A meeting of the Governing Board of the Colorado Retirement Association was held on May 19, 2023 at 9:00 a.m.
The following were present at the meeting:
- Chris Felton, Board Chairperson
- Adam Ford, Vice Chairperson – Participated by Zoom
- Tobe Allumbaugh, Board Member – Participated by Zoom
- Jerry DiTullio, Board Member – Participated by Zoom
- Terri Schafer, Board Member
- Tim Mullen, Executive Director
- Ed Krisor, Legal Counsel
- Denis Rice, Chief Financial Officer
- Mike Whalen, Retirement Plan Services Director
- Matt Evans, Retirement Services Coordinator
- Lois Kruse, Office Administrator
The following were not in attendance:
- Darius Allen, Board Member – Participated Zoom
- Meghan Martinez, Board Member
Board Chairperson Chris Felton, called the meeting to order at 9:00 a.m.
Mr. Felton asked members of the Board if they reviewed the minutes from the March 17, 2023 meeting and if there were any comments. There being none, a motion was made by Terri Schafer to approve the minutes as presented. Adam Ford seconded the motion and it passed unanimously. Mr. Felton abstained from the vote as he was not present at that meeting.
Jaime Morgan, Senior Director of Galliard Capital Management, LLC, along with Wendy Dominguez and Peter Mustian of Innovest Portfolio Solutions LLC Inc., were in attendance for the following updates
Innovest – Quarterly Update:
Wendy Dominguez started Innovest’s presentation with a review of fund and portfolio changes/enhancements, approved in 2022 and 2023, continuing to drive down fund expenses and save participants money. Next Ms. Dominguez discussed financial wellness. This can be defined as the overall financial health of an individual considering a wide variety of financial topics including; retirement readiness, debt management, emergency savings, budgeting, insurance, life events, and other subjects. This area is becoming more important to employers as good financial wellness can lead to healthier and less stressed employees. Certain aspects of financial wellness programs can be profit centers for recordkeepers and others providing those services. CRA will continue to consider the appropriateness and effectiveness of such programs for our participants.
Ms. Dominguez continued with a brief fee review, noting CRA is very competitive. The fee report is prepared annually and should be presented at one of the fall Board meetings. Innovest noted CRA’s concise and streamlined investment menu. The 1st quarter of 2023 was very good for asset growth and the markets, despite struggles with the economy and some large bank failures. While the 1st quarter of 2023 was good, the markets are still digging out from 2022, the worst bond market and 4th worst equity market in history.
The market and economic discussion also included; interest rate hikes, inverted yield curves, corporate earnings being squeezed, inflation, personal savings declining, increasing debt service ratios and loan delinquencies. There is thinking that all of the aforementioned could lead to a recession in the near future. At this point in time, despite these headwinds, the markets are still holding up well.
Mr. Mustian reviewed the Manager Scorecard and the Watch List, both of which showed no significant areas of concern. Most comments related to personnel within the mutual fund’s organization. Fund performance was reviewed. Year to date, growth funds are outperforming value funds, the opposite of what occurred in 2022. As a whole, CRA’s funds have performed very well compared to benchmarks.
Galliard Stable Value Fund Update:
Jaime Morgan began the Galliard presentation with an overview of the firm, noting stability of assets, clients and firm personnel.
The sale of Galliard, as discussed in early 2021, was complete as of November 2, 2021. The internal recordkeeping transition was scheduled over an 18-month timeline and was recently completed. Galliard is now under Allspring Global Investments and is no longer using Well Fargo’s systems.
Ms. Morgan’s overview focused on how stable value works and performs in a fast-rising interest rate environment. Returns lag in a rising interest rate environment and outperform in a decreasing interest rate environment. Also discussed were; the objectives of stable value investing, the mechanics of accounting for stable value, differences between market value and book value, and the protection wrap providers give the stable value fund. Ms. Morgan discussed the credit ratings of wrap providers, noting there are a few new entrants into the wrap arena.
