A meeting of the Governing Board of the Colorado Retirement Association was held on Monday, May 23, 2022, at 9:00 a.m.
The following were present at the meeting:
- Chris Felton, Board Chairman
- Paul Danley, Vice Chairman
- Darius Allen, Board Member-Participated by Zoom
- Tobe Allumbaugh, Board Member-Participated by Zoom
- Jerry DiTullio, Board Member-Participated by Zoom
- Adam Ford, Board Member-Participated by Zoom
- Terri Schafer, Board Member
- Tim Mullen, Executive Director
- Ed Krisor, Legal Counsel
- Denis Rice, Chief Financial Officer
- Matt Evans, Retirement Services Coordinator
- Lois Kruse, Office Administrator
Board Chair Chris Felton called the meeting to order at 9:01 a.m.
Mr. Felton asked members of the Board if they reviewed the minutes from the April 22, 2022 meeting and if there were any comments. There being none, a motion was made by Chris Felton to approve the minutes as presented. Paul Danley seconded the motion and it passed unanimously.
Mike Norman, Senior Managing Principal/Co-President, and Jamie Morgan, Senior Director, of Galliard Capital Management, Inc. along with Wendy Dominguez and Peter Mustian of Innovest Portfolio Solutions, Inc. were in attendance for the following updates.
Innovest-Quarterly Update, IPS Review:
Wendy Dominguez, Principal of Innovest Portfolio Solutions, began the presentation sharing that Innovest has moved into their new offices, just across the street. Wendy gave a brief overview of the SECURE Act, signed into law in late 2019, where several provisions had delayed effective dates and/or recent regulatory guidance. Securing a Strong Retirement Act of 2022 (SECURE 2.0) was approved by US House of Representatives. The next step is Senate approval in some form or another.
Innovest’s litigation update noted over 300 fiduciary breach lawsuits have been filed against plan sponsors since 2006. Most alleged breaches related to fee and expense monitoring and conflict of interest issues.
Wendy discussed CRA’s annual fee review for the 401(a) and 457(b) noting fees are very competitive for similarly sized plans. This report is prepared annually and a new report will be prepared after the June 30 fiscal year end.
Wendy also noted that total CRA Plan assets are down approximately $100 million from December 31, 2021 balance and now stand at approximately 2.185 billion.
Peter Mustian, a Principal at Innovest, continued the presentation noting that the markets for the first quarter of this year are a very different view when compared to last year. The markets reflect negative performance in nearly all asset classes, including bond. It is very unusual to have negative returns for both stocks and bonds. This negativity has also continued through April and May.
Peter recapped several reasons for the dramatic pull-back in the markets. Continuing geopolitical events, inflation and the impact of Fed tightening are the significant drivers for the current market conditions. Markets have historically struggled when the Fed hikes rates at a fast pace, and the balancing act is to curb inflation without creating a recession. Labor markets are also creating a challenging environment with unemployment remaining low.
Mr. Mustian reviewed the Manager Scorecard and the Watch List, both of which showed no significant areas of concern.
CRA’s Investment Policy Statement (IPS) was discussed next. Innovest proposed minor changes to the IPS reflecting enhanced description of the Self-Directed Brokerage Window and updating mutual funds in the appendix for changes over the past year.
A motion was made by Chris Felton to accept the changes to the CRA IPS as presented. Tobe Allumbaugh seconded the motion and it passed unanimously.
Galliard Capital Management, Inc.:
Mike Norman began the Galliard presentation with an overview of Stable Value and the firm.
The sale of Galliard, as discussed in early 2021, is complete as of November 2, 2021. That transition has gone very smoothly. Mike’s overview included a stable value refresher; the objective 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. Jamie Morgan gave a portfolio recap noting investment performance, portfolio characteristics, portfolio ratings and durations, and fund expenses.
Tim Mullen introduced Denis Rice, the new CFO for CRA, to the Board and our partners at Innovest and Galliard, then briefly Denis’s work history and qualifications.
The Innovest and Galliard teams left the Board meeting at this point in time.
At 10:10 a.m. Chris Felton suspended the meeting for a short break. The meeting resumed at 10:22 a.m.
Updated “Governing Board” language:
Tim Mullen proposed updated language for Section 1.2 of the Operating and Procedural Manual.
“Chairman” and/or “Vice-Chairman” would be updated to “Chairperson” and/or “Vice-Chairperson.”
Additionally, a serving Chairperson and/or Vice-Chairperson could continue to serve in their current capacity with a consensus of approval from the CRA Governing Board. A motion was made by Paul Danley to accept the proposed changes to Section 1.2 of the Operating and Procedural Manual.
Terri Schafer seconded the motion and it passed unanimously.
Fiscal Year-End (FYE) June 30, 2023 Budget:
Tim Mullen presented the proposed FYE June 30, 2023 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. Tobe Allumbaugh motioned to accept the FYE June 30, 2023 CRA budget as presented. Chris Felton seconded the motion and it passed unanimously.
CRA Activity Updates:
Tim Mullen noted that there have been no nominations for the upcoming CRA Board positions at this time. The deadline for nominations is May 31st.
There has been an uptick in requests for in-person employer and employee meetings. CRA Client Service Managers are filling up their travel schedules to accommodate.
Empower has rolled out a new phone function that will allow participants to leave a call back number if they do not want to wait on hold.
The Colorado Counties Inc. conference is next week. CRA is sponsoring and presenting at the Wednesday breakfast.
CRA completed and submitted an RFP to provide retirement services for the Town of Lyons last Friday.
Matt Evans explained the upcoming CRA marketing campaigns for the next several quarters.
Expense Reports:
Chris Felton asked members of the Board if there were any questions or concerns regarding the expense reports. There being none, expense reports were accepted as presented.
Executive Session pursuant to 24-6-402(4)(f) C.R.S. for the purpose of discussion of staff personnel matters:
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. Terri Schafer seconded the motion and the
executive session began at 11:04 a.m.
The public session of the CRA Board of Directors meeting resumed at 11:23 a.m. Chris Felton motioned to approve changes to CRA employee benefits, as discussed in the Executive Session, effective July 1, 2023. Adam Ford seconded the motion. The motion passed with a 6-1 vote; Jerry DiTullio was the dissenting vote.
The next meeting of the CRA Board of Directors will be held on Friday, June 17, 2022.
Chris Felton asked if anyone had any questions or additional items to discuss. There being no further business to come before the Board, Chris Felton adjourned the meeting at 11:24 a.m.
