San Jose Federated Retirement Board approves consent items, accepts city pre‑funding offer and several contracts; recommends Nakagawa to city council

San Jose — The San Jose Federated City Employees Retirement System board met in March and approved a set of routine and substantive items, accepted the city’s pre‑funding offer under a staff‑recommended discount‑rate methodology and forwarded a candidate for a vacant trustee seat to San Jose City Council.

The board took roll‑call votes on several items, including the rescission of an application for a service‑connected disability retirement, acceptance of the full consent calendar, approval of the city’s pre‑funding offer, authorization for the CEO to execute a new office lease and selection of legal counsel for disability/domestic relations work. The board also voted to forward the appointment of Nathan Nakagawa to city council to fill the unscheduled vacancy left by Trustee Jennings.

Why it matters: The votes affect plan administration (legal counsel and disability casework), the system’s relationship with its sponsor (the city’s decision to pre‑fund contributions), and operations (a lower‑cost lease). The pre‑funding choice and the board’s continuing asset allocation decisions influence the plan’s funded status and the timing of employer contributions.

Votes at a glance - Rescission of application for change of status (service‑connected disability): Motion to accept rescission carried by roll call (ayes recorded: Vice Chair Chandra; Trustees Abbott/Avasti/Faulkner/Linder; Chair). Outcome: approved. Notes: staff said the member was one of those previously discussed regarding workers’ comp (transcript evidence).

- Consent calendar (accept all consent items): Motion moved by Trustee Linder, seconded by Trustee Abbott; roll call votes recorded as ayes across trustees and chair. Outcome: approved.

- Acceptance of the city’s pre‑funding offer: Motion moved by Trustee Linder, seconded by Trustee Abbott; roll call recorded unanimous ayes. Notes: staff explained the board’s discount‑rate setting methodology would apply a 15% haircut to the plan’s 6.625% default discount rate this year (a smaller discount requires the city to pay more if it prefunds). The motion accepted the pre‑funding offer to the city.

- Strategic asset allocation: After a presentation of Maketa’s capital market assumptions and discussion, Vice Chair Chandra moved and Trustee Linder seconded a motion to maintain the existing strategic asset allocation. Roll call recorded unanimous ayes. Outcome: maintain existing allocation.

- Legal services (disability and domestic relations): The joint ad hoc legal services committee recommended Saltzman & Johnson for disability/domestic relations representation; the board approved awarding a contract not to exceed $505,000 over the contract term. Outcome: approved.

- Authorization to execute new lease for office space: Motion made and seconded to authorize the CEO to execute a lease agreement at a negotiated rate of $2.75 per square foot (significant reduction from current cost per square foot) for slightly larger space; roll call unanimous ayes. Outcome: approved; effective date and lease details to be completed by staff.

- Recommendation for vacant trustee seat: After public interviews of two finalists, the board voted to forward Nathan Nakagawa’s appointment to city council (substitute motion for Brian Chi failed). Recorded roll call: Vice Chair Chandra — aye; Trustee Evoste — no on substitute / no on original; Trustees Abbott, Faulkner and Linder — aye on the successful motion; Chair recorded an abstention on the final. Outcome: board will forward Nathan Nakagawa’s nomination to city council to fill the unscheduled vacancy through the remainder of the term.

What the board did not decide today: The board discussed, but did not change, its strategic risk limit (policy risk band) and did not adopt any tactical changes to the asset mix beyond reaffirming the current strategic allocation.

Speakers (selected): Vice Chair Chandra; Chair Horowitz; Trustees Abbott, Faulkner, Linder, Evoste; CIO (investment staff presenter); Laura Wyrick (Maketa Investment Group); Casey Boyer (Neuberger Berman — private equity); CEO Spencer Flynn.

Documentation and next steps: The board instructed staff to prepare the formal contract documents (legal services, lease) and to forward the trustee recommendation to city council for approval. The board also asked the investment committee to reconvene if market conditions materially change (the CIO said a 20% market drop would trigger special IC/board activity).