Stable value rates were compared to the Federal Funds Rate, the 3-year Treasury Yield and the SVSA Composite Blended Yield. Investment performance, portfolio characteristics, portfolio ratings and durations, and fund expenses were also discussed.
Wendy Dominguez, Peter Mustian, and Jaime Morgan left the Board meeting at this time.
2023 Scholarship Award Recipients:
Next on the agenda was the notification to the Board of the 2023 CRA Scholarship Award Recipients. This is the fourth year using the format where six winners will receive a one-time $2,000.00 scholarship from CRA. The 2023 CRA Scholarship Award Recipients are:
- Makayla Brossman
- Isaac Doll
- Christina Lambert, participant
- Mason Mireles
- Joshua Sandoval
- Ella Swanson
Denis Rice led the scholarship committee this year. Mr. Rice explained the process to assemble, score and analyze all of the applications. Mr. Mullen thanked the committee for the time and effort expended in the selection process.
Entity Qualification Reviews:
- City of Fruita
- City of Idaho Springs
- City of Montrose
- Evergreen Fire Protection District
- Front Range Passenger Rail District
- Town of Monument
Ed Krisor has reviewed the supplied information for the six entities. They all qualify to participate in CRA’s plans.
Jerry DiTullio motioned to allow the aforementioned six entities to join CRA. Chris Felton seconded the motion and it passed unanimously.
CRA Activity Updates:
CRA is one of three finalists for the Evergreen Fire Protection District RFP. CRA will be presenting to their Pension Board on May 25th.
CRA attended the Colorado City & County Managers Association conference at the end of April. It went well for CRA as a first-time attendee. CRA met with several existing clients and new prospects.
Mr. Mullen noted CRA will be attending the CCI (Counties) and CML (Municipalities) Annual Conferences at the end of May and June, respectively.
Innovest and CRA are continuing discussions with management of Voya and Empower regarding our RFP for record-keeping services. CRA will continue to evaluate the record-keeper’s capabilities, available plan services and other plan and operational options. Due diligence will continue for the next several months.
Mr. Mullen discussed renewals for various insurances. Fees for cyber and fiduciary liability insurances have increased significantly. CRA is currently shopping these policies.
Mr. Mullen introduced the possibility of investing with CSAFE and or COTRUST for short-term investing with CRA’s capital surplus.
Chris Felton made a motion to authorize Tim Mullen to further investigate and invest in one of the local government investment pools. Jerry DiTullio seconded the motion and it passed unanimously.
Legislative Update:
CRA Lobbyist Joan Green provided a legislative update. There are no bills that would directly impact Colorado Retirement Association at this time. Several bills were discussed, noting the current status (passed, did not pass). Ms. Green also noted a significant portion of bills proposed this year were very broad in nature.
Ms. Green exited the meeting after concluding her presentation.
Fiscal Year-End (FYE) June 30, 2024 Budget:
Tim Mullen and Denis Rice presented the proposed FYE June 30, 2024 budget and related analysis. Discussed were market considerations, impacts of market movements, estimated current year budget versus actual, and detailed analysis of the proposed revenue and expenses. Additional staffing is requested to accommodate employer growth and plan administration compliance.
Adam Ford brought up employee benefits relating to health insurance and associated costs. CRA is currently participating as a small employer for health benefits and is currently analyzing the possibility of qualifying for more beneficial rates associated with large employer group associations.
After significant discussions, Chris Felton motioned to accept the FYE June 30, 2024 CRA budget as presented, with the modification of a $100,000 increase to the Life/Health Insurance benefit line item to cover 100% of premiums for CRA employees. Terri Schafer seconded the motion. The motion passed with a 4-1 vote. Jerry DiTullio was the dissenting vote.
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 June 16, 2023. Due to scheduling conflicts the next meeting was later changed to July 24, 2023.
There being no further business to come before the Board, Mr. Felton adjourned the meeting at 12:02 p.m.
