Retirement plan committee and investment manager report healthy returns; staff note market risks

Board members received two financial briefings: a semi-annual retirement-plan update from the retirement committee and an annual investment report from Chandler Investment Management.

Retirement-plan update: Brian Latins (representing the retirement-plan committee) said the committee reviewed performance through Dec. 31 and proactively replaced two funds after portfolio-manager departures: MFS Value was replaced with Dodge & Cox and Northern Small Cap Value was replaced with Boston Small Cap Value II. The committee also reviewed the Fidelity Guaranteed Income Direct annuity option and found it met Secure Act fiduciary safe-harbor criteria, allowing participants to select annuity distribution options through the plan's brokerage link. Plan assets rose in the six-month window: the 401(a) employer-contribution plan rose about 9.4% to roughly $101 million and the 457(b) plan rose about 10.2% to roughly $127 million; combined gains were around $20 million in the six months.

Annual investment report (Chandler): Elena Sampson of Chandler presented the operating-reserve portfolio results and market context. Chandler noted slower economic growth, a softer labor market, and mixed inflation signals; markets have priced in possible Federal Reserve rate cuts later in the year.

Portfolio performance and composition: The board was shown an account summary (June 2024'June 2025) in which the operating cash portfolio earned about $3.2 million and reached a market value near $99.5 million. Credit quality was high (large allocations to U.S. Treasuries and AA-rated instruments), and Chandler reported a 1-year total return of about 6.33% for the cash portfolio versus the benchmark; Chandler said that translated to roughly a quarter-million dollars of outperformance versus benchmark since 2021. The quarterly performance also produced roughly $500,000 in earnings in the most recent quarter. The money-market yield in the cash portion was cited at approximately 3.95%.

Compliance and liquidity: Chandler confirmed the portfolios complied with California Government Code requirements for public-entity cash management (discussed as ) and stressed the emphasis on liquidity to support upcoming capital projects.

Questions from board members covered fees, participant access to one-on-one Fidelity consultations (staff said virtual consultations were available at no extra charge), and whether shifts in corporate spreads might change allocations. Elena said corporate spreads had tightened and Chandler expected to keep allocations conservative with higher Treasury weight in the near term unless market conditions change.

What the board will see next: staff said they are continuing participant education, one-on-one advisory sessions, fee benchmarking, and plan-design discussions (Roth in-plan conversion and after-tax 401(a) contributions). No approvals were needed; these were informational briefings.