Board Oversight > Minutes Archive > February 16, 2024, CRA Minutes

February 16, 2024, CRA Minutes

Board Meeting: September 15

A meeting of the Governing Board of the Colorado Retirement Association was held on February 16, 2024 at 9:00 a.m.

The following were present at the meeting:

  • Chris Felton, Board Chairperson
  • Darius Allen, Board Member- Participated by Zoom
  • Tobe Allumbaugh, Board Member- Participated by Zoom
  • Jerry DiTullio, Board Member – Participated by Zoom
  • Meghan Martinez, Board Member – Participated by Zoom
  • Terri Schafer, Board Member – Participated by Zoom
  • Tim Mullen, Executive Director
  • Ed Krisor, Legal Counsel
  • Mike Whalen, Retirement Plan Services Director
  • Matt Evans, Communications Specialist
  • Lois Kruse, Office Administrator

The following were not in attendance:

  • Adam Ford, Vice Chairperson

Board Chairperson Chris Felton, called the meeting to order at 9:03 a.m.

Mr. Felton asked members of the Board if they reviewed the minutes from the December 15, 2023 meeting and if there were any comments. There being none, a motion was made by Chris Felton to approve the minutes as presented. Meghan Martinez seconded the motion and it passed unanimously.

Innovest – Quarterly Update and Target Date Portfolio Review:

Peter Mustian from Innovest Portfolio Solutions, LLC, CRA’s investment advisor, began his presentation with the Long-Term Outlook and the Target Date Portfolio (TDP) Asset Allocation Study. The long-term outlook of the markets is a primary driver for potential changes in the Asset Allocation Study.

Mr. Mustian continued his presentation with a recap of significant events for 2023. In early 2023, the initial economic outlook suggested a slowing economy and a possible recession. This did not materialize. We ended up with a strong market and a strong economy. This strength did not happen without some concerns. The extensive monetary tightening put in place by the Federal Reserve (Fed) over the last two years led to some cracks in the economy, primarily in commercial real estate and regional banking, including several bank failures. Despite these concerns, the U.S. economy proved to be resilient. Consumer spending hit record levels, unemployment remained low, and inflation began to moderate. With this resiliency, concerns remain in the market moving forward.

Mr. Mustian reviewed the performance of the periodic table of returns for the last 10 years, emphasizing that diversification is an effective tool for patient investors in all market environments, and is especially important for the upcoming TDP discussion.

Within the periodic table of returns for the last ten years, a diversified portfolio ranks in the top one-third in annualized returns and in the bottom third for standard deviation and risk.

Mr. Mustian discussed Innovest’s long-term (5-10 year) outlook on the markets and economy. To summarize, five key points were noted that present potential opportunities in the markets, as follows:

  • The lagged effects of tighter monetary policy, mounting pressure on consumers and business, and increased geopolitical risks all pose possible challenges to continued economic growth and corporate earnings.
  • While U.S. equity valuations appear stretched compared to long term historical averages, international equities look relatively attractive. Investors should remain diversified by geography, capitalization, and style.
  • Higher starting yields point to better returns for bond investors going forward. Investors should consider extending durations for bonds.
  • Reduced allocations to hedging strategies in favor of traditional fixed income may be appropriate given higher yields and added diversification.
  • Effective portfolio management includes:
    • Periodically re-examining investment objectives and risk tolerances.
    • Remaining diversified and focused on the long-term.
    • Maintaining exposure to investments that may do well in a variety of economic outcomes – growth, recessions, inflation, etc.
    • Employing ongoing portfolio rebalancing.

Board Member Jerry DiTuillo joined the meeting via zoom at 9:15 a.m.

Mr. Mustian then gave an overview of how CRA’s TDPs are constructed and explained the current considerations used in researching proposed changes to these funds. The significant points of note in the construct of CRA’s Custom TDPs are:

  • A custom glide path with best-in-class target date fund families, using five leading fund managers.
  • Utilization of best-in-class investment managers, including both active and passive fund managers.
  • The increased ability to control the underlying allocations of asset classes and strategies.

Next, Mr. Mustian summarized current considerations for potential key changes to the TDPs:

  • Downsize risk targets are becoming more conservative.
  • Decrease in allocations to cash and increases to fixed income.
  • Due to increases in fixed income, there will be corresponding decreases to equity exposure.
  • To achieve lower downside risk targets, allocations to conservative asset classes would increase (i.e., fixed income, stable value).
  • Following members of the peer groups for TDPs, add a 2065 vintage and maintain all other current vintages.
  • Innovest also recommends replacement of iMGP, the current low correlated hedge fund within the TDPs, with Goldman Sachs Absolute Return Tracker.
  • Replacement of America Beacon International, CRA’s International Value manager with one of two alternatives.

The proposed changes recommended by Innovest to the CRA TDPs by vintage and percentage change are:

Vintage Equities Domestic Fixed Income Low-Correlated
Hedge Funds
Other Real Assets Stable Value
2065 N/A N/A N/A N/A N/A
2060 0 0 N/A 0 0
2055 -3 +3 N/A 0 0
2050 -3 +3 N/A 0 0
2045 -4 +4 0 0 0
2040 -5 +5 0 0 0
2035 -8 +7 0 0 +1
2030 -7 +7 0 0 0
2025 -6 +6 0 0 0
2020 -6 +6 0 0 0
2015 -2 +2 0 0 0
2010 0 0 0 0 0
Income 0 0 0 N/A 0

Mr. Mustain continued his presentation with a review of the iMGP fund. Per the Manager scorecard, there are various minor concerns. When aggregated, they become an overall elevated concern. iMGP has benefitted CRA’s TDPs in the past, however going forward there appear to be better opportunities available.

