A meeting of the Governing Board of the Colorado Retirement Association was held on March 19, 2021, at 9:00 a.m.
The following were present at the meeting:
- Chris Felton, Board Chairman
- Paul Danley, Vice Chairman
- Darius Allen, Board Member
- Adam Ford, Board Member
- Jerry DiTullio, Board Member
- Tim Mullen, Executive Director/Chief Financial Officer
- Ed Krisor, Legal Counsel
- Katie Dirksen, Retirement Services Coordinator
- Lois Kruse, Office Administrator
Tobe Allumbaugh, Board Member, was not in attendance.
Chris Felton called the meeting to order at 9:07 a.m.
Chris Felton asked members of the Board if they reviewed the minutes from the February 19, 2021 meeting and if there were any comments. There being none, a motion was made by Jerry DiTullio to approve the minutes as presented. Darius Allen seconded the motion. Adam Ford abstained from voting as he did not in participate in the February 19th meeting. All other Board members voted aye and the motion passed.
Innovest Long-Term Outlook and Target Date Considerations Presentation:
Wendy Dominguez, Peter Mustian and Jared Martin from Innovest Portfolio Solutions, CRA’s investment advisor, were admitted to the meeting.
During the February 19th Board meeting, Innovest presented a detailed analysis of CRA’s custom Target Date Portfolios. This analysis and discussion included, among other items, portfolio structure, glide path approach, best-in-class investment managers, CRA’s economies of scale and the ability to control the underlying allocations with a custom approach. Also discussed were fiduciary responsibilities, custom target date portfolio fees versus off the shelf passive portfolio fees, and increased litigation around fees and management of custom target date funds. It was determined that CRA would continue with its current custom target date fund approach, and would further analyze expense ratios for various components of the target date funds at the March Board meeting.
Wendy Dominguez started the presentation with an economic overview of 2020, the pandemic, and the opportunity that rebalancing portfolios provided to enhance returns throughout the year. It was noted that proper asset allocation provides the largest impact on portfolio returns and diversification mitigates risk and helps achieve portfolio goals.
The Innovest long term (5-10 year) outlook and analysis included 2020 expectations and revision of those expectations to create new and slightly reduced expectations for 2021 and forward. Overall, these reduced expectations resulted in no recommended changes to the portfolio allocations for this year.
Next, Peter Mustian discussed past returns, expected returns and expense ratios for both active and passive large cap funds within the CRA Target Date Portfolios. The passive fund provides a lower expense ratio, however the actively managed large cap funds provided larger returns.
When all factors were considered, if was determined to make no changes and keep the allocation of actively managed and passively managed large cap funds the same within the CRA Target Date Portfolios.
Next, Innovest discussed Invesco Steelpath MLP Select 40 Fund. This fund is only available within CRA’s Target Date Portfolios. While Innovest continues to like Midstream Energy, the MLP industry has experienced significant consolidation, resulting in higher volatility and increased challenges in constructing an optimal and diversified portfolio. To achieve this diversification within Midstream Energy, it is best to use a fund that can invest in both MLPs and C-Corps. Innovest recommended Tortoise MLP and Pipeline Fund to accomplish this objective.
A motion was made by Chris Felton to replace the Invesco Steelpath MLP Select 40 Fund with Tortoise MLP and Pipeline Fund. Paul Danley seconded the motion and it passed unanimously.
The Innovest team exited the meeting following their presentation.
Entity qualification review:
Ed Krisor stated that he has reviewed the information provided for South Park Ambulance District and they qualify to participate in CRA’s 401(a) and 457(b) plans. A motion was made by Chris Felton for acceptance of South Park Ambulance District into both CRA plans. Jerry DiTullio seconded the motion and it passed unanimously.
CRA Activity Update:
Tim Mullen noted the Client Service Managers are continuing to utilize the new Salesforce reporting tool, created to document and track service events with participants, with great success. The development for the employer version of this tracking tool within Salesforce is almost complete.
CRA Client Service Manager employer assignments have been adjusted for personnel changes and geographical efficiencies.
The election for the vacant CRA Board of Directors position, representing Municipalities and Special Districts, closed on March 18, 2021. Terri Schafer with Mile High Flood District has been elected. Tim Mullen will reach out to Terri welcoming her to the CRA Board. CRA thanks candidate Thomas Holman for his participation in the election.
The deadline for submitting CRA scholarship applications and supporting documentation is March 25, 2021. The scholarship committee intends to have all applications reviewed and to present their recommendations for CRA scholarship recipients to the Board for approval at the April 16th meeting.
Tim Mullen noted the February 28, 2021 year-to-date blended rate of return for both the 401(a) and the 457(b) plans is 2.18%. CRA’s loan rate remains at 4.25%. Loans balances are down from this time last year; however, the average loan balances remain about the same. As of March 12th, distributions from the plan have exceeded contributions into the plans.
Tim Mullen presented the Plan and Association financial statements for the six months ended December 31, 2020.
This discussion reviewed the balance sheets, income statements, year-to-date budget and the Association’s general ledger.
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.
The next meeting of the CRA Board of Directors will be held on Friday, April 16, 2021.
There being no further business to come before the board, Chris Felton adjourned the meeting at 10:27 a.m.