement. The fee waiver generated more than $420,000 in savings for CRA’s participants.

CRA’s operations department is continuing year-end compliance reviews. Empower and CRA are continuing to meet to find ways to improve workflow. Mike Whalen commented on the uptick in year-end Participation Agreement changes, many of which involve increasing contributions and removing eligibility periods.

Financial Update:
Doug Farmen shared that the December 8, 2021, year-to-date (YTD) fund performances ranged from a low of-0.88% (Metropolitan West Total Return Bond) to a high of 24.85% (Dodge & Cox Stock Fund). YTD, CRA’s Alternative Investments, available only within the Target Date Portfolios, performed even better with a low of 0.94% (JPMorgan Strategic Income Opportunities R6) and a high of 42.33% (Tortoise MLP & Pipeline Fund I). Comparatively, through December 8, 2021 the S&P was up by 25.16%.

As of November 30, 2021, the YTD blended rate of return for both the 401(a) and 457(b) plans was 9.57%.

CRA’s plan loan rate remains at 4.25%. Loans balances are up 0.50% from this time last year even though the quantity of loans outstanding has decreased.

Doug presented the Plan and Association financial statements for the 1st fiscal quarter ended September, 30, 2021. This discussion reviewed the balance sheets, income statements, budget versus actual, and the Association’s general ledger.

Entity qualification reviews:

  • Town of Green Mountain Falls
  • Pine Brook Water District

Ed Krisor stated that he has reviewed the supplied information for both entities and they qualify to participate in CRA’s plans.

The CRA Board of Directors had previously authorized entering into these Participation Agreements prior to December 3rd. Chris Felton moved to allow the Town of Green Mountain Falls and Pine Brook Water District to join CRA with an approval date of 12-3-21. Adam Ford seconded the motion and it passed unanimously.

Expense Reports:
Chris Felton asked the members of the Board if there were any questions or concerns regarding the expense reports. There being none, the reports were accepted as presented.

At 11:07 a.m. Chris Felton made a motion to go into Executive Session pursuant to 24-6-402(4)(f) C.R.S. for the purpose of discussion of staff personnel matters. Adam Ford seconded the motion and it passed unanimously.

The Executive Session ended at 11:29 a.m.

The public session of the CRA Board of Directors meeting resumed at 11:30 a.m.
Adam Ford motioned to approve enhancements to CRA employee benefits, as discussed in the Executive Session, effective January 2022. Chris Felton seconded the motion and it passed unanimously.

The next meeting of the CRA Board of Directors will be held on February 18, 2022.

Chris Felton asked if anyone had anything additional for the good of the order. There being no further business to come before the Board, Chris Felton adjourned the meeting at 11:32 a.m.