The Goldman Sachs Absolute Return Tracker fund was presented to CRA with no scorecard concerns and with significantly lower fees. This fund is very well diversified with good risk management.

Chris Felton motioned to approve the replacement of iMGP fund with the Goldman Sachs Absolute Return Tracker fund within the TDPs. Jerry DiTullio seconded the motion and it passed unanimously.

Chris Felton motioned to approve the proposed changes to the CRA TDPs including the addition of the 2065 vintage. Meghan Martinez seconded the motion and it passed unanimously.

Brett Minnick, also with Innovest, started his presentation with a brief update of Secure Act 2.0 legislation. Mr. Minnick noted that not all of the provisions of the act apply to the CRA plans. Regulatory guidance is still pending for many provisions. Assessment of recordkeeper capabilities and coordination with payroll providers are key considerations for implementing many of the provisions. Optional provisions do not have implementation deadlines.

Mr. Minnick stated that total fees for CRA’s 401(a) and 457(b) plans are comparable to other similarly sized retirement plans. The fees compare very favorably against smaller plans that would represent smaller employer groups. Additionally, CRA has actively managed funds and alternative investments, which are inherently slightly more expensive. The tradeoff of the minimal additional expense of these funds and investments was more than offset with their outperformance.

Mr. Minnick began his overview of the Manager Scorecard noting Peter Mustian had already addressed the iMGP fund. Mr. Minnick discussed various Manager Scorecard concerns for CRA’s fund offerings.

Mr. Minnick also discussed two watch list reports. These funds have been on the watchlist for five or more consecutive quarters.

American Funds Euro-Pacific Growth fund is on the watchlist for performance. The fund is very diversified and has the ability to select well performing stocks. The lagging performance, in part, can be contributed to exposure to emerging markets. Going forward, this could be an opportunity. Innovest recommends no changes at this time.

Mr. Minnick noted that American Beacon International Equity fund has been on the watch list for the past five quarters, due in part to ownership changes and decrease in assets under management. Innovest is presenting alternatives and recommending a change.

The two funds brought forth for review are: Causeway International Value fund, and the Dodge Cox International Stock fund. Mr. Minnick noted various pros and cons for each of the funds. After analysis and discussion, Innovest recommends replacing the American Beacon International Equity fund with the Dodge Cox International Stock fund.

After additional discussion between Innovest and the Board, a motion was made by Chris Felton to accept the recommendation as presented. Darius Allen seconded the motion and it passed unanimously.

Mr. Mullen thanked the Innovest team for their presentation and work on the Asset Allocation project.

Chris Felton called for a short break beginning at 10:21 a.m.

The Board meeting resumed at 10:27 a.m.


2024 Schedule of Board Meetings:

Chris Felton motioned to accept the Board meeting schedule for 2024 as presented. Meghan Martinez seconded the motion and it passed unanimously.


Meeting Posting Resolution:

Tim Mullen presented RESOLUTION NO. 1, SERIES OF 2024 (Designation of Public Place for Posting of Meeting Notices). This posting resolution is required for governmental agencies and is to be adopted at the first Board of Directors meeting of the respective calendar year. Chris Felton motioned to adopt Resolution #1, as presented. Darius Allen seconded the motion and it passed unanimously.


Legislative Update:

Joan Green, legislative lobbyist for CRA, gave a brief overview of approximately sixteen legislative bills.

Several House and Senate bills were discussed dealing with PERA and FPPA.

Several other bills were discussed that could potentially affect employers with various labor and employment issues. Also discussed was the ADA compliance deadline for website accessibility of July 1, 2024. CRA is actively working on this project.

Ms. Green left the meeting at 11:15 a.m.


Fiscal 2023 Annual Audit:

Tim Mullen began this portion of the meeting requesting the approval of the Fiscal 2023 Annual Audit as presented to the Board. A motion was made by Tobe Allumbaugh to approve the Fiscal 2023 Annual Audit. Chris Felton, seconded the motion and it was passed unanimously.


Entity Qualification Review:

Town of Keystone:

Tim Mullen and Ed Krisor have reviewed the supplied information for this entity. The Town of Keystone qualifies to participate in CRA’s 401a and 457b plans.

Mr. Felton motioned to allow the Town of Keystone to join CRA. Tobe Allumbaugh seconded the motion and it passed unanimously.


CRA Activity Updates:

Mr. Mullen started the CRA update portion of the meeting noting that work continues on implementing the new employer groups that started the first of the year. Thanks were given to all CRA employees with extra thanks to Mike Whalen for getting all of this work done.

As part of CRA’s retirement seminar series, the Medicare portion was held last Tuesday February 13th. Over 100 participants attended. The webinar was moderated by Francisco Chacon. Matt Evans was behind the scenes host.

CRA attended the County Sheriffs of Colorado (CSOC) conference in Loveland January 17th and 18th, 2024 and the Colorado Water Congress conference in Aurora January 31st through February 2nd, 2024. CRA gave a ten-minute presentation at the CSOC conference discussing plan flexibility and enhanced benefit design for public safety officers.

Mr. Mullen noted CRA will be attending the Colorado City & County Management Association annual conference April 17th through 19th, 2024.

Holly Kline was introduced to the Board. Ms. Kline started with CRA the 1st of the year and works in the operations department.


Expense Reports:

Mr. 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.


The next meeting of the CRA Board of Directors will be held on May 17, 2024.

Mr. 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.