HomeMy WebLinkAbout2016/06/21-Minutes-Joint Meeting CC w/ Retirement Fund bd CITY OF FORT WORTH, TEXAS
JOINT CITY COUNCIL— FORT WORTH EMPLOYEES' RETIREMENT FUND
BOARD MEETING
JUNE 21, 2016
Present:
Mayor Betsy Price
Council Member W.B. "Zim" Zimmerman, District 3
Council Member Cary Moon, District 4
Council Member Jungus Jordan, District 6
Council Member Dennis Shingleton, District 7
Council Member Kelly Allen Gray, District 8
Council Member Ann Zadeh, District 9
Fort Worth Employees' Retirement Fund Board Members Present:
Todd Cox, Place 2
Margaret Wise, Place 3
Betty Tanner, Place 4
Lance Usrey, Place 5
Billy Samuel, Chair, Place 6
Marsha Anderson, Place 7
Jesus Payan, Place 8
Jarod Cox, Place 9
Jason Brown, Place 10
Billy Crawford, Jr., Place 11
Scott Wade, Place 12
Aaron Bovos, Place 13
Absent:
Mayor Pro tem Salvador Espino, District 2
Council Member Gyna Bivens, District 5
Joel Parsons, Place 1
Staff Present:
David Cooke, City Manager
Sarah Fullenwider, City Attorney
Mary J. Kayser, City Secretary
Joelle Mevi, Fund Executive Director
1. Call to Order—Mayor Betsy Price and Chair Billy Samuel
With a quorum present, Mayor Price and Chair Samuel called the joint meeting of the Fort
Worth City Council and the Fort Worth Employees' Retirement Fund (ERF) Board to order at
1:10 pm., on Tuesday, June 21, 2016, in the Pre-Council Chamber, 1000 Throckmorton Street,
Fort Worth, Texas 76102.
CITY OF FORT WORTH, TEXAS
JOINT CITY COUNCIL—FORT WORTH EMPLOYEES' RETIREMENT FUND
JUNE 21,2016
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II. Welcome and Introductions—Mayor Betsy Price and Chair Billy Samuel
Mayor Price and Chair Samuel welcomed the members and audience to the meeting. Both boards
were introduced.
III. Report on January 1, 2016 Fund Valuation—Rocky Joyner, Segal Actuarial Services
Mr. Rocky Joyner, Segal Actuarial Services, reviewed the summary of the December 31, 2015,
valuation. He provided a summary of the valuation as of December 31, 2014, and as of
December 31, 2015. Mr. Joyner's presented information that detailed the fund's financial status
prior to the implementation of assumption changes and with no assumption changes
implemented. The amortization period of the unfunded liability is 62.4 years and the funded ratio
is 61.3%prior to any assumption changes being made. The amortization period is 72.5 years and
the funded ratio is 60.6%with assumption changes implemented.
IV. Update on Investment Performance and Strategic Initiatives - Joelle Mevi, Fund
Executive Director/CIO
Ms. Joelle Mevi, Fund Executive Director, presented the Fund Performance Update. The
Retirement Fund Investment portfolio ended calendar year 2014 with a loss of 16 basis points.
As of April 2016 the total fund market value was $2.018 billion and a calendar year to date
return of 2.05% and a 12 month return of-1.4%. She noted that while we are seeing positive
performance in 2016 the April 2015 to April 2016 timeframe was particularly volatile.
Ms. Joelle Mevi, Fund Executive Director, outlined the strategic initiatives for 2015 —2016.
Strategic Initiatives:
• An Asset/Liability study was completed.
• Based on 12/31/14 actuarial valuation
• Projections for a 20 year horizon
• Analysis under two methodologies
■ Deterministic — all assumptions remain fixed and assumed to be met over
the time horizon
■ Stochastic — Introduces uncertainty to future economic assumptions:
investments and inflation
• Conclusions
■ Plans financial health will deteriorate over the next 20 years, contributions
fall below the rates required to soundly fund the plan
■ This puts stress on the plan particularly if investment returns fall short of
the assumed rate of return
■ The Board may be faced with difficult decisions regarding the Plan's
investment strategy if returns are consistently short of the assumed rate of
return
CITY OF FORT WORTH, TEXAS
JOINT CITY COUNCIL— FORT WORTH EMPLOYEES' RETIREMENT FUND
JUNE 21, 2016
Page 3 of 4
• Ms. Mevi reviewed the 2016 Asset Allocation
• She reviewed the changes to actuarial assumption adopted by the Board in March 2016:
• Reduce investment rate of return from 8%to 7.75%
• Reduce inflation rate from 3% to 2.5%
• Payroll growth reduced from 3.25% to 3%
• Updated various demographic assumptions
• She reviewed other strategic Initiatives
• 2015 actuarial valuation completed using the newly-adopted actuarial
assumptions
• Held a strategic planning retreat to update the Strategic Plan for the next four
years
• A portfolio manager fee project has been initiated so that the fund can get a better
understanding of how FWERF fees compare to peers and to initiate fee
assessment and monitoring protocols
• She reviewed the roles of the City Council and the Board of Trustees
V. Progress Report for City Manager's Pension Review Committee — David Cooke, City
Manager
City Manager David Cooke provided an update on the work of the Pension Review Committee.
He reviewed the charge to the Committee:
To define and assess long-term sustainability; evaluate options to improve Fund's current
position without directly or indirectly requiring additional contributions from taxpayers/
ratepayers.
He reviewed the Principles:
Keep it simple
Don't pass the problem to future generations or make current situation worse
Make decisions with the long-term in mind
Mr. Cooke noted that Moody's downgraded the city's credit rating due to the pension issue and
the other rating agencies are giving pensions and their funding a lot of attention.
The committee has reviewed a 25-year history of Fund financials and plan changes, a summary
of Texas comparative cities, and employee statistics by employee group. The committee also
reviewed the December 31, 2015, valuation.
The committee will continue to evaluate options for the future. He noted that HB 3310 will
require the City Council and the ERF to jointly submit a "Funding Restoration Plan" by
November 2017 due to 3 consecutive years with amortization periods greater than 40 years.
CITY OF FORT WORTH,TEXAS
JOINT CITY COUNCIL—FORT WORTH EMPLOYEES' RETIREMENT FUND
JUNE 21,2016
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VI. Next Meeting—To be determined
The next meeting date will be determined.
VII. Request for Future Agenda Items
There were no future agenda items.
VIII. Adjourn
There being no further business, Mayor Price and Chair Samuel adjourned the joint meeting at
2:12 p.m.
These minutes were approved by the Fort Worth City Council on the 2"d day of August, 2016.
Attest: proved:
Mary J. Kay Be
City Secretary or