ST. MARY’S COUNTY, Md. — The St. Mary’s County OPEB Retiree Benefit Trust Committee on Aug. 29 heard Marquette Associates’ second‑quarter performance review and approved several of the consultant’s recommendations, including placing a John Hancock small‑cap fund on the trust’s watch list, executing a portfolio rebalancing to fund a projected reimbursement and authorizing a vendor option to automatically pay private‑market capital calls with a specified fallback liquidation.

Marquette Associates consultant Patrick Wing told the committee the trust returned 6.1% for the quarter, “in line with the policy index benchmark,” and that year‑to‑date performance was modestly ahead of the benchmark after a difficult first quarter. Wing said a significant share — about 18% to 20% of the portfolio — remains in legacy private‑market investments and is being carried at cost, which has weighed on shorter‑term relative performance.

Why it matters: The OPEB trust supports retiree health reimbursements for St. Mary’s County and the portfolio’s liquidity and returns affect the county’s ability to reimburse the general fund. The trust’s total assets were reported at about $131.8 million at the end of the quarter, and the committee discussed both near‑term cash needs and longer‑term asset‑allocation effects from legacy private investments.

Markets and manager developments

Wing gave a broad market overview for the quarter and described pockets of risk tied to concentrated large‑cap performance and private‑market valuations. He told the board that John Hancock had rolled the trust’s existing small‑cap holding into a different vehicle, the John Hancock Small Cap Growth Dynamic Fund, advised by a different subadviser. “Since they decided to make that change, we’re recommending … to put the new fund on the watch list and to do a replacement search in October,” Wing said.

The committee voted without recorded dissent to place the John Hancock small‑cap fund on the trust’s watch list and to direct staff and the consultant to conduct a replacement search. Marquette recommended the watch‑list placement because the fund’s subadviser changed and the new vehicle’s strategy and adviser differ from the fund the committee originally approved.

Rebalancing and cash flow

Marquette presented a conservative estimate for a quarterly reimbursement of roughly $1.25 million and proposed funding that outflow through modest sales in the equity sleeve: $250,000 from a Schwab U.S. large‑value fund and $1,000,000 from a Vanguard Russell 1000 index fund, with further reallocations into TIPS and fixed‑income managers to reduce the trust’s underweight in bonds. The consultant recommended moving $200,000 from Dodge & Cox International to a Schwab TIPS index and reallocating $1 million from cash into a split among the trust’s fixed‑income managers.

The committee approved the rebalancing recommendations by voice vote.

Capital‑call automation and fallback liquidity

Plan staff and Marquette described a vendor service from Principal whereby Principal would automatically execute capital calls for legacy private‑market commitments (wire the required contributions) rather than the county executing each notice manually. Patrick Wing said Principal already receives notices and could execute the wires; the usual deadline for a capital call is about two weeks after notice.

Staff and consultants recommended the board designate a fallback fund to sell only in the unlikely event cash is insufficient to meet a capital call. The committee designated the Lord Abbett short‑duration/fixed‑income fund (identified in the presentation as the nearest cash proxy) as the fallback source and approved the automation service. The committee’s motion to authorize the service and the fallback liquidation passed on a voice vote.

Other business and administrative notes

Joy Sapp, deputy director of finance and plan administrator, reported that capital calls since the last meeting totaled $129,000 and that the county’s fiscal 2026 budget to reimburse healthcare costs is set at $6,182,000; she said the first quarter reimbursement will be approximately $1,200,000. The committee set its next meeting for Oct. 24.

Votes at a glance

- Place John Hancock Small Cap Growth Dynamic Fund on watch list and conduct replacement search in October — approved (voice vote).
- Accept Marquette Associates’ presentation — approved (voice vote).
- Approve recommended rebalancing to fund estimated $1.25 million reimbursement (sell $250,000 from Schwab U.S. large value and $1,000,000 from Vanguard Russell 1000 index; reallocate into TIPS and fixed income) — approved (voice vote).
- Authorize Principal to auto‑execute private‑market capital calls and designate Lord Abbett short‑duration/fixed income fund as fallback to sell if cash is insufficient — approved (voice vote).

The committee handled the votes by unanimous voice vote; no roll call or individual tallies were recorded in the meeting transcript.

Ending

Committee members and consultants said they would return in October with manager‑search materials related to the John Hancock position and with updates on private‑market cash flows. The committee adjourned after routine administrative motions.